CATHAY RED - Audit Report / Information 2020

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Parent Company Only Financial Statements

For the Years Ended

December 31, 2020 and 2019

Report of Independent Auditors

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

Independent Auditors’ Report Translated from Chinese

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

Opinion

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

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

Basis for Opinion

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

Key Audit Matters

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

Revenue Recognition

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

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

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

Valuation of Construction Land

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

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

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

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 2020 parent company only financial statements and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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

Notice to Readers

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

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

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Parent Company Only Balance Sheets

December 31, 2020 and 2019

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

(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 Sheets (continued)

December 31, 2020 and 2019

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

(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 Statements of Comprehensive Income

For the Years Ended December 31, 2020 and 2019

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Parent Company Only Statements of Changes in Equity

For the Years Ended December 31, 2020 and 2019

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

(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 December 31, 2020 and 2019

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

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

1. HISTORY AND ORGANIZATION

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

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

2. DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS

FOR ISSUE

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

3. APPLICATION OF NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

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

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

The abovementioned amendments that are applicable for annual periods beginning on or after

January 1, 2021 have no material impact on the Company.

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

B. IFRS 17 “Insurance Contracts”

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

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

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

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

c. Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37) The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

English Translation of Financial Statements Originally Issued in Chinese

d. Annual Improvements to IFRS Standards 2018 - 2020

Amendment to IFRS 1

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

Amendment to IFRS 9 Financial Instruments

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

Amendment to Illustrative Examples Accompanying IFRS 16 Leases

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

Amendment to IAS 41

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

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

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

F. Definition of Accounting Estimates - Amendments to IAS 8

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

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

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, 2020 and 2019 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”).

(2) Basis of preparation

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

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

(3) Foreign currency transactions

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

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

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 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

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

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

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

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

(6) Cash and cash equivalents

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

(7) Financial instruments

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

English Translation of Financial Statements Originally Issued in Chinese

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

A. Financial instruments: Recognition and Measurement

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

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

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

Financial assets measured at amortized cost

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

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

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

Financial asset measured at fair value through other comprehensive income

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

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

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

B. Impairment of financial assets

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

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

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

The loss allowance is measured as follows:

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

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.

C. Derecognition of financial assets

A financial asset is derecognized when:

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

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

D. Financial liabilities and equity

Classification between liabilities or equity

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

Equity instruments

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

Financial liabilities

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

English Translation of Financial Statements Originally Issued in Chinese

Financial liabilities at amortized cost

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

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

Derecognition of financial liabilities

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

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

E. Offsetting of financial instruments

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

(8) Fair value

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

(9) Inventories

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

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

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

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

(10) Investments accounted for using the equity method

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

(11) Property, plant and equipment

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

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 Leased assets: 5 years

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

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

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

(12) Investment property

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

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

Buildings 4~50 years

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

(13) Leases

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

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

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

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

Company as a lessee

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

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

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

Company as a lessor

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

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

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

(14) Intangible assets

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

Computer software

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

(15) Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cashgenerating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

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

English Translation of Financial Statements Originally Issued in Chinese

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

(16) Revenue recognition

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

Construction income

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

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

(17) Borrowing costs

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

(18) Retirement benefits plans

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

(19) Income taxes

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

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

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

Deferred tax

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

(20) Business combinations

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

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

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

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

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

(1) Judgement

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

Operating lease commitment-Company as the lessor

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

(2) Estimates and assumptions

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

A. Fair value of financial instruments

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

B. Impairment of non-financial assets

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

English Translation of Financial Statements Originally Issued in Chinese

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

C. Retirement benefits plans

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

D. Income tax

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

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

English Translation of Financial Statements Originally Issued in Chinese

E. Inventory evaluation

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

F. Accounts receivables-estimation of impairment loss

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

6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

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

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

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

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	As of December 31,	As of December 31,
	2020	2019
	$2,437,036	$2,454,341
	$2,074,071	$2,234,695

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

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

(3) Notes receivable

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

(4) Accounts receivable and accounts receivable -related parties

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

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

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

(5) Inventories

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

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

Construction Project

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

English Translation of Financial Statements Originally Issued in Chinese

Construction Project

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

(6) Investments accounted for using the equity method

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

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

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

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

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

Cathay Real Estate Holding Corporation was liquidated in August 2020.

English Translation of Financial Statements Originally Issued in Chinese

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

(7) Property, plant and equipment

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

A. Owner occupied property, plant and equipment

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

(8) Investment property

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

English Translation of Financial Statements Originally Issued in Chinese

Land	Land	Buildings	Buildings	Total
$- - -		$2,321,366 181,618 (46,278)		$2,321,366 181,618 (46,278)
- - -		2,456,706 181,371 (91,214)		2,456,706 181,371 (91,214)
$-		$2,546,863		$2,546,863
$7,136,442		$3,511,577		$10,648,019
$7,153,543		$3,737,656		$10,891,199
	For theyears ended December 31,
	2020		2019
	$338,788 (82,156) (37,958)		$415,372 (105,881) (13,024)
	$218,674		$296,467

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

(9) Intangible assets

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

English Translation of Financial Statements Originally Issued in Chinese

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

Operating expenses	For theyears ended December 31,	For theyears ended December 31,
	2020	2019
	$877	$734

(10) Other non-current assets

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

(11) Short-term loans

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

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

(12) Short-term notes payable

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

(13) Bonds payable

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

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

English Translation of Financial Statements Originally Issued in Chinese

(14) Long-term loans

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

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

(15) Retirement employment benefits

A. Defined contribution plan

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

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

B. Defined benefits plan

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

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

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

(16) Common stock

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

English Translation of Financial Statements Originally Issued in Chinese

(17) Capital surplus

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

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

(18) Retained earnings

A. Legal reserve

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

B. Special reserve

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

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

English Translation of Financial Statements Originally Issued in Chinese

C. Retained earnings and dividend policies

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

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

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

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

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

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

(19) Operating revenues

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

English Translation of Financial Statements Originally Issued in Chinese

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

A. Disaggregation of revenue

For the year ended December 31, 2020

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

For the year ended December 31, 2019

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

B. Contract balances

Contract liabilities – current

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

C. Assets recognized from the revenue from contracts with customers

Incremental costs of obtaining contracts

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

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

(20) Expected credit losses/ (gains)

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

Please refer to Note 12 for information of credit risks.

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

English Translation of Financial Statements Originally Issued in Chinese

December 31, 2020

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

December 31, 2019

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

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

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

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

(21) Operating leases

A. Operating lease commitments - Company as lessee

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

English Translation of Financial Statements Originally Issued in Chinese

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

a. Amounts recognized in the balance sheet

(a) Right-of-use asset

The carrying amount of right-of-use asset

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

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

(b) Lease liability

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

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

b. Amounts recognized in the income statement

Depreciation charge for right-of-use assets

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

English Translation of Financial Statements Originally Issued in Chinese

c. Income and costs relating to leasing activities

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

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

d. Cash outflow relating to leasing activities

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

B. Company as lessor

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

(23) Non-operating income and expenses

A. Interest income

For the years ended December 31,

Deposit interest Others Total	2020	2019
	$726 430	$1,926 687
	$1,156	$2,613

B. Other income

For the years ended December 31,

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

C. Other gains and losses

For the years ended December 31,

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

D. Finance costs

For the years ended December 31,

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

English Translation of Financial Statements Originally Issued in Chinese

(24) Components of other comprehensive income

For the year ended December 31, 2020

Arising during theperiod	Reclassification adjustments duringtheperiod	Other comprehensive income,before tax	Income tax relating to components of other comprehensive income	Other comprehensive income,net of tax
$(733) (164,942) (1,480) (596)	$- - - (87,569)	$(733) (164,942) (1,480) (88,165)	$146 - - -	$(587) (164,942) (1,480) (88,165)
$(167,751)	$(87,569)	$(255,320)	$146	$(255,174)
		Other comprehensive income,before tax	Income tax relating to components of other comprehensive income	Other comprehensive income,net of tax
$(6,710) 368,350 675 (1,573)	$- - - -	$(6,710) 368,350 675 (1,573)	$1,342 - - -	$(5,368) 368,350 675 (1,573)
$360,742	$-	$360,742	$1,342	$362,084

English Translation of Financial Statements Originally Issued in Chinese

(25)Income taxes

The major components of income tax expense were as follows:

Income tax recognized in profit or loss

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

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

English Translation of Financial Statements Originally Issued in Chinese

Deferred tax assets (liabilities) relate to the following:

For the year ended December 31, 2020

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

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

For the year ended December 31, 2019

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

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

Unrecognized deferred tax assets

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

The assessment of income tax returns

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

(26) Earnings per share

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

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

(27) Business combinations

Acquisition of Lin Yuan Property Management Co., Ltd.

