FEDS — Annual Report 2020

Nov 13, 2020

Far Eastern Department Stores, Ltd.

Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Far Eastern Department Stores, Ltd.

Opinion

We have audited the accompanying financial statements of Far Eastern Department Stores, Ltd. (the “Company”), which comprise the balance sheets as of December 31, 2020 and 2019, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2020. 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.

• 1 -

The key audit matter identified in the Company’s financial statements for the year ended December 31, 2020 is stated as follows:

Fair Value Evaluation of Investment Properties

As of December 31, 2020, the carrying amount of investment properties was NT$9,023,303 thousand, accounting for 11% of the total assets and is material to the financial statements. The Company’s investment properties are subsequently measured using the fair value model. In the process of fair value assessment, valuation technique and inputs require consideration of the future economic benefits of investment properties to estimate the discounted cash flows. Future cash flows are extrapolated using the existing lease contracts of the Company and market rentals.

Since cash flow forecasts are subject to economic conditions which have a high level of measurement uncertainty, we have identified the evaluation of investment properties’ fair value as a key audit matter. Please refer to Notes 4(i), 5 and 14 to the accompanying financial statements for the relevant detailed information.

The main audit procedures that we performed in respect of the fair value of investment properties were as follows:

1. We evaluated the expertise, competency and independence of external valuation specialists appointed by management. We verified the qualification of valuation specialists to ensure that their objectivity and scope of work were not influenced or restricted, and confirmed that the methodology adopted was in compliance with relevant regulations.

2. We reviewed significant lease contracts to ensure the accuracy of fundamental information for cash flow forecasts.

3. We assessed the reasonableness of the assumptions and methods used in the valuation.

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 the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of 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.

• 2 -

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

1. 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.

2. 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.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. 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.

5. 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.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the 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.

• 3 -

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 for the year ended December 31, 2020 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 audits resulting in this independent auditors’ report are Shu-Chuan Yeh and Ming-Hsing Cho.

Deloitte & Touche Taipei, Taiwan Republic of China March 23, 2021

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

• 4 -

FAR EASTERN DEPARTMENT STORES, LTD.

BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at amortized cost - current (Note 8) Notes receivable (Note 9) Trade receivables (Note 9) Trade receivables from related parties (Notes 9 and 28) Other receivables (Notes 9 and 28) Inventories (Note 10) Prepayments (Note 28) Other current assets (Note 16) Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Notes 7 and 29) Investments accounted for using the equity method (Notes 11, 19 and 29) Property, plant and equipment (Notes 12, 29 and 30) Right-of-use assets (Note 13) Investment properties (Notes 14 and 29) Intangible assets (Note 15) Deferred tax assets (Note 23) Net defined benefit assets (Note 19) Other non-current assets (Notes 16 and 28) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 17 and 29) Short-term bills payable (Note 17) Contract liabilities - current (Note 21) Trade payables Trade payables to related parties (Note 28) Other payables (Notes 18 and 28) Current tax liabilities (Note 23) Lease liabilities - current (Note 13) Advance receipts (Note 28) Current portion of long-term borrowings (Notes 17 and 29) Other current liabilities (Notes 18 and 28) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 17 and 29) Deferred tax liabilities (Note 23) Lease liabilities - non-current (Note 13) Other non-current liabilities (Notes 18 and 28) Total non-current liabilities Total liabilities EQUITY Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity TOTAL		2020 Amount % $ 812,706 1 25,424 - - - 246,868 - 75,243 - 255,872 1 353,129 1 247,525 - 60,981 - 2,077,748 3 2,845,620 4 20,054,557 26 18,176,915 23 24,929,817 32 9,023,303 11 69,628 - 80,218 - 205,863 - 562,571 1 75,948,492 97 $ 78,026,240 100 $ 4,650,000 6 2,449,280 3 3,202,942 4 3,822,290 5 49,983 - 1,827,132 3 111,095 - 941,237 1 243,905 - 299,933 1 128,603 - 17,726,400 23 12,999,828 16 2,183,467 3 13,844,089 18 78,536 - 29,105,920 37 46,832,320 60 14,169,406 18 3,338,791 4 3,424,615 4 2,709,263 4 2,695,084 3 8,828,962 11 4,953,871 7 (97,110) - 31,193,920 40 $ 78,026,240 100		2019
				Amount % $ 538,361 1 25,271 - 3 - 345,747 1 79,534 - 279,279 - 512,976 1 215,686 - 64,807 - 2,061,664 3 3,101,049 4 19,821,401 25 18,724,837 24 25,836,205 32 8,997,056 11 55,892 - 70,344 - 234,035 - 536,733 1 77,377,552 97 $ 79,439,216 100 $ 5,000,000 6 2,499,312 3 3,024,526 4 3,612,036 5 56,943 - 2,075,491 3 161,580 - 929,821 1 193,734 - 2,500,000 3 154,488 - 20,207,931 25 11,799,757 15 2,142,641 3 14,397,967 18 100,514 - 28,440,879 36 48,648,810 61 14,169,406 18 3,327,466 4 3,298,695 4 2,865,351 4 1,931,429 2 8,095,475 10 5,295,169 7 (97,110) - 30,790,406 39 $ 79,439,216 100

The accompanying notes are an integral part of the financial statements.

• 5 -

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 21 and 28) OPERATING COSTS (Notes 10, 22 and 28) GROSS PROFIT OPERATING EXPENSES (Notes 22 and 28) Selling and marketing expenses General and administrative expenses Expected credit loss Total operating expenses OPERATING PROFIT NON-OPERATING INCOME AND EXPENSES Interest income (Note 22) Other income (Note 22) Other gains and losses (Notes 22 and 28) Finance costs (Notes 22 and 28) Share of profit of subsidiaries and associates accounted for using the equity method Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 23) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Notes 19, 20 and 23) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized (loss) gain on investments in equity instruments at fair value through other comprehensive income		2020 Amount % $ 11,037,055 100 4,405,831 40 6,631,224 60 355,331 3 4,288,347 39 801 - 4,644,479 42 1,986,745 18 933 - 181,578 2 65,005 - (466,377) (4) 462,395 4 243,534 2 2,230,279 20 291,140 2 1,939,139 18 (71,053) (1) (255,429) (2)		2019
				Amount % $ 10,614,744 100 4,168,762 39 6,445,982 61 378,762 4 3,941,540 37 513 - 4,320,815 41 2,125,167 20 242 - 177,242 2 (28,844) - (377,869) (4) 298,615 3 69,386 1 2,194,553 21 412,710 4 1,781,843 17 288,102 3 746,698 7 (Continued)

• 6 -

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Share of other comprehensive (loss) income of subsidiaries and associates accounted for using the equity method Income tax relating to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Share of other comprehensive income (loss) of subsidiaries and associates accounted for using the equity method Other comprehensive (loss) income for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE, NT$ (Note 24) Basic Diluted		2020 Amount % $ (109,861) (1) 14,211 - (422,132) (4) 8,734 - (413,398) (4) $ 1,525,741 14 $ 1.38 $ 1.37		2019
				Amount % $ 307,216 3 (57,620) (1) 1,284,396 12 (22,191) - 1,262,205 12 $ 3,044,048 29 $ 1.26 $ 1.26
		$		$

The accompanying notes are an integral part of the financial statements.

(Concluded)

• 7 -

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2019 Effect of retrospective application and retrospective restatement BALANCE AT JANUARY 1, 2019 AS RESTATED Special reserve under Rule No. 1030006415 issued by the FSC Appropriation of 2018 earnings Legal reserve Special reserve Cash dividends Net profit for the year ended December 31, 2019 Other comprehensive income (loss) for the year ended December 31, 2019, net of income tax Total comprehensive income (loss) for the year ended December 31, 2019 Adjustments resulting from investments in subsidiaries and associates accounted for using the equity method BALANCE AT DECEMBER 31, 2019 Appropriation of 2019 earnings Legal reserve Special reserve Cash dividends Net profit for the year ended December 31, 2020 Other comprehensive income (loss) for the year ended December 31, 2020, net of income tax Total comprehensive income (loss) for the year ended December 31, 2020 Adjustments resulting from investments in associates accounted for using the equity method Disposal of investments in equity instruments designated as at fair value through other comprehensive income by associates BALANCE AT DECEMBER 31, 2020	Share Capital Capital Surplus (Note 20) (Note 20) $ 14,169,406 $ 3,315,420 - - 14,169,406 3,315,420 - - - - - - - - - - - - - - - - - 12,046 14,169,406 3,327,466 - - - - - - - - - - - - - - - 11,325 - - $ 14,169,406 $ 3,338,791		Retained Earnings (Notes 19, 20 and 23) Unappropriated Legal Reserve Special Reserve Earnings $ 3,166,880 $ 2,656,286 $ 2,081,772 - - (585,446) 3,166,880 2,656,286 1,496,326 - 135,735 (135,735) 131,815 - (131,815 ) - 73,330 (73,330 ) - - (1,204,400) 131,815 73,330 (1,409,545) - - 1,781,843 - - 198,288 - - 1,980,131 - - 252 3,298,695 2,865,351 1,931,429 125,920 - (125,920 ) - (156,088 ) 156,088 - - (1,133,552) 125,920 (156,088) (1,103,384) - - 1,939,139 - - (71,064) - - 1,868,075 - - - - - (1,036) $ 3,424,615 $ 2,709,263 $ 2,695,084	Other Equity (Note 20) Unrealized Gain Exchange (Loss) on Financial Differences on Assets at Fair Translating the Value Through Financial Other Statements of Comprehensive Gain on Property Treasury Shares Foreign Operations Income Revaluation (Note 20) $ 90,654 $ 1,969,628 $ 2,170,970 $ (97,110 ) - - - - 90,654 1,969,628 2,170,970 (97,110) - - - - - - - - - - - - - - - - - - - - - - - - (25,329) 1,089,246 - - (25,329) 1,089,246 - - - - - - 65,325 3,058,874 2,170,970 (97,110) - - - - - - - - - - - - - - - - - - - - 3,225 (345,559) - - 3,225 (345,559) - - - - - - - 1,036 - - $ 68,550 $ 2,714,351 $ 2,170,970 $ (97,110)	Total Equity $ 29,523,906 (585,446) 28,938,460 - - - (1,204,400) (1,204,400) 1,781,843 1,262,205 3,044,048 12,298 30,790,406 - - (1,133,552) (1,133,552) 1,939,139 (413,398) 1,525,741 11,325 - $ 31,193,920

The accompanying notes are an integral part of the financial statements.

• 8 -

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss recognized on receivables Amortization of prepayments Finance costs Share of profit of subsidiaries and associates accounted for using the equity method Interest income Dividend income Loss on disposal of property, plant and equipment Loss on disposal of investment properties Impairment loss recognized on intangible assets (Gain) loss on changes in fair value of investment properties Concession on lease liabilities Net changes in operating assets and liabilities Notes receivable Trade receivables Trade receivables from related parties Other receivables Inventories Prepayments Other current assets Contract liabilities Notes payable and trade payables Trade payables to related parties Other payables Advance receipts Other current liabilities Net defined benefit liabilities Cash generated from operations Interest paid Interest received Dividends received Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at amortized cost Proceeds from sale of financial assets at amortized cost Acquisition of investments accounted for using the equity method Payments for property, plant and equipment	2020 $ 2,230,279 2,034,760 50,182 801 1,576 466,377 (462,395) (933) (181,578) 5,157 116 6,307 (19,544) (113,828) 3 98,078 4,291 23,407 159,847 (31,839) 3,826 178,416 210,254 (6,960) 31,563 145,551 (25,885) (42,881) 4,764,948 (445,758) 933 321,015 (296,462) 4,344,676 (25,424) 25,271 - (760,367)	2019 $ 2,194,553 1,654,458 26,757 513 - 377,869 (298,615) (242) (177,242) 6,229 247 - 75,802 - 137 363,880 (9,482) 58,349 (134,788) 22,134 (51,027) 176,694 (1,266,804) (19,205) 51,696 89,656 (412) (34,934) 3,106,223 (427,523) 242 332,030 (257,461) 2,753,511 (25,271) 25,495 (400,000) (986,290) (Continued)

• 9 -

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Proceeds from disposal of property, plant and equipment Payments for investment properties Increase in other non-current assets Acquisition of right-of-use assets Payments for intangible assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from short-term bills payable Repayments of short-term bills payable Proceeds from long-term borrowings Repayments of long-term borrowings Repayment of the principal portion of lease liabilities (Decrease) increase in other non-current liabilities Dividends paid Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF THE YEAR	2020 $ 484 (6,819) (55,669) (97,504) (27,035) (947,063) 73,550,000 (73,900,000) 26,283,806 (26,333,838) 111,250,004 (112,250,000) (570,201) (21,978) (1,131,061) (3,123,268) 274,345 538,361 $ 812,706	2019 $ 39 (8,369) (1,421,459) - (26,080) (2,841,935) 77,850,000 (79,560,000) 22,093,578 (21,893,298) 65,199,757 (62,000,000) (620,491) 13,791 (1,202,733) (119,396) (207,820) 746,181 $ 538,361

The accompanying notes are an integral part of the financial statements.

(Concluded)

• 10 -

NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

FAR EASTERN DEPARTMENT STORES, LTD.

1. GENERAL INFORMATION

Far Eastern Department Stores, Ltd. (the “Company” or “FEDS”) was incorporated in the Republic of China (ROC) in August 31, 1967 and operates a nationwide chain of department stores. The Company’s shares have been listed on the Taiwan Stock Exchange since October 11, 1978.

The financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors on March 23, 2021.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

• a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Company’s accounting policies:

Amendment to IFRS 16 “Covid-19 - Related Rent Concessions”

The Company elected to apply the practical expedient provided in the amendment to IFRS 16 with respect to rent concessions negotiated with the lessor as a direct consequence of the COVID-19. The related accounting policies are stated in Note 4. Prior to the application of the amendment, the Company shall determine whether or not the abovementioned rent concessions need to be accounted for as lease modifications.

The Company applied the amendment from January 1, 2020. Because the abovementioned rent concessions affect only in 2020, retrospective application of the amendment has no impact on the retained earnings as of January 1, 2020.

• b. The IFRSs endorsed by the FSC for application starting from 2021

Effective Date New IFRSs Announced by IASB Amendments to IFRS 4 “Extension of the Temporary Exemption from Effective immediately upon Applying IFRS 9” promulgation by the IASB Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 January 1, 2021 “Interest Rate Benchmark Reform - Phase 2”

• 11 -

As of the date the financial statements were authorized for issue, the Company assesses the possible impacts that the application of the aforementioned amendments and the related amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers will have on the Company’s financial position and financial performance and will disclose these other impacts when the assessment is completed.

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs “Annual Improvements to IFRS Standards 2018-2020” Amendments to IFRS 3 “Reference to the Conceptual Framework” 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” Amendments to IFRS 17 Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”

Effective Date Announced by IASB (Note 1)

January 1, 2022 (Note 2) January 1, 2022 (Note 3) To be determined by IASB January 1, 2023 (Note 6) January 1, 2023 January 1, 2023 January 1, 2023 (Note 7) January 1, 2023 (Note 8) January 1, 2022 (Note 4) January 1, 2022 (Note 5)

• Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

• Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

• Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.

• Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

• Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

• Note 6: On March 17, 2020, IASB made the decision to postpone the effective date of IFRS 17 to March 1, 2023. However, the amendments to IFRS 17 were announced formally in the third quarter of 2020.

• Note 7: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• 12 -

• Note 8: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

• 1) Amendments to IAS 1 "Classification of Liabilities as Current or Non-current"

The amendments are to clarify that when determining whether a liability is classified as non-current, it should be assessed whether at the end of the reporting period the Company has the right to defer the settlement period for at least 12 months after the reporting period. If the Company has the right at the end of the reporting period, regardless of whether the Company expects to exercise the right, the liability is classified as non-current. The amendments also clarify that if the Company must comply with certain conditions before it possesses the right to defer settlement of liabilities, the Company must comply with these conditions by the end of the reporting period, despite the fact that the lender may perform a test on the Company to check if it has complied with these conditions at a later date.

The amendments stipulate that for the purpose of classification of liabilities, the aforementioned settlement refers to the elimination of liabilities by transferring cash, other economic resources or equity instruments of the Company to the counterparty. However, the terms of the liability that could, at the option of the counterparty, result in its settlement by the transfer of the Company’s equity instruments (and if the option is separately recognized as an equity in accordance with IAS 32 "Financial Instruments: Presentation"), such terms do not affect the classification of the liability.

• 2) Amendments to IAS 1 “Disclosure of Accounting Policies”

The amendment stipulates that an entity should comply with the definition of material to determine the disclosure of material accounting policies. An accounting policy is material if information about that accounting policy could reasonably be expected to influence decisions that the primary users with general purposes make on the basis of those financial statements. The amendments clarify that:

• Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed.

• Accounting policy information may be material because of the nature of the transactions, other events or conditions, even if the amounts are immaterial.

• Not all accounting policy information related to material transactions, other events or conditions are themselves material.

Further, the amendments also cite examples to illustrate that accounting policy information may be considered material if it relates to material transactions, other events or conditions and that the accounting policies:

• a) Have changed during the period, giving rise to a material change in the information of the financial statements;

• b) Were chosen from alternatives permitted by IFRS Standards;

• c) Were developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS Standard that specifically applies;

• d) Relate to an area for which the entity is required to make significant judgments and assumptions; or

• e) Relate to complex accounting and users of the entity’s financial statements would otherwise not understand the relating transactions, other events or conditions.

