CATHAY RED - Audit Report / Information 2018

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Parent Company only Financial Statements

For The Years Ended

December 31, 2018 And 2017

Report of Independent Auditors

The reader is advised that these 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.

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, 2018 and 2017, and the related parent company only statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2018 and 2017, and notes to the parent company only financial statements, including the summary of significant accounting policies.

In our opinion, the parent company only financial statements referred to above present fairly, in all material respects, the parent company only financial position of the Company as of December 31, 2018 and 2017, and their parent company only financial performance and cash flows for the years ended December 31, 2018 and 2017, 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 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 and the reports of other auditors, 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 2018 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.

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 the company properly disclose information relating the construction income of financial statement. Please refer note 4(17) and note 6(21).

Valuation of inventories

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 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(7).

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:

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.

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 2018 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 21,2019

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.

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Parent Company Only Balance Sheet

As at 31 December 2018 and 31 December 2017

			(Expressed in thousands of New Taiwan Dollars)	(Expressed in thousands of New Taiwan Dollars)	(Expressed in thousands of New Taiwan Dollars)	(Expressed in thousands of New Taiwan Dollars)
Assets			December 31,2018		December 31,2017
Code	Items	Notes	Amount	％	Amount	％
1100 1120 1125 1150 1170 1200 1220 130x 1410 1470 1480 11xx 1517 1523 1543 1550 1600 1760 1780 1840 1990 15xx 1xxx	Current assets Cash and Cash equivalents Financial Assets At Fair Value Through Other Comprehensive Income-Current Financial assets in available-for-sale-Current Notes Receivable(Net) Accounts Receivable(Net) Others Receivable Current Tax Assets Inventories Prepayments Others Current-Assets Revenue from Contracts with Customers Total Current-Assets Non-Currents Assets Financial Assets At Fair Value Through Other Comprehensive Income-Non-Current Financial assets in available-for-sale-Non-Current Financial Assets measured at Cost-Non-Current Investment Accounted for Using Equity Method Property,Plant and Equipment Investment property(Net) Intangible Assets Deferred Tax Assets Other Non-Currents Assets Total Non-Currents Assets Total Assets	4 & 6(1) & 7 3 & 4 & 6(2) 3 & 4 & 6(3) 4 & 6(5) 4 & 6(6) 4 & 6(27) 4 & 6(7) & 7 3 & 6(7),(21) 3 & 4 & 6(2) 3 & 4 & 6(3) 3 & 4 & 6(4) 3 & 4 & 6(8) 4 & 6(9) 4 & 6(10) 4 & 6(11) 4 & 6(27) 6(12) &7	$925,462 2,620,886 - 23,164 230,089 2,195 59 25,991,144 119,074 354,840 481,597 30,748,510 1,637,651 - - 1,652,433 66,611 11,122,684 778 408,941 1,054,493 15,943,591 $46,692,101	2 6 - - - - - 56 - 1 1 66 3 - - 4 - 24 - 1 2 34 100	$662,729 - 2,983,349 24,121 56,357 2,545 - 28,838,278 185,637 74,161 - 32,827,177 - 1,525,265 211,885 1,505,488 65,471 9,026,310 1,124 578,403 946,622 13,860,568 $46,687,745	2 - 6 - - - - 62 - - - 70 - 3 1 3 - 20 - 1 2 30 100

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

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Parent Company Only Balance Sheet(Continue)

As at 31 December 2018 and 31 December 2017

(Expressed in thousands of New Taiwan Dollars)

Liabilities and Equity	Liabilities and Equity	Liabilities and Equity	December 31,2018	December 31,2018	December 31,2017	December 31,2017
Code	Items	Notes	Amount	％	Amount	％
2100 2110 2130 2150 2170 2180 2200 2230 2300 2310 2320 21xx 2530 2540 2570 2600 25xx 2xxx 3100 3110 3200 3300 3310 3320 3350 3400 3xxx	Current Liabilities Short-term Loans Short-term Notes Payable Contract Liability Notes Payable Accounts Payable Accounts Payable－Related Parties Others Payable Current Tax Liabilities Other-Current Liabilities Advance Receipts Long-Term Liabilities-Current Portion Total Current-Liabilities Non-Current Liabilities Corporate Bonds Long-term Loans Deferred Tax Liabilities 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(13) 4 & 6(14) 3 & 4 & 6(21) 4 4 4 & 7 4 & 6(27) 3 & 4 4&6(16) 4 & 6(15) 4 & 6(16) 4 & 6(27) 4 & 6(17) & 7 4 6(18) 6(19) 6(20)	$8,150,000 - 3,626,329 90,385 392,450 590,534 207,715 - 114,659 - 4,200,000	18 - 8 - 1 1 - - - - 9 37 6 2 - 1 9 46 25 - 9 1 19 29 - 54 100	$5,469,000 579,744 - 28,554 338,120 263,853 196,961 91,815 45,403 4,473,657 -	12 1 - - 1 1 - - - 9 - 24 6 20 - 1 27 51 25 - 8 1 14 23 1 49 100
			17,372,072		11,487,107
			3,000,000 998,050 10,049 237,194		3,000,000 9,163,501 8,542 260,093
			4,245,293		12,432,136
			21,617,365		23,919,243
			11,595,611 25,783 3,991,496 504,189 8,877,586		11,595,611 18,063 3,847,032 504,189 6,418,942
			13,373,271		10,770,163
			80,071		384,665
			25,074,736		22,768,502
			$46,692,101		$46,687,745

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

English Translation of Financial Statements Originally Issued in Chinese CATHAY REAL ESTATE DEVELOPMENT CO., LTD. Parent Company Only Income Statement

For the years ended 31 December, 2018 and 2017

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

			(Expressed in thousands of New Taiwan Dollars)	(Expressed in thousands of New Taiwan Dollars)	(Expressed in thousands of New Taiwan Dollars)	(Expressed in thousands of New Taiwan Dollars)
Code	Items	Notes	2018		2017
			Amount	`％`	Amount	`％`
4000 5000 5900 5920 5950 6000 6200 6450 6900 7000 7010 7020 7050 7070 7900 7950 8200 8300 8310 8311 8316 8330 8349 8360 8362 8380 8500 9750	Operating Revenue Operating Cost Gross Margin Realized sales profit Gross Margin(net) Operating Expense Administrative Expense Expected credit loss Total Operating Expense Operating Income Non-Operating Income and Expenses Other Revenues Other Gain or Loss Finance Costs Investment Income on Equity-Method Investees 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 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 taxes relating to not to be reclassified to profit or loss in subsequent periods To be reclassified to profit or loss in subsequent periods Unrealized valuation gains from available-for-sale financial assets 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 Basic Earnings Per Share (In dollars) Basic Earnings Per Share	4 & 6(10),(21) & 7 4 & 6(7),(9),(10),(24) & 7 4 & 6(9),(23),(24) & 7 4 & 6(22) 4 & 6(25) & 7 4 & 6(8) 4 & 6(27) 6(26),(27) 6(28)	$12,812,525 (9,544,022) 3,268,503 41 3,268,544 (927,553) (12) (927,565) 2,340,979 274,338 2,514 (1,906) 1,218,883 1,493,829 3,834,808 (225,197) 3,609,611 5,630 (493,136) (486) (1,525) - 153,763 (335,754) $3,273,857 After Taxes $3.11	100 (75) 25 - 25 (7) - (7) 18 2 - - 10 12 30 (2) 28 - (3) - - - 1 (2) 26	$10,610,084 (8,255,507) 2,354,577 41 2,354,618 (687,275) - (687,275) 1,667,343 227,821 (7,799) (5,342) (510,151) (295,471) 1,371,872 72,766 1,444,638 (5,004) - (613) 851 34,807 46,950 76,991 $1,521,629 After Taxes $1.25	100 (78) 22 - 22 (6) - (6) 16 2 - - (5) (3) 13 1 14 - - - - - - - - 14

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

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD. Parent Company Only Statements of Changes In Equity As at 31 December 2018 and 31 December 2017

==> picture [727 x 381] intentionally omitted <==

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

(Expressed in thousands of New Taiwan Dollars)
Retained Earnings Other Equity
Exchange Unrealized
Unrealized
differences (losses) gains
valuation
resulting from from financial
Items Capital Stock Capital Surplus Legal CapitalReserve SpecialCapital UnappropriatedRetained Total translating thefinancial value throughassets at fair (losses) gainsfrom Total
Reserve Earnings statements of other available-for- Remeasuremen
sale financial
foreign comprehensive ts of defined
assets
operations income benefit plans
Code 3100 3200 3310 3320 3350 3410 3420 3425 3445 3XXX
A1 Balance on 1 January 2017 $11,595,611 $10,407 $3,545,241 $504,189 $7,015,437 $11,064,867 $(110,975) $- $393,562 $25,087 $22,978,559
Appropriation and distribution of earnings for the year 2016
B1 Legal Capital Reserve - - 301,791 - (301,791) - - - - - -
B5 Cash dividends on common stock - - - - (1,739,342) (1,739,342) - - - - (1,739,342)
C17 Changes in other capital surplus - 7,656 - - - - - - - - 7,656
D1 Net income for the year ended 31 December 2017 - - - - 1,444,638 1,444,638 - - - - 1,444,638
D3 Other comprehensive income for the year ended 31 December 2017 - - - - - - 46,950 - 34,807 (4,766) 76,991
D5 Total comprehensive income for the year ended 31 December 2017 - - - - 1,444,638 1,444,638 46,950 - 34,807 (4,766) 1,521,629
Z1 Balance on 31 December 2017 $11,595,611 $18,063 $3,847,032 $504,189 $6,418,942 $10,770,163 $(64,025) $- $428,369 $20,321 $22,768,502
A1 Balance on 1 January 2018 $11,595,611 $18,063 $3,847,032 $504,189 $6,418,942 $10,770,163 $(64,025) $- $428,369 $20,321 $22,768,502
A3 Effects on retrospective application and restatement - - - - 384,970 384,970 - 459,529 (428,369) - 416,130
A5 Balance on 1 January 2018 (Adjusted) 11,595,611 18,063 3,847,032 504,189 6,803,912 11,155,133 (64,025) 459,529 - 20,321 23,184,632
Appropriation and distribution of earnings for the year 2017
B1 Legal Capital Reserve - - 144,464 - (144,464) - - - - - -
B5 Cash dividends on common stock - - - - (1,391,473) (1,391,473) - - - - (1,391,473)
C17 Changes in other capital surplus - 7,720 - - - - - - - - 7,720
D1 Net income for the year ended 31 December 2018 - - - - 3,609,611 3,609,611 - - - - 3,609,611
D3 Other comprehensive income for the year ended 31 December 2018 - - - - - - 153,763 (493,136) - 3,619 (335,754)
D5 Total comprehensive income for the year ended 31 December 2018 - - - - 3,609,611 3,609,611 153,763 (493,136) - 3,619 3,273,857
Z1 Balance on 31 December 2018 $11,595,611 $25,783 $3,991,496 $504,189 $8,877,586 $13,373,271 $89,738 $(33,607) $- $23,940 $25,074,736
----- End of picture text -----

The actual distribution of employees in the 2018 and 2017 was NT$3,841 thousand and NT$1,376 thousand respectively;

the compensation for the Board of Directors was NT$2,400 thousand and was deducted from the consolidated income statement.

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

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 31 December, 2018 and 2017

(Expressed in thousands of New Taiwan Dollars)	(Expressed in thousands of New Taiwan Dollars)	(Expressed in thousands of New Taiwan Dollars)	(Expressed in thousands of New Taiwan Dollars)
Code	Items	2018	2017
		Amount	Amount
AAAA A10000 A20000 A20100 A20200 A20300 A20900 A21200 A21300 A22400 A22500 A23100 A29900 A31130 A31150 A31180 A31200 A31230 A31240 A31270 A32125 A32130 A32150 A32160 A32180 A32210 A32230 A33000 A33100 A33500 AAAA BBBB B00400 B01800 B02400 B02700 B02800 B04500 B06700 B06800 B07600 BBBB CCCC C00100 C00600 C01700 C04400 C04500 C05600 CCCC EEEE E00100 E00200	Cash flows from operating activities Net income before tax Adjustments: Depreciation Amortization Provision for bad debt expenses Interest Expenses Interest Income Dividend Income Share of other comprehensive income of subsidiaries, associates and joint ventures Loss (gain) on disposal of property, plant and equipment Loss(gain) on disposal of investments Gain on disposal of investment property Changes in operating assets and liabilities: Decrease (increase) in notes receivable Decrease (increase) in account receivable Decrease (increase) in other receivable Decrease (increase) in inventories Decrease (increase) in prepayments Decrease (increase) in other current assets Decrease (increase) in revenue from contracts with customers Increase (decrease) in contract liability Increase (decrease) in notes payable Increase (decrease) in accounts payable Increase (decrease) in accounts payable to related parties Increase (decrease) in other payables Increase (decrease) in advances receipts Increase (decrease) in other current liabilities Cash inflow (outflow) generated from operations Interested received Income taxes paid Net cash flows from (used in) operating activities Cash flow from investing activities Proceeds from disposal of available-for-sale financial assets Acquired an investment using the equity method Returns the shares from investments using the equity method Acquisition of property, plant and equipment Disposal of property, plant and equipment Acquisition of intangible assets Increase in other non-current assets Decrease in other non-current assets Dividends received Net cash flows from (used in) investing activities Cash flow from financing activities Increase in short-term loans Decrease in short-term notes payable Decrease in long-term loans Decrease in other non-current liabilities Payment of cash dividends Interest paid Net cash flows from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period	$3,834,808 190,843 486 12 1,906 (734) (152,719) (1,218,883) (4,363) - 173,324 957 (173,743) 350 635,488 66,563 (280,679) (27,087) (847,328) 61,831 54,330 326,681 19,971 - 69,256 2,731,270 734 (217,167) 2,514,837 - (650,000) 1,785,698 (22,269) 7,456 (140) (107,871) - 242,220 1,255,094 2,681,000 (579,744) (3,965,451) (17,269) (1,391,473) (234,261) (3,507,198) 262,733 662,729 $925,462	$1,371,872 195,348 1,043 - 5,342 (1,557) (119,656) 510,151 (680) 847 275,552 2,273 (37,518) 4,133 1,200,476 (38,010) (1,309) - - (15,484) (261,462) (86,658) (4,002) (1,285,137) (6,694) 1,708,870 1,559 (328,546) 1,381,883 4,001 (276,637) - (5,237) 5,353 (1,381) - 104,048 183,231 13,378 2,279,000 (70,111) (2,225,319) (22,565) (1,739,342) (234,994) (2,013,331) (618,070) 1,280,799 $662,729

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

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, 2018 and 2017 (Amounts expressed in Thousands of New Taiwan Dollars, Unless Specified Otherwise) (Audited)

1. HISTORY AND ORGANIZATION

Cathay Real Estat e Develop m ent Co., L t d. (the “C o mpany”) w as incorp o rated on D ecember 1 , 1964. T he main b u sinesses of the com p any are en t rusted the manufactu r er to buil d residentia l and co m mercial b u ildings for leasing or s elling.