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

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

English Translation of Financial Statements Originally Issued in Chinese

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

7. RELATED PARTY TRANSACTIONS

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

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

Name of the relatedparties

Nature of
relationship of the
relatedparties

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

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

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

(2) Significant transactions with the related parties

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

English Translation of Financial Statements Originally Issued in Chinese

A. Cash in banks and short-term loans

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

B. Purchase

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

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

English Translation of Financial Statements Originally Issued in Chinese

C. Sales

a. Sales revenue

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

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

b. Rental Income

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

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

D. Notes and accounts receivable – related parties

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

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

English Translation of Financial Statements Originally Issued in Chinese

E. Notes and accounts payable – related parties

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

Name of the relatedparties	As of December 31,	As of December 31,
	2020	2019
Others: San Ching Engineering Lease - related parties a. Right-of-use assets Others: Cathay Life Insurance	$48,574	$210,853
	2020	2019
	$8,083	$22,861

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

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

b. Lease liabilities

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

Others: Cathay Life Insurance G. Others a. Other receivables	For the years ended December 31,	For the years ended December 31,
	2020	2019
	$275	$177

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

English Translation of Financial Statements Originally Issued in Chinese

b. Refundable deposits

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

c. Guarantee deposit received

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

d. Construction in progress

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

2019: None.

H. Other income

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

English Translation of Financial Statements Originally Issued in Chinese

I. Operating costs

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

J. Operating expenses

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

K. Property transaction

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

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

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

English Translation of Financial Statements Originally Issued in Chinese

L. Key management personnel compensation

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

8. PLEDGED ASSETS

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

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

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

9. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIES

(1) Significant contract

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

(2) Others

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

10. SIGNIFICANT DISASTER LOSSES

None.

11. SIGNIFICANT SUBSEQUENT EVENTS

None.

English Translation of Financial Statements Originally Issued in Chinese

12. OTHERS

(1) Categories of financial instruments

Financial Assets

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

Financial Liabilities

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

(2) Financial risk management objectives and policies

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

English Translation of Financial Statements Originally Issued in Chinese

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

(3) Market risk

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

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

Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s net investments in foreign subsidiaries. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Company.

The Company mainly engaged in various business activities in Taiwan, and the foreign currency held is not significant. Therefore, the Company’s risk due to changes in foreign currency exchange rates is not significant.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s investments with bank borrowings with variable interest rates.

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period, including investments and borrowings with variable interest rates and interest rate swaps. At the reporting date, a change of 10 basis points of interest rate in a reporting period could cause the profit to decrease/increase by NT$8,029 thousand and NT$7,400 thousand for the years ended December 31, 2020 and 2019, respectively.

English Translation of Financial Statements Originally Issued in Chinese

Equity price risk

The Company’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company’s listed and unlisted equity securities are classified under held for financial assets at fair value through other comprehensive income. The Company manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all equity investment decisions.

When the price of the listed equity securities at fair value through other comprehensive income increases/decreases 5%, it could have impacts of NT$206,400 thousand and NT$218,560 thousand for the years ended December 31, 2020 and 2019 on the equity attributable to the Company.

Please refer to Note 12.(8) for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(4) Credit risk management

Credit risk is the risk that a counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for accounts receivable and notes receivable) and from its financing activities, including bank deposits and other financial instruments.

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Company’s internal rating criteria etc. Certain counter parties’ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment or insurance.

As of December 31, 2020 and 2019, accounts receivable from top ten customers represented low percentage of the total accounts receivable of the Company. The credit concentration risk of other accounts receivable is insignificant.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Company’s treasury department in accordance with the Company’s policy. The Company only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating and no material default risk. Therefore, there is no significant credit risk for these counterparties.

English Translation of Financial Statements Originally Issued in Chinese

(5) Liquidity risk management

The Company’s objective is to maintain a balance between continuity of funding and flexibility using cash and cash equivalents, highly liquid equity investments, bank borrowings, convertible bonds and finance leases. The table below summarizes the maturity profile of the Company’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

Non-derivative financial instruments

	As of December 31,	As of December 31,	2020
Less than 1year	2 to 3years	4 to 5years	> 5years	Total
$13,533,145 1,289,541 12,317 24,093	$5,274,869 $- - - 2,100 - 38,609 11,467 As of December 31,		$- - - 8,290 2019	$18,808,014 1,289,541 14,417 82,459
Less than 1year	2 to 3years	4 to 5years	> 5years	Total
$10,505,616 986,426 3,042,000 19,300 33,752	$4,878,196 - - 13,952 36,454	$- - - - 11,045	$- - - - 56,193	$15,383,812 986,426 3,042,000 33,252 137,444

(6) Reconciliations of the liabilities from financing activities

Reconciliations of the liabilities for the year ended December 31, 2020:

As of January 1, 2020 Cash flows Non-cash changes Interest on lease liabilities Other (Note) As of December 31, 2020	Short-term borrowings $6,900,000 (290,000) - - $6,610,000	Short-term notes and bills payable	Long-term borrowings and Bonds payable (including currentportion)	Lease liabilities	Total
		$499,540 919,314 - -	$10,799,510 (169,769) - -	$33,252 (20,649) 426 1,388	$18,232,302 438,896 426 1,388
		$1,418,854	$10,629,741	$14,417	$18,673,012

Note: Lease liabilities that meet the lease recognition requirements in this period.

English Translation of Financial Statements Originally Issued in Chinese

Reconciliations of the liabilities for the year ended December 31, 2019:

As of January 1, 2019 Cash flows Non-cash changes Interest on lease liabilities Other (Note) As of December 31, 2019	Short-term borrowings	Short-term notes and bills payable	Long-term borrowings and Bonds payable (including currentportion)	Lease liabilities	Total
	$8,150,000 (1,250,000) - -	$- 499,540 - -	$8,198,050 2,601,460 - -	$- (9,677) 177 42,752	$16,348,050 1,841,323 177 42,752
	$6,900,000	$499,540	$10,799,510	$33,252	$18,232,302

Note: Lease liabilities that meet the lease recognition requirements in this period.

(7) Fair values of financial instruments

A. The methods and assumptions applied in determining the fair value of financial instruments:

The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

a. The carrying amount of cash and cash equivalents, trade receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.
b. For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities and bonds) at the reporting date.
c. Equity instruments that are not actively traded in the market (including shares of publicly issued companies in an inactive market and shares of undisclosed companies) are estimated by market method and are derived from market transactions of the same or comparable company equity instruments. The fair value is derived from the price and other relevant information (such as lack of liquidity discount factor, similar company stock price-to-earnings ratio, similar company's stock price-to-equity ratio).

English Translation of Financial Statements Originally Issued in Chinese

B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Company’s financial instruments measured at amortized cost (including cash and cash equivalents, receivables, payables and other current liabilities) measured at amortized cost approximate their fair value.

