Stock Code: 2546

KEDGE CONSTRUCTION CO., LTD. and Subsidiaries

Consolidated Financial Statements and Independent Auditors' Report

2021 and 2020

Company Address: 6F., No. 131, Sec. 3, Heping E. Rd., Taipei City, Taiwan, R.O.C. Telephone: (02) 23786789

ThereaderisadvisedthattheseconsolidatedfinancialstatementshavebeenpreparedoriginallyinChinese.Inthe eventofaconflictbetweenthesefinancialstatementsandtheoriginalChineseversionordifferenceininterpretati onbetweenthetwoversions,theChineselanguagefinancialstatementsshallprevail.

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	Items	Pages
1.	Front page	1
2.	Table of Contents	2
3.	Statement of Declaration	3
4.	Independent Auditors' Report	4-7
5.	Consolidated Balance Sheets	8
6.	Consolidated Statements of Comprehensive Income	9
7.	Consolidated Statements of Changes in Equity	10
8.	Consolidated Statements of Cash Flows	11
9.	Notes to the Consolidated Financial Statements
	(1) Company Overview	12
	(2) The Approval Date and Procedures of the Financial Report	12
	(3) Application of Newly Issued and Revised Standards and Interpretations	12-13
	(4) Summary of Significant Accounting Policies	13-27
	(5) Significant Accounting Judgments and Key Sources of Estimation and	27-28
	Assumption Uncertainty
	(6) Descriptions of Significant Accounting Items	29-52
	(7) Related-Party Transactions	53-55
	(8) Pledged Assets	55
	(9) Significant Contingent Liabilities and Unrecognized Contract Commitments	55-56
	(10) Significant Disaster Loss	56
	(11) Significant Events after the End of the Financial Reporting Period	56
	(12) Others	56
	(13) Disclosure Notes
	1. Information on Material Transactions	56-60
	2. Information on Reinvestment	61
	3. Information on Investments in Mainland China	61
	4. Information on Major Shareholders	61
	(14) Segment Information	62

Statement of Declaration

The entities that are required to be included in the consolidated financial statements of Kedge Construction Co., Ltd. as of and for the year ended December 31, 2021, under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 by the Financial Supervisory Commission, "Consolidated Financial Statements." In addition, the information required to be disclosed in the consolidated financial statements is included in the consolidated financial statements. Consequently, Kedge Construction Co., Ltd. and Subsidiaries do not prepare a separate set of consolidated financial statements.

Hereby declared

Company Name: Kedge Construction Co., Ltd. Chairman: Ai-Wei Yuan Date: March 25, 2022

Independent Auditors' Report

To the Board of Directors of Kedge Construction Co., Ltd.:

Audit Opinion

We have audited the Consolidated Balance Sheets of Kedge Construction Co., Ltd. and its subsidiaries as of December 31, 2021 and 2020, the Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Equity, Consolidated Statements of Cash Flows, and Notes to Consolidated Financial Statements (including Summary of Significant Accounting Policies) for the annual period from January 1 to December 31, 2021 and 2020.

In our opinion, the aforementioned Consolidated Financial Statements present fairly, in all material respects, the consolidated financial position of Kedge Construction Co., Ltd. as of December 31, 2021 and 2020, and its consolidated financial performance and consolidated cash flows for the annual periods ended December 31, 2021 and 2020 in conformity with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers," as well as International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and effected by the Financial Supervisory Commission.

Foundation of Audit Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and Generally Accepted Auditing Standards. Our responsibility under those standards will be further described in the section titled Auditor's Responsibilities for the Audit of the Consolidated Financial Statements. Following the code of professional ethics of accountants, the persons subject to the independence standards of our accounting firm have maintained their independence from the Kedge Construction Co., Ltd. and its subsidiaries, and fulfilled other responsibilities of the standards. We are convinced that we have acquired enough and appropriate audit evidence to serve as the foundation of the audit opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2021 consolidated financial statements of Kedge Construction Co., Ltd. and its subsidiaries. These matters were addressed in our audit of the consolidated financial report as a whole and forming our audit opinion. We do not express a separate opinion on these matters. In our judgment, key audit matters that shall be communicated in the audit report are as follows:

Construction Contracts

For accounting policies regarding construction contracts, please refer to Note 4 (13) of the Consolidated Financial Statements for revenue recognition. For accounting estimates and hypothetical uncertainties of estimated total contract costs for construction contracts, please refer to Note 5 of the Consolidated Financial Statements. For details of revenue recognition, please refer to Note 6 (15) of the Consolidated Financial Statements for revenue from customer contracts.

Description of Key Audit Matters:

The change of the total contract price and planned total cost of the construction contracts involves a high degree of judgment by management. The miscalculation of gross contract revenue may cause material changes in profit and loss during the financial reporting period, and therefore there are significant risks. Also, the Kedge Group recognizes the revenue and cost of contracts under construction according to the percentage of completion method, while the degree of completion is calculated based on the proportion of the incurred cost to the estimated total contract cost as of the financial reporting date. The miscalculations disclosed above may cause significant differences in the timing of recognition for profit and loss and the current financial statements.

Corresponding Audit Procedures:

Our main audit procedures regarding the aforementioned key audit matters included the following:

Test the internal control and implementation effectiveness of the contract and collection; obtain the detail list of addition and reduction of the total contract price of each construction for the current period; randomly check the external documents such as the contract, agreement, owner's communication or site coordination meeting minutes, as well as the valuation information of each period the condition of the owner's acceptance.
Sampling evaluates the preparation process of the construction budget of the management team, and sampling tests the effectiveness of its internal control system and implementation; randomly check external documents such as construction price lists, contracts, daily construction reports, invoices, and construction budgets, and check with construction budgets to verify the appropriateness of collection and accumulation of the construction type; checks the pricing information of each period to calculate the percentage of completion of the construction; randomly check and execute the cut-off point test of the construction in progress for the period before and after the balance sheet date.

Other Matters

Kedge Construction Co., Ltd. has also compiled Individual Financial Statements for 2021 and 2020, and they have also received an unqualified audit opinion from our CPA for your reference.

Responsibilities of the Management and Governing Body for the Consolidated Financial Statements

It is the management's responsibility to fairly present the consolidated financial statements in compliance with Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations and Interpretation Announcements endorsed and released effective by the Financial Supervisory Commission (FSC) and to sustain essential internal controls respecting the preparation of the consolidated financial statements so as to ensure that there is no material misrepresentation in the consolidated financial statements due to fraud or error.

In the preparation of the consolidated financial statements, the responsibility of management also includes the assessment of the sustainability of the Kedge Group, disclosure of relevant matters, as well as the adoption of the accounting base for continuing operations, unless the management intends to liquidate the Kedge Group or terminate the business, or there is no practicable measure other than liquidation or termination of the business.

The governing bodies of Kedge Construction Co., Ltd. and its subsidiaries (including the Audit Committee) have the responsibility to oversee the process by which the financial statements are prepared.

Auditor's Responsibility for Auditing Consolidated Financial Statements

The purpose of our audit of the consolidated financial statements is to obtain reasonable assurance as to whether the consolidated financial statements as a whole contains any material untruthful expression that may lead to fraud or error, and to issue an independent auditors' report. Reasonable assurance is a high degree of assurance but is not a guarantee that an audit conducted in accordance with the Generally Accepted Auditing Standards will always detect the existence of any material misrepresentation in the consolidated financial statements. Misrepresentation may be due to fraud or error. It is considered to be material if the misrepresented individual amount or the aggregated total can be reasonably expected to affect the economic decisions made by the users of the consolidated financial statements.