The Company is l o cated at 2 F ., No. 21 8 , Sec. 2, D unhua S. R d., Da-an D ist., Taip e i City 106 , Taiwan (R.O.C.) a n d has bee n listed on T aiwan Sto c k Exchang e (TWSE) s ince October 1967.

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

The financial stat e ments of t h e Compa n y (“the C o mpany”) f o r the year s ended December 31 , 2018 a n d 2017 w ere author i zed for is s ue in acc o rdance with a resol u tion of th e Board o f Directo r s on Marc h 21, 2019.

3. APPLICATION OF NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

(1) Ef f ect of the adoption o f new is s uances of or amend m ents to In ternation a l Financia l “ ＂
Re p orting Sta n dards ( I FRSs ) a s endorse d by the Fi n ancial Su p ervisory C ommissio n ( “ FSC ＂ ) ：

Ini t ial applic a tion of th e amendm e nts to the Regulatio n s Governi n g the Pre p aration o f Fi n ancial Rep o rts by Securities Issu e rs and the Internatio n al Financi a l Reportin g Standard s (IF R S), International Ac c ounting St a ndards (I A S), IFRIC Interpretat i ons (IFRI C ), and SI C Int e rpretation s (SIC) (co l lectively, “ IFRSs”) e n dorsed an d issued int o effect fr o m 2018 b y the Financial Superviso r y Commi s sion (FSC ) did not h ave a sig n ificant ef f ect on th e Co m pany exc e pt below:

A. I FRS 15“Revenue fro m Contrac ts with Cus t omers” (i n cluding A m endments to IFRS 1 5 “Clarificat i ons to IFR S 15 Reven u e from Co n tracts wit h Customer s ”)

I FRS 15 r eplaces I A S 11 Construction Contracts , IAS 18 Revenue a nd relate d I nterpretati o ns. In ac c ordance w i th the tra n sition pro v ision in I F RS 15, th e Compan y e lected to r ecognize t h e cumula t ive effect o f initially applying I F RS 15 at the date o f i nitial appl i cation (Ja n uary 1, 2018). The C ompany also elected to apply t h is standar d r etrospecti v ely only t o contracts that are n o t complet e d contract s at the da t e of initia l a pplication .

English Translation of Financial Statements Originally Issued in Chinese

The Company’s principal activities consist of the sale of goods and rendering of services. The impacts arising from the adoption of IFRS 15 on the Company are summarized as follows:

(a) Please refer to Note 4.17 for the accounting policies before or after January 1, 2018.
(b) Before January 1, 2018, the Company’s presold house transaction contracts of buyer only have the limited influence on the design of the real property, or to specify only minor changes to the basic design. In accordance with IAS 18, the Company’s presold house transaction contracts, a merchandise sales agreement, were recognized when the product is delivered; after January 1, 2018, the income is recognized when the Company transfers the promised merchandise to the customer and fulfill the performance obligation in accordance with IFRS 15. For part of presold house contracts, the company charges a part of the consideration at the time of signing and has obligation to provide the goods in the follow-up. Before January 1, 2018, the previous consideration was recognized as other current liabilities; after January 1, 2018, the consideration is recognized as a contractual liability in accordance with IFRS 15. On 1 January 2018, the amount of the Company reclassification from other current liabilities to contract liabilities was $4,473,657 thousand. Compared with the requirements of IAS 18, other current liabilities decrease $3,626,329 thousand and contract liabilities increase $3,626,329 thousand as of 31 December 2018.
(c) Before January 1, 2018, the Company's sales commission for construction was recognized as a current expense when the customer signed a presold house contract; after January 1, 2018, the income is recognized when the Company transfers the promised commodities to the customer and fulfills the performance obligations in accordance with IFRS 15. For some contracts applied IFRS 15, the sales commission for the construction is the incremental cost of the expected recoverable contract, the Company recognize the incremental contract cost. The Company's reclassification from retained earnings and deferred income tax assets to the incremental contract costs on 1 January 2018, was NT$454,510 thousand.
(d) Please refer to Note 4, Note 5 and Note 6 for additional disclosure note required by IFRS 15.

B. IFRS 9“Financial Instruments”

IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement . In accordance with the transition provision in IFRS 9, the Company elected not to restate prior periods at the date of initial application (January 1, 2018). The adoption of IFRS 9 has the following impacts on the Company:

English Translation of Financial Statements Originally Issued in Chinese

(a) The Company adopted IFRS 9 since January 1, 2018 and it adopted IAS 39 before January 1, 2018. Please refer to Note 4 for more details on accounting policies.
(b) In accordance with the transition provision in IFRS 9, the assessment of the business model and classification of financial assets into the appropriate categories are based on the facts and circumstances that existed as at January 1, 2018. The classifications and carrying amounts of financial assets as at January 1, 2018 are as follow:

IAS 39	IAS 39	IFRS 9
	Carrying		Carrying
Measurement categories		Measurement categories
	amounts		amounts

Fair value through other comprehensive income		Fair value through other comprehensive income	$4,751,673
Available-for-sale financial assets (including	4,720,499
$211,885 thousand measured at cost)
At amortized cost		At amortized cost (including cash and cash
Loans and receivables (including cash and cash	745,421	equivalents, notes receivable, accounts receivables,	745,421
equivalents, notes receivable, accounts receivable and		other receivables)
other receivables)
Total	$5,465,920	Total	$5,497,094

(c) The transition from IAS 39 to IFRS 9 as at January 1, 2018, the changes in the classifications of financial assets and financial liabilities are as follows:

IAS 39		IFRS 9				Other

					Retained	components

					earnings	of equity
Class of financial instruments	Carrying		Carrying
		Class of financial instruments		Difference	adjusted	adjusted
	amounts		amounts
					amounts	amounts

Available-for-sale financial assets`－`	$4,720,499	Measured at fair value through other	$4,751,673	$(31,174)	$-	$(31,174)
Stocks (including$211,885 thousand		comprehensive income (equity
measured at cost) (Note 1)		instruments)

Loans and receivables (Note 2)
Cash and cash equivalents	662,398	Cash and cash equivalents	662,398	-	-	-
Notes receivables, net	24,121	Notes receivables, net	24,121	-	-	-
Accounts receivables, net	56,357	Accounts receivables, net	56,357
Other receivables	2,545	Other receivables	2,545	-	-	-
Subtotal	745,421	Subtotal	745,421
Total	$5,465,920 /Total		$5,497,094		$-	$(31,174)

English Translation of Financial Statements Originally Issued in Chinese

Notes:

(1) In accordance with of IAS 39, available-for-sale financial assets include investments in funds, stocks of listed companies and stocks of unlisted companies. Details are described as follows:
a. Stocks (including listed and unlisted companies)

Based on the facts and circumstances that existed as at January 1, 2018, as these equity investments are not held-for-trading, the Company elected to designate them as financial assets measured at fair value through other comprehensive income. As at January 1, 2018, the Company reclassified available-for-sale financial assets (including measured at cost) to financial assets measured at fair value through other comprehensive income of NT$4,751,673 thousand. Other related adjustments are described as follows:

(a) The stocks of unlisted companies previously measured at cost in accordance with IAS 39. However, in accordance with IFRS 9, there is not only no need to recognize the loss on impairment, but also the stocks of unlisted companies must be measured at fair value. The fair value of the stocks of unlisted companies was NT$1,768,324 thousand as at January 1, 2018. The Company adjusted the carrying amount of financial assets measured at fair value through other comprehensive income by NT$1,737,150 thousand and adjusted other equity by NT$31,174 thousand.
(b) The stocks of listed companies of NT$2,983,349 thousand were measured at fair value. As at January 1, 2018, they were reclassified from availablefor-sale financial assets to financial assets measured at fair value through other comprehensive income and the fair value changes were adjusted within other equity accounts.
(2) In accordance with IAS 39, the cash flow characteristics for held-to-maturity investments and loans and receivables are solely payments of principal and interest on the principal amount outstanding. The assessment of the business model is based on the facts and circumstances that exited as at January 1, 2018. These financial assets were measured at amortized cost as they were held within a business model whose objective was to hold financial assets to collect contractual cash flows. Besides, in accordance with IFRS 9, there was no adjustment arised from the assessment of impairment losses for the aforementioned assets as at January 1, 2018. Therefore, there is no impact on the carrying amount as at January 1, 2018.

English Translation of Financial Statements Originally Issued in Chinese

(d) Other influence

The Company adopted the requirements of IFRS 9 since January 1,2018. The adjustments for investment using equity method and other equity were NT$14 thousand, respectively.

(e) Please refer to Note 4, Note 5, Note 6 and Note 12 for the related disclosures required by IFRS 7 and IFRS 9.
C. IFRIC 22 “ Foreign Currency Transactions and Advance Consideration ”

The interpretation clarifies that when applying paragraphs 21 and 22 of IAS 21 “The Effects of Changes in Foreign Exchange Rates”, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which the entity initially recognizes the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration.

The Company originally recorded their foreign currency sales transactions based on the exchange rate on the date of revenue recognition and converted into its functional currency. The exchange difference was recognized when the foreign currency advance payment was written off. The Company elected to apply this interpretation prospectively on 1 January 2018. This change in accounting principle did not significantly impact the Company's recognition and measurement.

D. Disclosure Initiative (Amendment to IAS7 “Statements of Cash Flows”)

Add the reconciliation information of beginning and ending balance of the Company’s financing activities related to liabilities. Please refer to Note 12 for more details.

(2) Standards or interpretations issued, revised or amended, by IASB and endorsed by FSC but not yet adopted at the date of issuance of the Company’s financial statements are listed below.

No.	Standards or interpretations issued, revised or amended	Effective date issued byIASB
a	IFRS 16“Leases”	January1,2019
b	IFRIC 23 “UncertaintyOver Income Tax Treatments”	January1,2019
c	IAS 28“Investment in Associates and Joint Ventures” — Amendments to IAS 28	January 1, 2019
d	Prepayment Features with Negative Compensation (Amendments to IFRS 9)	January 1, 2019
e	Improvements to International Financial Reporting Standards (2015- 2017 cycle)	January 1, 2019
f	Plan Amendment,Curtailment or Settlement(Amendments to IAS 19)	January1,2019

English Translation of Financial Statements Originally Issued in Chinese

A. IFRS 16“Leases”

The new standard requires lessees to account for all leases under one single accounting model (except for short-term or low-value asset lease exemptions), which is for lessees to recognize right-of-use assets and lease liabilities on the balance sheet and the depreciation expense and interest expense associated with those leases in the consolidated statements of comprehensive income. Besides, lessors’ classification remains unchanged as operating or finance leases, but additional disclosure information is required.

B. IFRIC 23 “Uncertainty Over Income Tax Treatments”

The Interpretation clarifies application of recognition and measurement requirements in IAS 12 “Income Taxes” when there is uncertainty over income tax treatments.

C. IAS 28“Investment in Associates and Joint Ventures” — Amendments to IAS 28

The amendments clarify that an entity applies IFRS 9 to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture before it applies IAS 28, and in applying IFRS 9, does not take account of any adjustments that arise from applying IAS 28.

D. Prepayment Features with Negative Compensation ( Amendments to IFRS 9)

The amendment allows financial assets with prepayment features that permit or require a party to a contract either to pay or receive reasonable compensation for the early termination of the contract, to be measured at amortized cost or at fair value through other comprehensive income.

E. Improvements to International Financial Reporting Standards (2015-2017 cycle):

IFRS 3 “Business Combinations”

The amendments clarify that an entity that has joint control of a joint operation shall remeasure its previously held interest in a joint operation when it obtains control of the business.

IFRS 11 “Joint Arrangements”

The amendments clarify that an entity that participates in, but does not have joint control of, a joint operation does not remeasure its previously held interest in a joint operation when it obtains joint control of the business.

English Translation of Financial Statements Originally Issued in Chinese

IAS 12 “Income Taxes”

The amendments clarify that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events.

IAS 23 “Borrowing Costs”

The amendments clarify that an entity should treats as part of general borrowings any borrowing made specifically to obtain an asset when the asset is ready for its intended use or sale.

F. Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)

The amendments clarify that when a change in a defined benefit plan is made (such as amendment, curtailment or settlement, etc.), the entity should use the updated assumptions to remeasure its net defined benefit liability or asset.

The abovementioned standards and interpretations issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after January 1, 2019. As the Company is still currently determining the potential impact of the standards and interpretations listed under (A), it is not practicable to estimate their impact on the Company now. All other standards and interpretations have no material impact on the Company.

A. IFRS 16 “Leases”

IFRS 16 “Leases” replaces IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, SIC-15 “Operating Leases - Incentives” and SIC-27 “Evaluating the Substance of Transactions Involving the Legal Form of a Lease”. The impact arising from the adoption of IFRS 16 on the Company are summarized as follows:

For the definition of a lease, the Company elects not to reassess whether a contract is, or contains, a lease at the date of initial application (January 1, 2019) in accordance with the transition provision in IFRS 16. Instead, the Company is permitted to apply IFRS 16 to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 but not to apply IFRS 16 to contracts that were not previously identified as containing a lease applying IAS 17 and IFRIC 4.

The Company is a lessee and is exempt from the lease option for leases and low-value leases that are ended within 12 months of the initial application date. The choice of shortterm leases is applicable and should be based on the underlying asset class related to the right to use. The underlying asset class is the grouping of assets with similar nature and purpose in the operation of the enterprise. The selection of low-value underlying assets applies and can be based on individual leases.

English Translation of Financial Statements Originally Issued in Chinese

(3) Standards or interpretations issued, revised or amended, by IASB but not yet endorsed by FSC at the date of issuance of the Company’s financial statements are listed below.

No.	Standards or interpretations issued, revised or amended	Effective date issued byIASB
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	To be determined by IASB
b	IFRS 17 “Insurance Contracts”	January1,2021
c	Definition of a Business(Amendments to IFRS 3)	January1,2020
d	Definition of Material(Amendments to IAS 1 and 8)	January1,2020

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

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 company of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following:

English Translation of Financial Statements Originally Issued in Chinese

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

C. Definition of a Business (Amendments to IFRS 3)

The amendments clarify the definition of a business in IFRS 3 Business Combinations. The amendments are intended to assist entities to determine whether a transaction should be accounted for as a business combination or as an asset acquisition.

IFRS 3 continues to adopt a market participant’s perspective to determine whether an acquired set of activities and assets is a business. The amendments clarify the minimum requirements for a business; add guidance to help entities assess whether an acquired process is substantive; and narrow the definitions of a business and of outputs; etc.

D. Definition of a Material (Amendments to IAS 1 and 8)

The main amendment is to clarify new definition of material. It states that “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make based on those financial statements, which provide financial information about a specific reporting entity.”

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Company’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. As the Company is still currently determining the potential impact of the standards and interpretations listed under (A) and (D), it is not practicable to estimate their impact on the Company now. The remaining standards and interpretations have no material impact on the Company.

English Translation of Financial Statements Originally Issued in Chinese

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, 2018 and 2017 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 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. Each entity in the Company 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 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.

English Translation of Financial Statements Originally Issued in Chinese

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 (Before January 1, 2018: IAS 39 Financial Instruments: Recognition and Measurement) 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.