(8) Fair value measurement hierarchy

A. Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 – Unobservable inputs for the asset or liability

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

B. Fair value measurement hierarchy of the Company’s assets and liabilities

The Company does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Company’s assets and liabilities measured at fair value on a recurring basis is as follows:

As of December 31, 2020

Financial assets: Financial assets at fair value through other comprehensive income Stocks	Level 1	Level 2	Level 3	Total
	$2,437,036	$1,690,972	$383,099	$4,511,107

English Translation of Financial Statements Originally Issued in Chinese

As of December 31, 2019

Financial assets: Financial assets at fair value through other comprehensive income Stocks	Level 1	Level 2	Level 3 Total
	$2,454,341	$1,916,850	$317,845 $4,689,036

The Company had no assets and liabilities recurring measured at fair value transferring between Level 1and Level 2 for the years ended December 31, 2020 and 2019.

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

As of January 1, 2020 Total gains and losses recognized for the year ended 31, December 2020: Amount recognized in OCI Disposals As of December 31, 2020 As of January 1, 2019 Total gains and losses recognized for the year ended 31, December 2019: Amount recognized in OCI Disposals As of December 31, 2019	Asset measured at fair value through other comprehensive income
	Stocks
	$317,845 78,241 (12,987)
	$383,099
	Asset measured at fair value through other comprehensive income
	Stocks
	$319,451 3,369 (4,975)
	$317,845

Total gains and losses recognized in profit or loss is NT$75,136 thousand and NT$3,326 thousand for the years ended December 31, 2020 and 2019, respectively.

English Translation of Financial Statements Originally Issued in Chinese

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

As of December 31, 2020

Financial assets： Financial assets at fair value through other comprehensive income Stocks As of Financial assets： Financial assets at fair value through other comprehensive income Stocks	Valuation technique	Material unobservable inputs	Quantitative information	Inputs and the fair value relationship	Inputs and the fair value relationship’s sensitivity analysis value relationship
	Market approach Discount for lack of marketability Assets approach P/E ratio of similar entities December 31, 2019 Valuation technique Material unobservable inputs		30%~50% 0%~30% Quantitative information	The higher the discount for lack of marketability, the lower the fair value of the stocks The higher the P/E ratio of similar entities, the higher the fair value of the stocks Inputs and the fair value relationship	10% increase (decrease) in the discount for lack of marketability would result in decrease (increase) in the Company’s equity by NT$34,998 thousand 10% increase (decrease) in the P/E ratio of similar entities would result in increase (decrease) in the Company’s equity by NT$17,530 thousand Inputs and the fair value relationship’s sensitivity analysis value relationship
	Market approach Assets approach	Discount for lack of marketability P/E ratio of similar entities	0%~30% 0%~30%	The higher the discount for lack of marketability, the lower the fair value of the stocks The higher the P/E ratio of similar entities, the higher the fair value of the stocks	10% increase (decrease) in the discount for lack of marketability would result in decrease (increase) in the Company’s equity by NT$18,863 thousand 10% increase (decrease) in the P/E ratio of similar entities would result in increase (decrease) in the Company’s equity by NT$18,579 thousand

English Translation of Financial Statements Originally Issued in Chinese

(9) Significant assets and liabilities denominated in foreign currencies

The Company did not hold major foreign currency financial assets and liabilities as of December 31, 2020.

Financial assets	As of December 31,2019	As of December 31,2019	As of December 31,2019
	Foreign currency	Exchange rate	NTD
	$313	30.201	$9,449
Investment accounted for using equity method USD

(10) Capital management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios to support its business and maximize shareholder value. The Company manages its capital structure and adjusts it, considering changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

13. OTHER DISCLOSURE

(1) Significant transaction information

A. Financings provided to others: None.
B. Endorsement/guarantee provided to others: None
C. Securities held as of December 31, 2020 (not including subsidiaries, associates and joint ventures): Please refer to Table 2.
D. Individual securities acquired or disposed of with accumulated amount exceeding NT$300 million or 20% of the paid-in capital: Please refer to Table 3.
E. Acquisition of property with the amount exceeding NT$300 million or 20% of the paid-in capital: Please refer to Table 4.
F. Disposal of property with amount exceeding NT$300 million or 20% of the paid-in capital: Please refer to Table 5.
G. Purchases or sales of goods from or to related parties exceeding NT$100 million or 20% of the paid-in capital or more: Please refer to Table 6.
H. Receivables from related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: None.
I. Derivative financial instruments undertaken: None.
J. Significant intercompany transactions between consolidated entities: Please refer to Table 7.

English Translation of Financial Statements Originally Issued in Chinese

(2) Investee information

A. Financings provided to others: None.
B. Endorsement/guarantee provided to others: Please refer to Table 1.
C. Securities held as of December 31, 2020 (not including subsidiaries, associates and joint ventures): Please refer to Table 8.
D. Individual securities acquired or disposed of with accumulated amount exceeding NT$300 million or 20% of the paid-in capital: None.
E. Acquisition of property with the amount exceeding NT$300 million or 20% of the paid-in capital: None.
F. Disposal of property with amount exceeding NT$300 million or 20% of the paid-in capital: None.
G. Purchases or sales of goods from or to related parties exceeding NT$100 million or 20% of the paid-in capital or more: None.
H. Receivables from related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: None.
I. Derivative financial instruments undertaken: None.
J. Names, locations and related information of investee companies: Please refer to Table 9.

(3) Investment in Mainland China

Please refer to Table 10.

(4) Information on Major Shareholders

Please refer to Table 11.

14. OPERATING SEGMENT INFORMATION

The Company is not required to prepare operating segment information according to article 22, Regulations Governing the Preparation of Financial Reports by Securities Issuers. The Company has disclosed the operating segment information in the consolidated financial statement.

English Translation of Financial Statements Originally Issued in Chinese

Table 1: Endorsement/guarantee provided to others

==> picture [778 x 135] intentionally omitted <==

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

Unit ︰ NT$1,000
Parent Subsidiaries
Receiving Party Limit of the
Limit on the Company Endorsed/
Endorsement / Endorsement or
Maximum Ending Actual Amount Endorsement/ Endorsed / Guaranteed
No. Endorser/ Guarantee Amount of Guarantee for
(Note1) Guarantor CompanyName Relationship(Note2) Amount for Balance for thePeriod (Note4) Balance(Note5) Borrowed(Note6) Collateral Percentage GuaranteeAmount Guaranteed forthe for theParent Entities in
Receiving Party (Note3) Subsidiaries Company China (Note7)
(Note3)
(Note7) (Note7)
Cathay Healthcare Hangzhou Kunning
1 Management Health Consulting 3 $206,747 $28,508 $- $- $- 0.00% $413,494 Y N Y
Co.,Ltd. Limited
A. Limit of the Endorsement / Guarantee Amount for Receiving Party ： NT$689,157 thousand 30%
Note
B. Limit on the Endorsement/Guarantee Amount ： NT$689,157 thousand60%
----- End of picture text -----

Note1 ： The Company and its subsidiaries are coded as follows:
(1) The Company is coded "0".
(2) The subsidiaries are coded starting from "1" in the order.
Note2 ： Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following seven categories:
(1) Having business relationship.
(2) The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.
(3) The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.
(4) The endorser/guarantor company and endorsed/guaranteed company both are owned directly or indirectly more than 90% voting shares by the company.
(5) Mutual guarantee of the trade as required by the construction contract.
(6) Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.
(7) The performance guarantees for the sale of pre-sales contracts under the Consumer Protection Law are jointly guaranteed
Note3 ： Fill in limit on endorsements/guarantees provided for a single party and ceiling on total amount of endorsements/guarantees provided as prescribed in the endorser/guarantor company’s
“Procedures for Provision of Endorsements and Guarantees”, and state each individual party to which the endorsements/guarantees have been provided and the calculation for ceiling on total amount of endorsements/guarantees provided in the footnote.
Note4 ： Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided.
Note5 ： Once endorsement/guarantee contracts or promissory notes are signed/issued by the endorser/guarantor company to the banks, the endorser/guarantor company bears endorsement/guarantee liabilities. And all other events involve endorsements and guarantees should be included in the balance of outstanding endorsements and guarantees.
Note6 ： Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company.
Note7 ： Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary and provision by subsidiary to listed parent company, and provision to the party in Mainland China.

