Stock Code:3703

CONTINENTAL HOLDINGS CORPORATION

Parent Company Only Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2020 and 2019

Address: 23F., No.95, Sec. 2, Dunhua S. Rd., Da'an Dist., Taipei City 106, Taiwan (R.O.C.) Telephone: (02)3701-2000

The independent auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and parent company only financial statements, the Chinese version shall prevail.

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 9. List of major account titles	Page
	1 2 3 4 5 6 7 8 8 8～9 9～19 19 19～35 35～38 38 38 38 38 38～42 43～47 48 48 49 49 50～51

Contents
1. Cover Page
2. Table of Contents
3. Independent Auditors’ Report
4. Balance Sheets
5. Statements of Comprehensive Income
6. Statements of Changes in Equity
7. Statements of Cash Flows
8. Notes to the Financial Statements
(1)
Company history
(2)
Approval date and procedures of the financial statements
(3)
New standards, amendments and interpretations adopted
(4)
Summary of significant accounting policies
(5)
Significant accounting assumptions and judgments, and major sources
of estimation uncertainty
(6)
Explanation of significant accounts
(7)
Related-party transactions
(8)
Pledged assets
(9)
Commitments and contingencies
(10) Losses Due to Major Disasters
(11) Subsequent Events
(12) Other
(13) Other disclosures
(a) Information on significant transactions
(b) Information on investees
(c) Information on investment in mainland China
(d) Major shareholders
(14) Segment information
9. List of major account titles

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) Telephone 電話 + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, Fax 傳真 + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) Internet 網址 home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of CONTINENTAL HOLDINGS CORPORATION:

Opinion

We have audited the financial statements of CONTINENTAL HOLDINGS CORPORATION(“the Company”), which comprise the balance sheets as of December 31, 2020 and 2019, the statements of comprehensive income, changes in equity and cash flows for the years then ended and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other auditors (please refer to Other Matter paragraph), the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the 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 Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined that are no key audit matters to be communicated in our report.

Other Matter

We did not audit the financial statements of investments measured by equity method of the Company. Those statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for investments measured by equity method, are based solely on the reports of the other auditors. The financial statements of investments measured by equity method reflect total assets constituting 23.63% of the total assets at December 31, 2019. The related share of loss of subsidiaries accounted for using the equity method constituted 201.20% of the income before tax for the year ended December 31, 2019.

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

3-1

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with 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 financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance (including the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ 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 the 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 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 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 Company’s internal control.
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 Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the 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 auditors’ 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

3-2

Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the 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 the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ 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.

The engagement partners on the audit resulting in this independent auditors’ report are Chung-Che Chen and Ti-Nuan Chien.

KPMG

Taipei, Taiwan (Republic of China) March 16, 2021

Notes to Readers

The accompanying parent company only financial statements are intended only to present the statement of financial position, financial performance and its cash flows in accordance with the 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.

The auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditors’ report and parent company only financial statements, the Chinese version shall prevail.

(English Translation of Parent Company Only Financial Statements and Report Originally Issued in Chinese) CONTINENTAL HOLDINGS CORPORATION

Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents(note 6(a)) 1200 Other receivables(note 6(b) and 7) 1220 Current tax assets 1410 Prepayments Non-current assets: 1550 Investments accounted for using equity method(note 6(c)) 1600 Property, plant and equipment(note 6(d)) 1755 Right-of-use assets(note 6(e)) 1920 Guarantee deposits paid Total assets	December 31, 2020 Amount % $ 204,159 1 10,893 - 289 - 74 - 215,415 1 23,575,217 99 1,944 - 30,181 - 1 - 23,607,343 99 $ 23,822,758 100	December 31, 2019 Amount % 176,888 1 11,038 - 266 - 82 - 188,274 1 22,735,690 99 1,943 - 39,298 - 1 - 22,776,932 99 22,965,206 100 Liabilities and Equity Current liabilities: 2200 Other payables 2230 Current tax liabilities(note 7) 2280 Current lease liabilities(note 6(g)) 2399 Other current liabilities, others Non-Current liabilities: 2580 Non-current lease liabilities(note 6(g)) 2640 Net defined benefit liability, non-current(note 6(h)) Total liabilities Equity attributable to owners of parent(note 6(j)): 3100 Capital stock 3200 Capital surplus 3300 Retained earnings 3400 Other equity Total equity Total liabilities and equity	December 31, 2020		December 31, 2019
			Amount %		Amount %
			$ 24,093 - - - 13,885 - 138 - 38,116 - 17,786 - 27,015 - 44,801 - 82,917 - 8,232,160 35 6,813,745 29 8,629,727 36 64,209 - 23,739,841 100 $ 23,822,758 100		17,833 - 271,327 1 12,590 - 131 - 301,881 1 28,085 - 25,288 - 53,373 - 355,254 1 8,232,160 36 6,804,435 30 7,491,023 33 82,334 - 22,609,952 99 22,965,206 100

See accompanying notes to parent company only financial statements.

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) CONTINENTAL HOLDINGS CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

4000 Operating revenues(note 6(l)): 4200 Investment revenues (for investment business) Net operating revenues 5000 Operating costs(note 6(g),(h),(m) and 7): 5800 Operating costs Gross profit from operations Operating expenses: 6200 Administrative expenses Net operating income Non-operating income and expenses(note 6(n)): 7100 Interest income(note 7) 7020 Other gains and losses 7050 Finance costs(note 6(g)) Income before tax (note 6(i)) 7950 Less: Income tax expenses Net income 8300 Other comprehensive income (loss): 8310 Item that will not be reclassified to profit or loss 8311 Remeasurements of defined benefit plans 8330 Share of other comprehensive income of subsidiaries accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will not be reclassified to profit or loss 8360 Item that will be reclassified to profit or loss 8380 Share of other comprehensive income of subsidiaries accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive loss Total comprehensive income (loss) Earnings per share (note 6(k)) Basic earnings per share Diluted earnings per share	2020 Amount % $ 1,555,241 100 1,555,241 100 - - 1,555,241 100 104,646 7 1,450,595 93 8,202 1 8,790 1 (527) - 16,465 2 1,467,060 95 (71,483) (5) 1,538,543 100 (1,632) - 218,568 14 2,942 - 213,994 14 (220,350) (14) - - (220,350) (14) (6,356) - $ 1,532,187 100 $ 1.87 $ 1.87	2019 Amount % 436,459 100 436,459 100 - - 436,459 100 75,272 17 361,187 83 9,538 2 179 - (515) - 9,202 2 370,389 85 273,382 63 97,007 22 3,578 1 (299,319) (68) 5,285 1 (290,456) (66) (115,887) (27) - - (115,887) (27) (406,343) (93) (309,336) (71) 0.12 0.12

See accompanying notes to parent company only financial statements.

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) CONTINENTAL HOLDINGS CORPORATION

Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Capital stock	Capital stock	Capital surplus		Retaine	d earnings	d earnings			Total other equity interest	Total other equity interest	Total other equity interest	Total other	Total equity
								Exchange differences on translation of foreign financial statements	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income		Gains (losses) on hedging instruments
			Legal reserve	Special reserve	Unappropriated retained earnings		Total
$ 8,232,160 - - - - - - - - 8,232,160 - - - - - - $ 8,232,160		6,804,435	587,239	2,493,481		5,073,160 97,007 (21,140) 75,867 (194,168) 231,248 (740,894) 7,347 (5,177) 4,447,383 1,538,543 11,769 1,550,312 (9,701) (411,608) - 5,576,386	8,153,880	(529,154) - (115,887) (115,887) - - - - - (645,041) - (220,350) (220,350) - - - (865,391)		978,564	12,950	462,360 - (385,203) (385,203) - - - - 5,177 82,334 - (18,125) (18,125) - - - 64,209	23,652,835
	- -	- -	- -	- -									97,007 (406,343)
	-	-	-	-									(309,336)
	- - - - -	- - - - -	194,168 - - - -										- - (740,894) 7,347 -
	8,232,160 - -		781,407 - -										22,609,952 1,538,543 (6,356)
	-		-										1,532,187
	- - -		9,701 - -										- (411,608) 9,310
	$ 8,232,160		791,108										23,739,841

See accompanying notes to parent company only financial statements.

