FIRST HOTEL — Annual Report 2020

Aug 31, 2021

Common stock code: 2706 Information on the Annual Report can be found at (Website: http://mops.twse.com.tw) (Website: http://twfirsthotel.com.tw)

FIRST HOTEL COMPANY LTD.

2020 Annual Report

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First Hotel

No 63, Sec.2, Nan Jing E. Rd., Taipei, Taiwan (02)2541-8234

[where any discrepancy arises Between the English translation and The original chinese version of this Annual Report the Chineses version shall prevail.]

Published on May 25, 2021

I. The Company’s spokesperson Acting spokesperson Name: An-Sheng Ku Name: Hsiu-Mei Lin Title: Chairperson Title: Acting spokesperson TEL: (02)2541-8234 TEL: Same as left E-mail: None.

II. Address and telephone number of the head office: Head office: No. 63, Section 2, Nanjing East Road, Taipei City TEL: (02)2541-8234 (Main Line)

III. Stock transfer agency: Name: Stock affairs division, First Hotel Company Ltd. Address: 11F., No. 41, Sec. 1, Zhonghua Rd., Taipei City, Taiwan (R.O.C.) TEL: (02)2381-3739 (Main Line) Website: None. IV. Attesting CPAs for the most recent year CPA firm: Deloitte & Touche CPA names: Ying-Chou Chen, Wang-Sheng Lin Address: 20F., No. 100, Songren Rd., Xinyi Dist., Taipei City, Taiwan (R.O.C.) TEL: (02)2725-9988

Website: http://www.deloitte.com.tw/

• V. Name of overseas exchange where securities are listed, and the methods for inquiring about the foreign-listed securities: None.

VI. Company website: http://twfirsthotel.com.tw

One. Letter to Shareholders ............................................................................................................................................ 1 Two. Company profile ..................................................................................................................................................... 4 I. Date of incorporation ............................................................................................................................................. 4 II. Company history ................................................................................................................................................... 4 Three. Corporate governance report I. Organizational system 1. Organizational structure ................................................................................................................................ 6 2. Business of major departments ..................................................................................................................... 7 II. Information on directors, GM, Deputy GM, Assistant GM and officer of each department. 1. Information on directors ............................................................................................................................... 8 2. Information on the GM, Deputy GM, Assistant GM and officer of each department. ................................ 12 III. Remuneration for directors, supervisors, GM and Deputy GM 1. Remuneration for directors .......................................................................................................................... 13 2. Remuneration for supervisors ...................................................................................................................... 14 3. Remuneration for GM and Deputy GM ....................................................................................................... 14 4. Analysis of total remuneration for directors, GM and Deputy GM as a percentage of net profits after tax in the standalone financial statements ............................................................................................................... 17 IV. The operation of corporate governance 1. The operation of the Board of Directors .................................................................................................... 18 2. The operation of the Audit Committee ...................................................................................................... 20 3. The operation of corporate governance and the difference from the “Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies,” and the reasons therefor. ........................................... 21 4. The composition, responsibilities and operation of the Remuneration Committee ................................... 25 5. The performance of Corporate Social Responsibility and the differences from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies, and the reasons therefor. ... 27 6. The performance of ethical corporate management and the differences from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the reasons therefor. ...... 30 7. If there are corporate governance best practice principles and related rules and regulations, include the methods for inquiring about them. ............................................................................................................. 31 8. Other important information that is helpful to understand the Company's operation of corporate governance may also be disclosed. ............................................................................................................ 31 9. Implementation of internal control system ................................................................................................ 32 10. During the most recent year or the current year up to the date of publication of the annual report, if the Company or its internal personnel have been punished in accordance with law, or the Company has punished its internal personnel for violating the provisions of the internal control system, the major deficiencies and improvements: ................................................................................................................ 33 11. Important resolutions of the shareholder meeting and board meeting during the most recent year or during the current year up to the date of publication of the annual report: ........................................................... 33 12. During the most recent year or during the current year up to the date of publication of the annual report, if directors had different opinions on important resolutions approved by the Board of Directors with records or written statements: ................................................................................................................................. 34

	13. For the most recent year or the current year up to the date of publication of the annual report,
	circumstances related to the resignation and dismissal of the Company’s chairperson, GM, accounting
	officer, finance officer, internal audit officer, and R&D officer: ............................................................... 34
V. Information on CPAs
	1. Information on the professional fees of CPAs ........................................................................................... 35
	2. If the non-audit fees paid to the attesting CPA, the CPA firm and its affiliates account for over one-fourth
	of the audit fees, the amount of audit and non-audit fees and the content of non-audit services should be
	disclosed: ................................................................................................................................................... 35
	3. Where the audit fees paid in the year of the change of CPA firm is less than the audit fees in the year
	before the change, the amount of the audit fees before and after the change and the reasons therefor
	should be disclosed: ................................................................................................................................... 35
	4. Where the audit fees have decreased by 10% or more from the previous year, the amount, percentage and
	reasons therefor should be disclosed: ........................................................................................................ 35
VI.	Information on change of CPAs ....................................................................................................................... 35
VII.	Anyone among the Company's chairperson, GM, or any managerial officers in charge of finance or
	accounting affairs who have in the most recent year held a position at the accounting firm of the attesting
	CPA or an affiliate of the accounting firm: ...................................................................................................... 35
VIII.	Any equity transfer or change in equity pledge by a director, managerial officer, or shareholder with 10%
	stake or more during the most recent year or during the current year up to the date of publication of the
	annual report.:................................................................................................................................................... 36
IX.	Information on the relationship between the top ten shareholders ................................................................... 37
X.	Total shareholding percentage .......................................................................................................................... 38
Four. Capital raising
I.	The Company’s capital and issuance of shares
	1. Source of capital ........................................................................................................................................ 39
	2. Shareholder structure ................................................................................................................................. 40
	3. Equity dispersion profile ........................................................................................................................... 40
	4. List of major shareholders ......................................................................................................................... 41
	5. Information on market price, net worth, earnings, dividend per share for the most recent two years ....... 42
	6. The Company’s dividend policy and implementation ............................................................................... 43
	7. The effect of the stock dividends to be resolved at the shareholder meeting on the Company's operating
	performance and earnings per share. ......................................................................................................... 43
	8. Profit sharing remuneration for employees and directors .......................................................................... 43
	9. Repurchase of the Company’s shares. ....................................................................................................... 44
II.	Issuance of corporate bonds and preferred stock .............................................................................................. 44
III.	Issuance of overseas depository receipts .......................................................................................................... 44
IV.	Employee stock options.................................................................................................................................... 44

V. Issuance of new shares in connection with mergers or acquisitions of shares of other companies: ................. 44
VI. Implementation of capital utilization plan ........................................................................................................ 44
Five. Operation overview
I. Business content ............................................................................................................................................... 45
II. Market, production and sales overview ............................................................................................................ 49
III. Number of employees, average years of service, average age and education distribution percentage ............. 54
IV. Information on environment protection expenditures ...................................................................................... 54
V. Labor relations.................................................................................................................................................. 54
VI. Important contracts ............................................................................................................................................. 56
Six. Financial status
I. Condensed balance sheet and statement of comprehensive income for the most recent 5 years ...................... 57
II. Analysis of financial ratio for the most recent 5 years ..................................................................................... 59
III. Review report of the Audit Committee on the financial statements for the most recent year .......................... 62
IV. Financial statements for the most recent year .................................................................................................. 63
V. Standalone financial statements for the most recent year audited and attested by CPAs. .............................. 125
VI. If the Company or its affiliates have experienced financial difficulties ......................................................... 125
Seven. Review and analysis of the financial status, financial performance, and risks
I. Financial status ............................................................................................................................................... 125
II. Financial performance .................................................................................................................................... 126
III. Cash flow ....................................................................................................................................................... 126
IV. Effect of major capital expenditures on finance and business matters in the most recent year. ..................... 127
V. Investment policy for the most recent year, the main reasons for profit or loss, improvement plan and
investment plan for the coming year. ............................................................................................................. 127
VI. Risk management assessment ........................................................................................................................ 127
VII. Other important matters.................................................................................................................................. 128
Eight. Special matters
I. Information on affiliates ................................................................................................................................. 128
II. Private placement of securities during the most recent year or the current year up to the date of publication of
the annual report, ............................................................................................................................................ 128
III. Holding or disposal of shares in the Company by the Company's subsidiaries during the most recent year or
the current year up to the date of publication of the annual report ................................................................. 128
IV. Other matters that require additional explanation .......................................................................................... 128
Nine. Any of the situations listed in Article 36, Paragraph 3, Subparagraph 2 of the Securities and Exchange Act,
which might materially affect shareholder equity or the price of the Company's securities,
which has occurred during the most recent year or the current year up to the date
of publication of the annual report. .................................................................................................................... 128

One. Letter to Shareholders

First of all, I would like to thank all shareholders for taking the time out of their busy schedules to attend the 2021 Annual Shareholders’ Meeting of the Company. The following is a report on the Company's business performance in 2020:

• I. For 2020, the Company's operating revenues were NT$264,866 thousand, down 23.61% from NT$346,735 thousand for the previous year (2019).

Profits before tax for 2020 were NT$201,122 thousand, down NT$458,533 thousand, or 69.51%, from the profits before tax of NT$659,655 thousand for the previous year (2019).

Net profits after tax for 2020 were NT$160,741 thousand, down NT$371,291 thousand, or 69.79%, from the net profits after tax of NT$532,032 thousand for 2019.

• II. The Company's travel service revenues in the year (2020) were NT$55.093 million, down 52.06% from those of the previous year (2019) of NT$114.917 million.

• III. As for the domestic and foreign investments of the Company:

• A. Domestic investments:

  1. Wan Hwa Enterprise Company distributed $35,924,000 in cash dividends for 2019.

  2. Dah Chung Bills Finance Corp. paid cash dividends of NT$22,841 thousand for 2019.

  3. Mega Financial Holding Company Limited paid cash dividends of NT$85 thousand for 2019.

  4. Chunghwa Telecom Co., Ltd. paid cash dividends of NT$56 thousand for 2019.

• B. Foreign investments:

  1. The Company's investment in Today's Hotel Corporation in the United States had losses after tax of around US$3,534 thousand for 2020, and the Company recognized a loss of NT$50,349 thousand under the equity method.

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• The Company's investment in Fawhotel Corporation in the United States had net profits after tax of around US$888 thousand for 2020, and the Company recognized a gain of NT$8,135 thousand under the equity method.

• IV. Future Outlook and Business Objective

Due to the outbreak of the coronavirus pandemic at the end of 2019, the epidemic has spread worldwide, causing damages to all industries. The tourism industry is also facing a significant challenge. In the coming year, the Company will continue to reduce costs, strengthen employee training, and expand the domestic tourism market while continuing to look for other diversified investments in order to increase revenues in the face of adversity. In addition, the Company will follow the government’s policies. It is our sincere hope that the epidemic will soon be under control, the border will open shortly, and all industries can resume to their normal operations.

Lastly,

To all Shareholders, Ladies and Gentlemen

good health and all the best.

General Manager: Hsiao-Hua Hsu

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Comparison of the Company's revenues and profits for 2020 and 2019

				Unit:ThousandNTD	Unit:ThousandNTD	Unit:ThousandNTD
Item	2020	%	2019	%	Increase or Decrease amount	Increase or decrease %
Operating revenue	264,866	100	346,735	100	( 81,869 )	( 23.61 )
Travel service revenues	55,093	21	114,917	33	( 59,824 )	( 52.06 )
Guest room revenues	16,529	6	06 74,7	21	( 58,177 )	( 77.87 )
Food service revenues	36,726	14	37,512	11	( 786 )	( 2.10 )
Post and telecommunication service revenues	4	0	14	0	( 10 )	( 71.43 )
Other revenues	1,834	1	2,685	1	( 851 )	( 31.69 )
Rental income	209,773	79	231,818	67	( 22,045 )	( 9.51 )
Operating costs	( 72,247 )	( 27 )	( 88,499 )	( 26 )	( 16,252 )	( 18.36 )
Gross profit	192,619	73	258,236	74	( 65,617 )	( 25.41 )
Operating expenses	( 27,245 )	( 11 )	( 32,623 )	( 9 )	( 5,378 )	( 16.49 )
Operating profit	165,374	62	225,613	65	( 60,239 )	( 26.70 )
Non-operating income and expenses	35,748	14	434,042	125	( 398,294 )	( 91.76 )
Profit before tax	201,122	76	659,655	190	( 458,533 )	( 69.51 )
Net profit	160,741	60	532,032	153	( 371,291 )	( 69.79 )

Chairperson: An-sheng Ku Managerial officer: Hsiao-hua Hsu Accounting officer: Hsiu-Mei Lin

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Two. Company profile

I. Date of Incorporation: September 27, 1968 II. Company history:

October 1962 The hotel was officially opened for business as the leading international hotel in Taiwan September 1968 The hotel was reorganized with a capital of NT$30 million and the Company was renamed First Hotel Company Ltd.

July 1977 The Company expanded its business and purchased another commercial building, located at No. 14, Nanjing West Road, Taipei City. September 1980 The Company invested NT$36,000,000 to purchase shares of Wan Hwa Enterprise Company Ltd., a TWSE-listed company, to achieve the purpose of diversification of operations and risks. 1980 ~ 1987 In order to enrich the operation capital, capital increases from capital surplus were approved over the years, amounting to NT$115,000,000, to a total capital of NT$145,000,000 as of the current year, with 14,5000,000 shares at NT$10 per share, which were fully issued.

October 1988 The Securities and Futures Commission approved the public offering of shares of the Company. Issuance of new shares with a capital increase of NT$43,500,000 from capital surplus and of NT$261,500,000 in cash was approved, and the total capital after the capital increase was NT$450,000,000. February 1991 On 28th, the Securities and Futures Commission approved the matters related to the TWSElisting of shares of the Company. April Invested in Today's Hotel Corporation in the U.S. to operate and invest in business hotels. June Listing and trading on the public market of the Taiwan Stock Exchange were officially approved. April 1992 Invested in F&W Hotel Corporation in the U.S. to engage in the construction of business hotels and the development and operation of real estate business.

1991 ~ 2006 In order to enrich the operation capital, over the years, capital increases of NT$1,155,667,200 from earnings, NT$226,389,340 from capital surplus, and NT$56,250,000 by cash were approved, resulting in total capital of NT$1,888,306,540 at the end of 2006, divided into 188,830,654 shares of NT$10 per share.

2007 In order to enrich the operation capital, the issuance of new shares with a capital increase from earnings of NT$453,193,570 was approved, and the total paid-in capital after the capital increase was NT$2,341,500,110.

June 2008 The Nanjing West Road’s Commercial Building, originally leased to China Rebar Company, Ltd., was leased to Shin Kong Mitsukoshi Department Store Co., Ltd. September In order to enrich the operation capital, the issuance of new shares with a capital increase from earnings of NT$234,150,010 was approved, and the total paid-in capital after the capital increase was NT$2,575,650,120.

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September 2009 In order to enrich the operation capital, the issuance of new shares with a capital increase from earnings of NT$257,565,010 was approved, and the total paid-in capital after the capital increase was NT$2,833,215,130. December Cooperated with the 2009 Taipei Deaflympics in improving the hearing impaired environment and won the Taipei City Government's evaluation of excellence. Cooperated with the 2009 Taipei Deaflympics in improving the English environment and won the Taipei City Government's evaluation of excellence. September 2010 In order to enrich the operation capital, the issuance of new shares with a capital increase from earnings of NT$254,989,360 was approved, and the total paid-in capital after the capital increase was NT$3,088,204,490. September 2011 In order to enrich the operation capital, the issuance of new shares with a capital increase from earnings of NT$247,056,350 was approved, and the total paid-in capital after the capital increase was NT$3,335,260,840. September 2012 In order to enrich the operation capital, the issuance of new shares with a capital increase from earnings of NT$166,763,040 was approved, and the total paid-in capital after the capital increase was NT$3,502,023,880. September 2013 In order to enrich the operation capital, the issuance of new shares with a capital increase from earnings of NT$196,113,330 was approved, and the total paid-in capital after the capital increase was NT$3,698,137,210. September 2014 In order to enrich the operation capital, the issuance of new shares with a capital increase from earnings of NT$221,888,230 was approved, and the total paid-in capital after the capital increase was NT$3,920,025,440. September 2015 In order to enrich the operation capital, the issuance of new shares with a capital increase from earnings of NT$282,241,830 was approved, and the total paid-in capital after the capital increase was NT$4,202,267,270. August 2016 In order to enrich the operation capital, the issuance of new shares with a capital increase from earnings of NT$302,563,240 was approved, and the total paid-in capital after the capital increase was NT$4,504,830,510. August 2017 In order to enrich the operation capital, the issuance of new shares with a capital increase from earnings of NT$360,386,440 was approved, and the total paid-in capital after the capital increase was NT$4,865,216,950 September 2018 In order to enrich the operation capital, the issuance of new shares with a capital increase from earnings of NT$134,766,510 was approved, and the total paid-in capital after the capital increase was NT$4,999,983,460.

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III. Corporate governance report:

• I. Organizational system

1. Organizational structure

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

Shareholders’
Meeting Audit
Committee:
Board of
directors
Remuneration Chairman Chief
Committee Auditor
General
Manager
Deputy General
Manager
Assistant Auditor
General
Manager
Sales
Finance Affairs General
Department Department Department Housekeeping Department
Cashier Dining Security Affairs General Human
Stock Affairs Accounting Reservation Concierge Housekeeping Resources
----- End of picture text -----

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• Business of major departments

• (1) Sales Department: Domestic and foreign business marketing and development, reservation and reception of customers, handling customer complaints, etc.

• (2) Housekeeping Department: Cleaning of rooms, making up guest clothes, delivery of bed linen and towels, etc.

• (3) Finance Department: Preparation and analysis of financial statements, cost control, funds planning, accounting processing, tax returns, and stock affairs.

• (4) General Affairs Department: Construction contracting, repair and maintenance, procurement, management of fire and safety inspection, human resources and security control, etc.

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II. Information on directors, General Manager, Deputy General Manager, Assistant General Manager and officer of each department.

1. Information on directors (1)

																	May1,2021	May1,2021	May1,2021	May1,2021
Position	Nationality or place or egistration	Name	Gender	Date elected	Term of Office	Date first elected	Shareholding when elected		Current shareholding		Shareholding of spouse and minor children now		Shareholding in the name of others		Major experience (education)	Concurrent positions in the Company and other companies now	Spouse or relatives within the second degree of kinship who are other officers, directors or supervisors			Remarks (1)
							Number of shares	Shareholding %	Number of shares	Shareholding %	Number of shares	Shareholding %	Number of shares	Ownership			Position	Name	Relationship
Chairman	ROC	Top-Five Engineering Co., Ltd. Representative An-Sheng Ku	Male	2019.06.24	3 years	2010.06.17	38,820 0	% 0.01 0	38,820 0	% 0.01 0	－ 108,888	－ % 0.02	0 0	0 0	Taiwan Television Enterprise, Ltd. Deputy General Manager	No	No	No	No	No
Directors	ROC	Wan Hwa Enterprise Company Representative: Shih-Yu Huang	Male	2019.06.24	3 years	2010.06.17 2013.06.19	99,000,503 3,878	% 19.80 －	99,000,503 3,878	% 19.80 0	－ －	－ －	0 0	0 0	Combined Logistics Command Finance officer, finance department	No	No	No	No	No
Independent director	ROC	Hsieh-Hung Li	Male	2019.06.24	3 years	2016.06.23	0	0	0	0	0	0	0	0	Sun Juan Metal Co., Ltd. Chairman	No	No	No	No	No
Independent director	ROC	Yi-Wu Yang (Note 2)	Female	2019.06.24	3 years	2016.06.23	0	0	0	0	0	0	0	0	Hao Huei Co., Ltd. Sales Executive	No	No	No	No	No
Independent director	ROC	Hsiu-Chin Chou	Female	2019.06.24	3 years	2019.06.24	0	0	0	0	0	0	0	0	Tang Hsianglin Architects Chief accountant	No	No	No	No	No

Remarks: 1. If the chairperson and the General Manager or equivalent (the top managerial officer) of the Company are the same person, each other’s spouse or relative within the first degree of kinship, the reason, rationality, necessity, corresponding measures should be stated.

2. Ms. Yi-Wu Yang, the former independent director of the Company, resigned as an independent director on March 9, 2021.

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Table 1: Major shareholders of corporate shareholders

	December 31,2020	December 31,2020	December 31,2020	December 31,2020	December 31,2020	December 31,2020	December 31,2020
Names of corporate shareholders	Major shareholders of corporate shareholders (Note 2)						Remarks
	Names of shareholders	Ownership	Names of shareholders	Ownership	Names of shareholders	Ownership
Top-Five Engineering Co.,Ltd.	Kuang-Hui Chiang	% 9.60	Kuang-Hsia Chiang	% 9.60
Wan Hwa Enterprise Company Ltd.	Today's Department Store Company Ltd.	% 19.96	First Hotel Company Ltd.	% 19.96	Zen Fong Investment Co. Ltd.	% 11.61
Today's Department Store CompanyLtd.	Wan Hwa Enterprise Company Ltd.	% 19.80	First Hotel Company Ltd.	% 19.80

If the major shareholder is a corporation, the major shareholder of the corporation is not listed in the above table because the information is not available.

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Information on directors (2)

Criteria Name	With at least five years of work experience and the following professional qualifications	With at least five years of work experience and the following professional qualifications	With at least five years of work experience and the following professional qualifications	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Number of other public companies in which the individual is concurrently serving as an independent director
	An instructor or higher up in a commerce, law, finance, accounting, or other academic department related to company business in a public or private junior college, college, or university.	A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and has been awarded a certificate in a professional capacity that is necessary for company business.	Work experiences in business, legal, financial, accounting or related areas required for the Company’s business	1	2	3	4	5	6	7	8	9	10	11	12
An-ShengKu			∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	∨		0
Shih-Yu Huang			∨	∨	∨	∨	∨		∨	∨	∨	∨	∨	∨		0
Hsieh-HungLi			∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	0
Yi-Wu Yang (Note1)			∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	0
Hsiu-Chin Chou			∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	∨	0

Note 1: Ms. Yi-Wu Yang, the former independent director of the Company, resigned as an independent director on March 9, 2021.

Note 2: For each director who has met the following criteria for the two years prior to their elections and during their tenure, please mark “ ✓ “ in the space below each criterion code.

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• (1) Not an employee of the Company or its affiliates.

• (2) Not a director or supervisor of the Company or its affiliates. (However, this restriction does not apply to independent directors elected in accordance with the Securities and Exchange Act or the laws and regulations of the local country, who concurrently serve as such at the Company and its parent or subsidiary or a subsidiary of the same parent.).

• (3) Not a natural-person shareholder holding more than 1% of the total number of issued shares or among the top 10 natural-person shareholders in its name, spouse, minor children, or others.

• (4) Not a managerial officer under (1) or a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship under (2), (3).

• (5) Not a director, supervisor, or employee of a corporate shareholder directly holding 5% or more of the total number of issued shares of the Company, or among the top 5 in shareholdings, or designating its representative to serve as a director or supervisor of the Company under Article 27, Paragraph 1 or 2 of the Company Act. (However, this restriction does not apply to independent directors elected in accordance with the Securities and Exchange Act or the laws and regulations of the local country, who concurrently serve as such at the Company and its parent or subsidiary or a subsidiary of the same parent.)

• (6) Not a director, supervisor, or employee of another company. If the same person controls a majority of the Company's director seats or shares with voting rights and those of that other company: (However, this restriction does not apply to independent directors elected in accordance with the Securities and Exchange Act or the laws and regulations of the local country, who concurrently serve as such at the Company and its parent or subsidiary or a subsidiary of the same parent.)

• (7) Not a director, supervisor, or employee of the other company or institution who is or whose spouse is the chairperson, General Manager or equivalent positions of the Company. (However, this restriction does not apply to independent directors elected in accordance with the Securities and Exchange Act or the laws and regulations of the local country, who concurrently serve as such at the Company and its parent or subsidiary or a subsidiary of the same parent.)

• (8) Not a director, supervisor, managerial officer, or shareholder holding 5% or more of the shares of a specific company or institution that has a financial or business relationship with the Company. (However, this restriction does not apply to independent directors elected in accordance with the Securities and Exchange Act or the laws and regulations of the local country, who concurrently serve as such at the Company and its parent or subsidiary or a subsidiary of the same parent and when the specific company or institution holds more than 20% of the Company’s total issued shares but not more than 50%.)

• (9) Not a professional, sole proprietor, partner, owner of a company or institution, director, supervisor, managerial officer or its spouse that provides the Company or related companieswith audit services or commercial, legal, financial, accounting or related services with a cumulative amount of remuneration in the last two years exceeding NT$500,000. This restriction does not apply, however, to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or the Business Mergers and Acquisitions Act or related laws or regulations.

• (10) Not a person who has a spouse or relatives of second degree of kinship in other directors.

• (11) Not a person with any of the circumstances under Article 30 of the Company Act.

• (12) Not a person elected in the capacity of the government, a corporation, or a representative as provided in Article 27 of the Company Act.

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• Information on directors, General Manager, Deputy General Manager, Assistant General Manager and officer of each department and branch.

													May1,2021	May1,2021	May1,2021	May1,2021
Position (Note 1)	Nationality	Name	Gender	Date elected	Shareholding		Shareholding of spouse and minor children		Shareholding in the name of others		Major experience (education) (Note 2)	Concurrent positions in other companies now	Managerial officers with spouses or relatives with a second degree of kinship			Remarks (Note 3)
					Number of shares	Shareholding %	Number of shares	Shareholding %	Number of shares	Ownership			Position	Name	Relationship
General Manager	ROC	Hsiao- Hua Hsu	Female	06 2006. . 19	0	0	2,693	-	0	0	Deputy General Manager, First Hotel Company Ltd.	No	No	No	No	No
Deputy General Manager	ROC	Hsiu- Mei Lin	Female	01 2010. . 01	3,278	0	0	0	0	0	Jinou Vocational High School of Commerce Accounting and Statistics Department	No	No	No	No	No
Assistant General Manager	ROC	Si-Wei Ni	Male	04 1997. . 01	6,939	0	0	0	0	0	Tokyo Vocational College School of Business	No	No	No	No	No

Note 1: The information on the General Manager, Deputy General Manager, Assistant General Manager, officers of departments and branches, and anyone whose position is equivalent to the General Manager, Deputy General Manager or Assistant General Manager, regardless of title, shall also be disclosed.