English Translation of Financial Statements Originally Issued in Chinese

Table 2: Securities held as of December 31, 2020 (not including subsidiaries, associates and joint ventures)

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Unit: NT$1,000 ; Share
As of December 31, 2020
Holding Company Type and Name of the Securities (Note) Relationship Financial Statement Account Percentage of Note
Shares Carrying Value Market Value
Ownership ( ％ )
Stock － Financial assets at fair value
Cathay Real Estate
Others through other comprehensive 57,681,332 $2,437,036 0.44% $2,437,036
Development Co., Ltd. Cathay Financial Holdings Co., Ltd.
income–current
Stock － Financial assets at fair value
〃 Others through other comprehensive 5,489,000 114,830 11.00% 114,830
Symphox Information Co., Ltd.
income–non-current
Stock －
〃 None 〃 195,000,000 1,690,973 3.68% 1,690,973
Taiwan Star Telecom Co., Ltd.
Stock －
〃 None 〃 1,580,083 - 3.23% -
Gong Cheng Industrial Co.
Stock －
〃 None 〃 2,000,000 25,922 10.00% 25,922
Gian Feng Investment Co., Ltd.
Stock －
〃 None 〃 3,448,276 92,965 1.72% 92,965
MetroWalk international Co., Ltd.
Stock －
〃 None 〃 30,314 45 3.33% 45
Budworth Investments Limited
Stock －
〃 Others 〃 7,485,000 74,828 4.99% 74,828
Nangang International One Co., Ltd.
Stock －
〃 Others 〃 7,485,000 74,508 4.99% 74,508
Nangang International Two Co., Ltd.
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Note ： Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

English Translation of Financial Statements Originally Issued in Chinese

Table 3: Individual securities acquired or disposed of with accumulated amount exceeding NT$300 million or 20% of the paid-in capital

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Unit ︰ NT$1,000
As of January 1, 2020 Purchase (Note 3) Sell (Note 3) As of December 31, 2020
Securities Category Financial Statement Counterparty Relationship
Company Shares
(Note 1) Account (Note 2) (Note 2) Shares Amount Amount Shares Price Book Cost Gain / Loss Shares Amount
(In thousand)
Investments accounted
Cathay Real Estate The stocks of Jinhua Realty
for using equity (Note5) Subsidiary - $- 40,800,000 $408,000 - $- $- $- 40,800,000 $408,000
Development Co., Ltd. Co., Ltd.
method
Investments accounted
〃 The stocks of Bannan Realty for using equity (Note5) Subsidiary - $- 40,800,000 $408,000 - $- $- $- 40,800,000 $408,000
Co., Ltd.
method
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Note 1 ： Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other relatedderivative securities. Note 2 ： Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave the columns blank.

Note 3 ： The accumulated consideration of acquisition or sale should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more.

Note 4 ： The Company' s paid-in capital means the parent's paid-in capital. If the stock has no par value or the par value do not equal to NT$10, according to the regulation of 20% paid-in capital transaction amount, the par value will be calculated by 10% of the total parent equity. Note 5 ： Initial acquisition.

English Translation of Financial Statements Originally Issued in Chinese

Table 4: Acquisition of property with the amount exceeding NT$300 million or 20% of the paid-in capital

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Unit ︰ NT$1,000
Disclosure of Information on Previous Transfer of
Property is Required for Related Parties who are also Purpose of
Relationship
Company Property Name Transaction Transaction Status of Payment Counterparty with the the Counterparty References for Acquisition Others
Date Amount Company Owner Relationshipwith the Date of Amount Determining Price and CurrentCondition
Transfer
Company
Cathay Real Estate
Development Co., Land Serial No.132, Jinhua Section, 2020.01.13 $1,500,000 Installment by Legal person None - - - $- Negotiation by two Construction None
Anping District, Tainan City agreement parties
Ltd.
Land Serial No. 256,257,273,
〃 Renping Section, Beitun District, 2020.01.21 1,518,151 Installment by Individual None - - - - Negotiation by two Construction None
agreement parties
Taichung City (Note)
〃 Land Serial No. 74, Ruanqiao 2020.07.10 697,376 Installment by Individual None - - - - Negotiation by two Construction None
Section, Beitou District, Taipei City agreement parties
Land Serial No. 433 etc., Muzha
〃 Section, Wenshan District, Taipei 2020.09.30 1,399,701 Installment by Individual None - - - - Negotiation by two Construction None
agreement parties
City
Land Serial No. 112, Section 5,
〃 Tammei Section, Neihu District, 2020.10.21 1,160,998 Installment by Legal person and None - - - - Negotiation by two Construction None
agreement Individual parties
Taipei City
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Note:It was originally Land Serial 2-3 etc. of Shuinan Section, Beitun District, Taichung City, acquired on January 21, 2020. The contract price is NT$1,518,144 thousand. The contract price was adjusted to NT$1,518,151 thousand after the rezoning of the land due to the change in area. After the rezoning, it became Land Serial No 256,257,273,Renping Section , Beitun District.

English Translation of Financial Statements Originally Issued in Chinese

Table 5: Disposal of property with the amount exceeding NT$300 million or 20% of the paid-in capital

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Unit ︰ NT$1,000
Original date of Transaction Relationship References for
Transaction Carrying Disposal of profit Purpose of
Company Property Name property Amount (Contract Status of Receivable Counterparty with the Determining Others
Date Value and loss (Note) Disposal
acquisition price ) Company Price
Cathay Real Estate Land Serial No. 132, Jinhua Valuation report
Installment by Jinhua Realty The Company's
Development Co., Section, Anping District, Tainan 2020.11.12 2020.1.13 $1,583,939 $1,614,198 $30,259 Subsidiary from Real estate None
agreement Co., Ltd. operation plan
Ltd. City appraiser
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Note ： The disposal of profit and loss are recognized as the unrealized sales profit of the related parties.

English Translation of Financial Statements Originally Issued in Chinese

Table 6: Purchases or sales of goods from or to related parties exceeding NT$100 million or 20% of paid-in capital or more

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Unit ︰ NT$1,000
Differences in transaction
Transaction terms compared to third Notes/accounts payable
Relationship
party transactions
Purchaser / Seller Counterparty with the Note
Percentage of Percentage of total
counterparty Purchases (Sales) Amount total purchases Credit term Unit price Credit term Balance notes/accounts
(sales) payable
Cathay Real Estate Development Co., Ltd. San Ching Engineering Co., Ltd Associate Construnction-in-progress $1,901,357 17.58% Not applicable $- - $48,574 5.03% (Note) Constuction
Cathay Real Estate Development Co., Ltd. Jinhua Realty Co., Ltd. Subsidiary Land held for construction site $1,614,198 12.10% Not applicable - - - - Obtain deposal benefits
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Note ： The notes/accounts payable of parent company only financial statements.