English Translation of Financial Statements Originally Issued in Chinese

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

An asset is classified as current when:

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

All other assets are classified as non-current.

A liability is classified as current when:

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

All other liabilities are classified as non-current.

(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.

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments (Before January 1, 2018: IAS 39 Financial Instruments: Recognition and Measurement) 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.

English Translation of Financial Statements Originally Issued in Chinese

A. Financial instruments: Recognition and Measurement

The accounting policy from January 1, 2018 is as follows:

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.
(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.

English Translation of Financial Statements Originally Issued in Chinese

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.

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 Company 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.

English Translation of Financial Statements Originally Issued in Chinese

Financial asset measured at fair value through profit or loss

Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

The accounting policy before 1 January 2018 as follow:

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

Financial assets of the Company are classified as financial assets at fair value through profit or loss, held-to-maturity investments, available-for-sale financial assets and loans and receivables. The Company determines the classification of its financial assets at initial recognition.

Available-for-sale financial assets

Available-for-sale investments are non-derivative financial assets that are designated as available-for-sale or those not classified as financial assets at fair value through profit or loss, held-to-maturity financial assets, or loans and receivables.

Foreign exchange gains and losses and interest calculated using the effective interest method relating to monetary available-for-sale financial assets, or dividends on an available-for-sale equity instrument, are recognized in profit or loss. Subsequent measurement of available-for-sale financial assets at fair value is recognized in equity until the investment is derecognized, at which time the cumulative gain or loss is recognized in profit or loss.

If equity instrument investments do not have quoted prices in an active market and their fair value cannot be reliably measured, then they are classified as financial assets measured at cost on balance sheet and carried at cost net of accumulated impairment losses, if any, as at the reporting date.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those that the Company upon initial recognition designates as available for sale, classified as at fair value through profit or loss, or those for which the holder may not recover substantially all its initial investment.

English Translation of Financial Statements Originally Issued in Chinese

Loans and receivables are separately presented on the balance sheet as receivables or bond investments for which no active market exists. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate method, less impairment. Amortized cost is calculated by considering any discount or premium on acquisition and fee or transaction costs. The effective interest method amortization is recognized in profit or loss.

B. Impairment of financial assets

The accounting policy from January 1, 2018 is as follows:

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.

English Translation of Financial Statements Originally Issued in Chinese

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.

The accounting policy before January 1, 2018 is as follows:

The Company assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. A financial asset is deemed to be impaired if, and only if, there is objective evidence of impairment because of one or more loss events that has occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset. The carrying amount of the financial asset impaired, other than receivables impaired which are reduced using an allowance account is reduced directly and the amount of the loss is recognized in profit or loss.

A significant or prolonged decline in the fair value of an available-for-sale equity instrument below its cost is considered a loss event.

Other loss events include:

(a) significant financial difficulty of the issuer or obligor
(b) a breach of contract, such as a default or delinquency in interest or principal payments
(c) it is becoming probable that the borrower will enter bankruptcy or other financial reorganization
(d) the disappearance of an active market for that financial asset because of financial difficulties

For loans and receivables measured at amortized cost, the Company first assesses individually whether objective evidence of impairment exists individually for financial asset that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exits for an individually assessed financial asset, whether significant or not, it includes the asset in a company of financial assets with similar credit risk characteristics and collectively assesses them for impairment. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows. The present value of the estimated future cash flows is discounted at the financial assets original effective interest rate. However, if the loan using floating rate, the discount rate used to measure the impairment loss is the effective interest rate. Interest income is based on the reduced carrying amount of the asset and is continuously estimated using the same discount rate to measure the impairment loss.

English Translation of Financial Statements Originally Issued in Chinese

Receivables together with the associated allowance are written off when there is no realistic prospect of future recovery. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to profit or loss.

In the case of equity investments classified as available-for-sale, where there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss – is removed from other comprehensive income and recognized in profit or loss. Impairment losses on equity investments are not reversed through profit or loss; increases in their fair value after impairment are recognized directly in other comprehensive income.

In the case of debt instruments classified as available-for-sale, the amount recorded for impairment is the accumulation loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that investment previously recognized in gain or loss. Future interest income is based on the reduced carrying amount of the asset, using the effective interest rate method to measure the impairment loss. The interest income is recognized in gain or loss. If the fair value of a debt instrument increases in a subsequent year, and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is recovered through profit or loss.

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.

English Translation of Financial Statements Originally Issued in Chinese

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 (Before January 1, 2018: IAS 39 Financial Instruments: Recognition and Measurement ) are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost.

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 expires.

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.

English Translation of Financial Statements Originally Issued in Chinese

(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.

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 property 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.

Starting from January 1, 2018, rendering of services is accounted in accordance with IFRS 15 but not within the scoping of inventories.

English Translation of Financial Statements Originally Issued in Chinese

(10) Construction Contract

The Company’s presold house transaction contracts of buyer only have the limited influence on the design of the real property, or to specify only minor changes to the basic design. In accordance with IFRS 15 “Revenue of Customer Contracts”, the Company’s presold house contract is a commodity sales agreement and the is recognized as sales revenue.

(11) 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 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 arised from the accounting of investment subsidiaries in accordance with IFRS 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.

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.

English Translation of Financial Statements Originally Issued in Chinese

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.

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 (before January 1, 2018: IAS 39 Financial Instruments: Recognition and Measurement). 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.

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 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.

English Translation of Financial Statements Originally Issued in Chinese

(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 Company recognized such parts as parent company only 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.

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 Other equipment:3~10 years

Leasehold improvements: The shorter of lease terms or economic useful lives

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.

(13) Investment property

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. After initial recognition, investment properties are measured using the cost model in accordance with the requirements of IAS 16 for that model, other than those that meet the criteria to be classified as held for sale (or are included in a disposal company that is classified as held for sale) in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

English Translation of Financial Statements Originally Issued in Chinese

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

Buildings 5 ～ 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 decide to transfer properties to or from investment properties according to actual use.

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.

(14) Leases

Company as a lessee

Finance leases which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in profit or loss.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

Company as a lessor

Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Rental revenue generated from operating leases was recognized over the lease term using the straight-line method. Contingent rents are recognized as revenue in the period in which they are earned.

English Translation of Financial Statements Originally Issued in Chinese

(15) 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.

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 (1 to 6 years).

(16) 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 parent company only 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.

English Translation of Financial Statements Originally Issued in Chinese

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.

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

(17) Revenue recognition

The accounting policy from January 1, 2018 is as follows:

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

Construction income

As explained in Note 4 (10) construction contracts, 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.

The accounting policy from January 1, 2017 is as follows:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. The following specific recognition criteria must also be met before revenue is recognized:

Construction income

As explained in Note 4 (10) construction contracts, the entrusting construction company in construction and planning of public housing is recognized as sales revenue in accordance with the IAS18 about the regulation of sales of goods. Therefore, the Company recognize profit and loss when the ownership transferred.

English Translation of Financial Statements Originally Issued in Chinese

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

Dividends

Revenue is recognized when the Company has the right to receive the payment.

Rental income

Revenue generated by operating leasing is recognized on a straight-line basis over the leasing period.

(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 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.

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.

English Translation of Financial Statements Originally Issued in Chinese

(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.

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:

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.

English Translation of Financial Statements Originally Issued in Chinese

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.

5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company’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 liabilities 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:

－ Financing 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.

English Translation of Financial Statements Originally Issued in Chinese

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

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 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.

English Translation of Financial Statements Originally Issued in Chinese

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, 2018, the deferred income tax assets that the Company has not recognize, please refer to Note 6 for more details.

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

Starting from January 1, 2018:

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.

Before January 1, 2018:

The Company considers the estimation of future cash flows when there is objective evidence showed indications of impairment. The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. However, as the impact from the discounting of short-term receivables is not material, the impairment of short-term receivables is measured as the difference between the asset's carrying amount and the estimated undiscounted future 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.

English Translation of Financial Statements Originally Issued in Chinese

6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand and petty cash Checking accounts and demand deposit Total	As of	As of
	December 31, 2018	December 31, 2017
	NTD	NTD
	$292 925,170	$431 662,298
	$925,462	$662,729

As of 31 December 2018, and 2017, cash and cash equivalents were not pledged as collateral or restricted for uses.

(2) Financial assets at fair value through profit or loss

Equity instruments investments measured at fair value through other comprehensive income`－` current: Listed company’s stocks Equity instruments investments measured at fair value through other comprehensive income`－` non-current: Unlisted company’s stocks Current Non-current	As of	As of
	December 31, 2018	December 31, 2017(Note)
	NTD	NTD
	$2,620,886
	$1,637,951
	$2,620,886
	$1,637,951

Note: The Company adopted IFRS 9 since January 1, 2018. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 9.

As of 31 December 2018, financial assets at fair value through over comprehensive income were not pledged.

English Translation of Financial Statements Originally Issued in Chinese

(3) Financial assets in available-for-sale

Stocks Add: Valuation adjustments Total Current Non-current Total	As of	As of
	December 31, 2018(Note)	December 31, 2017
	NTD	NTD
	$4,080,246 428,368 $4,508,614 As of	$4,080,246 428,368
		$4,508,614
	December 31, 2018(Note)	December 31, 2017
	NTD	NTD
		$2,983,349 1,525,265
		$4,508,614

Note: The Company adopted IFRS 9 since January 1, 2018. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 9.

The Company adopted IAS 39 before January 1, 2018 and classified certain financial assets as available-for-sale financial assets.

Available-for-sale financial assets were not pledged.

`－` (4) Financial assets measured at cost Non-current

Stocks	As of	As of
	December 31, 2018(Note)	December 31, 2017
	NTD	NTD
		$211,885

Note: The Company adopted IFRS 9 since January 1, 2018. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 9.

The Company adopted IAS 39 before 1 January 2018. The above investments in the equity instruments of unlisted entities are measured at cost as the fair value of these investments are not reliably measurable since the variability in the range of reasonable fair value measurements is significant for that investment and that the probabilities of the various estimates within the range cannot be reasonably assessed and used when measuring fair value.

Financial assets measured at cost were not pledged.

English Translation of Financial Statements Originally Issued in Chinese

(5) Notes receivable

Notes receivable arising from operating activities Less: Loss allowance Notes receivable, net	As of	As of
	December 31, 2018	December 31, 2017
	NTD	NTD
	$23,164 -	$24,121 -
	$23,164	$24,121

Notes receivables were not pledged.

The Company adopted IFRS 9 for impairment assessment since 1 January 2018. Please refer to Note 6.22 for more details on accumulated impairment. Please refer to Note 12 for more details on credit risk.

`－` (6) Accounts receivable and Accounts receivable related parties

Accounts receivable Less: Loss allowance Subtotal Accounts receivable`－`related parties Less: Loss allowance Subtotal Total	As of	As of
	December 31, 2018	December 31, 2017
	NTD	NTD
	$226,712 (12)	$56,357 -
	226,700	56,357
	3,389 -	- -
	-	-
	$230,089	$56,357

Accounts receivables and accounts receivables – related parties were not pledged.

Accounts receivable are generally on 30-365-day terms. The Company adopted IFRS 9 for impairment assessment since 1 January 2018. Please refer to Note 6.22 for more details on impairment of accounts receivable. The Company adopted IAS 39 for impairment assessment before 1 January 2018. The ageing analysis of accounts receivable and accounts receivablerelated parties for the year ended 31 December 2017 are as follows: (Please refer to Note 12 for more details on credit risk management.)

The Company's trade receivables mainly consist of housing loans from the bank, the rental of buildings and equipment, and the credit card payments for hotel accommodation. The Trading partners are mainly creditworthy financial institutions and customers with good credit rating.

English Translation of Financial Statements Originally Issued in Chinese

－ Accounts receivable and accounts receivable from related parties, net the aging analysis is as follows:

2017.12.31	Neither past due			Past due			Total
		Within 30 days	31-60 days	61-90 days	91-120 days	Over 121 days
	$56,357	$-	$-	$-	$-	$-	$56,357

(7) Inventories

Land held for construction site Construction in progress Buildings and land held for sale Subtotal Prepayment for land purchases Total	As of	As of
	December 31, 2018	December 31, 2017
	NTD	NTD
	$8,154,901 15,058,866 2,052,299	$8,895,746 16,032,714 3,572,983
	25,266,066 725,078	28,501,443 336,835
	$25,991,144	$28,838,278

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 land development analysis method. The the land profit is calculated by the legal use and intensity of the land, and the total sales amount after development or construction is estimated, deducting the direct costs, indirect costs, capital interest during the development period.
C. Significant Construction project as follow:

Construction Project	Amount	Percentage of Completion
Minsheng Jingguo Building Landmark Twin Towers Cathay Fu Tu Chief Executive Officer Cathay O2 Fu Building Cathay Ho Yung Hua Road	3,840,098 1,486,551 1,989,160 1,535,800 1,149,124 1,441,749 1,315,905	100.00% 99.00% 90.00% 78.00% 42.00% 17.00% 9.00%

English Translation of Financial Statements Originally Issued in Chinese

Park Beautiful Mansion 1,010,000 0.00%

D. The total interest capitalizes of the inventories mentioned above was found to be NT$ 230,859 thousand and NT$230,071 thousand for the year ended December 31, 2018 and 2017, respectively. The interest expense before capitalizing were NT$232,765 thousand and NT$235,413 thousand, respectively.

The interest rate of capitalized loan for inventories were 0.0859 %~0.1902% in 2018 and 0.0915%~0.1766% in 2017.

E. To successfully construct and deliver the building and housing to the customers, the company using trust accounts for the construction in progress are as follows:

Project(Amount)	Trustee	Period From April 8, 2014 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From February 12, 2015 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From December 9, 2015 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From April 13, 2017 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From April 13, 2017 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From October 18, 2017 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. From October 18, 2017 to the completion of the project, the license was obtained, and the first registration of the ownership was completed. 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
Chief Executive Officer (NT$1,710 thousand) Cathay Fu Tu (NT$17,075 thousand) Cathay O2 Fu Building (NT$5,811 thousand) Cathay New Village (NT$1,961 thousand) Cathay Ho (NT$144,189 thousand) Cathay Shui Hsiu (NT$844 thousand) Cathay Plus+ (NT$226,161 thousand) Park Beautiful Mansion (NT$95,657 thousand) TREE. RIVER. CATHAY’S HOME I (NT$144,431 thousand) HYGGE (NT$92,420 thousand)	Cathay United Bank China Trust Commercial 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

English Translation of Financial Statements Originally Issued in Chinese

Project(Amount)	Trustee	Period
		registration of the ownership was completed.

As of December 31, 2018, the Company has established a deed of trust with the bank for the construction of the case, and has handled the fund management of the presold customers. The trust period ended until the project is completed and the first time the ownership registration of the completed property is completed. The balance of the funds managed by the Company in accordance with the above trust deed is NT$730,259 thousand, which is equal to the price 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$9,225,088 thousand and NT$7,930,117 thousand for the years ended to December 31, 2018 and 2017, including the loss of inventory price falling NT$132,671 thousand for the years ended to December 31, 2018.
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 fulfills its obligation when the house hand over the the customers, and the incremental cost of the contract is amortized.