Note 2: Experiences related to the current position, such as having worked for the auditing and attesting CPA firm or its affiliates during the above-mentioned period, the title of the position and the duties performed should be specified.

Note 3: If the General Manager or equivalent (the top managerial officer) and the chairperson of the Company are the same person, each other’s spouse or relative within the first degree of kinship, the reason, rationality, necessity, corresponding measures (such as increasing the number of independent directors and having a majority of directors who are not concurrently serving as employees or managerial officers, etc.) and related information should be described.

• 12 -

III. Remuneration for directors, General Manager and Deputy General Manager

1. Remuneration for directors

Unit: Thousand NTD

Position	Name			Directors' r	Directors' r	emuneration	emuneration			A, B, C and D as a % of the net profits after tax	A, B, C and D as a % of the net profits after tax	Remu	Remu	neration forthe concurre	neration forthe concurre	nt positionas anemployee	nt positionas anemployee	nt positionas anemployee	nt positionas anemployee	A, B, C, D, E, F and G as a % of the net profits after tax	A, B, C, D, E, F and G as a % of the net profits after tax	Any Remuneration from invested enterprises other than subsidiaries?
		Remuneration (A)		Severance and pension (B)		Director remuneration (C)		Business execution expenses (D)				Salary, bonus, and allowance (E)		Severance and pension (F)		Employee profit sharing remuneration (G) (Note 6)
		The Company	All companies in the financial statements	The Company	All companies in the financial statements	The Company	All companies in the financial statements	The Company	All companies in the financial statements	The Company %	All companies in the financial statements	The Company	All companies in the financial statements	The Company	All companies in the financial statements	The Company		All companies in the financialstatements		The Company %	All companies in the financial statements
																Cash amount	Stock amount	Cash amount	Stock amount
Chairman	Representative of Top-Five Engineering Co., Ltd.: An- ShengKu	0	No consolidated statement	0	No consolidated statement	4,280 0	No consolidated statement	0 844	No consolidated statements	2.66 0.53	No consolidated statement	0	No consolidated statement	0	No consolidated statement	0	0	No consolidated statement	No consolidated statement	2.66 0.53	No consolidated statement	No
Directors	Representative of Wan Hwa Enterprise Company: Shih-Yu Huang					1,000 0		180 4		0.73 -										0.73 -
Independent director	Hsieh-Hung Li					240		32		0.17										0.17
Independent director	Yi-Wu Yang (Note)					240		32		0.17										0.17
Independent director	Hsiu-Chin Chou					240		12		0.16										0.16

Note: Ms. Yi-Wu Yang, the former independent director of the Company, resigned as an independent director on March 9, 2021.

• 13 -

2. Remuneration for supervisors

The Company has established an audit committee to replace the supervisors, so it is not applicable. 3. Remuneration for General Manager and Deputy General Manager

												Unit: Thousand NTD	Unit: Thousand NTD	Unit: Thousand NTD
Position	Name	Salary (A)		Severance and pension (B)		Bonus and allowance (C)		Employee profit sharing remuneration (D)				A, B, C and D as a % of the net profits after tax (%)		Remuneration from invested enterprises other than subsidiaries
		The Company	All companies in the financial statements	The Company Note	All companies in the financial statements	The Company	All companies in the financial statements	The Company		All companies state	in the financial ments	The Company %	All companies in the financial statements
								Cash amount	Stock amount	Cash amount	Stock amount
General Manager	Hsiao- Hua Hsu	1,140	No consolidated statement	23	No consolidated statement	4	No consolidated statement	150	0	No consolidated statement	No consolidated statement	0.82	No consolidated statement	No
Deputy General Manager	Hsiu- Mei Lin	1,140		23		4		112	0			0.80		No

Note: The severance and pension is contributed with 2% of monthly salary and is deposited into an account at the Bank of Taiwan in the name of the “Supervisory Committee of Labor Retirement Reserve.”

• 14 -

Remuneration of the top five highest paid management of listed companies

Unit: Thousand NTD

Position	Name	Salary (A) (Note 2)	Salary (A) (Note 2)	Severance and pension (B)	Severance and pension (B)	Bonus and allowance (C) (Note 3)	Bonus and allowance (C) (Note 3)	Employee profit sharing remuneration (D) (Note 4)	Employee profit sharing remuneration (D) (Note 4)	Employee profit sharing remuneration (D) (Note 4)	Employee profit sharing remuneration (D) (Note 4)	A, B, C and D as a % of the net profits after tax (%) (Note 6)	A, B, C and D as a % of the net profits after tax (%) (Note 6)	Remuneration from invested enterprises other than subsidiaries or parent company (Note 7)
		The Company	All companies in the financial statements	The Company	All companies in the financial statements	The Company	All companies in the financial statements	The Company		All companies in the financial statements (Note 5)		The Company	All companies in the financial statements
								Cash amount	Stock amount	Cash amount	Stock amount
General Manager	Hsiao- Hua Hsu	1,140	0	23	0	4	0	150	0	0	0	0.82	0	0
Deputy General Manager	Hsiu- Mei Lin	1,140	0	23	0	4	0	112	0	0	0	0.80	0	0
Assistant General Manager	Si- WeiNi	648	0	13	0	0	0	88	0	0	0	0.47	0	0

• 15 -

The name of the managerial officer in charge of the distribution of employee remuneration and the status of the distribution

						Unit: Thousands of NTD
	Position (Note 1)	Name (Note 1)	Stock amount	Cash amount	Total	Total as a percentage of net profits after tax (%)
Managers	General Manager	Hsiao-Hua Hsu	-	350	350	0.22
	Deputy General Manager	Hsiu-Mei Lin
	Assistant General Manager	Si-Wei Ni

Note 1: Individual names and titles should be disclosed, but the distribution of earnings shall be disclosed in aggregate.

Note 2: The amount of employee remuneration (including stock and cash) received by managerial officers in the most recent year should be disclosed as approved by the Board of Directors. If the amount cannot be estimated, the proposed payment amount for this year should be calculated in proportion to the actual payment amount last year. The net profits after tax refer to the net profits after tax of the most recent year; if IFRSs have been adopted, the net profits after tax refer to the net profits after tax of the most recent year for individual or stand-alone financial reports.

Note 3: The scope of application of managerial officers, as stipulated in the Order Tai-Cai-Sheng-San-Zi No. 0920001301 dated March 27, 2003, is as follows. (1) General Manager and equivalent (2) Deputy General Manager and equivalent (3) Assistant General Manager and equivalent (4) Officer of finance department (5) Officer of accounting department (6) Other persons who have the authority to manage and sign for the company.

Note 4: If the directors, General Manager and Deputy General Manager receive employee remuneration (including stock and cash), this table in addition to Table 1-2 should be filled in.

• 16 -

• Compare and describe the total remuneration paid to directors, General Manager, and Deputy General Manager in the most recent 2 years by the Company and all companies in the consolidated financial statements as a % of the net profits after tax. And explain the policies, criteria, combination, procedures for determining remuneration and the correlation to operating performances and future risks.

Year Position	2020	2020	2020	2020	2019	2019	2019
	The Company %		All companies in the financial statements		The Company %		All companies in the financial statements
Directors			No consolidated statement		1.79		No consolidated statement
	4.42
Thereasons are	explained asfollows: NA
Year Position		2020				2019
		The Company %		All companies in the financial statements		The Company %	All companies in the financial statements
General Manager Deputy General Manager		1.62		No consolidated statement		0.57	No consolidated statement
The reasons are explained as follows: NA

The policies, criteria, and combination of remuneration, the procedures for determining remuneration and the correlation to operating performances and future risks.

• (1) The remuneration of the Company's directors is determined based on the Company's Articles of Incorporation, and the remuneration of the General Manager and Deputy General Manager is determined based on the salary scale for employees approved by the Remuneration Committee and with reference to the industry standards.

• (2) The remuneration structure consists of salaries, bonuses, allowances and employee profit sharing remuneration, which are determined by the duties and responsibilities of the employees and by reference to the usual standards of the industry.

• (3) The Company's salary adjustments, employee profit sharing remuneration, and bonus allocations are planned based on the Company's operating performance and individual performance. They are implemented after approval of the appropriate authority and responsibility.

• 17 -

IV. Corporate governance:

1. The operation of the Board of Directors

• (1) The Board of Directors met 6 times (A) in the most recent year and the attendance of the directors was as follows:

Position	Name (Note 1)	Number of attendance in person (B)	Number of attendance by proxy	Percentage of attendance in person [B/A] (Note 2)	Remarks
Chairman	Top-Five Co., Ltd. Representative An- ShengKu	6	0	100
Directors	Wan Hwa Enterprise Company Ltd. Representative: Shih- Yu Huang	6	0	100
Independent director	Hsieh-Hung Li	6	0	100
Independent director	Yi-Wu Yang	4	0	100	Resigned on 2021/3/9
Independent director	Hsiu-Chin Chou	6	0	100
Other matters required to be recorded. I. If the operation of the Board of Directors is under any of the following circumstances, the date, period, proposal content, all independent directors’ opinions and the Company’s handling of their opinions should be described: (I) Matters listed in Article 14-3 of the Securities and Exchange Act: None. (II) In addition to the previous matters, other board meeting resolutions that have been opposed or reserved by independent directors with records or written statements: None. II. In implementing a director’s recusal for being an interested party in a proposal, the director’s name, the proposal content, the recusal reasons and his or her participation in voting should be stated: None. III. Listed companies should disclose information on the periodicity and duration, scope, method and content of the self- evaluation (or peer evaluation) by the board of directors: On November 4, 2020, the Company established the “Board of Directors' Performance Evaluation Measures” and the Board of Directors was reported on March 24, 2021. Please refer to Page 19. IV. Evaluation of the current and most recent year's objectives for enhancing the functions of the Board of Directors (e.g., establishing an audit committee, enhancing information transparency, etc.) and their implementation: (1) The Board of Directors operates in accordance with the “Procedure for Board of Directors Meetings.” (2) The Companyarranges educationprograms for directors accordingto their schedules.

• Note 1: If the director is a corporation, the name of the corporate shareholder and its representative should be disclosed. Note 2: (1) If a director vacates his or her position before the end of the year, the date of vacating the position should be indicated in the Remarks column. The percentage attendance in person (%) should be calculated based on the number of meetings of the Board of Directors and the actual number of attendance during his or her employment.

• (2) If a director is re-elected before the end of the year, the new or existing director should be listed and the date of re-election should be indicated in the Remarks column. The percentage attendance in person (%) is calculated based on the number of meetings of the Board of Directors and the number of attendance in person during the term of his or her employment.

• 18 -

(2) Evaluation of the Board of Directors

Evaluation periodicity	Evaluation period	Evaluation scope	Evaluation method	Evaluation content
Once a year	From: January 1, 2020 To: December 31, 2020	The entire Board of Directors	Internal self- evaluation of the Board of Directors	1. Participation in the operation of the Company; 2. Improvement of the quality of the Board of Directors' decision making; 3. Composition and structure of the Board of Directors; 4. Election and continuing education of the directors; 5. Internal control.
Once a year	From: January 1, 2020 To: December 31, 2020	Individual directors	Self-evaluation of directors	1. Alignment of the goals and mission of the Company; 2. Awareness of the duties of a director; 3. Participation in the operation of the Company; 4. Management of internal relationship and communication; 5. Professionalism and continuing education of the director; 6. Internal control.
Once a year	From: January 1, 2020 To: December 31, 2020	Functional committees	Internal self- evaluation of the Board of Directors	1. Participation in the operation of the Company; 2. Perception of functional committees’ responsibilities. 3. Improvement in the quality of the functional committee's decision- making. 4. Composition and member appointment of functional committees; 5. Internal control.

• Note 1: The periodicity of execution of the Board of Directors' evaluation.

• Note 2: The period covered by the Board of Directors' evaluation.

• Note 3: The scope of evaluation includes the performance evaluation of the board of directors, individual board members and functional committees.

• Note 4: The method of evaluation includes internal self-evaluation by the board of directors, self-evaluation by board members, peer evaluation, the appointment of external professional organizations, experts or other appropriate methods for performance evaluation.

• Note 5: The evaluation content includes at least the following items according to the scope of the evaluation: (1) Evaluation of the performance of the Board of Directors: at least the participation in the Company's operations, the quality of board decisions, the composition and structure of the board of directors, the selection and continuing education of directors, and internal control, etc. (2) Performance evaluation of individual board members: at least including the alignment of the Company's objectives and tasks, the directors' awareness of their duties and responsibilities, their participation in the Company's operations, internal relationship management and communication, the directors' professionalism and continuing education, and internal control. (3) Performance evaluation of functional committees: participation in company operations, awareness of functional committee responsibilities, quality of functional committee decisions, composition and selection of functional committee members, internal control, etc.

• 19 -

2. The operation of the Audit Committee

Information on the operation of the Audit Committee:

The Audit Committee met 6 times (A) in the most recent year and the attendance of the independent directors was as follows.

as follows.
Position	Name	Number of attendance in person (B)	Number of attendance by proxy	Percentage of attendance in person (%) (B/A) (Note)	Remarks
Independent director	Hsieh-Hung Li	6	0	100
Independent director	Yi-Wu Yang	4	0	100	Resigned on 2021/3/9
Independent director	Hsiu-Chin Chou	6	0	100
Other matters required to be recorded. I. If the operation of the Audit Committee is under any of the following circumstances, the date, period, proposal content, resolution of the Committee and the Company’s handling of the Committee’s opinions should be described: (I) Matters listed in Article 14-5 of the Securities and Exchange Act: 1. Audit Committee on August 5, 2020 Approved the financial statements for the first half of 2020 as submitted. 2. Audit Committee on November 4, 2020 ①Approved the financial statements for the 3rd quarter of 2020 as submitted. ②Approved the “Board of Directors’ Performance Evaluation Measures” as submitted. ③Approved certain provisions of the “Remuneration Committee Charter” as submitted. ④Approved the “Annual Audit Plan for 2021” as submitted. 3. Audit Committee on March 24, 2021 ①Approved the final accounting reports for 2020 as submitted. ②Approved the statement of Internal control for 2020 as submitted. ③Approved the distribution of earnings for 2020 as submitted. 4. Audit Committee on May 10, 2021 Approved the financial statements for the 1st quarter of 2021 as submitted. Approved the amendment to the “internal control system of the stock affairs unit” of the Company as submitted. (II) Except for the aforementioned matters, the other matters that are not resolved by the Audit Committee must be resolved with the consent of more than two-thirds of the Board of Directors: None. II. In implementing an independent director’s recusal for being an interested party in a proposal, the independent director’s name, the proposal content, the recusal reasons and his or her participation in voting should be stated: None. III. Communication between the independent directors and the internal audit officer and CPAs. (This shall include the significant matters, method and results of communication regarding the financial and business status of the Company): The audit officer submits monthly audit reports to the independent directors; if the independent directors need to communicate with CPAs, the Company can set up the time on their behalf.

Note: ＊ If an independent director vacates his or her position before the end of the year, the date of vacating the position should be indicated in the Remarks column. The percentage attendance in person (%) should be calculated based on the number of meetings of the Audit Committee and the actual number of attendance during his or her employment.

• ＊ If an independent director is re-elected before the end of the year, the new or existing independent director or should be listed and the date of re-election should be indicated in the Remarks column. The percentage of attendance in person (%) is calculated based on the number of meetings of the Audit Committee and the number of attendance in person during the term of his or her employment.

• 20 -

3. The operation of corporate governance and the difference from the “Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies,” and the reasons therefor.

Evaluation item	The state of operation (Note 1)	The state of operation (Note 1)	The state of operation (Note 1)	The difference from the “Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies,” and thereasons therefor.
	Yes	No	Summary description:
I. Has the Company formulated and disclosed its corporate governance best practice principles in accordance with the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies”?		ｖ	The Company does not have corporate governance best practice principles, but the spirit and principles of governance of the Company cover the corporate governance best practice principles.	The Company does not have corporate governance best practice principles for TWSE/TPEx listed companies, but the spirit and principles of governance of the Company cover the corporate governance bestpracticeprinciples.
II. Shareholding structure and shareholders' equity of the Company (I) Has the Company established internal operating procedures to handle shareholder recommendations, doubts, disputes and litigations, and implemented them in accordance with the procedures? (II) Does the Company have a list of the major shareholders who actually control the Company and those who ultimately have control over the major shareholders? (III) Has the Company established and implemented risk control and firewall mechanisms between related companies? (IV) Has the Company formulated internal regulations to prevent insiders from trading securities using undisclosed information on the market?	ｖ ｖ ｖ	ｖ	1. The Company has a spokesperson to handle shareholder proposals and other issues. 2. The Company receives a quarterly list of shareholders holding a 5% stake or more from the Taiwan Depository & Clearing Corporation. 3. The Company has no related company but has established regulations governing the management of transactions with related parties, endorsement and guarantee, and lending of funds, etc. In addition, in accordance with the “Regulations Governing Establishment of Internal Control Systems by Public Companies” of the Financial Supervisory Commission, “Supervision and Management of Subsidiaries” has been established. However, the Company currently has no subsidiaries. 4. The Company has formulated the “Management of Prevention of Insider Trading” to prevent insiders from trading securities using undisclosed information on the market?	1. The Company has appointed a spokesperson and an acting spokesperson in accordance with the regulations to handle related matters, and will appoint lawyers to handle any litigation matters, if any. 2. In compliance. 3. The Company has no related company 4. In compliance.

• 21 -

Evaluation item	The state of operation (Note 1)	The state of operation (Note 1)	The state of operation (Note 1)	The difference from the “Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies,” and thereasons therefor.
	Yes	No	Summary description:
III. The composition and responsibilities of the Board of Directors (I) Has the Board of Directors formulated and implemented a diversity policy on membership? (II) In addition to the Remuneration Committee and the Audit Committee established in accordance with law, has the Company voluntarily set up other functional committees? (III) Whether the Company has formulated board performance evaluation measures and methods, conducts performance evaluations annually and regularly, and reports the results of performance evaluations to the Board of Directors, and uses them as a reference for individual directors' remuneration and a nomination for reappointment? (IV) Does the Company regularly evaluate the independence of attesting CPAs?	ｖ ｖ ｖ	ｖ	1. The board of directors of the Company have different expertise in various fields, which are helpful to the development and operation of the Company. 2. The Company has not set up other functional committees. 3. The Company has established the board of directors' performance evaluation measures and the evaluation method, and conducts performance evaluation annually and regularly. The performance evaluation of the Board of Directors for 2020 was presented to the Board of Directors on March 24, 2021. The remuneration of the Company's directors is based on the Company's Articles of Incorporation, which stipulate that the Company may set aside not more than 3% of the above-mentioned profits as profit sharing remuneration for directors. 4. The Company regularly follows up on the rotation and the independence of CPAs as required bylaw.	1. In compliance. 2. Their establishments can be made according to the Company's operation status, scale and future needs. 3. In compliance. 4. In compliance.
IV. Does the Company as a listed enterprise have a suitable and appropriate number of corporate governance personnel and appoint a corporate governance officer to be responsible for corporate governance related matters (including but not limited to providing information necessary for directors and supervisors to perform their business, assisting directors and supervisors in complying with laws and regulations, conducting board meeting and shareholder meeting related matters in accordance with law, handling company registration and alteration registration, and preparing minutes of board meetings and shareholder meetings, etc.)?	ｖ		Corporate governance-related matters have been jointly undertaken by the Administration Department and the Finance Department. On March 24, 2021, the Board of Directors resolved to designate the finance officer, Hsiu-Mei Lin, as the Corporate Governance Officer, assist the Directors in legal compliance, etc.	In compliance
V. Has the Company established communication channels with stakeholders and a special section for stakeholders on the Company's website, and responded appropriately to important corporate social responsibility issues that are of concern to stakeholders?	V		The Company has a spokesperson and a proxy spokesperson, and relevant contact information is posted on the Market Observation Post System in accordance with the regulations to provide good communication.	In compliance
VI. Has the Company appointed a professional stock affairs agency to handle matters for shareholder meetings?		V	The Company's stock affairs are handled by the Company itself.	Stock affairs are handled by the Company itself.

• 22 -

Evaluation item	The state of operation (Note 1)	The state of operation (Note 1)	The state of operation (Note 1)	The difference from the “Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies,” and thereasons therefor.
	Yes	No	Summary description:
VII. Public disclosure of information: (I) Has the Company set up a website to disclose finance and business matters and corporate governance information? (II) Has the Company adopted other means of information disclosure (such as setting up an English website, appointing dedicated personnel responsible for the collection and disclosure of Company information, implementing a spokesperson system, posting the Company's earnings calls on its website, etc.)? (III) Does the Company publicly announce and file annual financial statements within two months after the end of the fiscal year, and the financial statements for the first, second and third quarters and the monthly operating status before theprescribed deadline?	ｖ	ｖ ｖ	1. The Company's website, http://twfirsthotel.com.tw, and the Market Observation Post System (MOPS) disclose information on finance and business matters and corporate governance. 2. In accordance with the regulations of the competent authorities, the Company shall regularly disclose relevant information, collect relevant reports and information, and implement the spokesperson system according to the regulations. In accordance with the regulations, earning calls or corporate briefings will be held. A description of the content and process in English and Chinese will be disclosed on the Company's website and the Market Observation Post System. 3. The Company's 2020 annual financial statements, the first, second, and third- quarter financial statements, and monthly operations were filed within the statutory deadline in accordance with the law.	1. In compliance. 2. In compliance. 3. The filing can be made according to the Company's operation status, scale and future needs.
VIII. Does the Company have other important information that is helpful to understand its implementation of corporate governance (including but not limited to employee rights, employee care, investor relations, supplier relations, stakeholder rights, continuing education of directors and supervisors, implementation of risk management policies and risk measurement standards, implementation of customer policies, the Company’s purchase of liability insurance for directors, etc.)?	ｖ		1. Employee rights and benefits: The Company always treats its employees with honesty and trust and protects their rights and benefits in accordance with the Labor Standards Act. 2. Employee care: Establish a good relationship with employees. 3. Investor relations: Good 4. Supplier relations: Good 5. Rights of stakeholders: No impact. 6. The continuing education of directors: The Company arranges education programs for directors according to their schedules. 7. Implementation of risk management policies and risk measurement standards: Good. 8. Implementation of customer policy: Good. 9. The Company’s purchases of liability insurance for directors. Insurance company: Union Insurance Company. Insured period: June 25, 2020 ~ June 25, 2021 Insured amount: NT$30,750,000	In compliance.

• 23 -

Evaluation item	The state of operation (Note 1)	The state of operation (Note 1)	The state of operation (Note 1)	The difference from the “Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies,” and thereasons therefor.
	Yes	No	Summary description:
IX. Please describe the improvements that have been made in response to the corporate governance evaluation results issued by the Corporate Governance Center of the Taiwan Stock Exchange in the most recent year, and propose priorities and measures for those not yet improved: Total score of 35.95 for corporate governance evaluation Ranking among listed companies:81%-100% Improvement will be made accordingto future needs and law.

Note 1: The state of operations, no matter if “Yes” or “No” are checked, should be stated in the summary description.

• 24 -

4. The composition, responsibilities and operation of the Remuneration Committee: (1) Information on the members of the Remuneration Committee

Position	Criteria Name	With at least five years of work experience and the following professional qualifications	With at least five years of work experience and the following professional qualifications	With at least five years of work experience and the following professional qualifications	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Number of other public companies in which the individual is concurrently serving as a remuneration committee member	Remarks
		Lecturers or above in public and private colleges and universities in business, legal, financial, accounting or related areas required for the Company’s business	A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and has been awarded a certificate in a professional capacity that is necessary for company business.	Work experiences in business, legal, financial, accounting or related areas required for the Company’s business	1	2	3	4	5	6	7	8	9	10
Independent director	Hsieh- Hung Li			V	V	V	V	V	V	V	V	V	V	V	0	-
Independent director	Yi-Wu Yang			V	V	V	V	V	V	V	V	V	V	V	0	Note 1
Other	Kuang- Hui Chiang			V	V	V	V	V	V	V	V	V	V	V	1	-

Note 1: The independent director, Ms. Yi-Wu Yang, resigned on March 9, 2021

• Note 2: For each member who has met the following criteria for the two years prior to their elections and during their tenure, please mark “v” in the space below each criterion code.

(1) Not an employee of the Company or its related companies.

• (2) Not a director or supervisor of the Company or its related companies. (However, this restriction does not apply to independent directors elected in accordance with the Securities and Exchange Act or the laws and regulations of the local country, who concurrently serve as such at the Company and its parent or subsidiary or a subsidiary of the same parent.).

• (3) Not a natural-person shareholder holding more than 1% of the total number of issued shares or among the top 10 natural-person shareholders in its name, spouse, minor children, or others.

• (4) Not a managerial officer under (1) or a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship under (2), (3).

• (5) Not a director, supervisor, or employee of a corporate shareholder directly holding 5% or more of the total number of issued shares of the Company, or among the top 5 in shareholdings, or designating its representative to serve as a director or supervisor of the Company under Article 27, Paragraph 1 or 2 of the Company Act. (However, this restriction does not apply to independent directors elected in accordance with the Securities and Exchange Act or the laws and regulations of the local country, who concurrently serve as such at the Company and its parent or subsidiary or a subsidiary of the same parent.)

• (6) Not a director, supervisor, or employee of another company. If the same person controls a majority of the Company's director seats or shares with voting rights and those of that other company: (However, this restriction does not apply to independent directors elected in accordance with the Securities and Exchange Act or the laws and regulations of the local country, who concurrently serve as such at the Company and its parent or subsidiary or a subsidiary of the same parent.)

• (7) Not a director, supervisor, or employee of the other company or institution who is or whose spouse is the chairperson, General Manager or equivalent positions of the Company. (However, this restriction does not apply to independent directors elected in accordance with the Securities and Exchange Act or the laws and regulations of the local country, who concurrently serve as such at the Company and its parent or subsidiary or a subsidiary of the same parent.)

• (8) Not a director, supervisor, managerial officer, or shareholder holding 5% or more of the shares of a specific company or institution that has a financial or business relationship with the Company. (However, this restriction does not apply to independent directors elected in accordance with the Securities and Exchange Act or the laws and regulations of the local country, who concurrently serve as such at the Company and its parent or subsidiary or a subsidiary of the same parent and when the specific company or institution holds more than 20% of the Company’s total issued shares but not more than 50%.)