English Translation of Financial Statements Originally Issued in Chinese

Table 7: Significant intercompany transactions between consolidated entities

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Unit ︰ NT$1,000
Transaction
(Note 1)No. Company name Counterparty Relationship Account Amount Transactionterms operating revenues or total assetsPercentage of consolidated total
(Note 2) (Note 3)
0 Cathay Real Estate Development Co., Ltd. Cathy Hospitality Consulting Co., Ltd. 1 Rental income $209 Regular -
0 Cathay Real Estate Development Co., Ltd. Cathy Hospitality Consulting Co., Ltd. 1 Operating expenses-conference fee 95 Regular -
0 Cathay Real Estate Development Co., Ltd. Cathy Hospitality Consulting Co., Ltd. 1 Operating expenses-entertainment expenses 182 Regular -
0 Cathay Real Estate Development Co., Ltd. Cathy Hospitality Consulting Co., Ltd. 1 Other income 4 Regular -
0 Cathay Real Estate Development Co., Ltd. Cathay Real Estate Management Co., Ltd. 1 Deferred credits-gains on Inter-affiliate accounts 13,334 Regular 0.02%
0 Cathay Real Estate Development Co., Ltd. Cathay Real Estate Management Co., Ltd. 1 Realized gain from inter-affiliate accounts 41 Regular -
0 Cathay Real Estate Development Co., Ltd. Cathay Real Estate Management Co., Ltd. 1 Cost of rental sales 1,800 Regular 0.01%
0 Cathay Real Estate Development Co., Ltd. Cathay Real Estate Management Co., Ltd. 1 Other income 22 Regular -
0 Cathay Real Estate Development Co., Ltd. Cathay Healthcare Management Co., Ltd. 1 Rental income 106 Regular -
0 Cathay Real Estate Development Co., Ltd. Cathay Healthcare Management Co., Ltd. 1 Construction cost 18 Regular -
0 Cathay Real Estate Development Co., Ltd. Cathay Healthcare Management Co., Ltd. 1 Operating expenses-advertising fee 28 Regular -
0 Cathay Real Estate Development Co., Ltd. Cathay Hospitality Management Co., Ltd. 1 Rental income 1,059 Regular 0.01%
0 Cathay Real Estate Development Co., Ltd. Cathay Hospitality Management Co., Ltd. 1 Operating expenses-advertising fee 95 Regular -
0 Cathay Real Estate Development Co., Ltd. Cathay Hospitality Management Co., Ltd. 1 Construction cost 90 Regular -
0 Cathay Real Estate Development Co., Ltd. Cathay Hospitality Management Co., Ltd. 1 Operating expenses-miscellaneous expenses 1,038 Regular 0.01%
0 Cathay Real Estate Development Co., Ltd. Cathay Hospitality Management Co., Ltd. 1 Operating expenses-entertainment expenses 617 Regular -
0 Cathay Real Estate Development Co., Ltd. Cathay Hospitality Management Co., Ltd. 1 Operating expenses-service fee 60 Regular -
0 Cathay Real Estate Development Co., Ltd. Lin Yuan Property Management Co., Ltd. 1 Operating expenses-miscellaneous expenses 502 Regular -
0 Cathay Real Estate Development Co., Ltd. Lin Yuan Property Management Co., Ltd. 1 Cost of rental sales 26,794 Regular 0.19%
0 Cathay Real Estate Development Co., Ltd. Lin Yuan Property Management Co., Ltd. 1 Other income 148 Regular -
0 Cathay Real Estate Development Co., Ltd. Jinhua Realty Co., Ltd. 1 Other receivables 1,486 Regular -
0 Cathay Real Estate Development Co., Ltd. Jinhua Realty Co., Ltd. 1 Other income 1,486 Regular 0.01%
0 Cathay Real Estate Development Co., Ltd. Jinhua Realty Co., Ltd. 1 Rental income 66 Regular -
0 Cathay Real Estate Development Co., Ltd. Jinhua Realty Co., Ltd. 1 Guarantee deposits received 40 Regular -
0 Cathay Real Estate Development Co., Ltd. Jinhua Realty Co., Ltd. 1 Construction revenue 1,614,198 Regular 11.55%
0 Cathay Real Estate Development Co., Ltd. Jinhua Realty Co., Ltd. 1 Construction cost 1,583,939 Regular 11.34%
0 Cathay Real Estate Development Co., Ltd. Jinhua Realty Co., Ltd. 1 Unrealized profit from sales 30,259 Regular 0.22%
0 Cathay Real Estate Development Co., Ltd. Bannan Realty Co., Ltd. 1 Other receivables 4,719 Regular 0.01%
0 Cathay Real Estate Development Co., Ltd. Bannan Realty Co., Ltd. 1 Other income 4,719 Regular 0.03%
0 Cathay Real Estate Development Co., Ltd. Bannan Realty Co., Ltd. 1 Rental income 29 Regular -
0 Cathay Real Estate Development Co., Ltd. Bannan Realty Co., Ltd. 1 Guarantee deposits received 23 Regular -
1 Cathay Real Estate Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Investment property－land 12,813 Regular 0.02%
1 Cathay Real Estate Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Investment property－buildings 847 Regular -
1 Cathay Real Estate Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Accumulated depreciation－investment property 326 Regular -
1 Cathay Real Estate Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Cost of rental sales 41 Regular -
1 Cathay Real Estate Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Management fee income 1,800 Regular 0.01%
1 Cathay Real Estate Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Operating expenses-service fee 22 Regular -
2 Cathay Healthcare Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Rent 106 Regular -
2 Cathay Healthcare Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Service income 46 Regular -
3 Cathy Hospitality Consulting Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Rent 209 Regular -
3 Cathy Hospitality Consulting Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Hospitality income 277 Regular -
3 Cathy Hospitality Consulting Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Operating expenses-miscellaneous expenses 4 Regular -
4 Cathay Hospitality Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Rent 1,059 Regular 0.01%
4 Cathay Hospitality Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Hospitality income 1,900 Regular 0.01%
5 Lin Yuan Property Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Technical service income 502 Regular -
5 Lin Yuan Property Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Maintenance income 26,794 Regular 0.19%
5 Lin Yuan Property Management Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Operating expenses-service fee 148 Regular -
6 Jinhua Realty Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Accounts payable－related parties 1,486 Regular -
6 Jinhua Realty Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Operating expenses-service fee 1,486 Regular 0.01%
6 Jinhua Realty Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Rent 66 Regular -
6 Jinhua Realty Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Refundable deposits 40 Regular -
6 Jinhua Realty Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Land held for construction site 1,614,198 Regular 2.71%
7 Bannan Realty Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Accounts payable－related parties 4,719 Regular 0.01%
7 Bannan Realty Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Operating expenses-service fee 4,719 Regular 0.03%
7 Bannan Realty Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Rent 29 Regular -
7 Bannan Realty Co., Ltd. Cathay Real Estate Development Co., Ltd. 2 Refundable deposits 23 Regular -
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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.

English Translation of Financial Statements Originally Issued in Chinese

Table 8: Securities held as of December 31, 2020 (not including subsidiaries, associates and joint ventures) (Investee information)

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Unit: NT$1,000 ; Share
As of December 31, 2020
Type and Name of the
Holding Company Relationship Financial Statement Account Percentage of Note
Securities(Note) Shares Carrying Value Market Value
Ownership ( ％ )
Stocks
Cathay Hospitality Financial assets at fair value through other
Others 15,000 $150 0.01% $150
Management Co., Ltd. Nangang International One Co., Ltd. comprehensive income-non-current
Stocks
〃 Others 〃 15,000 149 0.01% 149
Nangang International Two Co., Ltd.
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Note ： Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

English Translation of Financial Statements Originally Issued in Chinese

Table 9: Names, locations and related information of investee companies (excluding Mainland China)