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) CONTINENTAL HOLDINGS CORPORATION

Statements of Cash Flows

For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Income before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Interest expense Interest income Loss (gain) on disposal of property, plant and equipment Investment revenues Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Other receivables Prepayments Other current assets Total changes in operating assets Changes in operating liabilities: Other payables Other current liabilities Net defined benefit liability Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow (outflow) generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from investing activities: Acquisition of investments accounted for using equity method Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Disposal of property, plant and equipment Increase in refundable deposits Net cash flows used in investing activities Cash flows from financing activities: Payment of lease liabilities Cash dividends paid Net cash flows used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year	2020 $ 1,467,060 13,289 527 (8,202) 73 (1,555,241) (1,549,554) (917) 8 - (909) 6,260 7 421 6,688 5,779 (1,543,775) (76,715) 9,264 719,973 (527) (199,867) 452,128 (400,000) 400,000 (1,140) 640 - (500) (12,749) (411,608) (424,357) 27,271 176,888 $ 204,159	2019 370,389 13,146 515 (9,538) (179) (436,459) (432,515) (731) 62 50,000 49,331 (14,561) 21 (11,178) (25,718) 23,613 (408,902) (38,513) 4,653 887,172 (515) (438) 852,359 - - (233) 179 (1) (55) (11,369) (740,894) (752,263) 100,041 76,847 176,888

See accompanying notes to parent company only financial statements.

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) CONTINENTAL HOLDINGS CORPORATION

Notes to the Financial Statements

For the years ended December 31, 2020 and 2019

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

(1) Company history

CONTINENTAL HOLDINGS CORPORATION (the “ Company” ) was established through shares exchange with Continental Engineering Corp. (“CEC”) on April 8, 2010 and CEC became 100% - owned by the Company. On the same day, the Company was approved to be a listed Company by the FSC.

(2) Approval date and procedures of the financial statements:

The financial statements were approved and authorized for issue by the Board of Directors on March 16, 2021.

(3) New standards, amendments and interpretations adopted:

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2020:

●Amendments to IFRS 3 “Definition of a Business”
●Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”
●Amendments to IAS 1 and IAS 8 “Definition of Material”
●Amendments to IFRS 16 “COVID-19-Related Rent Concessions”
(b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2021, would not have a significant impact on its consolidated financial statements:

●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
－
●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform Phase 2”
(c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The Company does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:

●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

－
●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”
－
●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”
●Annual Improvements to IFRS Standards 2018-2020
●Amendments to IFRS 3 “Reference to the Conceptual Framework”
●Amendments to IAS 1 “Disclosure of Accounting Policies”
●Amendments to IAS 8 “Definition of Accounting Estimates”

(4) Summary of significant accounting policies:

The significant accounting policies presented in the financial statements are summarized follows. The following accounting policies were applied consistently throughout the periods presented in the financial statements.

(a) Statement of compliance

These financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(b) Basis of preparation
(i) Basis of measurement

Except for the following significant accounts, the financial statements have been prepared on a historical cost basis:

1) The defined benefit liabilities are measured at the present value of the defined benefit obligation less the fair value of the plan assets.
(ii) Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the Company operates. The Company’ s financial statements are presented in New Taiwan Dollars, which is the Company’s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

(i) It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
(ii) It holds the asset primarily for the purpose of trading;
(iii) It expects to realize the asset within twelve months after the reporting period; or
(iv) The asset is cash and 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.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(i) It expects to settle the liability in its normal operating cycle;
(ii) It holds the liability primarily for the purpose of trading;
(iii) The liability is due to be settled within twelve months after the reporting period; or
(iv) 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.

(d) Cash and cash equivalents

Cash comprises cash on hand, and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes that should be recognized as cash equivalents.

(e) Financial instruments

Account receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. An accounts receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

A financial asset is classified as measured at amortized cost. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

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

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

2) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘ principal’ is defined as the fair value of the financial assets on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

‧ contingent events that would change the amount or timing of cash flows;
‧ terms that may adjust the contractual coupon rate, including variable rate features;
‧ prepayment and extension features; and
‧ terms that limit the Company’s claim to cash flows from specified assets (e.g. nonrecourse features)
3) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, and other receivables).

The Company measures loss allowances at an amount equal to lifetime ECL, except for the following which are measured as 12-month ECL:

‧ Bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for accounts receivable are always measured at an amount equal to lifetime ECL.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’ s historical experience and informed credit assessment as well as forwardlooking information.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Company assesses whether financial asset carried at amortized cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data:

‧ significant financial difficulty of the borrower or issuer;

‧ a breach of contract such as a default or being more than 90 days past due;

‧ the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
‧ it is probable that the borrower will enter bankruptcy or other financial reorganization; or

‧ the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

4) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(ii) Financial liabilities
1) Financial liabilities

Financial liabilities are classified as measured at amortized cost.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

2) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations has been discharged, cancelled, or expired. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

(f) Subsidiaries

The subsidiaries in which the Company holds controlling interest are accounted for under equity method in the financial statements. Under equity method, the net income, other comprehensive income and equity in the financial statement are the same as those attributable to the owners of parent in the consolidated financial statements.

The changes of equity not losing controlling are regarded as the trading of equity between the Company and the owners.

(g) Property, plant and equipment
(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

(iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

The estimated useful lives of property, plant and equipment are as follows:

Transportation equipment	5 years
Computer equipment	3 years
Office equipment	3～5 years

(h) Leases

(i) Identifying a lease

At inception of a contract, the Company assesses whether a 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, the Company assesses whether:

1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
2) the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
3) the Company has the right to direct the use of the asset throughout the period of use only if either:
the Company has the right to direct how and for what purpose the asset is used throughout the period of use; or
the relevant decisions about how and for what purpose the asset is used are predetermined and:
- － the Company has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

－ the Company designed the asset in a way that predetermines how and for what purpose it will beused throughout the period of use.

When the lease is established or the contract is re-evaluated to determine whether the lease is included in the contract, the Company will allocate the consideration in the contract to individual lease components on a relative individual price basis.

(ii) As a leasee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method 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. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise the following:

－
fixed payments;
－ variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
－ amounts expected to be payable under a residual value guarantee; and
－ payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

－ there is a change in future lease payments arising from the change in an index or rate; or
－ there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or
－ there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
－ there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or
－ there is any lease modifications

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases of building and machinery that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

As a practical expedient, the Company elects not to assess all rent concessions that meets all the conditions as follows are lease modifications or not:

1) the rent concessions occurring as a direct con sequence of the COVID-19 pandemic;
2) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
3) any reduction in lease payments affects only payments originally due on or before 30 June 2021; and
4) there is no substantive change to other terms and conditions of the lease.

In accordance with the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

(i) Impairment of non-derivative financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (CGUs).

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(j) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(iv) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided.

A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(k) Income Taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if the following criteria are met:

(i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or
2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

Although the adoption of consolidated tax return system by the Company, calculation for income tax still abide by the abovementioned accounting principles. Based on the consolidated income tax reported by the Company, it needs to adjust the current tax assets or liabilities for the Company.

(l) Earnings per share

Disclosures are made of basic and diluted earnings per share attributable to ordinary equity holders of the Company. The basic earnings per share are calculated based on the profit attributable to the ordinary shareholders of the Company divided by weighted-average number of ordinary shares outstanding. The diluted earnings per share are calculated based on the profit attributable to the ordinary shareholders of the Company, divided by weighted-average number of ordinary shares outstanding after adjustment for the effects of all potential dilutive ordinary shares, such as employee remuneration.

(m) Operating Segments

Please refer to the consolidated financial report.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the financial statements in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash Cash in banks Cash equivalents Cash and cash equivalents	December 31, 2020 $ 20 204,139 - $ 204,159	December 31, 2019
		70 67,055 109,763
		176,888

(i) The aforesaid cash and cash equivalents were not pledged as collateral.
(ii) Time deposits were reclassified to other current assets.
(iii) Please refer to Note 6(o) for sensitivity analysis and interest rate risk of financial assets and liabilities of the Company.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(b) Other receivables

Other receivables-related party Less: Allowance for impairment	December 31, 2020 $ 10,893 - $ 10,893	December 31, 2019
		11,038 -
		11,038

Please refer to Note 6(o) for other credit risk information.

Equity-accounted investees of the Company as at the reporting date were as follows:

Equity-accounted investees of the Company as at the reporting	date were as follow	s:
Subsidiaries	December 31, 2020 $ 23,575,217	December 31, 2019
		22,735,690

(i) Subsidiaries

Please refer to the consolidated financial statement.

(ii) Guarantee

As of December 31, 2020 and 2019, the investments accounted for using equity method were not pledged as collateral.