• 13 -

• 3) Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments stipulate that accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty.” The accounting policies may require such items to be measured at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, an entity develops an accounting estimate to achieve the objective set out by the accounting policies. The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do not result in the correction of prior period errors.

As of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (the “Regulations”).

• b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments and investment properties which are measured at fair value, and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of the plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• 3) Level 3 inputs are unobservable inputs for the asset or liability.

When preparing the Company’s financial statements, the Company used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owner of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatment between the parent company only basis and consolidated basis were made to investments accounted for using the equity method, share of profit or loss of subsidiaries and associates accounted for using the equity method, share of other comprehensive income of subsidiaries and associates accounted for using the equity method and related equity items, as appropriate, in the Company’s financial statements.

• 14 -

• c. Classification of current and non-current assets and liabilities

Current assets include:

• Assets held primarily for the purpose of trading;

• Assets expected to be realized within 12 months after the reporting period; and

• Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

• Liabilities held primarily for the purpose of trading;

• Liabilities due to be settled within 12 months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue; and

• Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 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.

Assets and liabilities that are not classified as current are classified as non-current.

• d. Foreign currencies

In preparing the Company’s financial statements, transactions in currencies other than Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purposes of presenting the Company’s financial statements, the assets and liabilities of the Company’s foreign operations (including the subsidiaries and associates in other countries or subsidiaries which use currencies that are different from the Company) are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognized in other comprehensive income.

• e. Inventories

Inventories are stated at the lower cost or net realizable value, using the retail method. Inventories are recorded at the weighted-average cost on the balance sheet date. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale.

• f. Investments in subsidiaries

The Company uses the equity method of accounting to recognize its investments in subsidiaries. A subsidiary is an entity that is controlled by the Company.

• 15 -

Under the equity method, an investment in a subsidiary is initially recognized at cost and is adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. In addition, the Company recognizes the changes in the Company’s share of equity of subsidiaries attributable to the Company.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. Any difference between the carrying amounts of the Company’s interests and the fair value of the consideration paid or received is recognized directly in equity.

When the Company’s share of losses of a subsidiary equals or exceeds its interest in that subsidiary (which includes any carrying amount of the investment in the subsidiary accounted for using the equity method and long-term interests that, in substance for part of the Company’s net investment in the subsidiary), the proportionate share of losses is recognized.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the fair value of the net identifiable assets and liabilities over the cost of the acquisition is recognized immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

Profits and losses from downstream transactions with a subsidiary are eliminated in full in the Company’s financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized in the parent company only financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

• g. Investments in associates

An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. The Company uses the equity method of accounting to recognize its investments in associates.

Under the equity method, an investment in an associate is initially recognized at cost and is adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate. The Company also recognizes the changes in the Company’s share of the equity of associates attributable to the Company.

• 16 -

When the Company subscribes for additional new shares of the associate, at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus. If the Company’s ownership interest is reduced due to the additional subscription of new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

When the Company’s share of losses of an associate equals or exceeds its interest in that associate (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the associate), the Company discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Company discontinues the use of the equity method from the date on which its investment in the associate ceases. Any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on the disposal of the associate. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities.

When the Company transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Company’s financial statements only to the extent of interests in the associate that are not related to the Company.

• h. Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are measured at cost, less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such properties are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

The depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

On derecognize the asset of property, plant and equipment, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss for the year.

• 17 -

• i. Investment properties

Investment properties are properties held to earn long-term rental profit and/or capital gain (including properties that are qualified as investment properties and under construction). Investment properties also include land in which the intended use has yet to be determined.

Freehold investment properties are measured initially at cost, including transaction costs. All investment properties are subsequently measured using the fair value model. Changes in the fair value of investment properties are included in profit or loss for the period in which they arise.

Investment properties under construction, of which the fair value is not reliably measurable, are measured at cost less accumulated impairment loss until such time as either the fair value becomes reliably measurable or construction is completed (whichever comes earlier).

For a transfer of classification from investment properties to property, plant and equipment, the deemed cost of an item of property for subsequent accounting is its fair value at the commencement at the commencement of owner-occupation.

For a transfer of classification from property, plant and equipment to investment property at the end of owner-occupation, any difference between the fair value of the property at the transfer date and its previous carrying amount is recognized in other comprehensive income.

To derecognize an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss for the year.

j. Intangible assets

• 1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis during their expected useful lives. The estimated useful lives, residual values, and amortization method are reviewed at the end of each reporting period with the effect of any changes in estimates accounted for on a prospective basis.

• 2) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss for the year.

• k. Impairment of property, plant and equipment, right-of-use assets and intangible assets

At the end of each reporting period, the Company reviews for any indications of impairment loss pertaining to the property, plant and equipment, right-of-use assets and intangible assets. If any such indication exists, the recoverable amount of the asset is estimated. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. The impairment loss is recognized in profit or loss.

• 18 -

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount (deducting amortization or depreciation) that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

l. Financial instruments

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

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in debt instruments and equity instruments at FVTOCI.

• i. Financial assets at amortized cost

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

• i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost (including cash, cash equivalents, accounts receivable at amortized cost and refundable deposits) are measured at the carrying amount determined by the effective interest method less any impairment loss. Any exchange differences are recognized in profit or loss. Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset.

ii. Investments in equity instruments at FVTOCI

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

• 19 -

• b) Impairment of financial assets and contract assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

The Company always recognizes lifetime expected credit losses (ECLs) for trade receivables. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

Without taking the collateral held into consideration, pertinent to the objectives of the credit risk management, the Company determines that a default has occurred for a financial asset when internal or external information indicates that the borrower can no longer repay the liability, unless there is reasonable and substantiated information to recognize the default later.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account.

• c) Derecognition of financial assets

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

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

• 2) Financial liabilities

• a) Subsequent measurement

All financial liabilities are measured at amortized cost using the effective interest method.

• b) Derecognition of financial liabilities

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

m. Revenue recognition

The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

• 20 -

Revenue from the sale of goods are recognized as revenue when the goods are shipped or delivered because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently.

When the other party participates in providing goods or services to customers, the Company obtains control of the specified goods or services before they are transferred to the customers and, therefore, is acting as a principal in the transaction. On the contrary, the other party is acting as an agent. As the principal, the total amount of the consideration that is expected to be obtained in exchange for the transfer of goods or services is recognized as income. As an agent, the amount of any fees or commissions that the other party expected to obtain in exchange for the provision of goods or services, recognized as income. The charge or commission of the Company may be the net amount of the consideration. The income retained by the Company in exchange for goods or services is the amount retained after payment to the other party.

The Company offers award credits which can be used for future purchases when the customer shops (customer loyalty program). The award credits provide a material right to the customer. The transaction price allocated to the award credits is recognized as a contract liability when collected and will be recognized as revenue when the award credits are redeemed or have expired.

n. Leases

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

1) The Company as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

Variable lease payments that do not depend on an index or a rate are recognized as income in the periods in which they are incurred.

When a lease includes both land and building elements, the Company assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the lessee. The lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of a contract. If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with its lease classification. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases; in which case, the entire lease is classified as an operating lease.

2) The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

• 21 -

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the balance sheets.

The Company and the lessor conducted rent negotiations directly related to COVID-19 and adjusted the rent due before June 30, 2021, resulting in a decrease in rent. These negotiations did not significantly change other lease terms. The Company chooses to adopt a practical and expedient approach to all rent negotiations that meet the aforementioned conditions. It does not assess whether the negotiation is a lease modification, but recognizes a reduction of lease payment in the profit or loss when the concession event or situation occurs (accounted for as a deduction in variable lease payments) and reduces the lease liability accordingly.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

o. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than that which is stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

• p. Retirement benefit costs

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered services entitling them to the contributions.

• 22 -

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expenses when the plan amendment or curtailment occurs. Remeasurement, comprising actuarial gains and losses (the effect of the changes to the asset ceiling) and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income (loss) is reflected immediately in retained earnings and will not be reclassified subsequently to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Company’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

• q. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

• 1) Current tax

The current payable (recoverable) income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date in the country where the Company operates and generates taxable income (loss).

According to the Income Tax Law of the ROC, the recognition of annual undistributed surplus earnings that are taxable, is subject to the resolution passed in the shareholders’ meeting.

Adjustments of prior years’ tax liabilities are added to or deducted from the current period’s income tax expenses.

• 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these investments are recognized only to the extent that it is probable that there will be sufficient taxable profits against which to use the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

• 23 -

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. For investment properties that are measured using the fair value model, the carrying amounts of such assets are presumed to be recovered entirely through their sale.

• 3) Current and deferred tax for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income, in which case, the current and deferred taxes are also recognized in other comprehensive income, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The Company incorporates the economic impact caused by COVID-19 into the consideration of significant accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

Key Sources of Estimation Uncertainty

Fair value measurement and valuation process of the investment properties

Third-party qualified valuers were engaged to perform the fair value evaluation of the Company’s investment properties using the appropriate valuation techniques for fair value measurements.

The valuers of the Company determined the appropriate inputs by referring to the analyses of the financial position and the operation results of investees, recent transaction prices and prices of the same equity instruments not quoted in active markets in the vicinity of the Company’s investment properties. If there are changes in the actual inputs in the future which differ from expectation, the fair value might vary accordingly. The Company updates inputs every quarter to confirm the appropriateness of the fair value measurement.

Information on the valuation techniques and inputs used in determining the fair value of investment properties is disclosed in Note 14.

• 24 -

6. CASH AND CASH EQUIVALENTS

Cash on hand and revolving funds Checking accounts and demand deposits Cash equivalents Triple stimulus vouchers		December 31	December 31
		2020 $ 36,524 762,252 13,930 $ 812,706	2019 $ 35,642 502,719 - $ 538,361

The market rate intervals of cash in bank at the end of the reporting period are as follows:

Deposits in bank	December 31
	2020 2019 0.001%-0.050% 0.001%-0.330%

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT

Investments in equity instruments at FVTOCI Domestic investments Listed shares and emerging market shares Unlisted shares		December 31	December 31
		2020 $ 2,737,990 107,630 $ 2,845,620	2019 $ 2,993,461 107,588 $ 3,101,049

• a. These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Company’s strategy of holding these investments for long-term purposes.

• b. Refer to Note 29 for information relating to investments in equity instruments at FVTOCI pledged as security.

8. FINANCIAL ASSETS AT AMORTIZED COST - CURRENT

Time deposits with original maturities of more than 3 months Gross carrying amount Less: Allowance for impairment loss Amortized cost		December	31
		2020 $ 25,424 $ 25,424 - $ 25,424	2019 $ 25,271 $ 25,271 - $ 25,271

• 25 -

• a. The credit risk of financial instruments such as bank deposits is measured and monitored by the accounting department. The counterparties are creditworthy banks and financial institutions with good credit rating.

• b. As of December 31, 2020, and 2019, the interest rates for financial assets at amortized cost were 0.37% and 0.67% as at the end of the reporting period, respectively.

9. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES (INCLUDING RELATED PARTIES)

• a. Notes receivable

==> picture [462 x 99] intentionally omitted <==

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

December 31
2020 2019
Operating $ - $ 3
Non-operating 1,794 1,794
Less: Allowance for impairment loss (1,794) (1,794)
$ - $ 3
----- End of picture text -----

December 31, 2020 Not Past Due Less than 30 Days 31 to 60 Days 61 to 90 Days Over 90 Days Expected credit loss rate 0% 0% 0% 4.35% 100% Gross carrying amount $ - $ - $ - $ - $ 1,794 Loss allowance (Lifetime ECLs) - - - - (1,794) Amortized cost $ - $ - $ - $ - $ - December 31, 2019	Total $ 1,794 (1,794) $ -

Not Past Due Less than 30 Days 31 to 60 Days 61 to 90 Days Over 90 Days Expected credit loss rate 0% 0% 0% 4.35% 100% Gross carrying amount $ - $ 3 $ - $ - $ 1,794 Loss allowance (Lifetime ECLs) - - - - (1,794) Amortized cost $ - $ 3 $ - $ - $ -	Total $ 1,797 (1,794) $ 3

• b. Trade receivables

At amortized cost Trade receivables Less: Allowance for impairment loss		December 31	December 31
		2020 $ 323,449 (1,338) $ 322,111	2019 $ 425,818 (537) $ 425,281

• 26 -

The Company’s trade receivables pertained to revenue on credit cards and gift certificates. The average credit period for revenue from credit cards and gift certificates was 2 to 3 days and 15 days, respectively.

In determining the recoverability of a trade receivable, the Company considered any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period. Allowances for impairment loss were recognized against trade receivables based on estimated irrecoverable amounts determined with reference to past default experience of the counterparties and an analysis of their current financial position.

The Company measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date. As the Company’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Company’s different customer base.

The Company writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of trade receivables based on the Company’s provision matrix.

December 31, 2020

Not Past Due Expected credit loss rate 0% Gross carrying amount $ 320,554 Loss allowance (Lifetime ECLs) - Amortized cost $ 320,554 December 31, 2019 Not Past Due Expected credit loss rate 0% Gross carrying amount $ 421,913 Loss allowance (Lifetime ECLs) - Amortized cost $ 421,913	Less than 30 Days 31 to 60 Days 61 to 90 Days Over 90 Days 0% 0% 0% 100% $ 1,557 $ - $ - $ 1,338 - - - (1,338) $ 1,557 $ - $ - $ - Less than 30 Days 31 to 60 Days 61 to 90 Days Over 90 Days 0% 0% 0% 100% $ 1,793 $ 1,575 $ - $ 537 - - - (537) $ 1,793 $ 1,575 $ - $ -	Total $ 323,449 (1,338) $ 322,111 Total $ 425,818 (537) $ 425,281

• 27 -

The movements of the loss allowance of trade receivables were as follows:

Balance at January 1 Add: Remeasurement of loss allowance Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 537 801 $ 1,338	2019 $ 24 513 $ 537

c. Other receivables

At amortized cost Other receivables Less: Allowance for impairment loss		December 31	December 31
		2020 $ 277,279 (21,407) $ 255,872	2019 $ 300,686 (21,407) $ 279,279

The following table details the loss allowance of trade receivables based on the Company’s provision matrix.

December 31, 2020

Not Past Due Less than 30 Days 31 to 60 Days 61 to 90 Days Over 90 Days Expected credit loss rate 0% 0% 0% 0% 100% Gross carrying amount $ 255,872 $ - $ - $ - $ 21,407 Loss allowance (Lifetime ECLs) - - - - (21,407) Amortized cost $ 255,872 $ - $ - $ - $ - December 31, 2019 Not Past Due Less than 30 Days 31 to 60 Days 61 to 90 Days Over 90 Days Expected credit loss rate 0% 0% 0% 0% 100% Gross carrying amount $ 279,279 $ - $ - $ - $ 21,407 Loss allowance (Lifetime ECLs) - - - - (21,407) Amortized cost $ 279,279 $ - $ - $ - $ -

Total $ 277,279 (21,407) $ 255,872 Total $ 300,686 (21,407) $ 279,279

As of December 31, 2020, and 2019, there were no impairment loss on trade receivables; therefore, no loss allowance was recognized by management.

• 28 -

10. INVENTORIES

Merchandise The cost of goods sold includes: Cost of goods sold			December 31	December 31
		2020 $ 353,129 2020 $ 4,185,447		2019 $ 512,976 2019 $ 3,962,329

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates a. Investments in subsidiaries Bai Yang Investment Co., Ltd. (BYIC) Pacific Liu Tong Investment Co., Ltd. (PLTI) Bai Ding Investment Co., Ltd. (BDIC) FEDS Development Ltd. (FEDS Development) Far Eastern Ai Mai Co., Ltd. (AIMAI) Ya Tung Department Stores, Ltd. (YTDS) Yu Ming Advertising Agency Co., Ltd. (YMAC) Far Eastern CitySuper Co., Ltd (FECS) Far Eastern Hon Li Do Co., Ltd. (FEHLD) Asians Merchandise Company (AMC) Less: Ordinary shares held by subsidiary and reclassified from long-term investments to treasury shares of BDIC Less: The differences of accounting treatments from the consolidated financial statements (Note)		December 31	December 31
		2020 2019 $ 17,950,074 $ 17,712,547 2,104,483 2,108,854 $ 20,054,557 $ 19,821,401 December 31
		2020 $ 9,108,584 4,024,497 2,418,928 1,427,279 1,222,011 85,689 118,535 68,097 13,283 4,367 18,491,270 97,110 18,394,160 444,086 $ 17,950,074	2019 $ 9,104,890 3,781,245 2,392,241 1,409,738 1,287,839 131,722 119,878 36,407 12,529 4,495 18,280,984 97,110 18,183,874 471,327 $ 17,712,547

• 29 -

Note: Some of the Company’s leased assets from subsidiaries or investment properties which were leased to subsidiaries were evaluated under fair value method, but these investment properties were recognized as property, plant and equipment in the consolidated financial statements. In order to agree with the amount of net profit for the year, other comprehensive (loss) income and equity attributable to the owner of the Company in the consolidated financial statements, the difference of the accounting treatment between the Company only basis and the consolidated basis was adjusted under the heading of investments accounted for using the equity method, the share of (loss) profit of subsidiaries and associates was accounted for using the equity method, and the share of other comprehensive (loss) income of subsidiaries and associates was accounted for using the equity method and related equity items.