(8) Investments accounted for using the equity method

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

	2018.12.31	2018.12.31	2017.12.31	2017.12.31
Investee		Percentage		Percentage
		of Ownership		of Ownership
	Amount	(%)	Amount	(%)
Cathay Real Estate Management Co., Ltd	$119,792	100%	$111,642	100%
Cathay Healthcare Management Co., Ltd	553,758	85%	537,656	85%
Cathay Hospitality Management Co., Ltd	239,895	100%	115,531	100%
Cathay Hospitality Consulting Co., Ltd	403,074	100%	-	-
CathayReal Estate HoldingCorporation	335,914	100%	740,659	100%
Total	$1,652,433		$1,505,488

English Translation of Financial Statements Originally Issued in Chinese

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.

(9) Property, plant and equipment

Land	Buildings	Leased assets	Leasehold Improvement	Other equipment	Total
$1,346 - -	$1,829 - -	$106,260 22,269 (20,853)	$19,449 - -	$15,713 - -	$144,597 22,269 (20,853)
$1,346	$1,829	$107,676	$19,449	$15,713	$146,013
$1,346 - -	$1,829 - -	$114,327 4,761 (12,828)	$19,449 - -	$15,529 476 (292)	$152,480 5,237 (13,120)
$1,346	$1,829	$106,260	$19,449	$15,713	$144,597
$- - -	$305 36 -	$48,523 16,202 (17,760)	$19,355 94 -	$10,943 1,704 -	$79,126 18,036 (17,760)
$-	$341	$46,965	$19,449	$12,647	$79,402
$- - -	$269 36 -	$40,543 16,135 (8,155)	$17,495 1,860 -	$9,277 1,958 (292)	$67,584 19,989 (8,447)
$-	$305	$48,523	$19,355	$10,943	$79,126
$1,346	$1,488	$60,711	$-	$3,066	$66,611
$1,346	$1,524	$57,737	$94	$4,770	$65,471

A. 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.

English Translation of Financial Statements Originally Issued in Chinese

B. The Company's Property, plant and equipment are not capitalized from financial costs.

C. No Property, plant and equipment were pledged.

(10) Investment property

Land	Buildings	Total
$5,582,028 - 1,656,326 (61,876)	$5,673,743 - 786,179 (192,350)	$11,255,771 - 2,442,505 (254,226)
$7,176,478	$6,267,572	$13,444,050
$5,659,509 - - (77,481)	$5,988,259 - - (314,516)	$11,647,768 - - (391,997)
$5,582,028	$5,673,743	$11,255,771
$- - -	$2,229,461 172,807 (80,902)	$2,229,461 172,807 (80,902)
$-	$2,321,366	$2,321,366
$- - -	$2,170,547 175,359 (116,445)	$2,170,547 175,359 (116,445)
$-	$2,229,461	$2,229,461
$7,176,478	$3,946,206	$11,122,684
$5,582,028	$3,444,282	$9,026,310
	December 31, 2018	December 31, 2017
	$321,127 (116,678)	$418,412 (117,046)

English Translation of Financial Statements Originally Issued in Chinese

generating rental income Direct operating expenses from investment property not generating rental income Total	(10,006)	(13,200)
	$194,443	$288,166

The fair value of the investment properties held by the Company were NT$19,147,650 thousand and NT$14,058,903 thousand as of December 31, 2018 and 2017, respectively. The fair value in 2018 was valued by the company and determined based on the market evidence. In 2017, the fair value was valued by an independent external appraisal expert 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.

(11) Intangible assets

Cost: As at 1 Jan. 2018 Addition-acquired separately Disposals As at 31 Dec. 2018 As at 1 Jan. 2017 Addition-acquired separately Disposals As at 31 Dec. 2017 Amortization and impairment: As at 1 Jan. 2018 Amortization Disposals As at 31 Mar. 2018 As at 1 Jan. 2017 Amortization Disposals As at 31 Mar. 2017 Net carrying amount as at: 31 Dec. 2018 31 Dec. 2017	Computer software
	$34,636 140 -
	$34,776
	$35,359 1,381 (2,104)
	$34,636
	$33,512 486 -
	$33,998
	$34,573 1,043 (2,104)
	$33,512
	$778
	$1,124

English Translation of Financial Statements Originally Issued in Chinese

Amortization expense of intangible assets were as follow:

Operating expenses	December 31, 2018	December 31, 2017
	$486	$1,043

(12) Other non-current assets

Land Held for Construction Site Prepaid expense-equipment and investment Refundable deposits Other non-current assets- other Total	As of	As of
	December 31, 2018	December 31, 2017
	NTD	NTD
	$18,425 19,795 1,000,009 16,264	$18,425 - 911,933 16,264
	$1,054,493	$946,622

A. As of December 31, 2018, and 2017, the above land was temporarily registered under a third party’s name, both at cost amounting to NT$18,425 thousand:

Items	2018.12.31	2017.12.31	Type	Purpose	Securities
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

(13) Short-term loans

Unsecured bank loans Interest Rate	As of	As of
	December 31, 2018	December 31, 2017
	NTD	NTD
	$8,715,000	$5,469,000
	0.78%~1.20%	0.89%~1.15%

The Company’s unused short-term lines of credits amounted to NT$14,470,580 thousand, and NT$14,266,020 thousand as of December 31, 2018 and 2017, respectively.

(14) Short-term notes payable

	As	of
December	31,	December	31,
2018		2017

English Translation of Financial Statements Originally Issued in Chinese

Short-term notes and bills payable Less: unamortized discount Short-term notes and bills payable Interest rate	NTD	NTD
	$- -	$580,000 (256)
	$-	$579,744
	-	0.43%~0.58%

(15) Bonds payable

Domestic secured bonds Less: current portion Long-term bonds payable	As of	As of
	December 31, 2018	December 31, 2017
	NTD	NTD
	$3,000,000 -	$3,000,000 -
	$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 due day.

(16) Long-term loans

As of December 31, 2018and 2017, details of long-term loans are as follows:

	As at December 31, 2018	Interest Rate (%)	Maturitydate and terms of repayment
Bank credit loans Long-term notes and bills payable Subtotal Less: current portion Total	$4,700,000 498,050	1.15%~1.2% 0.62% Interest Rate (%)	From October 2016 to April 2020, repayments due day. From August 2018 to April 2020, repayments due day. Maturity date and terms of repayment
	5,198,050 (4,200,000)
	$998,050
	As at December 31, 2017
Bank credit loans Bank secured loans	$8,350,000 316,000	1.15%~1.31% 1.2%	From December 2015 to April 2020, repayment due day. From May 2017 to July 2019, repayments due day.

English Translation of Financial Statements Originally Issued in Chinese

Long-term notes and From August 2017 to April 2020, bills payable 497,501 0.622% repayments due day. Total $9,163,501

The mortgage first order is the partial inventories. Please refer to Note 8 of the pledged assets.

(17) 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, 2018 and 2017, the expenses related to defined contribution plan amounted to NT$3,572 thousand and NT$3,389 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, 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.

Safeguard and Utilization of the Labor Retirement Fund is regulated by the Ministry of Labor. Investment of the fund is made by outsourcing and self-management. A long-term investment strategy is adopted with both initiative and passive approach. Considering market risk, creditability and liquidity etc., the Ministry of labor has set limit for fund risk and risk management plan so that the target rate of return can be reached without excess exposure to risk. Because the Company is not authorized to manage the Fund, it cannot disclose the classification of the fair value of the plan asset according to IAS 19. As of December 31, 2018, the amount of contribution expected to be made in the following accounting year is NT$9,748 thousand.

As at December 31, 2018 and 2017, the defined benefit plan of the Company was expected to be expired in 2028.

Amounts to be recognized in profit or loss for the years ended 2018 and 2017 are summarized as follows:

English Translation of Financial Statements Originally Issued in Chinese

Current period service cost Net interest on the net defined benefit liability (asset) Subtotal	For the year ended December31,2018	For the year ended December31,2017
	$7,389 1,209	$8,203 1,653
	$8,598	$9,856

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, 2018	December 31, 2017	January 1, 2017
$167,520 (82,081)	$196,400 (79,733)	$192,508 (63,986)
$85,439	$116,667	$128,522

Reconciliation of net defined benefit liabilities(assets):

Present value of defined benefit obligation	Fair value of plan assets	Net defined benefit liabilities (assets)
$192,508 8,203 2,296	$(63,986) - (643)	$128,522 8,203 1,653
10,499	(643)	9,856
5,106 (741) -	- - 639	5,106 (741) 639
4,365	639	5,004
(10,972) -	6,224 (21,967)	(4,748) (21,967)
196,400	(79,733)	116,667
7,389 1,963	- (754)	7,389 1,209
9,352	(754)	8,598
2,030	-	2,030

English Translation of Financial Statements Originally Issued in Chinese

279 -	- (7,939)	279 (7,939)
2,309	(7,939)	(5,630)
(40,541) -	16,087 (9,742)	(24,454) (9,742)
$167,520	$(82,081)	$85,439

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

the defined benefit obligation:
Discount rate Expected rate of salary increases	December 31, 2018	December 31, 2017
	0.92% 2.00%	1.04% 2.00%

A sensitivity analysis for significant assumption as at December 31, 2018 and 2017 is, as shown below:

shown below:
Discount rate increase by 0.5% Discount rate decrease by 0.5% Future salary increase by 0.5% Future salary decrease by 0.5%	For theyear ended	December 31,2018	For theyear ended December 31,2017
	Increase defined benefit obligation	Decrease defined benefit obligation	Increase defined benefit obligation	Decrease defined benefit obligation
	$- 8,711 8,376 -	$8,208 - - 7,873	$- 10,606 10,016 -	$9,820 - - 9,427

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.

(18) Common stock

The Company had NT$2,000,000 thousand authorized shares of which NT$1,159,561 thousand shares were both issued as of December 31,2018 and 2017, respectively, at par value of NT$10. Each share has one vote and the right to receive dividends.

English Translation of Financial Statements Originally Issued in Chinese

(19) Capital surplus

Capital surplus
Treasury share transactions Others－Overdue dividends Total	As of
	December 31, 2018	December 31, 2017
	NTD	NTD
	$10,407 15,376	$10,407 7,656
	$25,783	$18,063

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.

(20) Retained earnings

A. Legal reserve

According to the Company Act, the Company needs to set aside 10%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 firsttime 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 31 December 2018, there were no use, disposition or reclassification of related assets and there is no need to revolving special reserve to retained earnings.

C. Retained earnings and dividend policies

English Translation of Financial Statements Originally Issued in Chinese

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 after deducting items (a)
(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 2017 and 2016, the details of earnings distribution and dividends per share as proposed by the board meeting on June 8, 2018 and resolved by the shareholder’s meeting on June 16, 2017, were as follows:

Legal reserve Common stock`－`cash dividend	Appropriation of earnings	Appropriation of earnings	Dividendper share	Dividendper share
	2017	2016	2017	2016
	$144,464 1,391,473	$301,791 1,739,342	$1.2	$1.5

E. Please refer to Note 6.24 for details of bonus to employees and directors.

(21) Operating revenues

Revenue from contracts with customers Rental income	For the year ended December 31, 2018 (Note)	For the year ended December 31, 2017
	NTD	NTD
	$411,667	$418,412

English Translation of Financial Statements Originally Issued in Chinese

Sales of buildings and land Total	12,400,858	10,191,672
	$12,812,525	$10,610,084

Note: The Company has adopted IFRS 15 from 1 January 2018. The Company elected to apply the standard retrospectively by recognizing the cumulative effect of initially applying the standard at the date of initial application (1 January 2018).

The Company has adopted IFRS 15 from January 1, 2018. Analysis of revenue from contracts with customers during the year is as follows:

A. Disaggregation of revenue

For the year ended December 31, 2018

For the year ended December 31, 2018
Rental income Sales of buildings and land Total Revenue recognition point: At a point in time Over time	Property and real estate Investment development department
	$411,667 12,400,858
	$12,812,525
	$12,400,858 411,667
	$12,812,525

B. Contract balances

－ Contract liabilities current

Sales of goods	Amount at beginningofperiod	Amount at end of period	Difference
	$4,473,657	$3,626,329	$(847,328)

During the period, contract liabilities significantly decreased as performance obligations are partially satisfied and NT$11,452,554 thousand included in the contract liability balance at the beginning of the period was recognized as revenue during the period, the remaining changing was the increase of unearned revenue during the period.

C. Assets recognized from the revenue from contracts with customers

English Translation of Financial Statements Originally Issued in Chinese

Sales of goods	Amount at beginningofperiod	Amount at end of period	Difference
	$454,510	$481,597	$27,087

The amortized amount of the incremental cost of the Company's acquisition of the contract on December 31, 2018 was NT$213,332 thousand.

(22) Expected credit losses/ (gains)

Operating expenses`－`Expected credit losses/ (gains) Accounts receivable	For the year ended December 31, 2018	For the year ended December 31, 2017(Note)
	$12

Note: The Company adopted IFRS 9 since January 1, 2018. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 9.

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 explanation of the loss allowance measured for the the year ended December 31, 2018 is as follows:

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, details are as follow:

Neither past due (Note 1)			Past due			Total
	Within 30 days	31-90 days	91-270 days	271- 365days	Over 365 days
$235,883 -	$4,377 0.01%	$3,474 0.05%	$9,531 0.10%	$- 0.15%	$- 0.20%	$253,265 12
-	-	2	10	-	-
$235,883	$4,377	$3,472	$9,521	$-	$-	$253,253

Note 1: The Company’s notes receivable is not overdue.

For the year ended December 31, 2018, the movement in the provision for impairment of notes receivable and accounts receivable is as follows:

English Translation of Financial Statements Originally Issued in Chinese

Beginning balance (in accordance with IAS 39) Beginning adjusted retained earnings Beginning balance (in accordance with IFRS 9) Addition/(reversal) for the current period Write off Ending balance	Receivables
	$- -
	- 12 -
	$12

(23) Operating lease

A. Operating lease commitments – Company as lessee

The Company has rent an office by operating lease.

Future minimum rentals payable under non-cancellable operating leases as at December 31, 2018, and 2017 are as follows:

Not later than one year Later than one year and not later than five years Total	For the year ended December 31,2018	For the year ended December 31,2017
	$8,447 -	$15,777 8,447
	$8,447	$24,224

Operating lease expenses recognized are as follows:

Minimum lease payments	For the year ended December 31,2018	For the year ended December 31,2017
	$16,496	$16,683

B. Operating lease commitments – Company as lessor

The Company has entered commercial property leases with remaining terms of between five and twenty years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions.