When auditing in accordance with Generally Accepted Auditing Standards, we practice professional judgment and maintains professional suspicion. We also perform the following tasks:

Identify and assess the risks of material misrepresentation in the consolidated financial statements due to fraud or error; Design and implement applicable countermeasures for the assessed risks, as well as obtain sufficient and appropriate audit evidence as to the basis of audit opinions. Because fraud may involve collusion, forgery, intentional omission, untrue declaration or the override of internal control, the risk of not detecting the material misrepresentation caused by fraud is higher than that caused by the error.
To acquire the necessary understanding of internal control relevant to audit so as to design appropriate audit procedures under the circumstances, but its purpose is not to express opinions on the effectiveness of internal control of the Kedge Group.
Evaluate the appropriateness of accounting policies adopted and the reasonableness of accounting estimates and relevant disclosures made by management.
Based on the audit evidence obtained, conclude on the appropriateness of the accounting base for continuing operations adopted by the management and whether there is a material uncertainty in the events or circumstances that may cause material doubts about the sustainability of the Kedge Group for continuing operations. If we believe that there is a material uncertainty in such events or circumstances, we shall remind the users of the consolidated financial statements to pay attention to the relevant disclosure of the consolidated financial statements in the audit report or we shall amend the audit opinion when such disclosure is inadequate. Our conclusions are based on the audit evidence obtained as of the date of our auditor's report. However, future events or circumstances may result in the Kedge Group no longer having the ability to going concerned.
Evaluate the overall presentation, structure, and content of the consolidated financial statements (including relevant notes), and whether the consolidated financial statements fairly represent the underlying transactions and events.
Obtain sufficient and appropriate audit evidence concerning the financial information of entities within the Group to express opinions on the consolidated financial statements. We are responsible for the guidance, supervision, and implementation of the Group's audit cases, and for forming the Group's audit opinions.

The matters we communicate with the governance body include the planned audit scope and time, as well as material audit findings (including a significant lack of internal control identified in the audit process).

We also provide the governance body with a declaration that the persons subject to the independence standards of our affiliated accounting firm have complied with the code of professional ethics of accountants, and communicate with the governance body all relations and other matters (including relevant protective measures) that may affect the independence of CPAs.

From the matters communicated with those charged with governance, we determined the key audit matters of the consolidated financial statements of Kedge Group of 2021. We state such matters in the audit report unless the law or regulation does not allow public disclosure of specific matters. Or in rare circumstances, we determine not to communicate specific matters in the audit report due to the reasonable probability that the negative impact of such communication is greater than the public interest.

KPMG Taipei, Taiwan Republic of China March 25, 2022

Notices to Readers

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

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

KEDGE CONSTRUCTION CO., LTD. and Subsidiaries

Consolidated Balance Sheets

As of December 31, 2021 and 2020

Unit: NT$ thousand

2021.12.31	2021.12.31	2020.12.31 Amount ％ 4,108,192 44 44,039 - 1,441,162 16 939,444 10 1,888,856 20 93,656 1 35,855 - 201,785 2 8,752,989 93 20,507 - 363,370 4 133,739 2 11,768 - 102,077 1 34,635 - 3,400 - 11,171 - 680,667 7 9,433,656 100 Liabilities and equity Current liabilities: 2100 Short-term loans (Note 6(8), (18) and 8) 2130 Current contract liabilities (Note 6(15)) 2150 Notes payable (Note 6(18)) 2170 Accounts payable (Note 6(18)) 2200 Other payables (Note 6(11) and (18)) 2230 Current tax liabilities 2300 Other current liabilities (Note 6(18)) Non-current liabilities: 2552 Warranty long-term provisions (Note 6(9)) 2600 Other non-current liabilities (Note 6(18)) Total liabilities Equity attributable to owners of the parent company (Note 6(13)): 3100 Share Capital 3200 Capital surplus 3300 Retained earnings 3400 Other equity interest Total equity attributable to owners of the parent company 36XX Non-controlling interests Total equity Total liabilities and equity	2021.12.31	2021.12.31	2020.12.31	2020.12.31
Amount	％	Amount	Amount	%	Amount	%
$ 4,024,912 80,722 2,159,046 1,004,862 820,009 84,984 46,619 310,140	43 1 23 11 9 1 1 3	4,108,192 44,039 1,441,162 939,444 1,888,856 93,656 35,855 201,785	$ 200,000 444,657 283,891 4,142,887 295,238 193,302 16,605	2 5 3 45 3 2 -	150,000 1,525,341 335,247 3,749,899 315,681 118,771 7,110	2 16 3 40 3 1 -
			5,576,580	60	6,202,049	65
			181,626 8,398	2 -	150,363 11,966	2 -
8,531,294	92	8,752,989
15,120 449,201 102,647 6,849 101,611 46,259 2,438 22,324	- 5 1 - 1 1 - -	20,507 363,370 133,739 11,768 102,077 34,635 3,400 11,171	190,024	2	162,329	2
			5,766,604	62	6,364,378	67
			1,060,357 518,401 1,702,978 229,197	12 6 18 2	1,060,357 518,294 1,345,805 144,653	11 6 14 2
			3,510,933	38	3,069,109	33
			206	-	169	-
746,449	8	680,667	3,511,139	38	3,069,278	33
			$ 9,277,743	100	9,433,656	100

$ 9,277,743	100	9,433,656

(Please see the Notes to the Consolidated Financial Statements)

KEDGE CONSTRUCTION CO., LTD. and Subsidiaries Consolidated Statements of Comprehensive Income January 1 to December 31, 2021 and 2020

Unit: NT$ thousand

2021		2020
Amount	％	Amount	％
$ 10,772,322 9,580,969	100 89	14,130,629 13,072,318	100 93
1,191,353	11	1,058,311	7
308,137 7,551	3 -	288,539 -	2 -
875,665	8	769,772	5
	- - - - -	8,280 22,315 (15,167) (3,009) 1	- - - - -
47,382	-	12,420	-
923,047 182,555	8 1	782,192 155,748	5 1
740,492	7	626,444	4
(1,575) 84,565	- 1	1,268 18,498	- -
82,990	1	19,766	-
$ 823,482	8	646,210	4
$ 740,476 16	7 -	626,440 4	4 -
$ 740,492	7	626,444	4
$ 823,445 37	8 -	646,202 8	4 -
$ 823,482	8	646,210	4
$ $	6.98		5.91
	6.92		5.87

(Please see the Notes to the Consolidated Financial Statements)

KEDGE CONSTRUCTION CO., LTD. and Subsidiaries Consolidated Statements of Changes in Equity January 1 to December 31, 2021 and 2020

Unit: NT$ thousand

	EquityAttributable to the Owners	EquityAttributable to the Owners	EquityAttributable to the Owners	of the Parent Company	of the Parent Company		Non- controlling interests 161	Total equity 2,741,122 626,444 19,766
Share Capital	Capital surplus 518,241		Retained earnings		Unrealized gains (losses) from financial assets at fair value through other comprehensive income in other equity 126,159	Total equity attributable to owners of the parent company 2,740,961
Common stock $ 1,060,357		Legal reserve 241,986	Unappropriat ed earnings 794,218	Total 1,036,204
- -	- -	- -	626,440 1,268	626,440 1,268	- 18,494	626,440 19,762	4 4
-	-	-	627,708	627,708	18,494	646,202	8	646,210
- - -	- - 53	40,325 - -	(40,325) (318,107) -	- (318,107) -	- - -	- (318,107) 53	- - -	- (318,107) 53
1,060,357 - -	518,294 - -	282,311 - -	1,063,494 740,476 (1,575)	1,345,805 740,476 (1,575)	144,653 - 84,544	3,069,109 740,476 82,969	169 16 21	3,069,278 740,492 82,990
-	-	-	738,901	738,901	84,544	823,445	37	823,482
- - -	- - 107	62,771 - -	(62,771) (381,728) -	- (381,728) -	- - -	- (381,728) 107	- - -	- (381,728) 107
$ 1,060,357	518,401	345,082	1,357,896	1,702,978	229,197	3,510,933	206	3,511,139

(Please see the Notes to the Consolidated Financial Statements)

KEDGE CONSTRUCTION CO., LTD. and Subsidiaries Consolidated Statements of Cash Flows January 1 to December 31, 2021 and 2020