BYIC PLTI BDIC FEDS Development AIMAI YTDS YMAC FECS FEHLD AMC	Proportion of Ownership and Voting Rights
	**December 31 **
	2020 2019 100% 100% 35% 35% 67% 67% 54% 54% 100% 100% 100% 100% 100% 100% 96% 96% 56% 56% 100% 100%

Refer to Note 31 for the details of the subsidiaries indirectly held by the Company.

The Company has 35% equity interest in PLTI. However, the proportion of the combined equity of PLTI held by the Company and its subsidiaries is 56.6%. The Company thus recognizes this investee as a subsidiary.

In December 2019, YTDS undertook a capital reduction to offset the deficit, which resulted in a decrease of 20,000 thousand shares of the Company’s shareholding in YTDS that corresponded to the existing ownership percentage. YTDS issued shares for an increase in cash capital, and the Company acquired 40,000 thousand shares at $10 per share, totaling $400,000 thousand.

The investments in subsidiaries accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2020 and 2019 were based on the subsidiaries’ financial statements audited for the same years by other auditors.

b. Investments in associates

Associates that are not individually material		**December 31 **	**December 31 **
		2020 $ 2,104,483	2019 $ 2,108,854

• 30 -

Aggregate information of associates that are not individually material are summarized as follows:

The Company’s share of Net (loss) profit for the year Other comprehensive income (loss) Total comprehensive income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ (10,253) 23,686 $ 13,433	2019 $ 10,029 (3,862) $ 6,167

The combined shareholding of the Company and its sub-subsidiary, Pacific Sogo Department Stores Co., Ltd., in Ding Ding Integrated Marketing Service Co., Ltd. and Yuan Hsin Digital Payment Co., Ltd., amounted to 20%. As such, these investments were accounted for using the equity method.

In October 2020 and July 2019, Yuan Hsin Digital Payment Co., Ltd. undertook a capital reduction to offset the deficit, which resulted in a decrease of the Company’s shareholding in Yuan Hsin Digital Payment Co., Ltd. that corresponded to the existing ownership percentage by 3,425 thousand shares and 3,662 thousand shares, respectively. In December 2020, Yuan Hsin Digital Payment Co., Ltd. issued shares for an increase in cash capital. The Company did not subscribe for additional new shares of Yuan Hsin Digital Payment Co., Ltd. As such, the shareholding percentage of the Company decreased from 15% to 11%.

The annual general shareholders’ meeting of Oriental Securities Corporation in 2020 passed a resolution for the capitalization of retained earnings. The Company acquired 1,683 thousand shares according to its existing ownership percentage.

The investments in associates accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2020 and 2019 were based on the associates’ financial statements audited for the same years by other auditors.

Refer to Note 29 for the information on the carrying amounts of investments in associates accounted for using the equity method that were pledged as security.

12. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2020 Additions Disposals Reclassifications Balance at December 31, 2020 Accumulated depreciation and impairment Balance at January 1, 2020 Disposals Depreciation expense Balance at December 31, 2020 Carrying amount at December 31, 2020 Cost Balance at January 1, 2019 Adjustments on initial application of IFRS 16 Balance at January 1, 2019 (restated) Additions Disposals Transfer from investment Properties Transfer to investment properties Reclassifications Balance at December 31, 2019	Land $ 8,038,597 - - - $ 8,038,597 $ - - - $ - $ 8,038,597 $ 8,038,597 - 8,038,597 - - - - - $ 8,038,597	Buildings $ 9,370,709 - - - $ 9,370,709 $ (2,418,480 ) - (161,727) $ (2,580,207) $ 6,790,502 $ 9,370,709 - 9,370,709 - - - - - $ 9,370,709	Buildings and Facilities $ 6,961,248 74,682 (21,895 ) 14,258 $ 7,028,293 $ (4,540,269 ) 20,362 (439,307) $ (4,959,214) $ 2,069,079 $ 5,827,917 - 5,827,917 180,829 (13,367 ) 58 - 965,811 $ 6,961,248	Decorative Facilities $ 6,519,897 302,513 (65,154 ) - $ 6,757,256 $ (5,411,333 ) 61,753 (319,912) $ (5,669,492) $ 1,087,764 $ 5,814,641 - 5,814,641 285,826 (38,823 ) - - 458,253 $ 6,519,897	Equipment Held Under Finance Leases a $ - - - - $ - $ - - - $ - $ - $ 4,696,820 (4,696,820) - - - - - - $ -	Plant, Transportation nd Miscellaneous Equipment $ 718,766 45,477 (17,830 ) 5,471 $ 751,884 $ (514,298 ) 16,943 (63,556) $ (560,911) $ 190,973 $ 623,158 - 623,158 71,827 (19,005 ) - - 42,786 $ 718,766	Construction in Progress Total $ 31,609,217 422,672 (104,879 ) 19,729 $ 31,946,739 $ (12,884,380 ) 99,058 (984,502) $ (13,769,824) $ - $ 18,176,915 $ 3,886,679 $ 38,258,521 (3,623,507) (8,320,327) 263,172 29,938,194 1,195,044 1,733,526 - (71,195 ) - 58 (2,154 ) (2,154 ) (1,456,062) 10,788 $ - $ 31,609,217 (Continued)

• 31 -

Accumulated depreciation and impairment Balance at January 1, 2019 Adjustments on initial application of IFRS 16 Balance at January 1, 2019 (restated) Disposals Depreciation expense Balance at December 31, 2019 Carrying amount at December 31, 2019	Land $ - - - - - $ - $ 8,038,597	Buildings $ (2,256,753 ) - (2,256,753 ) - (161,727) $ (2,418,480) $ 6,952,229	Buildings and Facilities $ (4,132,951 ) - (4,132,951 ) 11,677 (418,995) $ (4,540,269) $ 2,420,979	Decorative Facilities E $ (5,219,117 ) - (5,219,117 ) 34,404 (226,620) $ (5,411,333) $ 1,108,564	quipment Held Under Finance Leases a $ (853,509 ) 853,509 - - - $ - $ -	Plant, Transportation nd Miscellaneous Equipment $ (482,124 ) - (482,124 ) 18,490 (50,664) $ (514,298) $ 204,468	Construction in Progress Total $ (12,944,454 ) 853,509 (12,090,945 ) 64,571 (858,006) $ (12,884,380) $ - $ 18,724,837 (Concluded)

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings 55 years Buildings and facilities 8-15 years Decorative facilities 6 years Plant, transportation, and miscellaneous equipment 5-8 years

Some of the investment properties were transferred to property, plant and equipment at their fair value as the use of these assets had been changed to self-use for the year ended December 31, 2019.

Refer to Note 29 for the information on the carrying amounts of property, plant and equipment that were pledged as security.

13. LEASE ARRANGEMENTS

• a. Right-of-use assets

Carrying amount Land Buildings Plant, transportation, and miscellaneous equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Land Buildings Plant, transportation, and miscellaneous equipment		**December 31 **	**December 31 **
	2020 2019 $ 7,866,434 $ 8,038,783 17,058,198 17,797,153 5,185 269 $ 24,929,817 $ 25,836,205 For the Year Ended December 31
		2020 $ 239,070 $ 275,545 869,492 421 $ 1,145,458	2019 $ 2,094,106 $ 152,646 727,524 54 $ 880,224

• 32 -

b. Lease liabilities

Carrying amounts Current Non-current Range of discount rate for lease liabilities was as follows:		December 31	December 31
		2020 $ 941,237 $ 13,844,089	2019 $ 929,821 $ 14,397,967

Land Buildings Plant, transportation, and miscellaneous equipment	December 31
	2020 2019 0.88%-1.72% 1.17%-1.72% 0.86%-1.72% 0.90%-1.72% 0.88%-0.92% 0.92%

c. Material lease-in activities and terms

The Company operates a retail business of leasing property and equipment for its operating activities with lease term of 3 to 50 years. In addition to fixed payments, some lease contracts also indicate variable lease payments with different conditions. Some stores are leased by acquiring land use rights to build buildings and transfer buildings to lessor unconditionally at the end of the lease term.

In 2020, due to the COVID-19 pandemic that severely affected the global market economy, the Company entered into lease negotiations with some of the lessors. The lessors agreed to reduce the rents from January 1 to December 31, 2020. In 2020, the Company recognized the aforementioned rent reductions of $113,828 thousand (as a deduction in operating expenses).

d. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Expenses relating to variable lease payments not included in the measurement of lease liabilities Total cash outflow for leases	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 4,233 $ 2,428 $ (98,714) $ (850,006)	2019 $ 5,113 $ 3,866 $ 19,065 $ (1,784,930)

The Company has elected to apply the recognition exemption for short-term leases and low-value assets leases and, thus, did not recognize right-of-use assets and lease liabilities for these leases.

• 33 -

14. INVESTMENT PROPERTIES

Balance at January 1, 2020 Additions Disposals Reclassification Gain (loss) on fair value changes of investment properties Balance at December 31, 2020 Balance at January 1, 2019 Transfers to property, plant and equipment Additions Disposals Reclassification Loss on changes in the fair value of investment properties Balance at December 31, 2019	Land Buildings and Facilities Investment Properties under Construction $ 6,216,334 $ 2,770,598 $ 10,124 - (116) - - 2,689 4,130 - - - 33,697 (14,153) - $ 6,250,031 $ 2,759,018 $ 14,254 $ 6,249,972 $ 2,812,668 $ - - (58) - - (247) - - 399 7,970 - - 2,154 (33,638) (42,164) - $ 6,216,334 $ 2,770,598 $ 10,124	Total $ 8,997,056 (116) 6,819 - 19,544 $ 9,023,303 $ 9,062,640 (58) (247) 8,369 2,154 (75,802) $ 8,997,056

Some of the Company’s investment properties had been leased out under operating leases with lease term of 2-20 years, and the lease contracts include lessee’s buy-back agreement.

Except for minimum lease payments, some of the Company’s lease contracts stipulate that the Company should adjust rentals on the basis of the consumer price index per annum.

The maturity analysis of lease payments receivable under operating leases of investment properties at December 31, 2020 is as follows:

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 onwards		December 31	December 31
		2020 $ 731,686 680,939 619,301 564,989 549,951 4,157,164 $ 7,304,030	2019 $ 746,079 640,033 597,037 535,271 527,070 4,674,233 $ 7,719,723

The fair values of the investment properties as of December 31, 2020 and 2019 were based on the valuations carried out at those dates, on a recurring basis by independent qualified professional valuers, Hong-Kai Chang, Yi-Chih Chang, Yu-Fen Yeh and Kuang-Ping Tai from Savills Real Estate Appraiser Office, a member of certified ROC real estate appraisers.

Except for undeveloped lands, the fair values of investment properties were measured using the income approach and the significant assumptions used are the increase in the estimated future net cash inflows, or the decrease in discount rates that would result in increases in the fair values.

• 34 -

Expected future cash inflows Expected future cash outflows Expected future cash inflows, net Discount rate		**December 31 **	**December 31 **
		2020 $ 21,079,871 2,485,443 $ 18,594,428 4.095%	2019 $ 21,531,652 2,443,572 $ 19,088,080 4.345%

The market rentals in the area where the investment properties are located were between $1 thousand and $2 thousand per ping (i.e., per 3.3 square meters). The market rentals for comparable properties were between $1 thousand and $4 thousand per ping (i.e., per 3.3 square meters).

The expected future cash inflows generated by investment properties referred to rental income, interest income on rental deposits and disposal value. The rental income was extrapolated using the existing lease contracts of the Company and comparative market rentals covering 5-10 years, taking into account the annual rental growth rate. The interest income on rental deposits was extrapolated by the one-year average deposit interest rate, and the disposal value was determined by the direct capitalization method under the income approach. The expected future cash outflows on investment properties included expenditures such as property taxes, insurance premiums, management fees, maintenance costs and replacement allowances. These expenditures were extrapolated on the basis of the current level of expenditures, taking into account the future adjustments to the government-announced land value, the tax rate promulgated under the Construction Cost Index and the House Tax Act and construction costs.

The discount rate was determined with reference to the interest rate for two-year time deposits of Chunghwa Post Co., Ltd. plus 0.75% and the risk premium of investment properties of 2.5%.

Part of the land owned by the Company which is located in the east of Taiwan was not developed yet. The fair value of the undeveloped land area was measured by the land development analysis approach. The increase in the estimated total sales price, the increase in the rate of return, or the decrease in the overall capital interest rate would result in increase in the fair value. The significant assumptions used are as follows:

Estimated total sales price Rate of return Overall capital interest rate		**December 31 **	**December 31 **
		2020 $ 1,647,633 18%-20% 1.34%-2.72%	2019 $ 1,511,974 18%-20% 1.56%-3.08%

The total sales price is estimated on the basis of the most effective use of land or property available for sale after development is completed, taking into account the related regulations, optimism of domestic macroeconomic prospects, local land use, and comparable market prices.

Refer to Note 29 for the information on the carrying amounts of investment properties pledged as collateral for borrowings.

• 35 -

15. INTANGIBLE ASSETS

Cost Balance at January 1, 2020 Additions Reclassifications Balance at December 31, 2020 Accumulated amortization and impairment Balance at January 1, 2020 Impairment loss Amortization expenses Balance at December 31, 2020 Carrying amount at December 31, 2020 Cost Balance at January 1, 2019 Additions Reclassifications Balance at December 31, 2019 Accumulated amortization and impairment Balance at January 1, 2019 Amortization expenses Balance at December 31, 2019 Carrying amount at December 31, 2019

Computer Software $ 142,301 27,035 43,190 $ 212,526 $ (86,409) (6,307) (50,182) $ (142,898) $ 69,628 $ 109,859 26,080 6,362 $ 142,301 $ (59,652) (26,757) $ (86,409) $ 55,892

The following intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Computer software 3-5 years

• 36 -

16. OTHER ASSETS

Refundable deposits Prepayment for equipment Leases incentives Others Current Non-current		December 31	December 31
		2020 $ 160,077 39,461 356,009 68,005 $ 623,552 $ 60,981 562,571 $ 623,552	2019 $ 159,027 67,716 309,990 64,807 $ 601,540 $ 64,807 536,733 $ 601,540

17. BORROWINGS

a. Short-term borrowings

Credit loans Secured loans (Note 29) Interest rate intervals are as follows Credit loans Secured loans b. Short-term bills payable Commercial papers Less: Unamortized discount on bills payable		December 31	December 31
		2020 2019 $ 3,950,000 $ 4,300,000 700,000 700,000 $ 4,650,000 $ 5,000,000 0.81%-0.87% 0.90%-1.00% 0.86% 0.92% December 31
		2020 $ 2,450,000 720 $ 2,449,280	2019 $ 2,500,000 688 $ 2,499,312

• 37 -

Outstanding short-term bills payable are as follows:

December 31, 2020

Promissory Institution Commercial papers Mega Bills Finance Shanghai Bank China Bills Finance Grand Finance International Bills Finance Taiwan Cooperative Bills Finance Taiwan Bills Finance Ta Ching Bill Finance December 31, 2019 Promissory Institution Commercial papers Mega Bills Finance Shanghai Bank China Bills Finance Grand Finance International Bills Finance Taiwan Cooperative Bills Finance Taiwan Bills Finance Ta Ching Bill Finance	Nominal Amount $ 500,000 500,000 350,000 300,000 200,000 200,000 200,000 200,000 $ 2,450,000 Nominal Amount $ 600,000 500,000 350,000 300,000 200,000 200,000 200,000 150,000 $ 2,500,000	Discount Amount $ 207 196 57 35 65 14 99 47 $ 720 Discount Amount $ 127 251 64 113 29 74 5 25 $ 688	Carrying Amount Interest Rate Collateral $ 499,793 0.62% - 499,804 0.332% - 349,943 0.25% - 299,965 0.65% - 199,935 0.51% - 199,986 0.70% - 199,901 0.60% - 199,953 0.61% - $ 2,449,280 Carrying Amount Interest Rate Collateral $ 599,873 0.73% - 499,749 0.482% - 349,936 0.50% - 299,887 0.90% - 199,971 0.70% - 199,926 0.83% - 199,995 0.70% - 149,975 0.74% - $ 2,499,312	Carrying Amount of Collateral $ - - - - - - - -
				$ -
				Carrying Amount of Collateral $ - - - - - - - -
				$ -

c. Long-term borrowings

Secured loans Credit loans Revolving commercial papers Less: Current portion Long-term borrowings Interest rate intervals are as follows: Secured loans Credit loans Revolving commercial papers		December 31
	2020 2019 $ 10,400,000 $ 10,100,000 2,000,000 3,000,000 899,761 1,199,757 13,299,761 14,299,757 299,933 2,500,000 $ 12,999,828 $ 11,799,757 0.860%-0.880% 0.900%-1.720% 0.860% 0.900%-1.200% 0.281%-0.402% 0.399%-0.429%

• 38 -

18. OTHER LIABILITIES

Other payables Payables for salaries and bonus Payables for purchase of equipment Payables for remuneration of directors Payables for compensation of employees Others Other liabilities Deposits received Others Current Other payables Other liabilities Non-current Other liabilities		December 31	December 31
		2020 $ 328,122 636,325 173,544 77,093 612,048 $ 1,827,132 $ 78,536 128,603 $ 207,139 $ 1,827,132 $ 128,603 $ 78,536	2019 $ 316,121 939,356 162,342 76,257 581,415 $ 2,075,491 $ 100,514 154,488 $ 255,002 $ 2,075,491 $ 154,488 $ 100,514

19. RETIREMENT BENEFIT PLANS

a. Defined contribution plan

The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plan

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contribute amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the following year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the following year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy.