Future minimum rentals receivable under non-cancellable operating leases as at 31 December 2018 and 2017 are as follows:

English Translation of Financial Statements Originally Issued in Chinese

Not later than one year Later than one year and not later than five years Later than five years Total	For the year ended December 31,2018	For the year ended December 31,2017
	$220,161 843,432 507,812	$245,568 853,556 717,849
	$1,571,405	$1,816,973

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

Function Description	For theyear ended December 31, 2018	For theyear ended December 31, 2018	For theyear ended December 31, 2018	For theyear ended December 31, 2017	For theyear ended December 31, 2017	For theyear ended December 31, 2017
	Operating Cost	Operating Expense	Total	Operating Cost	Operating Expense	Total
Employee benefits expense
Salaries and wages	$37,932	$149,798	$187,730	$29,980	$136,503	$166,483
Labor and health insurance	-	11,963	11,963	-	12,019	12,019
Pension	-	12,170	12,170	-	13,245	13,245
Director’s remuneration	-	2,400	2,400	-	2,400	2,400
Other employee benefits expense	-	5,310	5,310	-	4,680	4,680
Depreciation and depletion	189,010	1,833	190,843	191,493	3,855	195,348
Amortization	-	486	486	-	1,043	1,043

Note: The employees of the Company were 148 and 147 for the year ended 2018 and 2017, respectively, both number of directors who have not served as employees is 4.

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 Company 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 NTD$3,841 thousand and NTD$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

English Translation of Financial Statements Originally Issued in Chinese

year ended December 31, 2018. The Company’s the board of director’s meeting on March 21, 2019, resolved to distribute NTD$3,841 thousand and NTD$2,400 thousand of employee’s and director’s compensation in cash.

The actual distribution of the employee compensation and remuneration to directors were NT$1,376 thousand and NT$2,400 thousand for the year ended 31 December 2017. There are no material differences exist between the estimated amount and the actual distribution.

(25) Non-operating income and expenses

A. Other income

Other income
Interest income Dividend income Others Total Other gains and losses Gains (losses) on disposal and abandon of property, plant and equipment Gains (losses) on disposal of investment Other Total Finance costs Interest on borrowings from bank	For the year ended December 31,2018	For the year ended December 31,2017
	$734 152,719 120,885	$1,557 119,656 106,608
	$274,338	$227,821
	For the year ended December 31,2018	For the year ended December 31,2017
	$4,363 - (1,849)	$680 (847) (7,632)
	$2,514	$(7,799)
	For the year ended December 31,2018	For the year ended December 31,2017
	$1,906	$5,342

B. Other gains and losses

C. Finance costs

(26) Components of other comprehensive income

For the year ended December 31, 2018

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	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
	$5,630 (493,136)	$- -	$5,630 (493,136)	$(1,525) -	$4,105 (493,136)

English Translation of Financial Statements Originally Issued in Chinese

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	(486) 153,763	-	(486) 153,763	-	(486) 153,763
	$(334,229)	$-	$(334,229)	$(1,525)	$(335,754)

For the year ended December 31, 2017

Items that will not be reclassified to profit or loss: Remeasurements of defined benefit plans 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: Unrealized gains (losses) from financial assets in available-for-sale 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
	$(5,004) (613) 35,156 46,950	$- - (349) -	$(5,004) (613) 34,807 46,950	$851 - - -	$(4,153) (613) 34,807 46,950
	$76,489	$(349)	$76,140	$851	$76,991

(27) Income taxes

Based on the amendments to the Income Tax Act announced on February 7, 2018, the Company’s applicable corporate income tax rate for the year ended December 31, 2018 has changed from 17% to 20%. The corporate income surtax on undistributed retained earnings has changed from 10% to 5%.

The major components of income tax expense (income) were as follows:

Income tax expense (income) recognized in profit or loss

Current income tax expense (income): Current income tax charge Current land value increment tax charge	For the year ended December 31,2018	For the year ended December 31,2017
	NTD	NTD
	$- 125,252	$97,678 108,589

English Translation of Financial Statements Originally Issued in Chinese

Adjustments in respect of current income tax of prior periods Deferred tax expense (income): Deferred tax expense (income) relating to origination and reversal of temporary differences Deferred tax expense (income) relating to changes in tax rate Total income tax expense (income)	41 188,595 (88,691)	2,650 (281,683) -
	$225,197	$(72,766)

Income tax relating to components of other comprehensive income

Deferred tax expense (income): Remeasurements of defined benefit plans Deferred tax expense (income) relating to changes in tax rate Total	For the year ended December 31,2018	For the year ended December 31,2017
	NTD	NTD
	$(1,126) (399)	$851 -
	$(1,525)	$851

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 The parent company statutory income tax rate (tax rate of 20% per in 2018`；`tax rate of 17% per in 2017) Tax effect of revenues exempt from taxation Tax effect of non-deductible expense Tax effect of deferred tax assets/liabilities 10% surtax on undistributed retain earnings Adjustments in respect of current income tax of	For the year ended December 31,2018	For the year ended December 31,2017
	NTD	NTD
	$3,834,808	$1,371,872
	$766,962 (798,111) 20,022 199,722 - 41	$233,218 (372,498) 15,268 (157,671) 97,678 2,650

English Translation of Financial Statements Originally Issued in Chinese

prior periods Current land value increment tax 125,252 Deferred tax expense (income) relating to changes in tax rate (88,691) Total income tax expense (income) recognized in profit or loss $225,197 Deferred tax assets (liabilities) relate to the following: For the year ended December 31, 2018 Beginning balance as at 1 Jan. 2018 Deferred tax income (expense) recognized in profit or loss Deferred tax income (expense) recognized in other comprehensive income Temporary differences Revaluations of investment property to fair value as deem cost at the date of transition to IFRS`－`land value increment tax $(8,542) $(1,507) $- Revaluations of investment property to fair value as deem cost at the date of transition to IFRS 74,011 22,735 - Depreciation difference for tax purpose`－`investment property 77,677 23,862 - Depreciation difference for tax purpose of property, plants and Equipment`－`interest capitalization 1,933 497 - Investments Accounted for Using Equity Method 241,286 (171,270) - Unrealized intragroup profits and losses 98 22 - Allowance for loss 1,071 329 - Allowance for loss of inventories price falling 1,630 27,035 - Non-current liability – Defined benefit Liability 14,318 (27) (1,525) Accrued expenses over two years transfer to revenue 5 2 - Unrealized advertising fee 84,658 10,594 - Unrealized commission fee (Note) 12,176 (12,176) - Deferred tax expense/ (income) $(99,904) $(1,525) Net deferred tax assets/(liabilities) $500,321	125,252 (88,691)	125,252 (88,691)	125,252 (88,691)	108,589 -
	$225,197			$(72,766)
			Deferred tax income (expense) recognized in other comprehensive income	Ending balance as at 31 Dec. 2018
$(8,542) 74,011 77,677 1,933 241,286 98 1,071 1,630 14,318 5 84,658 12,176		$(1,507) 22,735 23,862 497 (171,270) 22 329 27,035 (27) 2 10,594 (12,176)	$- - - - - - - - (1,525) - - -	$(10,049) 96,746 101,539 2,430 70,016 120 1,400 28,665 12,766 7 95,252 -
$500,321		$(99,904)	$(1,525)	$398,892

English Translation of Financial Statements Originally Issued in Chinese

Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	$508,863 $(8,542)	$408,941
		$(10,049)

Note: The Company has applied the IFRS 15 from January 1, 2018 to adjust the beginning balance of deferred income tax assets of NT$ 69,540 thousand. Please refer to Note 3 for details.

For the year ended December 31, 2017

Beginning balance as at 1 Jan. 2017	Deferred tax income (expense) recognized in profit or loss	Deferred tax income (expense) recognized in other comprehensive income	Ending balance as at 31 Dec. 2017
$(8,542) 41,117 43,154 1,116 97,191 58 595 905 7,531 3 45,573 58,626	$- 32,894 34,523 817 144,095 40 476 725 5,936 2 39,085 23,090	$- - - - - - - - 851 - - -	$(8,542) 74,011 77,677 1,933 241,286 98 1,071 1,630 14,318 5 84,658 81,716
$287,327	$281,683	$851	$569,861

$295,869			$578,403
$(8,542)			$(8,542)

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

English Translation of Financial Statements Originally Issued in Chinese

Year	Tax losses for theperiod	Unused tax	losses as of	Expirationyear
		December 31, 2018	December 31, 2017
		NTD	NTD
2017 2018	$268,489 1,090,463	$268,489 1,090,463	$268,489 -	2027 2028
		$1,358,952	$268,489

Unrecognized deferred tax assets

As of 31 December 2018, and 2017, deferred tax assets have not been recognized in respect of unused tax losses, unused tax credits and deductible temporary differences amounting to NT$271,790 thousand and NT$110,162 thousand, respectively, as the future taxable profit may not be available.

Unrecognized deferred tax liabilities relating to the investment in subsidiaries

The Company did not recognize any deferred tax liability for taxes that would be payable on the unremitted earnings of the Company’s overseas subsidiaries, as the Company has determined that undistributed profits of its subsidiaries will not be distributed in the foreseeable future. As of December 31, 2018, and 2017, the Company didn’t have the taxable temporary differences associated with unrecognized deferred tax liabilities relating to the investment in subsidiaries.

The assessment of income tax returns

As of December 31, 2018, the assessment of the income tax returns of the Company and its subsidiaries was as follows:

The Company	The assessment of income tax returns
	Assessed and approved up to 2016

(28) 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.

In view of the company did not issue a potential ordinary share with dilution, the combined company doesn’t have to dilute the amount of the basic earnings per share.

English Translation of Financial Statements Originally Issued in Chinese

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 thousand) Basic earnings per share	For the year ended December 31, 2018	For the year ended December 31, 2017
	NTD	NTD
	$3,609,611	$1,444,638
	1,159,561	1,159,561
	$3.11	$1.25

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.

7. RELATED PARTY TRANSACTIONS

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

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 Real Estate Management Co., Ltd. (Cathay Real Estate Management)
Cathay Hospitality Consulting Co., Ltd. (Cathay Hospitality Consulting)
Cathay Life Insurance Co., Ltd. (Cathay Life Insurance)
Cathay United Bank Co., Ltd. (Cathay United Bank)
San Ching Engineering Co., Ltd. (San Ching Engineering)
Cathay Century Insurance Co., Ltd. (Cathay Century Insurance)
Lin Yuan Property Management Co., Ltd. (Lin Yuan Property)
Cathay Culture Organization (Cathay Culture)
Nangang International One Co., Ltd. (Nangang One)
Nangang International Two Co., Ltd. (Nangang Two)
Individual

Subsidiary
Subsidiary
Subsidiary
Others
Others
Others
Others
Others
Others
Others
Others
Others

Significant transactions with the related parties

The Company's related party transactions amount, less than 3 million, don’t be disclosed.

English Translation of Financial Statements Originally Issued in Chinese

(1) Cash in banks and short-term loan

Name of the relatedparties	Type		As of December 31,2018	As of December 31,2018
		Maximum amount	Year ended balance	Interest rate (%)	Interest income (expenses)
Cathay United Bank Name of the relatedparties	Demand deposit Checking accounts Securities accounts Short-term loan Type	$2,954,915 1,423,306 1,170,662 400,000	$555,128 0.05% 97,966 - 52,269 0.01% 210,000 1.00% As of December 31,2017		$147 - 7 -
		Maximum amount	Year ended balance	Interest rate (%)	Interest income (expenses)
Cathay United Bank	Demand deposit Checking accounts Securities accounts Short-term loan	$1,899,493 1,127,405 770,609 130,000	$416,384 40,203 46,322 -	0.05% - 0.01% 0.02%	$193 - 8 (36)

(2) Purchase

Name of the related parties	Type	As of	As of
		December 31, 2018	December 31, 2017
San Ching Engineering Cathay United Bank	Building constructing or expansion Management fee of trust service	$2,430,896 2,856	$2,664,862 11,227
		$2,433,752	$2,676,089

A. The sales 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$11,899,255 thousand and NT$ 11,069,132 thousand, respectively, for the year ended of 2018 and 2017.

English Translation of Financial Statements Originally Issued in Chinese

(3) Sales

A. Sales revenue

Name of the related parties	Type	As of	As of
		December 31, 2018	December 31, 2017
Individual	Sales of buildings and land	$36,851	$-

The transaction price and collection conditions above don’t have significantly different from those of the general customers.

B. Rental Income

Name of the related parties	Type	As of	As of
		December 31, 2018	December 31, 2017
Cathay Life Insurance Cathay United Bank Cathay Hospitality Total	Office and vehicles rental Office and vehicles rental Office rental	$8,057 18,813 25,041	$8,739 19,236 23,677
		$51,911	$51,652

The rental period is 2 to 5 years and collect rent monthly which were ruled by the contract.

(4) Accounts payable – related parties

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

Name of the relatedparties	As of	As of
	December 31, 2018	December 31, 2017
San-Ching Engineering	$590,101	$263,394

(5) Others

A. Refundable deposits

Name of the related parties	Items	As of	As of
		December 31, 2018	December 31, 2017
Cathay Life Insurance	Rent deposit	$3,803	$3,773

English Translation of Financial Statements Originally Issued in Chinese

B. Guarantee deposit received

Name of the related parties	Items	As of	As of
		December 31, 2018	December 31, 2017
Cathay United Bank	Rent deposit	$4,608	$4,549

C. Construction in progress

As of December 31, 2018, the case for the Minsheng Jingguo Building, the payment to the Cathay Life Insurance Co., Ltd. is NT$67,486 thousand, the account is listed under the inventory construction in progress.

(6) Other income

Name of the related parties	Items	As of	As of
		December 31, 2018	December 31, 2017
Cathay Life Insurance Cathay United Bank Nangang One Nangang Two Total	Management fee and planning fee Management fee and planning fee Consultancy service Consultancy service	$3,688 4,839 14,080 17,920	$3,927 4,909 7,040 8,960
		$40,527	$24,836

(7) Lease costs

Name of the related parties	Items	As of	As of
		December 31, 2018	December 31, 2017
Lin Yuan Property Cathay Century Cathay Real Estate Management Total	Management and repairing fee Insurance fee Management fee	$45,976 6,383 4,200	$41,100 4,313 3,150
		$56,559	$48,563

(8) Rental expenses

Rental expenses
Name of the related parties	Items	As of
		December 31, 2018	December 31, 2017
Cathay Life Insurance	Office renting	$15,814	$15,844

English Translation of Financial Statements Originally Issued in Chinese

(9) Operating expenses

Name of the related parties	Items	As of	As of
		December 31, 2018	December 31, 2017
Cathay Architecture Agency San Ching Engineering Total	Commission Service fee	$- 6,172	$5,038 381
		$6,172	$5,419

(10) Key management personnel compensation

Short-term employee benefits Post-employment benefits	For the year ended December 31,2018	For the year ended December 31,2017
	NTD	NTD
	$24,163 108	$25,929 108
	$24,271	$26,037

8. PLEDGED ASSETS

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

Items	As of	As of	Secured liabilities
	December 31,2018	December 31,2017
	NTD	NTD
Inventories Investment property Total	$5,320,359 8,057,172	$7,053,639 7,372,770	Long-term loan Long-term loan
	$13,377,531	$14,426,409

Pledged or mortgaged assets are expressed in dollars.

9. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIES

(1) Significant contract

Except for Note 7.2. as of December 31, 2018, the total contract price of the construction contracts signed by the Company and non-related parties was NT$6,808,888 thousand, and the total amount of NT$3,567,761 thousand was not paid.