Unit: NT$ thousand

Cash flows from operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss) Depreciation expense Expected credit loss Net (profit) loss on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of loss (gain) of associates and joint ventures accounted for using the equity method Gains on disposal of property, plant and equipment Impairment loss of non-financial assets Gain on lease modification Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: (Increase) Decrease in financial instruments mandatorily measured at fair value through profit or loss (Increase) Decrease in contract assets (Increase) Decrease in notes and accounts receivable Notes and accounts receivable - decrease in related parties Decrease in prepayments Increase in other financial instruments - current Decrease (increase) in other financial assets Increase in non-current net defined benefit assets- Total changes in operating assets Total changes in operating assets: (Decrease) increase in contract liabilities Decrease in notes payable Increase in accounts payable (Decrease) Increase in other payables Increase in liability reserve Increase (decrease) in other current liabilities Increases in net defined benefit liabilities Increase in other non-current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interests received Dividends received Interest payment Income taxes paid Net cash flows from (used in) operating activities Cash flows from investing activities: Purchase of financial assets measured at fair value through other comprehensive income Acquisition of property, plant and equipment Disposal of property, plant and equipment Increase in other financial assets Net cash flows used in investing activities Cash flows from financing activities: Increase in short-term loans Decrease in short-term loans Increase in short-term promissory notes payable Decrease in short-term promissory notes payable Repayment of lease principal amount Cash dividend distribution Net cash outflows from financing activities Net (decrease) increase in cash and cash equivalents Opening balance of cash and cash equivalents of the period Ending balance of cash and cash equivalents of the period	2021	2020
	$ 923,047 19,694 7,551 (34,684) 1,457 (10,035) (28,584) 5,387 (33) 18,618 (58)	782,192 12,080 - 6,095 3,009 (8,280) (18,131) (1) - - -
	(20,687)	(5,228)
	(1,999) (702,560) (72,969) 1,068,847 8,672 (26,088) (108,896) (613)	23,984 154,221 188,144 24,519 112,027 (13,331) 41,886 (2,040)
	164,394	529,410
	(1,080,684) (51,356) 392,988 (20,336) 31,263 9,800 - 1,048	537,230 (26,664) 150,548 56,794 47,881 (13,777) 1,268 830
	(717,277)	754,110
	(552,883)	1,283,520
	(573,570)	1,278,292
	349,477 10,387 28,584 (1,457) (119,648)	2,060,484 8,245 18,131 (3,009) (97,914)
	267,343	1,985,937
	(1,266) (3,875) 76 (11,154)	- (80,717) - (3,215)
	(16,219)	(83,932)
	410,000 (360,000) 260,000 (260,000) (2,676) (381,728)	581,000 (581,000) 200,000 (200,000) (2,115) (318,107)
	(334,404)	(320,222)
	(83,280) 4,108,192	1,581,783 2,526,409
	$ 4,024,912	4,108,192

(Please see the Notes to the Consolidated Financial Statements)

KEDGE CONSTRUCTION CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements

2021 and 2020

(Unless otherwise stated, the unit for all amounts is in NT$ thousands.)

1. Company Overview

Kedge Construction Co., Ltd. (hereinafter referred to as "the Company") was incorporated on April 13, 1982, located at 6F., No. 131, Sec. 3, Heping E. Rd., Taipei City, Taiwan. The main business items of the Company and its subsidiaries (hereinafter referred to as “the Consolidated Company") are comprehensive construction and the development, lease, sale, etc. of housing and building.

2. The Approval Date and Procedures of the Financial Report

The consolidated financial statements were published upon approval by the Board of Directors on March 25, 2022.

3. Application of Newly Issued and Revised Standards and Interpretations

(1) The Impact of Adopting Newly Released and Revised Standards and Interpretations Endorsed by the Financial Supervisory Commission

The group has adopted the newly recognized IFRSs specified above since January 1, 2021, and assessed that the application will not have a material impact on the consolidated financial statements.

Amendments to IFRS 4, "Temporary Exemption from Applying IFRS 9"
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 "Interest Rate Benchmark Reform - Phase 2"

The group has adopted the newly recognized IFRSs specified above since April 1, 2021, and assessed that the application will not have a material impact on the consolidated financial statements.

 Amendments to IFRS 16 "COVID-19-Related Rent Concessions after June 30, 2021"

(2) Impacts of IFRS Endorsed by FSC but yet to come into effect

The Consolidated Company has assessed that the application of the above newly endorsed IFRS, effective on January 1, 2022, will not result in a material impact on the consolidated financial statements.

Amendments to IAS 16 "Property, Plant and Equipment - Proceeds before Intended Use"
Amendments to IAS 37 "Onerous Contracts - Cost of Fulfilling a Contract"
Annual Improvements to IFRS Standards during 2018 - 2020 Cycle
Amendments to IFRS 3, "Reference to the Conceptual Framework"

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(3) Newly issued and amended standards and interpretations yet to be endorsed by the FSC

For IFRSs issued by IASB but not yet endorsed by the FSC, the impact on the Consolidated Company are as follows:

The effective date New or amended of issuance by standards Main amendments to the content IASB Amendments to IAS 1 The amendments are intended to enhance January 1, 2023 "Classify Liabilities as the consistency of the application of the Current or Non-current" standard, in order to assist companies in determining whether debts or other liabilities with uncertain liquidation dates should be classified as current (or those that might expire within one year) or noncurrent on the balance sheet. The amendments also clarify the classification requirements for debts that may be repaid through convert into equity.

The Consolidated Company is in the process of evaluating the impact on the consolidated financial position and performance of the adoption of the standards and interpretations mentioned above, and the Consolidated Company will disclose relevant impacts when the evaluation is completed.

The Consolidated Company expects that the following newly published and amended IFRS unendorsed will not result in a material impact on the consolidated financial statements.

Amendments to IFRS 10 and IAS 28, "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture"
IFRS 17, "Insurance Contracts," and amendments to IFRS 17
Amendments to IAS 1, "'Disclosure of Accounting Policies"
Amendments to IAS 8, "Definition of Accounting Estimates"
Amendments to IAS 12 "Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction"

4. Summary of Significant Accounting Policies

The summary of material accounting policies adopted in the consolidated financial statements is as follows. Other than the description of accounting variations in Note 3, the following accounting policies have been consistently applied to all stated periods in the consolidated financial statements.

(1) Compliance Statement

The consolidated financial statements are prepared following the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as the "Preparation Regulations") and the IFRS, IAS, Interpretation and Interpretation Announcements endorsed and released by the FSC (hereinafter referred to as the "IFRS endorsed by the FSC").

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(2) Foundation of Preparation
Foundation of Measurement

Apart from the essential items in the following balance sheet, the consolidated financial statements are prepared on the foundation of historical cost:

(1) Financial assets measured at fair value through profit or loss;
(2) Financial assets measured at fair value through other comprehensive income; and
(3) Net defined benefit liabilities (or assets) are measured by the fair value of pension fund assets minus the present value of the defined benefit obligations and the cap effects measurement mentioned in note 4 (14).
Functional Currency and Presentation Currency

Each entity of the Consolidated Company takes the currency of the main economic environment in which each business operates as its functional currency. The consolidated financial statements present the NT dollar as the functional currency. All financial information represented in NTD is in the unit of thousands of NT$.

(3) Foundation of Consolidation
Preparation Principle of Consolidated Financial Statements

The preparation subjects of the consolidated financial statements include the Company and individuals controlled by the Company (i.e. subsidiaries). The Company controls an individual entity when it is exposed to, or has rights to, variable remuneration from its participation in that individual and can influence that remuneration through its power over that individual.

From the date of attaining control over the subsidiary, its financial statements shall be included in the consolidated financial statements until the date of losing control. The transactions, balances and, any unrealized income and expenses between the consolidated companies have been eliminated in full at the time of preparing the consolidated financial statements. The total comprehensive income of subsidiaries is attributable to the owners and non-controlling interests of the Company, even if the non-controlling interests become the deficit balance.

The financial statements of the subsidiaries have been appropriately adjusted to facilitate their accounting policies are consistent with those used by the Consolidated Company.