(d) Property, plant and equipment

Movements of the cost, depreciation, and impairment of property, plant and equipment of the Company for the years ended December 31, 2020 and 2019, were as follows:

Cost or deemed cost: Balance at January 1, 2020 Additions Disposals Balance at December 31, 2020 Balance at January 1, 2019 Additions Disposals Balance at December 31, 2019 Depreciation and impairment losses: Balance at January 1, 2020 Depreciation Disposals Balance at December 31, 2020	Transportation equipment $ 2,252 1,140 (1,140) $ 2,252 $ 4,432 - (2,180) $ 2,252 $ 517 375 (427) $ 465	Office equipment		Computer equipment 167 - (167) - 167 - - 167 167 - (167) -	Total
		233 - -			2,652 1,140 (1,307) 2,485 4,599 233 (2,180) 2,652 709 426 (594) 541 (Continued)
		233
		- 233 -
		233
		25 51 -
		76

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

Balance at January 1, 2019 Depreciation Disposals Balance at December 31, 2019 Carrying amount Balance at December 31, 2020 Balance at December 31, 2019	Transportation equipment $ 2,322 375 (2,180) $ 517 $ 1,787 $ 1,735	Office equipment		Computer equipment	Total 2,489 400 (2,180) 709 1,944 1,943
		- 25 -		167 - - 167 - -
		25
		157
		208

As of December 31, 2020 and 2019, the property, plant and equipment were not pledged as collateral.

(e) Right-of-use assets

The movements in the cost and depreciation of the leased buildings and transportation equipment were as follows:

Buildings Cost: Balance at January 1, 2020 $ 50,672 Additions 2,232 Disposals - Balance at December 31, 2020 $ 52,904 Balance at of January 1, 2019 $ - Effects of retrospective application 50,672 Balance at December 31, 2019 $ 50,672 Depreciation and impairment losses: Balance at January 1, 2020 $ 11,923 Depreciation 12,146 Disposals - Balance at December 31, 2020 $ 24,069 Balance at of January 1, 2019 $ - Depreciation 11,923 Balance at December 31, 2019 $ 11,923 Carrying amounts: Balance at December 31, 2020 $ 28,835 Balance at December 31, 2019 $ 38,749	Transportation equipment 1,372 1,514 (1,372) 1,514 - 1,372 1,372 823 717 (1,372) 168 - 823 823 1,346 549	Total 52,044 3,746 (1,372) 54,418 - 52,044 52,044 12,746 12,863 (1,372) 24,237 - 12,746 12,746 30,181 39,298

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(f) Bonds payable

On November 5, 2020, the Company's Board of Directors decided to issue the secured ordinary corporate bond amounting to no more than $2 billion, which had been approved by the Taipei Exchange (TPEx) on December 31, 2020. The offering information and main rights and obligations were as follows:

Item 1st secured ordinary corporate bond issued in 2020 Issued amount The bond was issued at $2 billion. Par value Each unit was valued at $1 million. Issued price The bond was issued at par value on the issued date. Tenor The bond issued with maturities of 5 years. The tenor was from January 11, 2021 to January 11, 2026. Coupon rate Fixed rate 0.55%. Repayment The principal of the bond will be repaid on the maturity. Interest Interests was paid once a year at coupon rate since the issued date. Payment Guarantee The corporate bond was guaranteed by Mega International Commercial Bank in accordance with the guaranty deed of appointment.

(g) Lease liabilities

The Company’s lease liabilities were as follows:

Current Non-current For the maturity analysis, please refer to Note 6(o). The amounts recognized in profit or loss were as follows: Interest on lease liabilities Variable lease payments not included in the measurement of lease liabilities		December 31, 2020 $ 13,885 $ 17,786 2020 377 836	December 31, 2019 12,590 28,085 2019
	$ $		494
			766

The amounts recognized in the statement of cash flows for the Company was as follows:

Total cash outflow for leases	2020 $ 13,962	2019
		12,629

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(i) Real estate leases

As of December 31, 2020, the Company leases buildings for its office space, with lease terms of five years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

(ii) Other leases

The Company leases transportation equipment, with lease terms of three years.

In addition, the Company leases office equipment and machinery, with lease terms of one to three years which are short-term or leases of low-value items. The Company has elected not to recognize right-of-use assets and leases liabilities for these leases.

(h) Employee benefits

(i) Defined benefit plan

The present value of the defined benefit obligations and fair value of plan assets were as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability	December 31, 2020 $ 27,015 - $ 27,015	December 31, 2019
		25,288 -
		25,288

1) Composition of plan asset

The Company failed to comply with the Labor Standards Act. to compensate retirement funds.

2) Movements in present value of the defined benefit obligations

The movements in present value of defined benefit obligations for the years ended December 31, 2020 and 2019 were as follows:

Defined benefit obligation, January 1 Current service costs and interest Remeasurement of the net defined benefit liability (asset) －Actuarial gains arose from changes in financial assumption －Experience adjustments Benefits paid by the plan Defined benefit obligation, December 31	2020 $ 25,288 421 131 1,175 - $ 27,015	2019 39,328 719 - (2,862) (11,897) 25,288

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

3) Movements of defined benefit plan assets in fair value

The movements in the fair value of the defined benefit plan assets for the years ended December 31, 2020 and 2019 were $0.

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the years ended December 31, 2020 and 2019 were as follows:

Current service costs Net interest on net defined benefit liability Administrative expenses	2020 $ 155 266 $ 421 $ 421	2019
		288 431
		719
		719

5) Remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income

The Company’s remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income for the years ended December 31, 2020 and 2019 were as follows:

Accumulated amount, January 1 Recognized during the period Accumulated amount, December 31	2020 $ (2,592) 1,306 $ (1,286)	2019
		270 (2,862)
		(2,592)

6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increase rate	December 31, 2020 December 31, 2019 % 1.00 1.00%~1.20 % % 3.00 % 3.00

The Company is expected to make a contribution payment of $0 to the defined benefit plans for the one year period after reporting date.

The weighted-average lifetime of the defined benefit plan is 3 to 14 years.

7) Sensitivity Analysis

When calculating the present value of the defined benefit obligations, the Company uses judgments and estimations to determine the actuarial assumptions, including discount rates and future salary changes, as of the financial statement date. Any changes in the actuarial assumptions may significantly impact the amount of the defined benefit obligations.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

As of December 31, 2020 and 2019, the changes in the principal actuarial assumptions will impact the present value of the defined benefit obligation as follows:

December 31, 2020 Discount (change in 0.25%) Future salary increase (change in 1.00%) December 31, 2019 Discount (change in 0.25%) Future salary increase (change in 1.00%)	Impact on the defined benefit obligations Increase Decrease (0.25)%~(2.19)% 0.25%~2.29% 2.16%~14.86% (2.09)%~(12.93)% (0.33)%~(2.24)% 0.33%~2.34% 2.62%~15.88% (2.50)%~(13.69)%

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions remain constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of the pension liabilities in the balance sheets.

The analysis is performed on the same basis for prior year.

(ii) Defined contribution plan

The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act. Under this defined contribution plan, the Company allocates a fixed amount to the Bureau of the Labor Insurance without additional legal or constructive obligations.

The Company’ s pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $1,797 thousand and $1,688 thousand for the years ended December 31, 2020 and 2019, respectively.

(i) Income Tax

(i) Income tax expenses

Income tax expenses for the years ended December 31, 2020 and 2019 were as follows:

Current income tax expenses Adjustment for prior periods Income tax expenses	2020 $ - (71,483) $ (71,483)	2019
		272,591 791
		273,382

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

Income tax recognized in other comprehensive income (expense) benefit for the years ended December 31, 2020 and 2019 were as follows:

Items that will not be reclassified to profit or loss Remeasurement of defined benefit plans	2020 $ (2,942)	2019
		5,285

The reconciliation of income tax expense (benefit) and income before tax for the years ended December 31, 2020 and 2019 were as follows:

Income before tax Income tax expense at domestic statutory tax rate Investment gain accounted for using equity method Dividend revenue Other Adjustment for prior periods Income basic tax Additional surtax on unappropriated earnings Total	2020 $ 1,467,060 $ 293,412 (311,048) 20,510 (2,874) (71,483) - - $ (71,483)	2019 370,389 74,078 (87,292) 14,863 115 791 112,300 158,527 273,382

(ii) Status of approval of income tax

The Company’ s income tax returns for the year up to 2016 have been assessed by the tax authorities.

(j) Capital and reserves

As of December 31, 2020 and 2019, the total value of nominal authorized ordinary shares amounted to $10,000,000 thousand. Face value of each share is $10, which means in total there were 1,000,000 thousand ordinary shares, of which 823,216 thousand shares, were issued and paid upon issuance.