English Translation of Financial Statements Originally Issued in Chinese

(2) Others

Guarantee notes issued for borrowings (financing) were NT$39,936,890 thousand as of December31,2018.

10. SIGNIFICANT DISASTER LOSSES

None.

11. SIGNIFICANT SUBSEQUENT EVENTS

None.

12. OTHERS

(1) Categories of financial instruments

Financial Assets	As of	As of
	December 31, 2018	December 31, 2017
Financial assets at fair value through other comprehensive income Available-for-sale financial assets (Note 2) Financial assets at amortised cost (Note 3) Loans and receivables (Note 4) Total Financial Liabilities	NTD	NTD
	$4,258,537 (Note 1) 1,180,718 (Note 1)	(Note 1) $4,720,499 (Note 1) 745,421
	$5,439,255	$5,465,920
	As of
	December 31, 2018	December 31, 2017
Financial liabilities at amortized cost: Short-term borrowings Short-term notes and bills payable Accounts payables Bonds payable Long-term borrowings (including current portion) Guarantee deposit received Total	NTD	NTD
	$8,150,000 - 1,281,084 3,000,000 5,198,050 138,340	$5,469,000 579,744 827,488 3,000,000 9,163,501 129,970
	$17,767,474	$19,169,703

English Translation of Financial Statements Originally Issued in Chinese

Note:

The Company adopted IFRS 9 since January 1, 2018. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 9.
Balances as at December 31, 2017 both include financial assets measured at cost.
Including cash and cash equivalents, notes receivable, accounts receivable and other receivables.
Including cash and cash equivalents, notes receivable, accounts receivable and other receivables.

(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.

The Company 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 Company complies with its financial risk management policies always.

(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 instruments).

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.

English Translation of Financial Statements Originally Issued in Chinese

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$8,150 thousand and NT$6,049 thousand for the years ended December 31, 2018 and 2017, respectively.

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 equity securities and unlisted equity securities are classified under held for financial assets at fair value through other comprehensive income. (available-for-sale financial assets as of December 31, 2017) The Company manages the equity price risk through diversification and placing limits on individual and total equity instruments.

When the price of the listed equity securities at fair value through other comprehensive income increases/decreases 5%, it could have impacts of NT$101,834 thousand for the year ended December 31, 2018, on the profit/loss or equity attributable to the Company. When the price of the unlisted equity securities at fair value through other comprehensive income increases/decreases 10%, it could have impacts of NT$5,262 thousand for the year ended December 31, 2018, on the equity attributable to the Company.

When the price of the unlisted equity securities classified as available-for-sale decreases 10%, it could have impacts of NT$4,424 thousand for the year ended December 31, 2017, on the equity attributable to the Company. When the price of the listed equity securities classified as available-for-sale decrease 5%, it could have impacts of NT$101,834 thousand for the year ended December 31, 2017, on the profit/loss or equity attributable to the Company. An increase of 5% in the value of the listed securities would only impact equity but would not influence profit or loss.

English Translation of Financial Statements Originally Issued in Chinese

(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 receivables and notes receivables) 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, 2018, and 2017, accounts receivable from top ten customers represented low percentage of the total accounts receivable of the Company, respectively. 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. Consequently, there is no significant credit risk for these counterparties.

(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

December 31, 2018 Borrowings Accounts payable Bonds payable Guarantee deposits	Less than 1year	2 to 3years	4 to 5years	> 5years	Total
	$12,399,350 1,281,084 - 31,057	$1,003,925 - 3,042,000 29,716	$- - - 16,980	$- - - 60,587	$13,403,275 1,281,084 3,042,000 138,340

English Translation of Financial Statements Originally Issued in Chinese

December 31, 2017 Borrowings Accounts payable Bonds payable Guarantee deposits	Less than 1year	2 to 3years	4 to 5years	> 5years	Total
	$6,048,744 827,488 - 41,061	$9,270,093 - 3,042,000 21,395	$- - - 16,174	$- - - 51,340	$15,318,837 827,488 3,042,000 129,970

(6) Reconciliations of the liabilities from financing activities

Reconciliations of the liabilities for the year ended December 31, 2018:

Changes in liabilities from financing activities are derived from changes in cash flows.

Reconciliations of the liabilities for the year ended December 31, 2017:

Not applicable.

(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, accounts receivables, accounts payables and other current liabilities approximate their fair value because of its shorter 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 (for example, private placement of stocks in the market, 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, like the company's stock price-to-equity ratio).

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 assets (including loans and receivables) and liabilities measured at amortized cost approximate their fair value:

C. Fair value hierarchy

The following table provides financial instrument analysis information measured at fair value after the original recognition, and divide the fair value into the following three levels of disclosure:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: inputs other than quoted market 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 liabilities.

December 31, 2018

Financial assets: Financial assets at fair value through other comprehensive income Stocks	Level 1	Level 2	Level 3	Total
	$2,620,886	$1,318,200	$319,451	$4,258,537

December 31, 2017

Financial assets: Available-for-sale financial assets Stocks	Level 1	Level 2	Level 3	Total
	$2,983,349	$1,516,019	$9,246	$4,508,614

The company had no recurring assets and liabilities transfer between level 1 input and level 2 input for the year ended December 31, 2018 and 2017.

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

English Translation of Financial Statements Originally Issued in Chinese

2018.1.1 Amount recognized in OCI Transfer from the level 3 2018.12.31 2017.1.1 Amount recognized in OCI Transfer from the level 3 2017.12.31	Asset
	At fair value through other comprehensive income
	Stocks
	$342,874 (23,423) -
	$319,451
	Asset
	Available-for-sale
	Stocks
	$8,337 909 -
	$9,246

Total gains and losses recognized in profit or loss for the year ended 31 December 2018 and 2017 is the amount of NT$(23,423) thousand and NT$909 thousand, 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 at December 31, 2018:

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	0%~30%	The higher the discount for lack of marketability, the lower 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$22,309 thousand

English Translation of Financial Statements Originally Issued in Chinese

Stocks Assets approach P/E ratio of 0%~30% The higher the P/E ratio of 10% increase (decrease) in the P/E ratio of similar entities similar entities, the higher similar entities would result in increase the fair value of the stocks (decrease) in the Company’s equity by NT$16,371 thousand As at December 31, 2017: Material Inputs and Valuation unobservable Quantitative Inputs and the fair value relationship’s technique inputs information the fair value relationship sensitivity analysis value relationship Financial assets ： Available for-sale Stocks Assets approach P/E ratio of 0%~30% The higher the P/E ratio of 10% increase (decrease) in the P/E ratio of similar entities similar entities, the higher similar entities would result in increase the fair value of the stocks (decrease) in the Company’s equity by NT$925 thousand

(8) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

Financial assets Monetaryitems:	December 31,2018	December 31,2018	December 31,2018	December 31,2017	December 31,2017	December 31,2017
	Foreign currency	Exchange rate	NTD	Foreign currency	Exchange rate	NTD
	$10,877	30.838	$335,914	$24,715	29.968	$740,659
USD

(9) 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

English Translation of Financial Statements Originally Issued in Chinese

A. Financings provided to others: None.
B. Endorsement/guarantee provided to others: Please refer to schedule 1.
C. Securities held as of December 31, 2018 (not including subsidiaries, associates and joint ventures): Please refer to schedule 2.
D. Individual securities acquired or disposed of with accumulated amount exceeding NT$300 million or 20 percent of the the Company’s capital stock: None.
E. Acquisition of property with the amount exceeding NT$300 million or 20% of the Company’s paid-in capital: Please refer to schedule 3.
F. Disposal of property with amount exceeding NT$300 million or 20% of the Company’s paid-in capital: None.
G. Purchases or sales of goods from or to related parties exceeding NT$100 million or 20% of the Company’s paid-in capital or more: Please refer to schedule 4.
H. Receivables from related parties with amounts exceeding NT$100 million or 20% of the Company’s paid-in capital: None.
I. Derivative financial instruments undertaken: None.
J. Significant intercompany transactions between consolidated entities: Please refer to schedule 5.

(2) Investee information

A. Financings provided to others: None.
B. Endorsement/guarantee provided to others: Please refer to schedule 1.
C. Securities held as of December 31, 2018 (not including subsidiaries, associates and joint ventures): Please refer to schedule 6.
D. Individual securities acquired or disposed of with accumulated amount exceeding NT$300 million or 20 percent of the Company’s capital stock: Please refer to schedule 7.
E. Acquisition of property with the amount exceeding NT$300 million or 20% of the Company’s paid-in capital: None.

English Translation of Financial Statements Originally Issued in Chinese

F. Disposal of property with amount exceeding NT$300 million or 20% of the Company’s paid-in capital: None.
G. Purchases or sales of goods from or to related parties exceeding NT$100 million or 20% of the Company’s paid-in capital or more: None.
H. Receivables from related parties with amounts exceeding NT$100 million or 20% of the Company’s paid-in capital: None.
I. Derivative financial instruments undertaken: None.
J. Names, locations and related information of investee companies: Please refer to schedule 8.

(3) Investment in Mainland China as of December 31, 2018

Please refer to schedule 9.

English Translation of Financial Statements Originally Issued in Chinese Cathay Real Estate Development Corporation Ltd Notes To Parent Company Only Financial Statements For the Years Ended December 31, 2018 and 2017

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

Schedule1: Endorsement/guarantee provided to others

		Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000
No. (Note1)	Endorser/ Guarantor	Receiving Party		Limit of the Endorsement / Guarantee Amount for Receiving Party	Maximum Balance for the Period	Ending Balance	Actual Amount Borrowed	Amount of Collateral	Percentage	Limit on the Endorsement/ Guarantee Amount	Parent Company Endorsed / Guaranteed for the Subsidiaries	Subsidiaries Endorsed/ Guaranteed for the Parent Company	Endorsement or Guarantee for Entities in China
		Company Name	Relationship (Note2)
0	The company	Golden Gate Pacific Company Limited	3	$7,522,421	$1,714,465	$-	$-	$-	-	$15,044,842	Y	N	N
0	The company	Shanghai Lujing Real Estate Limited	3	7,522,421	880,372	-	-	-	-	15,044,842	Y	N	Y
1	Cathay healthcare management co.,Ltd	Hangzhou Kunning Health Consulting Limited	3	7,522,421	61,466	61,466	-	-	0.25%	15,044,842	Y	N	Y
Note	A. Limit of the Endorsement / Guarantee Amount for Receiving Party：NT$25,074,736 thousand 30% B. Limit on the Endorsement/Guarantee Amount：NT$25,074,736 thousand60%

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 50% 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.

English Translation of Financial Statements Originally Issued in Chinese

Cathay Real Estate Development Corporation Limited Notes To Parent Company Only Financial Statements For the Years Ended December 31, 2018 and 2017

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

Schedule2: Securities held as of December 31, 2018 (not including subsidiaries, associates and joint ventures)

Shares: In thousand

Company	Type and Name of the Securities (Note1)	Relationship	Financial Statement Account	As of December 31,2018	As of December 31,2018	As of December 31,2018	As of December 31,2018
				Shares	Carrying Value	Percentage of Ownership (％)	Market Value
The Company	Stock－ Cathay Financial holdings Co., Ltd	Others	Financial assets at fair value through other comprehensive income–current	55,763,541	$2,620,886	0.44%	$2,620,886
〃	Stock－ Lin Yuan Property Management Co., Ltd.	Others	Financial assets at fair value through other comprehensive income–non-current	300,000	8,904	10.00%	8,904
〃	Stock－ Symphox Information Co.,Ltd	Others	〃	5,489,000	90,733	11.00%	90,733
〃	Stock－ Taiwan Star Telecom Co.,Ltd	None	〃	195,000,000	1,318,200	4.63%	1,318,200
〃	Stock－ GongChengIndustrial Co.,Ltd	None	〃	1,580,083	-	3.23%	-
〃	Stock－ Gian FengInvestment Co.,Ltd.	None	〃	2,000,000	9,040	10.00%	9,040
〃	Stock－ MetroWalk internatinal Co.,Ltd	None	〃	3,448,276	55,966	1.72%	55,966
〃	Stock－ Budworth Investments Limited	None	〃	191,880	4,977	3.33%	4,977
〃	Stock－ NangangInternational One Co.,Ltd.	Others	〃	7,485,000	74,973	4.99%	74,973
〃	Stock－ NangangInternational Two Co.,Ltd.	Others	〃	7,485,000	74,858	4.99%	74,858

Note1 ： Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities, as defined in IFRS 9 “Financial Instruments”.

English Translation of Financial Statements Originally Issued in Chinese Cathay Real Estate Development Corporation Limited Notes To Parent Company Only Financial Statements For the Years Ended December 31, 2018 and 2017

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

Schedule3: Acquisition of property with the amount exceeding NT$300 million or 20% of the Company’s paid-in capital

							Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000
Company	Property Name	Transaction Date	Transaction Amount	Status of Payment	Counterparty	Relationship with the company	Disclosure of Information on Previous Transfer of Property is Required for Related Parties who are also the Counterparty				References for Determining Price	Purpose of Acquisition and Current Condition	Others
							Owner	Relationship with the Company	Date of Transfer	Amount
The Company	No. 106, SihXin Section, Xindian District,New Taipei City	2018.05.17	$1,763,914	Installment by agreement	New Taipei City Government	None	-	-	-	$-	Internal assessment and approved bychairman	Construction	None
The Company	No. 25, Pingshi Section, Eastern District,Tainan City	2018.05.29	928,396	Installment by agreement	Tainan City Government	None	-	-	-	-	Internal assessment and approved bychairman	Construction	None
The Company	No. 212, Zhuxing Section, Beitun District,TaichungCity	2018.11.22	844,083	Installment by agreement	Individual	None	-	-	-	-	Negotiation by two parties	Construction	None

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

Schedule4: Purchases or sales of goods from or to related parties exceeding NT$100 million or 20% of paid-in capital or more

			Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000	Unit︰NT$1,000
Purchaser / Seller	Counterparty	Relationship with the counterparty	Transaction				Differences in transaction terms compared to third partytransactions		Notes/accounts payable		Note
			Purchases (Sales)	Amount	Percentage of total purchases (sales)	Credit term	Unit price	Credit term	Balance	Percentage of total notes/accounts payable
The Company	San Ching Engineering Co., Ltd	Associate	Construnction- in-progress	$2,430,896	27.56%	N/A	$-	-	$590,101	54.98% (Note)	Resdential building

Note ： The Notes/accounts payable of parent company only financial statements.