(9) Not a professional, sole proprietor, partner, owner of a company or institution, director, supervisor, managerial officer or its spouse that provides the Company or related companies with audit services or commercial, legal, financial, accounting or related services with a cumulative amount of remuneration in the last two years exceeding NT$500,000. This restriction does not apply, however, to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or the Business Mergers and Acquisitions Act or related laws or regulations.

• (10) Not a person with any of the circumstances under Article 30 of the Company Act.

• 25 -

• (2) Information on the operation of the Remuneration Committee

• (I) The Company’s Remuneration Committee has 3 members.

• (II) The term of office of the current members: August 7, 2019 to June 23, 2022. The Remuneration Committee met 3 times (A) in the most recent year and the qualifications and attendance of the members are as follows.

Position	Name	Number of attendance in person (B)	Number of attendance by proxy	Percentage of attendance in person (%) ( B/A ) (Note)	Remarks
Convener	Hsieh-Hung Li	3	-	100
Member	Yi-Wu Yang	2	-	100	Resigned on 2021/3/9
Member	Kuang-Hui Chiang	3	-	100
Other matters required to be recorded. I. If the Board of Directors does not adopt or amend the recommendations of the Remuneration Committee, it should state the date, period, proposal content, resolution of the board, and its handling of the committee’s opinions (if the remuneration approved by the board is better than the recommendation proposed by the committee, the difference and reasons should be stated): None. II. For the proposals by the Remuneration Committee. If any members have objections or reservations with records or written statements, the date, period, proposal content, the opinions of all members, its handling of the members’ opinions should be stated: None.

Note:

• (1) If a member of the Remuneration Committee vacates his or her position before the end of the year, the date of vacating the position should be indicated in the Remarks column, and the percentage attendance in person (%) should be calculated based on the number of meetings of the Remuneration Committee and the actual number of attendance during his or her employment.

• (2) If the Remuneration Committee is re-elected before the end of the year, the new or existing member of the Committee should be listed and the date of re-election should be indicated in the Remarks column. The percentage of attendance in person (%) is calculated based on the number of meetings of the Remuneration Committee and the number of attendance in person during the term of his or her employment.

• 26 -

5. The performance of Corporate Social Responsibility and the differences from the Corporate Governance Best Practice Principles for TWSE/TPEx-Listed Companies, and the reasons therefor.

Evaluation item			The state of operation (Note 1)	The differences from the Corporate Governance Best Practice Principles for TWSE/TPEx-Listed Companies, and the reasons therefor.
	Yes	No	Summary description (Note 2)
I. Does the Company conduct risk evaluations on environmental, social and corporate governance issues related to the Company's operations in accordance with the materiality principle, and formulate relevant risk management policies or strategies? (Note 3)		ｖ	1. The Company has always been upholding corporate social responsibility; in addition to the installation of indoor surveillance systems, outdoor video surveillance cameras are also set up around the community to participate in the community watch. 2. The Company holds general safety and health education and disaster prevention and other social responsibility education training twice a year. 3. Please refer to pages 127-128 for the risk management assessment.	If there are legal or practical considerations, we shall apply the “Corporate Governance Best Practice Principles for TWSE/TPEx-Listed Companies” and related laws and regulations.
II. Has the Company set up a full-time (part-time) unit to promote corporate social responsibility, together with senior management authorized by the Board of Directors to handle related matters and report to the board on handlingthe matters?	ｖ		Administration Unit	In compliance
III. Environmental issues (I) Has the Company set up an appropriate environmental management system based on the characteristics of its industry? (II) Is the Company committed to improving resource utilization efficiency and using recycled materials with low impact on the environment? (III) Does the Company evaluate the potential risks and opportunities of climate change to the Company now and in the future, and take corresponding measures to respond to climate related issues? (IV) Does the Company make statistics on greenhouse gas emissions, water consumption and the total weight of waste for the past two years, and formulate policies for energy conservation and carbon reduction, greenhouse gas reduction, water consumption reduction or other waste management?	ｖ ｖ ｖ	ｖ	1. In order to protect the environment, we will ask our customers who are staying over at our hotel whether we can save water resources by not washing the bed covers and sheets every day if they are not stained, and then send them for washing when they leave the hotel. 2. Paper recycling; restaurants not using disposable chopsticks. 3. The Company implements energy saving and carbon reduction, with a display microcomputer temperature controller to regulate the temperature at a constant level, and set the air- conditioning host start specification, as well as the use of energy-saving light bulbs. The on and off time periods of signboard lights are adjusted according to seasonality. 4. Garbage is divided into general garbage, recyclable garbage, and non-recyclable garbage. ①Recyclable garbage is entrusted to professional vendors for recycling. ②General garbage and non-recyclable garbage are entrusted to professional vendors for removal and disposal. 5. Waste cooking oil and food waste will be recycled by qualified recyclers approved by the Environmental Protection Administration. 6. Although the statistics were not made for the past two years, the Company has spared no effort in energysavingand carbon reduction.	1. In compliance. 2. In compliance. 3. In compliance. 4. The Company will handle it in accordance with the law and future needs.
IV. Social issues (I) Has the company formulated relevant management policies and procedures according to relevant laws and regulations and the International Bill of Human Rights?	v v		1. The Company follows the labor standards and regulations to handle employees' labor and health insurance and contribute to labor pensions to ensure labor rights and interests.	1. In compliance. 2. In compliance.

• 27 -

Evaluation item	The state of operation (Note 1)	The state of operation (Note 1)	The state of operation (Note 1)	The differences from the Corporate Governance Best Practice Principles for TWSE/TPEx-Listed Companies, and the reasons therefor.
	Yes	No	Summary description (Note 2)
(II) Whether the Company has formulated and implemented reasonable employee welfare measures (including remuneration, vacation and other benefits, etc.), and appropriately reflects operating performance or results in employee remuneration? (III) Does the Company provide employees with a safe and healthy working environment and related education? (IV) Has the Company established an effective career development training program for employees? (V) Does the Company comply with relevant laws and regulations and international standards regarding customer health and safety, customer privacy, marketing and labeling of products and services, and establish relevant customer rights protection policies and complaint procedures? (VI) Has the Company formulated supplier management policies that require suppliers to follow relevant regulations on issues such as environmental protection, occupational safety and health, or labor rights, and monitor their implementation?	v v v v		2. The Company has established personnel management rules and regulations for employee performance assessment, salary, leave, benefits, rewards and punishments. 3.Regularly hold annual employee health checkups, regularly arrange for employees to participate in general safety and health on-the- job education and disaster prevention training, and implement a safe and healthy working environment for employees. 4. The Company arranges employee functional training courses from time to time according to their time. 5.①The Company has a “Customer Service Center” to handle customer service related issues. ②In order to provide high quality service to our customers, we place customer opinion survey forms in our guest rooms and maintain two-way communication with our customers. ③The Company operates in accordance with the relevant laws and regulations for external marketing. 6. The company attaches importance to social responsibility and strictly selects cooperative suppliers, and requires suppliers to provide test reports on their product components to strive for excellent quality, and requires suppliers to follow environmental protection, occupational safety and health or labor human rights standards.	3. In compliance. 4. In compliance. 5. In compliance. 6. In compliance.
V. Does the Company make reference to international reporting standards or guidelines to prepare corporate social responsibility or other reports that disclose non-financial information about the Company? Has the assurance or opinion from third-party certifying institutions been obtained for the reports of the preceding paragraph?		ｖ	The Company has not prepared a corporate social responsibility report.	The report can be prepared according to the Company's operation status, scale and future needs.
VI. If the Company has related practice principles of its o	wn in accordance with the “Corporate Social Responsibility Best Practice Principles for

• 28 -

Evaluation item	The state of operation (Note 1)	The state of operation (Note 1)	The state of operation (Note 1)	The differences from the Corporate Governance Best Practice Principles for TWSE/TPEx-Listed Companies, and the reasons therefor.
	Yes	No	Summary description (Note 2)
TWSE/TPEx Listed Companies,” please state the differences between the two and the state of implementation: The Company has not established the code of “Corporate Social ResponsibilityReport”.
VII. Other important information that is helpful to understand the implementation of corporate social responsibility: The Company regularly arranges for our employees to attend safety and protection education and training, and insures consumers with third party liability accident insurance from insurance companies. In addition, for the convenience of customers with mobility problems, we have invested in the renovation of barrier-free rooms, bathrooms, toilets, elevators, and nursing rooms, etc. We have also installed surveillance systems inside and outside the hotel to regularly detect and prevent pinhole photography, providing an additional layer of protection for nearby residents and visitors,and contributingto society.

• Note 1: If “Yes” is checked for the state of the operations, please describe the important policies, strategies, and measures adopted and their implementation; if “No” is checked, please explain the reasons and the relevant policies, strategies and implementation in the future.

• Note 2: Where the Company has prepared a corporate social responsibility report, the state of the operations may be specified by way of a reference to the corporate social responsibility report and the index page.

• Note 3: The materiality principle applies to those environmental, social and corporate governance issues that have a significant impact on the Company's investors and other stakeholders.

• 29 -

6. The performance of ethical corporate management and the differences from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the reasons therefor.

Evaluation item	The state of operation(Note)	The state of operation(Note)	The state of operation(Note)	The difference from the “Ethical Corporate Management Best Practice Principles for TWSE or TPEx Listed Companies,” and the reasons therefor.
	Yes	No	Summary description:
I. Formulate ethical corporate management policy and plan (I) Has the Company formulated an ethical corporate management policy approved by the Board of Directors, and are the policy and practice of ethical corporate management stated in the Company’s regulations and external documents, as well as the commitment of the Board of Directors and the senior management to actively implement the policy? (II) Whether the Company has established a mechanism for evaluating the risk of unethical conduct, regularly analyzes and evaluates the activities in the scope of business with a higher risk of unethical conduct, and on the basis of this, has formulated a plan to prevent unethical conduct, which covers at least the preventive measures for the conduct set out in Paragraph 2 of Article 7 of the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”? (III) Whether the Company has specified operating procedures, conduct guidelines, and disciplinary and complaint systems for violations in the plan to prevent unethical conduct and implemented the plan as well as regularly reviews and amends it?	ｖ ｖ	ｖ	1. The Company has not established ethical corporate management best practice principles. 2.3. The Company's personnel management regulations stipulate that employees shall strictly observe the confidentiality of their duties, protect the interests and reputation of the Company, and shall not act for personal gains under the guise of work and engage in corruption or fraudulent acts, and shall not use the Company's name to solicit trouble or accept gifts outside the Company. The personnel management regulations have set up rules about rewards and punishments. The cases of rewards and punishments are signed up and presented by the competent unit to the personnel unit, which will apply for approval and announcement by the General Manager.	1. The principles can be established according to the Company's operation status, scale and future needs. 2. There are no significant differences from the Company's personnel management rules.
II. The implementation of ethical corporate management (I) Does the Company evaluate the ethical records of its counterparties and specify the ethical conduct clauses in the contracts signed with the counterparties? (II) Does the Company have a dedicated unit under the Board of Directors to promote ethical corporate management and regularly report (at least once a year) to the Board of Directors on its ethical management policy and plan to prevent unethical conduct and monitor their implementation? (III) Does the Company have a policy to prevent conflict of interest, provide appropriate channels for explanation, and implement it? (IV) Whether the Company has established an effective accounting system and internal control system for the implementation of ethical corporate management, and the internal audit unit draws up relevant audit plans based on the evaluation results of risk of unethical conduct, and audits the compliance of the plan to prevent unethical conduct or entrusts a CPA to perform the audit?	ｖ ｖ	ｖ ｖ	1. Since the official opening of our company in October 1962, the Company has been upholding the principle of “treating people with honesty and treating customers with respect” and have built up a good reputation over a long period of time, and have adhered to the concept of sustainable operation. 2. Each department of the Company shall endeavor to fulfill its corporate social responsibility in accordance with its duties. 3. The chairperson holds regular business meetings and any events that may endanger or benefit the Company shall be presented at the meetings. 4. The Company has established an effective accounting system and an internal control system, and the internal auditors regularly examine the operations of the systems to ensure ethical corporate management.	1.2. The principles can be established according to the Company's operation status, scale and future needs. 3. In compliance. 4. In compliance. 5. In compliance.

• 30 -

• The state of operation (Note) The difference from the “Ethical Corporate

• Management Best

• Evaluation item Practice Principles Yes No Summary description: for TWSE or TPEx Listed Companies,” and the reasons therefor.

• (V) Does the Company regularly organize internal and external ｖ 5. The Company promotes the concept and education and training on ethical corporate management? standards of ethical corporate management in regular meetings.

• III. The operation of the Company's whistleblower reporting system (I) Has the Company set up a specific whistleblower reporting ｖ In order to guide the Company's No significant and reward system and a convenient reporting channel, and employees to meet ethical standards, the difference. designated appropriate personnel to deal with the reported Company has established a code of ethical matters? conduct. It encourages the Company's

• (II) The Company shall keep the identity of the whistleblower and ｖ directors and employees to report to the the content of the whistleblower confidential in a written Audit Committee, managerial officers, statement by the relevant personnel handling the internal audit officer or other appropriate whistleblower case, and the Company undertakes to protect personnel with clear information and the whistleblower from improper disposal as a result of the evidence when they suspect or discover any whistleblower case. violation of laws and regulations or the code

• (III) Whether the Company takes measures to protect ｖ of ethical conduct. whistleblowers from being improperly handled due to The Company shall properly handle reporting? the reported information in a confidential and responsible manner. It shall make every effort to protect the safety of those who make reports in good faith from any form of threat. The Company shall provide guidance to those who make malicious and untrue reports.

• IV. Enhance Information Disclosure Does the Company disclose the content and effectiveness of its ｖ The Company discloses the implementation In compliance. Ethical Corporate Management Principles on its website and of the ethical corporate management and the the Market Observation Post System? measures taken on the Company's website: http://twfirsthotel.com.tw and the Market Observation Post System.

V. If the Company has related practice principles of its own in accordance with the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies,” please state the differences between the two and the state of implementation: The Company has not established the ethical corporate management best practice principles.

VI. Other important information that is helpful to understand the implementation of ethical corporate management: (e.g., if the Company is reviewing or amending its ethical corporate management best practice principles): None.

Note: The state of operations, no matter if “Yes” or “No” are checked, should be stated in the summary description.

7. If the Company has the corporate governance best practice principles and related rules and regulations, the methods for inquiring them: http://twfirsthotel.com.tw

8. Other important information that is helpful to understand the Company's operation of corporate governance: None.

• 31 -

9. Implementation of internal control system (1) Statement of internal control system

First Hotel Company Ltd. Statement of internal control system

Date: March 24, 2021

The Company states the following for its 2020 internal control system based on the results of self-evaluation:

• I. The Company knows that establishing, implementing and maintaining an internal control system is the responsibility of the Company's Board of Directors and managerial officers, and the Company has established this system. Its purpose is to provide reasonable assurance of the achievement of objectives such as the effectiveness and efficiency of operations (including profitability, performance and asset security, etc.), the reliability, timeliness, and transparency of reporting, as well as compliance with relevant rulings, laws and regulations, etc.

• II. The internal control system has its inherent limitations. No matter how perfect the design is, an effective internal control system can only provide a reasonable assurance of the achievement of the above three objectives; moreover, due to changes in the environment and circumstances, the effectiveness of the internal control system may change accordingly. However, the Company's internal control system has a selfmonitoring mechanism. Once a defect is identified, the Company will take corrective actions.

• III. The Company determines the effectiveness of the design and implementation of its internal control system in accordance with the criteria of the effectiveness of the internal control system stipulated in the “Regulations Governing Establishment of Internal Control Systems by Public Companies” (hereinafter referred to as the “Regulations”). The criteria of the internal control system adopted in the “Regulations” are based on the process of managerial control and divide internal control system into five components: 1. control environment, 2. risk evaluation, 3. control operations, 4. Information and communication, and 5. Monitoring operations. Each component consists of a number of items. Please refer to the “Regulations” for these items.

• IV. The Company has adopted the aforementioned criteria of the internal control system to evaluate the effectiveness of the design and implementation of its internal control system.

• V. Based on the evaluation results of the preceding paragraph, the Company believed that the design and implementation of its internal control system were effective as of December 31, 2020, with an understanding of the extent to which the objectives of effectiveness and efficiency of operations were achieved, whether the reporting was reliable, timely, transparent, and if the compliance with relevant rulings, laws and regulations is met, and a reasonable assurance of the achievement of these objectives.

• VI. This statement will become the main content of the Company's annual report and will be made public. If the above-mentioned disclosures have falsehood or concealment, legal liability under Articles 20, 32, 171 and 174 of the Securities and Exchange Act will be incurred.

• VII. This statement was approved by the Company’s Board of Directors on March 24, 2021. All the 4 directors present agreed with the content of this statement and declare so here.

First Hotel Company Ltd.

Chairperson: An-sheng Ku Affixed with seal General Manager: Hsiao-Hua Hsu Affixed with seal

• (2) Whether a CPA was entrusted with reviewing the internal control system: None.

• 32 -

10. During the most recent year or during the current year up to the date of publication of the annual report, if the Company or its internal personnel have been punished in accordance with law, or the Company has punished its internal personnel for violating the provisions of the internal control system, the major deficiencies and improvements: None.

11. Important resolutions of the shareholder meeting and board meeting during the most recent year or the current year up to the date of publication of the annual report: Excerpts of important resolutions of the shareholders' meeting held on June 15, 2020

• (1) Adopted the Company’s “Annual accounting reports for 2019” as submitted.

• (2) Adopted the Company’s “Distribution of earnings for 2019” as submitted. Cash dividends of $0.45 per share were distributed on October 15, 2020.

• (3) Approved the amendment to certain provisions of “Rules of procedure for shareholders’ meeting.”

The resolutions of the shareholders' meeting have all been implemented.

Excerpts of important resolutions of the Board of Directors. Board meeting on August 5, 2020.

• (1) Reported the financial statements for the first half of 2020.

• (2) Approved the “base date for dividend distribution” and “payment date for dividend” as submitted.

• Board meeting on November 4, 2020.

• (1) Reported the financial statements for the 3rd quarter of 2020.

• (2) Approved the “Board of Directors’ Performance Evaluation Measures” as submitted.

• (3) Approved certain provisions of the “Remuneration Committee Charter” as submitted.

• (4) Approved the “salary scale for employees” as submitted.

• (5) Approved the “Annual Audit Plan for 2021” as submitted.

• Board meeting on March 24, 2021

• (1) Approved the “2020 profit sharing remuneration for employees and directors” as submitted.

• (2) Adopted the final accounting reports for 2020 as submitted.

• (3) Adopted the “statement of Internal control for 2020” as submitted.

• (4) Approved the distribution of earnings for 2020 as submitted.

• (5) Approved the amendment to certain provisions of the “Audit Committee Charter” of the Company as submitted.

• (6) Approved the amendment to certain provisions of the “Procedure for Board of Directors’ Meetings” of the Company as submitted.

• (7) Approved the amendment to the “Rules Governing the Scope of Powers of Independent Directors” of the Company as submitted.

• (8) Approved the amendment to “Article 14 and Article 28 of the Articles of Incorporation” of the Company as submitted.

• (9) Approved the amendment to “Article 4 and Article 16 of the Procedure for Election of Directors and Independent Directors” of the Company as submitted.

• (10) Approved the “by-election of an independent director” as submitted.

• (11) Approved the “proposed list of candidates for independent director” as submitted.

• (12) Formulated the date and place of the 2021 regular shareholders’ meeting, the main content of the motion, and the period for accepting shareholders' proposals and nominations of candidates for independent directors.

• Board meeting on May 10, 2021

• (1) Reported the financial statements for the 1st quarter of 2021.

• (2) Approved the amendment to the “internal control system of the stock affairs unit” of the Company as submitted.

• 33 -

12. During the most recent year or the current year up to the date of publication of the annual report, directors had different opinions on important resolutions approved by the Board of Directors with records or written statements: None.

13. For the most recent year or the current year up to the date of publication of the annual report, circumstances related to the resignation and dismissal of the Company’s chairperson, General Manager, accounting officer, finance officer, internal audit officer, and R&D officer: None.

• 34 -

V. Information on the professional fees of CPAs:

1. Professional fees of CPAs:

CPA firm	CPA name	CPA name	Audit period	Remarks	Remarks
Deloitte & Touche	Ying-Chou Chen	Wang-Sheng Lin	20200101~20 201231
				Amount unit: Thousands of NTD
Amount range	Professional fee item		Audit fees	Non-audit fees	Total
Less than 2,000 thousands			1,982	140	2,122

Note: The nature of the non-audit fee is the fee for the checklist, etc.

1. If the non-audit fees paid to the attesting CPA, the CPA firm and its affiliates account for one-fourth of the audit fees, the amount of audit and non-audit fees and the content of non-audit services should be disclosed: None.

2. Where the audit fees paid in the year of the change of CPA firm is less than the audit fees in the year before the change, the amount of the audit fees before and after the change and the reasons therefor should be disclosed: Not applicable.

3. Where the audit fees have decreased by 10% or more from the previous year, the amount, percentage and reasons therefor should be disclosed: Not applicable

4. VI. Information on change of CPAs: None.

VII. Anyone among the Company's chairperson, General Manager, or any managerial officers in charge of finance or accounting affairs who have in the most recent year held a position at the accounting firm of the attesting CPA or an affiliate of the accounting firm: None.

• 35 -

VIII. Any equity transfer or change in equity pledge by a director, managerial officer, or shareholder with a 10% stake or more during the most recent year or during the current year up to the date of publication of the annual report:

Position	Name	2020		The currentyear upto May1	The currentyear upto May1
		Increase (decrease) in the number of shares held	Increase (decrease) in the number of shares pledged	Increase (decrease) in the number of shares held	Increase (decrease) in the number of shares pledged
Chairman	Top-Five Co., Ltd. Representative An- Sheng Ku	0 0	0 0	0 0	0 0
Directors	Wan Hwa Enterprise Company Ltd. Representative: Shih- Yu Huang	0 0	0 0	0 0	0 0
Independent director	Hsieh-Hung Li	0	0	0	0
Independent director	Yi-Wu Yang (Note)	0	0	0	0
Independent director	Hsiu-Chin Chou	0	0	0	0
General Manager	Hsiao-Hua Hsu	0	0	0	0
Deputy General Manager	Hsiu-Mei Lin	0	0	0	0
Assistant General Manager	Si-Wei Ni	0	0	0	0
Major Shareholders	Kubo Investment Corporation	0	0	0	0
Major Shareholders	Mandarin Investment Corporation	0	0	0	0

The Company’s independent director, Ms. Yi-Wu Yang, resigned on March 9, 2021.

• 36 -

IX. Information on the relationship between the top ten shareholders

Name	Shareholding by the individual	Shareholding by the individual	Shareholding of spouse and minor children	Shareholding of spouse and minor children	Total shareholding in the name of others	Total shareholding in the name of others	The title/name of and relationship among the top 10 shareholders if anyone is a related party, a spouse or a relative within the second degree of kinship of another under Statements of Financial Accounting Standards No. 6.	The title/name of and relationship among the top 10 shareholders if anyone is a related party, a spouse or a relative within the second degree of kinship of another under Statements of Financial Accounting Standards No. 6.	Remarks
	Number of shares	Shareholding %	Number of shares	Shareholding	Number of shares	Shareholding	Name	Relation ship
Kubo Investment Corporation Chairperson: Tai-Chuan Chou	99,000,503 2,396	19.80 -	No No	No No	No No	No No	No No	No No
Wan Hwa Enterprise Company Chairperson: Mao-Chang Tsai	99,000,503 -	19.80 -	No No	No No	No No	No No	No No	No No
Mandarin Investment Corporation Chairperson: Chien-Chung Cheng	73,605,668 -	14.72 -	No No	No No	No No	No No	No No	No No
Zen Fong Investment Corporation Chairperson:Mei-ChenChen	40,761,943 -	8.15 -	No No	No No	No No	No No	No No	No No
Overseas Investment Corporation Chairperson:Hsueh-YaoLiu	,782,919 17 -	3.56 -	No No	No No	No No	No No	No No	No No
Gu Sen International Co., Ltd. Chairperson: Chia-Chih Lin	15,525,000 -	3.11 -	No No	No No	No No	No No	No No	No No
Today's Department Store Company Ltd. Chairperson, Kuang-Hsia Chiang	15,162,906 874 69,	3.03 0.01	No No	No No	No No	No No	No No	No No
Kun-Yu Su	11,288,978	2.26	No	No	No	No	No	No
Standard Chartered Custodian Royal Bank of Liberia Singapore Co.,Ltd.	8,213,184 -	1.64 -	No No	No No	No No	No No	No No	No No
Sheng Wei Investment Co. Ltd. Chairperson: Mao-LungChu	6,534,967 1,695,234	1.31 0.34	No 4,439,664	No 0.89	No No	No No	No No	No No

• 37 -

X. Total shareholding percentage

Total shareholding percentage	Total shareholding percentage	Total shareholding percentage	Total shareholding percentage	Total shareholding percentage
December 31, 2020					Unit: shares: %
Invested enterprise	Investment by the Company		Investment by directors, managerial officers and business under direct or indirect control		Total investment
	Number of shares	Ownership	Number of shares	Ownership	Number of shares	Ownership
Today's Hotel Corporation of USA	16,200,000	48.21	－	－	16,200,000	48.21
F&Whotel Corporation of USA	3,875,000	31.00	－	－	3,875,000	31.00

Note: The Company's investment accounted for using the equity method.

• 38 -

Four. Capital raising

• I. The Company’s capital and issuance of shares

1. Source of capital

Year and month	Issue price	Authorized capital	Authorized capital	Authorized capital	Paid-in capital	Paid-in capital	Paid-in capital	Paid-in capital	Remarks	Remarks	Remarks
		Number of shares		Amount	Number of shares		Amount		Source of capital		Using property other than cash as payment of shares	Other
2010.9	10	350,000,000		3,500,000,000	308,820,449		3,088,204,490		Capital increase from earnings NT$254,989,360		No
2011.9	10	350,000,000		3,500,000,000	333,526,084		3,335,260,840		Capital increase from earnings NT$247,056,350		No
2012.9	10	450,000,000		4,500,000,000	350,202,388		3,502,023,880		Capital increase from earnings NT$166,763,040		No
2013.9	10	450,000,000		4,500,000,000	369,813,721		3,698,137,210		Capital increase from earnings NT$196,113,330		No
2014.9	10	450,000,000		4,500,000,000	392,002,544		3,920,025,440		Capital increase from earnings NT$221,888,230		No
2015.9	10	000 450,000,		4,500,000,000	420,226,727		4,202,267,270		Capital increase from earnings NT$282,241,830		No
2016.8	10	600,000,000		6,000,000,000	450,483,051		4,504,830,510		Capital increase from earnings NT$302,563,240		No
2017.8	10	600,000,000		6,000,000,000	486,521,695		4,865,216,950		Capital increase from earnings NT$360,386,440		No
2018.9	10	600,000,000		6,000,000,000	499,998,346		4,999,983,460		Capital increase from earnings NT$134,766,510		No
Note: The above			information is from January 1, 2010 to December 31, 2018.
Type of stock			Authorized capital								Remarks
			Shares in circulation (Note)			Unissued shares			Total
Ordinary share			499,998,346			100,001,654		600,000,000		TWSE-listed stock

Note: The stock is a TWSE-listed company stock.