(i) Capital surplus

The components of the capital surplus were as follows:

Premiums from issuance of share capital Treasury stock transactions Change on subsidiaries equity	December 31, 2020 $ 6,397,913 406,518 9,314 $ 6,813,745	December 31, 2019
		6,397,913 406,518 4
		6,804,435

1) The Company was established on April 8, 2010, it became the holding company of CEC via a share swap. The net equity of CEC’s stock in excess of par value of the Company’s stock was $7,368,919 thousand, this amount was credited to capital surplus. In 2011, the Company used capital surplus to distribute Year 2010 cash dividends for an amount of $504,695 thousand.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

2) In accordance with the R.O.C. Company Act, realized capital surplus can only reclassified as share capital or distributed as cash dividends after offsetting losses. The aforementioned capital surplus includes share premiums and donation gains. In accordance with the Securities Offering and Issuance Guidelines, the amount of capital surplus to increase share capital shall not exceed 10% of the actual share capital amount.

(ii) Retained earnings

In accordance with the Company’s articles of incorporation, net income of the current period should firstly be offset against losses in the previous years and income tax, then with 10% of which be appropriated as legal reserve. The appropriation for legal reserve is discontinued when the balance of the legal reserve equals the total authorized capital. In addition, special reserve will be appropriated base on operating requirements and regulations. The remaining net income plus the undistributed retained earnings shall be distributed according to the distribution plan. The cash dividends shall not be below 20% of the total dividends.

The distribution plan shall issue new shares which should be proposed by the Board of Directors and submitted to the shareholders’ meeting for approval.

1) Legal Reserve

When the Company incurs no loss, it may, pursuant to a resolution by the shareholders’ meeting, as required, distribute its legal reserve by issuing new shares or cash, and only the portion of legal reserve which exceeds 25% of the paid in capital.

2) Special Reserve

The Company applied the exemptions at the first-time adoption of IFRSs and increased its retained earnings by $4,448,666 thousand, which were resulted from unrealized revaluation increments, exchange differences on translation of foreign financial statements, and the fair value of investment property being used as the cost on initial recognitions at the transition date, as well as the amount of $2,592,640 thousand being appropriated to special reserve according to Permit No. 1010012865, issued by the FSC on April 6, 2012. The aforementioned special reserve may be reversed in proportion with the usage, disposal, or reclassification of the related assets, and then, be distributed afterwards. As of December 31, 2020 and 2019, the special reserve related to all IFRSs adjustments amounted to $2,262,233 thousand.

A portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earning distribution. The amount to be reclassified should equal the current-period total net reduction of other stockholders’ equity. Similarly, a portion of unappropriated earnings prior-period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other stockholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other stockholders’ equity shall qualify for additional distributions.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

3) Earnings distribution

Cash dividend amount in the earning distribution for 2019 has been approved in the Board of Directors meeting on April 30, 2020. And the earning distribution for 2018 has been approved in the general shareholders’ meeting on June 12, 2019. The relevant dividend distributions to shareholders were as follows:

2019	2018 Amount per share Total Amount 0.9 740,894 Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Gains (losses) on hedging instruments Total 728,286 (911) 82,334 - - (220,350) 218,603 - 218,603 - (16,378) (16,378) 946,889 (17,289) 64,209 978,564 12,950 462,360 - - (115,887) 5,177 - 5,177 (255,455) - (255,455) - (13,861) (13,861) 728,286 (911) 82,334	2018 Amount per share Total Amount 0.9 740,894 Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Gains (losses) on hedging instruments Total 728,286 (911) 82,334 - - (220,350) 218,603 - 218,603 - (16,378) (16,378) 946,889 (17,289) 64,209 978,564 12,950 462,360 - - (115,887) 5,177 - 5,177 (255,455) - (255,455) - (13,861) (13,861) 728,286 (911) 82,334
Total Amount
411,608
Exchange differences on translation of foreign financial statements $ (645,041) (220,350) - - $ (865,391) $ (529,154) (115,887) - - - $ (645,041)
	728,286	82,334

(k) Earnings per share
(i) Basic earnings per share

The basic earnings per share that are calculated based on net income attributable to ordinary shareholders of the Company for the years ended December 31, 2020 and 2019 are $1,538,543 thousand and $97,007 thousand, respectively; the weighted-average number of ordinary shares outstanding are 823,216 thousand shares. The related calculations are as follows:

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

1) Net income attributable to ordinary shareholders

Net income attributable to ordinary shareholders $ 2) Weighted-average number of ordinary shares Weighted-average number of ordinary shares at December 31	2020 1,538,543 2020 823,216	2019 97,007 2019
		823,216

(ii) Diluted earnings per share

The diluted earnings per share that are calculated based on net income attributable to ordinary shareholders of the Company for the years ended December 31, 2020 and 2019 are $1,538,543 thousand and $97,007 thousand, respectively. After adjusting the effect of dilution of ordinary share, the weighted-average number of ordinary shares outstanding for the years ended December 31, 2020 and 2019 are 823,617 thousand shares and 823,494 thousand shares, respectively. The related calculations are as follows:

1) Net income attributable to ordinary shareholders

2020 Net income attributable to ordinary shareholders $ 1,538,543 2) Weighted-average number of ordinary shares (Diluted) 2020 Weighted-average number of ordinary shares (Basic) 823,216 Effect of employee bonuses 401 Weighted-average number of ordinary shares (Diluted) at December 31 823,617	2019
	97,007
	2019
	823,216 278
	823,494

(l) Revenue from contracts with customers

The Company’s revenues were as follows:

Investment revenues	2020 $ 1,555,241	2019
		436,459

(m) Remuneration for employees and directors

Based on the Company’ s articles of incorporation, remuneration for employees and directors is appropriated at the rate of 0.5% and a rate no more than 0.5%, respectively, of the profit before tax. The Company should make up its prior years’ accumulated deficit before any appropriation of profits. Employees of subsidiaries may also be entitled to the employee remuneration of the Company, which can be settled in the form of cash or stock.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

For the years ended December 31, 2020 and 2019, the Company estimated its employee remuneration to be $7,372 thousand and $1,861 thousand and its director’s remuneration to be $0. The estimated amounts mentioned above are calculated based on income before tax, excluding the remuneration to employees and directors of each period, multiplied it by the percentage of remuneration to employees and directors as specified in the Company’ s articles. These remunerations were expensed under operating expenses during 2020 and 2019. Related information would be available at the Market Observation Post System website. The amounts, as stated in the parent company only financial statements, are identical to those of the actual distributions for the years ended December 31, 2020 and 2019.

(n) Non-operating income and expenses

(i) Interest income

The Company’ s interest income for the years ended December 31, 2020 and 2019 were as follows:

Interest income Bank deposits Other Total Interest income	2020 $ 358 7,844 $ 8,202	2019
		631 8,907
		9,538

(ii) Other gains and losses

The Company’s other gains and losses for the years ended December 31, 2020 and 2019 were as follows:

The Company’s other gains and losses for the years ended D as follows:	ecember 31, 2020	and 2019 were
Gains (losses) on disposals of property, plant and equipment Other	2020 $ (73) 8,863 $ 8,790	2019
		179 -
		179

(iii) Financial costs

The Company’ s financial costs for the years ended December 31, 2020 and 2019 were as follows:

Interest expenses Bank borrowings Lease liabilities	2020 $ 150 377 $ 527	2019
		21 494
		515

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(o) Financial instruments

(i) Credit risk
1) Credit risk exposure

As of December 31, 2020 and 2019, the Company’ s maximum credit risk exposure resulting from un-collectability of accounts receivable from transaction parties and financial losses from offering financial guarantee was as follows:

The book value of financial assets recognized on the balance sheet; and
The financial guarantee provided by the Company amounted to $19,178,990 thousand and $18,749,533 thousand, respectively.
2) Credit risk concentrations: None.
3) Receivables of credit risk

For credit risk exposure of other receivables, please refer to note 6(b).

All of these financial assets are considered to have low risk, and thus the impairment provision recognized during the period was limited to 12 months expected losses. (Regarding how the financial instruments are considered to have low credit risk, please refer to Note 4(e)).