• 39 -

The amounts included in the balance sheets in respect of the Company’s defined benefit plan are as follows:

Present value of the defined benefit obligation Fair value of the plan assets Net defined benefit assets Movements in net defined benefit liabilities are as follows: Present Value of the Defined Benefit Obligation Balance at January 1, 2019 $ 667,816 Service cost Current service cost 5,581 Net interest expense (income) 7,513 Recognized in profit or loss 13,094 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial loss - changes in demographic assumptions 10,011 Actuarial loss - changes in financial assumptions 25,992 Actuarial loss - experience adjustments 8,496 Recognized in other comprehensive income 44,499 Contributions from the employer - Benefits paid (34,840) Company account paid (35) Balance at December 31, 2019 690,534 Service cost Current service cost 5,044 Net interest expense (income) 5,179 Recognized in profit or loss 10,223 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial loss - changes in demographic assumptions 2,462 Actuarial loss - changes in financial assumptions 16,849 Actuarial loss - experience adjustments 11,630 Recognized in other comprehensive income 30,941 Contributions from the employer Benefits paid (40,176) Balance at December 31, 2020 $ 691,522		December 31
	2020 2019 $ 691,522 $ 690,534 (897,385) (924,569) $ (205,863) $ (234,035) Fair Value of the Plan Assets Net Defined Benefit Liabilities $ (578,815) $ 89,001 - 5,581 (6,544) 969 (6,544) 6,550 (332,601) (332,601) - 10,011 - 25,992 - 8,496 (332,601) (288,102) (41,449) (41,449) 34,840 - - (35) (924,569) (234,035) - 5,044 (6,955) (1,776) (6,955) 3,268 40,112 40,112 - 2,462 - 16,849 - 11,630 40,112 71,053 (46,149) (46,149) 40,176 - $ (897,385) $ (205,863)

• 40 -

Through the defined benefit plan under the Labor Standards Law, the Company is exposed to the following risks:

• 1) Investment risk: The plan assets are invested in equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

• 2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments of the plan assets.

• 3) Salary risk: The present value of the defined benefit obligation is calculated with reference to the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations are as follows:

Discount rates Expected rates of salary increase	December 31
	2020 2019 0.500% 0.750% 2.000% 2.000%

If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease		**December **	31
		2020 $ (16,862) $ 17,485 $ 16,923 $ (16,409)	2019 $ (17,601) $ 18,275 $ 17,730 $ (17,168)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
		2020 $ 5,356 9.9 years	2019 $ 5,417 10.4 years

• 41 -

20. EQUITY

• a. Share capital

Ordinary shares

Shares authorized (in thousands) Shares authorized Shares issued and fully paid (in thousands) Shares issued		**December 31 **	**December 31 **
		2020 1,750,000 $ 17,500,000 1,416,941 $ 14,169,406	2019 1,750,000 $ 17,500,000 1,416,941 $ 14,169,406

Fully paid ordinary shares, which have a par value of $10, are entitled to one vote and a right to receive dividends per share.

• b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note) Issuance in excess of ordinary shares Treasury share transactions May only be used to offset a deficit Changes in percentage of ownership interest in subsidiaries and associates		December 31	December 31
		2020 $ 2,142,074 1,173,346 23,371 $ 3,338,791	2019 $ 2,142,074 1,173,346 12,046 $ 3,327,466

Note: Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year).

c. Retained earnings and dividend policy

According to the Articles of Incorporation, where the Company makes profit in a fiscal year, the profit shall be first utilized to make its business income tax payments and offset deficits. From any remaining profit, out of the profit after tax for the current period plus other profit items adjusted to the current year’s undistributed earnings other than profit after tax for the period, 10% will be appropriated as a legal reserve. After appropriating to the special reserve as required by government regulations, the remaining amount, along with any prior years’ undistributed earnings, may be utilized for earnings distribution in the form of dividend based on shareholding percentage. However, the Company may retain a certain portion depending on the operating needs. In case of a capital increase during the year, dividends appropriated to new shareholders are subject to the resolution passed in the shareholders’ meeting. For policies of compensation of employees and remuneration of directors stipulated by the Articles of Incorporation, please see Note 22(i).

• 42 -

The Company’s distribution of dividends would be in consideration of economic conditions, tax obligations, and operating requirements for cash. For an orderly system of dividend distribution, the dividends are distributed in accordance with the Articles of Incorporation. In addition, improvements of the financial structure and support for investment, capacity expansion or other major capital expenditures. The cash dividends to be distributed should not be below 50% than the current year’s post-tax net profit deduction, offsetting losses of previous years, the statutory surplus reserve and the special surplus reserve, except for the improvement of financial structure and the transfer of funds, capacity expansion or other major capital expenditures. The cash dividends to be distributed should not be below 10% of the total cash and share dividends for the current accounting year.

Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Under Order No. 1010012865, Order No. 1010047490 and Order No. 1030006415 issued by the FSC and the directive titled Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs, the Company should appropriate or reverse to a special reserve.

The appropriations of earnings for 2019 and 2018, which were approved in the shareholders’ meetings on June 24, 2020 and June 25, 2019, respectively, are as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 125,920 $ (156,088) $ 1,133,552 $ 0.80	2018 $ 131,815 $ 73,330 $ 1,204,400 $ 0.85

The appropriation of earnings for 2020 was proposed by the board of directors on March 23, 2021. The appropriations and dividends per share are as follows:

	For the Year	For the Year
		Ended
	December 31,
		2020
Legal reserve Special reserve	$ $	186,704 (89,694)
Cash dividends	$	1,558,635
Cash dividends per share (NT$)	$	1.10

The appropriation of earnings for 2020 is subject to the resolution of the shareholders in their meeting to be held on June 29, 2021.

• 43 -

d. Special reserve

Beginning at January 1 Initial application of IFRS 16 Appropriation in respect of net increases in the fair value of investment properties Reversals of special reserve Reversal of fair value of investment properties Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 2,865,351 - - (156,088) $ 2,709,263	2019 $ 2,656,286 135,735 73,330 - $ 2,865,351

On the initial application of the fair value model to investment properties and on the initial application of IFRS 16, property leasehold interests which were previously accounted for as operating leases under IAS 17 are recognized as investment properties and measured at fair value, the Company appropriated for a special reserve at the amount that was the same as the net increase arising from fair value measurement and transferred to retained earnings. The additional special reserve should be appropriated for subsequent net increases in fair value. The amount appropriated may be reversed to the extent that the cumulative net increases in fair value decrease or on the disposal of investment properties.

e. Other equity items

1) Exchange differences on translating the financial statements of foreign operations

Beginning at January 1 Exchange difference of subsidiaries and associates accounted for using the equity method Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 65,325 3,225 $ 68,550	2019 $ 90,654 (25,329) $ 65,325

• 2) Unrealized gain (loss) on financial assets at FVTOCI

Beginning at January 1 Recognized for the year Unrealized (loss) gain - equity instruments Share from subsidiaries and associates accounted for using the equity method Other comprehensive income recognized for the year Reclassification adjustment Cumulative unrealized gain of equity instruments transferred to retained earnings due to disposal Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 3,058,874 (255,429) (90,130) 2,713,315 1,036 $ 2,714,351	2019 $ 1,969,628 746,698 342,548 3,058,874 - $ 3,058,874

• 44 -

• f. Treasury shares

The shares that the subsidiaries held were acquired before the Company Act was amended in 2001. The Company’s shares held by its subsidiaries at the end of the reporting period are as follows:

December 31, 2020

Name of Subsidiary Number of Shares Held (In Thousands of Shares) Bai Ding Investment Co., Ltd. 8,207 December 31, 2019 Name of Subsidiary Number of Shares Held (In Thousands of Shares) Bai Ding Investment Co., Ltd. 8,207	Carrying Amount Market Price $ 97,110 $ 196,949 Carrying Amount Market Price $ 97,110 $ 213,771

Under the Securities and Exchange Act, the Company shall neither pledge treasury shares nor exercise shareholders’ rights on these shares, such as the rights to dividends and to vote. The subsidiaries holding treasury shares, however, retain shareholders’ rights, except the rights to participate in any share issuances for cash and to vote.

21. REVENUE

Sale of goods (Note) Commissions from concessionaires’ sales (Note) Maintenance and promotion fee income Rental income Investment properties (Note 14) Variable lease payments that do not depend on an index or a rate and contingent rentals Other lease payments Other operating leases Variable lease payments that do not depend on an index or a rate Other lease payments Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 5,061,768 3,929,067 714,932 20,850 217,608 238,458 103,295 573,746 677,041 915,499 415,789 $ 11,037,055	2019 $ 4,791,146 3,892,189 713,187 21,922 178,336 200,258 82,465 541,779 624,244 824,502 393,720 $ 10,614,744

• 45 -

Note: Gross revenue is presented as follows:

Concessionaires’ sales Sale of goods Contract Balances December 31, 2020 Notes receivable (Note 9) $ - Accounts receivable (Note 9) $ 322,111 Contract liabilities - current Sale of goods $ 3,163,634 Customer loyalty programs 39,308 $ 3,202,942	For the Year Ended December 31	For the Year Ended December 31
		2020 2019 $ 39,946,194 $ 37,141,303 5,311,412 5,035,862 $ 45,257,606 $ 42,177,165 December 31, 2019 January 1, 2019 $ 3 $ 140 $ 425,281 $ 780,192 $ 2,991,519 $ 2,807,936 33,007 39,896 $ 3,024,526 $ 2,847,832

The changes in the balance of contract liabilities primarily result from the timing difference between the Company’s performance and the respective customer’s payment.

Revenue of the reporting period recognized from the beginning contract liabilities which were satisfied in the previous periods is as follows:

From contract liabilities at the start of the years Sale of goods Customer loyalty programs	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 1,225,774 33,007 $ 1,258,781	2019 $ 1,270,069 39,896 $ 1,309,965

22. NET PROFIT FOR THE YEAR

Net profit for the year includes the following items:

a. Operating costs

Operating costs Cost of sales Rental costs Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 4,185,447 183,606 36,778 $ 4,405,831	2019 $ 3,962,329 171,075 35,358 $ 4,168,762

• 46 -

b. Interest income

Interest income Bank deposits Other income Dividends income	For the Year Ended	For the Year Ended	December 31
	2020 $ 933 **For the Year Ended **		2019 $ 242 December 31
		2020 $ 181,578	2019 $ 177,242

c. Other income

d. Other gains and losses

Loss on disposal of investment properties, net Foreign exchange loss, net Loss on disposal of property, plant and equipment, net Impairment loss of intangible assets Gain (loss) on change in fair value of investment properties Other gains Other losses Finance costs Interest on lease liabilities Interest on bank loans Other interest expense Total interest expense for financial liabilities measured at fair value through profit or loss Less: Amounts included in the cost of qualifying assets Information about capitalized interest is as follows: Capitalized interest amount Capitalization rate interval	For the Year Ended	December 31
	2020 $ (116) (117) (5,157) (6,307) 19,544 66,908 (9,750) $ 65,005 For the Year Ended	2019 $ (247) (63) (6,229) - (75,802) 63,041 (9,544) $ (28,844) December 31
	2020 $ 254,151 186,719 25,507 466,377 - $ 466,377 For the Year Ended	2019 $ 227,021 200,590 24,730 452,341 (74,472) $ 377,869 December 31
	2020 2019 $ - $ 74,472 - 0.98%-1.02%

e. Finance costs

• 47 -

f. Depreciation and amortization

Property, plant and equipment Right-of-use assets Less: Adjustment to receipts in advance and depreciation Intangible assets (including amortization expenses) An analysis of deprecation by function Operating costs Operating expenses An analysis of amortization by function Operating expenses g. Operating expenses directly related to investment properties Direct operating expenses from investment properties generating rental income Direct operating expenses from investment properties not generating rental income h. Employee benefits expenses Post-employment benefits Defined contribution plan Defined benefit plan (Note 19) Other employee benefits Total employee benefits expenses An analysis of employee benefits expenses by function Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2020 2019 $ 984,502 $ 858,006 1,145,458 880,224 (95,200) (83,772) 2,034,760 1,654,458 50,182 26,757 $ 2,084,942 $ 1,681,215 $ 90,755 $ 88,000 1,944,005 1,566,458 $ 2,034,760 $ 1,654,458 $ 50,182 $ 26,757 For the Year Ended December 31
	2020 $ 74,852 33,313 $ 108,165 For the Year Ended			2019 $ 62,278 41,427 $ 103,705 December 31
		2020 $ 34,163 3,268 37,431 1,196,997 $ 1,234,428 $ 1,234,428	2019 $ 32,860 6,550 39,410 1,144,299 $ 1,183,709 $ 1,183,709

• 48 -

• i. Compensation of employees and remuneration of directors

According to the Company’s Articles, the Company accrues compensation of employees and remuneration of directors at a rate of 2% to 3.5% and no less than 2.5%, respectively, of net profit before income tax, compensation of employees, and remuneration of directors. The compensation of employees and remuneration of directors for the years ended December 31, 2020 and 2019, which were approved by the Company’s board of directors on March 23, 2021 and March 27, 2020, respectively, are as follows:

Accrual rate

Compensation of employees Remuneration of directors Amount	**For the Year Ended December 31 **
	2020 2019 3.2% 3.2% 2.4% 2.4%

Compensation of employees Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2020 Cash $ 75,603 56,702	2019
		Cash $ 74,392 55,794

If there is a change in the amounts after the annual financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the financial statements for the years ended December 31, 2019 and 2018.

Information on the compensation of employees and remuneration of directors resolved by the Company’s board of directors is available at the Market Observation Post System website of the Taiwan Stock Exchange.

23. INCOME TAX

a. Income tax recognized in profit or loss

Major components of income tax expense are as follows:

Current income tax In respect of the current year Adjustments for the prior year Deferred income tax In respect of the current year Adjustments for the prior year Income tax expense recognized in profit or loss	**For the Year Ended **	**For the Year Ended **	December 31
		2020 $ 245,710 267 245,977 37,894 7,269 45,163 $ 291,140	2019 $ 267,838 2,590 270,428 136,596 5,686 142,282 $ 412,710

• 49 -

A reconciliation of accounting profit and income tax expenses is as follows:

Profit before income tax from continuing operations Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Tax-exempt income Unrecognized deductible temporary differences Adjustments for prior years’ income tax Adjustments for prior years’ deferred tax Land value increment tax Others Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 2,230,279 $ 446,056 599 (137,407) (22,753) 267 7,269 (2,891) - $ 291,140	2019 $ 2,194,553 $ 438,911 234 (87,196) 63,258 2,590 5,686 (10,951) 178 $ 412,710

In July 2019, the Statute for Industrial Innovation was announced, stipulating that the construction or purchase of specific assets or technologies with undistributed earnings from fiscal year 2018 onward may be included as a deduction for calculating undistributed earnings. When the Company calculates undistributed earnings tax, it only deducts the amount of capital expenditure from actual reinvestments.

b. Income tax recognized in other comprehensive income

Deferred tax In respect of the current year Remeasurement on defined benefit plans	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 14,211 $ 14,211	2019 $ (57,620) $ (57,620)

c. Current tax assets and liabilities

Current tax liabilities Income tax payable		December 31	December 31
		2020 $ 111,095	2019 $ 161,580

• 50 -

d. Deferred tax assets and liabilities

The movements of deferred tax assets and liabilities are as follows:

For the year ended December 31, 2020

Deferred tax assets Temporary differences Investments accounted for using the equity method Promotion expense on gift certificates Right-of-use assets Others Deferred tax liabilities Temporary differences Depreciation Reserve for land revaluation increment tax Investment properties Investments accounted for using the equity method Differences of pension in determining taxable income Others For the year ended December 31, 2019 Deferred tax assets Temporary differences Investments accounted for using the equity method Promotion expense on gift certificates Right-of-use assets Differences of pension in determining taxable income Others	Opening Balance $ 9,435 18,488 20,071 22,350 $ 70,344 $ 1,031,733 391,157 363,604 245,340 46,807 64,000 $ 2,142,641 Opening Balance $ 111,485 17,497 20,071 17,899 25,193 $ 192,145	Recognized in Profit or Loss $ 8,193 (17) (1,842) 3,540 $ 9,874 $ 43,880 (2,891) (2,830) (513) 8,576 8,815 $ 55,037 Recognized in Profit or Loss $ (102,050) 991 - 12,654 (2,843) $ (91,248)	Recognized in Other Comprehen sive Income $ - - - - $ - $ - - - - (14,211) - $ (14,211) Recognized in Other Comprehen sive Income $ - - - (30,553) - $ (30,553)	Closing Balance $ 17,628 18,471 18,229 25,890 $ 80,218 $ 1,075,613 388,266 360,774 244,827 41,172 72,815 $ 2,183,467 Closing Balance $ 9,435 18,488 20,071 - 22,350 $ 70,344 (Continued)

• 51 -

Deferred tax liabilities Temporary differences Depreciation Reserve for land revaluation increment tax Investment properties Investments accounted for using the equity method Differences of pension in determining taxable income Others	Opening Balance $ 1,021,521 391,157 382,988 236,775 - 32,099 $ 2,064,540	Recognized in Profit or Loss $ 10,212 - (19,384) 8,565 19,740 31,901 $ 51,034	Recognized in Other Comprehen sive Income $ - - - - 27,067 - $ 27,067	Closing Balance $ 1,031,733 391,157 363,604 245,340 46,807 64,000 $ 2,142,641

(Concluded)

• e. Deductible temporary differences for which no deferred tax assets were recognized in the balance sheets

Deductible temporary differences		**December 31 **	**December 31 **
		2020 $ 822,205	2019 $ 935,976

f. Income tax assessments

The Company’s income tax returns through 2018 have been assessed by the tax authorities.

24. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31
		2020 $ 1.38 $ 1.37	2019 $ 1.26 $ 1.26

Earnings and weighted average number of ordinary shares outstanding for the computation of earnings per share are as follows:

Net Profit for the Year

Net profit for the year Effect of potential dilutive ordinary shares: Compensation of employees Earnings used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 1,939,139 - $ 1,939,139	2019 $ 1,781,843 - $ 1,781,843

• 52 -

Shares

(In Thousand Shares)

Weighted average number of ordinary shares outstanding in computation of basic earnings per share Effect of potential dilutive ordinary shares: Compensation of employees Weighted average number of ordinary shares outstanding in computation of dilutive earnings per share	For the Year Ended	For the Year Ended	December 31
		2020 1,408,734 4,499 1,413,233	2019 1,408,734 4,031 1,412,765

If the Company offered to settle the compensation paid to employees in cash or shares, the Company assumed the entire amount of the compensation or bonus will be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares was included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in their meeting in the following year.

25. CASH FLOW INFORMATION

• a. Non-cash transactions

For the years ended December 31, 2020 and 2019, the Company engaged in the following non-cash investing activities:

For the years ended December 31, 2020 and 2019, the prepayment for equipment reclassified to property, plant and equipment amounted to $19,729 thousand and $10,788 thousand, respectively (please see Note 12).

• b. Changes in liabilities arising from financing activities

For the year ended December 31, 2020

Opening Balance Cash Flows Short-term borrowings $ 5,000,000 $ (350,000 ) Short-term bills payable 2,499,312 (50,032 ) Long-term borrowings (including current portion) 14,299,757 (999,996 ) Lease liabilities 15,327,788 (570,201 ) Other non-current liabilities 100,514 (21,978) $ 37,227,371 $ (1,992,207) For the year ended December 31, 2019 Opening Balance Cash Flows Short-term borrowings $ 6,710,000 $ (1,710,000 ) Short-term bills payable 2,299,032 200,280 Long-term borrowings (including current portion) 11,100,000 3,199,757 Lease liabilities 13,854,173 (620,491 ) Other non-current liabilities 192,091 13,791 $ 34,155,296 $ 1,083,337		Non-cash Changes New Leases Change in Exchange Rate $ - $ - - - - - 141,567 - - - $ 141,567 $ - Non-cash Changes New Leases Change in Exchange Rate $ - $ - - - - - 2,094,106 - - - $ 2,094,106 $ -	Others Closing Balance $ - $ 4,650,000 - 2,449,280 - 13,299,761 (113,828 ) 14,785,326 - 78,536 $ (113,828) $ 35,262,903 Others Closing Balance $ - $ 5,000,000 - 2,499,312 - 14,299,757 - 15,327,788 (105,368) 100,514 $ (105,368) $ 37,227,371
Opening Balance Short-term borrowings $ 6,710,000 Short-term bills payable 2,299,032 Long-term borrowings (including current portion) 11,100,000 Lease liabilities 13,854,173 Other non-current liabilities 192,091 $ 34,155,296

• 53 -

26. CAPITAL MANAGEMENT

Under its operating development schemes and related government rules, the Company manages its capital to ensure it can continue to operate as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of net debt (borrowings offset by cash) and equity of the Company (comprising share capital, capital surplus, retained earnings and other equity). The Company’s capital management concerns its capital expenditures for capital structure and relative risks to ensure the optimal capital structure, and the Company may adjust the amount of dividends paid to shareholders, the number of new shares issued, proceeds from borrowings and repayments of borrowings, in order to balance the overall capital structure.

27. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments not measured at fair value

The financial instruments not measured at fair value are either those with due dates in the near future or those with a future collection value which approximately equals its carrying amount. Thus, the fair value of these financial instruments are estimated at their carrying amounts on the financial reporting date.

• b. Fair value of financial instruments measured at fair value on a recurring basis

• 1) Fair value hierarchy

December 31, 2020

Financial assets at FVTOCI Equity investments Domestic listed ordinary shares Domestic unlisted ordinary shares December 31, 2019 Financial assets at FVTOCI Equity investments Domestic listed ordinary shares Domestic unlisted ordinary shares	Level 1 $ 2,737,990 - $ 2,737,990 Level 1 $ 2,993,461 - $ 2,993,461	Level 2 $ - - $ - Level 2 $ - - $ -	Level 3 $ - 107,630 $ 107,630 Level 3 $ - 107,588 $ 107,588	Total $ 2,737,990 107,630 $ 2,845,620 Total $ 2,993,461 107,588 $ 3,101,049

• 54 -

There were no transfers between Level 1 and 2 in both 2020 and 2019.

• 2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2020

		Investment in	Investment in
			Equity
		Instruments at
	Financial Assets	FVTOCI
Balance at January 1, 2020		$	107,588
Recognized in other comprehensive income (included in unrealized valuation
gain (loss) on financial assets	at FVTOCI)		42
Balance at December 31, 2020		$	107,630
For the year ended December 31, 2019
		Investment in
			Equity
		Instruments at
	Financial Assets	FVTOCI
Balance at January 1, 2019		$	99,828
Recognized in other comprehensive income (included in unrealized valuation
gain (loss) on financial assets	at FVTOCI)		7,760
Balance at December 31, 2019		$	107,588

• 3) Valuation techniques and inputs applied for Level 3 fair value measurements

Financial Instruments Domestic unlisted shares

Valuation Techniques and Inputs

a) Asset-based approach. Valuation based on the fair value of an investee, calculated through each investment of the investee using the income approach, market approach or a combination of the two approaches, while also taking the liquidity premium into consideration. b) Transaction method of market approach. The approach is a valuation strategy based on market ratios of companies with similar profitability at the end of the reporting period, while taking the liquidity premium into consideration.

• c. Categories of financial instruments

Financial assets Financial assets at amortized cost (1) Equity instruments at FVTOCI Financial liabilities Measured at amortized cost (2)	December 31
	2020 2019 $ 1,576,190 $ 1,427,222 2,845,620 3,101,049 26,176,982 27,644,053

• 55 -

• 1) The balances included the carrying amount of cash and cash equivalents, notes and accounts receivable (including related parties), other receivables and refundable deposits, all of which are financial assets measured at amortized cost.

• 2) The balances included the carrying amount of short-term borrowings, short-term bills payable, notes payable and trade payables (including related parties), other payables, long-term borrowings including the current portion and deposits received, which are measured at amortized cost.

• d. Financial risk management objectives and policies

The Company’s major financial instruments include equity investments, trade receivables, trade payables and borrowings. The Company’s financial risk management pertains to the management’s operations-related market risks (including exchange rate risk, interest rate and other price risks), credit risks and liquidity risks. To reduce its financial risk, the Company is committed to identifying, assessing and avoiding the market uncertainties and reducing negative effects of these market changes on the Company’s financial performance.

The main financial activities of the Company are governed by the Company’s internal management and approved by the board of directors. The financial schemes, which include fund raising plans should be carried out in compliance with the Company’s policies.

1) Market risk

• a) Interest rate risk

The Company was exposed to interest rate risk because the Company borrowed funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix of fixed and floating rate borrowings.

The carrying amount of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period are as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities Sensitivity analysis	**December 31 **
	2020 2019 $ 39,354 $ 25,271 14,785,326 17,327,788 88,585 50,112 20,399,041 19,799,069

The sensitivity analyses below were determined based on the Company’s exposure to interest rates for financial assets and financial liabilities at the end of the reporting period. For sensitivity analysis purposes, the sensitivity rate was adjusted as a result of the volatile financial market. The measurement of the increase or decrease in the interest rates is based on 100 basis points, which is reported to the senior management denoting the management’s assessment for the reasonableness of the fluctuation of the interest rates.

If interest rates increase/decrease by 100 basis points and all variables remained unchanged, the profit before tax for the years ended December 31, 2020 and 2019 would decrease/increase by $203,105 thousand and $197,490 thousand, respectively.

• 56 -

b) Other price risks

The Company was exposed to equity price risks involving equity investments in listed companies and beneficial certificates. The Company’s investments in listed companies and beneficial certificates should be in compliance with the rules made by the board of directors in order to achieve the goal of risk management and maximize the returns on investments.

Sensitivity analysis

The sensitivity analyses below were determined based on the exposure to equity price risks at the end of the reporting period. For sensitivity analysis purposes, the sensitivity rate was adjusted as a result of the volatile financial market.

If equity prices increase/decrease by 5%, the pre-tax other comprehensive income for the years ended December 31, 2020 and 2019 would increase/decrease by $142,281 thousand and $155,052 thousand, respectively, due to the change in fair value of financial assets measured at fair value through other comprehensive income.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. At the end of the reporting period, the Company’s credit risk was mainly contributed from trade receivables in operating activities, bank deposits and financial instruments in financial activities.

To maintain the quality of trade receivables, the Company manages credit risk by assessing customers’ credit status in terms of financial status, historical transactions, etc., and obtains an adequate amount of collaterals as guarantees from the customers with high credit risk. In addition, the Company reviews the recoverable amount of each trade debt at the end of the reporting period to ensure that adequate allowances are made for irrecoverable amounts. On the credit risk management of bank deposits and other financial instruments, the Company trades with counterparties which comprise banks with good credit ratings.

3) Liquidity risk

Liquidity risk is a risk in which the Company has difficulty in settling its financial liabilities either by cash or other financial assets. The Company manages its liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance its operations and mitigate the effects of fluctuations in cash flows. Further, the management monitors the use of bank borrowings and ensures compliance with loan covenants, to avoid critical damage and mitigate the reputation risk facing the Company.

To cater to the demand of capital payments for a particular purpose, the Company maintains adequate cash by way of long-term financing/borrowings. For the management of cash shortage, the Company monitors cash management and allocates cash appropriately to maintain financial flexibility and ensure the mitigation of liquidity risk.

The maturity analysis of the non-derivative financial liabilities is prepared based on the undiscounted cash flow of the financial liabilities (including the principal and estimated interest) from the earliest date on which the Company can be required to pay. As such, the bank loans in which the Company may be asked to settle immediately are included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity analysis of other non-derivative financial liabilities is prepared based on the agreed repayment dates.

• 57 -

December 31, 2020

	On	Demand or
	Not	Later than
		1 Year		1-2 Years		2-3 Years		3-4 Years		4-5 Years		5+ Years		Total
Non-derivative financial liabilities
Short-term borrowings	$	4,650,000	$	-	$	-	$	-	$	-	$	-	$	4,650,000
Short-term bills payable		2,449,280		-		-		-		-		-		2,449,280
Trade payables		3,822,290		-		-		-		-		-		3,822,290
Trade payables to related parties		49,983		-		-		-		-		-		49,983
Other payables		1,827,132		-		-		-		-		-		1,827,132
Lease liabilities		941,237		944,462		940,553		927,068		847,382		13,062,511		17,663,213
Long-term borrowings (including
current portion)		299,933		9,599,828		3,400,000		-		-		-		13,299,761
Deposits received		44,741		6,237		4,546		5,752		16,060		1,200		78,536

Additional information about the maturity analysis for lease liabilities

Lease liabilities	Less than 1 Year $ 941,237	1-5 Years $ 3,659,465	5-10 Years $ 4,264,801	10-15 Years $ 3,865,346	15-20 Years $ 2,518,365	20+ Years $ 2,413,999

December 31, 2019

	On	Demand or
	Not	Later than										Later than
		1 Year		1-2 Years		2-3 Years		3-4 Years		4-5 Years		5 Years		Total
Non-derivative financial liabilities
Short-term borrowings	$	5,000,000	$	-	$	-	$	-	$	-	$	-	$	5,000,000
Short-term bills payable		2,499,312		-		-		-		-		-		2,499,312
Trade payables		3,612,036		-		-		-		-		-		3,612,036
Trade payables to related parties		56,943		-		-		-		-		-		56,943
Other payables		2,075,491		-		-		-		-		-		2,075,491
Lease liabilities		929,821		915,947		919,171		920,354		923,127		13,826,908		18,435,328
Long-term borrowings (including
current portion)		2,500,000		11,799,757		-		-		-		-		14,299,757
Deposits received		30,641		14,084		6,237		3,842		5,752		39,958		100,514

Additional information about the maturity analysis for lease liabilities

Lease liabilities	Less than 1 Year $ 929,821	1-5 Years $ 3,678,599	5-10 Years $ 4,239,757	10-15 Years $ 4,013,803	15-20 Years $ 2,732,117	20+ Years $ 2,841,231

The amounts of variable interest rate instruments for both non-derivative financial liabilities mentioned above are subject to change if the changes in variable interest rates differ from those estimates of interest rates determined at the end of the year.

28. TRANSACTIONS WITH RELATED PARTIES

The transactions between the Company and its related parties, other than those disclosed in other notes, are summarized as follows:

a. The Company’s related parties and their relationships

Related Party

Relationship with the Company

Far Eastern Ai Mai Co., Ltd. (AIMAI) Subsidiary Ya Tung Department Stores, Ltd. (YTDS) Subsidiary Yu Ming Advertising Agency Co., Ltd. (YMAC) Subsidiary Far Eastern CitySuper Co., Ltd. (FECS) Subsidiary Bai Ding Investment Co., Ltd. (BDIC) Subsidiary

(Continued)

• 58 -

Relationship with the Company

Related Party

Bai Yang Investment Co., Ltd. (BYIC) Far Eastern Hon Li Do Co., Ltd. (FEHLD) Chubei New Century Shopping Mall Co., Ltd. FEDS Asia Pacific Development Co., Ltd. FEDS New Century Development Co., Ltd. Far Eastern Big City Shopping Malls Co., Ltd. Pacific Sogo Department Stores Co., Ltd. (SOGO) Ding Ding Integrated Marketing Service Co., Ltd. (DDIM) Oriental Securities Corporation (OSC) Yuan Hsin Digital Payment Co., Ltd. (YHDP) Far Eastern International Leasing Corporation Far Eastern New Century Corporation (FENC)

Far EasTone Telecommunications Co., Ltd.

New Century InfoComm Tech Co., Ltd. Far Eastern General Contractor Inc. (FEGC) Far Eastern Construction Co., Ltd. (FEC)

Far Eastern Resources Development Co., Ltd. Ding Ding Hotel Co., Ltd.

Far Eastern Electronic Toll Collection Co., Ltd. Far Eastern Apparel Co., Ltd. Yuan Ding Co., Ltd. (YDC) YDT Technology International Co., Ltd. Far Eastern Technical Consultants Co., Ltd. Yuanshi Digital Technology Co., Ltd. Asia Cement Corporation Ya Tung Ready Mixed Concrete Co., Ltd. Everest Textile Co., Ltd.

Far Eastern International Bank (FEIB)

Yuan Bo Asset Management Corporation

Oriental Union Chemical Corporation Yuan Ze University

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Associate Associate Associate Investor with significant influence over the Company (equity method investor of FEDS) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Associate of investor with significant influence over the Company (the subsidiary of FENC) Other related party (the chairman of Company, also the vice chairman of FEIB) Other related party (the subsidiary of Far eastern international leasing corporation) Other related party (the same chairman) Other related party (the same chairman)

(Continued)

• 59 -

Relationship with the Company

Related Party

Far Eastern Medical Foundation U-Ming Marine Transport Corporation Mr. Xu Yuanzhi Memorial Foundation Ding & Ding Management Consultants Co., Ltd.

Other related party (the same chairman) Other related party (the same chairman) Other related party (related party in substance) Other related party (related party in substance) (Concluded)

• b. Operating revenue

Line Item Related Party Category/Name Sales of goods (Note) Subsidiaries Associates of investor with significant influence over the Company Other related parties Other operating revenue Other related parties Subsidiaries Associates of investor with significant influence over the Company Associates	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2020 $ 35,576 31,087 680 $ 67,343 $ 48,520 25,115 18,467 1,288 $ 93,390	2019 $ 31,694 34,116 999 $ 66,809 $ 55,305 27,308 20,504 2,189 $ 105,306

Note: Sales to related parties and unrelated parties were made under normal terms.

• c. Purchases

Line Item Related Party Category/Name Operating costs (Note) Associates of investor with significant influence over the Company Subsidiaries	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 14,083 3,372 $ 17,455	2019 $ 22,697 3,057 $ 25,754

Note: Purchases from related parties and unrelated parties were made under normal terms.

