Highwealth — Annual Report 2020

Nov 12, 2020

1

Stock Code:2542

HIGHWEALTH CONSTRUCTION CORP.

Parent Company Only Financial Statements

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

Address: 10F., No.267, Lequn 2nd Rd., Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.) Telephone: (02)2755-5899

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

2

Table of contents

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

Page

1 2 3 4 5 6 7 8 8 8～9 10～27 27 28～57 58～62 63 63～64 64 64 64～65 66～69 69 70 70 70 71～80

3

Independent Auditors ’ Report

To the Board of Directors of Highwealth Construction Corp.:

Opinion

We have audited the accompanying parent company only financial statements of Highwealth Construction Corp. (“the Company”), which comprise the parent company only balance sheets as of December 31, 2020 and 2019, the parent company only statement of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

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

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. Revenue recognition

Please refer to note 4(o) and 6(w) of the parent company only financial statements for the account policies on revenue recognition and the details of revenue.

Description of key audit matter

The real estate industry, in which the Company is into, has a higher tendency of revenue fluctuation, therefore the management has set up relevant internal control procedures. The Company's sales revenue was $18,074,191 thousand in 2020, whether revenue is presented fairly has a significant impact on financial statement. Therefore, the recognition of sales revenue is one of the most important evaluation in performing our audit procedures.

3-1

Auditing procedures proformed

Our principal audit procedures included testing the effectiveness of the design and implementing the internal control system of sales revenue. Inspection of sales contracts, bank account transaction record and real estate ownership transfer document, etc. Testing the samples of sales transaction before and after the end of the year to ensure the correctness of sales revenue.

2.Inventory valuation

Please refer to note 4(g) and 6(e) of the parent company only financial statements for the accounting policies on measuring inventory, assumption used and uncertainties considered in determining the net realizable value and the details of inventory.

Description of key audit matter

As of December 31, 2020, inventory of the Company valued $97,465,526 thousand, constituting 72% of the total assets, which was presented with lower of cost or net realizable value method. The judgment of net realizable value of inventory relies on management since the Company focuses on real estate industry, which is not only deeply affected by politics, economics, and revolution of housing and land taxation, but also an industry involving a large portion of capital infusion and long-term payback. Thus, the valuation of inventory is one of the most important valuation in performing our audit procedures.

Auditing procedures proformed

Our principal audit procedures included understanding the Company’s operating and accounting procedures for inventory valuation. Obtain the Company management’s data of inventory valuation, inspecting and recalculating the net realizable value of inventory whether adequate. The net realizable value can be assessed in both ways: through reviewing the recent selling price of the premises, or by inquiring the selling price of premises nearby from the “Actual Selling Price of Real Estate” website.

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

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers. And for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

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

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

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

3-2

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

1. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

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

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

3-3

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

KPMG

Taipei, Taiwan (Republic of China) March 19, 2021

Notes to Readers

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

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

4

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) HIGHWEALTH CONSTRUCTION CORP.

Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollar)

Assets Current assets: 1100 Cash and cash equivalents (Note 6(a)) 1110 Current financial assets at fair value through profit or loss (Notes 6(b) and 8) 1150 Notes receivable, net (Note 6(d)) 1170 Accounts receivable, net (Notes 6(d) and 7) 130X Inventories (Notes 6(e), 7 and 8) 1410 Prepayments 1460 Non-current assets classified as held for sale, net (Note 6(f)) 1476 Other current financial assets (Notes 6(l), (z), 7,8 and 9(b)) 1479 Other current assets, others 1480 Current assets recognized as incremental costs to obtain contract with customers (Note 6(l)) Non-current assets: 1517 Non-current financial assets at fair value through other comprehensive income (Note 6(c)) 1550 Investments accounted for using equity method, net (Notes 6(g), (h), and 8) 1600 Property, plant and equipment (Notes 6(i) and 8) 1755 Right-of-use assets (Notes 6(j)) 1760 Investment property, net(Notes 6(k) and 8) 1780 Intangible assets 1840 Deferred tax assets (Notes 6(t)) 1980 Other non-current financial assets (Notes 6(l) and 8) Total assets	December 31, 2020 Amount % $ 6,543,049 5 270,366 - 1,290,121 1 107,195 - 97,465,526 72 217,737 - 733,106 1 9,186,064 7 13,178 - 1,954,525 1	December 31, 2019 Amount % 7,581,341 7 287,726 - 1,271,200 1 103,176 - 75,215,692 69 332,607 - - - 4,177,236 4 20,988 - 1,307,988 1 90,297,954 82 550,364 1 5,923,202 5 899,210 1 10,093 - 4,017,978 4 3,190 - 14,544 - 7,858,341 7 19,276,922 18 109,574,876 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (Note 6(m)) 2110 Short-term notes and bills payable (Note 6(n)) 2130 Current contract liabilities (Notes 6(w), 7 and 9(a)) 2150 Notes payable 2170 Accounts payable 2180 Accounts payable to related parties (Note 7) 2200 Other payables (Note 7) 2230 Current tax liabilities 2280 Lease liabilities (Note 6(q)) 2305 Other current financial liabilities (Note 7) 2321 Bonds payable, current portion (Note 6(p)) 2322 Long-term borrowings, current portion (Note 6(o)) 2399 Other current liabilities, others Non-Current liabilities: 2530 Bonds payable (Note 6(p)) 2540 Long-term borrowings (Note 6(o)) 2570 Deferred tax liabilities (Note 6(t)) 2640 Net defined benefit liability, non-current (Note 6(s)) Total liabilities Stockholders' Equity: 3100 Common stock (Note 6(u)) 3200 Capital surplus (Note 6(u)) Retained earnings (Note 6(u)): 3310 Legal reserve 3350 Unappropriated retained earnings 3400 Other equity interest (Note 6(u)) 3500 Treasury stock (Note 6(u)) Total equity Total liabilities and equity	December 31, 2020	December 31, 2020	December 31, 2020
			Amount	%	Amount
	117,780,867 87
	553,139 - 5,295,101 4 437,576 - 1,427 - 3,876,811 3 2,757 - 14,544 - 8,214,252 6
	18,395,607 13
	$ 136,176,474 100

See accompanying notes to parent company only financial statements.

5

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) HIGHWEALTH CONSTRUCTION CORP.

Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

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

4000 Operating revenue (Note 6(w)) 5000 Operating costs (Note 6(e)) Gross profit from operations 5910 Less: Unrealized profit (loss) from sales 5920 Add: Realized profit (loss) on from sales(note) Gross profit from operations Operating expenses: 6100 Selling expenses (Note 7) 6200 Administrative expenses Net operating income Non-operating income and expenses: 7100 Total interest income (Note 6(y)) 7010 Other income (Notes 6(y) and 7) 7020 Other gains and losses, net (Note 6(y)) 7050 Share of profit of associates and joint ventures accounted for using equity method, net (Note 6(y)) 7070 Share of profit (loss) of associates and joint ventures accounted for using equity method, net (Note 6(g)) Total non-operating income and expenses Profit from continuing operations before tax 7950 Less: Income tax expenses(Note 6(t)) Profit 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Gains on remeasurements of defined benefit plans(Note 6(s)) 8316 Unrealized gains from investments in equity instruments measured at fair value through other comprehensive income 8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive income that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income Total comprehensive income Earnings per share (Note 6(v)) Basic earnings per share Diluted earnings per share	2020	% 100 69	2019	% 100 72 28 - - 28 6 4 10 18 - 1 - (3) 1 (1) 17 1 16 - - - - - - - - - 16 2.42 2.10
	Amount $ 18,157,516 12,521,372		Amount 20,373,762 14,683,003
	5,636,144 - 1,236	31 - -	5,690,759 184 -
	5,637,380	31	5,690,575
	923,931 724,738	5 4	1,175,942 886,483
	1,648,669	9	2,062,425
	3,988,711	22	3,628,150
	8,424 50,385 136,188 (713,351) (477,590)	- - 1 (4) (3)	14,482 121,861 14,199 (682,798) 224,993
	(995,944)	(6)	(307,263)
	2,992,767 346,966	16 2	3,320,887 291,098
	2,645,801	14	3,029,789
	(1,469) 2,775 1,256 -	- - - -	167 22,474 (489) -
	2,562	-	22,152
	51 -	- -	(149) -
	51	-	(149)
	2,613	-	22,003
	$ 2,648,414	14	3,051,792
	$	2.11
	$	1.80

See accompanying notes to parent company only financial statements.

6

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) HIGHWEALTH CONSTRUCTION CORP.

Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollar)

Balance on January 1, 2019 Effects of retrospective application Equity at beginning of period after adjustments Profit (loss) Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings in 2018: Legal reserve appropriated Cash dividends of ordinary share Appropriation and distribution of retained earnings for the period from Jnauary 1, 2019 to September 30, 2019 Legal reserve appropriated Cash dividends of ordinary share Conversion of convertible bonds Adjustments of capital surplus for company's cash dividends received by subsidiaries Difference between consideration and carrying amount of subsidiaries acquired or disposed Changes in ownership interests in subsidiaries Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance on December 31, 2019 Profit (loss) Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Cash dividends of ordinary share Stock dividends of ordinary share Conversion of convertible bonds Adjustments of capital surplus for company's cash dividends received by subsidiaries Difference between consideration and carrying amount of subsidiaries acquired or disposed Changes in ownership interests in subsidiaries Changes in other additional paid in capital Balance at December 31, 2020	Share capital	Capital surplus		Retained earnings		Total other equity interest	Total other equity interest	Total other equity interest	Treasury stock
						Exchange differences on translation of foreign financial statements	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Total other equity interest
	Common stock		Legal reserve	Unappropriated retained earnings	Total retained earnings

See accompanying notes to parent company only financial statements.

7

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) HIGHWEALTH CONSTRUCTION CORP.

Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollar)

2020 Cash flows from (used in) operating activities: Profit before tax $ 2,992,767 Adjustments: Adjustments to reconcile profit (loss): Depreciation expense 76,193 Amortization expense 4,859 Expected credit loss 4,680 Net loss (gain) on financial assets or liabilities at fair value through profit or loss (44,151) Interest expense 713,351 Interest income (8,424) Dividend income (15,166) Share of loss (profit) of subsidiaries,associates and joint ventures accounted for using equity method 477,590 Loss on disposal of property, plant and equipment 133 Gain on disposal of investment properties (112,057) Unrealized profit from sales - Realized loss (profit) on from sales (1,236) Total adjustments to reconcile profit (loss) 1,095,772 Changes in operating assets and liabilities: Changes in operating assets: Decrease in financial assets or liabilities at fair value through profit or loss, mandatorily measured at fair value 61,327 Increase in notes receivable (21,901) Decrease (increase) in accounts receivable (5,719) Increase in inventories (21,678,220) Decrease (increase) in prepayments 63,748 Decrease in other current assets 7,810 Increase in other financial assets (5,008,875) Increase in incremental costs to obtaining a contract (646,537) Total changes in operating assets (27,228,367) Changes in operating liabilities: Increase in contract liabilities 3,216,148 Decrease in notes payable (3,902) Increase (decrease) in accounts payable (include related parties) (197,279) Increase (decrease) in other payable (23,979) Increase (decrease) in other financial liabilities (55,444) Increase (decrease) in other current liabilities 518,445 Increase in net defined benefit liability 466 Total changes in operating liabilities 3,454,455 Total changes in operating assets and liabilities (23,773,912) Total adjustments (22,678,140) Cash inflow (outflow) generated from operations (19,685,373) Income taxes paid (195,344) Net cash flows from (used in) operating activities (19,880,717)	2020 $ 2,992,767 76,193 4,859 4,680 (44,151) 713,351 (8,424) (15,166) 477,590 133 (112,057) - (1,236)	2019 3,320,887 69,652 3,929 1,819 (23,559) 682,798 (14,482) (4,778) (224,993) - - 184 -
	1,095,772	490,570
		40,561 (32,049) 78,750 (8,589,200) (76,910) 7,668 (1,003,174) (607,702)
	(27,228,367)	(10,182,056)
	3,216,148 (3,902) (197,279) (23,979) (55,444) 518,445 466	1,524,477 (12,278) 616,303 95,918 115,064 (126,431) 435
	3,454,455	2,213,488
	(23,773,912)	(7,968,568)
	(22,678,140)	(7,477,998)
	(19,685,373) (195,344)	(4,157,111) (274,035)
	(19,880,717)	(4,431,146)

7-1

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) HIGHWEALTH CONSTRUCTION CORP.

Statements of Cash Flows (CONT ’ D)

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollar)

Cash flows from (used in) investing activities: Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Proceeds from disposal of non-current assets classified as held for sale Acquisition of property, plant and equipment Acquisition of intangible assets Proceeds from disposal of investment properties Interest received Dividends received Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase in short-term loans Decrease in short-term loans Increase (decrease) in short-term notes and bills payable Proceeds from issuing bonds Proceeds from long-term debt Repayments of long-term debt Payment of lease liabilities Increase in other financial liabilities Cash dividends paid Interest paid Net cash flows from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year	2020 - (82,485) 308,773 (3,938) (4,426) 154,093 8,460 221,459	2019 491 (2,752,981) - (36,451) (2,303) - 14,504 137,357
	601,936	(2,639,383)
	35,411,358 (20,504,355) 2,012,869 5,000,000 550,000 (144,838) (11,746) (355,911) (2,333,257) (1,383,631)	22,696,834 (9,324,413) (784,813) - 316,400 (95,472) (9,517) (1,128,532) (5,249,822) (1,163,142)
	18,240,489	5,257,523
	(1,038,292) 7,581,341	(1,813,006) 9,394,347
	$ 6,543,049	7,581,341

See accompanying notes to parent company only financial statements.

8

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

For the years ended December 31, 2020 and 2019

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

(1) Company history

HIGHWEALTH CONSTRUCTION CORP. (the “Company”) was incorporated in January 1980 as a company limited by shares under the company Act of the Republic of China. Originally known as Yufu Construction Co., Ltd., after several times of rename. It changed its name to Hongju Construction Co., Ltd. after the acquisition of Hongju Construction Co., Ltd. in May 1989. Hongju Construction acquired Highwealth in 2000 and changed its name to Highwealth Construciton Corp. in May 2003. The Company registered address is 10F, No.267, Lequn 2nd Rd., Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.) The Company primarily engages in the business of construction, sales, and leasing of residual and commercial buildings. Please refer to the financial statements for the Company’s main business activities.

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

The parent company only financial statements were authorized for issuance by the Board of Directors on March 19, 2021.