(ii) Liquidity risk

The following tables show the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

December 31, 2020 Non-derivative financial liabilities Other payables Lease liabilities December 31, 2019 Non-derivative financial liabilities Other payables Lease liabilities	Carrying amount $ 24,093 31,671 $ 55,764 $ 17,833 40,675 $ 58,508	Contractual cash flows 24,093 32,052 56,145 17,833 41,368 59,201	Within 1 year 24,093 14,150 38,243 17,833 12,955 30,788	1-5 years - 17,902 17,902 - 28,413 28,413	More than 5 years
					- -
					-
					- -
					-

The Company is not expecting that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(iii) Fair value of financial instruments
1) Categories and fair value of financial instruments

The fair value of financial assets and liabilities, including the information on fair value hierarchy were as follows； however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

	December 31, 2020	December 31, 2020	December 31, 2020
Book Value $ 204,159 10,893 1 $ 215,053 $ 24,093 31,671 $ 55,764		Fair Value
	Level 1 Level 2 Level 3 - - - - - - - - - - - - - - - - - - - - - December 31, 2019			Total
				- - -
				-
				- -
				-

		Fair Value
	Level 1 - - - - - - -	Level 2 - - - - - - -	Level 3 - - - - - - -	Total
				- - -
				-
				- -
				-

2) Transfer between Level 1 and Level 2

There were no level transfers in 2020 and 2019.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(p) Financial risk management
(i) Overview

The Company is exposed to the following risks from its financial instruments:

1) Credit risk
2) Liquidity risk
3) Market risk

According to the exposed risks stated above, the following notes are the objectives, policies and procedures of the risk measurement and management of the Company.

(ii) Risk management framework
1) The daily operation of the Company is affected by multiple financial risks, including credit risk, liquidity risk and market risk. The overall risk control policy focuses on unpredictable events in financial market and seeks reduction of potential adverse impact on financial status and financial performance.
2) The Company’s finance department implements risk management in accordance with the policy approved by the Board of Directors. The Company’s financial department work to identify, assess and minimize various financial risks.
(iii) Credit risk

Credit risk is the risk of financial loss to the Company if counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from other receivables.

1) Investment

The credit risk exposure in the bank deposits, fixed income investments and other financial instruments are measured and monitored by the Company’s finance department. Since the Company’ s transactions are with banks, financial institutions, corporate organizations and government agencies, with good credit ratings there are no noncompliance issues and therefore no significant credit risk.

2) Guarantee

As of December 31, 2020 and 2019, the Company’s guarantee for project construction and bank loans for related parties amounted to $20,803,676 thousand and $22,427,510 thousand, respectively.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(iv) Liquidity risk

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

The Company is an investment holding company established on the basis of share conversion. The assets are long-term investments and the working capital requirements are very low. Therefore, there is no liquidity risk due to the inability to raise funds to meet contractual obligations.

As of December 31, 2020 and 2019, the Company has unused credit limit for $2,100,000 thousand and $100,000 thousand, respectively.

(v) Market risk

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

(q) Capital Management

The Company meets its objectives of managing capital to safeguard the capacity to continue to operate, to continue to provide a return on shareholders, to maintain the interest of other related parties and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to the shareholders, reduce the capital for redistribution to shareholders, issue new shares or sell assets to settle any liabilities.

The Company uses the debt-to-equity ratio to manage capital. This ratio is using the total net debt divided by the total capital. The net debt from the balance sheet is derived from the total liabilities, less, cash and cash equivalents. The total capital and equity includes capital stock, capital surplus, retained earnings and other equity, plus, net debt.

The Company’s debt-to-equity ratio as of December 31, 2020 and 2019 were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total equity Adjusted capital Debt-to-equity	December 31, 2020 $ 82,917 (204,159) (121,242) 23,739,841 $ 23,618,599 % -	December 31, 2019 355,254 (176,888) 178,366 22,609,952 22,788,318 % 0.78

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(r) Non-cash financing activities

The non-cash financing activities of the Company were as follows:

Reconciliation of liabilities arising from financing activities were as follow:

Lease liabilities Lease liabilities	January 1, 2020 $ 40,675 January 1, 2019 $ 52,044	Cash flows (12,749) Cash flows (11,369)	Changes in lease payment 3,745 Changes in lease payment -	December 31, 2020
				31,671
				December 31, 2019
				40,675

(7) Related-party transactions:

(a) Parent Group and Ultimate Controlling Party

Montrion Corporation is both the parent company and the ultimate controlling party of the Company. It owns 50.05% of all shares outstanding of the Company.

(b) Names and relationship with related parties

Names and relationship with related parties
Name of related party	Relationship with the Company
Continental engineering Corp.(CEC)	Subsidiary
Continental Development Corp.(CDC)	Subsidiary
HDEC Corp.(HDEC)	Subsidiary
CEC International Corp.	Subsidiary
CEC International Corp.(India) Private Limited(CICI)	Subsidiary
CEC International Malaysia Sdn. Bhd.	Subsidiary
Continental Engineering Corp. (Hong Kong) Limited(CEC	Subsidiary
HK)
CDC Commercial Development Corp. (CCD)	Subsidiary
MEGA Capital Development Sdn. Bhd.	Subsidiary
Bangsar Rising Sdn. Bhd.	Subsidiary
CDC Asset Management Malaysia Sdn. Bhd.	Subsidiary
CDC US Corp.	Subsidiary
CDC Investment Management LLC	Subsidiary
Trimosa Holdings LLC	Subsidiary
950 Investment LLC	Subsidiary
950 Property LLC	Subsidiary
950 Hotel Property LLC	Subsidiary
950 Retail Property LLC	Subsidiary
HDEC Construction Corp.	Subsidiary

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

Name of related party	Relationship with the Company
North Shore Environment Corp.	Subsidiary
Blue Whale Water Technologies Corp.	Subsidiary
HDEC (Puding) Environment Corp.	Subsidiary
HDEC-CTCI (Linhai) Corp.	Subsidiary
Metropolis Property Management Corporation	Other related party
WFV Corporation	Other related party
Tsai○○	Other related party (Resigned on June
	30, 2020)

(c) Other related party transactions:
(i) Other outstanding balance

The amounts of outstanding balances between the Company and related parties were as follows:

Subsidiary－CEC Subsidiary－HDEC Subsidiary－CDC Subsidiaries Other related parties	Other Receivables	Other Receivables
	December 31, 2020 December 31, 2019 $ 7,599 7,877 2,994 3,161 300 - $ 10,893 11,038 Other Payables	December 31, 2019
		7,877 3,161 -
		11,038
		December 31, 2019
		- 86
		86

(ii) Rental

In April 2018, the Company leased an office building from other related party. A five-year lease contract were signed. The Company applied IFRS 16, with a date of initial application on January 1, 2019. This lease transaction recognized the additional amount of $50,672 thousand of right-of-use assets and lease liabilities.

For the years ended December 31, 2020 and 2019, the Company recognized the amounts of $370 thousand and $484 thousand as interest expenses, and the balance of lease liabilities amounted to $30,323 thousand.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(iii) Endorsements and Guarantees

The Company guarantees for its related parties as follows:

	December 31, 2020	December 31, 2019
		526,043 2,189,684 17,855,733 962,250 893,800
		22,427,510
	2020 13,384 2020 5,178 2,666 7,844 2020 4,787 1,360 2,563 8,710 2020 6,397	2019 20,057 2019 5,896 3,011 8,907 2019 - - - - 2019 6,320
$

$ $


$ $ $

In 2020, the Company sold its transportation equipment to other related party for $640 thousand (excluding tax), and recognized the loss of disposal for $73 thousand. All the payments had been received.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(d) Key Management Personnel Transaction

Key Management Personnel Compensation

Short-term employee benefits	2020 $ 22,986

The Company provides two vehicles for key management personnel at a cost of $2,252 thousand in 2020 and 2019.

(8) Pledged assets: None

(9) Commitments and contingencies:

As of December 31, 2020 and 2019, the Company provided promissory notes for performance guarantee amounted to $52,760.

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(12) Other:

(a) Personnel expenses, depreciation, depletion and amortization are summarized as follows:

		2020	2020	2019	2019	2019
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits
Salary	-	42,605	42,605	-	14,298	14,298
Labor and health insurance	-	3,188	3,188	-	3,093	3,093
Pension	-	2,218	2,218	-	2,407	2,407
Remuneration of directors	-	13,480	13,480	-	13,480	13,480
Others	-	9,000	9,000	-	3,497	3,497
Depreciation	-	13,289	13,289	-	13,146	13,146
Depletion	-	-	-	-	-	-
Amortization	-	-	-	-	-	-

Note: The salary expenses at the company's request to its subsidiaries were accounted under the employee benefits.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

For the years ended December 31, 2020 and 2019, the information on the number of employees and employee benefit expenses of the Company are as follows:

Number of employees Number of directors (non-employee) Average employee benefit expense Average employee salary expense Percentage of average employee salary expense Supervisor's Remuneration

The Company's remuneration policy (including directors, managers and employees) are as follow:

(i) Directors’ remuneration policy:

If the Company turns a profit during the year then 0.5% should be allocated as employee remuneration and no more than 0.5% as directors' remuneration. After taking the level of directors’ involvement in the Company operations as well as domestic/overseas trends in the structure of directors’ compensation into account, the 10th meeting of the 3rd Board of Directors session resolved that directors’ remuneration will be paid as fixed compensation instead. A distinction shall also be made between Independent Directors and ordinary Directors.