• 39 -

2. Shareholder structure

2. Shareholder structure	2. Shareholder structure	2. Shareholder structure	2. Shareholder structure
						May 1, 2021
Shareholder structure Quantity	Governance agency	Financial institution	Other legal entities	Individual	Foreign institution and foreigner	Total
Number of persons	-	-	39	15,487	45	15,571
Number of Shares Held	-	-	385,624,289	101,226,058	13,147,999	499,998,346
Shareholding percentage (%)	-	-	77.12	20.25	2.63	100

Note: Listed companies and emerging companies shall disclose the proportion of their shares held by Chinese capital; Chinese capital refers to the people, legal entities, organizations, and other institutions in Mainland China or their companies invested in third regions as stipulated in Article 3 of the Regulations on the Permission for People from the Mainland to Invest in Taiwan.

3. Equity dispersion profile

in Article 3 of the Regulations on the Permission for People from the Mainland to Invest in Taiwan. . Equity dispersion profile	in Article 3 of the Regulations on the Permission for People from the Mainland to Invest in Taiwan. . Equity dispersion profile	in Article 3 of the Regulations on the Permission for People from the Mainland to Invest in Taiwan. . Equity dispersion profile
Par value of $10 per share			May 1, 2021
Shareholding range	Number of shareholders	Number of Shares Held	Shareholding percentage %
1~999	10,625	1,908,850	0.38
1,000~5,000	3,317	6,884,524	1.38
5,001~10,000	630	4,659,578	0.93
10,001~15,000	267	3,262,674	0.65
15,001~20,000	170	3,032,005	0.61
20,001~30,000	146	3,672,304	0.74
30,001~50,000	129	5,167,733	1.03
50,001~100,000	118	8,211,973	1.64
100,001~200,000	79	11,108,343	2.22
200,001~400,000	42	11,796,904	2.36
400,001~600,000	8	4,001,500	0.80
600,001~800,000	8	5,548,438	1.11
800,001~1,000,000	4	3,601,165	0.72
More than 1,000,001	28	427,142,355	85.43
Total	15,571	499,998,346	100.00

• 40 -

4. List of major shareholders

ist of major shareholders
Shares Names of major shareholders	Number of Shares Held	Shareholding percentage %
Kubo Investment Corporation	,000,503 99	19.80
Wan Hwa Enterprise Company Ltd.	99,000,503	19.80
Mandarin Investment Corporation	73,605,668	14.72
Zen Fong Investment Corporation	40,761,943	8.15
Overseas Investment Corporation	17,782,919	3.56
Gu Sen International Co., Ltd.	15,525,000	3.11
Today Co., Ltd.	15,162,906	3.03
Kun-Yu Su	11,288,978	2.26
Standard Chartered Custodian Royal Bank of Liberia Singapore Co., Ltd.	8,213,184	1.64
Sheng Wei Investment Co. Ltd.	6,534,967	1.31

• 41 -

5. Information on market price, net worth, earnings, dividend per share for the most recent two years

Unit: NTD

					Unit: NTD
Item			2020	2019	The current year up to March 31, 2021 (Note 8)
	Year
Market price per share (Note 1)	Highest		15.90	16.30	14.20
	Lowest		10.85	13.95	13.25
	Average		13.73	14.92	13.73
Net worth per share (Note 2)	Before distribution		18.05	18.73	17.79
	After distribution		—	18.28	－
Earnings per share	Weighted average number of shares		499,998,346	499,998,346	499,998,346
	Earnings per share (Note 3)		0.32	1.06	-0.01
	cash dividends		0.15	0.45	－
Dividends Per Share (Note)	Stock dividends	Stock dividends from earnings	—	—	－
		Stock dividends from capital surplus	－	－	－
	Accumulated unpaid dividends(Note 4)		－	－	－
Analysis of return on investment	Price to earnings ratio (Note 5)		42.91	14.08
	Price to dividends ratio (Note 6)		91.53	33.16	－
	Cash dividend yield (Note 7)		% 1.09	% 3.02	－

Note: The dividend per share for 2019 was approved at the 2020 regular shareholders’ meeting and the dividend per share for 2020 will be approved at the 2021 regular shareholders’ meeting.

• Note 1: List the highest and lowest market prices of each year, and calculate the average market price of each year based on the transaction value and volume of each year.

Note 2: List the number of shares issued at the end of the year as the basis and the distribution of shares resolved at the following year's shareholders' meeting.

• Note 3: If there is a retroactive adjustment due to circumstances such as stock dividend, etc., earnings per share before and after the adjustment should be listed.

• Note 4: If equity securities are issued with terms that allow dividends to be accrued and accumulated until the year the Company makes a profit, the amount of cumulative undistributed dividends up till the current year shall be disclosed separately.

• Note 5: Price to earnings ratio = average closing price per share for the year/earnings per share.

• Note 6: Price to dividends ratio = average closing price per share for the year/cash dividend per share.

• Note 7: Cash dividend yield = dividend per share/average closing price per share for the year.

• Note 8: Net worth per share and earnings per share should be filled in with the information audited (reviewed) by CPAs for the most recent quarter as of the publication date of the annual report; the remaining columns should be filled in with the information for the current year as of the publication date of the annual report.

• 42 -

6. The Company’s dividend policy and implementation

(1) Dividend policy

The dividend policy approved at the Company's shareholders' meeting on June 22, 2018 is as follows:

When the Company makes a profit as indicated in the annual final accounting reports, the Company shall pay tax in accordance with the law, make up for accumulated losses and then set aside 10% as legal reserve except when the legal reserve has reached the Company's paid-in capital. In addition, if the Company complies with the regulations of the competent authorities, the remaining balance after setting aside or reversing the special reserve in accordance with the law, together with the accumulated unappropriated earnings, shall be retained at the discretion of the Board of Directors for business needs. The Board of Directors shall prepare a proposal for the distribution of earnings and submit it to the shareholders for a resolution to distribute dividends to shareholders.

The Company is a stable and growing company. In order to meet the operational development plan and achieve the goal of diversified operations. In case shareholder dividend is distributed, the cash dividend portion should be no less than 10% of the shareholder dividend distributed that year.

(2) Proposed dividend distribution at this shareholders' meeting

The Company's 2021 regular shareholders' meeting proposed to distribute cash dividends of $74,999,752 with $0.15 per share.

7. Effect of the stock dividends proposed at the shareholders’ meeting on the Company's operating results and earnings per share: Not applicable as there is no “stock dividend” distributed this time.

8. Profit sharing remuneration for employees and directors

(I) The percentage or range of profit sharing remuneration for employees and directors as set forth in the Articles of Incorporation.

If the Company has annual earnings, it shall set aside NT$2 million as employees' remuneration; the Company may set aside not more than 3% of the above-mentioned earnings as directors' remuneration. The aforementioned remuneration of employees and directors shall be resolved by the Board of Directors and reported to the shareholders' meeting. However, if the Company still has accumulated losses, the amount in losses make-up should be retained in advance, and the remuneration to employees and directors should be based on the aforementioned percentage.

(II) The basis for estimating the amount of profit sharing remuneration to employees and directors is calculating the number of shares for employee remuneration distributed in stock and the accounting treatment if the actual amount distributed differs from the estimated amount. The profit sharing remuneration to employees and directors for the current period is estimated in accordance with Article 25 of the Company's Articles of Incorporation and is paid in cash. If there is a change in the amount as of the resolution date of the shareholders’ meeting, the change will be accounted for as a change in the accounting estimate. It will be recorded as an adjustment in the year of the shareholders' meeting.

• (III) Profit sharing remuneration approved by the Board of Directors:

• (1) The amount of profit sharing remuneration for employees is $2,000,000 in cash and $0 in stock. The amount for directors is $6,000,000.

• 43 -

The amount of profit sharing remuneration for employees and directors approved by the Board of Directors is not different from the estimated amount for 2020.

• (2) The number of shares of employee profit sharing remuneration is 0 shares, representing 0% of the total net profits after tax and total employee profit sharing remuneration in the standalone financial statements for the period.

• (IV) Actual distribution of employee bonuses and directors' and supervisors' profit sharing remuneration for the previous year.

The shareholders' meeting held on June 15, 2020 resolved to distribute bonuses to employees and profit sharing remuneration to directors and supervisors of $2,000 thousand and $8,000 thousand, respectively, for 2019, which were not different from the estimated amounts in the accounting book.

9. Repurchase of the Company’s shares: None.

• II. Issuance of corporate bonds and preferred stock: None.

• III. Issuance of overseas depository receipts: None.

• IV. Employee stock options: None.

• V. Issuance of new shares in connection with mergers or acquisitions of shares

of other companies: None.

VI. Implementation of capital utilization plan

The Company has completed all the cash capital increases in the past, and there were no cash capital increases in the past three years (2018, 2019, 2020).

• 44 -

Five. Operation overview

I. Business content

• (I) Business scope

• The Company's business consists of tourist hotels and commercial building leasing.

Each revenue type as a percentage of operating revenue for the last two years

Unit: Thousands of NTD

			Unit: Thousands of NTD	Unit: Thousands of NTD
Year	2020		2019
Revenue **type **	Amount	％
			Amount	％
Rental income	209,773	79	231,818	67
Guest room revenues	16,529	6	74,706	21
Post and telecommuni cation service revenues	4	-	14	-
Food service revenues	36,726	14	37,512	11
Other income	1,834	1	2,685	1
Total	264,866	100	346,735	100

1. The Company's key performance indicator: 2020 occupancy rate was 17.93%

2. The Company’s current service offerings

   • (1) Tourism hotel operation - providing accommodation, dining, socializing and meeting places for customers.

   • (2) Commercial building leasing - offering commercial space for rent.

3. (II) Industry overview:

4. Industry’s current status, development and competition In 2017, the government promoted the “Tourism 2020 - Taiwan Sustainable Tourism Development Strategy”, which aimed to attract tourists to Taiwan and attract the attention of Taiwanese people through five major development strategies, including “developing diversified markets, promoting national tourism, guiding industrial transformation, developing smart tourism, and promoting experiential tourism.” However, due to the outbreak of the coronavirus (COVID-19) at the end of 2019, countries implemented various degree of border controls according to the changes of the epidemic, resulting in a major impact on the tourism business, including aviation, tourism, and food and beverage, among which the tourism industry was the most affected.

During the outbreak of the COVID-19, the Company strengthened prevention efforts (taking body temperature, wearing masks, and disinfecting regularly), maintained facility and equipment, provided a safe working environment for employees, and cooperated with government policies to weather the downturn in the tourist hotel industry.

45

1. Correlation between upstream, midstream and downstream industries. The Company is a tourist hotel that provides lodging and dining services and is in the middle of the industry in terms of industry affiliation.

Correlation between upstream, midstream and downstream industries.

==> picture [351 x 241] intentionally omitted <==

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

Upstream Midstream Downstream
Fresh food suppliers
Beverage suppliers
General goods
Consumer
Guest room goods
Network reservation
Personal reservation
Travel agency
Corporate reservation
Dining materials
Provision of raw
Provision Tourist hotel
Housekeeping
Reservation
----- End of picture text -----

46

(III) Technology and R&D overview:

In addition to regular maintenance of our facilities and equipment, the Company also takes suggestions from our customers and staff to improve the quality of our services in the hope that our customers will be comfortable and satisfied when staying at our hotel.

• (IV) Long and short term business development plan:

• Short term development plan:

  • (1) In cooperation with the Tourism Bureau of the Ministry of Transportation and Communications’ policy of opening up visa-free entry, we plan to gradually develop visitor sources by targeting countries that are granted visa-free entry.

  • (2) Stabilize and secure the source of guests from neighboring regions in Asia, especially Japan, Korea, and Mainland China.

  • (3) Actively seek foreign visitors to Taiwan for large-scale trade shows, international conferences, art groups, and sports events.

  • (4) Actively participate in travel trade shows to expand our visitor base and enhance our hotel's reputation.

  • (5) Strengthen human resource management and add internal software and hardware facilities.

  • (6) In line with the government's policy to promote the “Tourism Doubling Plan,” the hotel has installed wireless Internet facilities to attract business travelers with “barrier-free Internet access.”

  • (7) In order to enhance our services to our visitors, we have been renovating our guest rooms to improve the quality and comfort of our accommodation.

  • (8) In order to ensure smooth Internet access for customers, the hotel's network equipment has been upgraded to ensure the bandwidth is smooth at all times to comply with “barrier free internet accessibility.”

  • (9) With the rapid growth of the global Internet population and the continuous improvement of smartphones, consumers’ payment methods have gradually shifted from “plastic money” (credit cards) to “mobile money” (e.g. TaiwanPay, applepay, samsungpay, linepay, Alipay, etc.), foreseeing a greater integration of consumer behavior with the Internet in the future. For this reason, the Company has upgraded our hotel's software and hardware to boost the occupancy rate.

• Long term development plan:

  • (1) Join international booking organizations to attract business customers and to gain more business.

  • (2) We are a member contract store of the “Taiwan Traveler Card” for public officials promoted by the Tourism Bureau of the Ministry of Transportation and Communications.

  • (3) The Company will introduce Macine's Teppanyaki, Dante Coffee, Kanazawa Exotic Cuisine, Yamachan International (Japanese Izakaya), PENG'S GOURMET & BANQUET (Hunan cuisine), Shan Garden Taipei (Jiangsu and Zhejiang cuisine), Yichi Japanese Beef Roast and other restaurants to attract consumers with a wide range of dishes and affordable prices.

  • (4) In order to meet the changing trend of room booking, we have developed more room booking platforms.

  • (5) Tap into the new wealthy customers from Southeast Asia.

47

• (6) Keep abreast of the trends of the electronic channel tools, enhance the performance of the payment flow operation platform, improve the effectiveness of electronic marketing, and strengthen the integration of the Internet marketing system.

• (7) In order to support the promotion of electronic invoicing by the competent authorities, the Company invested in a comprehensive upgrade of computer equipment in 2019 to meet the market demand.

• (8) Strengthen staff training, build employee cohesion, and establish a good reputation in order to achieve the vision of sustainable operation.

48

II. Market, production and sales overview

(I) Market analysis

The main business sales area: The Company mainly operates tourist hotels and commercial buildings for rental, providing tourists with accommodation, meeting and dining venues, etc. Based on the nationality of the housing tourists in the past two years, the hotel's tourists are mostly from Southeast Asia and Northeast Asia.

Unit: %

		Unit: %
Year Nationality of tourists	2020	2019
Northeast Asia (Japan. Korea)	15.17	25.19
Southeast Asia (Mainland China, Hong Kong and domestic customers)	78.44	69.33
North America	3.78	2.70
Europe	1.41	0.99
Central Asia (India. Arabia)	0.25	0.95
Australia (New Zealand)	0.32	0.29
Africa	0.43	0.18
Other	0.20	0.37
Total	100.00	100.00

• (II) Market share of tourist hotels in the Taipei area.

Unit: %

		Unit: %
Year Nationality of tourists	2020	2019
Our country	1.09	1.07
Mainland China	1.46	3.72
Japan	1.64	1.33
Other areas in Asia	0.73	1.02
Other	0.68	2.76

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• (III) Future supply and demand in the market:

• According to the United Nations World Tourism Organization (UNWTO), the future focus of global tourism development is in Asia. Taiwan is located at the center of the Asia-Pacific region and has potential for tourism development. The Tourism Bureau promotes the “Tourism2020-Taiwan Sustainable Tourism Development Program” with the goals of “Innovation and Sustainability to build a Happy Local Industry,” “Diversification and Creation of added value in Tourism,” and “Safety and Security to fulfill Tourism Social Responsibility,” and through five major development strategies, including “Developing Diversified Markets, Promoting National Tourism, Guiding Industrial Transformation, Developing Smart Tourism, and Promoting Experiential Tourism” to actively build Taiwan's tourism brand and bring the world to Taiwan and Taiwan to the world.

• (IV) Competitive niches and development prospects, favorable and unfavorable factors

• (1) Competitive niches:

  • The hotel has a long history, is located in the center of the city with convenient transportation, and has a high reputation, allowing customers to enjoy the essence of local culture and interest. The room rate is in the middle of the range, which gives us a competitive edge in the market.

• (2) Favorable factors:

  • a) The Tourism Bureau of the Ministry of Transportation and Communications has adopted a visa-free entry policy, which is conducive to increasing the willingness of foreign visitors to come to Taiwan.

  • b) The hotel is located less than 200 meters from the MRT Songjiang-Nanjing Station Exit 1 and 8, and the Luzhou, Xinzhuang and Songshan lines all stop at the Songjiang-Nanjing Station. The operation of the airport MRT and the rise of low-cost airlines have boosted the willingness of the young generations from Japan, Korea, Hong Kong, Singapore and Malaysia to travel. It is believed that the international airlines and the domestic transportation network will be more closely integrated, and it will be more convenient for foreign tourists to arrive at the hotel via the well-connected MRT network, which is beneficial to the business opportunities of the hotel.

• (3) Unfavorable factors:

  • a) In order to promote the Tourism Doubling Plan, the government adopts BOT to encourage private operators to build several hotels and requires them to attract tourists to Taiwan by limiting the price, which made it difficult to raise the room rate in the market.

  • b) The number of Mainland Chinese traveling to Taiwan has dropped dramatically, which has affected Taiwan's tourism industry.

  • c) The implementation of the system of one fixed and one flexible day off per week has led to an increase in a number of costs, making operations more difficult.

• (4) Countermeasures: Actively develop new customer sources and markets and diversify business and risks.

50

• (V) Important applications and production process of the major products. The Company is mainly engaged in tourist hotels and commercial buildings rental, providing visitors with the necessary venues for accommodation, meetings, and dining.

• (VI) Supply of major raw materials:

• The Company is mainly engaged in tourist hotels and commercial buildings rental and the provision of rooms for accommodation, meetings and dining services. The major raw materials are room supplies and food, etc. The supply is stable.

51

• (VII) The names of suppliers/customers who accounted for more than 10% of the total purchases (sales) in any of the most recent 2 years, their purchases (sales) amount and proportion, and the reasons for the increase or decrease. However, if the contract stipulates that the customer's name cannot be disclosed.or if the counterparty is an individual and not a related party, the name of the customer may be substituted with a code:

• Major purchase suppliers: There are no suppliers who account for more than 10% of the Company's purchases, so it is not applicable.

• Major sales customers:

Information on the major customers in the most recent 2 years

Unit: Thousands of NTD

2020	2020	2020	2020	2019	2019	2019	2019	1Q2021	1Q2021	1Q2021	1Q2021
Name	Amount	As a percentage of net sales for the whole year (%)	Relationship with the issuer	Name	Amount	As a percentage of net sales for the whole year (%)	Relationship with the issuer	Name	Amount	As a percentage of net sales for the whole year (%)	Relationship with the issuer
Company A	191,982	72.48	No	Company A	211,236	37.36	No	Company A	52,734	75.89	No
Operating revenue	264,866	100.00	-	Operating revenue	346,735	100.00	-	Operating revenue	69,489	100.00	-

52

(VIII) Production volume and value for the most recent 2 years Production volume unit: Days

Production value unit: Thousands of NTD

Year Segment	2020	2020	2020	2019	2019	2019
	Production capacity	Production volume	Production value	Production capacity	Production volume	Production value
Rental costs	-	365	17,653	-	365	17,302
Travel service costs	-	365	54,594	-	365	71,197
Subtotal	-	365	72,247	-	365	88,499

Note: The company is a tourist business, so the production capacity is not applicable.

(IX) Sales volume and value for the most recent 2 years

Sales volume unit: Days

Sales value unit: Thousands of NTD

Year Segment	2020	2020	2019	2019
	Domestic sales		Domestic sales
	Volume	Value	Volume	Value
Rental revenues	365	209,773	365	231,818
Travel service revenues	365	55,093	365	114,917
Subtotal	365	264,866	365	346,735

Note: The Company is not a manufacturer and has no export sales volume or value.

53

III. Number of employees, average years of service, average age and education distribution percentage for the most recent 2 years

Information on employees for the most recent 2 years and the current year up to March 31, 2021

	Year	2020	2019	The current year up to March 31, 2021 (Note)
Number of employees	Management	27	32	26
	Technical staff	3	4	3
	Service staff	10	16	10
	Total	40	52	39
	Average age	56.75	55.5	56.74
	Average years of service	13.1	10.8	13.39
Education distribution percentage	Above master	2	2	2
	Above college	13	14	13
	Senior high school	20	28	19
	Below senior high school	5	8	5

IV. Information on environment protection expenditures: (None)

V. Labor relations

1. Employee benefits measures:

2. (1) All of the employees of the Company are covered by labor and national health insurance.

3. (2) In order to improve work efficiency and motivate employees, we provide monthly performance bonuses and appropriate profit sharing remuneration for employees in accordance with the Company's Articles of Incorporation.

4. (3) We provide lunch or dinner every day and have dormitories for our employees from other counties or cities to stay in so that they can save money on food and lodging.

5. Employee education and training:

A: Employee training:

• (1) In 2020, the Company's safety and health consultant, Dongjun Industrial Co., Ltd., dispatched professionals to provide two on-the-job safety and health training courses and two disaster prevention training and practical exercises for the Company's employees, with a total of 56 participants.

54

• (2) Arranged for an administration manager to attend the on-the-job training for the occupational safety and health manager organized by the Industrial Safety and Health Association of the ROC.

• (3) Arranged for 32 of our employees to attend 3 sessions of the “Training and Industry Transformation of Hotel and Tourism Industry” organized by the Tourism and Hotel Industry Association of the ROC from June 29, 2020 to July 3, 2020, July 6, 2020 to July 10, 2020, and July 13, 2020 to July 17, 2020, for a total of 40 hours per session.

• (4) On October 12, 2020 and October 13, 2020, we arranged one of our auditors to attend the “Auditing Techniques in Practice” and “Internal Auditing Skills for Compliance with Laws and Regulations” courses held by the Institute of Internal Auditors, R.O.C. for a total of 12 hours.

• (5) On October 6, 2020 and October 16, 2020, arranged an audit officer to attend the “Internal Auditing and Internal Control Personal Information Law Practical Operations” and “Practical Introduction to the Code of Ethics and ISO 37001” training held by the Institute of Internal Auditors, R.O.C. for a total of 12 hours.

B: Managerial officers trained in corporate governance related courses.

• On 2020/11/12 and 2020/11/13, the accounting officer of the Company attended the “Continuing Education Course for Accounting Supervisors of Issuer Securities Exchange” organized by the Accounting Research and Development Foundation of the ROC for a total of 12 hours.

• Retirement system:

In order to take care of our employees in their old age and to ensure that they can work in a stable environment, we have established the “Employee Retirement Plan.” Also, the “Labor Pension Act” is applicable to all new employees after July 1, 2005.

1. Other important agreements:

In order to ensure the personal safety of our employees, the following protection measures are in place.

• (1) Regular employee health checkups once a year.

• (2) The Company reports to the competent authorities twice a year for fire safety equipment inspection and once a year for safety inspection of fire prevention and refuge facilities and equipment in buildings.

• Losses suffered from labor disputes in the most recent 2 years: (None).

• If the Company's personnel involved in the transparency of financial information obtain the relevant licenses specified by the competent authorities: None.

• The Company has established operating procedures for handling internal material information under the “Management of Insider Transactions” and has communicated it to all employees in writing and has every employee sign the “Non-Disclosure Agreement.”

55

VI. Important contracts

			May1,2021	May1,2021
Nature of contract	Party involved	Contract start and end date	Major content	Restricted clause
Lease contract	The Eslite spectrum Corporation	2018.06.01 / 2030.05.31	Rent out the second basement and ground 1-5 floors of No. 14 Nanjing West Road, Taipei City used for department stores, etc.	－
Lease contract	Kuang Zhen Co., Ltd.	2018.07.01 / 2023.06.30	Rent out the entire second floor of No. 63, Section 2, Nanjing East Road, Taipei City for PENG'S GOURMET & BANQUET	－
Lease contract	Shiang Garden Taipei	.07.21 2018 / 2023.02.20	Rent out part of the third floor of No. 63, Section 2, Nanjing East Road, Taipei City for Shiang Garden Taipei.	－
Lease contract	Health Cooking Co., Ltd.	2018.03.01 / 2023.02.28	Rent out the 2nd and 3rd floors and the entrance stairwell on the 1st floor of No. 65 and 67, Section 2, Nanjing East Road, Taipei City, and No. 63 for Japanese Beef Roast.	－
Lease contract	Macine’s Western Restaurant Co., Ltd.	2021.01.01 / 2021.12.31	Rent out the basement floor of No. 63, Section 2, Nanjing East Road, Taipei City, for teppanyaki.	－

56

Six. Financial status

I. Condensed balance sheet and statement of comprehensive income

(I) Condensed balance sheet and statement of comprehensive income

Condensed balance sheet

Unit: Thousand NTD

Year Item	Year Item	Financial information for the most recent 5 years (Note 1)	Financial information for the most recent 5 years (Note 1)	Financial information for the most recent 5 years (Note 1)	Financial information for the most recent 5 years (Note 1)	Financial information for the most recent 5 years (Note 1)	Financial information for the current year up to March 31, 2021 (Note 3)
		2020	2019	2018	2017	2016
Current assets		2,553,400	2,564,908	2,544,524	2,489,295	2,344,377	2,606,651
Property, plant and equipment		375,910	377,330	378,112	381,487	384,828	375,498
Intangible Assets		-	-	-	-	-	-
Other	assets	7,563,219	7,885,940	7,457,355	6,695,273	6,544,523	7,368,851
Total	Assets	10,492,529	10,828,178	10,379,991	9,566,055	9,273,728	10,351,000
Current liabilities	Before distribution	139,182	123,542	132,543	94,489	89,562	150,093
	After distribution	Note 2	348,541	357,542	228,769	179,659	-
Non-current liabilities		1,326,288	1,337,186	1,266,199	1,118,796	1,085,948	1,303,489
Total liabilities	Before distribution	470 1,465,	1,460,728	1,398,742	1,213,285	1,175,510	1,453,582
	After distribution	Note 2	1,685,727	1,623,741	1,347,565	1,265,607	-
Equity attributable to shareholders of parent company		-	-	-	-	-	-
Capital		4,999,984	4,999,984	4,999,984	4,865,217	4,504,830	984 4,999,
Capital surplus		76,031	76,031	76,031	76,031	76,031	76,031
Retained earnings	Before distribution	3,183,506	3,247,259	2,939,753	2,778,214	2,674,122	3,176,259
	After distribution	Note 2	3,022,260	2,714,754	2,509,168	2,223,639	-
Other equityinterests		767,538	1,044,176	965,481	633,308	843,235	645,144
Treasuryshares		-	-	-	-	-	-
Total equity	Before distribution	9,027,059	9,367,450	8,981,249	8,352,770	8,098,218	8,897,418
	After distribution	Note 2	9,142,451	8,756,250	8,218,490	8,008,121	-

Note 1: The financial information for the years 2016 to 2020 was prepared in accordance with International Financial Reporting Standards.