(3) New standards, amendments and interpretations adopted:

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

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

• Amendments to IFRS 3 “Definition of a Business”

• Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”

• Amendments to IAS 1 and IAS 8 “Definition of Material”

• Amendments to IFRS 16 “COVID-19-Related Rent Concessions”

• (b) The impact of IFRS issued by the FSC but not yet effective

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

• Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rates Benchmark － ”

• Reform Phase 2

(Continued)

9

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The following new and amended standards, which may be relevant to the Company, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

FSC:
Standards or		Effective date per
Interpretations	Content of amendment	IASB
Amendments to IAS 1	The amendments aim to promote consistency	January 1, 2023
“Classification of Liabilities as	in applying the requirements by helping
Current or Non-current”	companies determine whether, in the
	statement of balance sheet, debt and other
	liabilities with an uncertain settlement date
	should be classified as current (due or
	potentially due to be settled within one year)
	or non-current.
	The amendments include clarifying the
	classification requirements for debt a
	company might settle by converting it into
	equity.
Amendments to IAS 37	The amendments clarify that the‘costs of	January 1, 2022
“Onerous Contracts－Cost	fulfilling a contract’comprises the costs
of Fulfilling a Contract”	that relate directly to the contract as follows:
	●the incremental costs – e.g. direct labor
	and materials; and
	●an allocation of other direct costs – e.g. an
	allocation of the depreciation charge for an
	item of property, plant and equipment used
	in fulfilling the contract.

The Company is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its financial position and financial performance. The results thereof will be disclosed when the Company completes its evaluation.

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

(Continued)

10

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(4) Summary of significant accounting policies:

The significant accounting policies presented in the parent company only financial statements are summarized as below. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the parent company only financial statements.

(a) Statement of compliance

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

• (b) Basis of preparation

• (i) Basis of preparation

The parent company only financial statements have been prepared on the historical cost basis except for the following significant accounts.

• 1) Financial asset measured at fair value through profit or loss are measured at fair value;

• 2) Financial instruments measured at fair value through other comprehensive income are measured at fair value;

• 3) The defined benefit liability (asset) is recognized as the fair value of the plan asset less the present value of defined benefit obligation and the upper limit impact mentioned in note 4(p).

• (ii) Functional and presentation currency

The functional currency of each Company entities is determined based on the primary economic environment in which the entities operate. The Company’s parent company only financial statements are presented in New Taiwan Dollar, which is the Company’s functional currency.All the financial information presented in NTD has been rounded to the nearest thousand.

(c) Foreign currencies

• (i) Currencies transaction

Transactions in foreign currencies are translated to the respective functional currencies of Company entities at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on retranslation are recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

(Continued)

11

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• 1) Fair value through other comprehensive income equity investment;

• 2) A financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or

• 3) Qualifying cash flow hedges to the extent that the hedge is effective.

(ii) Foreign operation

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the reporting currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated at the average exchange rate. Translation differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non controlling interests. When the Company disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

(d) Current and non-current distinction

An asset is classified as current when

• (i) The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;

• (ii) The Company holds the asset primarily for the purpose of trading;

• (iii) The Company expects to realize the asset within twelve months after the reporting period;

• (iv) The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current when

• (i) The Company expects to settle the liability in its normal operating cycle;

• (ii) The Company holds the liability primarily for the purpose of trading;

• (iii) The liability is due to be settled within twelve months after the reporting period;

(Continued)

12

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• (iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(e) Cash and cash equivalents

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

(f) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

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

On initial recognition, a financial asset is classified as measured at: amortized cost, fair value through other comprehensive income (FVOCI) – equity investment, or fair value through profit or loss (FVTPL). Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

• 1) Financial assets measured at amortized cost

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

• It is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(Continued)

13

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

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

• 2) Fair value through other comprehensive income (FVOCI)

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL

• It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets

• Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

’ Dividend income is recognized in profit or loss on the date on which the Company s right to receive payment is established., which in the case of quoted securities is normally company the ex-dividend date.

• 3) Fair value through profit or loss (FVTPL)

All financial assets not classified as measured at amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets in this category are measured at fair value at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Subsequent changes that are measured at fair value, which consider any dividend and interest income, are recognized in profit or loss.

• 4) Business model assessment

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

(Continued)

14

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• 5) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (”ECL”) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and accounts receivable, other receivable,guarantee deposit paid and other financial assets), debt investments measured at FVOCI, accounts receivable measured at FVOCI and contract assets.

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

• Debt securities that are determined to have low credit risk at the reporting date; and

• Other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for accounts receivables and contract assets are always measured at an amount equal to lifetime ECL.

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

The Company considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of ‘investment grade which is ’ ’ considered to be BBB- or higher per Standard & Poor s, Baa3 or higher per Moody s or twA or higher per Taiwan Ratings.

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

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

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

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

(Continued)

15

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

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

• Significant financial difficulty of the borrower or issuer；

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

• The lender of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider；

• It is probable that the borrower will enter bankruptcy or other financial reorganization； or

• The disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and its recognized in other comprehensive income instead of reducing the carrying amount of the asset.

The gross carrying amount of a financial asset is written off either partially or in full to the extent that there is no realistic prospect of recovery. The Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could ’ still be subject to enforcement activities in order to comply with the Company s procedure for recovery of amounts due.

• 6) Derecognition of financial assets

Financial assets are derecognized when the contractual rights to the cash flows from the assets expire, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets, or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

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

(Continued)

16

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity instruments

Debt and or equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual agreement arrangements and the definitions of a financial liability and an equity instrument.

2) Equity instruments

An equity instrument is any contract that evidences the residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

3) Treasury shares

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital surplus or retained earnings (if the capital surplus is not sufficient to be written down).

• 4) Compound financial instruments

Compound financial instruments issued by the Company comprise convertible bonds denominated in NTD that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.

The liability component of compound financial instruments is initially recognized at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognized at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not remeasured.

Interest related to the financial liability is recognized in profit or loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognized.

5) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative, or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

(Continued)

17

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

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

6) Derecognition of financial liabilities

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

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

7) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to offset the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(g) Inventories

• (i) Construction industry

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition, and capitalization of interest.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The net realizable value is estimated as follows:

1) Construction site

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses, or estimated by recent market value (development analytical method or comparison method).

2) Construction in progress

Net realizable value is the estimated selling price (prevailing market condition) in the ordinary course of business, less the estimated costs and selling expenses needed to complete.

(Continued)

18

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

3) Real estate for sales

Net realizable value is the estimated selling price (refer to the market condition estimated by authority) in the ordinary course of business, less the estimated selling cost and expenses need to sell the real estate.

(h) Non-current assets held for sale

Non-current assets or disposal groups comprising assets and liabilities that are highly probable to be recovered primarily through sale rather than through continuing use, are reclassified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the Company’s accounting policies. Thereafter, generally, the assets or disposal groups are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to assets not within the scope of IAS 36 – Impairment of Assets. Such assets will continue to be measured in accordance with the Company’s accounting policies. Impairment losses on assets initially classified as held for sale and any subsequent gains or losses on remeasurement are recognized in profit or loss. Gains are not recognized in excess of the cumulative impairment loss that has been recognized. Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortized or depreciated, and any equity-accounted investee is no longer equity accounted.

(i) Investing subsidiaries

In preparing the parent company only financial statements of the Company, investee company that controlled by the Company is accounted for under the equity method. Under equity method, profit for the year and other comprehensive income for the year reported in an entity’s Parent Company only financial statement of comprehensive income, shall equal to profit for the year and other comprehensive income’ attributable to owners of the parent reported in that entity’s consolidated statement of comprehensive income. Total equity reported in an entity’s Parent Company only ’ financial statements shall equal to equity attributable to owners of parent reported in that entity s consolidated financial statements.

The Company’s changes in equity interests in subsidiaries that did not lead to loss of control, deemed as equity transactions between owners.

(j) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is initially recognized at cost and then subsequently measured at cost again. The depreciation expense is appropriated in accordance with the depreciable amount after the initial recognition. The depreciation methods, useful lives, and residual values of investment property are same as the practice of the property, plant, and equipment.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount) is recognized in profit or loss.

(Continued)

19

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

(k) Property, plant and equipment

• (i) Recognition and measurement

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

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

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

• (ii) Subsequent expenditure

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

• (iii) Depreciation

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

Land is not depreciated.

The estimated useful lives of property, plant and equipment for the current and comparative periods are as follows:

eriods are as follows:
1) Buildings	3～50 years
2) Transportation equipment	5 years
3) Office equipment	3～5 years
4) Other equipment	3 years

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

• (iv) Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owner-occupied to investment property.

(Continued)

20

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• (l) Lease

• (i) Identifying a lease

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

• 1) The contract involves the use of an identified asset – this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified.

• 2) The Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

• 3) The Company has the right to direct the use of the asset throughout the period of use only if either:

• The customer has the right to direct how and for what purpose the asset is used throughout the period of use; or

• The relevant decisions about how and for what purpose the asset is used are predetermined and:

  • － The customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or

  • － The customer designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

(ii) As a lessee

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

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful lives of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

(Continued)

21

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

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

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

• 1) Fixed payments;

• 2) Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• 3) Amounts expected to be payable under a residual value guarantee; and

• 4) Payments for purchase or termination options that are reasonably certain to be exercised.

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

• 1) There is a change in future lease payments arising from the change in an index or rate; or

• 2) There is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or

• 3) There is a change of its assessment on whether it will exercise a purchase, extension or termination option; or

• 4) There is a change of its assessment on lease period on whether it will exercise an extension or termination option; or

• 5) There are any lease modifications

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

If an arrangement contains lease and non-lease components, the Company allocates the consideration in the contract to each lease component based on their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Company has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

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

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

(Continued)

22

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases of office equipment and lease of low-value assets, The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(iii) As a lessor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

The Company recognizes a finance lease receivable at an amount equal to its net investment in the lease. Initial direct costs incurred in negotiating and arranging on operating lease is added to the net investment of the lease asset. The lessor recognizes the interest income over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor’s net investment in the lease. The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other income’.

(m) Intangible assets

(i) Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(Continued)

23

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

• (iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

The estimated useful lives for current and comparative periods are as follows:

Computer software

1～3 years

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

(n) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories, contract assets and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

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

(Continued)

24

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(o) Revenue

(i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’s main types of revenue are explained below.

1) Land development and sale of real estate

The Company develops and sells residential properties and usually sales properties in advance during construction or before construction begins. Revenue is recognized when control over the properties has been transferred to the customer. The properties have generally no alternative use for the Company due to contractual restrictions. However, an enforceable right to payment does not arise until legal title of a property has passed to the customer. Therefore, revenue is recognized at a point in time when the legal title has passed to the customer

The revenue is measured at the transaction price agreed under the contract. For sale of readily available house, in most cases, the consideration is due when legal title of a property has been transferred. While deferred payment terms may be agreed in rare circumstances, the deferral never exceeds twelve months. The transaction price is therefore not adjusted for the effects of a significant financing component. For pre-selling properties, the consideration is usually received by installment during the period from contract inception until the transfer of properties to the customer. If the contract includes a significant financing component, the transaction price will be adjusted for the effects of the time value of money during the period, using the specific borrowing rate of the construction project. Receipt of a prepayment from a customer is recognized as contract liability. Interest expense and contract liability are recognized when adjusting the effects of the time value of money. Accumulated amount of contract liability is recognized as revenue when control over the property has been transferred to the customer.

2) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

• (ii) Contract costs-incremental costs of obtaining a contract

The Company recognizes as an asset the incremental costs of obtaining a contract with a customer if the Company expects to recover those costs. The incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.

(Continued)

25

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(p) Employee benefits

• (i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided in the periods during which services are rendered by employees.

(ii) Defined benefit plans

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

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

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

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

(iii) Short-term employee benefits

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

(q) Income Taxes

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

(Continued)

26

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

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

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are not recognized for the following:

• (i) Assets and liabilities that are initially recognized from non-business combination transactions, with no effect on net income or taxable gains (losses).

• (ii) Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

• (iii) Taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

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

• (i) If the entity has the legal right to settle tax assets and liabilities on a net basis; and

• (ii) The taxing of deferred tax assets and liabilities fulfill one of the below scenarios:

• 1) Levied by the same taxing authority; or

• 2) Levied by different taxing authorities, but where each such authority intend to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation; or where the timing of asset realization and debt liquidation is matched.

A deferred tax asset is recognized for unused tax losses available for carry-forward, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, unused tax credits and deductible temporary differences can be utilized. Such unused tax losses, unused tax credits and deductible temporary differences are also re-evaluated every year on the financial reporting date, and adjusted based on the probability that future taxable profit will be available against which the unused tax losses, unused tax credits and deductible temporary differences can be utilized.

• (r)

Earnings per share

The Company disclose the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. The basic earnings per share is calculated based on the profit attributable to the ordinary shareholders of the Company divided by weighted average number of ordinary shares outstanding. The diluted earnings per share is calculated based on the profit attributable to ordinary shareholders of the Company, divided by weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as remuneration of employees and employee stock options.

(Continued)

27

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(s) Operating segments

Please refer to the consolidated financial report of Highwealth Construciton Corp. for the years ended December 31, 2020 and 2019 for operating segments information.

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

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

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

Information for the assumptions of uncertainty and the estimation having significant risks that will result in significant adjustments in the following year is as follows:

• (a) Valuation of inventories

Inventories are measured at the lower of cost and net realizable value. The Company’s evaluate the selling price in the market is below the cost, and write off the cost of inventory to net realizable value. The estimation of net realizable value is based on current market conditions. Please refer note 6(e) for inventory valuation.

The Company’s accounting policies and disclosures included financial and non-financial assets and liabilities measured at fair value. The Company’s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value. The fair value measurement of ’ investment property is based on the website of Department of Land Administration and estate agency s website or the close deal in similar district.

Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

• Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.

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

• Level 3: inputs for the assets or liabilities that are not based on observable market data.

The transfers policy between levels of the fair value hierarchy

If there is any movement of financial instruments measured at fair value between Level 1, Level 2 and Level 3, the Company recognizes the movement at the reporting date. Please refer notes as follows:

• (a) Note 6(k) Investment property.

• (b) Note 6(z) Financial instruments.

(Continued)

28

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

Bank overdrafts used for cash management purposes Demand Deposits Cash and cash equivalent	December 31, 2020 $ 3,862 6,539,187 $ 6,543,049	December 31, 2019 1,866 7,579,475
		7,581,341

Please refer Note 6(z) for the disclosure of the Company’s financial assets and liabilities interest risk and sensitivity analysis.

• (b) Financial assets at fair value through profit or loss

Mandatorily measured at fair value through profit or loss: Stocks listed on domestic markets Embedded derivative-call options and conversion options Total	December 31, 2020 $ 263,550 6,816	December 31, 2019 287,726 -
	$ 270,366	287,726

For the net gain or loss on fair value on financial instruments at FVTPL, please refer to note 6(y).

In 2020 and 2019, the acquisition and disposal gain or loss on financial assets at fair value through profit or loss of the Company was $11,009 thousand, $72,336 thousand, $0 thousand and $40,561 thousand, respectively.