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Unit: NT$1,000 ; USD$1,000 ; Share
Original cost At the end of period
Balance at Balance at Number of Investees company net Share of
Investor Investee Region Main Business Note
December 31, December 31, shares Percentage Amount income Profits/Losses
2020 2019
Cathay Real Estate Development Cathay Real Estate Holding British Virgin General trade and investing $- $242,747 - - $- $(376) $(376) Subsidiary
Co., Ltd. Corporation Islands (USD 9,592)
Cathay Real Estate Development Cathay Real Estate Management
ROC Construction management 50,000 50,000 5,000,000 100.00% 115,014 27,576 27,576 Subsidiary
Co., Ltd. Co., Ltd.
Cathay Real Estate Development Cathay Healthcare Management
ROC Consultancy 467,500 467,500 46,750,000 85.00% 585,785 106,646 90,647 Subsidiary
Co., Ltd. Co., Ltd.
Cathay Real Estate Development Cathay Hospitality Management
ROC Service industry 650,000 400,000 65,000,000 100.00% 132,418 (286,161) (278,435) Subsidiary
Co., Ltd. Co., Ltd.
Cathay Real Estate Development Cathay Hospitality Consulting Co.,
ROC Service industry 750,000 750,000 75,000,000 100.00% 332,026 (257,350) (244,197) Subsidiary
Co., Ltd. Ltd
Cathay Real Estate Development Wholesale of Drugs, Medical
Cymbal Medical Network Co., Ltd. ROC 100,000 100,000 10,000,000 100.00% 87,000 (11,979) (11,979) Subsidiary
Co., Ltd. Goods
Cathay Real Estate Development Lin Yuan Property Management ROC Apartment building management 68,809 - 1,530,000 51.00% 58,767 40,288 Note3 20,549 Subsidiary
Co., Ltd. Co., Ltd. service industry
Cathay Real Estate Development Jinhua Realty Co., Ltd. ROC Housing and Building 408,000 - 40,800,000 51.00% 376,917 (1,616) (824) Subsidiary
Co., Ltd. Development and Rental industry
Cathay Real Estate Development Bannan Realty Co., Ltd. ROC Housing and Building 408,000 - 40,800,000 51.00% 405,774 (4,366) (2,227) Subsidiary
Co., Ltd. Development and Rental
Cymbal Medical Network Co., Ltd. Xing De Co., Ltd. ROC Manpower dispatch and leasing 80,000 80,000 8,000,000 100.00% 74,328 (5,509) (5,509) [Second-tier]
industry subsidiary
Cymbal Medical Network Co., Ltd. Cymlin Co., Ltd. ROC Manpower dispatch and leasing 26,000 - 2,600,000 100.00% 25,796 (204) (204) [Second-tier]
industry subsidiary
Cathay Healthcare Management Cathay Healthcare Management British Virgin General trade and investing - 103,122 - - - - - Second-tier
Co., Ltd Limited (BVI) Islands (USD 3,400) subsidiary
Cathay Real Estate Holding CCH Commercial Company Cayman Islands Investing - 2,641 - - - - - Second-tier
Corporation Limited (USD 90) subsidiary
Cathay Healthcare Management Cathay Healthcare Management Cayman Islands Business management - 103,122 - - - - - Third-tier
Limited (BVI) Limited (Cayman) (USD 3,400) subsidiary
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Note 1: If a public company has holding company in other country and had issued consolidated financial statement under local regulations, about these investee could disclosed their holding company’s relevant information. Note 2: If not belong to Note 1, filled in by the following rules:

(1) In “Investee”, “Region”, “Main Business”, “Original cost” and “At the end of period” columns should filled in in order follow the company invest directly or invest indirectly and explain each relationship in “Note” column. (2) In“Investees company net income” column should filled in each investee net income.

(3) In“Share of Profits/Losses”column only need to filled in the company recognized each subsidiaries and the company under equity method’s profits or loss. Make sure it had contained each subsidiaries had contained their investee profit or loss in their net income.

Note 3: Excluding the current profit and loss before the acquisition.

English Translation of Financial Statements Originally Issued in Chinese

Table 10: Investment in Mainland China

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Unit ︰ NT$1,000 ; USD$1,000
Accumulated Accumulated
Accumulated
Investment Flows Outflow of Carrying Inward
Total Amount Method of Outflow of Investees Share of
Main Investment from Percentage of Amount as of Remittance of
Investee company of Paid-in Investment Investment from company net Profits/Losses
Businesses Taiwan as of Ownership December 31, Earnings as of
Capital (Note1) Taiwan as of income (Note2)
Outflow Inflow(Note3) December 31, 2020 December 31,
January 1, 2020
2020 2020
Tailin Management $225,604 (2) $8,945 $8,945
Business
Consulting (Shanghai) CCH REIM (HK) $- $- $- 0.00% $- $- -
Limited management (USD 7,300) Company Limited (USD 300) (USD 300)
Hangzhou Kunning $115,827 $103,122 $12,705 $115,827 $(16,606)
Health Consulting Consultancy (1) $- $(19,536) 85% $- -
(USD 3,820) (USD 3,400) (USD420) (USD 3,820) (b).2
Limited(Note3)
Accumulated Investment in Mainland Investment Amounts Authorized by
Upper Limit on Investment
China Investment Commission, MOEA
$115,827 $4,053,324
$14,673,134
(USD 3,820) (USD 142,182)
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Note1: The methods for engaging in investment in Mainland China include the following:

(1) Directly invested in China

(2) Investment in Mainland China companies through a company invested and established in a third region

(3) Other method

Note2: Investees company net income:

(a) If the investees is uder preparation, should take note.
(b) If the investees' net income is base on these three condition, should take note.

(1) The investes' finance statement has certification by the CPA firm in Taiwan which has partnership with international CPA firm.

(2) The investes' finance statement has certification by the parenent company in Taiwan.

(3) Others.

Note3: Currently being dissolved and liquidated

English Translation of Financial Statements Originally Issued in Chinese

Table 11:Information of major shareholder

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Shares
Total Shares Owned Ownership Percentage
Shareholders
Employee Pension Management Committee of Cathay Life Insurance Co., Ltd. 288,067,626 24.84%
Wan Pao Development Co., Ltd. 204,114,882 17.60%
Fubon Life Insurance Co., Ltd. 87,133,000 7.51%
Cathay Life Insurance Co., Ltd. 72,200,584 6.22%
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English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

Statement of Assets, Liabilities and Equity Items
Statement of cash and cash equivalents
Statement financial assets at fair value through other comprehensive income-current
Statement of notes receivable
Statement of accounts receivable
Statement of inventories
Statement of inventories－construction in progress－buildings and land
Statement of changes in financial assets at fair value through other comprehensive income-non-current
Statement of changes in investments accounted for using equity method
Statement of changes in property, pland and equipment
Statement of changes in accumulated depreciation of property, plant and equipment
Statement of changes in right-of-use assets
Statement of changes in accumulated depreciation of right-of-use assets
Statement of changes in investment property
Statement of changes in accumulated depreciation of investment property
Statement of changes in intangible assets
Statement of deferred tax assets/liabilities
Statement of other non-currents assets
Statement of short-term loans
Statement of short-term notes payable
Statement of contract liabilities-current
Statement of notes payable
Statement of accounts payable
Statement of other payables
Statement of lease liabilities
Statement of long-term loans
Statement of other non-current liabilities
Statement of Profit and Loss Items
Statement of operating revenues
Statement of operating costs
Statement of operating expenses
Statement of other income
Statement of other gains and losses
Statement of finance costs
Statement of summary statement of employee benefits, depreciation and amortization expenses by function
Item

Statement Index
1
2
3
4
5
5.1
6
7
Note 6 (7)
Note 6 (7)
8
9
Note 6 (8)
Note 6 (8)
Note 6 (9)
Note 6 (25)
10
11
12
13
14
15
16
17
18
19
20
21
22
Note 6 (23)
Note 6 (23)
Note 6 (23)
Note 6 (22)

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

1.Statement of Cash and Cash Equivalents

December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Items Description Amount Notes
Cash on hand and petty Cash $291
Bank deposits 1,439,400
Cash equivalent date due: January 8, 2021 529,743
interest rate:0.2%
Total $1,969,434
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English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

2. Statement of Financial Assets at Fair Value through Other Comprehensive Income-Current

December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Par Value Acquisition Accumulated Fair Value
Type and Name of the Securities Description Share (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 57,681,332 $10 $576,813 - $2,103,800 Not applicable $42.25 $2,437,036
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English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

3. Statement of Notes Receivable

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Notes
HYGGE Premises ticket of buildings and land $980
Cathay Plus+ Premises ticket of buildings and land 1,981
City Landmark Premises ticket of buildings and land 500
Others Premises ticket of buildings , land and rent 28,066 The amount of individual
item in others does not
exceed 5% of the account
balance.
Subtotal 31,527
Less: loss allowance -
Net amount $31,527
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100