Where the change of the ownership interest and interests of the Consolidated Company to a subsidiary does not result in the loss of control over the subsidiary, it shall be treated as an equity transaction with the owner. The difference between the adjustment amount of non-controlling interests and the fair value of the consideration paid or received shall be directly recognized in equity attributable to the owners of the Company.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

Subsidiaries Included in the Consolidated Financial Statements

Percentage of ownership

Name of investment company	Subsidiaries	Nature of business	2021.12.31	2020.12.31	Explanation
The Company The Company Jointly held by Guanqing Electromechani cal and Jiequn Investment	Guanqing Electromechani cal Co., Ltd. (Guanqing Electromechani cal) Jiequn Investment Co., Ltd. (Jiequn Investment) Dingtian Construction Co., Ltd. (Dingtian Construction)	Electrical equipment installation and fire safety equipment installation, etc. General Investment The comprehensive construction industry, etc.	99.96% 99.98% 100.00%	99.96% 99.98% 100.00%	holds directly more than 50% of the issued voting share in the subsidiary. holds directly more than 50% of the issued voting share in the subsidiary. holds indirectly more than 50% of the issued voting share in the subsidiary.

Subsidiaries not Included in the Consolidated Financial Statements: None.
(4) Classification Standard for Distinguishing Current and Non-current Assets and Liabilities

Assets that meet one of the following conditions are classified as current assets, and all other assets that are not current assets are classified as non-current assets:

The asset is expected to be realized within its normal operating cycle, or it is intended to be sold or depleted;
The asset is held mainly for trading purposes;
The asset is expected to be realized within 12 months after the reporting period; or
The asset is cash or cash equivalent, but it will be used for the exchange of assets or settlement of liabilities at least 12 months after the reporting period, unless otherwise limited.

Liabilities that meet one of the following conditions are classified as current liabilities, and all other liabilities that are not current liabilities are classified as non-current liabilities:

The liability is expected to be settled within its normal operating cycle;
The liabilities held are primarily for the trading purpose;
The liabilities are expected to settle the obligation within 12 months after the reporting period; or
The liabilities have no unconditional right to defer the settlement for at least 12 months after the reporting period. The liabilities provisions may be settled by issuing equity instruments at the option of the counterparty, and will not impact its classification.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(5) Cash and cash equivalents

Cash includes cash on hand and demand deposit. Cash equivalents refer to the short-term and highly liquidity investment that can be converted into quota cash at any time with little risk of value change. Time deposits are classified as cash equivalents only when they satisfy the aforementioned definition, and the purpose of holding is to meet the short-term cash commitments rather than investment or other purposes.

(6) Financial Instruments

The accounts receivable and debt securities issued are primitively recognized at the time of generation. All other financial assets and financial liabilities are primitively recognized when the Consolidated Company became a party to the terms of the financial instrument contract. Financial assets not measured at fair value through profit or loss (other than accounts receivable excluding material financial components) or financial liabilities primitively at fair value may be measured directly attributable to the transaction cost of the acquisition or issuance. The accounts receivable excluding material financial components are primitively measured at transaction prices.

1. Financial Assets

Where the purchase or sale of financial assets is in line with conventional trading practices, the accounting treatment of all purchases and sales of financial assets classified in the same way by the Consolidated Company shall be consistently on the trade date or the settlement date.

Financial assets at the time of initial recognition are classified as financial assets measured at amortized cost, equity instrument investment measured at fair value through other comprehensive profit and loss, or financial assets measured at fair value through profit and loss. The Consolidated Company shall reclassify all the affected financial assets from the first day of the next reporting period only when changing the business model for managing financial assets.

(1) Financial Assets Measured at Amortized Cost

When financial assets meet the following conditions and not designated at fair value through profit or loss, they are measured at amortized cost:

It refers to the holding of the financial assets under the business model for the purpose of receiving contractual cash flow.
The contractual terms of the financial asset generate the cash flow on a specific date, which is fully used to pay for the outstanding principal amount and interest of the principal.

Such assets are subsequently amortized by the initial amount recognized plus or minus the accumulated amortization amount calculated by the effective interest method, and the amortized cost measurement of any allowance loss is adjusted. Interest income, foreign exchange profit or loss, and impairment loss are recognized in profit and loss. When derecognition, gain or loss is recognized in profit and loss.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(2) Financial Assets at Fair Value through Other Comprehensive Income

At the time of initial recognition, the Consolidated Company may make an irrevocable choice and report the subsequent changes at the fair value of equity instrument investment not held for trading to other comprehensive income. The aforementioned choice is made on the item by item basis.

Equity instrument investors shall be measured at fair value subsequently. Dividend income (unless it clearly represents the recovery of part of the investment cost) is recognized in profit and loss. The remaining net profit or loss is recognized as other comprehensive income and is not reclassified to profit and loss.

The dividend income of equity investment shall be recognized on the date when the Consolidated Company is entitled to receive dividends (usually the exdividend date).

(3) Financial Assets at Fair Value through Profit or Loss

Financial assets not measured at the aforementioned amortized cost or fair value through other comprehensive income are measured at fair value through profit or loss, including derivative financial assets. At the time of initial recognition, to eliminate or materially reduce accounting mismatches, the Consolidated Company may irrevocably designate financial assets that meet the criteria of measuring at amortized cost or at fair value through other comprehensive income as financial assets measured at fair value through profit or loss.

Such assets are subsequently measured at fair value, and their net profit or loss (including any dividend and interest income) is recognized as profit or loss.

(4) Impairment of Financial Assets

Regarding the financial assets measured through amortized cost (including cash and equivalent cash, financial assets measured by amortized cost, notes receivable and accounts receivable, other receivables, refundable deposits, and other financial assets, etc.) and contract assets, the Consolidated Company shall recognize loss allowance for expected credit losses.

The loss allowance of the following financial assets are measured based on the expected credit losses amount in 12 months, and the remaining are measured based on the lifetime expected credit loss amount:

Determine that the debt securities have low credit risk on the reporting date; and

 The credit risk of other debt securities and bank deposits (for example, the occurrence of default risk exceeding the expected duration of financial instruments) has not increased significantly since the initial recognition.

The loss allowance for accounts receivable and contractual assets is measured by the amount of lifetime expected credit losses.

In determining whether the credit risk has increased significantly since the initial recognition, the Consolidated Company shall consider reasonable and verifiable information (available without excessive cost or investment), including qualitative and quantitative information, analysis based on the historical experience, credit evaluation, and prospective information.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

The consolidated 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.

Expected credit loss refers to the weighted estimate of credit loss probability during the expected duration of financial instruments. The credit loss is measured by the present value of all cash shortfall, namely the difference between the cash flow that the Consolidate Company can collect according to the contract and the expected cash flow that the Consolidate Company will receive. Expected credit loss is discounted at the effective interest rate of financial assets.

On each reporting date, the Consolidated Company assesses whether there is credit impairment on financial assets measured at amortized cost and debt securities measured at fair value through other comprehensive income. When one or more events are arising that will bring unfavorable influence to expected future cash flow, there is already credit impairment to the financial asset. Evidence of credit impairment of financial assets includes observable data on the following:

Material financial difficulties of the borrower or the issuer;
Default, such as delay or overdue for more than 90 days;
Due to the economic or contractual reasons related to the borrower's financial difficulties, the Consolidated Company gives the borrower concessions that would not have been inspected;
The borrower is likely to file for bankruptcy or conduct other financial reorganization; or
Due to financial difficulties, the active market of the financial assets disappeared.

The loss allowance of financial assets measured through amortized cost is deducted from the carrying amount of assets. The loss allowance of debt instrument investment measured at fair value through other comprehensive income is adjusted profit and loss and recognized in other comprehensive income (without reducing the carrying amount of assets).

When the Consolidated Company cannot reasonably expect the whole or part of the recovered financial assets, it directly reduces the total carrying amount of its financial assets. The Consolidated Company analyzes the time and amount of write off individually based on whether it reasonably expects to be recoverable. The Consolidated Company expects that the amount written off will not be materially reversed. However, the written-off financial assets can still be enforced to comply with the procedures for the Consolidated Company to recover the overdue amount.

(5) Derecognition of Financial Assets

The Consolidated Company only derecognizes the financial assets when the contractual rights of the assets’ cash flow are terminated, or when the financial assets have been transferred and almost all the risks and remuneration of the ownership of the asset have been transferred to other enterprises, or when almost all the risks and remuneration of the ownership have not been transferred or retained, and the control of the financial assets have not been retained.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

When the Consolidated Company enters into a transaction to transfer financial assets, if it retains all or almost all of the risks and remuneration of ownership of the transferred assets, it will continue to be recognized in the balance sheet.