Note 2: The distribution of earnings for 2020 is a pending resolution at the 2021 Annual Shareholders’ Meeting. Note 3: The Company's financial information for the first quarter of 2021 has been reviewed by CPAs.

57

(II) Condensed statement of comprehensive income

(II) Condensed statement of comprehensive income	(II) Condensed statement of comprehensive income	(II) Condensed statement of comprehensive income	(II) Condensed statement of comprehensive income	(II) Condensed statement of comprehensive income	(II) Condensed statement of comprehensive income	(II) Condensed statement of comprehensive income
(Unit: Thousands of NTD,but earningsper share in NTD)
Year Item	Financial information for the most recent 5 years (Note 1)					Financial information for the current year up to March 31, 2021 (Note2)
	2020	2019	2018	2017	2016
Operatingrevenue	264,866	346,735	330,487	329,866	335,491	69,489
Gross profit	192,619	258,236	243,460	236,406	243,255	53,040
Operating profits or losses	165,374	225,613	210,952	204,442	210,652	47,817
Non-operating income and expenses	35,748	434,042	474,393	455,429	389,786	( 57,393 )
Profit before tax	201,122	659,655	685,345	659,871	600,438	( 9,576 )
Net profits (losses) for the period	160,741	2 532,03	430,208	555,094	501,533	( 7,247 )
Other comprehensive income for the period (Net aftertax)	( 276,133 )	79,168	120,081	( 210,445 )	( 92,806 )	( 122,394 )
Total comprehensive incomeforthe year	( 115,392 )	611,200	550,289	344,649	408,727	( 129,641 )
Earningsper share	0.32	1.06	0.86	1.11	1.00	-0.01

Note 1: The financial information for the years 2016 to 2020 was prepared in accordance with International Financial Reporting Standards.

Note 2: The Company's financial information for the first quarter of 2021 has been reviewed by CPAs.

(III) Audit opinions of CPAs for the most recent 5 years

Year	CPA firm	CPA name	Audit opinion
2020	Deloitte & Touche	Ying-Chou Chen, Wang-Sheng Lin	Unqualified opinion with other matter paragraphs.
2019	Deloitte & Touche	Ying-Chou Chen, Wang-Sheng Lin	Unqualified opinion with other matter paragraphs.
2018	Deloitte & Touche	Ying-Chou Chen, Rui- Chan Huang	Unqualified opinion with other matter paragraphs.
2017	Deloitte & Touche	Ying-Chou Chen, Rui- Chan Huang	Unqualified opinion with other matter paragraphs.
2016	Deloitte & Touche	Ying-Chou Chen, Rui- Chan Huang	Unqualified opinion with other matter paragraphs.

58

II. Analysis of important financial ratios

Year Analysis item	Year Analysis item	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	The current year up to March 31, 2021
		2020	2019	2018	2017	2016
Capital structure (%)	Debts to assets ratio	14.0	13.5	13.5	12.7	12.7	14.0
	Long-term capital to property, plant, and equipment ratio	2,754.2	2,836.9	2,710.2	2,482.8	2,386.6	2,716.6
Solvency %	Current ratio	1,834.6	2,076.1	1,919.8	2,634.5	2,617.6	1,736.7
	Quick ratio	1,833.7	2,075.0	1,918.6	2,633.0	2,616.0	1,735.3
	Interest coverage multiplier	161.3	529.2	458.2	361.8	283.8	-39.8
Operation performance	Accounts receivable turnover rate (times)	101.8	70.7	62.7	54.6	50.7	629.6
	Average collection days	3.6	5.2	5.8	6.7	7.2	0.6
	Inventory turnover rate (times)	Not applicable.	Not applicable.	Not applicable.	Not applicable.	Not applicable.	Not applicable.
	Accounts payable turnover rate (times)	1.2	1.6	1.8	2 2.	2.3	1.0
	Average sales days	Not applicable.	Not applicable.	Not applicable.	Not applicable.	Not applicable.	Not applicable.
	Property, plant and equipment turnover rate (times)	0.7	0.9	0.9	0.9	0.9	0.7
	Total assets turnover rate (times)	0.02	0.03	0.03	0.04	0.04	0.03
Profitability	Return on assets (%)	1.5	5.0	4.3	5.9	5.5	-0.3
	Return on equity (%)	1.8	5.8	5.0	6.8	6.3	-0.3
	Percentage of net profits before tax to paid-incapital(%)	4.0	13.2	13.7	13.6	13.3	-0.8
	Net profit margin (%)	60.7	153.4	130.2	168.3	149.5	-10.4
	Earnings per share (NTD)	0.32	1.06	0.86	1.11	1.00	-0.01
Cash flows	Cash flow ratio (%)	95.2	124.6	131.0	179.9	175.1	33.15
	Cash flow adequacy ratio (%)	108.7	143.9	205.1	205.9	238.2	104.5
	Cash reinvestment ratio (%)	( 0.8 )	( 0.6 )	0.5	0.9	0.9	0.5
Leverage	Operating leverage	1.12	1.09	1.10	1.11	1.12	1.10
	Financial leverage	1.01	1.01	1.01	1.01	1.01	1.00
For the year	ended December 31, 2020, accounts receivable turnover rate, interest coverage multiplier, average collection days,
accounts payable turnover rate, property, plant and equipment turnover rate, return on assets, return on equity, net profits before
income taxes to paid-in capital, net profit margin, earnings per share, cash flow ratio, cash flow adequacy ratio, and cash reinvestment ratio increased (decreased) by 20% or more from the year ended December 31, 2019, mainly due to the COVID- 19 epidemic.
Note 1: The year(s) not audited by CPAs should be noted. Note 2: TWSE or TPEx listed companies should include in the analysis the financial information for the current year as of the quarter prior to the publication date of the annual report.

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Note 3: The following formula should be shown at the end of this table for the annual report.

1. Capital structure

2. (1) Debts to assets ratio = total liabilities/total assets.

3. (2) Long-term capital to property, plant, and equipment ratio = (total equity + noncurrent liabilities)/net property, plant, and equipment.

4. Solvency

5. (1) Current ratio = current assets/current liabilities.

6. (2) Quick ratio = (current assets - inventory - prepaid expenses)/current liabilities.

7. (3) Interests coverage multiplier = net profits before tax and interest expense/interest expense for the period.

8. Operation performance

9. (1) Receivable (including accounts receivable and notes receivable from business operations) turnover rate = net sales / balance of average accounts receivable for various periods (including accounts receivable and notes receivable from business operations).

10. (2) Average collection days = 365/accounts receivable turnover rate.

11. (3) Inventory turnover rate = costs of goods sold/average inventory.

12. (4) Payable (including accounts payable and notes payable from business operations) turnover rate = costs of goods sold / balance of average accounts payable for various periods (including accounts payable and notes payable from business operations).

13. (5) Average sales days = 365/inventory turnover rate.

14. (6) Property, plant, and equipment turnover rate = net sales/average property, plant, and equipment.

15. (7) Total assets turnover rate = net sales/average total assets.

16. Profitability

17. (1) Return on assets = [net profits after tax + interest expense x (1 - tax rate)]/average total assets.

18. (2) Return on equity = net profits after tax/average total equity.

19. (3) Net profit margin = net profits after tax/net sales.

20. (4) Earnings per share = (net profits attributable to shareholders of the parent - preferred stock dividend)/weighted average number of shares outstanding. (Note 4)

21. Cash flows

22. (1) Cash flow ratio = net cash flow from operating activities/current liabilities.

23. (2) Cash flow adequacy ratio = sum of net cash flow from operating activities for the most recent 5 years /( sum of capital expenditures, inventory additions, and cash dividend) for the most recent 5 years.

24. (3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividend) / (gross property, plant, and equipment + long-term investment + other non-current assets + working capitals). (Note 5)

25. Leverage:

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  - (1) Operating leverage = (net operating revenues - variable operating costs and expenses) / operating profits (Note 6).

  - (2) Financial leverage = operating profits / (operating profits - interest expense).

• Note 4: Special attention should be paid to the following when measuring earnings per share with the above calculation formula:

• Based on the weighted-average number of common shares rather than the number of shares outstanding at the end of the year.

• Where there are cash capital increase or treasury stock transactions, the weighted average number of shares should be used considering the period of circulation.

• Where there is a capital increase from earnings or capital surplus, when calculating the annual or semi-annual earnings per share for previous years, retrospective adjustments should be made in proportion to the capital increase, regardless of the issuance period of such capital increase.

• If the preferred shares are non-convertible and cumulative, their dividends for the current year (whether paid or not) should be deducted from the net profits after tax or added to the net losses after tax. If the preferred shares are non-cumulative, their dividends should be deducted from net profits after tax if there are net profits after tax; if there are net losses, no adjustment is required.

• Note 5: Special attention should be paid to the following in performing cash flow analysis.

• Net cash flow from operating activities represents the net cash inflow from operating activities in the cash flow statement.

• Capital expenditures represent the annual cash outflows from capital investments.

• Increase in inventory is included only if the ending balance is greater than the beginning balance, or zero if inventory decreases at the end of the year.

• Cash dividends include cash dividends on common stock and preferred stock.

• Gross property, plant and equipment represent the total amount of property, plant and equipment before accumulated depreciation.

• Note 6: The issuer should distinguish between fixed and variable operating costs and operating expenses according to their nature. Where estimates or subjective judgments are involved, pay attention to the reasonableness and maintain consistency.

• Note 7: If the Company's stock has no face value or the face value per share is not NT$10, the ratios related to paid-in capital in the preceding paragraph should be replaced with the ratio of equity attributable to shareholders of the parent in the balance sheet.

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III. Review report of the Audit Committee on the financial statements for the most recent year The Audit Committee of First Hotel Company Ltd. reviewed the 2020 final accounting reports

Audit Committee’s audit report

The Board of Directors has prepared and presented the Company’s 2020 financial statements, business report and earnings distribution proposal. Among them, the company's 2020 financial statements have been audited by CPA Ying-chou Chen and Wang-sheng Lin of Deloitte & Touche, who have issued an audit report.

The above statements have been examined by the Audit Committee and found to be in compliance. With the consent of all members, the Committee hereby presents the above in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

FIRST HOTEL COMPANY LTD.

Convener of the Audit Committee: Hsieh-hung Li

March 30, 2021

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IV. Financial Reports in Recent Years

(I) Accountant’s Auditing Report in Recent Years

To First Hotel Company Ltd.:

Opinions

We have audited the balance sheets of First Hotel Company Ltd. as of December 31, 2020 and 2019, as well as the comprehensive income statements, the statements of changes in equity and cash flow statements, and notes to the financial statements (including a summary of significant accounting policies) for the years 2020 and 2019, from January 1[st] to December 31[st] .

In our opinion, based on our audits and the reports of other independent auditors (please refer to the Other Information), the financial statements referred to above present fairly, in all material respects, the financial position of First Hotel Company Ltd. as of December 31, 2020 and 2019, and its financial performance and cash flows from January 1[st] to December 31[st] , 2020 and 2019, in conformity with the requirements of regulations governing the preparation of financial statements by securities issuers and International Financial Reporting Standards, International Accounting Standards, and Interpretations endorsed and issued into effect by the Financial Supervisory Commission.

Basis for Opinions

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

Key Audit Matters

Key audit matters are those matters that were of most significance in our audit to First Hotel Company Ltd. of the 2020 financial statements of the current period in our professional judgment. 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.

Key audit matters of the 2020 financial statements of First Hotel Company Ltd. are as follows: Investments accounted for under the equity method

As of December 31, 2020, the balance of the investment in Today's Hotel Corporation of the USA under the equity method was NT$4,114,738 thousand, accounting for 39% of total assets. As of December 31, 2020, the amount of loss recognized under the equity method in relation to Today's Hotel Corporation USA was NT$50,349 thousand, accounting for (25%) of net profits before tax. Since the amounts of the aforementioned items are significant in relation to the overall financial statements, if the investee's financial

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statements do not properly reflect the results of operations for the year or do not correctly calculate the investment income or loss, the amount in the investment using the equity method and its share of the income or loss will be adjusted for deviations and is therefore considered a key audit matter for the year ended December 31, 2020. Please refer to Notes 4 and 9 for related accounting policies and disclosures.

In order to address the above risks, we understood the planning of the audit teams of these affiliated companies, assessed the professional competence of the audit teams and communicated the materiality of the audit and the risk of a material misstatement by means of audit contact letters. Upon completing the audit, we assessed whether the audit teams had obtained sufficient and appropriate audit evidence and obtained audited financial statements to confirm and verify the accuracy of the amount in profit or loss and related investments recognized under the equity method.

Other Information

Among the affiliated companies accounted for under the equity method in the financial statements of First Hotel Company Ltd., the 2020 and 2019 financial statements of Forward Time Corporation, Today’s V, Inc. and Today’s VI, LLC accounted for under the equity method by F&W Hotel corporation and Today's Hotel Corporation USA have not been audited by us. Therefore, our opinion on the financial statements referred to above is based on the report of the other auditors as to the amounts of the above-mentioned investments accounted for under the equity method and the shares of income or loss of the affiliates accounted for under the equity method. For the years ended December 31, 2020 and 2019, the above balances audited by other accountants amounted to NT$1,471,744 thousand and NT$1,474,791 thousand, respectively, accounting for 14% of total assets. The share of income or loss of affiliates recognized under the equity method amounted to NT$76,283 thousand and NT$25,988 thousand, respectively, accounting for 38% and 4% of net profits before tax in 2020 and 2019.

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 the IFRS, IAS, IFRIC and SIC endorsed and issued into effect by the Financial Supervisory Commission 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 ability of First Hotel Company Ltd. 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.

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Those charged with governance, including the audit committee, are responsible for overseeing First Hotel Company Ltd.'s financial reporting process.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance. Still, it is not a guarantee that an audit conducted in accordance with the generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence users' economic decisions based on these financial statements.

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

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. 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 to express an opinion on the effectiveness of the internal control of First Hotel Company Ltd.

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. Based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of First Hotel Company Ltd. to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause First Hotel Company Ltd. 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 appropriate audit evidence regarding the financial information of the entities or business activities within First Hotel Company Ltd. to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion of First Hotel Company Ltd.

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those of most significance in the audit of First Hotel Company Ltd.’s financial statements for the year ended December 31, 2020 and are the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Deloitte & Touche CPA Ying-chou Chen CPA Wang-sheng Lin Financial Supervisory Commission Approval Financial Supervisory Commission Approval Jin-Guan-Zheng-Shen-Zi No. 1050024633 Jin-Guan-Zheng-Shen-Zi No. 1060023872

March 29, 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.

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First Hotel Company Ltd.

Balance sheets

December 31, 2020 and 2019

Unit: Thousand NTD

Code 1100 1110 1120 1136 1150 1170 1476 1479 11XX 1517 1550 1600 1760 1840 1920 1990 15XX 1XXX	Assets Current assets Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Financial assets at fair value through other comprehensive income - current (Notes 4 and 8) Financial assets at amortized cost - current (Notes 4 and 6) Notes receivable (Note 4) Accounts receivable (Note 4) Other financial assets - current (Note 4) Other current assets Total current assets Non-current assets Financial assets at fair value through other comprehensive income - noncurrent (Notes 4 and 8) Investments accounted for using the equity method (Notes 4 and 9) Property, plant and equipment (Note 4 and 10) Investment property (Notes 4 and 11) Deferred tax assets (Notes 4 and 15) Refundable deposits (Note 20) Other non-current assets Total noncurrent assets Total Assets		December 31, 2020 Amount % $ 267,017 2 11,220 - 1,456 - 2,265,022 22 114 - 606 - 6,671 - 1,294 - 2,553,400 24 2,092,716 20 4,454,346 42 375,910 4 948,509 9 64,348 1 2,939 - 361 - 7,939,129 76 $ 10,492,529 100	December 31, 2020 Amount % $ 267,017 2 11,220 - 1,456 - 2,265,022 22 114 - 606 - 6,671 - 1,294 - 2,553,400 24 2,092,716 20 4,454,346 42 375,910 4 948,509 9 64,348 1 2,939 - 361 - 7,939,129 76 $ 10,492,529 100		December 31, 2019	December 31, 2019	December 31, 2019
			Amount $ 267,017 11,220 1,456 2,265,022 114 606 6,671 1,294 2,553,400 2,092,716 4,454,346 375,910 948,509 64,348 2,939 361 7,939,129 $ 10,492,529			Amount $ 297,605 11,177 1,470 2,239,538 501 3,982 9,269 1,366 2,564,908 2,179,063 4,734,708 377,330 950,230 18,158 3,110 671 8,263,270 $ 10,828,178		%
								3 - - 21 - - - - 24 20 44 3 9 - - - 76 100

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Code 2150 2219 2230 2300 21XX 2570 2640 2645 25XX 2XXX 3110 3210 3240 3200 3310 3320 3350 3300 3410 3420 3400 3XXX	Liabilities and Shareholders’Equity Current liabilities Notes payable Other payables Current tax liabilities (Note 4) Other current liabilities Total current liabilities Non-current liabilities Deferred tax liabilities (Notes 4 and 15) Net defined benefit liabilities - noncurrent (Notes 4 and 12) Deposits received (Notes 4 and 11) Total noncurrent liabilities Total liabilities Shareholders’ Equity Capital Capital surplus Capital stock premium Gain on disposal of assets Total capital surplus Retained earnings Legal reserve Special reserve Unappropriated retained earnings Total retained earnings Other equity interests Exchange differences arising on translation of foreign operations Unrealized valuation gain or loss on financial assets at fair value through other comprehensive income Total other equity Total equity Total Liabilities and Equity	$ 64,610 18,382 47,564 8,626 139,182 1,198,571 960 126,757 1,326,288 1,465,470 4,999,984 76,008 23 76,031 855,488 592,542 1,735,476 3,183,506 ( 257,394 ) 1,024,932 767,538 9,027,059 $ 10,492,529	1 - - - 1 12 - 1 13 14 48 1 - 1 8 6 16 30 ( 3 ) 10 7 86 100	$ 58,811 21,864 33,181 9,686 123,542 1,208,695 1,734 126,757 1,337,186 1,460,728 4,999,984 76,008 23 76,031 802,237 592,542 1,852,480 3,247,259 ( 72,635 ) 1,116,811 1,044,176 9,367,450 $ 10,828,178	1 - - - 1 11 - 1 12 13 46 1 - 1 7 6 17 30 - 10 10 87 100

The accompanying notes are an integral part of the financial statements. (Please refer to the audit report dated March 29, 2021 of Deloitte & Touche).

Chairperson: An-sheng Ku Managerial officer: Hsiao-hua Hsu

Accounting officer: Hsiu-Mei Lin

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First Hotel Company Ltd.

Comprehensive Income statements

From January 1[st] to December 31[st] , 2020 and 2019

Code Operating revenues (Note 4) 4300 Rental incomes (Note 11) Travel service revenues 4411 Guest room revenues 4412 Food service revenues 4413 Post and telecommunication service revenues 4418 Others 4400 Total travel service revenues 4000 Total operating revenues Operating costs (Note 14) 5300 Rental costs Travel service costs 5411 Guest room costs 5412 Food service costs 5413 Post and telecommunication service costs 5400 Total travel service costs 5000 Total operating costs 5900 Gross profit 6000 Operating expenses (Notes 4, 10, 11, 12 and 14) 6900 Operating profit	(Unit: Thousand 2020	(Unit: Thousand 2020	NTD, but earnings per share in 2019 % Amount 79 $ 231,818 6 74,706 14 37,512 - 14 1 2,685 21 114,917 100 346,735 7 17,302 10 40,839 10 30,037 - 321 20 71,197 27 88,499 73 258,236 11 32,623 62 225,613	NTD, but earnings per share in 2019 % Amount 79 $ 231,818 6 74,706 14 37,512 - 14 1 2,685 21 114,917 100 346,735 7 17,302 10 40,839 10 30,037 - 321 20 71,197 27 88,499 73 258,236 11 32,623 62 225,613	NTD, but earnings per share in 2019 % Amount 79 $ 231,818 6 74,706 14 37,512 - 14 1 2,685 21 114,917 100 346,735 7 17,302 10 40,839 10 30,037 - 321 20 71,197 27 88,499 73 258,236 11 32,623 62 225,613	NTD)
		Amount $ 209,773 16,529 36,726 4 1,834 55,093 264,866 17,653 25,932 28,358 304 54,594 72,247 192,619 27,245 165,374			Amount $ 231,818 74,706 37,512 14 2,685 114,917 346,735 17,302 40,839 30,037 321 71,197 88,499 258,236 32,623 225,613	%
						67 21 11 - 1 33 100 5 12 9 - 21 26 74 9 65

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Code Non-operating income and expenses 7060 Share of gain or loss of affiliated enterprise accounted for using the equity method (Notes 4 and 9) 7100 Interest incomes (Note 4) 7130 Dividend incomes (Notes 4 and 8) 7190 Other incomes (Notes 4 and 22) 7235 Net gain on financial assets at fair value through profit or loss 7510 Interest expenses (Note 11) 7590 Non-operating expenses 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expenses (Notes 4 and 15) 8200 Net Profit Other comprehensive income (Notes 4, 9, 12, 13 and 15) Items that are not reclassified to profit or loss 8311 Remeasurement of defined benefit plan 8316 Unrealized valuation gain or loss on equity instruments at fair value through other comprehensive income 8320 Share of other comprehensive income of affiliated enterprise accounted for using the equity method 8349 Income taxes related to items that are not reclassified 8310		2020	% ( 16 ) 7 22 2 - - ( 1) 14 76 (16) 60 - ( 32 ) ( 3 ) 1 (34)		2019
		Amount $ 42,214 ) 18,842 58,906 3,494 43 1,255 ) 2,068) 35,748 201,122 40,381) 160,741 505 86,361 ) 7,199 ) 1,681 91,374)			Amount $ 352,872 23,325 59,562 1,537 58 1,249 ) 2,063) 434,042 659,655 127,623) 532,032 473 152,320 24,122 4,817) 172,098	%
	( ( ( ( ( ( (			( ( ( (		102 7 17 - - - ( 1) 125 190 (37) 153 - 44 7 ( 1) 50

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Code Items that will be reclassified under profit or loss 8371 Exchange differences on translation of financial statements of foreign operations of affiliated enterprises recognized under the equity method 8399 Income taxes related to items that may be reclassified to profit or loss 8360 8300 Other comprehensive income for the period (net after- tax) 8500 Total comprehensive income or loss for the year Earnings per share (Note 16) 9710 Total basic earnings per share	2020	% ( 87 ) 17 (70) (104) (44)	2019
	Amount ( $ 230,949 ) 46,190 ( 184,759) ( 276,133) ($ 115,392) $ 0.32		Amount ( $ 116,163 ) 23,233 ( 92,930) 79,168 $ 611,200 $ 1.06	%
				( 34 ) 7 (27) 23 176

The accompanying notes are an integral part of the financial statements. (Please refer to the audit report dated March 29, 2021 of Deloitte & Touche).

Chairperson: An-sheng Ku Managerial officer: Hsiao-hua Hsu Accounting officer: Hsiu-Mei Lin

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First Hotel Company Ltd.

Statements of changes in equity

From January 1[st] to December 31[st] , 2020 and 2019

Unit: Thousand NTD

									Unit: Thousand NTD
Code A1 Balance January 1, 2019 Appropriation and distribution of 2018 earnings B1 Legal reserve B5 cash dividends D1 2019 net profits D3 2019 other comprehensive income after tax D5 2019 total comprehensive Income Z1 Balance December 31, 2019 Appropriation and distribution of 2019 earnings B1 Legal reserve B5 cash dividends D1 2020 net profits D3 2020 other comprehensive income or loss after tax D5 2020 total comprehensive Income or Loss Z1 Balance as of December 31, 2020		Capital (Note 13) $ 4,999,984 - - - - - 4,999,984 - - - - - $ 4,999,984	Capital surplus (Notes 4 and 13) $ 76,031 - - - - - 76,031 - - - - - $ 76,031		Retained earnings (Notes 4 and 13) Legal reserve Special reserve Unappropriated retained earnings $ 759,216 $ 592,542 $ 1,587,995 43,021 - ( 43,021 ) - - ( 224,999 ) - - 532,032 - - 473 - - 532,505 802,237 592,542 1,852,480 53,251 - ( 53,251 ) - - ( 224,999 ) - - 160,741 - - 505 - - 161,246 $ 855,488 $ 592,542 $ 1,735,476		Otherequity (Notes4and13) Exchange differences arising on translation of foreign operations Unrealized valuation gain or loss on financial assets at fair value through other comprehensive income $ 20,295 $ 945,186 - - - - - - ( 92,930) 171,625 ( 92,930) 171,625 ( 72,635 ) 1,116,811 - - - - - - ( 184,759) ( 91,879) ( 184,759) ( 91,879) ($ 257,394) $ 1,024,932		Total equity
							Exchange differences arising on translation of foreign operations $ 20,295 - - - ( 92,930) ( 92,930) ( 72,635 ) - - - ( 184,759) ( 184,759) ($ 257,394)
					Legal reserve $ 759,216 43,021 - - - - 802,237 53,251 - - - - $ 855,488	Special reserve $ 592,542 - - - - - 592,542 - - - - - $ 592,542
								( (	$ 8,981,249 - ( 224,999 ) 532,032 79,168 611,200 9,367,450 - ( 224,999 ) 160,741 ( 276,133) ( 115,392) $ 9,027,059

Chairperson: An-sheng Ku

The accompanying notes are an integral part of the financial statements. (Please refer to the audit report dated March 29, 2021 of Deloitte & Touche). Managerial officer: Hsiao-hua Hsu Accounting officer: Hsiu-Mei Lin

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First Hotel Company Ltd.