For credit risk and market risk, please refer to note 6(z).

Please refer to note 8 for the financial asset that had been pledged as collateral for bank borrowings for the years ended December 31, 2020 and 2019.

• (c) Financial assets at fair value through other comprehensive income

Equity investments at fair value through other comprehensive income: Unlisted Common Share	December 31, 2020 December 31, 2019 $ 553,139 550,364

• (i) Equity investments at fair value through other comprehensive income

The Company designated the investments shown above as equity investment at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term for strategic purposes and not hold for sale.

(Continued)

29

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

As of December 31, 2019, the Company has sold its shares at a fair value of $491 thousand, and the Company realized a gain of $125 thousand, which was recognized as other comprehensive income, and thereafter, was reclassified to retained earnings.

• (ii) For credit risk and market risk, please refer to note 6(z).

• (iii) As of December 31, 2020, and 2019, the financial assets at fair value through other comprehensive income of the Company had not been pledged as collateral for long-term borrowings.

• (d) Note and account receivables

Note receivables Trade receivables Less: loss allowance	December 31, 2020 $ 1,295,101 109,887 7,672	December 31, 2019 1,273,200 104,168 2,992
	$ 1,397,316	1,374,376

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information. The expected credit losses of the note receivables and trade receivables were as followed:

Current More than 365 days past due Current More than 365 days past due	December 31, 2020	December 31, 2020	December 31, 2020	Loss allowance Provision - 7,672 7,672 Loss allowance Provision - 2,992 2,992
	Gross carrying amount $ 1,397,316 7,672	Weighted-aver age loss rate
	$ 1,404,988
	Gross carrying amount $ 1,374,376 2,992	Weighted-aver age loss rate
		- 100%
	$ 1,377,368

(Continued)

30

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

The movement in the allowance for notes and accounts receivable was as follows：

Balance on January 1 Impairment losses recognized Amounts written off Balance on December 31 (e) Inventories	For the years ended December 31 2020 2019 $ 2,992 5,003 4,680 1,819 - (3,830)
	$ 7,672 2,992

Properties and Land held for sale Land held for construction sites Construction in progress Prepaid for land purchase Total	December 31, 2020 $ 10,271,781 24,570,145 62,623,600 -	December 31, 2019 12,496,069 14,064,227 48,151,146 504,250
	$ 97,465,526	75,215,692

For the years ended December 31, 2020 and 2019, the cost of goods sold recognized in parent company only comprehensive income amounted to $12,480,646 thousand and $14,644,621 thousand, respectively. For the years ended December 31, 2020 and 2019, because parts of properties and land held for sale had been sold, the factor led to net realizable value below cost has been gone, the increase in net realizable value write-off the amount of cost of goods sold $7,886 thousand and $44,951 thousand, respectively.

For the years ended December 31, 2020 and 2019, the Company has changed the usage of partial asset, and reclassified properties and land held for sale to property, plant and equipment and investment property according to definition, please refer to note 6(i) and (j).

For the years ended December 31, 2020 and 2019, construction in progress of the company is calculated using a capitalization rate 1.91% and 2.06%, respectively. For capitalized interest, please refer to note 6(y).

As of December 31, 2020, and 2019, the inventories of the Company had been pledged as collateral for bank borrowings, please refer to note 8.

(f) Non-current assets held for sale

Based on the resolution made during the Board Meeting on November 26, 2020, and December 24, 2020, the Company expected to dispose the land and building on JinTai section, Zhongshan Dist in Taipei City, and the selling process had been proceeded. Therefore, the Company reclassified the property and building to non-current assets held for sale. As December 31, 2020, the carrying value of non-current assets held for sale was $733,106 thousand, which the contract amount for the sold and leased back was $1,246,370 thousand (include taxes). The assets held for sale of the Company had been pledged as collateral, please refer to note 8.

(Continued)

31

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(g) Investments accounted for using equity method

The components of investments accounted for using the equity method at the reporting date were as follows:

Subsidiaries (i) Subsidiaries	December 31, 2020 $ 5,295,101	December 31, 2019 5,923,202

Please refer to consolidated financial statement of 2020.

Due to the organizational structure adjustment of the Company, the Board of Directors made a resolution on June 25, 2019 to acquire 100% of the common stock of Bo Yuan Construction Co., Ltd., which was previously entirely owned by Qi Yu Construction Co., Ltd., by cash $930,000 thousand. On August 8, 2019, the Company acquired direct control over Bo Yuan Construction Co., Ltd.

(ii) Guarantees

As of December 31, 2020, and 2019, the investments accounted for using equity method had been pledged as collateral for bank borrowings, please refer to note 8.

• (h) Changes in a parent's ownership interest in a subsidiary

The Company acquired Run Long Construction Co., Ltd.’s shares with cash in 2020 and 2019.

The effects of the changes in shareholdings were as follows:

Carrying amount of non-controlling interest on acquisition Consideration paid to non-controlling interests Retained earnings	For the years ended December 31 2020 2019 $ 33,031 243,542 (112,828) (750,765) $ (79,797) (507,223)

• (i) Property, plant and equipment

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

Cost or deemed cost: Balance onJanuary 1, 2020 Additions Disposals Reclassification to properties held for sale Balance on December 31, 2020	Land $ 487,463 - - (240,413)	Buildings and construction 440,954 - - (222,972)	Other equipment Constructio n in progress 65,017 - 3,938 - (15,035) - - -	Total
				993,434 3,938 (15,035) (463,385)
	$ 247,050	217,982	53,920 -	518,952

(Continued)

32

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

Balance on January 1, 2019 Transfer from inventories Additions Disposals Transfer in (out) Reclassification to investment property Balance on December 31, 2019 Depreciation and impairments loss: Balance on January 1, 2020 Depreciation Reclassification to properties held for sale Disposals Balance on December 31, 2020 Balance on January 1, 2019 Depreciation Reclassification to investment property Disposals Balance on December 31, 2019 Carrying amounts: Balance on December 31, 2020 Balance on December 31, 2019 Balance on January 1, 2019	Land $ 476,705 12,636 - - - (1,878)	Buildings and construction 414,423 15,951 5,635 - 6,687 (1,742)	Other equipment Construction inprogress 42,079 - - - 24,129 6,687 (1,191) - - (6,687) - -	**Total **
				933,207 28,587 36,451 (1,191) - (3,620)
	$ 487,463	440,954	65,017 -	993,434
	$ - - - -	67,565 12,174 (21,860) -	26,659 - 11,740 - - - (14,902) -	94,224 23,914 (21,860) (14,902)
	$ -	57,879	23,497 -	81,376
	$ - - - -	57,602 10,094 (131) -	15,889 - 11,961 - - - (1,191) -	73,491 22,055 (131) (1,191)
	$ -	67,565	26,659 -	94,224
	$ 247,050	160,103	30,423 -	437,576
	$ 487,463	373,389	38,358 -	899,210
	$ 476,705	356,821	26,190 -	859,716

(i) In order to manage activating strategies of assets and obtain the maximum effectiveness, the information of 2020 and 2019 for the reclassification of non-current assets held for sale and investment properties please refer to note 6 (f) and note 6 (k).

(ii) As of December 31, 2020, and 2019, the property, plant and equipment of the Company had been pledged as collateral for bank borrowings, please refer to note 8.

(j) Right-of-use assets

The Company leases assets including land and transportation equipment. Information about leases for which the Company as a lessee was presented below:

Cost: Balance on January 1, 2020 Lease modification Decrease Balance on December 31, 2020	Land $ 21,135 2,988 (19,270)	Transportation equipment		Total 23,021 2,988 (19,270)
		1,886 - -
	$ 4,853	1,886		6,739

(Continued)

33

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

Balance on January 1, 2019 Effects of retrospective application Balance on January 1, 2019 after adjustments Additions Balance on December 31, 2019 Depreciation and impairment losses: Balance on January 1, 2020 Depreciation for the year Decrease Balance on December 31, 2020 Balance on January 1, 2019 Effects of retrospective application Balance on January 1, 2019 after adjustments Depreciation for the year Balance on December 31, 2019 Carrying amounts: Balance on December 31, 2020 Balance on December 31, 2019 (k) Investment Property Cost or deemed cost: Balance on January 1, 2020 Reclassification from inventories Disposals Reclassification to properties held for sale Balance on December 31, 2020 Balance on January 1, 2019 Reclassification from inventories Reclassification from Property, plant and equipment Balance on December 31, 2019 Depreciation and impairments loss: Balance on January 1, 2020 Depreciation Disposals Reclassification properties held for sale Balance on December 31, 2020	Land $ - 9,167 9,167 11,968 $ 21,135 $ 11,409 11,287 (19,270) $ 3,426 $ - 2,674 2,674 8,735 $ 11,409 $ 1,427 $ 9,726 Land and improvement $ 2,178,471 120,736 (22,087) (155,284)	Land $ - 9,167	Transportation equipment - 1,886	Transportation equipment - 1,886	Total - 11,053 11,053 11,968 23,021 12,928 11,654 (19,270) 5,312 - 3,565 3,565 9,363 12,928 1,427 10,093 Total 4,252,670 233,075 (42,572) (299,303) 4,143,870 3,995,019 254,031 3,620 4,252,670 234,692 40,625 (536) (7,722) 267,059
		9,167 11,968	1,886 -
		$ 21,135	1,886
		$ 11,409 11,287 (19,270)	1,519 367 -
		$ 3,426	1,886
		$ - 2,674	- 891
		2,674 8,735	891 628
		$ 11,409	1,519
		$ 1,427	-
		$ 9,726	367
			Buildings and construction 2,074,199 112,339 (20,485) (144,019)
	$ 2,121,836		2,022,034
	$ 2,070,966 105,627 1,878		1,924,053 148,404 1,742
	$ 2,178,471		2,074,199
	$ 40,818 - - -		193,874 40,625 (536) (7,722)
	$ 40,818		226,241

(Continued)

34

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

Balance on January 1, 2019 Depreciation Reclassification from Property, plant and equipment Balance on December 31, 2019 Carrying amounts: Balance on December 31, 2020 Balance on December 31, 2019 Balance on January 1, 2019 Fair value: Balance on December 31, 2020 Balance on December 31, 2019	Land and improvement $ 40,818 - -	Buildings and construction 155,509 38,234 131
	$ 40,818	193,874
	$ 2,081,018	1,795,793
	$ 2,137,653	1,880,325
	$ 2,030,148	1,768,544

The investment property is real estate property owned by the Company and leased to third parties. Please refer to note 6 (q) and 6(v) for more information.

The fair value measurement of investment property is based on the website of Department of Land Administration and estate agency’s website or the close deal in similar district. The fair value measurement for investment property has been categorized as a level 3 fair value based on the inputs to the valuation technique used.

As of December 31, 2020 and 2019, the Company’s investment property had been pledged as collateral for bank borrowings, please refer to note 8.

(l) Other financial assets and current incremental costs of obtaining a contract

Other current financial assets Current incremental costs of obtaining a contract-current Other non-current financial assets	December 31, 2020 $ 9,186,064 1,954,525 8,214,252	December 31, 2019 4,177,236 1,307,988 7,858,341 13,343,565
	$ 19,354,841

(i) Other financial asset

Other financial assets include Trust account for presale of properties, reserve account for borrowing, performance guarantee, reserve account for corporation bonds and construction deposit.

(ii) Incremental costs of obtaining a contract-current

The Company expects that incremental commission fees paid to intermediaries, and the bonus for the internal sales department are recoverable The Company has therefore capitalized them as contract costs. Capitalized commission fees are amortized when the related revenues are recognized. For the years ended December 31, 2020 and 2019, the Company recognized $317,850 thousand and $483,395 thousand of selling expenses, respectively.

(Continued)

35

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(iii) As of December 31, 2020, and 2019, the other financial assets of the Company had pledged as collateral for long-term borrowings, please refer to note 8.

• (m) Short-term borrowings

Unsecured bank loans Secured bank loans Less：Syndicated Loan Expense Total Range of interest rates	December 31, 2020 $ 4,633,333 53,558,280 (6,888)	December 31, 2020 $ 4,633,333 53,558,280 (6,888)		December 31, 2019 7,933,333 35,351,277 (7,307) 43,277,303 1.495%~2.30%
	$ 58,184,725
		1.245%~2.00%

• (i) The issue of bank loan and repayment

For the years ended December 31, 2020 and 2019, the incremental amounts are $35,411,358 thousand and $22,696,834 thousand, respectively; the repayment amounts are $20,504,355 thousand and $9,324,413 thousand, respectively. Please refer to note 6(y) for interest expense.

• (ii) Collateral for Bank Loans

For the collateral for short-term borrowings, please refer to note 8.

(n) Short-term notes and bills payable

Commercial paper payable Less: Discount on short-term notes and bills payable Total Commercial paper payable Less: Discount on short-term notes and bills payable Total	December 31, 2020	December 31, 2020	Amount $ 4,981,300 (4,580) $ 4,976,720
	Guarantee or acceptance institute	Range of interest rate
	Financial institute 0.398%~1.738% December 31, 2019
			Amount $ 2,974,200 (10,349) $ 2,963,851
	Trust or acceptance institute	Range of interest rate
	Financial institute	1.65%~1.838%

For the collateral for short-term notes and bills payable, please refer to note 8.

(Continued)

36

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(o) Long-term borrowings

The Company’s long-term borrowings details, conditions, and provisions were as follows:

Secured bank loans Less: current portion Total Secured bank loans Less: current portion Total		December	31, 2020	Amount $ 3,990,600 (941,422)
	Currency	Range of interest rate	Maturity
	TWD	1.47%~1.94% **December **	2021~2038 31, 2019
				$ 3,049,178
				Amount $ 3,585,438 (107,373)
	Currency	Range of interest rate	Maturity
	TWD	1.69%~2.25%	2021~2038
				$ 3,478,065

• (i) The issue of bank loan and repayment

The amount issued for the years ended December 31, 2020 and 2019 are $550,000 thousand and $316,400 thousand, respectively; the repayment amounts are $144,838 thousand and $95,472 thousand, respectively, please refer to note 6(y) for interest expense.

• (ii) Collateral for Bank Loans

For the collateral for long-term borrowings, please refer to note 8.

• (p) Bonds payable/ current portion of bonds payable

The details of the Company’s bonds payable were as follows:

Secured ordinary corporate bonds - current Secured convertible bond - non-current Secured ordinary corporate bonds- non-current Total	December 31, 2020 $ 6,981,477 10,114,500 7,433,506	December 31, 2019 - 10,270,574 9,468,125
	$ 24,529,483	19,738,699

• (i) The Company issued the secured ordinary corporate bonds amounting to $5,000,000 thousand $2,500,000 thousand, $5,000,000 thousand, and $2,000,000 thousand with an interest rate of 0.53%, 0.90%, 1.15% and 1.00% in December 2020, May 2018, April 2016, and November 2016. The secured ordinary corporate bonds were issued for 5 years, interest paid annually, repayment of principal and interest at maturity.