All Independent Directors are members of the Company’s Audit Committee and Compensation Committee. Reasonable compensation is paid to Independent Directors based on their level of engagement, the business performance of the Company, linkage to future risks, as well as prevailing industry standards.

(ii) Managers' and employees' remuneration policy:

The Company strives to provide competitive total reward packages. To ensure internal fairness and external competitiveness, salary surveys are conducted each year to serve as a reference for adjustments to compensation and to respond to changes in the external salary market in a timely manner. To ensure equal working rights regardless of gender, there is no gender-based difference in compensation at every level. Gender equality in the workplace is enforced by basing compensation purely on the qualifications required for each position, individual ability and performance. To encourage the continued pursuit of excellence among employees, the Company has drawn up regulations governing performance bonuses. Employees that make a contribution to the Company’s development are rewarded with performance bonuses based on the Company’s and their individual performance for the year. The performance-based bonuses establish a fair and reasonable reward system for encouraging greater employee initiative.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

Management and employee remuneration at the Company consist of fixed compensation and variable bonuses. Fixed compensation is the monthly salary based mainly on factors such as roles, skills, market rates, and company operations. Variable bonuses are based on the Company’ s operating performance for the year, the contributions made by managers and employees during the year, as well as the Company’ s operating risks. The procedure for determining remuneration requires approval through the internal the Level of Authority Table. Management compensation should be submitted to the Remuneration Committee for review before being presented to the Board for approval.

(b) Condensed balance sheet and income statement of significant subsidiaries

(i) CONTINENTAL ENGINEERING CORPRATION.

CONTINENTAL ENGINEERING CORPRATION.

Balance Sheets

December 31, 2020 and 2019

Assets Current assets Fund and long-term investments Property, plant and equipment Right-of-use assets Investment property and other assets Total assets Liabilities and equity Current liabilities Long-term liabilities Other liabilities Total liabilities Capital stock Capital surplus Retained earnings Other equity Total equity Total liabilities and equity	December 31, 2020 $ 9,750,998 1,822,239 1,390,188 152,328 2,334,819 $ 15,450,572 $ 8,798,704 1,850,000 552,770 11,201,474 4,400,621 1,255,082 (1,620,572) 213,967 4,249,098 $ 15,450,572	December 31, 2019 11,712,210 1,742,175 1,322,405 163,033 2,196,311 17,136,134 10,063,322 2,960,000 631,399 13,654,721 4,000,621 1,245,772 (1,891,460) 126,480 3,481,413 17,136,134

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

CONTINENTAL ENGINEERING CORPRATION. Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

Subject 2020 Operating revenues $ 14,019,428 Operating costs (13,179,911) Gross profit from operations 839,517 Operating expenses (674,460) Net operating income 165,057 Non-operating income and expenses 90,144 Income (loss) before tax 255,201 Income tax expenses - Net income (loss) 255,201 Other comprehensive income (loss) 103,174 Total comprehensive income (loss) $ 358,375	2019
	17,116,519 (16,250,969) 865,550 (749,456) 116,094 (1,484,411) (1,368,317) (4,446) (1,372,763) (340,379) (1,713,142)

(ii) CONTINENTAL DEVELOPMENT CORPORATION

CONTINENTAL DEVELOPMENT CORPORATION

Balance Sheets

December 31, 2020 and 2019

Assets Current assets Fund and long-term investments Property, plant and equipment Right-of-use assets Investment property Total assets	December 31, 2020 $ 23,903,965 5,750,421 758 38,626 2,126,422 $ 31,820,192	December 31, 2019
		22,878,425 5,688,132 1,245 58,629 2,135,561
		30,761,992

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

Liabilities and equity Current liabilities Long-term liabilities Other liabilities Total liabilities Capital stock Capital surplus Retained earnings Other equity Total equity Total liabilities and equity	December 31, 2020 $ 14,425,109 1,233,000 50,895 15,709,004 5,907,670 3,253,687 7,099,590 (149,759) 16,111,188 $ 31,820,192	December 31, 2019 11,864,224 2,441,500 68,957 14,374,681 6,001,589 3,253,687 7,176,181 (44,146) 16,387,311 30,761,992

CONTINENTAL DEVELOPMENT CORPORATION Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

Subject 2020 Operating revenues $ 5,723,216 Operating costs (4,142,678) Gross profit from operations 1,580,538 Operating expenses (602,855) Net operating income 977,683 Non-operating income and expenses (22,784) Income before tax 954,899 Income tax expenses (68,624) Net income 886,275 Other comprehensive loss (108,225) Total comprehensive income $ 778,050	2019 4,785,718 (3,657,815) 1,127,903 (472,213) 655,690 905,467 1,561,157 (98,154) 1,463,003 (68,826) 1,394,177

(Continued)

CONTINENTAL HOLDINGS CORPORATION

Notes to the Financial Statements

(13) Other disclosures:

(a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company:

(i) Loans to other parties:

Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:
						(In Thousands of New Taiwan Dollars)
Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for businesses between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral		Maximum amount of loans provided to a single enterprise	Maximum amount of loans
													Item	Value
1	CEC	CEC HK	Other receivables	Yes	6,024	5,938	5,938	5%	2	-	Operation requirements	-	-	-	1,699,639	1,699,639
1	CEC	CIC	Other receivables	Yes	450,300	427,200	299,040	Taifx3+1%	2	-	Operation requirements	-	-	-	1,699,639	1,699,639
1	CEC	ABC	Other receivables	No	90,750	-	-	The same day at a federal rate+0.50%	2	-	Operation requirements	-	Buildings	70,202	1,699,639	1,699,639
2	CDC	BANGSAR	Other receivables	Yes	219,649	207,701	146,859	7.90%	2	-	Land purchases and operation requirements	-	-	-	6,444,475	6,444,475
2	CDC	MEGA	Other receivables	Yes	879,663	831,812	473,355	7.65% ~7.90%	2	-	Land purchases and operation requirements	-	-	-	6,444,475	6,444,475
2	CDC	Grand River D. Limited	Other receivables	No	414,958	414,958	318,528	1.90% ~2.5%	2	-	Land purchases and operation requirements	-	-	-	6,444,475	6,444,475

Note 1: The total amount of loans provided to others is limited to 40% of net equity value. The amount of loans to a single business enterprise is limited to 40% of net equity value. Relevant calculation are as follows:
1) CEC:

Maximum amount of loans is limited to 40% of net equity value: $4,249,098 thousand × 40% ＝ 1,699,639 thousand

Maximum amount of loans provided to a single business enterprise is limited to 40% of net equity value: $4,249,098 thousand × 40% ＝ 1,699,639 thousand

2) CDC:

Maximum amount of loans is limited to 40% of net equity value: $16,111,188 thousand × 40% ＝ 6,444,475 thousand

Maximum amount of loans provided to a single business enterprise is limited to 40% of net equity value: $16,111,188 thousand × 40% ＝ 6,444,475 thousand Note 2: Financing purposes:

1) Business dealings: 1
2) Short-term financing needs: 2

(Continued)

CONTINENTAL HOLDINGS CORPORATION

Notes to the Financial Statements

(ii) Guarantees and endorsements for other parties:

(In Thousands of New Taiwan Dollars)