Cash flow statements

From January 1[st] to December 31[st] , 2020 and 2019

Code Cash flow from operating activities A10000 Profit before income tax A20010 Income and expenses having no effect on cash flows A20100 Depreciation expense A20200 Amortization expense A20400 Net gain on financial assets and liabilities at fair value through profit or loss A20900 Interest expenses A21200 Interest income A21300 Dividend incomes A22300 Share of gain or loss of affiliated enterprise accounted for using the equity method A30000 Net changes in assets and liabilities related to operating activities A31130 Notes receivable A31150 Accounts receivable A31240 Other current assets A31250 Other financial assets A32130 Notes payable A32180 Other payables A32230 Other current liabilities A32240 Net defined benefit liabilities A33000 Cash flow from operating activities A33500 Income taxes paid AAAA Net cash generated by operating activities Cash Flow from Investing Activities B00040 Increase in financial assets at amortized cost B02700 Purchase of property, plant and equipment B03700 Increase in refundable deposits B03800 Decrease in refundable deposits B06800 Decrease in other non-current assets B07500 Interest received B07600 Dividend received BBBB Net cash inflow (outflow) from investing activities	2020 $ 201,122 3,678 39 ( 43 ) 1,255 ( 18,842 ) ( 58,906 ) 42,214 387 3,376 72 343 ( 1,648 ) ( 4,737 ) ( 1,060 ) ( 269) 166,981 ( 34,441) 132,540 ( 25,484 ) ( 537 ) ( 2,246 ) 2,417 271 21,097 58,906 54,424	Unit: Thousand NTD 2019 $ 659,655 4,645 39 ( 58 ) 1,249 ( 23,325 ) ( 59,562 ) ( 352,872 ) 638 203 135 ( 37 ) ( 2,288 ) ( 1,700 ) 446 82 227,250 ( 73,361) 153,889 ( 242,021 ) ( 2,099 ) ( 5,682 ) 6,643 - 23,187 59,562 ( 160,410)

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Code Cash Flow from Financing Activities C03000 Increase in guarantee deposit received C03100 Decrease in guarantee deposit C04500 Cash dividends paid CCCC Net cash used in financing activities EEEE Decrease in cash and cash equivalents for the period E00100 Beginning of year cash and cash equivalents E00200 End of year cash and cash equivalents

The accompanying notes are an integral part of the financial statements. (Please refer to the audit report dated March 29, 2021 of Deloitte & Touche).

Chairperson: An-sheng Ku Managerial officer: Hsiao-hua Hsu Accounting officer: Hsiu-Mei Lin

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First Hotel Company Ltd.

Notes to financial statements.

From January 1[st] to December 31[st] , 2020 and 2019

(Amounts are in NTD thousand unless otherwise stated)

I. Company history

The Company is mainly engaged in tourist hotels, rental of commercial buildings and related businesses.

The shares issued by the Company are listed and traded on the Taiwan Stock Exchange.

II. Date and procedures for passing the financial report

These financial statements were approved by the Board of Directors on March 24, 2021.

III. Newly-released and amended standards and interpretations

(i) First-time application of 2020 International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), Interpretations (“IFRICs” and “SICs”) (hereinafter collectively referred to as the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (hereinafter referred to as the “FSC”) by the Company.

The adoption of the IFRSs endorsed and issued into effect by the FSC will not significantly change the Consolidated Company's accounting policies.

(ii) The effect of the IFRSs endorsed and issued into effect by the FSC for 2021 not applicable to the Company:

the Company:
Newly released / corrected / amended standards and interpretations Amendment to IFRS 4 “Extension of Provisional Exemption for Application of IFRS 9” Amendments to the IFRS 9, IAS 39, and IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform - Phase II” Amendment to IFRS 16 “Rent Reduction associated with the COVID-19 pandemic.”	Effective Date of IASB publication
	Effective from the date of publication Effective for annual reporting periods beginning after January 1, 2021 Effective for annual reporting periods beginning after June 1, 2020

The Company does not expect the above amendments to have a material impact on the Company. The Company will continue to evaluate the effect of the amendment to other IFRSs on the financial positions and performance of the Company to the date the financial statements are approved and released. They will make appropriate disclosure after the evaluation.

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(iii) The IFRSs released by the IASB but not yet endorsed and issued into effect by the FSC and not applicable to the Company

not applicable to the Company
Newly released / corrected / amended standards and interpretations Annual improvements to IFRS standards 2018 - 2020 cycle Amendment to IFRS 3 “Update the index of the conceptual framework.” Amendment to IFRS 10 and IAS 28, “Sale or Contribution of Assets between an Investor and its Affiliate or Joint Venture.” IFRS 17 “Insurance Contracts” Amendment to IFRS 17 Amendment to IAS 1 “Classification of Liabilities as Current or Noncurrent” Amendment to IAS 1 “Disclosure of Accounting Policies.” Amendment to IAS 8 “Definition of Accounting Estimates.” Amendment to IAS 16 “Property, plant and equipment: Price before reaching the intended state of use” Amendment to IAS 37 “Onerous Contracts - Cost of Performing Contracts.”	Effective Date of IASB publication(Note 1)
	January 1, 2022 (Note 2). January 1, 2022 (Note 3). Undecided January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 (Note 6). January 1, 2023 (Note 7). January 1, 2022 (Note 4). January 1, 2022 (Note 5).

• Note 1: Unless otherwise stated, the aforementioned new/amended/revised standards or interpretation are effective for annual reporting periods beginning after the respective dates.

• Note 2: The amendment to IFRS 9 applies to swaps or changes in the terms of financial liabilities that occur in annual reporting periods beginning after January 1, 2022; the amendment to IAS 41, “Agriculture,” applies to fair value measurements in annual reporting periods beginning after January 1, 2022; and the amendment to IFRS 1, “First-time Adoption of IFRSs,” applies retrospectively to annual reporting periods beginning after January 1, 2022.

• Note 3: This amendment applies to business mergers for which the acquisition date falls within the annual reporting period after January 1, 2022.

• Note 4: This amendment applies to plant, property and equipment that begins to operate in the manner such as location and condition expected by management after January 1, 2021.

• Note 5: This amendment applies to contracts with unfulfilled obligations as of January 1, 2022.

• Note 6: This amendment will be applicable for annual reporting periods beginning after January 1, 2023.

• Note 7: This amendment applies to changes in accounting estimates and changes in accounting policies that occur in annual reporting periods beginning after January 1, 2023.

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The Company does not expect the above amendments to have a material impact on the Company. The Company will continue to evaluate the effect of the amendment to other IFRSs on the financial positions and performance of the Company to the date the financial statements are approved and released. They will make appropriate disclosure after the evaluation.

IV. Summary of significant accounting policies

(i) Compliance statement

The financial statements are prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs approved and published by the FSC.

• (ii) Basis of preparation

The consolidated financial statements were prepared on the historical cost basis, except for financial instruments measured at fair value and net defined benefit liabilities recognized at the present value of defined benefit obligation less the fair value of plan assets. Historical cost is generally determined by the fair value of the consideration paid to acquire the asset. The evaluation of fair value could be classified into Level 1 to Level 3 by the observable intensity and importance of the related input value:

1. Level 1 input value: Refers to the quotation of the same asset or liability in an active market as of the evaluation (before adjustment).

2. Level 2 input value: Refers to the direct (the price) or indirect (inference of price) observable input value of asset or liability further to the quotation of Level 1.

3. Level 3 input value: The unobservable input value of asset or liability.

4. (iii) Standards in differentiating current and noncurrent assets and liabilities

Current assets include:

1. Assets held mainly for trading purposes;

2. Assets that are expected to be realized within twelve months from the balance sheet date; and

3. Cash and cash equivalents (excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date).

Current liabilities include:

1. Liabilities held mainly for trading purposes;

2. Liabilities that are to be paid off within twelve months from the balance sheet date; and

3. Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date.

Those that are not current assets or liabilities above are classified as noncurrent assets or

• liabilities.

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(iv) Foreign currency

Foreign currency monetary items are translated at the closing rate on each balance sheet date. The exchange differences arising from the settlement of monetary items or translating monetary items are recognized in the current profit or loss.

The foreign non-currency items measured at fair value are translated in accordance with the exchange rate on the fair value determination date and the exchange difference is booked as profit or loss in the period. However, for the changes in fair value recognized in other comprehensive income, the exchange difference is recorded in other comprehensive income.

The foreign non-currency items measured at historical cost are translated in accordance with the exchange rate on the transaction date without the need for a translation again.

In preparing the financial statements, the assets and liabilities of the Company's foreign operations are translated into New Taiwan dollars at the exchange rates prevailing on each balance sheet date, and income and expense items are translated at the average exchange rates for the period, with the resulting exchange differences recorded in other comprehensive income.

Upon the disposal of a foreign operation that constitutes a loss of significant influence over the foreign operation, all interests related to the foreign operation that is attributable to the Company's owners are reclassified to profit or loss.

In the case of partial disposal of a foreign operation (i.e., the Company's ownership interest in an affiliate is reduced without a loss of significant influence), the cumulative translation differences recognized in other comprehensive income are reclassified profit or loss in proportion to the disposal.

(v)

Investment in affiliates

An affiliate is an entity over which the Company has significant influence but not a subsidiary or a joint venture.

The Company uses the equity method to account for its investments in affiliates. Under the equity method, investments in affiliated companies are initially recognized at cost, and the carrying amount in the investment after the acquisition date increases or decreases in accordance with the Company's share of profits or losses of the affiliated companies and other comprehensive income and profit distribution. In addition, changes in equity in affiliated companies are recognized on a proportional basis to shareholdings.

If the Company does not subscribe for new shares of a related company in proportion to its shareholding, resulting in a change in the Company's shareholding and a resulting increase or decrease in the net value of the investment, the increase or decrease is adjusted to capital surplus and investments accounted for using the equity method. However, if the Company does not subscribe or acquire according to the shareholding percentage and causes a decrease in the ownership interest of affiliated companies, the previously recognized amount in the

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affiliated companies will reduce the ratio accordingly based on the comprehensive income and its accounting process is same as the direct disposition of the relevant assets or liabilities for the affiliated companies; If the previous adjustment should be debited to capital surplus and the balance of capital surplus from investments accounted for using the equity method is insufficient, the difference is debited to retained earnings.

The recognition of further losses ceases when the Company's share of losses in an affiliate equals or exceeds its interest in the affiliate (including the carrying amount in its investment in the affiliate under the equity method and other long-term interests that are in substance a component of the Company's net investment in the affiliate). The Company recognizes additional losses and liabilities only to the extent that legal obligations, constructive obligations or payments on behalf of affiliates have been incurred.

In assessing the impairment, the Company treats the overall carrying amount in the investment as a single asset to compare the recoverable amount with the carrying amount and performs an impairment test. The impairment loss recognized is also part of the carrying amount in the investment. Any reversal of the impairment loss can be recognized within the range of the recoverable amount in the subsequently increased investment.

(vi)

The Company measures its remaining investment in the former affiliate at fair value at the date of loss of significant influence. The difference between the fair value of the remaining investment and any disposal price and the carrying amount in the investment at the date of loss of significant influence is recognized in profit or loss for the current period. In addition, all amounts recognized in other comprehensive income related to the affiliate are accounted for on the same basis as if the affiliate had directly disposed of the related assets or liabilities. Property, plant and equipment

Property, plant and equipment are recognized at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment losses.

No depreciation on self owned land

Property, plant and equipment are depreciated on a straight-line basis over their useful lives, with separate depreciation for each significant component. The Company reviews the estimated useful lives, residual values and depreciation methods at least at the end of each year and defers the effect of changes in applicable accounting estimates.

When property, plant and equipment are derecognized, the difference between the net disposal price and the carrying amount in the assets is recognized in profit or loss.

(vii) Real estate investment

Investment property is held to earn rent or for capital appreciation or both. Investment property also includes land held for future use that has not yet been determined and is therefore considered to be held for capital appreciation.

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Investment property is recognized at cost (including transaction cost) and subsequently measured at cost less accumulated depreciation and accumulated impairment losses. The Company accounts for depreciation on a straight-line basis.

When investment property is derecognized, the difference between the net disposal price and the carrying amount in the assets is recognized in profit or loss.

(viii) Impairment of property, plant and equipment and investment property

The Company assesses at each balance sheet date whether there is any indication that property, plant and equipment and investment property may have been impaired. If any indication of impairment exists, the recoverable amount in the asset is estimated. If the recoverable amount in an individual asset cannot be estimated, the Company estimates the recoverable amount in the cash-generating unit to which the asset belongs. Shared assets are allocated to individual cash-generating units on a reasonably consistent basis.

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

When an impairment loss is subsequently reversed, the carrying amount in the asset or cash-generating unit is increased to the revised recoverable amount, provided that the increased carrying amount does not exceed the carrying amount (net of amortization or depreciation) that would have been determined if the impairment loss had not been recognized in prior years for that asset or cash-generating unit. Reversal of impairment loss is recognized in profit or loss.

(ix) Financial instruments

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

Financial assets and financial liabilities that are not measured at fair value through profit or loss are measured at fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial assets or financial liabilities. Transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

1. Financial assets

Regular transactions of financial assets are recognized and derecognized using trade date accounting.

• (1) Type of measurement

The types of financial assets held by the Company are financial assets at fair value through profit or loss, financial assets at amortized cost, and investments in equity instruments at fair value through other comprehensive income.

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• A. Financial assets at fair value through profit and loss

Financial assets at fair value through profit or loss are financial assets that are mandatorily measured at fair value through profit or loss. Financial assets mandatorily measured at fair value through profit or loss include investments in equity instruments investments not designated by the Consolidated Company as being measured at fair value through other comprehensive income and investments in debt instruments not qualified for classification as being measured at amortized cost or at fair value through other comprehensive income.

Financial assets at fair value through profit or loss are measured at fair value. Gains or losses arising from remeasurement are recognized in gains and losses. Please refer to Note 18 for the determination of fair value.

• B. Financial assets measured at amortized cost

The Company's financial assets, if meeting both of the following conditions, are classified as financial assets at amortized cost:

• a. Financial assets held under a particular mode of operation and the purpose of holding is for the collection of contractual cash flows; and

• b. The terms of the contracts give rise to cash flows at specified dates that are solely for the payment of principal and interest on the outstanding principal amount.

Financial assets carried at amortized cost (including cash and cash equivalents, time deposits with original maturities of more than three months, notes and accounts receivable, etc.) are measured at amortized cost using the effective interest method to determine the total carrying amount less any impairment loss after initial recognition, with any foreign currency exchange gain or loss recognized in profit or loss.

Interest income is calculated by multiplying the effective interest rate by the total carrying amount in the financial assets.

Cash equivalents include time deposits with a maturity of less than 3 months that are highly liquid, readily convertible into a fixed amount in cash with minimal risk of value changes, and are used to meet short-term cash commitments.

• C. Investments in equity instruments at fair value through other comprehensive income

The Company may make an irrevocable choice at the time of initial recognition for designating the investment of equity instruments not availablefor-sale and not recognized by the acquirer under corporate merger and

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acquisition or with consideration at fair value through other comprehensive income for measurement.

The investment of equity instruments at fair value through other comprehensive income is measured at fair value. Subsequent changes in fair value will be recognized as other comprehensive income and accumulated into other equity. In the disposition of assets, accumulated gains or loss shall be directly transferred to retained earnings without classification as profit or loss.

The dividend of the investment of equity instruments at fair value through other comprehensive income shall be recognized as income when the Consolidated Company's right in the collection of dividends is ascertained, unless the dividend is obviously representing the recovery of the cost of investment in part.

• (2) Impairment of financial assets

The Company at each balance sheet date assesses the impairment loss of financial assets (including accounts receivable) at amortized cost according to the expected credit loss.

An allowance for losses is recognized for accounts receivable based on the expected credit loss over the duration.

The carrying amount in all financial assets is reduced through an allowance account.

• (3) De-recognition of financial assets

The Company has financial assets derecognized only when the contractual rights from the cash flows of a financial asset become invalid or when the financial assets are transferred. Almost all the risks and rewards of the asset ownership have been transferred to other enterprises.

When a particular entry of financial assets measured at amortized cost is removed, the difference between its book value and consideration shall be recognized as profit or loss. When investments in equity instruments measured at fair value through other comprehensive income are derecognized as a whole, the cumulative gain or loss is transferred directly to retained earnings. It is not reclassified to profit or loss.

2. Equity instruments

The debt and equity instruments issued by the Company are classified as financial liabilities or equity pursuant to the contractual agreements and the definition of financial liabilities and equity instruments.

Equity instruments issued by the Company are recognized for an amount after deducting the direct issuing cost from the proceeds collected.

The Company’s equity retrieved is debited or credited to the equity.

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The Company’s equity purchased, sold, issued, or cancelled is not recognized in the profit or loss.

1. Financial liabilities

2. (1) Subsequent measurement

Financial liabilities measured at amortized cost are measured at amortized cost using the effective interest method. Except for the recognition of interest on short-term accounts payable, which is not material.

• (2) De-recognition of financial liabilities

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

• (x) Revenue recognition

After the Company identifies performance obligations in customer contracts, the transaction price is allocated to each performance obligation and revenue is recognized when each performance obligation is satisfied.

1. Travel service revenues

Travel service revenue is recognized when the services are actually provided and is measured at the transaction price agreed between the Company and the buyer. Prepayments received before the services are provided are recognized as contract liabilities.

1. Rental income

Rental income is recognized in accordance with IFRS 16, “Leases,” and is recognized monthly for the realized portion.

• (xi) Lease The Company is the lessor

The Company assesses whether a contract is (or contains) a lease at the date of contract establishment.

A lease is classified as a capital lease when the terms and conditions of the lease transfer substantially all the risks and rewards incidental to the ownership of the asset to the lessee. All other leases are classified as operating leases.

Under operating leases, rental payments, net of lease incentives, are recognized as income on a straight-line basis over the period of the relevant lease. The original direct cost incurred in acquiring an operating lease is added to the carrying amount in the subject asset and recognized as an expense on a straight-line basis over the lease period.

Rentals under leases that do not depend on changes in indices or rates are recognized as income in the period in which they are incurred.

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(xii) Government grants

Government grants are recognized when there is reasonable assurance that the Company will comply with the conditions attached to the government grant and that the grant will be received.

Government grants are recognized in other income on a systematic basis over the period in which the related costs for which they are intended to compensate are recognized as expenses by the Company.

Government grants are recognized in profit or loss in the period in which they become collectible if they are intended to compensate for expenses or losses already incurred or to provide immediate financial support to the Company and have no future related costs. (xiii) Employee benefits

1. Short-term employee benefits

2. Liabilities relating to short-term employee benefits are measured by the non-

3. discounted amount in the expected payment in exchange for employee services.

4. 1. Post-employment benefits

Under a defined contribution pension plan, the pension amount appropriated during the service years of the employees is recognized as an expense.

The defined benefit cost (including service cost, net interest and remeasurement) of a defined benefit pension plan is actuarially determined using the projected unit credit method. Service cost (including current service cost) and net interest on net defined benefit liabilities (assets) are recognized as employee benefit expense as incurred. Remeasurements (including actuarial gains and losses and return on plan assets, net of interest) are recognized in other comprehensive income and included in retained earnings as incurred and are not reclassified to profit or loss in subsequent periods.

The net defined benefit liability (asset) represents the deficit (remaining) of the defined benefit pension plan appropriation. The net defined benefit asset may not exceed the present value of refunds of appropriations from the plan or reductions in future appropriations.

(xiv) Income tax

Income tax expense is the sum of the current income tax and deferred income tax.

1. Income tax in the current period

Surtax on unappropriated earnings calculated in accordance with the Income Tax Act is recognized in the year in which resolutions are made at the shareholder meeting. The adjustment to prior period income tax payable is booked as current income tax.

1. Deferred income tax

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Deferred tax is calculated on temporary differences between the carrying amounts of assets and liabilities and the tax bases used to compute taxable income. Deferred tax liabilities are generally recognized for all taxable temporary differences. In contrast, deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which income tax credits can be utilized, such as deductions for temporary differences, loss carry forwards and investment tax credits.

Deferred tax liabilities are recognized for taxable temporary differences associated with affiliates except where the Company can control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not be reversed in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and equities are recognized only to the extent that it is probable that sufficient taxable income will be available to realize the benefits of the temporary differences and within the amount of the reversal expected to occur in the foreseeable future.

The carrying amount in deferred tax assets must be reviewed at each balance sheet date. The carrying amount in those that no longer have any sufficient taxable income to recover all or part of the asset should be adjusted down. Those that are not originally recognized as deferred income tax assets should also be reexamined at each balance sheet date. The book amount in those that are likely to generate taxable income in the future for the recovery of all or part of their assets should be adjusted up.

Deferred income tax assets and liabilities are measured in accordance with the expected liability liquidation or the tax rate in the period when the asset is realized. The tax rate is based on the tax rate and tax laws that are legislated or substantively legislated at the balance sheet date. The measurement of deferred income tax liabilities and assets reflects the tax consequences of the manner in which an enterprise expects to recover or settle the carrying amount of its assets and liabilities at the balance sheet date.

3.

• Current and deferred income tax

Current and deferred income taxes are recognized in the profit or loss, except for the current and deferred income taxes related to the items recognized in other comprehensive income or directly included in the equity are recognized in other comprehensive income or directly included in the equity.

V. Critical accounting judgments and key sources of estimation and uncertainty

When the Company adopts accounting policies, the Company’s management is required to make judgments, estimates and assumptions that are based on historical experience and other factors that are not readily apparent from other sources. Actual results may differ from the estimates.

Management will review the estimates and underlying assumptions on an ongoing basis. If a revision of an estimate affects only the current period, it is recognized in the period in which it is revised. If a revision of an accounting estimate affects both the current and future periods, it is recognized in the period in which it is revised and in the future periods.

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The investor's shareholding is less than 50% but is the single largest shareholder, and it is judged that there is no control.

As stated in Note 9, the Company holds 48.21% of Today’s Hotel Corporation USA's voting rights and is the single largest shareholder. The Company has considered the number and distribution of the voting rights of the other shareholders, and the shareholdings of the other shareholders are not extremely dispersed. The Company does not have a seat on the board of directors of Today’s Hotel Corporation USA. The Company is unable to direct the relevant activities of Today’s Hotel Corporation USA. Therefore, the Company does not have control over Today’s Hotel Corporation USA and therefore classifies it as an affiliate of the Company.

VI. Cash and cash equivalents

Cash and cash equivalents
Cash on hand and working capital Checking accounts and demand deposits Cash equivalents Time deposits with an original maturity of less than 3 months	December 31, 2020 $ 306 17,695 249,016 $ 267,017	December 31, 2019
			$ 91 51,398 246,116 $ 297,605

As of December 31, 2020 and 2019, bank time deposits with original maturities of more than 3 months amounted to NT$2,265,022 thousand and NT$2,239,538 thousand, respectively, which were classified as financial assets at amortized cost - current.

The interest rate ranges of bank time deposits as of the balance sheet date were as follows:

Cash equivalents Time deposits with an original maturity of less than 3 months Financial assets measured at amortized cost	December 31, 2020 0.35%～0.41% 0.41%～0.82%	December 31, 2019
		0.62%～0.66% 0.66%～1.07%

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VII. Financial assets at fair value through profit or loss - current

VII.	Financial assets at fair value through profit or loss-current	Financial assets at fair value through profit or loss-current
VIII.	December 31, 2020 Financial assets mandatorily measured at fair value through profit or loss Money Market Funds $ 11,220 Financial assets at fair value through other comprehensive income December31,2020 Current Domestic investments Listed stocks Chunghwa Telecom Co., Ltd. $ 1,456 Noncurrent Domestic investments Listed stocks Wan Hwa Enterprise Company Ltd. $ 1,113,640 Mega Financial Holding Company Limited 1,485 1,115,125 Non-listed stocks Dah Chung Bills Finance Corp. 238,193 Kubo Investment Corporation 209,719 Today’s Department Store Company Ltd. 496,699 944,611 Foreign investments Non-listed stocks Forward Time International, Ltd (BVI) 32,980 $ 2,092,716		December 31, 2019
			$ 11,177 December31,2019
	Current Domestic investments Listed stocks Chunghwa Telecom Co., Ltd. Noncurrent Domestic investments Listed stocks Wan Hwa Enterprise Company Ltd. Mega Financial Holding Company Limited Non-listed stocks Dah Chung Bills Finance Corp. Kubo Investment Corporation Today’s Department Store Company Ltd. Foreign investments Non-listed stocks Forward Time International, Ltd (BVI)
				$ 1,470 $ 1,198,959 1,524 1,200,483 245,230 204,400 494,760 944,390 34,190 $ 2,179,063

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The Company invests in the above noncurrent equity instruments for long-term strategic purposes and expects to earn profits through long-term investments. The Company's management believes that it would be inconsistent with the aforementioned long-term investment plan to include short-term fair value fluctuations of these investments in profit or loss. Therefore, it has elected to designate these investments at fair value through other comprehensive income.

The Company recognized dividend income of NT$58,906 thousand and NT$59,562 thousand for the years ended December 31, 2020 and 2019, respectively. The amount in related investment still held by the Company then was NT$58,906 thousand and NT$59,562 thousand, respectively.

IX. Investments accounted for under the equity method

Investment in affiliates Investment in affiliates Affiliates of materiality Today’s Hotel Corporation USA Affiliates of no materiality F&W Hotel Corporation USA	December 31, 2020 $ 4,454,346 December31,2020 $ 4,114,738 339,608 $ 4,454,346	December 31, 2019	December 31, 2019
		$ 4,734,708 December31,2019
			$ 4,382,538 352,170 $ 4,734,708

(i) Affiliates of materiality

Affiliates of materiality
Company name Today’s Hotel Corporation USA	Percentage ofshareholding and votingrights
	December 31, 2020 48.21%	December 31, 2019
		48.21%

For the business nature, principal place of business and country, etc. information of the above affiliated companies, please refer to Schedule 2, “Name and Location of Investees...and Other Related Information.”

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Aggregate financial information of affiliates of materiality is as follows.