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

4. Statement of Accounts Receivable

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Notes
Third parties
Housing sales $240,039
Others 848 The amount of individual item in
others does not exceed 5% of the
account balance.
Subtotal 240,887
Less: loss allowance (10)
Net amount 240,877
Related parties
Others 44 The amount of individual item in
others does not exceed 5% of the
account balance.
Less: loss allowance -
Net amount 44
Total $240,921
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101

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Inventories

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Amount
Net Realizable
Items Description Cost Notes
Value
Construction land $8,497,634 $14,200,670 Lower cost and
net realizable value
Construction in progress Buildings and 13,030,307 20,554,731 Lower cost and
land net realizable value
Please refer schedule 5.1
Buildings and land held for 2,914,124 3,730,298 Lower cost and
sale net realizable value
Subtotal 24,442,065 38,485,699
Prepayment for Land 2,762,342 2,762,342 Listed at cost. However, the
Purchases Company’s list prices for
housing are all greater than
the estimated cost of real
estate
Net Amount $27,204,407 $41,248,041
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102

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

5.1. Statement of Inventories － Construction in Progress － Buildings and Land

For the year ended December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Reduction (Transfer to
Beginning Balance as Addition Cost of Ending balance as of
Project name of January 1, 2020 Construction Building and land held December 31, 2020 Note
for sale)
Tree Rivers, Cathay’s Home II $1,435,625 $268,732 $- $1,704,357
Tree Rivers, Cathay’s Home I 1,066,834 230,012 - 1,296,846
Taoyuan City Central Road Section 2 1,958,826 19,039 - 1,977,865
Liberty Stationery Corp. 451,013 447,507 - 898,520
Cathay Uptown 740,372 155,803 - 896,175
Cathay the Seeds of Happiness 2,067,245 974,655 3,041,900 -
Cathay Plus+ 1,398,082 528,119 1,926,201 -
Cathay Mega+ 1,064,863 325,512 - 1,390,375
City Landmark 1,878,793 432,638 - 2,311,431
Cathay O2 Fu Building 2,434,370 298,383 2,732,753 -
Others 1,514,980 1,866,526 826,768 2,554,738
Total $16,011,003 $5,546,926 $8,527,622 $13,030,307
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103

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Financial Asset Measured at Fair Value through Other Comprehensive Income- Non-Current

For the year ended December 31, 2020

(Expressed in thousands of NT and USD)

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Unrealized
Beginning Balance as of Ending balance as of
January 1, 2020 Addition Disposal evaluation gains December 31, 2020 Guarantee or
and losses pledged
Type and Name of the Securities Share Fair Value Share Amount Share Amount Amount Share Fair Value Note
Stock
Gong Cheng Industrial Co., Ltd. 1,580,083 $- - $- - $- $- 1,580,083 $- None
MetroWalk internatinal Co., Ltd. 3,448,276 77,379 - - - - 15,586 3,448,276 92,965 "
Gian Feng Investment Co., Ltd. 2,000,000 26,160 - - - - (238) 2,000,000 25,922 "
Budworth Investment Limited 30,314 45 - - - - - 30,314 45 "
Nangang International One Co., Ltd. 7,485,000 74,957 - - - - (129) 7,485,000 74,828 "
Nangang International Two Co., Ltd. 7,485,000 74,751 - - - - (243) 7,485,000 74,508 "
Lin Yuan Property Management Co., Ltd. 300,000 9,882 - - 300,000 12,987 3,105 - - " Note1
Symphox Information Co., Ltd. 5,489,000 54,671 - - - - 60,159 5,489,000 114,830 "
Taiwan Star Telecom Co., Ltd. 195,000,000 1,916,850 - - - - (225,877) 195,000,000 1,690,973 "
Total $2,234,695 $- $12,987 $(147,637) $2,074,071
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Note1 ： The disposal in the current period is to obtain control after increasing the shareholding, and transfer it to the investments accounted for using the equity method.

104

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Changes in Investments Accounted for Using the Equity Method

For the year ended December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Beginning Balance as of Addition Disposal Ending balance as of Market Value
January 1, 2020 December 31, 2020
Guarantee
Notes
Percentage of Percentage of or pledged
Investee Shares Ownership Amount Shares Amount Shares Amount Shares Ownership Amount Unit Price Amount
(%) (%)
Cathay Real Estate Management Co., Ltd. 5,000,000 100.00% $117,650 - $27,576 (Note1) - $30,212 (Note2,5) 5,000,000 100.00% $115,014 $23.00 $115,014 None
Cathay Healthcare Management Co., Ltd. 46,750,000 85.00% 579,491 - 90,647 (Note1) - 84,353 (Note2,3,5) 46,750,000 85.00% 585,785 12.53 585,785 "
Cathay Hospitality Management Co., Ltd. 40,000,000 100.00% 160,854 25,000,000 250,000 (Note4) - 278,436 (Note1,8) 65,000,000 100.00% 132,418 1.81 132,418 "
Cathay Hospitality Consulting Co., Ltd. 75,000,000 100.00% 576,223 - - - - 244,197 (Note1) 75,000,000 100.00% 332,026 4.03 332,026 "
Cathay Real Estate Holding Corporation 9,591,891 100.00% 9,449 - - - 9,591,891 9,449 (Note1,3,7) - - - - - "
Cymbal Medical Network Co., Ltd. 10,000,000 100.00% 98,979 - - - - 11,979 (Note1) 10,000,000 100.00% 87,000 8.70 87,000 "
Lin Yuan Property Management Co., Ltd. - - - 1,530,000 89,358 (Note1,4,6) - 30,591 (Note2,5) 1,530,000 51.00% 58,767 38.41 58,767 "
Jinhua Realty Co., Ltd. - - - 40,800,000 408,000 (Note4) - 31,083 (Note1,9) 40,800,000 51.00% 376,917 9.98 376,917 "
Bannan Realty Co., Ltd. - - - 40,800,000 408,000 (Note4) - 2,226 (Note1) 40,800,000 51.00% 405,774 9.95 405,774 "
Total $1,542,646 $1,273,581 $722,526 $2,093,701
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NOTE 1 ： Share of profit or loss of subsidiaries, associates and joint ventures and profit or loss from IFRS 16.

NOTE 2 ： Cash dividend from Investee.

NOTE 3 ： Recognition of cumulative translation adjustment of Investee.

NOTE 4 ： Increase of the invesetment in the current period.

NOTE 5 ： Remeasurements of defined benefit plans.

NOTE 6 ： Bargain purchase gain

NOTE 7 ： Liquidation in the current period

NOTE8 ： Adjustment of unrealized gain or loss on financial instrument

NOTE 9 ： Parent-subsidiary relationship adjustment of unrealized intragroup profits and losses

105

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Changes in Right-of-use Assets

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Land Builiding Total	$20,055 30,303 $50,358 Beginning Balance as of January 1, 2020	Addition $- 1,388 $1,388	Disposal $- - $-	Ending balance as of December 31, 2020 $20,055 31,691 $51,746 Note

106

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Changes in Accumulated Depreciation of Right-of-use Assets

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Land Builiding Total	$4,542 7,443 $11,985 Beginning Balance as of January 1, 2020	Addition $7,250 16,165 $23,415	Disposal $- - $-	Ending balance as of December 31, 2020 Note $11,792 23,608 $35,400

107

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Other Non-Current Assets

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Notes
Guarantee deposits paid
Third parties
Muzha Deposit $98,170
Nangang Deposit 194,601
Beitou Deposit 330,337
Xindian(I) Deposit 100,980
Xindian(II) Deposit 164,820
Other 313,117 The amount of individual item
in others does not exceed 5% of
the account balance.
Subtotal 1,202,025
Related parties
Others Deposit of Rent 12,090 The amount of individual item
in others does not exceed 5% of
the account balance.
Subtotal 12,090
Total 1,214,115
Land held for construction site the farm required in the 18,425
name of third party
Prepaid equipment 3,441
Other non-current assets 16,264
Total 1,252,245
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108