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Maximum amount of guarantees and endorsements for a specific enterprise	Highest balance of guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements over net worth in the latest financial statements	Maximum amount of guarantees and endorsements	Parent company's endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary's endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	CHC	CICI	2	94,959,364	528,419	487,406	487,406	-	% 2.05	94,959,364	Y	N	N
0	CHC	HDEC	2	94,959,364	2,121,069	1,927,269	1,372,590	-	% 8.12	94,959,364	Y	N	N
0	CHC	CEC HK	2	94,959,364	974,500	-	-	-	% -	94,959,364	Y	N	N
0	CHC	CEC	2	94,959,364	20,586,258	18,389,001	8,948,300	-	% 77.46	94,959,364	Y	N	N
1	CEC	Fu Tsu Construction Co.,Ltd.	5	12,747,294	9,358,000	9,358,000	9,358,000	-	% 200.23	25,494,588	N	N	N
1	CEC	CIC	2	8,498,196	347,875	42,720	-	-	% 1.01	8,498,196	N	N	N
1	CEC	PDC	4	8,498,196	32,000	-	-	-	% -	8,498,196	N	N	N
1	CEC	CEC HK	2	8,498,196	311,840	293,840	-	-	% 6.92	8,498,196	N	N	N
1	CEC	CICI	2 and 5	12,747,294	4,234,695	3,884,790	3,884,790	-	% 91.43	25,494,588	N	N	N
1	CEC	CIMY	2 and 5	12,747,294	3,549,888	-	-	-	% -	25,494,588	N	N	N
2	CDC	CDC US	2	32,222,376	151,250	142,400	135,280	-	% 0.88	32,222,376	N	N	N
2	CDC	CCD	2	32,222,376	1,475,000	1,415,000	1,210,000	-	% 8.78	32,222,376	N	N	N
2	CDC	BANGSAR	2 and 6	32,222,376	186,369	176,231	-	-	% 1.09	32,222,376	N	N	N
2	CDC	MEGA	2 and 6	32,222,376	449,213	422,928	236,056	-	% 2.63	32,222,376	N	N	N
2	CDC	950P	2 and 6	32,222,376	3,795,334	3,573,260	1,641,458	-	% 22.18	32,222,376	N	N	N
2	CDC	Fanlu	6	32,222,376	1,557,000	1,557,000	771,750	-	% 9.66	32,222,376	N	N	N
3	CCD	CDC	3	13,513,540	1,258,200	1,258,200	868,500	1,258,200	% 37.24	13,513,540	N	N	N
3	CCD	CDC	3 and 7	13,513,540	1,215,000	1,215,000	705,935	-	% 35.96	13,513,540	N	N	N
4	HDEC	CEC	4 and 5	26,155,224	6,103,750	6,103,750	6,103,750	-	% 186.69	26,155,224	N	N	N
4	HDEC	AXIOM	5	26,155,224	13,500	-	-	-	% -	26,155,224	N	N	N
4	HDEC	BWC	2 and 6	26,155,224	800,700	800,700	547,740	-	% 24.49	26,155,224	N	N	N
4	HDEC	CTCI-HDEC	6	26,155,224	98,000	98,000	98,000	-	% 3.00	26,155,224	N	N	N
4	HDEC	NSC	2	26,155,224	2,820,000	2,820,000	550,000	-	% 86.25	26,155,224	N	N	N
4	HDEC	LHC	2	26,155,224	5,071	5,071	5,071	-	% 0.16	26,155,224	N	N	N
4	HDEC	LHC	2 and 6	26,155,224	1,485,000	1,485,000	990,000	-	% 45.42	26,155,224	N	N	N
4	HDEC	PDC	2	26,155,224	1,327,000	1,327,000	32,000	-	% 40.59	26,155,224	N	N	N

(Continued)

CONTINENTAL HOLDINGS CORPORATION

Notes to the Financial Statements

Note 1: According to the policy of CHC, the total amount of endorsements/guarantees is limited to four times the net equity value in accordance with the Company’s most recent financial statements: $23,739,841 thousand × 4 ＝ $94,959,364 thousand

The total amount of endorsements/guarantees provided to a single business is limited to four times the net equity value in accordance with the Company’s most recent financial statements: $23,739,841 thousand × 4 ＝ $94,959,364 thousand

According to the policy of CEC, the total amount of endorsements/guarantees is limited to six times the net equity value in accordance with the Company’s most recent financial statements in the event of joint liability in joint ventures with other companies in the same industry: $4,249,098 thousand × 6 ＝ $25,494,588 thousand

The total amount of endorsements/guarantees provided to a single business is limited to three times the net equity value in accordance with the Company’s most recent financial statements: $4,249,098 thousand × 3 ＝ $12,747,294 thousand

According to the policy of CEC, the total amount of endorsements/guarantees is limited to two times the net equity value in accordance with the Company’s most recent financial statements except in the event of joint liability in joint ventures with other companies in the same industry: $4,249,098 thousand × 2 ＝ $8,498,196 thousand

The total amount of endorsements/guarantees provided to a single business is limited to two times the net equity value in accordance with the Company’s most recent financial statements: $4,249,098 thousand × 2 ＝ $8,498,196 thousand

According to the policy of CDC, the total amount of endorsements/guarantees is limited to two times the net equity value in accordance with the Company’s most recent financial statements: $16,111,188 thousand × 2 ＝ $32,222,376 thousand

According to the policy of CCD the total amount of endorsements/guarantees is limited to four times the net equity value in accordance with the Company’s most recent financial statements: $3,378,385 thousand × 4 ＝ $13,513,540 thousand

According to the policy of HDEC, the total amount of endorsements/guarantees is limited to eight times the net equity value in accordance with the Company’s most recent financial statements: $3,269,403 thousand × 8 ＝ $26,155,224 thousand

The total amount of endorsements/guarantees provided to a single business is limited to eight times the net equity value in accordance with the Company’s most recent financial statements: $3,269,403 thousand × 8 ＝ $26,155,224 thousand

Note 2: Seven categories between relationship with the endorser/guarantor:
1) Having business relationship.
2) The endorser / guarantor parent company directly and indirectly holds more than 50% of voting shares of the endorsed / guaranteed subsidiary.
3) The endorser / guarantor subsidiary which directly and indirectly be held more than 50% voting shares by the endorsed / guaranteed parent company.
4) The endorser / guarantor company and the endorsed / guaranteed party both be held more than 90% by the parent company.
5) Company that is mutually protected under contractual requirements based on the needs of the contractor.
6) Company that is endorsed by its shareholders in accordance with its shareholding ratio because of the joint investment relationship.
7) Performance guarantees for presale contracts under the Consumer Protection Act.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(iii) Securities held as of December 31, 2020 (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Name of holder	Category and name of security	Relationship with company	Account name	Ending balance	Ending balance	Ending balance	Ending balance
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
CEC	Evergreen Steel Corp.	-	Non-current financial assets at fair value through other comprehensive income	25,645,907	1,181,250	% 6.42	1,181,250
CEC	Xinrong Enterprise	-	Non-current financial assets at fair value through other comprehensive income	12,256,347	607,523	% 8.45	607,523
CEC	Metro Consulting Service Ltd.	-	Non-current financial assets at fair value through other comprehensive income	300,000	2,306	% 6.00	2,306
CEC	International Property & Finance Co., Ltd.	-	Non-current financial assets at fair value through other comprehensive income	26,301	-	% 1.64	-
CEC	Shin Yu Energy Development Co., Ltd.	-	Non-current financial assets at fair value through other comprehensive income	22,405,297	-	% 9.00	-
CDC	Grand River D. Limited	-	Non-current financial assets at fair value through profit or loss	51,436,803	606,305	% 10.00	606,305

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

									(In Thousands	(In Thousands	(In Thousands	(In Thousands	of New Taiwan Dollars)	of New Taiwan Dollars)
Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginning Balance		Purchases		Sales				Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
CHC	CEC-Common stock	Investment for using equity method	CEC	Subsidiary	400,062,071	6,484,584	40,000,000	400,000	-	-	-	-	440,062,071	6,884,584

(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None

(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Type of property	Transaction date	Acquisition date	Book value	Transaction amount	Amount actually receivable	Gain from disposal	Counter-party	Nature of relationship	Purpose of disposal	Price reference	Other terms
CDC	55 Timeless-Inventory	2020.03.07	N/A	Inventory held-for- sale, not applicable	601,555	601,555	Inventory held-for- sale, not applicable	Natural person	Not related party	Profit	Evaluation report	-
CDC	55 Timeless-Inventory	2020.08.03	N/A	Inventory held-for- sale, not applicable	319,548	12,000	Inventory held-for- sale, not applicable	Far rich international corporation	Not related party	Profit	Evaluation report	-
CDC	La bella vita-Inventory	2020.09.29	N/A	Inventory held-for- sale, not applicable	545,625	545,625	Inventory held-for- sale, not applicable	Razola investment INC. Taiwan branch (B.V.I.)	Not related party	Profit	Evaluation report	-
CDC	55 Timeless-Inventory	2020.11.07	N/A	Inventory held-for- sale, not applicable	348,000	139,200	Inventory held-for- sale, not applicable	China Star Investment Limited	Not related party	Profit	Evaluation report	-
CDC	55 Timeless-Inventory	2020.12.02	N/A	Inventory held-for- sale, not applicable	350,328	140,364	Inventory held-for- sale, not applicable	Natural person	Not related party	Profit	Evaluation report	-

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Related party	Relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
CEC	CDC	Related party of the Company	Construction contract	(1,281,959)	9.14%	Same as those in general transactions	-	-	682,020	17.54%	Note 1
CDC	CEC	Related party of the Company	Construction project	1,281,959	24.89%	Same as those in general transactions	-	-	(682,020)	54.54%
HDEC	LHC	Parent company	Construction contract	(839,368)	66.68%	Same as those in general transactions	-	-	318,105	80.65%	Note 1
LHC	HDEC	Parent company	Construction project	839,368	44.64%	Same as those in general transactions	-	-	(318,105)	54.85%
HDEC	NSC	Parent company	Construction contract	(170,907)	13.58%	Same as those in general transactions	-	-	21,838	5.54%	Note 1
NSC	HDEC	Parent company	Construction project	170,907	41.19%	Same as those in general transactions	-	-	(21,838)	74.30%

Note 1: The Company recognized its construction contract income using the percentage-of-completion method.