• 60 -

d. Receivables from related parties

Line Item Related Party Category/Name Trade receivable Associates of investor with significant influence over the company Other related parties Subsidiaries Investor with significant influence over the Company Associates Other receivables Subsidiaries Associates of investor with significant influence over the company Other related parties e. Other non-current assets Line Item Related Party Category/Name Lease incentives Associates of investor with significant influence over the company Yuan Ding Co., Ltd Other related parties Far Eastern International Bank Ltd. Refundable deposits Associates of investor with significant influence over the company f. Payables to related parties Line Item Related Party Category/Name Trade payable Associates of investor with significant influence over the company Subsidiaries		December 31	December 31
		2020 2019 $ 29,920 $ 33,535 28,831 38,647 7,648 3,230 7,195 2,970 1,649 1,152 $ 75,243 $ 79,534 $ 7,754 $ 7,516 1,511 1,990 54 4,106 $ 9,319 $ 13,612 December 31
		2020 2019 $ 18,741 $ 13,768 863 1,134 $ 19,604 $ 14,902 $ 7,741 $ 7,741 **December 31 **
		2020 $ 26,764 23,219 $ 49,983	2019 $ 33,022 23,921 $ 56,943 (Continued)

• 61 -

Line Item Related Party Category/Name Other payables Associates of investor with significant influence over the company Far Eastern General Construction Inc. Ya Tung Ready-Mixed Concrete Corporation Others Associates Subsidiaries Investor with significant influence over the Company Other related parties g. Other current liabilities Line Item Related Party Category/Name Advance receipts Associates of investor with significant influence over the company Others Associates Subsidiaries Associates of investor with significant influence over the company Others h. Other non-current liabilities Line Item Related Party Category/Name Guarantee deposits received Associates of investor with significant influence over the company Yuan Ding Co., Ltd Others Other related parties Subsidiaries		**December 31 **	**December 31 **
		2020 2019 $ 217,682 $ 217,051 78,769 90,392 18,640 30,777 315,091 338,220 60,605 50,630 51,758 41,111 41,866 37,653 7,563 88 $ 476,883 $ 467,702 (Concluded) **December 31 **
		2020 2019 $ 844 $ 1,471 $ 372 $ 520 67 23 55 102 - 1,154 $ 494 $ 1,799 December 31
		2020 $ 57,880 87 57,967 1,023 881 $ 59,871	2019 $ 48,676 87 48,763 1,023 881 $ 50,667

• 62 -

• i. Lease arrangements - the Company as lessee

Related Party Category/Name Acquisition of right-of-use assets Associates of investor with significant influence over the Company Associates Line Item Related Party Category/Name Lease liabilities (Note) Associates of investor with significant influence over the company Far Eastern Construction Co., Ltd Asia Cement Corporation Yuan Ding Co., Ltd Far Eastern Resources Development Co., Ltd. Other related parties Associates	For the Year Ended	For the Year Ended	For the Year Ended	For the Year Ended	December 31
			2020 2019 $ 92,571 $ - 5,337 - $ 97,908 $ - **December 31 **
		2020 $ 3,649,049 309,379 32,933 8,685 4,000,046 9,615 4,988 $ 4,014,649		2019 $ 3,790,369 384,961 11,106 10,807 4,197,243 10,897 - $ 4,208,140

Note: The lease payments, payable either monthly or yearly, are Company and the related parties. Related Party Category/Name Interest expense Associates of investor with significant influence over the company Other related parties Associates	made per the agreement between the **For the Year Ended December 31 **	made per the agreement between the **For the Year Ended December 31 **	made per the agreement between the **For the Year Ended December 31 **
		2020 $ 67,460 175 15 $ 67,650	2019 $ 70,615 197 - $ 70,812

j. Construction projects

The construction projects of the Company were as follows:

Associates of investor with significant influence over the company Other related parties	For the Year Ended	For the Year Ended	December 31
		2020 $ 29,692 13,737 $ 43,429	2019 $ 691,248 - $ 691,248

• 63 -

k. Other related-party transactions

Line Item Related Party Category/Name Operating expenses Subsidiaries (Note) Investor with significant influence over the Company Associates Associates of investor with significant influence over the company Other related parties Other gains and losses - Subsidiaries gains Pacific Sogo Department Stores Co., Ltd. Others Other related parties Far Eastern International Bank Ltd. Associates Associates of investor with significant influence over the company Other gains and losses - Associates losses Oriental Securities Corporation Associates of investor with significant influence over the company Investor with significant influence over the Company Finance costs Subsidiary Pacific Sogo Department Stores Co., Ltd. Loans from other related parties Related Party Category/Name Far Eastern International Bank Ltd. Interest revenue Related Party Category/Name Far Eastern International Bank Ltd.	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 2019 $ 188,339 $ 239,920 83,986 78,502 47,039 43,984 46,726 43,960 39,119 8,879 $ 405,209 $ 415,245 $ 18,723 $ 18,104 3,366 1,970 22,089 20,074 19,301 18,121 90 279 15 50 $ 41,495 $ 38,524 $ 7,054 $ 7,131 7 - 6 1 $ 7,067 $ 7,132 $ 12,227 $ 11,606 December 31
	2020 $ - For the Year Ended			2019 $ - December 31
			2020 $ 639	2019 $ 765

l. Loans from other related parties

• 64 -

m. Compensation of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended	For the Year Ended	December 31
		2020 $ 73,686 34 $ 73,720	2019 $ 72,113 214 $ 72,327

The remuneration of directors and other key management personnel was determined by the compensation committee of the Company in accordance with the individual performance and the market trends.

29. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings and administrative proceedings:

Financial assets at FVTOCI Investments accounted for using the equity method Property, plant and equipment Investment properties		December 31	December 31
		2020 $ 1,512,000 1,181,946 13,616,836 1,309,425 $ 17,620,207	2019 $ 1,678,250 1,183,170 13,762,450 1,319,887 $ 17,943,757

30. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant unrecognized commitments and contingencies of the Company as of December 31, 2020 and 2019 are as follows:

• a. Significant unrecognized commitments

The amounts of unrecognized commitments are as follows:

Acquisition of property, plant and equipment		December 31	December 31
		2020 $ 431,182	2019 $ 605,809

• b. In April 2019, under a ruling by the MOEA whereby “the terms and conditions of gift certificates for certain goods and for certain services within the retail industry should be documented in a standard contract while others should not”, the Company and SOGO signed an agreement to have mutual performance guarantees on gift certificates bought by customers. The guarantee period was from April 1, 2020 to March 31, 2021. As of December 31, 2020, the Company’s guarantee amount for SOGO was $4,882,843 thousand and that of SOGO for the Company was $3,221,064 thousand.

• 65 -

31. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions and b. investees:

• 1) Financing provided to others: Table 1.

• 2) Endorsements/guarantees provided: Table 2.

• 3) Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Table 3.

• 4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None.

• 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in

  • capital: None.

• 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.

• 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: None.

• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 4.

• 9) Trading in derivative instruments: None.

• b. Information on investees: Table 5.

• c. Information on investments in mainland China:

• 1) Name of the investees in mainland China, main business and products, paid-in capital, method of investment, information on inflow or outflow of capital, percentage of ownership, investment income or loss, ending balance of investment, repatriation of investment income, and the limit of investment in mainland China: Table 6.

• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses:

  • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: None.

  • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: None.

  • c) The amount of property transactions and the amount of the resultant gains or losses: None.

  • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: Table 2.

  • e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: Table 1.

• 66 -

• f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: None.

• d. Information of major shareholders: List all shareholders with ownership of 5% or greater, showing the names and the numbers of shares and percentage of ownership of each shareholder, please see Table 7.

• 67 -

TABLE 1

FAR EASTERN DEPARTMENT STORES, LTD.

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period	Ending Balance	Actual Borrowing Amount	Interest Rate	Nature of Financing	Business Transaction Amounts	Reason for Short-term Financing	Allowance for Impairment Loss	Colla	**teral **	Financing Limit for Each Borrower	Aggregate Financing Limits
													Item	Value
1	Pacific Sogo Department Stores Co., Ltd.	Pacific China Holding Ltd.	Other receivables	Y	$ 2,000,000	$ 2,000,000	$ -	-	(Note A)	$ -	Transaction	$ -	-	$ -	$ 4,705,699 (Note B)	$ 4,705,699 (Note B)
2	Chongqing FEDS Co., Ltd.	Chongqing Pacific Consultant and Management Co., Ltd. Dalian Pacific Department Store Co., Ltd. Chengdu FEDS Co., Ltd Chengdu Quanxing Building Pacific Department Store Co., Ltd. Shanghai Bai Ding Consultant and Management Co., Ltd. Chongqing Metropolitan Plaza Pacific Department Store Co., Ltd.	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Y Y Y Y Y Y	742,016 (RMB 170,000 thousand ) 436,480 (RMB 100,000 thousand ) 654,720 (RMB 150,000 thousand ) 654,720 (RMB 150,000 thousand ) 43,648 (RMB 10,000 thousand ) 218,240 (RMB 50,000 thousand )	742,016 (RMB 170,000 thousand ) 218,240 (RMB 50,000 thousand ) 654,720 (RMB 150,000 thousand ) 218,240 (RMB 50,000 thousand ) 43,648 (RMB 10,000 thousand ) 218,240 (RMB 50,000 thousand )	679,599 (RMB 155,700 thousand ) - 196,416 (RMB 45,000 thousand ) 17,459 (RMB 4,000 thousand ) - -	1.504523%- 4.129436% (Note F) 1.504523%- 4.129436% (Note G) 1.504523%- 4.129436% (Note H) 1.504523%- 4.129436% (Note I) - -	(Note A) (Note A) (Note A) (Note A) (Note A) (Note A)	- - - - - -	Transaction Transaction Transaction Transaction Transaction Transaction	- - - - - -	- - - - - -	- - - - - -	12,477,568 (Note D) 12,477,568 (Note D) 12,477,568 (Note D) 12,477,568 (Note D) 12,477,568 (Note D) 12,477,568 (Note D)	12,477,568 (Note D) 12,477,568 (Note D) 12,477,568 (Note D) 12,477,568 (Note D) 12,477,568 (Note D) 12,477,568 (Note D)
3	Chongqing Metropolitan Plaza Pacific Department Store Co., Ltd.	Chongqing FEDS Co., Ltd.	Other receivables	Y	305,536 (RMB 70,000 thousand )	305,536 (RMB 70,000 thousand )	-	1.41%-3.87% (Note J)	(Note A)	-	Transaction	-	-	-	12,477,568 (Note D)	12,477,568 (Note D)
4	Pacific China Holdings (HK) Limited	Pacific China Holding Ltd.	Other receivables	Y	284,800 (US$ 10,000 thousand)	284,800 (US$ 10,000 thousand )	102,528 (US$ 3,600 thousand )	1.74%-3.32% (Note K)	(Note A)	-	Transaction	-	-	-	12,477,568 (Note D)	12,477,568 (Note D)
5	Pacific (China) Investment Co., Ltd.	Chongqing FEDS Co., Ltd.	Other receivables	Y	43,648 (RMB 10,000 thousand )	43,648 (RMB 10,000 thousand )	-	1.41%-3.66% (Note L)	(Note A)	-	Transaction	-	-	-	12,477,568 (Note D)	12,477,568 (Note D)
6	Shanghai Pacific Department Store Co., Ltd.	Shanghai Xujiahui Centre Group	Other receivables	Y	187,250 (RMB 42,900 thousand )	187,250 (RMB 42,900 thousand )	187,250 (RMB 42,900 thousand )	1.35% (Note M)	(Note A)	-	Transaction	-	-	-	267,191 (Note B)	267,191 (Note B)
7	FEDS Development Ltd.	Yuan Ding Enterprise (Shanghai) Co., Ltd. Far Eastern New Century (China) Investment Co., Ltd.	Other receivables Other receivables	Y Y	97,669 (RMB 22,377 thousand ) 91,181 (RMB 20,890 thousand )	- -	- -	- -	(Note A) (Note A)	- -	Transaction Transaction	- -	- -	- -	6,238,784 (Note C) 6,238,784 (Note C)	12,477,568 (Note D) 12,477,568 (Note D)

Note A: Short-term financing.

Note B: 40% of the financing company’s net assets.

Note C: The amount of the collateral/guarantees is based on 20% of the net value of the ultimate parent company, Far Eastern Department Stores Co., Ltd per its latest financial statements.

Note D: The amount of the collateral/guarantees is based on 40% of the net value of the ultimate parent company, Far Eastern Department Stores Co., Ltd per its latest financial statements.

Note E: As the amount of the investee, Lian Ching Investment Co., Ltd. had been written off to zero and the Company has not undertaken any liabilities, no disclosure pertaining to the investee is made.

Note F: The interest for the period amounted to RMB3,944 thousand.

Note G: The interest for the period amounted to RMB45 thousand.

Note H: The interest for the period amounted to RMB1,176 thousand.

Note I: The interest for the period amounted to RMB182 thousand.

Note J: The interest for the period amounted to RMB459 thousand.

Note K: The interest for the period amounted to US$78 thousand.

Note L: The interest for the period amounted to RMB30 thousand.

Note M: The interest for the period amounted to RMB579 thousand.

• 68 -

TABLE 2

FAR EASTERN DEPARTMENT STORES, LTD.

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Maximum Endorsement/ Guarantee Amounts Allowable	Endorsement/ Guarantee Provided by Parent Company	Endorsement/ Guarantee Provided by A Subsidiary	Endorsement/ Guarantee Provided to Mainland China
		Name	Nature of Relationship (Note F)
0	Far Eastern Department Stores, Ltd.	FEDS New Century Development Co., Ltd. Bai Yang Investment Co., Ltd. Bai Ding Investment Co., Ltd. FEDS Development Ltd. Chubei New Century Shopping Mall Co., Ltd. Far Eastern CitySuper Co., Ltd Pacific Sogo Department Stores Co., Ltd.	2 2 2 2 2 2 2	$ 18,716,352 (Note A) 18,716,352 (Note A) 18,716,352 (Note A) 18,716,352 (Note A) 18,716,352 (Note A) 18,716,352 (Note A) 18,716,352 (Note A)	$ 30,000 100,000 1,150,000 1,424,000 (US$ 50,000 thousand) 3,700,000 80,000 4,889,496	$ - - 1,150,000 284,800 (US$ 10,000 thousand) 3,700,000 80,000 4,882,843	$ - - 450,000 - 630,000 - 4,882,843	$ - - - - - - -	- - 4 1 12 - 16	$ 31,193,920 (Note B) 31,193,920 (Note B) 31,193,920 (Note B) 31,193,920 (Note B) 31,193,920 (Note B) 31,193,920 (Note B) 31,193,920 (Note B)	Y Y Y Y Y Y Y	- - - - - - -	- - - - - - -
1	Pacific Sogo Department Stores Co., Ltd.	Far Eastern Department Stores, Ltd. Pacific China Holding Ltd. Dalian Pacific Department Store Co., Ltd. Chongqing Metropolitan Plaza Pacific Department Store Co., Ltd.	3 2 2 2	18,716,352 (Note C) 18,716,352 (Note C) 18,716,352 (Note C) 18,716,352 (Note C)	3,224,420 10,153,856 (US$ 341,200 thousand) (RMB 100,000 thousand) 340,454 (RMB 78,000 thousand) (Note G) 514,496 (US$ 15,000 thousand) (RMB 20,000 thousand) (Note G)	3,221,064 7,404,800 (US$ 260,000 thousand) (RMB 0 thousand) 340,454 (RMB 78,000 thousand) (Note G) 514,496 (US$ 15,000 thousand) ( RMB 20,000 thousand) (Note G)	3,221,064 3,465,651 (US$ 0 thousand) (RMB 794,000 thousand) 87,296 (RMB 20,000 thousand) 284,800 (US$ 10,000 thousand) (RMB 0 thousand)	- - - -	10 24 1 2	31,193,920 (Note D) 31,193,920 (Note D) 31,193,920 (Note D) 31,193,920 (Note D)	- - - -	Y - - -	- - Y Y
2	Far Eastern Big City Shopping Malls Co., Ltd.	Pacific Sogo Department Stores Co., Ltd.	3	393,416 (Note A)	154,325	153,202	153,202	-	-	655,693 (Note B)	-	-	-

Note A: The amount is 60% of net assets based on the latest financial statements of the endorser/guarantor.

Note B: The amount is 100% of net assets based on the latest financial statements of the endorser/guarantor.

Note C: The amount of the collateral/guarantees is based on 60% of the net value of the ultimate parent company, Far Eastern Department Stores Co., Ltd per its latest financial statements.

Note D: The amount of the collateral/guarantees is based on 100% of the net value of the ultimate parent company, Far Eastern Department Stores Co., Ltd per its latest financial statements.

(Continued)

• 69 -

(Concluded)

Note E: As the amount of the investee, Lian Ching Investment Co., Ltd. had been written off to zero and the Company has not undertaken any liabilities, no disclosure pertaining to the investee is made.

• Note F: Relationships between the endorsement/guarantee provider and the guaranteed party:

• Trading partner.

• The direct and indirect shareholding of the Company amounts to more than 50%.

• The companies that directly and indirectly hold more than 50% of the Company’s voting rights.

• The Company that directly and indirectly holds more than 90% of the voting shares.

• Guaranteed by the Company according to the construction contract.