Financial Liabilities and Equity Instruments
(1) Classification of Liabilities or Equities

The debt and equity instruments issued by the Consolidated Company are classified as financial liabilities and equity in accordance with the substance of contractual arrangements and the definitions of financial liabilities and equity instruments.

(2) Equity Transactions

Equity instruments refer to any contracts containing residual interest after the Consolidated Company subtracts liabilities from assets. The equity instruments issued by the Consolidated Company are recognized at the price obtained deduct the direct issue cost.

(3) Financial Liabilities

Financial liabilities are classified as amortized costs or the fair value measurement through profit or loss. Financial liabilities, if held for trading, derivatives or designated at the time of initial recognition, are classified as the fair value measurement through profit or loss. Financial liabilities measured at fair value through profit or loss are the fair value measurement, and the related net profit and loss, including any interest paid, are recognized in profit and loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expenses and exchange gains and losses are recognized in profit or loss. Any profit or loss at the time of derecognize is also recognized in profit and loss.

(4) Derecognition of Financial Liabilities

The Consolidated Company derecognizes financial liabilities when the contractual obligations have been fulfilled, canceled or matured. When the provisions of financial liabilities are revised and there is a material difference in the cash flow of the modified liabilities, the initial financial liabilities shall be derecognized, and the new financial liabilities shall be recognized at fair value based on the revised provisions.

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

(5) Offsetting of Financial Assets and Financial Liabilities

Financial assets and financial liabilities shall be offset against each other and expressed in the net amount in the balance sheet only when the Consolidated Company currently has the legally enforceable rights to offset and has the intention for netting settlement or realizing assets and settlement at the same time.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

(7) Investments in Associates

Associates refer to those for which the Consolidated Company has a material influence upon their financial and operating policies but without controlling or joint controlling.

The Consolidated Company adopts the equity method for handling the equity of associates. Under the equity method, the initial acquisition is recognized according to the cost, and the investment cost includes the transaction cost. The carrying amount of invested associates includes the goodwill recognized at the time of initial investment less any accumulative impairment loss.

The consolidated financial statements include the amount of profit and loss and other comprehensive profit and loss of each invested associate recognized by the Consolidated Company according to the proportionate interest after the adjustment of the consistency with the accounting policies of the Consolidated Company from the date of attaining a material influence to the date of losing such influence. When the equity of associates change, not including profit and loss and other comprehensive profit and loss, and do not affect the shareholding ratio of the Consolidated Company, the Consolidated Company shall recognize all the equity changes as capital surplus according to the shareholding ratio.

The unrealized profits and losses arising from the transaction between the Consolidated Company and the associates shall be recognized in the financial statements of the associates only within the scope of the interest of the non-affiliated investor to the associate.

When the Consolidated Company recognizes the loss of associates in proportion and its share is equal to or more than its equity in associates, it shall stop recognize the loss. The Consolidated Company shall recognize additional losses and related liabilities only to the extent of legal obligations, constructive obligations or payments made on behalf of the investee.

(8) Investment Property

Investment property refers to property held for earning rent or asset appreciation or both, rather than for normal business sale, production, provision of goods or services, or administrative purposes. Investment property is initially measured by cost and subsequently measured by cost minus accumulated depreciation and accumulated impairment. Its depreciation method, service life, and residual value are treated following the provisions of property, plant, and equipment.

The gain or loss on disposal of the investment property (calculated by the difference between the net disposal proceed and the carrying amount of the item) is recognized in profit and loss.

Rental income from investment property is recognized in other income on a straight-line basis during the lease term. The lease incentive is recognized as part of the lease income during the lease term.

(9) Property, Plant and Equipment
Recognition and Measurement

Property, plant, and equipment items are measured by cost (including capitalized borrowing costs) less accumulated depreciation and any accumulated impairment.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

When the useful life of a material component of property, plant, and equipment is different, it shall be treated as a separate item (main component) of property, plant, and equipment.

The gain or loss on disposal of the property, plant, and equipment is recognized in profit and loss.

Subsequent Cost

Subsequent expenditures are capitalized only when their future economic benefits are likely to flow into the Consolidated Company.

Depreciation

Depreciation is calculated by deducting the residual value from the asset cost and is recognized in profit or loss within the estimated useful life of each component using the straight-line method.

No depreciation shall be recognized for the land.

The estimated useful life of the current period and comparative periods are as follows:

(1) Houses and buildings 5 to 53 years
(2) Transportation equipment 5 years
(3) Other equipment 3 to 5 years

The Consolidated Company shall review the depreciation method, useful life, and residual value on each reporting date, and make appropriate adjustments as necessary.

(10) Leases

The Consolidated Company evaluates whether the contract is a lease or contains a lease on the contract establishment date. If the contract transfers control over the use of the identified assets for a period of time in exchange for consideration, the contract is a lease or contains a lease.

Lessee

The Consolidated Company recognizes the right-of-use asset and the lease liability on the inception of the lease. The right-of-use asset is initially measured at cost, which includes the initial measured amount of the lease liability, adjusts any lease benefits paid on or before the inception of the lease, and adds the initial direct cost incurred and the estimated cost of dismantling, removing the underlying asset and restoring its location or underlying asset, and deducting any leasing incentives received.

The right-of-use asset is subsequently depreciated by the straight-line method from the inception of the lease to the expiration of the useful life of the right-of-use asset or the earlier of the lease term. Also, the Consolidated Company shall regularly assess whether the right-of-use asset is impaired and processes any impairment loss that has occurred, and cooperates to adjust the right-of-use asset when the lease liability is remeasured.

Lease liabilities are primitively measured by the present value of the unpaid lease benefits on the inception of the lease. If the interest rate implicit in the lease is easy to determine, the discount rate shall be the interest rate; if it is not easy to determine, the incremental borrowing rate of interest of the Consolidated Company shall be used. Generally speaking, the Consolidated Company uses its incremental borrowing rate of interest as the discount rate.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

Lease benefits included in the measurement of lease liabilities consist of:

(1) Fixed benefits, including substantial fixed benefits;
(2) The variable lease benefits depend on an index or rate, and the index or rate on the inception of the lease is applied as the initial measurement;
(3) The residual guarantee amount expected to be paid; and
(4) When reasonably determined that the purchase option or lease termination option will be exercised, the exercise price or the penalty payable.

The lease liability subsequently accrues interest with the effective interest method, and its amount is measured when the following occurs:

(1) Changes in the index or rate used to determine lease benefits result in changes in future lease benefits;
(2) The residual guarantee amount expected to be paid has changed;
(3) The evaluation of the underlying asset purchase option has changed;
(4) The assessment of whether to exercise the option of extension or termination has changed, and alter the assessment of the lease term;
(5) Modification of the subject matter, scope, or other terms of the lease.

When the lease liability is remeasured due to the above changes in the index or rate used to determine the lease benefits, changes in the residual guarantee amount, and changes in the evaluation of the purchase, extension or termination option, the carrying amount of the right-of-use asset shall be adjusted accordingly, and when the carrying amount of the right-of-use asset is reduced to zero, the surplus remeasured amount shall be recognized in profit and loss.

For the lease modification of reducing the lease scope, the carrying amount of the right-of-use asset is reduced to reflect the partial or full termination of the lease, and the difference between it and the remeasurement amount of the lease liability is recognized in profit and loss.

The Consolidated Company expresses the right-of-use assets and the lease liabilities that do not meet the definition of investment property as separate line items in the balance sheet.

For short-term leases of office equipment and leases of low-value underlying assets, the Consolidated Company chooses not to recognize the right-of-use assets and lease liabilities, but to recognize the related lease benefits as expenses on the straight-line basis during the lease term.

Lessor

For transactions in which the Consolidated Company is the lessor, it is to classify the tenancy agreement according to whether it transfers almost all risks and remuneration attached to the ownership of the underlying asset on the lease establishment date. If so, it is classified as a financial lease, otherwise, it is classified as an operating lease. At the time of evaluation, the Consolidated Company's considerations include relevant specific indicators, such as whether it covers the main component of the economic life of the underlying asset during the lease term.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

If the Consolidated Company is a sublease lessor, the main lease and sublease transactions are processed separately, and the classification of the sublease transaction is evaluated by the right-of-use asset generated by the main lease. If the main lease is a short-term lease and the recognition exemption applies, the sublease transaction should be classified as an operating lease.