(Continued)

37

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• (ii) The Company’s details of secured convertible bonds were as follows:

Secured convertible bonds Discount on bonds payable-unamortized amount Accumulated convertible amount Ending balance: bonds payable Embedded derivatives- put option and call option (FVPL)	December 31, 2020	December 31, 2019 10,577,820 (307,140) (106)
	$ 10,577,820 (185,335) (277,985)
	$ 10,114,500	10,270,574
	$ 6,816	-

In June 2017, the Company issued a secured 5-year convertible bond with zero interest for $10,577,820 thousand with the following conditions:

  - 1) The conversion price was $57.1 per share, when it comes to adjusting conversion price of subsidiary’s common share, it should adhere to the Company’s conversion rules. The conversion price change with formula within issuance details. The secured convertible bond does not have reset feature.

  - 2) At any time within three months after the issuance date till 40 days before maturity date, the subsidiary would repurchase the bond at the face value if the close of the subsidiary's ordinary share price exceeded 30% of the bond's conversion price for successive 30 days, or the outstanding value of the bond was lower than 10% of the total issuance value.

  - 3) The bondholders can execute put options after three years from the issuance date, the redemption value is 103.7971% of the bonds value (the real yield is 1.25%).

  - 4) Unless the bond has been redeemed before maturity, repurchased and cancelled or converted, the bond will be redeemed by the Company on the maturity date at 106.4082% of the principal amount of the bond (the real yield is 1.25%).

• (iii) Please refer to the note 6(y) for the interest expense for the years ended December 31, 2020 and 2019. For the details of collateral of secured convertible bonds and bonds payable, please refer to note 8.

• (q) Lease liabilities

The carrying amount of lease liabilities were as follows：

Current	December 31, 2020 $ 1,442	December 31, 2019 10,200

For the maturity analysis, please refer to Note 6(z).

(Continued)

38

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

The amounts recognized in profit or loss were as follows：

Interest on lease liabilities Expenses relating to short-term and low-value leases	For the years ended December 31 2020 2019 $ 113 181
	$ 101,400 117,516

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

Total cash outflow for leases	For the years ended December 31 2020 2019 $ 113,259 127,214

(i) Real estate leases

As of December 31, 2020, the Company leases land for its reception center. The leases of reception center typically run for a period of 2-3 years.

(ii) Other leases

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

The Company also leases office equipment, short-term reception center, and outdoor advertising. These leases are short-term and leases of low-value items. The Company has elected not to recognize its right-of-use assets and lease liabilities for these leases.

(r) Operating lease

(i) Leases as lessor

The Company leases out its investment property. The Company has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Please refer to note 6(k) for investment property.

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date are as follows:

Less than one year One to two years Two to three years Three to four years Four to five years Total undiscounted lease payments	December 31, 2020 $ 72,808 50,306 39,455 37,247 20,319	December 31, 2019 64,132 50,788 42,062 33,610 13,388
	$ 220,135	203,980

For the years ended December 31, 2020 and 2019, rental income from investment properties were $73,891 thousand and $61,450 thousand, respectively.

(Continued)

39

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(s) Employee benefits

• (i) Defined benefit plans

The expenses recognized in profit or loss for the Company were as follows:

The present value of defined benefit plans Fair value of plan asset Net defined benefit liability	December 31, 2020 $ 65,223 (29,347)	December 31, 2019 61,735 (27,607)
	$ 35,876	34,128

• 1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Company’s Bank of Taiwan labor pension reserve account balance amounted to $29,347 thousand as of December 31, 2020. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

• 2) Movements in present value of the defined benefit obligations

The movement in present value of the defined benefit obligations for the Company were as follows:

Defined benefit obligations at January 1 Current service cost and interest Remeasurement of net define benefit liabilities (assets) －Return on plan assets excluding interest income Defined benefit obligations at December 31	For the years ended December 31 2020 2019 $ 61,735 59,792 1,193 1,243 2,295 700 $ 65,223 61,735
	2020 $ 61,735 1,193 2,295 $ 65,223

(Continued)

40

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• 3) Change of fair value of plan asset

The amounts included in the parent company only balance sheets in respect of the Company’s fair value of plan asset for the years ended December 31, 2020 and 2019 were as follows:

Fair value of plan asset January 1 Remeasurement of net defined benefit liabilities (assets) －Return on plan assets (excluding interest income) Amount that has been allocated to the plan Expected return on plan asset Fair value of plan assets, December 31	For the years ended December 31 2020 2019 $ 27,607 25,799 826 867 635 647 279 294 $ 29,347 27,607
	2020 $ 27,607 826 635 279
	$ 29,347

• 4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company were as follows:

Current service cost Net interest of net liabilities for defined benefit obligations Administration expense	For the years ended December 31 2020 2019 $ 576 570 338 379 $ 914 949 $ 914 949
	2020 $ 576 338 $ 914
	$ 914

• 5) Actuarial valuations

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

Discount rate Future salary increase rate	2020.12.31 0.625% 2.00%	2019.12.31
		1.000% 2.00%

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $628 thousand.

The weighted average lifetime of the defined benefit plans is 11.10 years.

(Continued)

41

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

6) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

benefit obligation shall be as follows:
December 31, 2020 Discount rate (0.25% difference) Future salary increase rate (0.25% difference) December 31, 2019 Discount rate (0.25% difference) Future salary increase rate (0.25% difference)	Defined benefit obligation Increase 0.25％ Decrease 0.25％ $ (1,575) 1,624 1,564 (1,525) (1,621) 1,675 1,622 (1,579)
	Increase 0.25％ $ (1,575) 1,564 (1,621) 1,622

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

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2020 and 2019.

(ii) Defined contribution plans

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

The pension costs incurred from the contributions to the Bureau of the Labor Insurance for the years ended December 31, 2020 and 2019 amounted to $9,871 thousand and $9,224 thousand, respectively.

(t) Income tax

(i) Income tax expenses

The components of income tax expenses for the years ended December 31, 2020 and 2019 were as follows:

Current tax expense Current period Land value increment tax Additional surtax on unappropriated earnings Adjustment for prior periods Tax expense	For the years ended December 31 2020 2019 $ 188,576 - 176,514 198,057 - 62,775 (18,124) 30,266	For the years ended December 31 2020 2019 $ 188,576 - 176,514 198,057 - 62,775 (18,124) 30,266
	2020 $ 188,576 176,514 - (18,124)
	$ 346,966	291,098

(Continued)

42

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

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

Income before tax Income tax expense at domestic statutory tax rate Land tax exempt income Book –tax difference between recognition time Book –tax difference of capitalization Profit or loss from investment accounted for using equity method Book –tax difference between deferred sales commission Land value increment tax Financial assets measured at fair value through profit and loss Unrealized profit or loss from associated company Additional surtax on unappropriated earnings Adjustment for prior periods Others Total	For the years ended December 31 2020 2019 $ 2,992,767 3,320,887	For the years ended December 31 2020 2019 $ 2,992,767 3,320,887
	2020 $ 2,992,767
	598,553 (515,938) 53,602 (56,853) 95,518 71,567 176,514 (8,830) (247) - (18,124) (48,796)	664,177 (757,497) 111,057 (57,390) (44,999) 57,688 198,057 (4,712) 37 62,775 30,266 31,639
	$ 346,966	291,098

(ii) Deferred tax asset and liability recognized

Changes in the amount of deferred tax assets and liabilities for 2020 and 2019 were as follows:

Deferred tax assets:

Balance on January 1, 2020 Balance on December 31, 2020 Balance on January 1, 2019 Balance on December 31, 2019	Investment property impairment	Others	Total 14,544 14,544 14,544 14,544
	$ 11,242	3,302
	$ 11,242	3,302
	$ 11,242	3,302
	$ 11,242	3,302

(Continued)

43

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

Deferred tax liabilities:

Deferred tax liabilities:
Balance on January 1, 2020 Balance on December 31, 2020 Balance on January 1, 2019 Balance on December 31, 2019	Others $ 340
	$ 340
	$ 340
	$ 340

(iii) The Company’s income tax had been examined by the tax authorities till 2018 except for 2017.

(u) Capital and other equity

As of December 31, 2020, and 2019, the total value of authorized ordinary shares were $20,000,000 thousand, with par value of $10 per share. The paid-in capital were $12,902,969 thousand and $11,666,288 thousand, respectively.

(i) Ordinary shares

The reconciliation of outstanding shares for the years ended December 31, 2020 and 2019 are as follows:

as follows:
Balance on January 1 Capital increase by retained earning Convertible bonds transfer Balance on December 31		Ordinary Shares 2020 2019 1,166,629 1,166,627 116,663 - 7,005 2
		2020
		1,166,629 116,663 7,005
		1,290,297	1,166,629

A resolution was passed during the general meeting of shareholders held on June 10, 2020, for the issuance of 100 new shares per thousand shares by retained earnings and capital surplus, amounting to $1,166,628 thousand. The Company had received approval from the Financial Supervisory Commission for this capital increase on August 3, 2020. And a resolution was passed during the board meeting, to set October 1, 2020 as the date of capital increase, and had finished registration on October 16, 2020.

For the year ended December 31, 2020 and 2019, due to the convertible bonds’ holder exercised the convert option, the Company issuance of 7,005 per thousand new shares and 2 per thousand new shares, respectively, amounting to $70,053 thousand and $22 thousand, respectively. Among the 7,005 thousand shares had not performed the registration.

(Continued)

44

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(ii) Capital surplus

The balance of capital surplus as of December 31, 2020 and 2019, were as follows:

Treasury share transactions Difference arising from subsidiary’s equity Conversion premium of convertible bonds Capital surplus-premium from merger Donation from shareholders Other	December 31, 2020 $ 432,357 33,530 203,231 62 3,284 8,357	December 31, 2019 379,053 33,525 81 62 3,396 8,357
	$ 680,821	424,474

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

(iii) Retained earnings

In accordance with the Company’s articles of incorporation, which were approved during the general meeting of shareholders held on June 10, 2020, after paying the income taxes, the Company’s net earnings should first be used to offset the prior years’ deficits. Of the remaining balance, 10% is to be appropriated as legal reserve, which in accordance with the regulations of the competent authority or reversal appropriated retained earnings. And then any remaining profit, together with any undistributed retained earnings, shall not be distributed less than 20% as shareholders’dividends proposed by the Board of Directors to be submitted to the stockholders’ meeting for approval. The cash dividends should not be less than 10% of the total dividends.

As the Company distributes dividends or legal reserves and part or all paid-in capital in cash, the Company should hold a Board meeting to pass the resolution by more than half of the directors present at Board meeting, which requires a quorum of two-third of all the directors. The resolution should be submitted to the shareholder’s meeting.

In addition, the articles of incorporation for the Company were amended before the general meeting of shareholders on June 10, 2020, the Company distributes the surplus earning and offset losses after the end of each quarter. If there are earnings during the quarter, the Company shall distribute the earnings in accordance with the above-mentioned procedures.

(Continued)

45

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

• 2) Special reserve

In accordance with Rule No. 1010012865 issued by the FSC on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders’ equity. Similarly, a portion of unappropriated earnings prior-period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions.

3) Earnings distribution

Earnings distribution for the years ended December 31, 2019 and 2018 was decided by the resolution adopted, at the general meeting of shareholders held on June 10, 2020 and 2019, respectively. The relevant dividend distributions to shareholders were as follows:

2019, respectively. The relevant	dividend distributions to shareholders were as follows:	dividend distributions to shareholders were as follows:	dividend distributions to shareholders were as follows:	dividend distributions to shareholders were as follows:
Dividends distributed to ordinary shareholders: Cash dividends Stock dividends Total	For the years ended December 31 2019 2018 Amount per share (dollars) Total amount Amount per share (dollars) Total amount $ 3.0 3,499,886 3.5 4,083,194 1.0 1,166,628 - - $ 4,666,514 4,083,194
	2019 Amount per share (dollars) Total amount $ 3.0 3,499,886 1.0 1,166,628 $ 4,666,514
			Amount per share (dollars) 3.5 -
		$ 4,666,514

Earnings distribution for the second and third quarters of 2019 was decided based on the resolution approved during the general meetings of the shareholders held on August 13, 2019 and November 13, 2019, respectively, the amount of dividend distributions was 1,166,628 thousand and 1,166,629 thousand, respectively.

The Company cash dividends of earning distribution plan was approved during the general meetings of the shareholders held on March 19, 2021 as follows:

Dividends distributed to ordinary shareholders: Cash dividends		Total amount 2,581,927

(Continued)

46

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(iv) Treasury shares

• 1) In accordance with Securities and Exchange Act requirements as stated above, the number of shares repurchased should not exceed 10 percent of all shares outstanding. ’

• Also, the value of the repurchased shares should not exceed the sum of the Company s retained earnings, share premium, and realized capital reserves. As of December 31, 2020, the Company had not repurchased any share.

• 2) Prior to Company ACT amendment in 2001, Subsidiaries of the Company, Ju Feng Hotel Management Consultant., Co., Ltd., Highwealth Real Estate Co., Ltd., and Chyi Yuh Construction Co., Ltd. held part of the Company’s shares for investment purpose. Run Long Construction Co., Ltd., a subsidiary the Company has control over, acquired 11,950 thousand of the Company’s shares for investment purpose in the public market in 2015 and received stock dividend from retained earnings of 1,195 thousand shares on 2020. As of December 31, 2020, and 2019, the market price per share were $45.85 and $46.3, respectively.