Note 2: Aforesaid notes and accounts receivable are including contract assets.

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Counter-party	Relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
CEC	CDC	Related party of the Company	Accounts receivable 682,020	2.02	-	-	316,727	-
HDEC	LHC	Parent company	Accounts receivable 318,105	3.86	-	-	247,666	-

Note 1: Aforesaid notes and accounts receivable are including contract assets.

(ix) Trading in derivative instruments:

As of December 31, 2020, subsidiaries of the Company entered into forward exchange agreement with an amount of USD1,499 thousand, and MYR40,150 thousand and hedging instruments in USD14,582 thousand, JPY3,218 thousand, and EUR825 thousand.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(b) Information on investees:

The following table provides investee’ information as of December 31, 2020 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2020	Balance as of December 31, 2020	Balance as of December 31, 2020	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares (thousands)	Percentage of ownership	Carrying value
CHC	CEC	Taiwan	Comprehensive construction	6,884,584	6,484,584	440,062,071	% 100.00	4,194,626	255,201	309,828	Note 1
CHC	CDC	Taiwan	Housing and building development and lease	6,220,748	6,620,748	590,766,953	% 100.00	16,111,188	886,275	886,275	Note 1
CHC	HDEC	Taiwan	Construction of underground pipeline	2,360,366	2,360,366	197,800,000	% 100.00	3,269,403	359,138	359,138	Note 1
CEC	CICI	India	Construction projects	497,839	497,839	73,981,492	% 100.00	169	47,253	Disclosure not required	-
CEC	CIC	British Virgin Islands	Investment and holding	1,726,329	1,726,329	52,780,940	% 100.00	(294,723)	(45,664)	〃	-
CEC	CIMY	Malaysia	Construction projects	207,177	352,527	26,340,476	% 87.10	30,991	206	〃	-
CEC	CEC HK	Hong Kong	Construction projects	384	384	100,000	% 100.00	(7,550)	(8,155)	〃	-
CIC	NCC	British Virgin Islands	Investment and holding	1,640,006	1,640,006	10,353	% 45.47	-	207,102	〃	-
CDC	BANGSAR	Malaysia	Real estate development	4,444	4,444	600,000	% 60.00	4,476	40	〃	-
CDC	CCD	Taiwan	Housing and building development and lease	976,539	976,539	44,573,940	% 80.65	2,724,668	35,205	〃	-
CDC	Fanlu	Taiwan	Housing and building development and lease	566,646	391,646	56,664,562	% 35.00	513,185	(88,646)	〃	-
CDC	MEGA	Malaysia	Real estate development	7,375	7,375	825,000	% 55.00	22	(1,611)	〃	-
CDC	CDC US	The U.S.	Investment	2,061,080	2,061,080	5,000,000	% 100.00	1,894,210	(10,045)	〃	-
CDC	CDCAM	Malaysia	Construction Management	7,524	7,524	1,000,000	% 100.00	7,555	399	〃	-
HDEC	SDC	Taiwan	Construction projects	49,600	49,600	3,000,000	% 100.00	39,746	3,916	〃	-
HDEC	NSC	Taiwan	Pollution protection and other environmental sanitation	1,112,000	1,112,000	166,000,000	% 100.00	2,813,985	214,667	〃	-
HDEC	BWC	Taiwan	Pollution protection and other environmental sanitation	362,100	362,100	37,740,000	% 51.00	443,833	104,118	〃	-
HDEC	PDC	Taiwan	Pollution protection and other environmental sanitation	340,000	240,000	34,000,000	% 100.00	339,131	(44)	〃	-
HDEC	CTCI-HDEC	Taiwan	Pollution protection and other environmental sanitation	245,000	245,000	24,500,000	% 49.00	232,352	(621)	〃	-
HDEC	LHC	Taiwan	Pollution protection and other environmental sanitation	412,500	247,500	42,165,750	% 55.00	470,048	86,097	〃	-

Note 1: The information on investment income/loss for the year ended December 31, 2020 was derived from the investees’ financial statements audited by the auditors for the same period.

(Continued)

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Wei-Dar Development Co., Ltd.	206,025,200	% 25.02
Tamerton Group Limited	85,672,300	% 10.40
Han-De Construction Co., Ltd.	63,755,667	% 7.74

(14) Segment information:

Please refer to the consolidated financial statements.

CONTINENTAL HOLDINGS CORPORATION

Statement of changes in investments accounted for using equity method

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Beginning	Addi	Decr	ease Amount - 400,000 -	Cash dividends - (654,173) (65,800)	Gain on investment (loss) 309,829 886,275 359,137	Cumulative translation adjustment (121,285) (99,065) -	Unrealized gain or loss on financial instrument 218,603 - -	Actuarial on losses defined benefit plans 15,687 (2,613) -	Unrealized gain or loss on cash flow hedge (9,831) (6,547) -	Ending B	Market Net Asse
Shares (in thousand)	Shares (in thousand) 40,000 30,608 20,700	Shares (in thousand) - 40,000 -								Shares (in thousand) 440,062 590,767 197,800	Unit price 9.66 27.27 16.53
400,062 600,159 177,100
			400,000	(719,973)	1,555,241	(220,350)	218,603	13,074	(16,378)

CONTINENTAL HOLDINGS CORPORATION

Statement of operating revenues

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item		Description	Amount
Investment revenues		$	1,555,241
	Statement of	administrative expenses

Item Salary and wages expenses Rent expense Supplies expense Traveling expense Postage expense Repair and maintenance expense Advertisement expense Insurance expense Taxes expense Depreciation expense Meal expense Employee benefit Training expense Building management fee Computer maintenance fee Service fee Directors’ remuneration expense Other expenses (include utilities expense)	Description Amount $ 59,395 836 514 138 460 168 809 4,214 52 13,289 729 386 206 2,443 334 11,255 6,280 3,138 $ 104,646

AI assistant

CHC — Annual Report 2020

52369_rns_2020-11-05_b2bf4648-aa1f-4628-952f-5f6f5033b251.pdf

CONTINENTAL HOLDINGS CORPORATION

Table of contents

KPMG

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

Other Matter

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

Auditors’ Responsibilities for the Audit of the Financial Statements

KPMG

Notes to Readers

(English Translation of Parent Company Only Financial Statements and Report Originally Issued in Chinese) CONTINENTAL HOLDINGS CORPORATION

Balance Sheets

December 31, 2020 and 2019

Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) CONTINENTAL HOLDINGS CORPORATION

Statements of Changes in Equity

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) CONTINENTAL HOLDINGS CORPORATION

Statements of Cash Flows

For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars)

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) CONTINENTAL HOLDINGS CORPORATION

Notes to the Financial Statements

For the years ended December 31, 2020 and 2019

(1) Company history

(2) Approval date and procedures of the financial statements:

(3) New standards, amendments and interpretations adopted:

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(4) Summary of significant accounting policies:

(a) Statement of compliance

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(d) Cash and cash equivalents

(e) Financial instruments

(i) Financial assets

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(f) Subsidiaries

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(ii) Subsequent expenditure

(h) Leases

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(ii) As a leasee

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(j) Employee benefits

(i) Defined contribution plans

(ii) Defined benefit plans

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(k) Income Taxes

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(l) Earnings per share

(m) Operating Segments

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

(6) Explanation of significant accounts:

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(b) Other receivables

(i) Subsidiaries

(ii) Guarantee

(d) Property, plant and equipment

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(e) Right-of-use assets

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(f) Bonds payable

(g) Lease liabilities

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(i) Real estate leases

(ii) Other leases

(h) Employee benefits

(i) Defined benefit plan

2) Movements in present value of the defined benefit obligations

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

4) Expenses recognized in profit or loss

CONTINENTAL HOLDINGS CORPORATION Notes to the Financial Statements

(ii) Defined contribution plan

CHC Annual Report 2020