• An investee company. The guarantees were provided based on the Company’s proportionate share in the investee company.

• Companies in the same industry provide among themselves joint and several securities for as performance guarantees of sales contracts for pre-construction homes pursuant to the Consumer Protection Act.

Note G: Pacific Sogo Department Stores Co., Ltd. acts as the guarantor for a credit limit application to the bank to cater to the operating capital need.

• 70 -

TABLE 3

FAR EASTERN DEPARTMENT STORES, LTD.

MARKETABLE SECURITIES HELD DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company	Type and Name of Marketable Securities	Relationship with Issuer of Securities	Financial Statement Account		December 31, 2020	December 31, 2020		Note
				Shares (In Thousands)	Carrying Amount	Percentage of Ownership (%)	Fair Value
Far Eastern Department Stores, Ltd. Bai Ding Investment Co., Ltd. Bai Yang Investment Co., Ltd. Yu Ming Advertising Agency Co., Ltd.	Shares Asia Cement Corporation Far Eastern New Century Corporation Kaohsiung Rapid Transit Corporation Yuan Ding Leasing Corp. Yuan Ding Co., Ltd Yuan Shi Digital Technology Co., Ltd. Shares Far Eastern Department Stores, Ltd. Asia Cement Corporation Far Eastern New Century Corporation Chung-Nan Textile Co., Ltd. Ding Ding Management Consultants Co., Ltd. Yue Ding Industry Co., Ltd. Oriental Securities Investment Advisory Co., Ltd. Ding Sheng Investment Co., Ltd. Shares Far Eastern International Bank Ltd. Asia Cement Corporation U-Ming Marine Transport Corporation Oriental Securities Investment Advisory Co., Ltd. Beneficiary certificate DWS Taiwan Money Market Fund	4 3 - - 4 4 2 7 6 - 8 7 8 - 8 7 8 8 -	Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current	50,000 19,964 6,286 7,309 3 312 8,207 14,814 15,812 2,984 421 2,752 1 40,329 23,312 3,849 200 1 2,730	$ 2,160,021 577,969 35,391 71,658 10 571 196,968 639,982 457,744 95,856 9,877 48,177 10 306,757 252,934 166,297 7,380 10 32,203	1 - 2 9 - - 1 - - 5 5 2 - 18 1 - - - -	$ 2,160,021 577,969 35,391 71,658 10 571 196,968 639,982 457,744 95,856 9,877 48,177 10 306,757 252,934 166,297 7,380 10 32,203	35,000 thousand shares of Asia Cement Corporation pledged for loans and commercial papers issued of the investor company 5,200 thousand shares of Asia Cement Corporation pledged for commercial papers issued of the investor company 15,000 thousand shares of Far Eastern New Century Corporation pledged for loans of the investor company

(Continued)

• 71 -

Holding Company	Type and Name of Marketable Securities	Relationship with Issuer of Securities	Financial Statement Account		December 31, 2020	December 31, 2020		Note
				Shares (In Thousands)	Carrying Amount	Percentage of Ownership (%)	Fair Value
FEDS New Century Development Co., Ltd. FEDS Development Ltd. Pacific Sogo Department Stores Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Far Eastern Big City Shopping Malls Co., Ltd. Pacific China Holding Ltd.	Shares Asia Cement Corporation Beneficiary certificate DWS Taiwan Money Market Fund Shares Kowloon Cement Corp., Ltd. Shares CMC Magnetics Corp. Quanta Computer Inc. Pacific Construction Co., Ltd. DBTEL Inc. Oriental Union Chemical Corp. U-Ming Marine Transport Corporation Pacific Liu Tong Investment Co., Ltd. E-Shou Hi-tech Co., Ltd. Tian Yuan Investment Co., Ltd. PURETEK Corp. Pacific 88 Co., Ltd. Yuan Shi Digital Technology Co., Ltd. Beneficiary certificate DWS Taiwan Money Market Fund Shares Asia Cement Corporation Oriental Union Chemical Corp. Shares Overseas Development Corp. Taiwan Ocean Farming Corp.	7 - 7 - - - - 8 8 1 - - - - 7 - 7 8 - -	Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current	1,506 8,503 46 200 1 7,931 10 716 300 800 18,300 98,000 119 16 312 17,273 742 40 2,250 2,250	$ 65,041 100,278 16,551 1,895 58 78,992 34 14,535 11,070 4,019 - - - - - 203,719 32,055 812 - -	- - 2 - - 2 - - - - 15 20 - 1 1 - - - 15 15	$ 65,041 100,278 16,551 1,895 58 78,992 34 14,535 11,070 4,019 - - - - - 203,719 32,055 812 - -

(Continued)

• 72 -

(Concluded)

• Note A: 1. Subsidiary of FEDS.

• Parent company.

• Investor with significant influence over the Company.

• Associate of investor with significant influence over the Company. 5. Other related party.

• Investor with significant influence over FEDS.

• Associate of investor with significant influence over FEDS.

• Other related party of FEDS.

• 73 -

TABLE 4

FAR EASTERN DEPARTMENT STORES, LTD.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
Pacific Sogo Department Stores Co., Ltd. Pacific China Holdings (HK) Limited and Pacific China Holding Ltd. Chongqing FEDS Co., Ltd. Shanghai Pacific Department Store Co., Ltd.	Sogo Department Store Co., Ltd. Pacific China Holdings (B.V.I) Limited and Pacific China Holding Ltd. Chongqing Pacific Consultant and Management Co., Ltd. Chengdu FEDS Co., Ltd. Shanghai Xujiahui Centre Group	Associate Subsidiary Same ultimate parent company Same ultimate parent company Other related party	$ 121,952 103,014 (Note A) 680,480 (Note A) 196,670 (Note A) 189,778 (Note A)	- - - - -	$ 121,952 - - - -	Collection expedited - - - -	$ 332 - - - -	$ 121,952 - - - -

Note A: This balance refers to fund lending.

• 74 -

TABLE 5

FAR EASTERN DEPARTMENT STORES, LTD.

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

(In Thousands of New Taiwan Dollars)
Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount		Balance as of December 31, 2020			Net Income (Loss) of the Investee	Share of (Loss) Profit	Note A
				December 31, 2020	December 31, 2019	Shares (In Thousands)	Percentage of Ownership (%)	Carrying Amount
Far Eastern Department Stores Co., Ltd Bai Ding Investment Co., Ltd. FEDS Asia Pacific Development Co., Ltd. FEDS New Century Development Co., Ltd. Bai Yang Investment Co., Ltd. Ya Tung Department Stores, Ltd. Yu Ming Advertising Agency Co., Ltd. Far Eastern Hon Li Do Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Pacific Sogo Department Stores Co., Ltd. Pacific China Holdings (HK) Limited Pacific China Holding Ltd.	Bai Yang Investment Co., Ltd. Oriental Securities Corporation Pacific Liu Tong Investment Co., Ltd. Bai Ding Investment Co., Ltd. Far Eastern Ai Mai Co., Ltd. FEDS Development Ltd. Yu Ming Advertising Agency Co., Ltd. Ya Tung Department Stores, Ltd. Ding Ding Integrated Marketing Service Co., Ltd. Asians Merchandise Company Far Eastern Hon Li Do Co., Ltd. Far Eastern CitySuper Co., Ltd. Yuan Hsin Digital Payment Co., Ltd. Oriental Securities Corporation Pacific Liu Tong Investment Co., Ltd. Far Eastern International Leasing Corporation Pacific Sogo Department Stores Co., Ltd. Yue Ming Trading Co., Ltd. Far Eastern Hon Li Do Co., Ltd. Far Eastern CitySuper Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Chubei New Century Shopping Mall Co., Ltd. FEDS Asia Pacific Development Co., Ltd. Far Eastern International Leasing Corporation Bai Ding Investment Co., Ltd. FEDS New Century Development Co., Ltd. Pacific Liu Tong Investment Co., Ltd. FEDS Development Ltd. Pacific China Holdings (HK) Limited Far Eastern Big City Shopping Malls Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Pacific Sogo Department Stores Co., Ltd. Pacific Department Store Co., Ltd. Pacific China Holdings (HK) Limited Pacific Department Store Co., Ltd. Lian Ching Investment Co., Ltd. (Note C) Pacific Venture Investment Ltd. Sogo Department Store Co., Ltd. Ding Ding Integrated Marketing Service Co., Ltd. Far Eastern Big City Shopping Malls Co., Ltd. Yuan Hsin Digital Payment Co., Ltd. Pacific China Holding Ltd. Bai Fa China Holdings (HK) Ltd.	Taiwan Taiwan Taiwan Taiwan Taiwan British Virgin Island Taiwan Taiwan Taiwan US Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan British Virgin Island Hong Kong Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Hong Kong Taiwan Taiwan Hong Kong Taiwan Taiwan Taiwan Taiwan British Virgin Island Hong Kong	Investment Securities investment Investment Investment Retail Investment Advertising and import agent Department store Marketing Trading Building leasing Retail Other financing and supporting services Securities investment Investment Leasing Department store Import and export trading and distribution Building leasing Retail Investment Investment Shopping mall Shopping mall Leasing Investment Shopping mall Investment Investment Investment Department store Investment Investment Investment Department store Department store Investment Department store Investment Investment Credit card business Marketing Department store Other financing and supporting services Investment Investment	$ 8,922,181 143,652 1,764,210 33,357 1,535,538 125,058 33,000 919,292 64,500 5,316 40,278 478,269 238,292 163,563 658,129 301,125 33,490 21,291 28,672 - 99,000 99,000 2,000,000 1,522,761 1,555,590 577,457 2,245,272 99,000 723,946 3,853,976 200,000 55,000 1,200 8,400 4,469,904 62,480 6,117,447 599,000 270,641 357,050 32,984 64,500 300,000 238,292 4,414,400 46	$ 8,922,181 143,652 1,764,210 33,357 1,535,538 125,058 33,000 919,292 64,500 5,316 40,278 478,269 238,292 163,563 658,129 301,125 33,490 21,291 28,672 - 99,000 99,000 2,000,000 1,522,761 1,555,590 577,457 2,245,272 99,000 723,946 3,853,976 200,000 55,000 1,200 8,400 4,469,904 62,480 6,117,447 599,000 270,641 357,050 32,984 64,500 300,000 238,292 4,414,400 46	924,991 141,980 281,734 119,981 87,744 218 3,500 41,000 3,631 950 1,571 47,827 8,226 98,281 100,250 22,203 11,254 4,901 1,259 2 19,800 19,800 200,000 149,100 132,388 60,019 232,000 19,800 185 44,080 20,000 11,000 200 1,400 650,817 6,840 66,120 60,296 26,764 100,000 7,120 3,631 30,000 8,226 130,200 2	100 20 35 67 100 54 100 100 10 100 56 96 11 14 13 5 1 47 44 - 2 2 100 70 30 33 100 2 46 40 40 1 - - 79 3 60 29 50 48 34 10 60 11 100 100	$ 9,108,584 2,016,983 4,024,497 2,321,818 (Note B) 1,222,011 1,427,279 118,535 85,689 25,787 4,367 13,283 68,097 61,713 1,396,294 1,445,737 327,680 159,994 68,833 13,872 1 302,756 302,756 1,991,269 1,779,226 1,690,092 1,176,926 2,403,784 302,756 1,215,339 (1,133,042 ) 281,241 167,942 2,860 19,373 10,838,804 139,390 (1,699,563 ) 1,019,110 - - - 25,787 421,862 61,713 (2,936,789 ) 46	$ 68,637 97,350 814,794 226,601 (59,253 ) (6,820 ) 14,246 (45,828 ) (15,685 ) 100 1,312 33,128 (186,922 ) 97,350 814,794 173,611 1,060,261 588 1,312 33,128 814,794 814,794 (1,383 ) 109,694 173,611 226,601 19,094 814,794 (6,820 ) (652,744 ) 147,148 814,794 814,794 814,794 1,060,261 83,449 (652,744 ) 83,449 - - - (15,685 ) 147,148 (186,922 ) (577,790 ) -	$ 68,668 19,136 286,236 151,269 (59,253 ) (2,569 ) 14,246 (45,828 ) (1,352 ) 100 846 31,690 (28,037 )	Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Associate Associate Subsidiary Associate Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Associate Subsidiary Associate Associate Associate Subsidiary Associate Subsidiary Subsidiary

(Continued)

• 75 -

(Concluded)

Note A: The foreign-currency investments were translated at the rate of US$1:NT$28.48 prevailing on December 31, 2020.

Note B: The amount is the investment accounted for using the equity method to $2,418,928 thousand deduct the parent company shares reclassification to treasury shares of $97,110 thousand.

Note C: The amount of Lian Ching Investment Co., Ltd. had been written off to zero, no liabilities were undertaken by the Company and the accounts are not disclosed in the financial statement.

• 76 -

TABLE 6

FAR EASTERN DEPARTMENT STORES, LTD.

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital (Note A)	Method of Investment (Note F)	Accumulated Outflow of Investment from Taiwan as of January 1, 2020 (Note A)	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2020 (Note A)	Net Income (Loss) of the Investee (Note D)	% Ownership of Direct or Indirect Investment	Share of (Loss) Profit (Note D)	Carrying Amount as of December 31, 2020	Accumulated Repatriation of Investment Income as of December 31, 2020
					Outflow	Inflow
Shanghai Pacific Department Store Co., Ltd. Chengdu Quanxing Building Pacific Department Store Co., Ltd. Chongqing Metropolitan Plaza Pacific Department Store Co., Ltd. Chongqing Pacific Consultant and Management Co., Ltd. Shanghai Pacific Consultant and Management Co., Ltd. Shanghai Bai Ding Consultant and Management Co., Ltd. Chongqing FEDS Co., Ltd. Chengdu Department Emporium Group Co., Ltd. Dalian Pacific Department Store Co., Ltd. Pacific(China) Investment Co., Ltd. Chengdu FEDS Co., Ltd Yuan Ding Enterprise(Shanghai)Co., Ltd.	Department store Department store Department store Consulting services Consulting services Consulting services Department store Department store, logistics and storehouse Department store Investment Department store Wholesale of equipment and consulting services	$ 504,096 626,275 85,440 2,079,040 9,968 2,848 79,744 982,084 69,837 6,151,680 3,816,320 7,696,997	(2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2)	$ 365,470 (Note B) 28,195 (Note B) 85,440 (Note B) 5,696 (Note B) 4,884 (Note B) - - - - - - -	$ - - - - - - - - - - - -	$ - - - - - - - - - - - -	$ 365,470 (Note B) 28,195 (Note B) 85,440 (Note B) 5,696 (Note B) 4,884 (Note B) - - - - - - -	$ (66,649) (17,865) (238,746) (15,572) 264 (8,105) 28,077 32,025 (11,232) (48,525) (43,535) (99,768)	49 67 67 67 33 100 100 22 67 67 67 20	$ (48,307) (11,999) (160,352) (10,459) 87 (8,105) 28,077 - (7,544) (31,970) (29,240) (19,954)	$ 122,967 (72,656) (353,530) 757,735 6,182 2,924 977,841 1,148,607 4,519 (45,915) (112,540) 1,542,009	$ - - - - - - - - - - - -

(Continued)

• 77 -

(Concluded)

Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$ - (Note C)	$225,362 (US$7,913 thousand) (Notes A and C)	$ - (Note E)

Note A: Translated at the rate of US$1:NT$28.48 and RMB1:NT$4.3648 prevailing on December 31, 2020.

Note B: The payment was made by Pacific Construction Co., Ltd. (the former shareholder).

Note C: The payment made by the Company and the investment amount approved by the Investment Commission, except for the payment made by subsidiary and the subsidiary’s investment amount approved by the Investment Commission.

Note D: The financial report was audited by an international accounting firm with a cooperative working relationship.

Note E: There is no upper limit, as stated in the Principles Governing the Review of Investment or Technical Corporation in Mainland China (No. 10720421530), which was issued by the Industrial Development Bureau, Ministry of Economic Affairs, ROC. Note F: Three investment types are as follows:

1. The Company made the investment directly.

2. The Company made the investment through companies registered in a third region. The companies registered in a third region were FEDS Development Ltd. and Pacific China Holding Ltd.

3. Others.

4. 78 -

TABLE 7

FAR EASTERN DEPARTMENT STORES, LTD.

INFORMATION ON MAJOR SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2020

Major Shareholder	Shareholding	Shareholding
	Number of Shares Held	Shareholding Percentage
Far Eastern New Century Corporation Yuan Ding Investment Corporation Asia Cement Corporation Land Union Investment Limited	241,769,702 139,785,985 80,052,950 77,135,000	17.06 9.86 5.64 5.44

• Note 1: The information on major shareholders above is extracted as of the last business day of the current quarter. The shareholders are holding non-physical ordinary and preference shares (including treasury stocks) of 5% or more. The share capital in the financial statements of the Company and the actual registration of non-physical shares may differ due to a difference in computation basis.

• Note 2: For the above information, if the shares are entrusted to a trustee by the shareholder, it is disclosed by account of settlor. In accordance with the Securities Exchange Act, shareholder who has acquired a 10% shares or more has to disclose his insider ownerships, including the shares held and shares entrusted to a trust, in which the shareholder possesses the right to use on the trusted assets. For information on insider ownership declaration, please see the Market Observation Post System website.

• 79 -

FAR EASTERN DEPARTMENT STORES, LTD.