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

Schedule 5: Significant intercompany transactions between consolidated entities

Schedule 5: Significant intercompany transactions between consolidated entities	Schedule 5: Significant intercompany transactions between consolidated entities	Schedule 5: Significant intercompany transactions between consolidated entities
			Unit︰NT$1,000
No. (Note 1)	Company name	Counterparty		Transaction
			Relationship (Note 2)	Account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note 3)
0	The Company	CatahyReal Estate Management Co.,Ltd	1	Deferred Credits-Gains on Inter-Affiliate Accounts	$13,415	Regular	0.03%
0	The Company	CatahyReal Estate Management Co.,Ltd	1	Realizedgain from inter-affiliate accounts	41	Regular	-
0	The Company	CatahyReal Estate Management Co.,Ltd	1	Cost of rental sales	4,200	Regular	0.03%
0	The Company	CatahyHealthcare Management Co.,Ltd	1	Rent income	385	Regular	-
0	The Company	CatahyHealthcare Management Co.,Ltd	1	Advertisement	49	Regular	-
0	The Company	CathayHospitalityManagement Co.,Ltd	1	Rent income	25,041	Regular	0.18%
0	The Company	CathayHospitalityManagement Co.,Ltd	1	Entertainment	309	Regular	-
0	The Company	CathayHospitalityConsultingCo.,Ltd	1	Rent income	49	Regular	-
0	The Company	CathayHospitalityConsultingCo.,Ltd	1	Accounts receivable－relatedparties	9	Regular	-
1	CatahyReal Estate Management Co.,Ltd	The Company	2	Investmentproperty－land	12,813	Regular	0.03%
1	CatahyReal Estate Management Co.,Ltd	The Company	2	Investmentproperty－buildings	847	Regular	-
1	CatahyReal Estate Management Co.,Ltd	The Company	2	Accumulated Depreciation－Investmentproperty	245	Regular	-
1	CatahyReal Estate Management Co.,Ltd	The Company	2	Cost of rental sales	41	Regular	-
1	CatahyReal Estate Management Co.,Ltd	The Company	2	Service income	4,200	Regular	0.03%
2	CatahyHealthcare Management Co.,Ltd	The Company	2	Rent	385	Regular	-
2	CatahyHealthcare Management Co.,Ltd	The Company	2	Service income	49	Regular	-
3	CathayHospitalityManagement Co.,Ltd	The Company	2	Rent	4,580	Regular	0.03%
3	CathayHospitalityManagement Co.,Ltd	The Company	2	Service income	309	Regular	-
3	CathayHospitalityManagement Co.,Ltd	The Company	2	Guest room costs	20,461	Regular	0.15%
4	CathayHospitalityConsultingCo.,Ltd	The Company	2	Rent	49	Regular	-
4	CathayHospitalityConsultingCo.,Ltd	The Company	2	Other accrued expenses	9	Regular	-
3	CathayHospitalityManagement Co.,Ltd	CathayHospitalityConsultingCo.,Ltd	3	Accounts receivable	874	Regular	-
4	CathayHospitalityConsultingCo.,Ltd	CathayHospitalityManagement Co.,Ltd	3	Other accrued expenses	874	Regular	-

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 ： The Types of the transactions are coded as follows:

(1) The Company to subsidiaries is coded "1".
(2) Subsidiaries to The Company is coded "2".
(3) Subsidiaries to Subsidiaries is coded "3".

Note3 ： 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.

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

Schedule6: Securities held as of December 31, 2018 (Investee information )

Schedule6: Securities held as of December 31, 2018 (Investee information )	Schedule6: Securities held as of December 31, 2018 (Investee information )	Schedule6: Securities held as of December 31, 2018 (Investee information )	Schedule6: Securities held as of December 31, 2018 (Investee information )
				Unit︰NT$1,000
Holding Company	Type and Name of the Securities(Note)	Relationship	Financial Statement Account	As of December,31 2018				Note
				Shares	Carrying Value	Percentage of Ownership (％)	Market Value
Cathay hospitality management Co., Ltd	Stocks Nangang International One Co., Ltd.	Others	Financial assets at fair value through other comprehensive income–non-current	15,000	$150	0.01%	$150
〃	Stocks Nangang International Two Co., Ltd.	Others	〃	15,000	150	0.01%	150

Note ： Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities, as defined in IFRS 9 “Financial Instruments”.

English Translation of Financial Statements Originally Issued in Chinese Cathay Real Estate Development Corporation Limited Notes To Parent Company Only Financial Statements

For the Years Ended December 31, 2018 and 2017

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

Schedule7: Individual securities acquired or disposed of with accumulated amount exceeding NT$300 million or 20% of paid-in capital

													Unit︰NT$1,000	Unit︰NT$1,000
Company	Securities Category (Note 1)	Financial Statement Account	Counterparty (Note 2)	Relationship (Note 2)	As January 1, 2018		Purchase (Note 3)		Sell(Note 3)				As December 31, 2018
					Shares	Amount	Shares(In thousand)	Amount	Shares	Price	Book Cost	Gain / Loss	Shares	Amount
CCH Commercial Company Limited	Lotus Investment Company Limited/ Stocks	Investments Accounted for Using Equity Method	New Oriental Retail Holdings Limited	None.	5	$295,996 (USD 9,877)	-	$-	5	$3,403,779	$202,778	$2,128,213	-	$-
	Golden Gate Investment Company Limited/ Stocks				5	783,477 USD 26,144)	-	-	5		706,888		-	-
Note 1： Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other relatedderivative securities. Note 2： If the securities listed above are investments accounted for using the equity method, fill in the second column. 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 o											r 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.

English Translation of Financial Statements Originally Issued in Chinese

Cathay Real Estate Development Corporation Limited Notes To Parent Company Only Financial Statements For the Years Ended December 31, 2018 and 2017

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

Schedule8: Names, locations and related information of investee companies as of December 31, 2018 (excluding Mainland China)

				; USD$1,000 Unit`︰`NT$1,000	; USD$1,000 Unit`︰`NT$1,000	; USD$1,000 Unit`︰`NT$1,000	; USD$1,000 Unit`︰`NT$1,000	; USD$1,000 Unit`︰`NT$1,000	; USD$1,000 Unit`︰`NT$1,000	; USD$1,000 Unit`︰`NT$1,000	; USD$1,000 Unit`︰`NT$1,000
Investor	Investee	Region	Main Business	Original cost		At the end ofperiod			Investees company net income	Share of Profits/Losses	Note
				Balance at December 31, 2018	Balance at December 31, 2017	Number of shares	Percentage	Amount
The Company	Cathay Real Estate Holding Corporation	British Virgin Islands	General trade and investing	$597,409 (USD 21,052)	$2,383,107 (USD 79,052)	21,051,891	100.00%	$335,914	$1,226,952	$1,226,952	Subsidiary
The Company	Catahy Real Estate Management Co.,Ltd	ROC	Construction management	50,000	50,000	5,000,000	100.00%	119,792	40,552	40,552	Subsidiary
The Company	Cathay Healthcare Management Co.,Ltd	ROC	Consultancy	467,500	467,500	46,750,000	85.00%	553,758	86,972	73,927	Subsidiary
The Company	Cathay Hospitality Management Co.,Ltd	ROC	Service industry	400,000	800,000	40,000,000	100.00%	239,895	(75,622)	(75,622)	Subsidiary
The Company	Cathay Hospitality Consulting Co., Ltd	ROC	Service industry	450,000	-	45,000,000	100.00%	403,074	(46,926)	(46,926)	Subsidiary
Cathay healthcare Management Co., Ltd	Cathay Healthcare Management Limited(BVI)	British Virgin Islands	General trade and investing	78,469 (USD 2,600)	63,115 (USD 2,100)	130,000	100.00%	14,156 (USD 459)	(40,892) USD(1,355)	-	Sub- subsidiary
Cathay Real Estate Holding Corporation	CCH REIM Company Limited	Cayman Islands	Investing	20,120 (USD 687)	20,120 (USD 687)	100,000	50.00%	(2,138) USD(69)	(26,116) USD(865)	-	Joint venture
Cathay Real Estate Holding Corporation	CCH Commercial Company Limited	Cayman Islands	Investing	574,206 (USD 19,580)	2,355,734 (USD 77,580)	7,758	66.67%	338,233 (USD 10,968)	1,857,607 (USD 61,553)	-	Sub- subsidiary
CCH Commercial Company Limited	Lotus Investment Company Limited	Cayman Islands	Investing	- (USD -)	1,198,888 (USD 40,331)	-	0.00%	- (USD -)	(107,583) USD(3,565)	-	Third-tier subsidiary
CCH Commercial Company Limited	Golden Gate Investment Company Limited	Cayman Islands	Investing	- (USD -)	1,817,517 (USD 60,900)	-	0.00%	- (USD -)	(97,663) USD(3,236)	-	Third-tier subsidiary
Golden Gate Investment Company Limited	Golden Gate Pacific Company Limited	Hong Kong	Business management	- (USD -)	1,817,414 (USD 60,897)	-	0.00%	- (USD -)	(97,593) USD(3,234)	-	Fourth-tier subsidiary
CCH REIM Company Limited	CCH REIM (HK) Company Limited	Hong Kong	Investing	474,138 (USD 15,187)	452,164 (USD 14,437)	10,722,620	100.00%	(4,874) USD(158)	(40,482) USD(1,341)	-	Joint venture
Lotus Investment Company Limited	Lotus Pacific Company Limited	Hong Kong	Business management	- (USD -)	1,196,804 (USD 40,301)	-	0.00%	- (USD -)	(107,510) USD(3,562)	-	Fourth-tier subsidiary
Cathay Healthcare Management Limited(BVI)	Cathay Healthcare Management Limited(Cayman)	Cayman Islands	Business management	78,469 (USD 2,600)	63,115 (USD 2,100)	130,000	100.00%	14,154 (USD 459)	(40,892) USD(1,355)	-	Third-tier subsidiary

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.

English Translation of Financial Statements Originally Issued in Chinese

Cathay Real Estate Development Corporation Limited Notes To Parent Company Only Financial Statements For the Years Ended December 31, 2018 and 2017

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

Schedule9: Investment in Mainland China as of December 31, 2018

Schedule9: Investment in Mainland China as of December 31, 2018	Schedule9: Investment in Mainland China as of December 31, 2018	Schedule9: Investment in Mainland China as of December 31, 2018	Schedule9: Investment in Mainland China as of December 31, 2018	Schedule9: Investment in Mainland China as of December 31, 2018
					;USD$1,000 Unit︰NT$1,000
Investee company	Main Businesses	Total Amount of Paid-in Capital	Method of Investment (Note1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2018	Investment Flows		Accumulated Outflow of Investment from Taiwan as of December 31, 2018	Investees company net income	Percentage of Ownership	Share of Profits/Losses (Note2)	Carrying Amount as of December 31, 2018	Accumulated Inward Remittance of Earnings as of December 31, 2018
					Outflow	Inflow(Note3)
Tailin Management Consulting (Shanghai) Limited	Business management	$225,604 (USD 7,300)	(2) CCH REIM (HK) CompanyLimited	$8,945 (USD 300)	$-	$-	$8,945 (USD 300)	$(40,023)	50%	$(20,012) (b).(2)	$(114,036)	$-
Jiaheng (Shanghai) Real Estate Limited	Investing	1,971,132 (USD 66,628)	(2) Lotus Pacific CompanyLimited	1,314,088 (USD 44,419)	-	1,156,397 (USD 39,089)	157,691 (USD 5,330)	(101,368)	66.67%	(67,582) (b).(2)	-	-
Shanghai Lujing Real Estate Limited	Investing	2,064,902 (USD 69,057)	(2) Golden Gate Pacific Company Limited	2,370,121 (USD 79,583)	-	2,085,706 (USD 70,033)	284,415 (USD 9,550)	(63,326)	66.67%	(42,219) (b).(2)	-	-
Hangzhou Kunning Health Consulting Limited	Consultancy	78,469 (USD 2,600)	(2) Cathay Healthcare Management Limited(Cayman)	63,115 (USD 2,100)	15,354 (USD 500)	-	78,469 (USD 2,600)	(40,892)	85%	(34,758) (b).(2)	12,031	-

Accumulated Investment in Mainland China		Investment Amounts Authorized by Investment Commission, MOEA		Upper Limit on Investment
(USD17,780) $529,520		(USD 153,902) $4,746,030		$15,044,842

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: Jiaheng (Shanghai) Real Estate Limited and Shanghai Lujing Real Estate Limited was loss of control due to the disposal of Lotus Investment Company Limited and Golden Gate Investment Company Limited by CCH Commercial Company Limited. Please refer 6.(29) for more details.

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

1.Detail List of Cash and Cash Equivalents

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [462 x 551] intentionally omitted <==

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

Items Summary Amount Notes
Cash on Hand and Petty Cash $292
Bank Deposits 925,170
Total $925,462
----- End of picture text -----

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Detail List of Financial asset measured at fair value through other comprehensive income

As at 31 December 2018

==> picture [735 x 368] intentionally omitted <==

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

(Expressed in thousands of NT and USD)
Par Value Acquisition Accumulated Fair Value
Shares
Type and Name of the Securities Summary (in thousand) (NTD) Amount Interest Rate Cost impairment Price Amount Note
Financial assets at fair value through other comprehensive income–
current
Cathay Financial holdings Co., Ltd Listed stock 55,763,541 $10 $557,635 - $2,036,677 Not applicable $47.00 $2,620,886
Add ： Financial assets at fair value through other comprehensive
584,209
income–current
Net $2,620,886
Financial assets at fair value through other comprehensive income–
non-current
Gong Cheng Industrial Co. Unlisted stock 1,580,083 10 15,801 - $9,852 Not applicable 0.00 $-
MetroWalk internatinal Co., Ltd Unlisted stock 3,448,276 10 34,483 - 24,850 Not applicable 16.23 55,966
Gian Feng Investment Co., Ltd. Unlisted stock 2,000,000 10 20,000 - 18,551 Not applicable 4.52 9,040
Budworth Investment Limited Unlisted stock 191,880 USD 1 USD 192 - 1,772 Not applicable 25.94 4,977
Nangang International One Co., Ltd. Unlisted stock 7,485,000 10 74,850 - 78,462 Not applicable 10.02 74,973
Nangang International Two Co., Ltd. Unlisted stock 7,485,000 10 74,850 - 78,399 Not applicable 10.00 74,858
Lin Yuan Property Management Co., Ltd. Unlisted stock 300,000 10 3,000 - 3,000 Not applicable 29.68 8,904
Symphox Information Co., Ltd Unlisted stock 5,489,000 10 54,890 - 90,568 Not applicable 16.53 90,733
Taiwan Star Telecom Co., Ltd Unlisted stock 195,000,000 10 1,950,000 - 1,950,000 Not applicable 6.76 1,318,200
Subtotal 2,255,454 $1,637,651
Add ： Financial assets at fair value through other comprehensive
(617,803)
income–non-current
Net Amount $1,637,651
----- End of picture text -----

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Detail List of Notes Receivable Detail List

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [462 x 565] intentionally omitted <==

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

Items Summary Amount Notes
Chief Executive Officer Premises ticket of buildings and land $3,420
HYGGE Premises ticket of buildings and land 4,020
Cathay Mu Shan Premises ticket of buildings and land 2,588
Cathay Shiu Hsiu Premises ticket of buildings and land 600
The individual balance
Others Premises ticket of buildings , land and rent 12,536 does not reach 5% of the
balance of the subject
Subtotal 23,164
Less: Allowance Loss -
Net Amount $23,164
----- End of picture text -----

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Detail List of Accounts Receivable

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [444 x 552] intentionally omitted <==

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

Items Summary Amount Notes
House sales $218,860
The individual balance does not reach
Others 11,241
5% of the balance of the subject
Subtotal 230,101
Less ： Allowance loss (12)
Net Amount $230,089
----- End of picture text -----