Today’s Hotel Corporation USA

Today’s Hotel Corporation USA
Current assets Non-current assets Current liabilities Non-current liabilities Shareholders’ Equity The Company’s shareholding The Company’s equity interests Operating revenue Net profits for the year Other comprehensive income Total comprehensive income	December 31, 2020 $ 3,840,646 7,952,384 ( 507,843 ) ( 2,750,917) 8,534,270 48.21% $ 4,114,738 2020 $ 1,926,647 ( $ 104,429 ) 55,805 ($ 48,624)	December 31, 2019
		$ 4,511,374 8,249,806 ( 989,446 ) ( 2,682,024) 9,089,710 48.21% $ 4,382,538 2019
		(	$ 5,999,886 $ 734,342 227,526) $ 506,816

(ii) Aggregate information on affiliates of no materiality

The Company’s share Net profits for the year Other comprehensive income Total comprehensive income		2020 $ 8,135 ( 20,697) ($ 12,562)	2019
			( $ 1,185 ) 17,659 $ 16,474

The Company's share of profit or loss and other comprehensive income of affiliated companies recognized under the equity method for the years ended December 31, 2020 and 2019 were based on the audited financial statements of the respective affiliated companies for the same periods.

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X. Property, plant and equipment

Cost Balance January 1, 2019 Additions Reclassification Balance December 31, 2019 Accumulated depreciation Balance January 1, 2019 Depreciation expense Balance December 31, 2019 Net as of December 31, 2019 Cost Balance as of January 1, 2020 Additions Balance as of December 31, 2020 Accumulated depreciation Balance as of January 1, 2020 Depreciation expense Balance as of December 31, 2020 Net as of December 31, 2020		Land		Buildings		Machinery and equipment	Transportati on equipment and office equipment	Transportati on equipment and office equipment		Operation facilities		Others		Total
		$ 364,131 - - $ 364,131 $ - - $ - $ 364,131 $ 364,131 - $ 364,131 $ - - $ - $ 364,131		$ 114,949 - - $ 114,949 $ 110,515 1,525 $ 112,040 $ 2,909 $ 114,949 - $ 114,949 $ 112,040 742 $ 112,782 $ 2,167		$ 28,859 - - $ 28,859 $ 27,201 300 $ 27,501 $ 1,358 $ 28,859 - $ 28,859 $ 27,501 249 $ 27,750 $ 1,109		$ 11,835 103 1,464 $ 13,402 $ 6,237 564 $ 6,801 $ 6,601 $ 13,402 - $ 13,402 $ 6,801 708 $ 7,509 $ 5,893		$ 16,223 139 - $ 16,362 $ 15,437 492 $ 15,929 $ 433 $ 16,362 29 $ 16,391 $ 15,929 258 $ 16,187 $ 204	(	$ 1,505 1,857 1,464) $ 1,898 $ - - $ - $ 1,898 $ 1,898 508 $ 2,406 $ - - $ - $ 2,406		$ 537,502 2,099 - $ 539,601 $ 159,390 2,881 $ 162,271 $ 377,330 $ 539,601 537 $ 540,138 $ 162,271 1,957 $ 164,228 $ 375,910

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The Company depreciates its property, plant and equipment on a straight-line basis over the following useful lives:

eful lives:
Buildings
Main building	29 to 48 years
Auxiliary building	5 to 15 years
Machinery and equipment
Utilities equipment	5 to 15 years
Elevator equipment	5 to 15 years
Air Conditioning Equipment	5 to 8 years
Fire fighting equipment	5 to 8 years
Other machines and equipment	5 to 10 years
Transportation equipment	15 years
Office equipment	5 to 8 years
Operation facilities	5 years

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XI. Real estate investment

Real estate investment
Cost Balance January 1, 2019 Change in the year Balance December 31, 2019 Accumulated depreciation Balance January 1, 2019 Depreciation expense Balance December 31, 2019 Net as of December 31, 2019 Cost Balance as of January 1, 2020 Change in the year Balance as of December 31, 2020 Accumulated depreciation Balance as of January 1, 2020 Depreciation expense Balance as of December 31, 2020 Net as of December 31, 2020		Real estate investment
		$ 1,049,872 - $ 1,049,872 $ 97,878 1,764 $ 99,642 $ 950,230 $ 1,049,872 - $ 1,049,872 $ 99,642 1,721 $ 101,363 $ 948,509

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The Company depreciates its investment property on a straight-line basis over the following useful lives:

Buildings
Main building	29 to 51 years
Auxiliary building	5 to 10 years
Machinery and equipment
Utilities equipment	15 years
Elevator equipment	17 years
Air Conditioning Equipment	5 years
Operation facilities	5 to 10 years

The fair values of the Company's investment property were NT$5,140,701 thousand and NT$4,622,434 thousand as of December 31, 2020 and 2019, respectively. The fair values were estimated by the Company's management with reference to market evidence of similar property transaction prices and were Level 3 input values.

All of the Company's investment properties are owned by the Company.

Investment property owned by the Company is leased out as operating leases. The leases expired one after another by the end of May 2030. The rental was calculated with reference to the rental of the neighboring shopping mall and adjusted according to the lease agreement. The lessees did not have a preferential right to acquire the property at the end of the lease period.

As of December 31, 2020 and 2019, the Company had received NT$126,757 thousand in security deposits (recorded as deposits received) under operating leases. For the years ended December 31, 2020 and 2019, the rental income was NT$1,255 thousand and NT$1,249 thousand, respectively, based on the interest rate of bank time deposits during the lease period, and interest expense was debited.

93

The total future lease payments to be received by the Company for investment property leased under operating leases are as follows:

leased under operating leases are as follows:
1st year 2nd year 3rd year 4th year 5th year More than 5 years	December 31, 2020 $ 248,556 252,882 236,469 237,429 244,990 1,140,837 $ 2,361,163	December 31, 2019
			$ 237,802 241,270 242,720 230,994 237,429 1,385,827 $ 2,576,042

Due to the severe impact of the coronavirus epidemic on the market economy in 2020, the Company agreed to change

the rent for some months of some leases to be calculated based on the turnover and the contracted percentage.

94

XII. Post-employment benefits plan

• (i) Defined contribution plan

The pension system of the Company under the “Labor Pension Act” is a government-administered defined contribution pension plan with contributes 6% of employees' monthly salaries contributed to the personal accounts at the Bureau of Labor Insurance. For the years ended December 31, 2020 and 2019, the Company recognized in the comprehensive income statements a total of NT$686 thousand and NT$843 thousand, respectively, in accordance with the percentage of the defined contribution plan. (ii) Defined benefit plan

The Company has a retirement plan for its regular employees; the Labor Standards Act has been in effect since March 1998. The calculation of seniority of the Company's employees prior to the implementation of the Labor Standards Act was in accordance with the “Regulations for the Implementation of Post-Employment and Retirement” of the “Personnel Management Regulations” of the Company, which came into effect on January 1, 1989. Therefore, if the Company's employees who were employed before the implementation of the Labor Standards Act retire or are laid off, their seniority for determining pension or severance will be calculated in two stages as follows: (1) For seniority prior to the implementation of the Labor Standards Act, pension or severance shall be paid in accordance with the provisions of the “Regulations for the Implementation of Post-Employment and Retirement” of the “Personnel Management Regulations” of the Company, which came into effect on January 1, 1989. (ii) The seniority after the implementation of the Labor Standards Act shall be in accordance with the provisions of the Labor Standards Act.

The pension system of the Company under the “Labor Standards Act” is a governmentadministered defined benefit pension plan. Since August 2003, The Company has been appropriating 2% of employees' monthly salaries to pension funds, which is deposited by the Supervisory Committee of Labor Retirement Reserve in the Committee's name into a special account at the Bank of Taiwan. Before the end of the year, if the balance in the special account is estimated to be insufficient to pay for employees who are expected to meet the retirement requirements in the following year, the difference will be made up in one lump sum by the end of March of the following year. The management of the special account is entrusted to the Bureau of Labor Funds, the Ministry of Labor. The Consolidated Company has no right to influence the investment management strategy.

The amounts included in the Company’s balance sheets for defined benefit plans are shown below:

Present value of defined benefit obligation Fair value of plan assets Appropriations for shortfall (recorded as net defined benefit obligation)	December 31, 2020 $ 17,434 ( 16,474) $ 960	December 31, 2019	December 31, 2019
	(	(	$ 17,539 15,805) $ 1,734

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The changes in the Company's net defined benefit obligation are as follows:

January 1, 2019 Service costs Service costs for the period Interest expenses (incomes) Recognized in profit or loss Remeasurement Return on plan assets (Other than amounts included in net interest) Actuarial loss – change in financial assumptions Actuarial gain– adjustment through experience Recognized in other comprehensive income Employer appropriation December 31, 2019 January 1, 2020 Service costs Service costs for the period Interest expenses (incomes) Recognized in profit or loss Remeasurement Return on plan assets (Other than amounts included in net interest) Actuarial loss – change in financial assumptions Actuarial gain – adjustment through experience Recognized in other comprehensive income Employer appropriation Benefit Payment December 31, 2020	Present value of defined benefit obligation $ 16,967 361 148 509 - 205 ( 142) 63 - $ 17,539 $ 17,539 364 110 474 - 175 ( 143) 32 - ( 611) $ 17,434
	( ( (

96

The Company is exposed to the following risks due to the pension system under the Labor Standards Act:

1. Investment risk: The Bureau of Labor Funds, Ministry of Labor invests the labor pension fund in domestic and foreign equity securities, debt securities, and bank deposits through its own management or entrusted third parties, but the amount allocated to the Company's plan assets is based on the income at a rate no less than the local bank's 2-year time deposit rate.

2. Interest rate risk: A decrease in interest rates on government bonds will increase the present value of the defined benefit obligation, but the return on debt investment in plan assets will also increase, which will have a partially offsetting effect on the net defined benefit obligation.

3. Salary risk: The present value of the defined benefit obligation is calculated by reference to the plan member's future salary. Therefore, increases in plan member’s salary will result in an increase in the present value of the defined benefit obligation.

The present value of the Company's defined benefit obligation was actuarially determined

by a qualified actuary and the significant assumptions at the measurement date were as follows:

Discount rate Expected rate of salary increase	December 31, 2020 0.375% 1.500%	December 31, 2019
		0.625% 1.500%

The amount by which the present value of the defined benefit obligation would increase (decrease) if there are reasonable possible changes in significant actuarial assumptions, with all other assumptions held constant, is as follows:

Discount rate Increase by 0.25% Decrease by 0.25% Expected rate of salary increase Increase by 0.25% Decrease by 0.25%	December31,2020 ($ 175) $ 179 $ 174 ($ 171)	December31,2019	December31,2019
	( (	( (	$ 204) $ 209 $ 204 $ 200)

The sensitivity analysis above may not reflect actual changes in the present value of the defined benefit obligation because the actuarial assumptions may be correlated and changes in only one assumption are not feasible.

97

Amount expected to be appropriated within 1 year Average duration to maturity of the defined benefit obligation reholders’Equity Share capital - common stock Authorized number of shares (in thousands) Authorized capital stock Number of shares issued and fully paid (in thousands) Capital stock issued	December 31, 2020 $ 88 4.0 years December31,2020 600,000 $ 6,000,000 499,998 $ 4,999,984	December 31, 2019	December 31, 2019
		$ 88 4.7 years December31,2019
			600,000 $ 6,000,000 499,998 $ 4,999,984

XIII. Shareholders’ Equity

• (i) Share capital - common stock

The issued common stock has a face value of NT$10 per share and each share is entitled to one voting right and receiving dividends.

• (ii) Capital surplus

Capital surplus
Capital stock premium Gain on disposal of assets	December 31, 2020 $ 76,008 23 $ 76,031	December 31, 2019
			$ 76,008 23 $ 76,031

The excess of capital surplus over the par value of stock issued (including the issuance of common stock in excess of par value, conversion premium of corporate bonds, etc.) may be used to make up losses. It may be used to pay cash dividends or capitalize as equity when the Company has no losses, provided that the capitalization is limited to a certain percentage of the paid-in capital each year.

• (iii) Retained earnings and dividend policy

In accordance with the provisions of the earnings distribution policy of the Company's Articles of Incorporation, when the Company makes a profit as indicated in the annual final accounting reports, the Company shall pay tax in accordance with the law, make up for accumulated losses and then set aside 10% as legal reserve except when the legal reserve has reached the Company's paid-in capital. In addition, if the Company complies with the regulations of the competent authorities, the remaining balance after setting aside or reversing the special reserve in accordance with the law, together with the accumulated unappropriated earnings, shall be retained at the discretion of the Board of Directors for business needs. The Board of Directors shall prepare a proposal for the distribution of earnings and submit it to the shareholders for a resolution to distribute dividends to shareholders.

98

The Company is a stable and growing company. In order to meet the operational development plan and achieve the goal of the diversified operation, in case shareholder dividend is distributed, the cash dividend portion should be no less than 10% of the shareholder dividend distributed that year.

The earnings distribution should be ratified at the shareholders' meeting to be held in the following year.

The Company has provided and reversed the special reserve in accordance with the letter JinGuan-Zheng-Fa-Zi No. 1010012865 and the provisions of the “Questions and Answers on the Application of International Financial Reporting Standards (IFRSs) to the Provision of Special Reserve.” If the amount debited to the other shareholders’ equity is subsequently reversed, the reversed amount can be distributed.

The legal reserve should be provided until the balance reaches the Company's total paid-in capital. The legal reserve may be used to make up losses. If the Company has no losses, the excess of legal reserve over 25% of the paid-in capital may be distributed in cash in addition to capitalization as equity.

At the shareholders' annual meetings held on June 15, 2020 and June 24, 2019, the Company

resolved the following distribution of earnings for 2019 and 2018, respectively.

Legal reserve cash dividends	Earnings distribution proposal 2019 2018 $ 53,251 $ 43,021 224,999 224,999	Dividends Per	Share (NT$)
	2019 $ 53,251 224,999	2019 $ 0.45	2018
			$ 0.45

The distribution of earnings and dividends per share for 2020 proposed by the Board of Directors on March 24, 2021 are as follows:

Legal reserve cash dividends	Earnings distribution proposal $ 16,125 75,000	Dividends Per Share (NT$)
		$ 0.15

The distribution of earnings for 2020 is a pending resolution at the 2021 Regular Shareholders’ Meeting.

(iv) Special reserve

When IFRS was first adopted, the Company recorded NT$592,542 thousand of unrealized revaluation gain in retained earnings, and a special reserve of the same amount was provided. Subsequent use, disposal or reclassification of the related assets may result in a reversal and distribution of earnings.

99

(v) Total other equity

1.	Exchange differences arising on translation of foreign operations	Exchange differences arising on translation of foreign operations	Exchange differences arising on translation of foreign operations
			2020		2019
	Balance at the beginning of the year	( $	72,635 )	$	20,295
	Share of exchange differences on
	translation of financial
	statements of foreign operations
	of affiliated enterprises
	recognized under the equity
	method	(	230,949 )	(	116,163 )
	Related income tax		46,190		23,233
	Balance at the end of the year	($	257,394)	($	72,635)
2.	Unrealized valuation gain or loss on financial assets at fair			value	through other
	comprehensive income
			2020		2019
	Balance at the beginning of the year	$	1,116,811	$	945,186
	Unrealized valuation gain or loss on
	financial assets at fair value
	through other comprehensive
	income	(	86,361 )		152,320
	Share of other comprehensive
	income of affiliated enterprise
	accounted for using the equity
	method	(	7,199 )		24,122
	Related income tax		1,681	(	4,817)
	Balance at the end of the year	$	1,024,932	$	1,116,811

100

XIV. Employee benefits, depreciation and amortization expenses

Employee benefits expense Payroll expenses Labor and health insurance fees Pension costs Directors' remuneration Others Depreciation expense Amortization expense		2020	2020		Total $ 15,934 1,951 1,060 7,104 937 $ 26,986 $ 3,678 $ 39		2019
	Operating costs $ 7,169 969 - - 360 $ 8,498 $ 2,819 $ -	Operating expenses				Operating costs $ 10,255 1,121 - - 534 $ 11,910 $ 3,926 $ -	Operating expenses $ 11,424 856 1,222 8,360 818 $ 22,680 $ 719 $ 39		Total
			$ 8,765 982 1,060 7,104 577 $ 18,488 $ 859 $ 39						$ 21,679 1,977 1,222 8,360 1,352 $ 34,590 $ 4,645 $ 39

The Company had 39 and 52 employees at the end of 2020 and 2019, respectively, and no director was also an employee.

The Company contributes a fixed amount in NT$2,000 thousand to employees' remuneration and no more than 3% to directors' remuneration based on the profits before tax before employee and director remuneration distributions for the year, respectively. The remuneration of employees was estimated at NT$2,000 thousand for both 2020 and 2019, and the remuneration of directors was estimated at NT$6,000 thousand and NT$8,000 thousand for 2020 and 2019, respectively. The directors' remuneration was estimated at 2.87% and 1.19% of the aforementioned profits before tax, respectively.

On March 24, 2021 and March 25, 2020, respectively, the Board of Directors resolved to pay employee remuneration and director remuneration for 2020 and 2019 as follows:

Amount resolved by the Board of Directors Amount recognized in financial statements	2020 Employee cash remuneration Director remuneration $ 2,000 $ 6,000 $ 2,000 $ 6,000	2020 Employee cash remuneration Director remuneration $ 2,000 $ 6,000 $ 2,000 $ 6,000	2019	2019	2019
	Employee cash remuneration $ 2,000 $ 2,000		Employee cash remuneration $ 2,000 $ 2,000	Director remuneration
					$ 8,000 $ 8,000

If there is a change in the amount after the annual financial statements are approved and released, the change

will be accounted for as a change in the accounting estimate. It will be recorded as an adjustment in the following year.

Please refer to the “Market Observation Post System” of the Taiwan Stock Exchange for information on the remuneration of employees and directors and supervisors resolved by the board of directors of the Company.

101

XV. Income tax

(i) Income tax expenses (benefits) recognized in profit or loss

The major components of income tax expense are as follows:

		2020		2019
Income tax in the current period
Occurred in the year	$	36,206	$	49,525
Surtax on undistributed
earnings		12,713		8,128
Prior year adjustment	(	95 )	(	605 )
Deferred income tax
Occurred in the year	(	8,443)		70,575
Income tax expenses recognized in
profit or loss	$	40,381	$	127,623
The reconciliation of accounting income to		income tax expenses is as follows:
		2020		2019
Profit before income tax	$	201,122	$	659,655
Income tax expenses calculated
based on profits before tax and
statutory tax rate (20%)	$	40,224	$	131,931
Non-deductible expenses for tax
purposes	(	29 )		81
Tax-exempt incomes	(	12,432 )	(	11,912 )
Surtax on undistributed earnings		12,713		8,128
Prior year adjustment	(	95)	(	605)
Income tax expenses recognized
in profit or loss	$	40,381	$	127,623

The reconciliation of accounting income to income tax expenses is as follows:

(ii) Income tax expenses (benefits) recognized in other comprehensive income

Deferred income tax Exchange differences arising on translation of foreign operations Unrealized valuation gain or loss on financial assets at fair value through other comprehensive income		2020 ( $ 46,190 ) ( 1,681) $ 47,871)		2019
				( $ 23,233 ) 4,817 $ 18,416)

102

(iii) Deferred tax assets and liabilities

Changes in deferred tax assets and liabilities are as follows:

2020

2020
Deferred income tax assets Temporary difference Exchange differences arising on translation of foreign operations Deferred tax liabilities Temporary difference Financial assets at fair value through other comprehensive income Share of profit or loss recognized using the equity method Reserve for land revaluation increment tax	Balance at the beginning of the year $ 18,158 $ 20,888 843,022 344,785 $ 1,208,695	Recognized in profit or loss $ - $ - ( 8,443 ) - ($ 8,443)	Recognized in other comprehensive income $ 46,190 ( $ 1,681 ) - - ($ 1,681)	Balance at the end of the year
					$ 64,348 $ 19,207 834,579 344,785 $ 1,198,571

103

2019

2019
Deferred income tax assets Temporary difference Exchange differences arising on translation of foreign operations Deferred tax liabilities Temporary difference Financial assets at fair value through other comprehensive income Share of profit or loss recognized using the equity method Exchange differences arising on translation of foreign operations Reserve for land revaluation increment tax	Balance at the beginning of the year $ - $ 16,071 772,447 5,075 344,785 $ 1,138,378	Recognized in profit or loss $ - $ - 70,575 - - $ 70,575	Recognized in other comprehensive income $ 18,158 $ 4,817 - ( 5,075 ) - ($ 258)	Balance at the end of the year
					$ 18,158 $ 20,888 843,022 - 344,785 $ 1,208,695

(iv) The state of income tax assessment

The Company's income tax returns have been assessed by the tax authorities up to 2018.

XVI. Earnings per share

Unit: NT$ per share

				Unit: NT$ per share
Total basic earnings per share		2020 $ 0.32		2019
				$ 1.06

104

The earnings and weighted-average number of common shares used to calculate basic earnings per share are as follows:

earnings per share are as follows:
Net profits for the period (numerator) Weighted average number of shares of common stock (denominator)		2020 $ 160,741 2020 499,998		2019
			$ 532,032 Unit: Thousand shares 2019
				499,998

XVII. Capital risk management

The company's capital management's primary objective is to ensure that the Company can support corporate operations and maximize shareholders' equity by optimizing debt and equity balances while continuing to operate. The Company manages and adjusts its capital structure according to economic conditions and may pay dividends or issue new shares to maintain and adjust capital structure.

The Company is not subject to any other external capital requirements.

XVIII. Financial instruments

• (i) Fair Value Information - Financial Instruments Not Measured at Fair Value

• The Company's management believes that the carrying amounts of financial assets and

• liabilities that are not measured at fair value approximate their fair values.

• (ii) Fair value information - Financial instruments measured at fair value on a recurring basis

• Fair value hierarchy

December 31, 2020

December 31, 2020
Financial assets at fair value through profit and loss Money Market Funds Financial assets at fair value through other comprehensive income or loss - investments in equity instruments Domestic listed stocks Domestic and foreign non-listed stocks		Level 1 $ 11,220 $1,116,581 - $1,116,581		Level 2 $ - $ - - $ -		Level3 $ - $ - 977,591 $ 977,591		Total
								$ 11,220 $1,116,581 977,591 $2,094,172

105

December 31, 2019

mber 31, 2019
Financial assets at fair value through profit and loss Money Market Funds Financial assets at fair value through other comprehensive income or loss - investments in equity instruments Domestic listed stocks Domestic and foreign non-listed stocks		Level 1 $ 11,177 $ 1,201,953 - $ 1,201,953		Level 2 $ - $ - - $ -		Level 3 $ - $ - 978,580 $ 978,580		Total
								$ 11,177 $ 1,201,953 978,580 $ 2,180,533

There were no transfers between Level 1 and Level 2 fair value measurements in 2020 and 2019.

1. Reconciliation of financial instruments measured at fair value in Level 3

2. 2020

2020
Financial assets Balance at the beginning of the year Recognized in other comprehensive income (unrealized valuation gains or losses on financial assets measured at fair value through other comprehensive income) Balance at the end of the year	Investments in equity instruments at fair value through other comprehensive income
	(	$ 978,580 989) $ 977,591

2019

2019
Financial assets Balance at the beginning of the year Recognized in other comprehensive income (unrealized valuation gains or losses on financial assets measured at fair value through other comprehensive income) Balance at the end of the year	Investments in equity instruments at fair value through other comprehensive income
		$ 893,808 84,772 $ 978,580

106

1. Methods, valuation techniques and input values for measuring the fair value of financial instruments

2. (1) The fair values of financial instruments with standard terms and conditions and traded in active markets are determined by reference to quoted market prices (including listed stocks and beneficiary certificates of open-end funds, etc.).

3. (2) The Company holds financial assets measured at fair value in Level 3, which are non-listed stocks, and the fair value is measured primarily by the income, market and asset methods. The estimates or assumptions used are based on information and estimates of future cash flows with reference to market comparable transactions. The major unobservable input values include the discount for the absence of control at 19.68% and 21.45% as of December 31 2020 and 2019, respectively, and the discount for the risk of lack of marketability at 16.54%~26.10% and 16.58% ～ 22.67% as of December 31 2020 and 2019, respectively. The fair value of the investments would decrease by NT$9,206 thousand and NT$17,985 thousand, respectively, if the discount for the absence of control increases by 1%, and by NT$11,861 thousand and NT$8,744 thousand, respectively, if the discount for the risk of lack of marketability increases by 1%.

(iii) Types of financial instrument

Types of financial instrument
Financial assets Financial assets at fair value through profit and loss Mandatorily measured at fair value through profit or loss Financial assets at amortized cost (Note 1) Financial assets at fair value through other comprehensive income Investments in equity instruments Financial liabilities Financial assets measured at amortized cost (Note 2)	December 31, 2020 $ 11,220 2,542,369 2,094,172 66,780	December 31, 2019
		$ 11,177 2,554,003 2,180,533 60,250

Note 1: The balance includes financial assets measured at amortized cost, such as cash and cash equivalents, investments in debt instruments, notes receivable, accounts receivable, other financial assets - current and refundable deposits.

Note 2: The balance includes financial liabilities measured at amortized cost, such as notes payable and certain other payables.

107

(iv) Purpose and policy of financial risk management

The Company's financial risk management objective is to manage market risk (including interest rate risk and other price risks), credit risk and liquidity risk associated with operating activities. The Company identifies, measures and manages the aforementioned risks in accordance with the Company's policies and risk appetite.

The Company has established appropriate policies, procedures and internal controls for the aforementioned financial risk management in accordance with relevant regulations. Significant financial activities are subject to review by the Board of Directors in accordance with relevant regulations and internal control systems. During the implementation of the financial risk management activities, the Company did comply with the relevant regulations established for financial risk management.

1. Market risk

Market risk refers to the potential loss that the Company may suffer from the related transactions due to changes in market interest rates or prices. The Company assesses that the impact of market risk on financial assets and liabilities is limited.

There have been no changes in the Company's exposure to market risk of financial instruments and how it manages and measures such exposures.

• (1) Interest rate risk

Interest rate risk is the risk of fluctuations in the fair value of financial instruments or future cash flows due to market changes. The Company's interest rate risk is mainly related to floating-rate time deposits. The Company assesses that the change in interest rates does not impact the Company's net profits before tax.