If the agreement includes leasing and non-leasing components, the Consolidated Company shall employ the provisions of IFRS 15 to share the consideration in the contract.

(11) Impairments of Non-financial Assets

The Consolidated Company assesses on each reporting date whether there is any indication that the carrying amount of non-financial assets (other than inventory, contractual assets, and deferred income tax assets) may be impaired. If any indication exists, the recoverable amount of the asset is estimated. Goodwill is regularly tested for impairment every year.

The purpose of the impairment test, a group of assets whose cash inflow is mostly independent of other individual assets or asset groups, is regarded as the smallest identifiable asset group. Goodwill acquired from a business combination is allocated to each cash-generating unit or group of cash-generating units that are expected to benefit from the synergy combination.

The recoverable amount of an individual asset or a cash-generating unit is the higher of its fair value less costs of disposal and its use-value. When evaluating the use-value, the estimated future cash flow is converted to the present value at the pre-tax discount rate, which should reflect the current market's evaluation of the time value of money and the specific risk of the asset or cash-generating unit.

If the recoverable amount of an individual asset or cash-generating unit is lower than the carrying amount, an impairment loss is recognized.

The impairment loss is recognized immediately in profit and loss, and first reduces the carrying amount of the goodwill of the cash-generating unit, and then reduces the carrying amount of each asset in proportion to the carrying amount of other assets in the unit.

(12) Provisions

The recognition of provisions means a current obligation for past events so that in the future the Consolidated Company is most likely to outflow resources with economic benefits to settle it, and the amount of the obligation can be reliably estimated. The provision is discounted at a pre-tax discount rate that reflects the current market's assessment of the time value of money and the specific risk of liabilities. The amortization of the discount is recognized as interest expense.

The warranty provision is recognized at the completion of the construction and is measured at correlation probability weighting according to the historical warranty data and all possible results.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(13) Revenue Recognition

Revenue from Contracts with Clients

The revenue is measured by the consideration expected to be entitled to for the transfer of goods or services. The Consolidated Company recognizes the revenue when the control over goods or services is transferred to the client, and the performance obligations are met. The main revenue items of the Consolidated Company are described as follows:

(1) Labor Services

The Consolidated Company provides business management services and recognizes the relevant revenue during the financial reporting period of providing labor services.

Under a fixed-price contract, the client pays a fixed amount of money according to the agreed schedule.

(2) Construction Contracts

The Consolidated Company is engaged in the contracting business of residential property and public construction. Since the assets are under the control of clients at the time of construction, the revenue is gradually recognized over time based on the proportion of the construction costs incurred to date to the estimated total contract costs. The contract includes fixed and variable consideration. The client pays a fixed amount of money according to the agreed schedule. Some variable consideration (such as penalty and price adjustment calculated based on overdue days) is estimated by the expected value based on the accumulated experience in the past. The Consolidated Company recognizes revenue only within the range where the accumulated income is highly unlikely to have a material reversal. If the amount of recognized revenue has not yet been claimed, it shall be recognized as a contract asset. When there is an unconditional right to the consideration, the contract asset shall be transferred to the accounts receivable.

If it is unable to reasonably measure the completion degree of the performance obligation of the construction contract, the contract revenue shall only be recognized within the scope of the expected recoverable cost.

When the Consolidated Company foresees that the inevitable cost of fulfilling the obligations of a construction contract exceeds the expected economic benefits from the contract, the liability reserve of the loss-making contract is recognized.

If the situation changes, the estimates of revenue, cost, and degree of completion will be revised, and the increase or decrease will be reflected in profit and loss during the period when the management is informed of the change.

The Consolidated Company provides a standard warranty for residential property and public construction in line with the agreed specifications and has recognized the warranty liability reserve for this obligation. Please refer to Note 6 (9) for details.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

Cost of Client Contracts

Cost of Fulfilling Contracts

If the cost of fulfilling client contracts is not within the scope of other standards (IAS 2 "inventory", IAS 16 "property, plant and equipment", or IAS 38 "intangible assets"), the Consolidated Company shall only recognize such cost as an asset when it is directly related to contract or explicitly identifiable expected contract, which will be generating or strengthening resources for future satisfaction (or continuous satisfaction) of performance obligations, and expected to be recoverable.

The general and management costs, the costs of wasted raw materials, labor or other resources used to perform the contract but not reflected in the contract price, the costs related to the fulfilled (or partially fulfilled) performance obligation and the costs related to unfulfilled performance obligation or fulfilled (or partially fulfilled) performance obligation that cannot be distinguished are recognized as an expense when incurred.

(14) Employee Benefits

1. Defined Contribution Plan

The contribution obligation of the defined contribution plan is recognized as an expense during the period of service provided by the employee.

2. Defined Benefit Plan

The net obligation of the Consolidated Company to determine the benefit plan is calculated by converting the future benefit amount earned by the employee in the current period or the previous period into the present value for each benefit plan and deducting the fair value of any plan assets.

The defined benefit obligation is calculated annually by a qualified actuary using the projected unit credit method. When the calculation result may be beneficial to the Consolidated Company, the recognized assets shall be limited to the present value of any economic benefits available in the form of refunding the contribution from the plan or reducing the future contribution to the plan. When calculating the present value of economic benefits, any minimum funding requirements are considered.

The remeasurement of net defined benefit liabilities, including actuarial gains and losses, plan asset returns (excluding interest), and any changes in the impact of the asset ceiling (excluding interest), are immediately recognized in other comprehensive income and accumulated in retained earnings. The net interest expense (income) of the net defined benefit liabilities (assets) determined by the Consolidated Company is the net defined benefit liabilities (assets) and the discount rate determined at the beginning of the annual reporting period. The net interest paid and other expenses of the benefit plan are recognized in profit and loss.

When the plan is amended or reduced, the number of benefits changes related to past service costs or reduced benefits or losses shall be recognized as profit or loss immediately. When the settlement occurs, the Consolidated Company shall recognize the settlement profit and loss of the defined benefit plan.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

Short-term Employee Benefits

Short-term employee benefit obligations are recognized as expenses when services are provided. If the Consolidated Company has current legal or constructive payment obligations due to the past services provided by employees and the obligations can be estimated reliably, the amount shall be recognized as liabilities.

(15) Income Tax

Income tax includes current and deferred income tax. Except for items related to the Consolidated Company and directly recognized into equity or other comprehensive incomes, current and deferred income tax shall be recognized in profit or loss.

Current income tax includes the estimated income tax payable or tax refund receivable calculated based on the taxable income (loss) of the current year, and any adjustments to income tax payable or tax refund receivable in previous years. The amount is the best estimate of the expected payment or receipt based on the legal tax rate or substantively enacted tax rate on the reporting date.

Deferred income tax is measured and recognized on the temporary difference between the carrying amount of assets and liabilities for financial reporting purposes and their tax base. The temporary difference for the following conditions will not be recognized as deferred income tax:

Assets or liabilities initially recognized in a transaction other than a business combination that at the time of the transaction does not affect accounting profit and taxable income (loss);
Due to temporary differences arising from investment in subsidiaries, associates and joint venture interests, the Consolidated Company can control the reversing point of temporary differences and is likely not to revert in the foreseeable future; and
The taxable temporary difference arising from the initial recognition of goodwill.

For unused tax losses and unused income tax deduction at the later stage of the transfer and deductible temporary differences, they are recognized as deferred income tax assets to the extent that there is likely to be future taxable income available for use. On each reporting day, it shall be reassessed to reduce the relevant income tax benefits to the extent that they are not likely to be realized or to revert the reduced amount to the extent that they are likely to become sufficient taxable income.

Deferred income tax is measured by the tax rate when the expected temporary difference is reversed and is based on the legal tax rate or substantively enacted tax rate on the reporting date.