The details of the treasury shares held by subsidiaries are as followed:

Subsidiary Ju Feng Hotel Management Consultant., Co., Ltd. Highwealth Real Estate Co., Ltd. Qi Yu Construction Co., Ltd. Run Long Construction Co., Ltd.	**December **	December 31, 2019 Shares (thousand) Book value 4,162 1,733 8,045 10,850 2,495 - 11,950 71,227	December 31, 2019 Shares (thousand) Book value 4,162 1,733 8,045 10,850 2,495 - 11,950 71,227
		Shares (thousand) 4,162 8,045 2,495 11,950
	29,317 $ 86,568	26,652	83,810

• (v) Other equity items

Balance on January 1, 2020 Exchange differences on foreign operations Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Balance on December 31, 2020	Exchange differences on translation of foreign financial statements $ 195 51 - $ 246	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income 532,432 - 2,775 535,207	Total 532,627 51 2,775 535,453

(Continued)

47

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

Balance on January 1, 2019 Exchange differences on foreign operations Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance on December 31, 2019	Exchange differences on translation of foreign financial statements $ 344 (149) - - $ 195	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income 510,083 - 22,474 (125) 532,432	Total 510,427 (149) 22,474 (125) 532,627

• (v) Earnings per share

• (i) Basic earnings per share

The Company’s basic earnings per share is calculated by profit attributable to ordinary shareholders of the Company for 2020 and 2019 were $2,645,801 thousand and $3,029,789 thousand, respectively, and both the weighted average number of ordinary shares outstanding for 2020 and 2019 were 1,254,564 thousand and 1,253,975 thousand shares, respectively, calculated as follows:

• 1) Profit attributable to ordinary shareholders of the Company

Profit attributable to ordinary shareholders of the Company 2) Weighted-average number of ordinary shares Ordinary shares outstanding on January 1 Effect of treasury stock Effect of conversion of convertible bonds Effect of stock dividends Weighted-average number of ordinary shares on December 31	For the years ended December 31 2020 2019 $ 2,645,801 3,029,789 For the years ended December 31 2020 2019 1,166,629 1,166,627 (29,317) (29,317) 588 1 $ 116,663 116,663 1,254,563 1,253,974
	2020 1,166,629 (29,317) 588 $ 116,663
	1,254,563

(Continued)

48

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(ii) Diluted earnings per share

The Company’s diluted earnings per share is calculated by profit attributable to ordinary shareholders of the Company for 2020 and 2019 were $2,739,518 thousand and $3,122,453 thousand respectively. After adjusting the effect of dilution of ordinary share, the weighted average number of ordinary shares for 2020 and 2019 were 1,521,648 thousand and 1,486,977 thousand shares, respectively. The related calculations are as follows:

• 1) Profit attributable to ordinary shareholders of the Company (diluted)

Profit attributable to ordinary shareholders of the Company (diluted)	For the years ended December 31 2020 2019 $ 2,739,518 3,122,453	For the years ended December 31 2020 2019 $ 2,739,518 3,122,453
	2020 $ 2,739,518

• 2) Weighted-average number of ordinary shares (diluted)

Weighted-average number of ordinary shares (basic) Effect of conversion of convertible bonds Effect of employee share bonus Weighted-average number of ordinary shares (diluted) on December 31	For the years ended December 31 2020 2019 1,254,563 1,253,974 266,076 232,016 1,018 986	For the years ended December 31 2020 2019 1,254,563 1,253,974 266,076 232,016 1,018 986
	2020 1,254,563 266,076 1,018
	1,521,657	1,486,976

• (w) Revenue from contracts with customers

• (i) Disaggregation of revenue

Primary geographical markets: Taiwan Major products/services lines: Sales of real estate Other revenue Timing of revenue recognition: Revenue transferred at a point in time Products and services transferred over time	For the years ended December 31 2020 2019 $ 18,157,516 20,373,762 $ 18,074,191 20,299,461 83,325 74,301 $ 18,157,516 20,373,762 $ 83,325 74,301 18,074,191 20,299,461 $ 18,157,516 20,373,762
	$ 18,074,191 83,325
	$ 18,157,516
	$ 83,325 18,074,191
	$ 18,157,516

(Continued)

49

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(ii) Contract balances

Contract balances
Contract liabilities-sales of real estate Contract liabilities-advance receipt Total	December 31, 2020 $ 7,944,933 4,044	December 31, 2019 4,415,748 8,308	January 1, 2019 2,891,226 8,353 2,899,579
	$ 7,948,977	4,424,056

For details on accounts receivable and allowance for impairment, please refer to note 6(d).

The amount of revenue recognized for the years ended December 31, 2020 and 2019. that was included in the contract liability balance at the beginning of the period were $596,524 thousand and $1,762,512 thousand, respectively.

The major change in the balance of contract assets and liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received. There were no other significant changes for the years ended December 31, 2020 and 2019.

(x) Employee compensation and directors' and supervisors' remuneration

In accordance with the articles of incorporation the Company should contribute no less than 0.1%of the profit as employee compensation and less than 1% as directors ’ and supervisors ’ remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The recipients of shares and cash may include the employees of the Company’s affiliated companies who meet certain conditions.

For the years ended December 31, 2020 and 2019, the Company estimated its employee remuneration amounting to $36,000 thousand, and directors ’ and supervisors' remuneration amounting to $7,500 thousand and $8,400 thousand, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in the Company’s articles. These remunerations were expensed under operating costs or operating expenses during 2020 and 2019. Related information would be available at the Market Observation Post System website. The amounts, as stated in the parent company only financial statements, are identical to those of the actual distributions for 2020 and 2019.

(y) Non-operating income and expense

(i) Interest income

The details of interest income were as follows:

(Continued)

50

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(ii) Other income

The details of other income were as follows:

Contract termination income Dividend income Others	For the years ended December 31 2020 2019 $ 10,237 14,377 15,166 4,778 24,982 102,706 $ 50,385 121,861
	2020 $ 10,237 15,166 24,982
	$ 50,385

(iii) Other gains and losses

The details of other gains and losses were as follows:

Foreign exchange losses Losses on disposal of property, plant and equipment Gains on disposal of investment properties Gains (losses) on financial assets (liabilities) at fair value through profit or loss Other expenses	For the years ended December 31 2020 2019 $ - (5) (133) - 112,057 - 44,151 23,559 (19,887) (9,355)	For the years ended December 31 2020 2019 $ - (5) (133) - 112,057 - 44,151 23,559 (19,887) (9,355)
	2020 $ - (133) 112,057 44,151 (19,887)
	$ 136,188	14,199

(iv) Finance costs

The details of finance costs were as follows:

Interest expense Bank loans and collateral Amortization on discounted corporate bond Interest on corporate bond Other finance costs Less: capitalized interest	For the years ended December 31 2020 2019 $ 1,294,091 1,076,833 109,298 117,730 100,183 99,962 14,468 181 (804,689) (611,908)	For the years ended December 31 2020 2019 $ 1,294,091 1,076,833 109,298 117,730 100,183 99,962 14,468 181 (804,689) (611,908)
	2020 $ 1,294,091 109,298 100,183 14,468 (804,689)
	$ 713,351	682,798

(Continued)

51

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• (z) Financial instruments

• (i) Credit risk

  • 1) Credit risk exposure

The financial instrument’s biggest credit risk exposure is the same as the carrying amount of the financial assets.

• 2) Concentration of credit risk

The Company has a vast client base that is not connected; thus, the ability to concentrate the credit risk is limited.

• 3) Receivables and debt securities

For credit risk exposure of note and trade receivables, please refer to note 6(d).

Other financial assets at amortized cost are other receivables (classified as other current financial assets). All these financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected losses.

The loss allowance provisions were determined as follows:

Balance on December 31, 2020(as opening balance) Balance on December 31, 2019(as opening balance)	Other receivables $ 8,235 $ 8,235

• (ii) Liquidity risk

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

Contractual cash flows December 31, 2020 Non derivative financial liabilities: Secured loans $ 59,030,247 Unsecured loans 4,707,850 Short-term investment payables 4,981,300 Other financial liabilities-current 176,268 Convertible bond 10,362,835 Ordinary corporate bonds (current) 14,720,874 Notes payable, accounts payable and other payables 3,428,778 Lease liability 1,450 $ 97,409,602	Contractual cash flows	Within 1 year	1-5 years	Over 5 years 14,989,732 - - - - - 28 -
		4,576,634 4,190,738 4,981,300 - - 7,083,280 3,389,643 1,450	39,463,881 517,112 - 176,268 10,362,835 7,637,594 39,107 -
	$ 97,409,602	24,223,045	58,196,797	14,989,760

(Continued)

52

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

Contractual cash flows December 31, 2019 Non derivative financial liabilities: Secured loans $ 41,607,416 Unsecured loans 8,102,799 Short-term investment payables 2,974,200 Other financial liabilities-current 231,712 Convertible bond 10,640,714 Ordinary corporate bond 9,688,502 Notes payable, accounts payable and other payables 4,800,573 Lease liability 10,308 $ 78,056,224	Contractual cash flows	Within **1year **	1-5 years	Over 5 years 2,870,736 - - - - - 870 -
		8,690,022 4,048,716 2,974,200 - - 100,000 4,742,009 10,308	30,046,658 4,054,083 - 231,712 10,640,714 9,588,502 57,694 -
	$ 78,056,224	20,565,255	54,619,363	2,871,606

The Company does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(iii) Market risk

• 1) Currency risk exposure: None

• 2) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Company’s financial assets and liabilities.

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non-derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.5% when reporting to management internally, which also represents the Company management's assessment of the reasonably possible interest rate change.

’ If the interest rate had increased / decreased by 0.5% basis points, the Company s interest expenses would have increased / decreased by $335,760 thousand and $249,133 thousand for the years ended December 31, 2020 and 2019, with another variable factors remaining constant. Considering that capitalized interest of profit may decrease or increase by $157,779 thousand and $131,387 thousand. This is mainly due to the Company’s borrowing at variable rates.

(Continued)

53

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• 3) Other market price risk

For the years ended December 31, 2020 and 2019, the sensitivity analyses for the changes in the securities price at the reporting date were performed using the same basis for the profit and loss as illustrated below:

Prices of securities at the reporting date Increase 10% Decrease 10%	For the years ended December 31 2020 2019 Comprehensive Income (Loss) (net of tax) Net Income (Loss) (net of tax) Comprehensive Income (Loss) (net of tax) Net Income (Loss) (net of tax) $ 55,314 26,355 55,036 28,773 $ (55,314) (26,355) (55,036) (28,773)	For the years ended December 31 2020 2019 Comprehensive Income (Loss) (net of tax) Net Income (Loss) (net of tax) Comprehensive Income (Loss) (net of tax) Net Income (Loss) (net of tax) $ 55,314 26,355 55,036 28,773 $ (55,314) (26,355) (55,036) (28,773)	For the years ended December 31 2020 2019 Comprehensive Income (Loss) (net of tax) Net Income (Loss) (net of tax) Comprehensive Income (Loss) (net of tax) Net Income (Loss) (net of tax) $ 55,314 26,355 55,036 28,773 $ (55,314) (26,355) (55,036) (28,773)	For the years ended December 31 2020 2019 Comprehensive Income (Loss) (net of tax) Net Income (Loss) (net of tax) Comprehensive Income (Loss) (net of tax) Net Income (Loss) (net of tax) $ 55,314 26,355 55,036 28,773 $ (55,314) (26,355) (55,036) (28,773)
	2020
	Comprehensive Income (Loss) (net of tax) $ 55,314	Net Income (Loss) (net of tax)		Comprehensive Income (Loss) (net of tax) 55,036
		26,355
	$ (55,314)	(26,355)		(55,036)

• (iv) Information of fair value

• 1) Valuation techniques for financial instruments measured at fair value

The fair value of financial assets and liabilities at fair value through profit or loss, and financial assets at fair value through other comprehensive income is measured on a recurring basis. The carrying amount and fair value of the Company’s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

Financial assets at fair value through profit or loss Derivative financial assets Derivative financial assets mandatorily measured at fair value through profit or loss Subtotal Financial assets at fair value through other comprehensive income Stocks in unlisted company Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other financial assets - current Other financial assets - non-current Subtotal		December 31, 2020	December 31, 2020	December 31, 2020	Total 6,816 263,550
	Book Value $ 6,816 263,550		FairValue
		Level 1 - 263,550	Level 2 6,816 -	Level 3 - -
	$ 270,366	263,550	6,816	-	270,366
	$ 553,139	-	555,139	-	555,139
	$ 6,543,049 1,397,316 9,186,064 8,214,252	- - - -	- - - -	- - - -	- - - -
	$ 25,340,681	-	-	-	-

(Continued)

54

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

Financial liabilities measured at amortized cost Short-term loans Short-term investment payables Notes payable, accounts payable and other payables Lease liabilities Other financial liabilities- current Corporate bonds payable (Current portions) Long-term loans (Current portions) Subtotal Financial assets at fair value through profit or loss Derivative financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Stocks in unlisted company Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other financial assets- current Other financial assets- non-current Subtotal Financial liabilities measured at amortized cost Short-term loans Short-term investment payables Notes payable, accounts payable and other payables Lease liabilities Other financial liabilities- current Corporate bonds payable Long-term loans (Current portions) Subtotal		December 31, 2020	December 31, 2020	December 31, 2020	Total - - - - - - -
	Book Value $ 58,184,725 4,976,720 3,428,778 1,442 176,268 24,529,483 3,990,600		Fair Value
		Level 1 - - - - - - -	Level 2 - - - - - - -	Level 3 - - - - - - -
	$ 95,288,016	-	-	-	-
		December 31, 2019			Total 287,726
	Book Value $ 287,726		Fair Value
		Level 1 287,726	Level 2 -	Level 3 -
	$ 550,364	-	550,364	-	550,364
	$ 7,581,341 1,374,376 4,177,236 7,858,341	- - - -	- - - -	- - - -	- - - -
	$ 20,991,294	-	-	-	-
	$ 43,277,303 2,963,851 4,800,573 10,200 231,712 19,738,699 3,585,438	- - - - - - -	- - - - - - -	- - - - - - -	- - - - - - -
	$ 74,607,776	-	-	-	-

(Continued)

55

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• 2) Valuation techniques for financial instruments not measured at fair value

The Company’s valuation techniques and assumptions used for financial instruments not measured at fair value are as follows:

• a) Financial assets measured at amortized cost (debt investment that has no active markets) and financial liabilities measured at amortized cost.

If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values.

• 3) Valuation techniques for financial instruments measured at fair value

• a) Non-derivative financial instruments

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm ’ s-length basis. Whether transactions are taking place ‘regularly’ is a matter of judgment and depends on the facts and circumstances of the market for the instrument.

Quoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

Measurements of fair value of financial instruments without an active market are based on a valuation technique or quoted price from a competitor. Fair value measured by a valuation technique can be extrapolated from similar financial instruments, the discounted cash flow method, or other valuation technique including a model using observable market data at the reporting date.

• b) Derivative financial instruments

Measurement of the fair value of derivative instruments is based on the valuation techniques generally accepted by market participants such as the discounted cash flow or option pricing models. Fair value of forward currency is usually determined by the forward currency exchange rate.

• 4) Transfers between Level 1 and Level 2

Stock held by the Company quoted in an active market is sorted to Level 1. There is no difference regarding valuation techniques between 2020 and 2019. There is no transfer between first and second level measured at fair value in 2020 and 2019.

(Continued)

56

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• (aa) Financial risk management

• (i) Overview

The Company has exposures to the following risks from its financial instruments:

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

The following likewise discusses the Company’s exposure information, objectives, policies and processes for measuring and managing the above mentioned risks.

• (ii) Structure of risk management

The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

• (iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investments in debt securities.

• 1) Account receivable and other receivable

The Company is credit risk is affected by its clients. Accounts receivable generated by selling real estate has a lower credit risk since the payment is completed by the masses with transferring, check, or loans form the bank.