• (2) Other price risk

The Company has price risk due to equity securities investments and fund beneficiary certificates. If the equity and fund prices had increased/decreased by 1%, profit or loss would have increased/decreased by NT$112 thousand for both 2020 and 2019 due to the change in fair value of financial assets measured at fair value through profit or loss. Other comprehensive income would have increased/decreased by NT$11,166 thousand and NT$12,020 thousand for 2020 and 2019, respectively, due to the change in fair value of financial assets measured at fair value through other comprehensive income.

108

2. Credit risk

Credit risk refers to the risk of financial loss resulting from the default of contractual obligations by the counterparties. As of the balance sheet date, the Company's maximum exposure to the credit risk of financial loss due to nonperformance by counter-parties is mainly from the carrying amount in financial assets recognized in individual balance sheets.

The business unit manages customer credit risk in accordance with the Company's policies, procedures and controls for customer credit risk. The credit risk of all customers is evaluated by taking into account the customer's financial condition, historical transaction experience and the current economic environment. The Company also uses certain credit enhancement tools (such as advance on sales) at appropriate times to reduce the credit risk of specific customers.

3.

The Company does not have significant credit risk exposure to any single counterparty or to any group of counterparties with similar characteristics. Liquidity risk

The Company manages and maintains sufficient positions of cash and cash equivalents to support its operations and mitigate the impact of cash flow fluctuations. Liquidity and Interest Rate Risk Schedule

The below details the analysis of the remaining contractual maturities of the Company's non-derivative financial liabilities with contractual repayment periods, which are based on the earliest possible date on which the Company can be required to make repayment, and is prepared using the undiscounted cash flows of the financial liabilities, which include cash flows of interest and principal. December 31, 2020

December 31, 2020
Non-derivative financial liabilities Notes payable Other payables December 31, 2019 Non-derivative financial liabilities Notes payable Other payables	Immediate repayment or less than 3 months $ 64,610 2,170 Immediate repayment or less than 3 months $ 58,811 1,439	3 to 6 months $ - - 3 to 6 months $ - -	6 months to 1 year $ - - 6 months to 1 year $ - -	More than 1 year
				$ - - More than 1 year
				$ - -

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XIX. Related-Party Transactions

• (i) Related parties' names and relationships

Name of the related parties Others	Relationship with the Company
	Chairperson, Directors and Key Management of the Company

• (ii) There were no other significant transactions between the Company and its related parties in 2020 and 2019.

• (iii) The total remuneration to directors and other key management for 2020 and 2019 were as follows:

follows:
Short-term employee benefits Post-employment benefits		2020 $ 9,816 232 $ 10,048		2019
				$ 12,579 236 $ 12,815

XX. Significant contingent liabilities and unrecognized contract commitments

As of the end of 2020, the bank performance guarantees for the Company's accommodation coupons amounted to NT$2,246 thousand, and the Company had provided NT$2,246 thousand of time deposits as collateral (recorded as refundable deposits). The Company had issued commercial paper and unused credit facilities amounting to NT$400,000 thousand and NT$6,000 thousand, respectively.

XXI. Information on foreign currency assets and liabilities with significant effect

The Company’s foreign currency assets and liabilities with significant effect December 31, 2020

December 31, 2020
Foreign currency assets Non-monetary items Financial assets at fair value through other comprehensive income USD Investments accounted for under the equity method USD Foreign currency liabilities No	Foreign currency $ 1,158 156,403	Exchange rate 28.480(USD: NTD) 28.480(USD: NTD)	Book value
			$ 32,980 4,454,346

110

December 31, 2019

December 31, 2019
Foreign currency assets Non-monetary items Financial assets at fair value through other comprehensive income USD Investments accounted for under the equity method USD Foreign currency liabilities No	Foreign currency $ 1,140 157,929	Exchange rate 29.98(USD: NTD) 29.98(USD: NTD)	Book value
			$ 34,190 4,734,708

XXII. Other Information

The Company received a government subsidy of NT$3,460 thousand (recorded as other income) in accordance with the “Regulations of the Ministry of Transportation and Communications for the Relief and Revitalization of Industries Affected by Severe and Special Infectious Pneumonia and Having Operational Difficulties.”

Due to the impact of the COVID-19 epidemic, the global economy is in severe recession and contraction due to the lock-down management policy. The Company's business has also been affected by the epidemic, with guest room revenues and operating revenues from affiliated companies being more affected by the epidemic control measures. The Company will continue to pay attention to the subsequent development and respond carefully to reduce the possible adverse impact. Please refer to Note 11 for the impact on rental incomes.

XXIII. Additional disclosures

• (i) Information on major transactions and (ii) information on investees:

• Lending funds to others: None.

• Provision of endorsements and guarantees to others: None.

• Holding marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Schedule 1.

• Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company's paid-in capital: None.

• Acquisition of real estate exceeding NT$300 million or 20% of paid-in capital or more: None.

• Disposal of real estate exceeding NT$300 million or 20% of paid-in capital or more: None.

• Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: None.

• Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.

111

1. Engagement in derivative transactions: None.

2. Name and location of investees...and other related information (excluding Mainland China investees): Schedule 2

3. (iii) Information on investments in China: None.

4. (iv) Information on major shareholders: Please refer to Schedule 3 for the names, amounts and percentages of shares held by shareholders with 5% or more of the equity.

XXIV. Segment Information

Information provided to the key operating decision maker to allocate resources and evaluate departmental performance, centering on each type of product or services delivered or offered. The reportable segments of the Company are as follows:

Travel service Segment - Provides tourist hotel service

Leasing Segment - Rent out commercial buildings

• (i) Segment Revenue and Operating Results

The revenues and operating results of the Company's continuing operations analyzed by reportable segment are as follows:

Travel service segment Leasing segment Total from continuing operations Interest income Interest expenses General income (expense) Net profits before tax (continuing operations)		Segment	revenues 2019 $114,917 231,818 $346,735		Depreciation and amortization 2020 2019 $ 1,098 $ 2,162 1,721 1,765 $ 2,819 $ 3,927	Depreciation and amortization 2020 2019 $ 1,098 $ 2,162 1,721 1,765 $ 2,819 $ 3,927		Segment profits or losses	Segment profits or losses	Segment profits or losses
		2020 $55,093 209,773 $264,866			2020 $ 1,098 1,721 $ 2,819					2019
									$43,720 214,516 258,236 23,325 ( 1,249 ) 379,343 $659,655

The revenues reported above were generated from transactions with external customers. There were no inter-segment sales in 2020 and 2019.

Segment profits refer to each segment's profits, excluding general income (expense), interest income, interest expense, and income tax expense. This measure is provided to the chief business decision maker to allocate resources to segments and to measure their performance.

112

(ii) Segment assets

Segment assets
Segment assets Travel service segment Leasing segment Total segment assets Financial assets at fair value through profit and loss Financial assets at fair value through other comprehensive income Investments accounted for under the equity method General assets Total Assets	December 31, 2020 $ 323,422 948,510 1,271,932 11,220 2,094,172 4,454,346 2,660,859 $ 10,492,529	December 31, 2019
			$ 324,464 950,230 1,274,693 11,177 2,180,533 4,734,708 2,627,067 $ 10,828,178

(iii) Geographical information

The Company's operating revenues in 2020 and 2019 were derived from the Company's home country, and therefore the Company does not have geographic information.

113

Unit: Thousand NTD

First Hotel Company Ltd.

Marketable securities held at the end of the period.

December 31, 2020

Schedule 1

Companies held	Types and names of marketable securities	Relationship with the securities issuer	Account in the book		The end of theperiod	The end of theperiod		Remarks
				Thousands of units / Thousands of shares	Book value	Ownership	Fair value
First Hotel Company Ltd.	Stocks and Funds Taiwan Cooperative Bank Money Market Funds Chunghwa Telecom Co., Ltd. Wan Hwa Enterprise Company Ltd. Mega Financial Holding Company Limited Dah Chung Bills Finance Corp. Kubo Investment Corporation Today’s Department Store Company Ltd. Forward Time International, Ltd	－ － － － － － － －	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 - noncurrent Financial assets at fair value through other comprehensive income - noncurrent Financial assets at fair value through other comprehensive income - noncurrent Financial assets at fair value through other comprehensive income - noncurrent Financial assets at fair value through other comprehensive income - noncurrent Financial assets at fair value through other comprehensive income - noncurrent	1,096 13 89,810 50 32,629 1,906 5,082 654	$ 11,220 1,456 1,113,640 1,485 238,193 209,719 496,699 32,980	- - 19.96% - 7.24% 9.54% 19.80% 5.40%	$ 11,220 1,456 1,113,640 1,485 238,193 209,719 496,699 32,980	Note Note Note Note

Note: Calculated based on the net asset value or closing price of the investee as of December 31, 2020.

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First Hotel Company Ltd.

Name and Location of Investees...and Other Related Information

From January 1[st] to December 31[st] , 2020

Schedule 2

Unit: NTD Thousands; USD in Dollars

Name of Investor	Investee	Location	Main business activities	Original investment amount	Original investment amount	Shares held as of the end of period	Shares held as of the end of period	Shares held as of the end of period	Net profit (loss) of the investee for the current period	Investment income (loss) recognized for the current period	Remarks
				Balance at the end of period	The end of the last period	Number of shares (thousand)	Ownership	Book value
First Hotel Company Ltd.	Today’s Hotel Corporation USA F&W Hotel Corporation of USA	United States United States	Tourist hotel Mainly engaged in business hotel investment	USD16,200,000 USD 4,068,750	USD16,200,000 USD 4,068,750	16,200 3,875	48.21 31.00	$ 4,114,738 339,608	( USD 3,534,098 ) USD 888,106	( $ 50,349 ) 8,135	Note Note

Note: Recognized on the basis of the financial statements audited by CPA for the year ended December 31, 2010.

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First Hotel Company Ltd.

Information on major shareholders

December 31, 2020

Schedule 3

Unit: shares

	Unit: shares	Unit: shares
Names of major shareholders	Shares
	Number of Shares Held	Ownership
Kubo Investment Corporation Wan Hwa Enterprise Company Ltd. Mandarin Investment Corporation Zen FongInvestment Corporation	99,000,503 99,000,503 73,605,668 40,761,943	19.80% 19.80% 14.72% 8.15%

• Note 1: The information on major shareholders in this Exhibit is compiled by Taiwan Depository & Clearing Corporation based on the last business day of the quarter in which the shareholders held 5% or more of the Company's common shares and preferred shares whose registration and delivery have been completed in non-physical form (including treasury shares). The number of shares recorded in the Company's financial statements and the actual number of shares registered and delivered in non-physical form may differ depending on the basis of preparation of the calculations.

• Note 2: If a shareholder delivers his or her shares to a trust, the above information shall be disclosed by the individual trustor account opened by the trustee. As for the declaration of insider’s equity for shareholders with more than 10% shareholding in accordance with the Securities and Exchange Act, the shareholding of the shareholder includes his or her own shares plus the shares that he or she has delivered to a trust and has the right to decide the use of the trust property, etc.. Please refer to the Market Observation Post System for information on insider's equity declaration.

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First Hotel Company Ltd.

Schedule of changes in financial assets at fair value through other comprehensive income - noncurrent

2020

Schedule 1

Unit: Thousand NTD

- Name Listed stocks Wan Hwa Enterprise Company Ltd. Mega Financial Holding Company Limited Non-listed stocks Dah Chung Bills Finance Corp. Kubo Investment Corporation Today’s Department Store Company Ltd. Forward Time International, Ltd Total	Balance at the beginning of the year Number of shares (thousand) Fairvalue 89,810 $ 1,198,959 50 1,524 1,200,483 32,629 245,230 1,906 204,400 5,082 494,760 654 34,190 978,580 $ 2,179,063	Balance at the beginning of the year Number of shares (thousand) Fairvalue 89,810 $ 1,198,959 50 1,524 1,200,483 32,629 245,230 1,906 204,400 5,082 494,760 654 34,190 978,580 $ 2,179,063	Increase in the year Number of shares (thousand) Amount - $ - - - - - - - 5,319 - 1,939 - - 7,258 $ 7,258	Increase in the year Number of shares (thousand) Amount - $ - - - - - - - 5,319 - 1,939 - - 7,258 $ 7,258	Decrease in the year Number of shares (thousand) Amount - ( $ 85,319 ) - ( 39) ( 85,358) - ( 7,037 ) - - - - - ( 1,210) ( 8,247) ($ 93,605)	Balance at the end of the year Number of shares (thousand) Fairvalue 89,810 $ 1,113,640 50 1,485 1,115,125 32,629 238,193 1,906 209,719 5,082 496,699 654 32,980 977,591 $ 2,092,716	Balance at the end of the year Number of shares (thousand) Fairvalue 89,810 $ 1,113,640 50 1,485 1,115,125 32,629 238,193 1,906 209,719 5,082 496,699 654 32,980 977,591 $ 2,092,716	Provision of guarantees or pledges (Note2)	Remarks
	Number of shares (thousand) 89,810 50 32,629 1,906 5,082 654		Number of shares (thousand) - - - - - -		Number of shares (thousand) - - - - - -	Number of shares (thousand) 89,810 50 32,629 1,906 5,082 654
									Note 1 Note 1 Note 1 Note 1 Note 1 Note 1

Note 1: The increase and decrease in the current year mainly represent the valuation adjustments resulting from changes in fair value. Note 2: None was provided as collaterals.

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Unit: Thousand NTD

First Hotel Company Ltd.

Schedule of Changes in Investments Accounted for Under Equity Method

2020

Schedule 2

-Name Today’s Hotel Corporation USA F&W Hotel Corporation USA	Balance at the beginning of the year Number of shares (thousand) Amount 16,200 $ 4,382,538 3,875 352,170 $ 4,734,708	Balance at the beginning of the year Number of shares (thousand) Amount 16,200 $ 4,382,538 3,875 352,170 $ 4,734,708	Increaseinthe year Number of shares (thousand) Amount - $ - - - $ -	Increaseinthe year Number of shares (thousand) Amount - $ - - - $ -	Decreasein	Decreasein	the year Amount $ 217,451 20,697 $ 238,148	Gain or loss on investment ( $ 50,349) 8,135 ($ 42,214)	Balance at the end ofthe	Balance at the end ofthe	Balance at the end ofthe	year Amount $ 4,114,738 339,608 $ 4,454,346	Market value or net worth (Note4) Unit Price Total price $ 4,114,738 339,608 $ 4,454,346	Market value or net worth (Note4) Unit Price Total price $ 4,114,738 339,608 $ 4,454,346	Provision of guarantees or pledges (Note 5)	Remarks
	Number of shares (thousand) 16,200 3,875		Number of shares (thousand) - -		Number of shares (thousand) - -				Number of shares (thousand) 16,200 3,875	Shareholding % 48.21 31.00			Unit Price
																Notes 1 and 2 Notes 1 and 3

Note 1: Recognized on the basis of the financial statements audited by CPA for the year ended December 31, 2010. Note 2: The decrease in the current year was due to the recognition of translation differences on the financial statements of foreign operations.

Note 3: The decrease for the year was due to the recognition of unrealized valuation loss on investments in equity instruments measured at fair value through other comprehensive income and the translation difference on the financial statements of foreign operations.

Note 4: The net equity in the investees was calculated based on the financial statements of the investees and the Company's percentage of ownership. Note 5: None was provided as collaterals.

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First Hotel Company Ltd. Schedule of notes payable December 31, 2020 Schedule 3 CustomerName Others (Note)	Unit: Thousand NTD Amount	Unit: Thousand NTD Amount
		$ 64,610

Unit: Thousand NTD

Note: None of the balance exceeded 5% of the total balance of this item.

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First Hotel Company Ltd.

Schedule of other payables December 31, 2020

Schedule 4

Unit: Thousand NTD

Item Employee remuneration payables Director remuneration payables Salary Business tax House tax Others (Note) Total		Amount
		$ 4,887 6,144 281 2,387 2,229 2,454 $ 18,382

Note: None of the balance exceeded 5% of the total balance of this item.

120

First Hotel Company Ltd. Schedule of deposits received December 31, 2020

December 31, 2020
Schedule 5 Item Company A Others (Note) Note: None of the balance exceeded 5% of the total balance of this item.	Unit: Thousand NTD Amount
		$ 120,800 5,957 $ 126,757

Unit: Thousand NTD

121

First Hotel Company Ltd.

Schedule of guest room costs and operating expenses

2020

Schedule 6

Unit: Thousand NTD

Item Salary Directors' remuneration Utilities expenses Meal coupon expenses Tax Depreciation and amortization Service expenses Cleaning expenses Repair expenses Others (Note)	Guestroomcosts $ 7,169 - 4,268 4,043 3,680 1,098 - 877 713 4,084 $ 25,932	Operating expenses	Operating expenses
			$ 8,765 7,104 13 - 997 898 2,613 4 1,977 4,874 $ 27,245

Note: None of the balance exceeded 5% of the total balance of this item.

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First Hotel Company Ltd.

Schedule of employee benefits, depreciation and amortization expenses

2020 and 2019

Schedule 7

Unit: Thousand NTD

Employee benefits expense Payroll expenses Labor and health insurance fees Pension costs Directors' remuneration Others Depreciation expense Amortization expense		2020		Total $ 15,934 1,951 1,060 7,104 937 $ 26,986 $ 3,678 $ 39		2019
	Operating costs $ 7,169 969 - - 360 $ 8,498 $ 2,819 $ -	Operating expenses $ 8,765 982 1,060 7,104 577 $ 18,488 $ 859 $ 39			Operating costs $ 10,255 1,121 - - 534 $ 11,910 $ 3,926 $ -	Operating expenses $ 11,424 856 1,222 8,360 818 $ 22,680 $ 719 $ 39		Total
								$ 21,679 1,977 1,222 8,360 1,352 $ 34,590 $ 4,645 $ 39

1. As of the end of 2020 and 2019, the average number of employees of the Company were 42 and 49 employees, respectively, which included 5 directors, respectively, who did not hold a concurrent employee position.

2. The average employee benefit expenses were NT$537 thousand and NT$535 thousand for 2020 and 2019, respectively.

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1. The average employee salary expenses were NT$431 thousand and NT$442 thousand for 2020 and 2019, respectively. The change in average employee salary expenses was -3%.

2. The supervisors’ remuneration for the current year was NT$0 thousand and the supervisors’ remuneration for the previous year was NT$1,000 thousand.

3. The Company's remuneration policy is as follows:

4. (1) The remuneration of the Company's directors is determined in accordance with the Company's Articles of Incorporation, based on their positions and responsibilities, and with reference to the usual industry standards.

5. (2) The remuneration of the Company's managerial officers is based on the salary scale for employees approved by the Remuneration Committee. It is based on the positions and responsibilities they hold, with reference to the usual industry standards.

6. (3) The remuneration of the Company's employees is based on the positions and responsibilities they hold and the Company's business performance and personal performance. It is implemented after approval by appropriate authorization.

124

V. Standalone financial statements for the most recent year audited and attested by CPAs: Not applicable.

VI. If the Company or its related companies have experienced financial difficulties in the most recent year or during the current year up to the date of publication of the annual report: None. Seven. Review and analysis of the financial status, financial performance, and risks I. Financial status:

. Financial status:	. Financial status:	. Financial status:	. Financial status:	. Financial status:
Year Item	2020	2019	Difference
			Amount	%
Current assets	2,553,400	2,564,908	( 11,508 )	( 0.45 )
Non-current assets	7,939,129	8,263,270	( 324,141 )	( 3.92 )
Total Assets	10,492,529	10,828,178	( 335,649 )	( 3.10 )
Current liabilities	139,182	123,542	15,640	12.66
Non-current liabilities	1,326,288	1,337,186	( 10,898 )	( 0.81 )
Total liabilities	1,465,470	1,460,728	4,742	0.32
Capital	4,999,984	984 4,999,	0	0.00
Capital surplus	76,031	76,031	0	0.00
Retained earnings	3,183,506	3,247,259	( 63,753 )	( 1.96 )
Other equity interests	767,538	1,044,176	( 276,638 )	( 26.49 )
Total equity	9,027,059	9,367,450	( 340,391 )	( 3.63 )
Note: Other equity exceeded 20%, mainly due to the translation difference of the financial statements of foreignoperations.

125

II. Financial performance

1. Comparative analysis of operating results

	Unit: Thousand NTD	Unit: Thousand NTD	Unit: Thousand NTD	Unit: Thousand NTD	Unit: Thousand NTD
	2020	2019	Increase or Decrease amount		Change percentage (%)
Operating revenue	264,866 $ ( 72,247 )	346,735 $ ( 88,499 )	( 81,869 $ ) ( 16,252 ) ( 65,617 ) ( 5,378 ) ( 60,239 ) ( 398,294 ) ( 458,533 ) ( 87,242 ) ( 371,291 )		( 23.61 ) ( 18.36 ) ( 25.41 ) ( 16.49 ) ( 26.70 ) ( 91.76 ) ( 69.51 ) ( 68.36 ) ( 69.79 )
Operating costs
Grossprofit	192,619 ( 27,245 )	258,236 ( 32,623 )
Operating expenses
Operating profit	165,374 35,748	225,613 434,042
Non-operating income and expenses
Profits before tax	201,122 ( 40,381 )	659,655 ( 127,623 )
Income tax expense
Net profits after tax	160,741 $	532,032 $
Analysis of changes in the percentage of increase or decrease.
Operating revenues, gross profits, non-operating income and expenses, profits before tax, income tax
expense, and net profits after tax decreased by more than 20% in 2020 compared to 2019, mainly due to
the impact of COVID-19.

Operating revenues, gross profits, non-operating income and expenses, profits before tax, income tax expense, and net profits after tax decreased by more than 20% in 2020 compared to 2019, mainly due to the impact of COVID-19.

1. Analysis of changes in operating gross profits: Operating gross profits decreased by more than

20% in 2020 compared to 2019, mainly due to the impact of the COVID19 outbreak.

III. Review and analysis of cash flow

1. Analysis of liquidity for the most recent 2 years

Year Item	2020	2019	Increase or decrease percentage (%)
Cash flow ratio	95.2	124.6	( 23.60 )
Cash flow adequacy ratio	108.7	143.9	( 24.46 )
Cash reinvestment ratio	( 0.81 )	( 0.57 )	42.11
Analysis of changes in the percentage of increase or decrease. Cash flow ratio, cash flow adequacy ratio and cash reinvestment ratio increased (decreased) by 20% or more, mainly due to the impact of COVID-19.

126

2. Analysis of cash liquidity for the coming year

Unit: Thousand NTD

2. Analysis of	cash liquidity for	the coming year		Unit: Thousand NTD	Unit: Thousand NTD
Cash at the beginning of the period Balance (1)	Estimated net cash flow from operating activities for the whole year(2)	Estimated cash outflow for the whole year (3)	Estimated cash balance (1)+(2)-(3)	Remedies for estimated cash shortage
				Investing plan	Financing plan
267,017	193,000	150,000	310,017	-	-

IV. Effect of major capital expenditures on finance and business matters in the most recent year. None.

V. Investment policy for the most recent year, the main reasons for profit or loss, improvement plan and investment plan for the coming year:

The Company has invested in domestic and foreign companies to expand and diversify operations. After tax of these invested enterprises, the net profits have been growing steadily over the years, which is beneficial to the Company's investment income. However, due to the impact of the COVID-19 epidemic, the world adopted a closed-door management policy, which resulted in a severe economic recession and contraction, and the tourism industries were also affected by the epidemic. The Company will continue to pay attention to the subsequent development and prudently respond to reduce the possible adverse impact.

VI. Risk management assessment:

1. The impact of changes in interest rates, exchange rates, and inflation on the Company's profit and loss in recent years and future countermeasures.

2. (1) Changes in interest rates

The Company has no short-term or long-term loans as of the date of publication of the annual report. Therefore, the interest rate has no significant impact on the Company.

• (2) Changes in exchange rates

The devaluation of the NTD will motivate foreign tourists to visit Taiwan. Actively develop the domestic market and diversify operations and risks in response to changes in exchange rates.

• (3) Inflation

The Company interacts well with suppliers, keeps an eye on the changes in market prices, reduces purchase costs by controlling prices with volume. We also have alternative suppliers available to counter the impact of inflation on the Company's profit and loss.

1. Policies on high-risk, highly-leveraged investments, lending funds others, endorsement and guarantee, and derivatives transactions, main reasons for gain or loss, and future countermeasures: Not applicable.

2. Future R&D plans and estimated R&D expenses: Not applicable.

127

1. The impact of significant domestic and foreign policy and legal changes on the Company's finance and business matters and the countermeasures:

2. The Company pays attention to important domestic and international policy and legal changes that affect its operations. As of the publication date of the annual report, the changes in relevant laws and regulations did not have a significant impact on the Company.

3. The impact of technological changes and industry changes on the Company's finance and business matters and the countermeasures: Not applicable.

4. Impact of recent corporate image change on corporate crisis management and

5. countermeasures: Not applicable.

6. Expected benefits and possible risks of the merger and acquisition and countermeasures: Not applicable.

7. Expected benefits of plant expansion and possible risks and countermeasures: Not applicable

8. Risks associated with the concentration of purchases and sales and countermeasures: Not applicable.

9. 10.The impact on the Company, risk and countermeasures of a substantial shift or change in shareholding of directors, or major shareholders holding more than 10 percent of the shares: None.

10. 11.The impact of the change in management rights on the Company, the risks and countermeasures: Not applicable.

11. 12.For litigation or non-litigation events, if the Company, its directors, supervisors, General Manager, de facto person in charge, major shareholders with more than 10% stake, or subordinate companies have been convicted by final and binding judgments or are still bound by significant litigation, non-litigation or administrative disputes, the results of which may have a significant impact on shareholder interests or securities prices, the facts of the dispute, the amount of the subject matter, the start date of the litigation, the main parties involved and the handling of the case as of the date of publication of the annual report shall be disclosed: Not applicable.

12. 13.Other important risks and countermeasures: None.

VII. Other important matters: None.

Eight. Special matters

• I. Information on related company: Not applicable

• II. Private placement of securities during the most recent year or the current year up to the date

of publication of the annual report: None.

• III. Holding or disposal of shares in the Company by the Company's subsidiaries during the

most recent year or the current year up to the date of publication of the annual report: Not applicable.

• IV. Other matters that require additional explanation: None.

• Nine. Any of the situations listed in Article 36, Paragraph 3, Subparagraph 2 of the Securities and Exchange Act, which might materially affect shareholder equity or the price of the Company's securities, which has occurred during the most recent year or the current year up to the date of publication of the annual report: None.

128

FIRST HOTEL COMPANY LTD.

Person in charge: An-Sheng Ku