The Consolidated Company only offsets the deferred income tax assets and deferred income tax liabilities when the following conditions are met simultaneously:

Have the legally enforceable right to offset the current income tax assets and current income tax liabilities against each other; and
Deferred income tax assets and deferred income tax liabilities are related to one of the following taxpayers levied by the same taxation authority:
(1) Same taxpayer; or

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

(2) Different taxpayers, yet each taxpayer intends to settle current income tax assets and liabilities on a net basis or realize assets and settle liabilities at the same time in each future period when a material amount of deferred income tax assets are expected to be recovered, and deferred income tax liabilities are expected to be settled.

(16) Earnings per Share

The Consolidated Company presents the basic and diluted earnings per share attributable to the Company's common equity holders. The basic earnings per share of the Consolidated Company are calculated by dividing the profit and loss attributable to the Company's common equity holders by the weighted average number of outstanding common shares in the current period. Diluted earnings per share are calculated by adjusting the profit and loss attributable to the common equity holders of the Company and the weighted average number of outstanding common shares, respectively, after adjusting the impact of all potential diluted common equity.

(17) Segment Information

The operating segment is an integral part of the Consolidated Company, which is engaged in business activities that may generate revenue and incur expenses (including revenue and expense related to the transactions among other components in the Consolidated Company). The operating results of all operating segments are periodically reviewed by the major operating decision-makers of the Consolidated Company to make decisions on the allocation of resources to the segments and to evaluate their performance. Every operation segment has its independent financial information.

5. Significant Accounting Judgments and Key Sources of Estimation and Assumption Uncertainty

The management must make judgments, estimates, and assumptions when preparing the consolidated financial statements under the preparation standards and IFRS endorsed by the FSC, which will have an impact on the adoption of accounting policies and the reported amount of assets, liabilities, earnings, and expenses. The actual results may differ from the estimates.

The management continuously reviews estimates and basic assumptions, and changes in accounting estimates are recognized during the period of change and the future period affected.

The accounting policy involves significant judgments and information that has a material impact on the amount recognized in the consolidated financial statements is as follows:

(1) Judgment on Whether It Has a Material Impact on Associates

The Consolidated Company holds 46.67% of the voting shares of ReadyCom eServices Corporation, but the Consolidated Company does not substantially participate in the decision of the company's financial and operational policies. So it has no significant influence on ReadyCom eServices Corporation.

The following assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, and they reflects the impact of the COVID-19 pandemic, of which the details are as follows:

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(1) Revenue Recognition

The recognition of the profit and loss of the construction contract of the Consolidated Company refers to the recognition of the contract revenue and the contract cost respectively according to the complete degree of the contractual activities and the degree of completion is measured by the proportion of the contract cost incurred so far in the estimated total contract cost. The Consolidated Company considers the nature, estimated duration, contract projects, construction process, construction method, and estimated contract amount of each project to estimate the total contract cost. The above estimation basis is subject to change due to conditions of work, overall price fluctuations, and owner requirements.

The accounting policy and disclosure of the consolidated company include the adoption of fair value measurement on financial and non-financial assets and liabilities. The Consolidated Company verifies the independent source data to make the evaluation result close to the market status, confirms that the data source is independent, reliable, consistent with other resources and represents the executable price, and regularly calibrates the evaluation model, conducts backtesting, updates the input value and data required by the evaluation model and any other necessary fair value adjustments to ensure that the evaluation result is reasonable. For investment property, the Consolidated Company evaluates it periodically or entrusts an external appraiser to evaluate it according to the evaluation method and parameter hypothesis announced by the FSC.

In measuring the assets and liabilities, the Consolidated Company will employ the observable input value in the market as much as possible. The level of fair value is classified as follows based on the input value adopted by the evaluation technology:

Level 1: The public offer price (unadjusted) of the same asset or liability in the active market.
Level 2: In addition to the public offer price included in level 1, the input parameters of assets or liabilities are directly (namely price) or indirectly (namely derived from price) observable.
Level 3: Input parameters of assets or liabilities are not based on observable market data (non-observable parameters).

In case of any transfer event or situation of fair value between different levels, the Consolidated Company shall recognize such transfer on the reporting date.

Please refer to the following notes for information about the assumptions used to measure fair value:

Note 6 (7), investment property
Note 6 (18), financial instrument

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

6. Descriptions of Significant Accounting Items

(1) Cash and cash equivalents

Cash and petty cash Demand deposits Check deposits Time deposits Cash equivalents Cash and cash equivalents	2021.12.31	2020.12.31
	$ 510 2,210,307 1,078,350 - 735,745	710 224,793 503,467 1,548 3,377,674
	$ 4,024,912	4,108,192

The aforementioned cash equivalents are short-term bills, whose maturity ranges are between January and February in 2022 and January and March in 2021, and the interest rate ranges are 0.25% to 0.26% and 0.24% to 0.26%, respectively.

For the disclosed information on the interest rate risk and sensitivity analysis of the financial assets and liabilities of the Consolidated Company, please refer to Note 6(18).

(2) Financial Assets at Fair Value through Profit or Loss

Financial assets mandatorily measured at fair value through profit or loss: Non-derivative financial assets TWSE (or TPEx) listed company shares	2021.12.31	2020.12.31
	$ 80,722	44,039

The Consolidated Company has mandatorily designated the aforementioned items as non-derivative financial assets measured at fair value through profit or loss. The dividend income recognized in 2021 and 2020 was NT$2,819,000 and NT$1,929,000 respectively.
As of December 31, 2021 and 2020, none of the financial assets of the Consolidated Company was pledged as collateral.
(3) Financial Assets at Fair Value through Other Comprehensive Income

Equity instruments measured at fair value through other comprehensive income Domestic TWSE (or TPEx) listed company shares - Kindom Development Co., Ltd. Domestic stocks listed in TWSE or TPEx - Fubon Financial C Special Domestic non-TWSE (nor TPEx) listed company shares - Commonwealth Publishing Company Unlisted domestic stocks - Taiwan Calcom International Computer Graphic Co., Ltd. Total	2021.12.31	2020.12.31
	$ 441,328 1,240 6,633 -	357,545 - 5,825 -
	$ 449,201	363,370

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

Equity instrument investments measured at fair value through other comprehensive income

The equity instrument investment held by the Consolidated Company is a long-term strategic investment and not held for trading purposes, so it has been designated to be measured at fair value through other comprehensive income.

For the equity instrument investment designated as measured at fair value through other comprehensive income, the dividend incomes recognized by the Consolidated Company in 2021 and 2020 were NT$25,765,000 and NT$16,202,000.
The Consolidated Company did not dispose of strategic investment in 2021 and 2020, and accumulated profit and loss during that period were not transferred within the equity.
None of the financial assets of the Consolidated Company has been pledged as collateral.
Please refer to Note 6 (18) for credit risk (including impairment of debt instrument investment) and market risk information.
(4) Notes and accounts receivable

Accounts Receivable Less: Loss allowance	2021.12.31	2020.12.31
	$ 1,012,413 (7,551)	939,444 -
	$ 1,004,862	939,444

The Consolidated Company adopts the simplified method to estimate the expected credit loss for all notes receivable and accounts receivable, that is, to measure lifetime expected credit losses. For this measuring purpose, the Consolidated Company considers the past default records of clients, the current financial circumstances, the industrial economic situation, and the industrial outlook at the same time. The expected credit loss of notes receivable and accounts receivable of the Consolidated Company is analyzed as follows:

Not past due Past due 90 days and above		2021.12.31	Allowance of lifetime expected credit losses - 7,551 7,551
	The carrying amount of notes receivable and accounts receivable	Weighted average expected credit loss rate
	$ 1,004,862 7,551	- 100%
	$ 1,012,413

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

Not past due		2020.12.31
	The carrying amount of notes receivable and accounts receivable $ 939,444	Weighted average expected credit loss rate -	Allowance of lifetime expected credit losses -

Changes of loss allowance of notes receivable and accounts receivable of the Consolidated Company is as follows:

Beginning balance Impairment losses recognized Reversal of impairment loss Ending Balance	2021	2020
	$ - 7,551 -	- 11,587 (11,587)
	$ 7,551	-

As of December 31, 2021 and 2020, none of the receivables of the Consolidated Company were pledged as collateral.