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

5. Detail of List Inventories

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [453 x 564] intentionally omitted <==

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

Amount
Net Realizable
Items Summary Cost Notes
Value
Lower cost and
Construction Land $8,154,901 $11,150,061
net realizable value
house and Lower cost and
Construction In Progress 15,058,866 16,947,480
land net realizable value
Please refer schedule 5-1
Land Held for Construction Lower cost and
2,052,299 2,488,677
Site net realizable value
Subtotal 25,266,066
Prepayment for Land
725,078
Purchases
Net Amount $25,991,144
----- End of picture text -----

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

－－ 5-1. Detail List of Inventories Construction In Progress Buildings and land

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [444 x 554] intentionally omitted <==

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

Beginning Addition Cost Reduction (Transfer Ending balance
Project name Balance at 1 of to Building and land as at 31 Dec. Note
Jan, 2018 Construction held for sale) 2018
TREE. RIVER.
CATHAY’S $13,656 $966,196 $- $979,852
HOME I
Cathay Fu Tu 1,349,304 641,865 - 1,991,169
Taoyuan city
central road 27,650 1,905,286 - 1,932,936
section2
Cathay Ho 1,401,883 260,644 - 1,662,527
Chief Executive
2,273,597 493,776 - 2,767,373
Officer
Cathay Plus+ 14,813 1,172,259 - 1,187,072
The Royal Gallery 1,385,818 533,547 1,919,365 -
Landmark Twin
1,854,772 400,634 2,255,406 -
Towers
Cathay Double A 1,313,517 526,367 1,839,884 -
KaoHsiung
999,986 92,879 - 1,092,865
Ersheng 1st Rd.
Cathay O2 Fu
1,707,845 204,051 - 1,911,896
Building
Others 3,689,873 3,153,448 5,310,145 1,533,176
Total $16,032,714 $10,350,952 $11,324,800 $15,058,866
----- End of picture text -----

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Detail List of Investments accounted for using the equity method

As at 31 December 2018

==> picture [727 x 170] intentionally omitted <==

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

(Expressed in thousands of New Taiwan Dollars)
Beginning Balance at 1 Jan, 2018 Addition Disposal Beginning Balance at 31 Dec, 2018 Market Value
Percentage of Percentage of Guarantee Notes
Investee Shares Ownership Amount Shares Amount Shares Amount Shares Ownership Amount Unit Price Amount or pledged
(%) (%)
Catahy Architecture Agency Co., Ltd 5,000,000 100.00% $111,642 - $40,551 (Note1) - $32,401 (Note2&5) 5,000,000 100.00% $119,792 $23.96 $119,792 N/A
Cathay healthcare Management Co., Ltd 46,750,000 85.00% 537,656 - 73,927 (Note1) - 57,825 (Note2&3&5) 46,750,000 85.00% 553,758 11.85 553,758 N/A
Cathay hospitality management Co., Ltd 80,000,000 100.00% 115,531 20,000,000 200,000 (Note4) 60,000,000 75,636 (Note1&6) 40,000,000 100.00% 239,895 6.00 239,895 N/A
Cathay hospitality consulting Co., Ltd - - - 45,000,000 450,000 (Note4) - 46,926 (Note1) 45,000,000 100.00% 403,074 8.96 403,074 N/A
Cathay Real Estate Holding Corporation 79,051,891 100.00% 740,659 - 1,380,953 (Note1&3) 58,000,000 1,785,698 (Note7) 21,051,891 100.00% 335,914 16.43 335,914 N/A
Total $1,505,488 $2,145,431 $1,998,486 $1,652,433
----- End of picture text -----

NOTE 1 ： Profit or loss of the investment accounted for using equity method.

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 ： Pension adjustment in the current period.

NOTE 6 ： Adjustment of adoption to IFRS 9 in the current period.

NOTE 7 ： Capital reduction in the current period.

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Detail List of Property, Pland and Equipment changing

As at 31 December 2018

Related information of Property, Pland and Equipment, please refer Notes 6.9.

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Detail List of Investment property changing

As at 31 December 2018

Related information of Property, Pland and Equipment, please refer Notes 6.10.

English Translation of Financial Statements Originally Issued in Chinese CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Detail List of Intangible assets changing

As at 31 December 2018

Related information of Intangible assets, pleas refer Notes 6.11.

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

10. Detail List of Other non-current assets

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

Items	Summary		Amount	Notes
Guarantee Deposits Paid Xindian (I) Xindian (II) Taoyuan Wuling Beitou Others Subtotal Guarantee Deposits Paid`－` related parties Cathay Life Insurance Total Land held for construction site Prepayments for equipment Prepayments for investment Other non-current assets`－` Total	Deposit Deposit `仁` Contract security deposit Deposit Deposit for rent Farm acquired in the name of a third party		$100,981 131,890 356,461 217,900 188,974 996,206 3,803 1,000,009 18,425 9,813 9,982 16,264 $1,054,493	Please refer Note 7 The individual balance does not reach 5% of the balance of the subject

100

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

11. Detail List of Short-Term Loans

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [732 x 337] intentionally omitted <==

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

Guarantee or
Type Bank Ending Balance Priod Interest rate Limited Notes
pledged
Association guarantor is the
Credit loan First Bank $390,000 2018/11~2019/01 0.78%~1.20% $390,000 N/A
Chairman of the Company
Association guarantor is the
Mizuho Bank 1,450,000 2018/07~2019/01 0.78%~1.20% 1,450,000 N/A
Chairman of the Company
Agricultural Bank of Association guarantor is the
200,000 2018/12~2019/03 0.78%~1.20% 200,000 N/A
Taiwan Chairman of the Company
Association guarantor is the
Cathay United Bank 210,000 2018/12~2019/01 0.78%~1.20% 210,000 N/A
Chairman of the Company
China Construction Association guarantor is the
2,900,000 2018/07~2019/02 0.78%~1.20% 2,900,000 N/A
Bank Chairman of the Company
Association guarantor is the
Hua Nan Bank 800,000 2018/07~2019/01 0.78%~1.20% 800,000 N/A
Chairman of the Company
Association guarantor is the
Chang Hwa Bank 2,200,000 2016/10~2019/02 0.78%~1.20% 2,200,000 N/A
Chairman of the Company
Total $8,150,000
----- End of picture text -----

101

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

12. Detail List of Notes Payable

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [456 x 553] intentionally omitted <==

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

Items Summary Amount Notes
Chen Hao-Yi Architects Firm $6,990
Shin Nan Natural Gas Co.,
8,892
Ltd
The individual balance
Others 74,503 does not reach 5% of the
balance of the subject.
Total $90,385
----- End of picture text -----

102

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

13. Detail List of Accounts Payable

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

Items	Summary	Amount	Notes
(1)General transaction Cathay Mu Shan Cathay Golden City The Royal Gallery Wen Lin Yuan YOO Fu Building Cathay Double A Fu Building Others Total (2)Trancsaction with related parties San Ching Engineering Others Total	Final cost payable Final cost payable Final cost payable Final cost payable Final cost payable Final cost payable Final cost payable and warranty payable	$50,586 38,291 56,155 44,304 29,112 64,413 109,589 $392,450 $590,101 433 $590,534	The individual balance does not reach 5% of the balance of the subject The individual balance does not reach 5% of the balance of the subject

103

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

14. Detail List of Other Payablse Detail List

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

Items	Summary		Amount	Notes
Payroll and bonus payable Interest payable Cost of rental sales Dividend payable Divedend refundable Others Total			$70,237 23,400 20,099 41,027 35,373 17,579 $207,715	The individual balance does not reach 5% of the balance of the subject

104

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

15. Detail List of Contract Liability

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

Items	Summary		Amount	Notes
Advance Real Estate Receipts Cathay Fu Tu Cathay Ho Cathay New Village Chief Executive Officer Cathay Plus+ Cathay DoubleA Fu Building Cathay O2 Fu Building Others Total	Advance Real Estate Receipts and rent		$568,163 394,332 204,166 788,779 266,246 184,620 357,163 862,860 $3,626,329	The individual balance does not reach 5% of the balance of the subject

105

English Translation of Financial Statements Originally Issued in Chinese CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Detail List of Bonds payable

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [733 x 318] intentionally omitted <==

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

Amount
Date of interest Interest
Name Trustee Issued date payment rate Issued amount Repaid Ending Unamortized Repayment
Balance premium(discount) Book Value method Guarantee
Far Eastern Repayment at
104-1 104.7.24~109.7.24 Yearly 1.40% $2,000,000 $- $2,000,000 $- $2,000,000 N/A
International Bank maturity
Far Eastern Repayment at
104-1 104.7.24~109.7.24 Yearly 1.40% 1,000,000 - 1,000,000 - 1,000,000 N/A
International Bank maturity
$3,000,000 $- $3,000,000 $- $3,000,000
----- End of picture text -----

106

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

17. Detail List of Long-term loans

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [728 x 257] intentionally omitted <==

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

Guarantee or
Creditor Summary Amount Period Interest Rate Note
pledged
ShangHai Commercial & Association guarantor is the
$500,000 2017/08~2020/04 1.15%~1.20% N/A
Savining Bank Chairman of the Company.
Association guarantor is the
Hua Nan Bank 3,000,000 2016/10~2019/11 1.15%~1.20% N/A
Chairman of the Company.
Far Eastern International Association guarantor is the
1,200,000 2016/10~2019/12 1.15%~1.20% N/A
Bank Chairman of the Company.
ShangHai Commercial & Association guarantor is the
498,050 2018/8~2019/8 0.62% N/A
Savining Bank Chairman of the Company.
Subtotal 5,198,050
Less : Current portion 4,200,000
Total $998,050
----- End of picture text -----

107

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Detail List of Other Non-Current Liabilities

As at 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [466 x 551] intentionally omitted <==

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

Items Summary Amount Note
Net defined benefit liability $85,439
Guarantee Deposits Received
The Landis Housing deposit 46,153
HOME MEDIA Group Ltd. Housing deposit 12,237
The individual
balance does not
Others Housing deposit 79,950
reach 5% of the
balance of the subject
Subtotal 138,340
Deferred Credits-
Other liabilities Unrealized Gains on Inter- 13,415
Afffiliate Accounts
Total $237,194
----- End of picture text -----

108

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Detail List of Operating Income Detail List

For the year-ended 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [458 x 551] intentionally omitted <==

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

Items Summary Amount Notes
Rental Income $411,667
Land Income 7,704,902
Building Income 4,695,956
Total $12,812,525
----- End of picture text -----

109

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Detail List of Operating Cost

For the year-ended 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [458 x 551] intentionally omitted <==

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

Items Summary Amount Notes
Lease Costs $318,934
Land Costs 3,999,460
Building Costs 5,225,628
Total $9,544,022
----- End of picture text -----

110

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Detail List of Operating Expense

For the year-ended 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [454 x 550] intentionally omitted <==

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

Items Summary Amount Notes
Selling Expenses $559,190
Salary and Wages 171,014
Taxes 73,476
Provision for bad debt
12
expenses
Other Expense 123,873 The expenses are
less than 5% of the
balance of the
Total $927,565 subject.
----- End of picture text -----

111

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

22.Non-Operating Income and Expenses Detail List

For the year-ended 31 December 2018

(Expressed in thousands of New Taiwan Dollars)

==> picture [458 x 552] intentionally omitted <==

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

Items Summary Amount Notes
Other Income
Deposit interest, short-term notes
Interest Revenue $734
receivable, etc.
Dividends Received 152,719
Building management fees, planning
Other Income 120,885
and default income, etc.
Total $274,338
Other Gain or Loss
Loss (gain) on disposal of
$4,363
property, plant and equipment
Others (1,849)
Total $2,514
----- End of picture text -----

112

AI assistant

CATHAY RED — Audit Report / Information 2018

52129_rns_2018-11-14_0de9ac9a-06d3-4898-8d8d-c48f5b272f88.pdf

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Parent Company only Financial Statements

For The Years Ended

Independent Auditors ’ Report Translated from Chinese

Opinion

Basis for Opinion

Key Audit Matters

Revenue recognition

Valuation of inventories

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

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

Notice to Readers

English Translation of Financial Statements Originally Issued in Chinese

English Translation of Financial Statements Originally Issued in Chinese

English Translation of Financial Statements Originally Issued in Chinese CATHAY REAL ESTATE DEVELOPMENT CO., LTD. Parent Company Only Income Statement

For the years ended 31 December, 2018 and 2017

English Translation of Financial Statements Originally Issued in Chinese

English Translation of Financial Statements Originally Issued in Chinese CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Parent Company Only Statements of Cash Flows

1. HISTORY AND ORGANIZATION

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

3. APPLICATION OF NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

English Translation of Financial Statements Originally Issued in Chinese

B. IFRS 9“Financial Instruments”

English Translation of Financial Statements Originally Issued in Chinese

English Translation of Financial Statements Originally Issued in Chinese

English Translation of Financial Statements Originally Issued in Chinese

A. IFRS 16“Leases”

IFRS 3 “Business Combinations”

IFRS 11 “Joint Arrangements”

English Translation of Financial Statements Originally Issued in Chinese

A. IFRS 16 “Leases”

English Translation of Financial Statements Originally Issued in Chinese

B. IFRS 17 “ Insurance Contracts ”

English Translation of Financial Statements Originally Issued in Chinese

English Translation of Financial Statements Originally Issued in Chinese

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of compliance

(2) Basis of preparation

(3) Foreign currency transactions

English Translation of Financial Statements Originally Issued in Chinese

(4) Translation of financial statements in foreign currency

English Translation of Financial Statements Originally Issued in Chinese

(5) Current and non-current distinction

(6) Cash and cash equivalents

(7) Financial instruments

The accounting policy from January 1, 2018 is as follows:

Financial assets measured at amortized cost

English Translation of Financial Statements Originally Issued in Chinese

Financial asset measured at fair value through other comprehensive income

Financial asset measured at fair value through profit or loss

The accounting policy before 1 January 2018 as follow:

Available-for-sale financial assets

Loans and receivables

English Translation of Financial Statements Originally Issued in Chinese

B. Impairment of financial assets

The accounting policy from January 1, 2018 is as follows:

English Translation of Financial Statements Originally Issued in Chinese

The accounting policy before January 1, 2018 is as follows:

English Translation of Financial Statements Originally Issued in Chinese

Classification between liabilities or equity

English Translation of Financial Statements Originally Issued in Chinese

Equity instruments

Financial liabilities

Financial liabilities at amortized cost

Derecognition of financial liabilities

E. Offsetting of financial instruments

English Translation of Financial Statements Originally Issued in Chinese

(8) Fair value

(9) Inventories

English Translation of Financial Statements Originally Issued in Chinese

(10) Construction Contract

(11) Investments accounted for using the equity method

English Translation of Financial Statements Originally Issued in Chinese

English Translation of Financial Statements Originally Issued in Chinese

(12) Property, plant and equipment

(13) Investment property

CATHAY RED Audit Report / Information 2018

Independent Auditors `’` Report Translated from Chinese

`－` (4) Financial assets measured at cost Non-current

`－` (6) Accounts receivable and Accounts receivable related parties