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

11. Statement of Short-Term Loans

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Guarantee or
Type Bank Ending Balance Priod Interest rate Limited Notes
pledged
Association guarantor is the
Credit loan Mizuho Bank $1,450,000 2020/7~2021/1 0.75%~0.89% $1,450,000 None
Chairman of the Company
Bank of China 650,000 2020/12~2021/1 0.75%~0.89% 1,500,000 " Association guarantor is the
Chairman of the Company
Sumitomo Mitsui Bank 860,000 2020/10~2021/3 0.75%~0.89% 900,000 " Association guarantor is the
Chairman of the Company
China Construction Bank 2,000,000 2020/10~2021/4 0.75%~0.89% 3,000,000 " Association guarantor is the
Chairman of the Company
Agricultural Bank of Taiwan 500,000 2020/5~2021/5 0.75%~0.89% 500,000 " Association guarantor is the
Chairman of the Company
Hua Nan Commercial Bank 1,150,000 2020/8~2021/8 0.75%~0.89% 1,150,000 " Association guarantor is the
Chairman of the Company
Total $6,610,000
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109

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

12. Statement of Short-Term Notes Payable

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Amount
Items Bank Priod Interest rate
Issued amount unamortized discount Book value Notes
Short-term notes DBS Bank 2020.11~2021.04 0.29%~0.30% $1,000,000 $921 $999,079
The Shanghai Commercial & 2020.09~2021.03 0.29%~0.30% 420,000 225 419,775
Savings Bank
Total $1,420,000 $1,146 $1,418,854
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110

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Contract Liabilities-Current

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Notes
Advance Real Estate Receipts
Tree Rivers, Cathay’s Home II $362,022
Tree Rivers, Cathay’s Home I 335,296
Cathay The Seeds of Happiness 523,949
Park Beautiful Mansion 305,170
HYGGE 268,473
Cathay Uptown 275,386
Cathay Opulence 281,985
Have a Rich Year 237,331
Cathay Mega+ 283,118
City Landmark 661,692
Others Advance real estate receipts 886,777 The amount of individual
and rent item in others does not
exceed 5% of the account
balance.
Total $4,421,199
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111

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

14. Statement of Notes Payable

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Notes
Shin Nan Natural Gas Co.,
$4,392
Ltd.
Others 56,410 The amount of individual item in
others does not exceed 5% of the
account balance.
Total $60,802
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112

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Accounts Payable

December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Items Description Amount Notes
(1)Transaction with third parties
Cathay Fu Tu Final cost payable $76,273
Cathay The Seeds of Happiness Final cost payable 328,742
Cathay Shui Hsiu Final cost payable 65,874
Cathay Plus+ Final cost payable 142,555
Cathay O2 Fu Building Final cost payable 73,326
The amount of individual item in
Others 169,987 others does not exceed 5% of the
account balance.
Total $856,757
(2)Transaction with related parties
San Ching Engineering
Final cost payable
and warranty payable $48,574
Others 452 The amount of individual item in
others does not exceed 5% of the
account balance.
Total $49,026
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113

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

16. Detail List of Other Payable

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Notes
Payroll and bonus payable $62,912
Commission payable 58,436
Cost of rental sales 16,610
Dividend payable 47,662
Dividend refundable 30,090
Business tax payable 78,887
Others 28,359 The amount of individual item in
others does not exceed 5% of the
account balance.
Total $322,956
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114

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

17. Statement of Lease Liabilities

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Item Description Rental Period Discount Rate Ending Balance Note
Land Advertising land 2019.08.01~2022.07.31 1.62% $6,249
Building Office builiding 2019.07.01~2021.06.30 1.57%~1.64% 8,168
Total $14,417
Current $12,317
Non-current 2,100
Total $14,417
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115

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

18. Statement of Long-Term Loans

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Guarantee or
Creditor Description Amount Period Interest Rate Note
pledged
Chang Hwa Commercial $2,400,000 2019.07~2021.07 0.85%~0.87% None Association guarantor is the
Bank Chairman of the Company.
Hua Nan Commercial 6,000,000 2020.07~2023.07 0.85%~0.87% " Association guarantor is the
Bank Chairman of the Company.
Far Eastern International 1,500,000 2019.07~2022.07 0.85%~0.87% " Association guarantor is the
Bank Chairman of the Company.
The Shanghai Commercial 729,741 2020.08~2023.08 0.29% " Association guarantor is the
& Savings Bank Chairman of the Company.
Subtotal 10,629,741
Less : current portion (5,400,000)
Total $5,229,741
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116

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

19. Statement of Other Non-Current Liabilities

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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Items Description Amount Note
Net defined benefit liability $79,249
Guarantee deposits received
Third parties
Home Media Group Ltd. Housing deposit 12,237
Din Tai Fung Co., Ltd. Housing deposit 6,000
The amount of individual item
Others Housing deposit 58,038
in others does not exceed 5% of
the account balance.
Subtotal 76,275
Related parties
Cathay United Bank Co., Ltd. Housing deposit 4,446
The amount of individual item
Others Housing deposit 1,738
in others does not exceed 5% of
the account balance.
Subtotal 6,184
Subtotal 82,459
Other liabilities Deferred credits- unrealized gains 13,333
on inter-afffiliate accounts
Total $175,041
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117

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Operating Revenues For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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

Items Description Amount Notes
Rental Income $365,117
Land Income 7,608,561
Building Income 5,362,550
Total $13,336,228
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118

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Statement of Operating Costs

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

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

Items Description Amount Notes
Lease costs $322,700
Land costs 5,878,900
Building costs 4,288,605
Total $10,490,205
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119

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

22. Statement of Operating Expenses

For the year ended December 31, 2020

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(Expressed in thousands of New Taiwan Dollars)
Items Description Amount Notes
Selling expenses Advertising etc. $569,850
Salary and wages 175,509
Taxes 85,597
Expected credit gains (34)
The amount of individual item
Other expenses 132,406
in others does not exceed 5% of
the account balance.
Total $963,328
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120

AI assistant

CATHAY RED — Audit Report / Information 2020

52129_rns_2020-11-13_d3963af1-7568-471f-b63f-9d809cc71ddf.pdf

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

For the Years Ended

Independent Auditors’ Report Translated from Chinese

Opinion

Basis for Opinion

Key Audit Matters

Revenue Recognition

Valuation of Construction Land

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

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 For the Years Ended December 31, 2020 and 2019

English Translation of I Financial Statements Originally Issued in Chinese

Cathay Real Estate Development Co., Ltd.

Notes to Parent Company Only Financial Statements

For the Years Ended December 31, 2020 and 2019

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

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

Amendment to IFRS 1

Amendment to IFRS 9 Financial Instruments

Amendment to Illustrative Examples Accompanying IFRS 16 Leases

Amendment to IAS 41

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

English Translation of Financial Statements Originally Issued in Chinese

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

English Translation of Financial Statements Originally Issued in Chinese

B. Impairment of financial assets

English Translation of Financial Statements Originally Issued in Chinese

C. Derecognition of financial assets

D. Financial liabilities and equity

Classification between liabilities or equity

Equity instruments

Financial liabilities

English Translation of Financial Statements Originally Issued in Chinese

Financial liabilities at amortized cost

Derecognition of financial liabilities

E. Offsetting of financial instruments

(8) Fair value

(9) Inventories

(10) 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

(11) Property, plant and equipment

English Translation of Financial Statements Originally Issued in Chinese

(12) Investment property

English Translation of Financial Statements Originally Issued in Chinese

(13) Leases

Company as a lessee

English Translation of Financial Statements Originally Issued in Chinese

English Translation of Financial Statements Originally Issued in Chinese

Company as a lessor

(14) Intangible assets

English Translation of Financial Statements Originally Issued in Chinese

Computer software

(15) Impairment of non-financial assets

English Translation of Financial Statements Originally Issued in Chinese

CATHAY RED Audit Report / Information 2020