The Company discloses the estimation of accounts receivables’ and other receivables’ loss with allowance for bad debt account. Allowance for bad debt account is composed with specific losses and batch of unrecognized losses components. Unrecognized losses components are determined by historically statistical data from similar financial assets.

• 2) Investments

The exposure to credit risk for the bank deposits, fixed income investments, and other financial instruments is measured and monitored by the Company’s finance department. The Company only deals with banks, other external parties, corporate organizations, government agencies and financial institutions with good credit rating. The Company does not expect any counterparty above fails to meet its obligations hence there is no significant credit risk arising from these counterparties.

(Continued)

57

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

3) Guarantees

The Company’s policy is to provide financial guarantees to subsidiaries that directly or indirectly hold more than 50% of voting shares and companies with business relations. At December 31, 2020 and 2019, the situation about the Company provided guarantees to wholly owned subsidiaries, please refer to note 7(b).

• (iv) Liquidity risk

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

• (v) Market risk

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

• (ab) Capital management

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

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

The Company and other entities in the same industry use the debt-to-equity ratio to manage capital. This ratio is the total net debt divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, and other equity plus net debt.

As of 2020, the Company’s capital management strategy is consistent with the prior year as of 2019. The gearing ratio is maintained so as to ensure an “A” credit rating and ensure financing at reasonable cost. The Company’s debt-to-equity ratio at the end of the reporting period as of December 31, 2020, were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total Equity Total adjusted capital Debt-to-equity ratio	December 31, 2020 $ 104,054,550 (6,543,049)	December 31, 2020 $ 104,054,550 (6,543,049)	December 31, 2019 79,178,582 (7,581,341)
	97,511,501 32,121,924		71,597,241 30,396,294
	$ 129,633,425		101,993,535
		75.22%	70.20%

(Continued)

58

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(7) Related-party transactions:

• (a) Names and relationship with related parties

The following are entities that have had transactions with related parties and the Company’s subsidiaries during the periods covered in the parent company only financial statements.

Name of related party Relationship with the Company Qi Yu Construction Co., Ltd. Subsidiary company Ju Feng Hotel Management Co., Ltd. Subsidiary company Highwealth Property Management Co., Ltd. Subsidiary company Jin Jyun Construction Co., Ltd. Subsidiary company Bo Yuan Construction Co., Ltd. Subsidiary company Guang Yang Investment Co., Ltd. Subsidiary company Yuan Sheng International Co., Ltd. Subsidiary company Quan Xiang Trading (Shanghai) Co., Ltd Subsidiary company Xingfuyu Trading (Xiamen) Co., Ltd. Subsidiary company Run Long Construction Co., Ltd. Subsidiary company Yi Chi Enterprise Co., Ltd. Subsidiary company Bi Chiang Enterprise Co., Ltd. Subsidiary company Highwealth Construction Corp. Subsidiary company Taichung Highwealth Culture and Art Foundation Same president with the Company Tsai ○○ Key management personnel of the subsidiary Fan ○○ Director of the Company Chen ○○ Key management personnel of the Company Lin ○○ Key management personnel of the subsidiary Huang ○○ Family of the key management personnel of the Company

(Continued)

59

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(b) Significant transactions with related parties

• (i) Operating revenue

Significant selling amount to related parties and the remaining balance were as follows:

Chen○○ Fan○○ Lin○○	Recognized revenue in current period For the years ended December 31 2020 2019 $ - - - - - -	Recognized revenue in current period For the years ended December 31 2020 2019 $ - - - - - -	**Advanced **	payment December 31, 2019 - - -
			December 31, 2020 514 952 143
	2020 $ - - -
	$ -	-	1,609	-

• (ii) Purchase

Significant purchasing amount to related parties and the remaining balance were as follows:

Subsidiary: Qi Yu Construction Co., Ltd Jin Jyun construction Co., Ltd Other subsidiaries	Purchasing Accumulated amount For the years ended December 31 2020 2019 2020 2019 $ 7,266,482 3,741,838 11,390,298 6,615,464 2,055,676 2,280,250 5,468,496 3,412,821 58,884 810 58,884 810	Purchasing Accumulated amount For the years ended December 31 2020 2019 2020 2019 $ 7,266,482 3,741,838 11,390,298 6,615,464 2,055,676 2,280,250 5,468,496 3,412,821 58,884 810 58,884 810	Purchasing Accumulated amount For the years ended December 31 2020 2019 2020 2019 $ 7,266,482 3,741,838 11,390,298 6,615,464 2,055,676 2,280,250 5,468,496 3,412,821 58,884 810 58,884 810	Purchasing Accumulated amount For the years ended December 31 2020 2019 2020 2019 $ 7,266,482 3,741,838 11,390,298 6,615,464 2,055,676 2,280,250 5,468,496 3,412,821 58,884 810 58,884 810
	2020	2019	2020
	$ 7,266,482 2,055,676 58,884	3,741,838 2,280,250 810	11,390,298 5,468,496 58,884
	$ 9,381,042	6,022,898	16,917,678	10,029,095

There were no significant difference of the price and conditions for related parties and ordinary contract mentioned above.

• (iii) Receivables from related parties

The details of receivables from related parties were as follows:

Accounted items Categories Accounts receivable Subsidiaries Other receivables (other financial assets-current) Subsidiaries	December 31, 2020 December 31, 2019 $ 2,637 1,185 408 1,273 $ 3,045 2,458

(Continued)

60

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(iv) Payables to related parties

The payables to related parties were as follows:

Accounted items Categories Accounts payable Subsidiaries: Qi Yu Construction Co., Ltd Jin Jyun Construction Co., Ltd 〃 Subsidiaries Other payables Subsidiaries	December 31, 2020 December 31, 2019 $ 1,055,035 888,851 199,391 409,573 59,305 5,412 73,283 8,924
	$ 1,387,014 1,312,760

(v) Contract liabilities

The details of contract liabilities from related parties were as follows:

Categories Subsidiaries	Note	December 31, 2020 $ 1,683	December 31, 2019 1,706
	Unearn rents and administration fees

• (vi) Guarantees

The Company provided guarantees to subsidiary company. As of December 31, 2020 and 2019, the guarantee ceiling was $8,711,917 thousand and $9,740,442 thousand, respectively, and the amount of $4,678,917 thousand and $4,507,442 thousand has been used, respectively.

Subsidiaries provided land for guarantees to the Company. As of December 31, 2020, and 2019, the guarantee ceiling was $1,907,700 thousand, and the amount of $1,907,700 thousand has been used.

• (vii) Others

• 1) The Details of the Company renting offices from related parties is as follows:

Subsidiaries	Guarantee deposit paid December 31, 2020 December 31, 2019 $ 1,614 1,614	Rental expense For the years ended December 31 2020 2020 15,817 9,238
	December 31, 2020 $ 1,614
		2020 15,817

• 2) Recognizing rental revenue due to renting offices to related parties:

Subsidiaries	Guarantee deposit received December 31, 2020 December 31, 2019 $ 956 776	Rental Revenue For the years ended December 31 2020 2020 9,303 9,221
	December 31, 2020 $ 956
		2020 9,303

(Continued)

61

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

• 3) Recognizing other income due to signing entrusted administration contract with related parties:

Subsidiaries	For the years ended December 31 2020 2019 $ 3,356 9,513
	2020 $ 3,356

• 4) Paying consulting and service fee to related parties for selling real estate on consignment:

Subsidiary company－Ju Feng Hotel Management Co., Ltd. Subsidiaries	For the years ended December 31 2020 2019 $ 84,428 80,795 - 1,122 $ 84,428 81,917
	2020 $ 84,428 -
	$ 84,428

• 5) Paying administration expense to related parties for administrating constructing site:

	For the years ended	December 31
	2020	2019
Subsidiaries	$ -	6,175
The related expense about selling activities with related parties as follows:
	For the years ended	December 31
	2020	2019
Subsidiaries	$ 66,564	2,467

• 6) The related expense about selling activities with related parties as follows:

• 7) As of December 31, 2020, and 2019, cooperation cases with related parties were as follows:

Case Name December 31, 2020 Buo Shao Section Buo Shao Section Guo Mao Section Hui An Fourth 〃	Categories Landowner-subsidiary company-Yeh Kee Enterprise Co., Ltd. Landowner-subsidiary company-Bijiang Enterprise Co., Ltd Builder-subsidiary company-Run Long Construction Co., Ltd. Builder-subsidiary company-Run Long Construction Co., Ltd. 〃	Type Cooperation cases Cooperation cases Cooperation cases Cooperation cases 〃	Security Refundable deposit $240,000 Refundable deposit 127,500 Guarantee deposit 50,000 Guarantee deposit 100,000 Guarantee deposit 200,000

(Continued)

62

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

Case Name December 31, 2019	Categories Landowner-subsidiary company-Yeh Kee Enterprise Co., Ltd. Landowner-subsidiary company-Bijiang Enterprise Co., Ltd Builder-subsidiary company-Run Long Construction Co., Ltd. Builder-subsidiary company-Run Long Construction Co., Ltd.	Type Cooperation cases Cooperation cases Cooperation cases Cooperation cases	Security Refundable deposit $160,000 Refundable deposit 125,000 Guarantee deposit 100,000 Guarantee deposit 100,000
Buo Shao Section Buo Shao Section Guo Mao Section Hui An Fourth

The project of Guo Mao case had been completed and exchanged land for building with the subsidiary during 2020. As of December 31, 2020, the procedure is processed in accordance with the joint construction.

• 8) Performance bond received from related parties for contract work:

Subsidiaries	December 31, 2020 $ 79,259	December 31, 2019 114,199

• 9) In September, 2008, the Company sold a portion of land to Mr. Tsai, ○○ with a land developing plan at 5 million dollars, recognized as other payables. The Company would repurchase the land without any interest if the plan was not completed within three years. Both parties agreed lengthening the expiry date unconditionally indefinitely. As of December 31, 2020, and 2019, other payables are both 5 million dollars.

• 10) The Company sold its premises to other related parties at the amount of $19,667 thousand in 2019.

• 11) The Company acquired 73,700 thousand shares of common stocks of Bo Yuan Construction Co., Ltd. from its subsidiary, Qi Yu Construction Co., Ltd., for $930,000 thousand. As of December 31, 2020, transactions were entirely completed.

• 12) In 2020 and 2019, the Company bought gift certificates from Bo Yuan Construction Co., Ltd., for $4,344 thousand and $3,345 thousand respectively.

• 13) In 2019, the Company donated $5,000 thousand to Taichung Highwealth Culture and Art Foundation for its promotion and development.

• (c) Key management personnel transactions

Short-term employee benefits	For the years ended December 31 2020 2019 $ 59,726 67,660
	2020
	$ 59,726

(Continued)

63

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(8) Pledged assets:

Pledged assets:
Pledged assets	Object	December 31, 2020 $ 180,000 75,293,967 16,645,841 1,006,139 378,931 3,830,506 722,922	December 31, 2019 171,900 57,501,802 11,348,263 1,298,617 832,318 3,974,571 -
Financial assets at FVTPL Inventories (construction) Other financial assets- current and non-current Investment accounted for using equity method Property, plant and equipment Investment property at net value	Mortgage Mortgage, issuing commercial paper and bonds payable Mortgage, issuing commercial paper, performance bond, real estate trust account, and bonds payable Mortgage Mortgage and bonds payable Mortgage, issuing commercial paper, and bonds payable
		$ 98,058,306	75,127,471

As of December 31, 2020, and 2019, the book value of pledged assets providing undrawn guaranteed loan are $3,394,004 thousand and $6,417,486 thousand, respectively.

(9) Commitments and contingencies:

• (a) Unrecognized contractual commitments

• (i) Contract price signed with clients were as follows:

Contract price signed with clients were as follows:
Amount of signed contracts Received amount from contracts Outstanding checks received from presale cases	December 31, 2020 $ 74,518,819	December 31, 2019 49,108,132
	$ 7,944,933	4,415,748
	$ 3,929,998	2,551,904

(ii) Unrecognized commitments generated by signing contracts for purchasing land for construction, building bulk, and investment properties are as follows:

Acquisition of inventory (construction)	December 31, 2020 $ -	December 31, 2019 4,543,329

(iii) As of December 31, 2020, the Company had not recognized the transaction of sale-and-leaseback, and the total amount expects to pay in the future is $163,512 thousand, and the expected rent term is January 1, 2021 to July 2026.

(Continued)

64

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(b) Others

As of December 31, 2020, and 2019 the refundable deposit paid for cooperation cases are $454,149 thousand and $424,642 thousand, respectively.

(10) Losses Due to Major Disasters: None

(11) Subsequent Events:

On March 19, 2021, the board of directors approved the donation of 712,500 thousand shares, and amounting $548,139 thousand of Lee Shuo Investment Co., Ltd. held by the company to other related parties – Taichung Highwealth and Art Foundation.

(12) Other:

A summary of current-period employee benefits, depreciation, and amortization, by function, were as follows:

By function By item	For the year ended December 31	For the year ended December 31	For the year ended December 31	For the year ended December 31	For the year ended December 31	For the year ended December 31
	2020			2019
	Operating cost	Operating Expense	Total	Operating cost	Operating Expense	Total
Employee benefits
Salary	$ -	327,880	327,880	-	330,028	330,028
Labor and health insurance	-	21,846	21,846	-	21,994	21,994
Pension	-	10,785	10,785	-	10,173	10,173
Remuneration of directors	-	16,513	16,513	-	16,783	16,783
Others	-	-	-	-	-	-
Depreciation	40,625	35,568	76,193	38,234	31,418	69,652
Depletion	-	-	-	-	-	-
Amortization	-	4,859	4,859	-	3,929	3,929

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

Number of employees Number of directors who were not employees The average employee benefit The average salaries and wages Percentage of average employee salary expense Remuneration to supervisors	2020 313	2020 313	2019 322 4 1,139 1,038 -
	4
	$ 1,167
	$ 1,061
	2.22% $ -	2.22%

(Continued)

65

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

The items of the Company’s salary and remuneration of directors, independent director, managers, and employees are as follows:

• (a) Independent directors

• (i) Regardless of the Company’s profit or loss, independent directors’ salary and remuneration need to be paid on monthly basis (or quarterly, half yearly) and be adjusted according to the value of his/her participation in the contribution to Company’s operation.

• (ii) The independent directors cannot participate in the distribution of director's compensation and other bonus distribution.

• (iii) According to the needs of the actual execution of the business, the Company has to pay for the traffic allowance.

• (b) Other directors

• (i) The Company pays other directors ’ remuneration, according to the value of his/her participation in the contribution to Company’s operation and refer to peer remuneration levels.

• (ii) Other directors’ remuneration is allocated at a rate specified in the Company’s articles of incorporation.

• (iii) According to the needs of the actual execution of the business, the Company has to pay for the traffic allowance.