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

Item Major Accounting Items in Assets, Liabilities and Equity Statement of cash Statement of trade receivables Statement of other receivables Statement of inventories Statement of change in financial assets at fair value through other comprehensive income Statement of changes in investments accounted for using the equity method Statement of changes in property, plant and equipment Statement of changes in accumulated depreciation and accumulated impairment of property, plant and equipment Statement of changes in investment properties Statement of changes in right-of-use assets Statement of changes in accumulated depreciation for right-of-use assets Statement of short-term borrowings Statement of short-term bills payable Statement of trade payables Statement of other payables Statement of long-term borrowings Statement of lease liabilities Statement of deferred tax liabilities Major Accounting Items in Profit or Loss Statement of operating revenue Statement of operating cost Statement of operating expenses Statement of other gains and losses Statement of finance costs Statement of labor, depreciation and amortization by function

**Statement Index **

1 2 3 4 5 6 Note 12 Note 12 Note 14 7 7 8 9 10 Note 18 11 12 Note 23(4) Note 21 13 14 Note 22(4) Note 22(5) 15

• 80 -

STATEMENT 1

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF CASH DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Rate (%) Cash on hand Revolving funds Checking accounts Demand deposits (Note) 0.001-0.05 Cash equivalents	Amount $ 1,897 34,627 673,667 88,585 13,930 $ 812,706

Note: The accounts include foreign currency deposit of US$140,897, EUR2,388.20 and AUD8,499.77, translated at the exchange rates of US$1:NT$28.48, EUR1:NT$35.02 and AUD1:NT$21.95.

• 81 -

STATEMENT 2

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF TRADE RECEIVABLES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Client Name Related parties (Note) Far Eastern International Bank Yuan Ding Co., Ltd Others (Note) Non-related parties National credit card center of R.O.C Others (Note) Less: Allowance for impairment loss	Amount $ 28,703 29,042 17,498 75,243 100,964 147,242 248,206 1,338 246,868 $ 322,111

Note: The amount of individual client included in others does not exceed 5% of the account balance.

• 82 -

STATEMENT 3

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF OTHER RECEIVABLES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Client Name Fubon insurance Others (Note)	Amount $ 188,508 67,364 $ 255,872

Note: The amount of individual client included in others does not exceed 5% of the account balance.

• 83 -

STATEMENT 4

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF INVENTORIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Merchandise Cosmetics and boutiques Supermarket and restaurants Men’s fashion Living and lifestyle		Amount
		Cost Net Realizable Value $ 333,430 $ 459,725 15,322 24,098 4,285 9,112 92 129 $ 353,129 $ 493,064

• 84 -

//

STATEMENT 5

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investees Shares Asia Cement Corporation Far Eastern New Century Corporation Yuan Ding Leasing Corp. Kaohsiung Rapid Transit Corporation Yuanshi Digital Technology Co., Ltd. Yuan Ding Co., Ltd.	Balance at January 1, 2020 Shares (In Thousands) Amount 50,000 $ 2,397,524 19,964 595,937 7,309 70,925 6,286 36,082 1,041 571 3 10 $ 3,101,049	Additions in Investment Shares (In Thousands) Amount - $ - - - - - - - - - - - $ -	Decrease in Investment Shares (In Thousands) Amount - $ - - - - - - - 729 - - - $ -	Unrealized Profit or Loss Amount $ (237,503) (17,968) 733 (691) - - $ (255,429)	Balance at December 31, 2020 Shares (In Thousands) Amount Collateral 50,000 $ 2,160,021 Including 35,000 thousand shares provided as collateral for bank borrowings and issuance 19,964 577,969 Nil 7,309 71,658 Nil 6,286 35,391 Nil 312 571 Nil 3 10 Nil $ 2,845,620
	Shares (In Thousands) 50,000 19,964 7,309 6,286 1,041 3	Shares (In Thousands) - - - - - -	Shares (In Thousands) - - - - 729 -		Shares (In Thousands) 50,000 19,964 7,309 6,286 312 3

• 85 -

STATEMENT 6

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF CHANGE IN INVESTMENTS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Par Value Investees Per Share BYIC $ 10 PLTI 10 BDIC 10 OSC 10 AIMAI 10 FEDS Development US$ 10 FECS 10 YHDP 10 YMAC 10 DDUN 10 FEHLD 10 Asians Merchandise Company (AMC) US$ 1 YTDS 10 Add: Credit balance on the carrying amounts of investments accounted for using the equity method and reclassified to other liabilities Less: Ordinary shares held by subsidiary and reclassified from long-term investments to treasury shares Less: The differences of accounting treatments from the consolidated financial statements (Note D)	Balance at January 1, 2020 Shares (In Thousands) Amount 924,991 $ 9,104,890 281,734 3,781,245 119,981 2,392,241 140,297 1,995,131 87,744 1,287,839 218 1,409,738 47,827 36,407 11,651 82,257 3,500 119,878 3,631 31,466 1,571 12,529 950 4,495 41,000 131,722 20,389,838 - 97,110 20,292,728 471,327 $ 19,821,401		Changes in	Investment		Other Amount (Note C) $ (323 ) (34,728 ) (74,093 ) (21,496 ) (6,575 ) - - 7,493 (8,431 ) (4,227 ) (72 ) - 118 $ (142,334)	Balance at December 31, 2020 Shares (In Thousands) (Note A) % Amount 924,991 100 $ 9,108,584 281,734 35 4,024,497 119,981 67 2,418,928 141,980 20 2,016,983 87,744 100 1,222,011 218 54 1,427,279 47,827 96 68,097 8,226 11 61,713 3,500 100 118,535 3,631 10 25,787 1,571 56 13,283 950 100 4,367 41,000 100 85,689 - 20,595,753 - 97,110 - 20,498,643 444,086 - $ 20,054,557	Market Value or Net Assets Value	Market Value or Net Assets Value
		Addition/Decrease in Investment (Note B) Shares (In Thousands) Amount - $ - - - - - 1,683 - - - - - - - (3,425 ) - - - - - - - - - $ -	Share of Loss of Subsidiaries and Associates Accounted for Using the Equity Method Amount $ 68,668 286,236 151,269 19,136 (59,253 ) (2,568 ) 31,690 (28,037 ) 14,246 (1,352 ) 846 101 (45,828) 435,154 (27,241) $ 462,395	Unrealized Gain or Loss on Financial Assets At FVTOCI Amount $ (59,674 ) (391 ) (47,997 ) 24,842 - 257 - - (7,152 ) - 1 - (16) $ (90,130)	Exchange Differences on Translating the Financial Statements of Foreign Operations Amount $ (4,977 ) (7,865 ) (2,492 ) (630 ) - 19,852 - - (6 ) (100 ) (21 ) (229 ) (307) $ 3,225
							Shares (In Thousands) (Note A) % 924,991 100 281,734 35 119,981 67 141,980 20 87,744 100 218 54 47,827 96 8,226 11 3,500 100 3,631 10 1,571 56 950 100 41,000 100 - - -
	Shares (In Thousands) 924,991 281,734 119,981 140,297 87,744 218 47,827 11,651 3,500 3,631 1,571 950 41,000	Shares (In Thousands) - - - 1,683 - - - (3,425 ) - - -						Unit Price NT$ $ 9.88 14.21 20.15 14.2 9.01 5,883.94 2.31 7.5 33.87 7.1 11.01 4.6 2.09	Total Amount $ 9,141,547 4,003,158 2,417,324 2,016,694 790,469 1,281,521 110,534 61,714 118,536 25,787 17,301 4,367 85,689 $ 20,074,641

Note A: Including 83,200 thousand shares of OSC provided as collateral of bank borrowings and bills payables.

Note B: The annual general shareholders’ meeting of Oriental Securities Corporation for 2020 passed a resolution for the capitalization of retained earnings. The Company acquired 1,683 thousand shares per its existing ownership percentage. In October 2020, Yuan Hsin Digital Payment Co., Ltd. undertook a capital reduction to offset the deficit, which resulted in a decrease that corresponded to the existing ownership percentage of the Company’s shareholding in Yuan Hsin Digital Payment Co., Ltd. by 3,425 thousand shares.

Note C: The adjustments of an increase of $11,325 thousand in capital reserve, a decrease of $14,222 thousand in actuarial loss and a decrease of $139,437 thousand in cash dividends are as per the existing shareholding percentage.

Note D: Please see Note 11.

• 86 -

STATEMENT 7

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF RIGHT-OF-USE ASSETS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Cost Land Buildings Plant, transportation, and miscellaneous equipment Accumulated depreciation Land Buildings Plant, transportation, and miscellaneous equipment	Balance at January 1, 2020 $ 8,191,429 19,378,186 323 27,569,938 (152,646 ) (1,581,033 ) (54) (1,733,733) $ 25,836,205	Addition in $ 103,196 130,537 5,337 $ 239,070 $ (275,545 ) (869,492 ) (421) $ (1,145,458)	Decrease in Reclassification $ - $ - - - - - $ - $ - $ - - - $ - $ -	Balance at December 31, 2020 Note $ 8,294,625 19,508,723 5,660 27,809,008 (428,191 ) (2,450,525 ) (475) (2,879,191) $ 24,929,817

• 87 -

STATEMENT 8

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Type Contract Period Interest Rates (%) Credit loans Taipei Fubon Bank 2020/12/02-2021/02/25 0.81 Taishin International Bank 2020/12/14-2021/01/11 0.87 Bank of Taiwan 2020/11/27-2021/01/20 0.86 Mizuho Corporate Bank Ltd. 2020/12/10-2021/01/07 0.85 Land Bank of Taiwan 2020/11/27-2021/01/19 0.87 Secured loans Bank of Taiwan 2020/12/28-2021/02/20 0.86	Balance, End of Year Loan Commitments Collateral $ 300,000 $ 300,000 - 1,500,000 2,500,000 - 800,000 800,000 - 1,000,000 1,000,000 - 350,000 800,000 - 3,950,000 5,400,000 700,000 700,000 Land and buildings $ 4,650,000 $ 6,100,000

• 88 -

STATEMENT 9

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF SHORT-TERM BILLS PAYABLES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Promissory Institution Contract Period Interest Rates (%) Mega Bills Finance Co., Ltd. 2020/12/18-2021/01/27 0.62 The Shanghai Commercial & Savings Bank 2020/12/21-2021/01/18 0.332 China Bills Finance Corporation 2020/12/11-2021/01/08 0.25 Grand Bills Finance Corporation 2020/11/25-2021/01/06 0.65 International Bills Finance Corporation 2020/12/16-2021/01/15 0.51 Taiwan Cooperative Bills Finance Corporation 2020/12/15-2021/01/04 0.70 Taiwan Finance Corporation 2020/12/28-2021/01/22 0.60 Ta Ching Bills Finance Corporation 2020/12/14-2021/01/11 0.61	Nominal Amount $ 500,000 500,000 350,000 300,000 200,000 200,000 200,000 200,000 $ 2,450,000	Discount Amount $ 207 196 57 35 65 14 99 47 $ 720	Carrying Amount Collateral $ 499,793 - 499,804 - 349,943 - 299,965 - 199,935 - 199,986 - 199,901 - 199,953 - $ 2,449,280

• 89 -

STATEMENT 10

FAR EASTERN DEPARTMENT STORES, LTD.

FAR EASTERN DEPARTMENT STORES, LTD.
STATEMENT OF TRADE PAYABLES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)
Vendor Name Related parties (Note) Unrelated parties Others (Note)	Amount $ 49,983 3,822,290 $ 3,872,273

Note: The amount of individual vendor in others does not exceed 5% of the account balance.

• 90 -

STATEMENT 11

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF LONG-TERM BORROWINGS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Type and Contract Repayment Interest Rates Creditor Period Terms (%) A revolving line of credit of commercial paper loans KGI Bank Less: Unamortized discount 2022.01.25 A revolving line of credit of loans is allowed 0.281 Mega Bank 2021.09.25 A revolving line of credit of loans is allowed 0.402 Less: Unamortized discount Secured loans Bank of Taiwan 2023.07.06 A revolving line of credit of loans is allowed 0.86 Hua Nan Commercial Bank 2022.07.24 A revolving line of credit of loans is allowed 0.88 Credit loans Bank of China 2022.07.22 A revolving line of credit of loans is allowed 0.86 Bank of Taiwan 2023.07.06 A revolving line of credit of loans is allowed 0.86	Current $ - - - 300,000 67 299,933 - - - - - - $ 299,933	Non-current $ 600,000 172 599,828 - - - 2,400,000 8,000,000 10,400,000 1,000,000 1,000,000 2,000,000 $ 12,999,828	Total Collateral $ 600,000 172 599,828 300,000 67 299,933 2,400,000 Land and buildings 8,000,000 Land and buildings 10,400,000 1,000,000 - 1,000,000 - 2,000,000 $ 13,299,761

• 91 -

STATEMENT 12

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

				Balance at
				December 31,
Item	Summary	Lease Period	Discount Rates	2020	Note
Land		2003/10/31-2053/10/30	0.88%-1.72%	$ 5,891,245	-
Buildings		2011/12/29-2041/12/31	0.86%-1.72%	8,888,876	-
Miscellaneous equipment		2019/03/01-2025/08/31	0.88%-0.92%	5,205	-
				14,785,326
Transferred into current liabilities
within a year				(941,237)
				$ 13,844,089

• 92 -

STATEMENT 13

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF OPERATING COST FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Cost of goods sold Inventories, beginning of year Add: Purchases Less: Inventories, end of year Less: Transferred to operating expenses Rental cost Others	Amount $ 512,976 4,025,940 353,129 340 4,185,447 183,606 36,778 $ 4,405,831

• 93 -

STATEMENT 14

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Advertising Payroll Depreciation Utilities Tax Others (Note)	Selling and Marketing Expenses General and Administrative Expenses $ 280,572 $ - - 1,082,318 - 1,944,005 - 210,833 - 285,089 74,759 766,102 $ 355,331 $ 4,288,347	Expected Credit Loss $ - - - - - 801 $ 801	Total $ 280,572 1,082,318 1,944,005 210,833 285,089 841,662 $ 4,644,479

Note: The amount of each item in others does not exceed 5% of the account balance.

• 94 -

STATEMENT 15

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF LABOR, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Employees’ benefits expenses Salary and bonus Labor and health insurance Pension Director remuneration Others Depreciation Amortization			2020	Total $ 1,024,885 86,899 37,432 57,433 27,779 $ 1,234,428 $ 2,034,760 $ 50,182			2019
		Classified as Cost of Revenue $ - - - - - $ - $ 90,755 $ -	Classified as Operating Expenses $ 1,024,885 86,899 37,432 57,433 27,779 $ 1,234,428 $ 1,944,005 $ 50,182			Classified as Cost of Revenue $ - - - - - $ - $ 88,000 $ -	Classified as Operating Expenses $ 977,745 83,686 39,410 56,528 26,340 $ 1,183,709 $ 1,566,458 $ 26,757	Total $ 977,745 83,686 39,410 56,528 26,340 $ 1,183,709 $ 1,654,458 $ 26,757

Note A: As of December 31, 2020 and 2019, the Company had 1,347 and 1,403 employees, which included 7 and 6 directors not serving concurrently as employees, respectively.

Note B: As of December 31, 2020 and 2019, the Company’s average employees’ benefits expenses were $878 thousand and $807 thousand, respectively.

• Note C: As of December 31, 2020 and 2019, the Company’s average employees’ salary and bonus were $765 thousand and $700 thousand, respectively.

Note D: The adjustment of average employees’ salary and bonus was 9.29%.

• Note E: The Company has established the remuneration committee in accordance with the laws and regulations. The committee takes into consideration the remuneration offered by the industry counterparts and publicly listed corporations and convenes meetings to evaluate and determine the remuneration of directors and managers.

The distribution of remuneration of directors is as provided by the Articles of Incorporation, Article 27. If the Company is profitable for the year, it shall appropriate not more than 2.5% of its profit as remuneration of directors. The actual appropriation percentage and amount of the remuneration of directors are reported to the shareholders’ meeting by the board of directors after taking into consideration the performance evaluation, operating performance of the Company, future business risks and other relevant factors. Furthermore, the payment is determined by taking into consideration the payments offered by the industry counterparts and publicly listed corporations.

The remuneration to managers consists of four types of payments, namely salary, pension, bonus reward and special allowance, and compensation of employees. The compensation of employees is appropriated as per the Articles of Incorporation. The actual appropriation percentage, amount and disbursement method are subject to the resolution passed by the board of directors, and in turn shall be reported to the shareholders’ meeting. The overall combination of the compensation is determined by taking into consideration the payments offered by the industry counterparts for the corresponding positions. The reasonableness of the correlation between individual performance, operating performance of the Company and future business risks is also taken into consideration, so as to establish a compensation policy that is rewarding and can reasonably reflect performances.

The Company shall review the compensation level of the market on a regular basis, so as to establish a fair, competitive and rewarding compensation benefit that retains employees and attracts outstanding talents to join the big family of Far Eastern Department Store. The compensation system consists of economic factors, namely the fixed salary, variable bonus and employee benefits, as well as non-economic factors, namely the work environment, job rotation, training and education, etc. Via a holistic design of the compensation system, the Company seeks to attract and retain outstanding and critical talents in the entity, boost working morale which form the core competitive advantages of the Company.

• 95 -