• (c) Managerial officer

• (i) The monthly fixed salary is determined by salary level of each rank.

• (ii) According to the result of the operation performance assessment, the Company distributes the performance bonus.

• (iii) Year-end bonuses will be paid based on the results of employee performance appraisal.

• (iv) Employees’ remuneration is allocated at a rate specified in the Company’s articles of incorporation.

• (v) Traffic allowance and supervisor allowance are paid in accordance to duties and standards.

• (d) Other employees

• (i) The salary of the Company’s employees is handled in accordance with the regulations of the “post ranks table” and “post salary benchmark table”. The employee salary is divided into recurring and non-recurring salaries.

• (ii) Recurring salaries include basic salaries, duties allowance, construction site allowance, professional allowance, meal allowance and other allowances.

• (iii) Non-recurring salaries include overtime pay, Dragon Boat Festival bonus, Mid-Autumn Festival bonus and year-end bonus.

(Continued)

66

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions:

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

• (i) Loans to other parties: None

• (ii) Guarantees and endorsements for other parties:

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationshi p with the Company
0	The company	Qi Yu Constructio nCo.,Ltd	2	$ 32,121,924	7,846,000	7,546,000	4,113,000	-	23.49%	64,243,848	Y	N	N
0	The company	Bo Yuan Constructio nCo.,Ltd	2	32,121,924	1,086,788	965,917	465,917	-	3.01%	64,243,848	Y	N	N
0	The company	Yuan Sheng Intern. Co., Ltd	2	32,121,924	200,000	200,000	100,000	-	0.62%	64,243,848	Y	N	N
1	Yi Chi Enterprise Co.,Ltd	The company	3	32,121,924	1,907,700	1,907,700	1,907,700	1,907,700	5.94%	64,243,848	N	Y	N
2	Run Long Construction Co.,Ltd.	Jin Jyun Constructio nCo.,Ltd.	2	1,014,187	200,000	-	-	-	- %	2,535,468	Y	N	N
3	Qi Yu Construction Co., Ltd	Goyu Building Materials Co.,Ltd	6	32,121,924	42,000	42,000	3,500	-	0.13%	64,243,848	N	N	N
3	Qi Yu Construction Co., Ltd	Yuan Sheng Intern. Co., Ltd	2	32,121,924	100,000	100,000	39,992	-	0.31%	64,243,848	Y	N	N

Note 1: The numbering is as follows:

• 1.“0” represents the parent company.

• Subsidiaries are sequentially numbered from 1 by company.

Note 2: The relationship between the guarantee and the guarantor are as follows:

1. Transactions between the companies.

2. The Company directly or indirectly holds more than 50% voting right.

3. When other companies directly or indirectly hold more than 50% voting rights of the Company.

4. The Company directly or indirectly holds more than 90% voting right.

5. A company that is mutually protected under contractual requirements based on the needs of the contractor.

6. A company that is endorsed by all the contributing shareholders in accordance with their shareholding ratio due to joint investment relationship.

7. Under the Consumer Protection Act, performance guarantees for pre-sale contracts for companies in the same industry.

8. Note 3: The Company, Yi Chi Enterprise Co., Ltd. and Qi Yu Construction Co., Ltd. endorsed the operation method for the total amount of guarantees and the limit for endorsement of a single enterprise:

9. The total amount of guarantee for external endorsement shall not exceed 200% of the net value of the company.

10. The guarantee amount for a single enterprise endorsement shall not exceed 100% of the current net value of the company.

11. Note 4: Run Long Construction Co., Ltd. endorsed the operation method for the total amount of guarantee s and the limit for endorsement of a single enterprise;

12. The total amount of guarantee for external endorsement shall not exceed 50% of the net value of Run Long Construction Co., Ltd.

13. The guarantee amount for a single enterprise endorsement shall not exceed 20% of the current net value of Run Long Construction Co., Ltd.

(Continued)

67

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

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

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company	Stock-Li Shuo Investment Co., Ltd.	-	Total non-current financial assets at fair value through other comprehensive income	712,500	$ 548,139	19.00%	548,139
〃	Stock-Shin Kong Real Estate Management Co., Ltd.	-	Total non-current financial assets at fair value through other comprehensive income	500,000	5,000	1.67%	5,000
〃	Stock- Da-Li Development Co., Ltd.	-	Financial assets at fair value through profit or loss-current	8,785,010	263,550	2.31%	263,550
Ju Feng Hotel Management Co., Ltd	Stock- Highwealth Construction Corp.	Ultimate Parent Company	Total non-current financial assets at fair value through other comprehensive income	4,578,348	209,917	0.36%	209,917
Highwealth Real Estate Co., Ltd.	Stock- Highwealth Construction Corp.	Ultimate Parent Company	Total non-current financial assets at fair value through other comprehensive income	8,849,291	405,740	0.69%	405,740
Qi Yu Construction Co., Ltd	Stock- Highwealth Construction Corp.	Ultimate Parent Company	Total non-current financial assets at fair value through other comprehensive income	2,744,601	125,840	0.21%	125,840
〃	Corporate bond- China Rebar Co., Ltd.	-	Financial assets at amortized cost-current	3	-	- %	-	Note
Run Long Construction Co., Ltd.	Stock-Highwealth Construction Corp.	Ultimate Parent Company	Financial assets at fair value through other comprehensive income-current	13,145,000	602,698	1.02%	602,698

Note: Recognized as impairment loss.

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: None

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

Name of company	Name of property	Transaction date	Transaction amount	Status of payment	Counter-party	Relationship with the Company	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	References for determining price	Purpose of acquisition and current condition
							Owner	Relationship with the Company	Date of transfer	Amount
The Company	Hui Guo Section	Febryart 26, 2020	8,375,890	8,375,890	Da○Co., Ltd.	not related parties	-	-	-	-	Open tender	Construction
〃	Shizheng Huimin Second	March 3, 2020	4,356,155	4,356,155	Mr. Yang, other 7 people, and Jiu○ Constrution, Co.,Ltd.	〃	-	-	-	-	Appraisal	〃
〃	Hui Guo Section	August 5, 2020	3,220,262	3,220,262	Mr. Chang and other 2 people	〃	-	-	-	-	〃	〃
〃	Zhong road fifth	September 8, 2020	2,490,499	2,490,499	Mr. Huang, other 13 people and Kao○ trading Co., Ltd.	〃	-	-	-	-	〃	〃
Run Long Construction Co., Ltd.	Guang Wu Section, Hsinchu	March 3, 2020	1,981,707	65,000	Kao○ trading Co., Ltd Mr. Chang, and other3 people	〃	-	-	-	-	〃	〃

Note: The transaction amount includes the right and interests of applying for a license.

(Continued)

68

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

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

Name of company	Type of property	Transaction date	Acquisition date	Book value	Transaction amount	Amount actually receivable	Gain from disposal	Counter-party	Nature of relationship	Purpose of disposal	Price reference	Other terms
The Company s	Buildings and Land held for ale	January 10, 2020	July 19, 2016	3,412,167	5,235,116		About 1,790 million	Yea○Inten. Development Co., Ltd, New○ Development Co., Ltd and Hi○Inter. Development Co.,Ltd	Unrelated party	Business purpose	Appraisal	None
The Company I p p p e	nvestment roperties, roperty, lant, and quipment	December 24, 2020	Not applicable	445,739	1,246,370		About 6335 million (Note 2)	Taiwan Life Insurance Co., Ltd.	〃	Business purpose	Appraisal	Sold then lease back
Qi Yu Construciton Co.,Ltd P a	roperty, plant nd equipment	December 24, 2020	Decenber 25, 2015	1,186,501	1,220,800		(164,144) (Note 3)	Taiwan Life Insurance Co., Ltd.	〃	Earning profit	Appraisal	〃
Run Long Construction Co., Ltd. B L s	uildings and and held for ale	September 2,2020	Not applicable	Due to sold of inventories, not appplicable	736,380		Due to sold of inventories, not appplicable	Trans Globe Life Insunace Co., Ltd.	〃		〃	None
Run Long Construction Co.,Ltd. P a	roperty, plant nd equipment	December 24, 2020	Decenber 25, 2015	1,187,386	1,221,710		(165,479) (Note 3)	Taiwan Life Insurance Co., Ltd.	〃		〃	Sold then lease back

Note 1: The necessary costs and expenses for disposal have been deducted.

Note 2: Include the unrealized gains or losses of $16.36 million.

Note 3: In 2020, the losses have been recognized and accounted for other gains and losses.

• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of company	Related party	Nature of relationship		Transactiondetails	Transactiondetails		Transaction differentf	s with terms romothers	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company	Qi Yu Construction Co., Ltd	Investee accounted for using equity method of the company	Contracting project	$ 7,266,482	21.27%	Pay by contract terms	-	-	(1,055,035)	(61.64)%	Note 2
The Company	Jin Jyun Construction Co., Ltd	Investee accounted for using equity method of the company	Contracting project	2,055,676	6.02%	Pay by contract terms	-	-	(199,391)	(11.65)%	Note 2
Qi Yu Construction Co., Ltd	The Company	The ultimate parent of the company	Contracted project	(6,478,224)	(72.69)%	Receive by contract terms	-	-	1,055,035	75.50%	Note 1
Qi Yu Construction Co., Ltd	Run Long Construction Co., Ltd	Investee accounted for using equity method of the company	Contracted project	(2,373,024)	(26.63)%	Receive by contract terms	-	-	531,969	33.32%	Note 1
Run Long Construction Co., Ltd	Qi Yu Construction Co., Ltd	Investee accounted for using equity method of the company	Contracting project	2,619,754	30.60%	Pay by contract terms	-	-	(531,969)	(41.33)%	Note 2
Run Long Construction Co., Ltd	Jin Jyun Construction Co., Ltd	Investee accounted for using equity method of the company	Contracting project	1,117,126	13.05%	Pay by contract terms	-	-	(284,628)	(22.11)%	Note 2
Qi Yu Construction Co., Ltd	The Company	The ultimate parent of the company	Contracted project	(2,173,880)	(42.18)%	Receive by contract terms	-	-	199,391	14.27%	Note 1
Jin Jyun Construction Co., Ltd	Run Long Construction Co., Ltd	Investee accounted for using equity method of the company	Contracted project	(1,442,394)	(27.99)%	Receive by contract terms	-	-	284,628	50.84%	Note 1

(Continued)

69

HIGHWEALTH CONSTRUCTION CORP. Notes to the Parent Company only Financial Statements

Name of company	Related party	Nature of relationship		Transacti	ondetails		Transaction differentf	s with terms romothers	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
Yuan Sheng International Co., Ltd.	The Company	The ultimate parent of the company	Contracted project	(159,656)	(72.02)%	Receive by contract terms	-	-	74,566	57.90%	Note 1

Note 1: The contracted company recognizes its construction revenue through percentage of completion method, and the amount of sales included.

Note 2: The contracting company records its import price through estimates of amount of purchase through number of trials.

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

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
Qi Yu Construction Co., Ltd	The company	The ultimate parent of the company	1,055,035	6.67	-	-	1,054,975	-
〃	Run Long Construction Co., Ltd	Investee accounted for using equity method of the company	531,969	5.39	-	-	326,732	-
Jin Jyun Construction Co., Ltd	The company	The ultimate parent of the company	199,391	7.14	-	-	183,014	-
〃	Run Long Construction Co., Ltd	Investee accounted for using equity method of the company	284,628	6.83	-		284,628	-

• (ix) Trading in derivative instruments: None

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2020 (excluding information on investees in Mainland China):

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31,2020	Balance as of December 31,2020	Balance as of December 31,2020	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31,2020	December 31,2019	Shares (thousands)	Percentage of ownership	Carrying value
The Company	Ju Feng Hotel Management Co.,Ltd	Taiwan	Residential and building development,rental and sales	$ 12,000	12,000	1,200,000	100.00%	29,449	4,690	(3,634)
〃	Highwealth Property Management Co.,Ltd.	Taiwan	Real estate brokerage, real estate trading	25,000	25,000	2,500,000	100.00%	53,318	15,479	378
〃	Qi Yu Construction Co., Ltd	Taiwan	Construction, housing and building development rental services etc.	1,530,041	1,530,041	205,000,000	100.00%	1,553,351	8,147	5,004
〃	Run Long Construction Co., Ltd.	Taiwan	Environmental protection technology, real estate development, rental and sales industries,etc.	861,910	779,424	21,153,600	5.72%	(588,202)	117,248	(12,296)
〃	Yi Chi Enterprise Co., Ltd.	Taiwan	Residential and building development, rental services, etc.	2,423,152	2,423,152	2,200,000	100.00%	2,436,161	(1,131)	(1,131)
〃	Bi Chiang Enterprise Co., Ltd.	Taiwan	Residential and building development, rental services, etc.	1,302,900	1,302,900	7,200	100.00%	1,264,737	(33,880)	(33,880)
〃	Highwealth Construction Corp.	Taiwan	Residential and building development, rental services, etc.	5,000	5,000	500,000	100.00%	1,302	(1,720)	(1,720)
〃	Bo Yuan Construction Co., Ltd	Taiwan	Residential and building development, rental services, etc.	930,000	930,000	73,700,000	100.00%	541,710	(429,713)	(429,713)
Qi Yu Construction Co.,Ltd.	Guang Yang Investment Co.,Ltd.	Taiwan	Investment	284,050	284,050	29,900,000	100.00%	327,698	6,630	Expempt from disclosure
〃	Yuan Sheng International Co.,Ltd.	Taiwan	Wholesale of Building Materials	78,484	78,484	8,100,000	100.00%	140,110	8,425	〃
〃	Run Long Construction Co., Ltd.	Taiwan	Environmental protection technology, real estate development, rental and sales industries,etc.	803,226	803,226	18,572,400	5.02%	253,598	117,248	〃
Qi Yu Construction Co.,Ltd.	Goyu Building Material Co.,Ltd	Taiwan	Wholesale of Building Materials	140,000	98,000	14,000,000	35.00%	128,595	(13,585)	〃
Guang Yang Investment Co., Ltd.	Run Long Construction Co., Ltd.	Taiwan	Environmental protection technology, real estate development, rental and sales industries,etc.	428,405	398,063	20,792,415	5.62%	327,634	117,248	〃
Run Long Construction Co., Ltd.	Jin Jyun Construction Co., Ltd.	Taiwan	Construction, housing and building development rental services etc.	518,300	518,300	50,000,000	100.00%	619,822	143,791	〃

(Continued)

70

HIGHWEALTH CONSTRUCTION CORP.

Notes to the Parent Company only Financial Statements

(c) Information on investment in mainland China:

• (i) The names of investees in Mainland China, the main businesses and products, and other information:

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2019	Investmentflows	Investmentflows	Accumulated outflow of investment from Taiwan as of December 31, 2020	Net income (losses) of the investee	Percentage of ownership	Investment income (losses) (Note2)	Book value	Accumulated remittance of earnings in current period
					Outflow	Inflow
Chuan Xiang Commercial Co.	Construction material, furniture, metalparts	26,555 USD 900,000	(Note 1)	26,555 USD 900,000	-	-	26,555 USD 900,000	(443)	100.00%	(443)	1,704	-
Shin Fu Yu Commercial Co.	Construction material wholesale	27,104 USD 900,000	(Note 1)	27,104 USD 900,000	-	-	27,104 USD 900,000	(155)	100.00%	(155)	1,571	-

==> picture [240 x 11] intentionally omitted <==

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

(ii) Limitation on investment in Mainland China:
----- End of picture text -----

Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
53,659 (USD1,800,000)	53,659 (USD1,800,000)	19,273,154 (Note)

Note 1: Three types of investment method are as follows:

1. Directly investing in the mainland area

2. Investing in the mainland through companies in another country (Please note the name of the investing company from the other country)

3. Other methods

Note 2: Profit and loss recognized from investment for the current period:

  1. If it is in preparation, and has no investment profit or loss, it should be noted

  2. The basis for profit or loss from investment are as follows:

  - A. The international accounting firm which has cooperative relationships with the CPA in the Republic of China verifies its financial statements

  - B. Financial statement of the parent company is verified by the Taiwanese accountant

  - C. Others

• (iii) Significant transactions: None

• (d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Xing Ri-Sheng Investment Co., Ltd	98,837,849	7.76%
Ear Winner Investment Co., Ltd	78,938,890	6.11%

(14) Segment information:

Please refer to the consolidated financial statements.

71

Highwealth Construction Corp.

Statement of cash and cash equivalents

December 31, 2020

(Expressed in thousands of New Taiwan Dollar)

Item Cash and petty cash Bank deposit Demand deposit Checking deposit Foreign currency deposit	Summary Amount $ 3,862 6,533,058 456 USD166,008.35 and HKD16.29 5,673 6,539,187 $ 6,543,049

72

Highwealth Construction Corp.

Statement of inventories

December 31, 2020

(Expressed in thousands of New Taiwan Dollar)

Item Land for construction Construction in progress	Summary Hui Guo Section Fu Xing North Sui Zheng Huimin Second Zhoun road fifth Others Less: Allowance to reduce inventory to market Wuri High Speed Rail Tan Hai fifth Ching sheng second Bai Lun Section San Kuai Cuo Section Shan Jie Section Hui Li Section Guang Wu Section Fong Kong section Hui Shun Second Hui An Fourth Yong Tsui section An Kong section Xin zhuang Section Ching Xi Section Hui An Third Xi Tun Section Fu Shan Section Liu He Section Shin Do Section Others Less: Allowance to reduce inventory to market	Amount Note $ 11,641,791 5,072,276 4,354,137 2,494,600 1,030,656 (23,315) 24,570,145 6,006,609 5,493,159 4,271,574 4,224,415 3,127,347 3,105,822 3,066,279 3,002,636 2,976,222 2,757,976 2,561,593 2,478,439 2,382,616 1,977,968 1,885,236 1,874,981 1,786,296 1,333,932 1,293,890 1,176,244 5,840,859 (493) 62,623,600

73

Highwealth Construction Corp.

Statement of inventories (CONT’D)

December 31, 2020

(Expressed in thousands of New Taiwan Dollar)

Item Real estate for sale Total	Summary Yong Tsui Section Long Fu Section Guo Mao Section Long Zhoug Sixth Jin Tai Ninth Kangning three section Hui Shun Section Henan Hui Min Hui Shun Section Jin Hua Section Dong Shi First Long Fu Section Long Zhong Fifth Others Less: Allowance to reduce inventory to market

74

Highwealth Construction Corp.

Statement of other receivables

December 31, 2020

(Expressed in thousands of New Taiwan Dollar)

Item Bank deposit Refundable deposit for construction Others	Summary Bank accounts for real estate value trust services, reserve accounts, certificates of deposit and etc. Guarantee deposit for cooperating construction and etc. Interest receivable and other receivables	Amount Note $ 8,433,612 619,471 132,981 $ 9,186,064

Statement of other non-current financial assets

Item Bank deposit Refundable deposit	Summary Reserve accounts for corporation bonds Guarantee deposit of rental, guarantee deposit of office and etc.	Amount Note $ 8,212,229 2,023 $ 8,214,252

75

Highwealth Construction Corp.

Statement of changes in investments accounted for

using the equity method

December 31, 2020

(Expressed in thousands of New Taiwan Dollar)

Entity Ju Feng Hotel Managment Consultant Co., Ltd Highwealth Real Estate Co., Ltd. Chyi Yuh Construction Co., Ltd Run Long Construction Co., Ltd Bo Yuan Construction Co., Ltd Yeh Kee Enterprise Co., Ltd. Bijiang Enterprise Co., Ltd Shin Fu Yu Commercial Co. Chuan Xiang Commercial Co. Highwealth Construciton Co. Total	Balance o	n 2	January 1, 019 Amount $ 36,686 61,930 1,694,299 (587,920) 975,454 2,437,292 1,298,617 1,701 2,121 3,022 $ 5,923,202	Increase in current period (note 1) Shares Amount - 8,324 - 16,467 - 11,255 4,882 107,952 - - - - - - - 25 - 26 - - 144,049	Decrease period	in current (note 2) Amount (15,561) (25,079) (152,203) (108,234) (433,744) (1,131) (33,880) (155) (443) (1,720) (772,150)	Balance	on December 31, 2019 Percentage of voting interest Amount % 100.00 29,449 % 100.00 53,318 % 100.00 1,553,351 % 5.72 (588,202) % 100.00 541,710 % 100.00 2,436,161 % 100.00 1,264,737 % 100.00 1,571 % 100.00 1,704 % 100.00 1,302 5,295,101	Market price or total equity amount Price per share Total amount Details of collateral Note 199.34 239,203 None 183.60 459,004 〃 15.47 3,171,734 〃 13.71 290,058 〃 7.35 541,710 〃 53.56 117,833 〃 (4,948.57) (34,640)Borrowings - 1,571 None - 1,704 〃 2.60 1,302 〃 4,789,479
	Shares			Shares - - - 4,882 - - - - - -	Shares - - - - - - - - - -		Shares 1,200 2,500 205,000 21,154 73,700 2,200 7 - - 500	Percentage of voting interest % 100.00 % 100.00 % 100.00 % 5.72 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	Price per share 199.34 183.60 15.47 13.71 7.35 53.56 (4,948.57) - - 2.60
	1,200 2,500 205,000 16,272 73,700 2,200 7 - - 500

Note 1: Increase in current period due to investment income recognized under equity method $5,382 thousands, deferred credits $1,556 thousands, acquisition cost $82,485 thousands, and adjusting capital surplus due to distributing cash dividend to subsidiaries $53,304 thousands,equity change in subsidiaries $5 thousands, and recognized comprehersive profit or loss for subsidiaries using equity method of $1,307 thousand.

Note 2: Decrease in current period due to investment loss recognized under equity method $482,972 thousands, cash dividend received $206,293 thousands, deferred credits $330 thousands, adjusting retained earnings with the difference of prices of acquiring subsidiary company and carrying amount $79,797 thousands and changes of voting interest percentage resulting in regarding subsidiary company purchasing parent company stock as treasury stock $2,758 thousands.

76

Highwealth Construction Corp.

Statement of short-term borrowings

December 31, 2020

(Expressed in thousands of New Taiwan Dollar)

Type of borrowings Short-term loan 〃 〃 〃 〃 〃 〃 〃 〃 Mortgage 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	Ending balance $ 1,500,000 1,000,000 1,000,000 200,000 100,000 150,000 500,000 150,000 33,333 12,459,000 1,741,000 642,655 2,093,000 600,000 673,000 532,000 1,165,000 1,471,000 1,907,700 1,815,500 450,000 484,500 1,437,200 114,867 1,984,000 1,359,000 1,290,000 440,370 1,354,000 4,200,000 588,361 1,708,084 500,000 531,000 114,100 700,000 164,789 1,721,000 623,990 4,839,362 1,740,000 146,735 160,179 1,800,000 $ 58,184,725	Contract period 2019.09.25~2021.10.28 2019.10.28~2021.10.28 2020.10.27~2021.10.26 2020.01.16~2021.10.26 2020.12.09~2021.12.09 2020.01.31~2021.01.31 2020.09.11~2023.09.10 2020.08.15~2021.08.14 2020.07.12~2021.07.12 2020.02.25~2026.05.26 2018.08.31~2023.08.31 2017.06.05~2022.06.05 2019.06.12~2024.06.12 2017.11.24~2022.11.24 2019.01.08~2024.01.08 2017.02.20~2022.02.20 2019.10.23~2024.10.23 2019.07.15~2024.07.15 2018.04.09~2023.04.09 2016.11.15~2023.03.06 2015.03.03~2022.03.03 2016.07.21~2021.07.21 2017.08.10~2022.08.10 2020.07.12~2021.07.12 2020.11.27~2025.11.27 2019.08.09~2027.12.01 2019.03.25~2024.03.25 2017.03.01~2022.03.01 2020.12.19~2021.10.19 2019.08.19~2026.08.19 2013.05.10~2025.05.10 2017.03.01~2022.03.01 2019.08.19~2026.08.19 2019.07.01~2026.08.19 2019.10.25~2022.10.25 2020.03.24~2025.12.31 2020.04.06~2022.04.06 2019.10.25~2022.10.25 2020.04.27~2021.04.27 2020.09.01~2025.09.01 2020.10.21~2025.10.21 2020.02.26~2021.02.26 2020.09.17~2021.09.17 2019.07.01~2024.07.01	Range of interest rates Mortgages Notes Note 2 - 〃 - 〃 - 〃 - 〃 - 〃 - 〃 - 〃 - 〃 - 〃 Land for Construction and Land in Coustruction 〃 Land in Coustruction 〃 Real estate for sale 〃 Land in Coustruction 〃 Land in Construction 〃 Land in Coustruction 〃 Land in Coustruction 〃 Land in Coustruction 〃 Land in Coustruction 〃 Real estate for sale 〃 Land in Coustruction 〃 Land in Coustruction 〃 Land in Coustruction 〃 Land in Coustruction 〃 Stock and Real estate for sale 〃 Land for Construction 〃 Land in Construction 〃 Land in Coustruction 〃 Land in Construction 〃 Land in Construction 〃 Land for Construction 〃 Land in Coustruction 〃 Land in Coustruction 〃 Land for Coustruction 〃 Real estate for sale 〃 Land in Coustruction 〃 Land for Coustruction 〃 Real estate for sale 〃 Land in Coustruction 〃 Inrestment property 〃 Land in Coustruction and Real estate for sale 〃 Land in Coustruction 〃 Real estate for sale 〃 Real estate for sale 〃 Land in Coustruction

Note 1: All the money is borrowed from the bank.

Note 2: The range of interest rate is 1.245% 〜 2.00%.

77

Highwealth Construction Corp.

.Statement of bonds payable

December 31, 2020

(Expressed in thousands of New Taiwan Dollar)

Name of bonds Corporate bonds first Corporate bonds second Corporate bonds third Corporate bonds fourth Convertible bonds fifth Corporate bonds sixth Corporate bonds seventh Less:Redeemble bonds due within one year	Trustee Land Bank of Taiwan Land bank of Taiwan Land bank of Taiwan Jin Sun International bank Land Bank of Taiwan Land Bank of Taiwan Jin sun International	Date of issuance 2016.04.12 2016.04.12 2016.11.29 2018.05.28 2017.06.08 2020.12.30 2020.12.30	Date of interest paid Yearly Yearly Yearly Yearly - Yearly Yearly	Interest rate % 1.15 % 1.15 % 1.00 % 0.90 % - % 0.53 % 0.53 % -			Amount		Carrying amount 2,988,268 1,993,581 1,999,628 2,488,545 10,114,500 2,967,009 1,977,952 (6,981,477) 17,548,006	Method for repayment Details of collateral Paid at maturity Other financial assets, investment property, and real estate for sale Paid at maturity Other financial assets, property, plant, and equipment, investment property, and real estate for sale Paid at maturity Other financial assets and real estate for sale Paid at maturity Other financial assets, investment property, and real estate for sale Paid at maturity at 106.4082% Other financial assets, investment property, and real estate for sale Paid at maturity Other financial assets,and Land in construction Paid at maturity Other financial assets, and real estate for sale Paid at maturity
					Total amount of issuance $ 3,000,000 2,000,000 2,000,000 2,500,000 10,577,820 3,000,000 2,000,000 (7,000,000) $ 18,077,820	Amount converted - - - - (277,985) - - - (277,985)	Balance on December 31,2019 3,000,000 2,000,000 2,000,000 2,500,000 10,299,835 3,000,000 2,000,000 (7,000,000) 17,799,835	Amount unamortized (11,732) (6,419) (372) (11,455) (185,335) (32,991) (22,048) 18,523 (251,829)

78

Highwealth Construction Corp.

Statement of prepayments

December 31, 2020

(Expressed in thousands of New Taiwan Dollar)

Item Advance real estate receipts Subtotal Advance receipts- rent Advance receipts, other	Summary Bai Lun Section Guang Wu Section Wuri High Speed Rail Xin Zhuang Section San Kuai Cuo Section Shan Jie Section Hui Li Section Guo Mao Section Jin Tai ninth Fong Gung. section Yong Tsui section Bo Xiao Phase II Hui An Third Yu Guang 891 Hui An Fourth Others	Amount Note $ 1,336,431 983,683 817,182 615,568 548,657 547,155 334,706 332,466 325,138 302,659 272,073 248,459 199,727 182,195 158,792 740,042 7,944,933 3,091 953 $ 7,948,977

79

Highwealth Construction Corp.

Statement of operating revenue

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollar)

Item Land revenue Building revenue Rental revenue Total	Amount Note $ 12,817,032 5,257,159 83,325 $ 18,157,516

Statement of operating costs

Item Land cost Building cost Gain from price recovery of inventory Rental cost Total	Amount Note $ 7,164,787 5,323,745 (7,886) 40,726 $ 12,521,372

80

Highwealth Construction Corp.

Statement of selling expenses

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollar)

Item Salaries Commission Rental Advertising Depreciation Other expense	Summary	Amount Note $ 99,101 232,891 90,833 337,478 11,287 152,341 $ 923,931

Statement of administrative expenses

Item Salaries Pension Rental Business trip expense Repair and maintenance Utilities Insurance Entertainment Donation Tax expense Registration Depreciation Amortization Board expense Employee benefit Charge of service Other expense	Summary	Amount Note $ 245,292 10,785 10,568 3,749 47,455 4,382 25,358 5,926 7,841 201,228 23,120 24,281 4,859 5,960 20,745 11,590 71,599 $ 724,738