(5) Investments accounted for using equity method

The investment of the Consolidated Company using the equity method on the reporting date is as follows:

ReadyCom eServices Corp.	2021.12.31 $ 15,120	2020.12.31 20,507

1. Associates

The share of associates' profit and loss enjoyed by the Consolidated Company is as follows:

Share attributable to the Consolidated Company: Net income of continuing operations	2021	2020
	$ (5,387)	1

The Consolidated Company does not have any contingent liabilities arising from the joint undertaking of the contingent liabilities of the associates with other investors or the individual accountability for the liabilities of the associates.

2. Collateral

As of December 31, 2021 and 2020, none of the investments under the equity method of the Consolidated Company was pledged as collateral.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

(6) Property, Plant and Equipment

Details of changes in cost, depreciation, and impairment loss of property, plant, and equipment of the Consolidated Company are as follows:

Land	Houses and buildings	Transportation equipment	Others equipment	Total
$ 62,430 - - -	36,313 - - -	1,930 - (1,930) -	58,969 3,875 - 189	159,642 3,875 (1,930) 189
$ 62,430	36,313	-	63,033	161,776
	14,969 21,344 -	1,930 - -	407 59,373 (811)	79,736 80,717 (811)
$ 62,430	36,313	1,930	58,969	159,642
	16,190 3,987 15,653 -	1,887 - - (1,887)	7,826 12,508 2,965 -	25,903 16,495 18,618 (1,887)
$ -	35,830	-	23,299	59,129
	14,337 1,853 -	1,876 11 -	407 7,554 (135)	16,620 9,418 (135)
$ -	16,190	1,887	7,826	25,903
$ 62,430	483	-	39,734	102,647
$ 62,430	632	54	-	63,116
$ 62,430	20,123	43	51,143	133,739

1. Impairment loss

In 2021, the Consolidated Company had no substantial economic benefits in the future for its buildings and other equipment, and therefore it recognized the impairment loss of NT$18,618,000, accounted for under other gains and losses.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

2. Collateral

Please refer to Note 8 for details of the property, plant, and equipment of the Consolidated Company pledged as collateral for the financing line as of December 31, 2021 and 2020.

(7) Investment Property

Cost or deemed cost: Balance as of January 1, 2021 Balance on December 31, 2021 Balance on January 1, 2020 Balance on December 31, 2020 Depreciation and impairment losses: Balance as of January 1, 2021 Depreciation for the year Balance on December 31, 2021 Balance on January 1, 2020 Depreciation for the year Balance on December 31, 2020 Carrying amount: December 31, 2021 January 1, 2020 December 31, 2020 Fair value: December 31, 2021 December 31, 2020	Land, houses and buildings
	$ 127,549
	$ 127,549
	$ 127,549
	$ 127,549
	$ 25,472 466
	$ 25,938
	$ 25,005 467
	$ 25,472
	$ 101,611
	$ 102,544
	$ 102,077
	$ 174,536
	$ 174,536

The fair value of investment property is based on the evaluation of the independent appraisers (with a relevant professional qualification accredited) or of the Consolidated Company through the comprehensive consideration by the comparative method (taking into account the information of the deal price of the real estate agent and the actual price registration of the Ministry of the Interior). The input value used in the fair value evaluation technique belongs to Level 3.

The fair value is evaluated by the income approach. In the absence of the current price in the active market, the evaluation considers the total aggregate estimated cash flow received from the lease of the property and discounts it with the earning rate that reflects the specific risks inherent in the net cash flow to determine the value of the property. The discount rates applied for the years ended on December 31, 2021 and 2020 both ranged at 1.18%.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

Please refer to Note 8 for details of the investment property of the Consolidated Company pledged as collateral for the financing line as of December 31, 2021 and 2020.

(8) Short-term loans

Details on short-term loans of the Consolidated Company were as follows:

Unsecured bank loans Unused limit Interest rate interval	2021.12.31 $ 200,000	2021.12.31 $ 200,000		2020.12.31 150,000 4,288,003
	$ 4,462,680
		1.05%		1.10%

For details of the Consolidated Company's interest rate risk and liquidity risk, please refer to Note 6(18).

Please refer to Note 8 for details of the collateral of the Consolidated Company's asset pledged for bank loans.

(9) Provisions

Balance as of January 1, 2021 Additional provisions for the current period Provisions used in the current period Balance on December 31, 2021 Balance on January 1, 2020 Additional provisions for the current period Provisions used in the current period Balance on December 31, 2020	Warranty
	$ 150,363 37,076 (5,813)
	$ 181,626
	$ 102,482 53,233 (5,352)
	$ 150,363

In 2021 and 2020, the warranty provisions of the Consolidated Company are mainly related to construction contracting. The warranty provisions are estimated based on the historical warranty data of various constructions. The Consolidated Company expects that the liability will occur mostly one year after the construction acceptance.

(10) Operating lease

The investment property leased by the Consolidated Company doesn't transfer all risks and remuneration attached to the ownership of the underlying assets, so the tenancy agreement is classified as an operating lease. Please refer to Note 6 (7) investment property for details.

The maturity analysis of the lease payment is listed as follows according to the nondiscounted future cash flows of lease receivable after the reporting date:

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

Less than 1 year 1 to 2 years Non-discounted future cash flows of lease	2021.12.31	2020.12.31
	$ 3,360 -	6,074 580
	$ 3,360	6,654

In 2021 and 2020, the rental income from investment property were NT$5,992,000 and NT$6,082,000. In addition, there was no material maintenance and servicing expense.

(11) Employee Benefits

1. Defined Benefit Plan

The adjustment of the present value of the defined benefit obligations and the fair value of the plan assets of the Consolidated Company is as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit obligation (assets) liabilities	2021.12.31

The defined benefit plan of the Consolidated Company is contributed to the special pension fund account at the Bank of Taiwan. The pension payment of each employee under the Labor Standards Act is calculated based on the base number of service years and the average salary of 6 months before retirement.

(1) Components of plan assets

The pension fund contributed by the Consolidated Company following the Labor Standards Act is under the overall management of the Bureau of Labor Funds of the Ministry of Labor. According to the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, with regard to utilization of the Fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks.

The Consolidated Company's contributions to the pension funds were deposited with Bank of Taiwan, which amounted to NT$24,023,000 on the reporting date. For the utilization of the pension fund, including the earnings rate and asset allocation of the fund, please refer to the information published on the website of the Bureau of Labor Funds of the Ministry of Labor.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

(2) Changes in present value of defined benefit obligations

The changes in the present value of defined benefit obligations of the Consolidated Company in 2021 and 2020 are as follows:

Defined benefit obligation on January 1 Current service cost and interest Remeasurement of net defined benefit liability (asset) `－`Actuarial gain and loss arising from changes in financial assumptions - Experience adjustments Benefits paid by the plan Defined benefit obligation on December 31	2021	2020
	$ 22,148 177 570 (658) (652)	22,317 201 512 (639) (243)
	$ 21,585	22,148

(3) Changes in fair value of plan assets

Changes in fair value of defined benefit plan assets of the Consolidated Company in 2021 and 2020 are as follows:

Fair value of plan assets on January 1 Interest income Remeasurement of net defined benefit liability (asset) `－`Return on plan assets (excluding current interest) Amount contributed to the plan Benefits paid by the plan Fair value of plan assets on December 31	2021	2020
	$ 25,548 207 (1,662) 582 (652)	23,678 217 1,141 755 (243)
	$ 24,023	25,548

(4) The Consolidated Company had no upper limit impact on defined benefit plan assets in 2021 and 2020.
(5) Expenses recognized as profit and loss

The expenses recognized as profit and loss of the Consolidated Company in 2021 and 2020 are as follows:

Net interest from net defined benefit liability (asset) Operating costs	2021 $ (30)	2020 (16) (16)
	$ (30)

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(6) Remeasurement of net defined benefit liability (asset) recognized as other comprehensive income

The remeasurement of the net defined benefit liability (asset) accumulated and recognized as other comprehensive income of the Consolidated Company as of December 31, 2021 and 2020 is as follows:

Accumulated balance on January 1 Current recognition Accumulated balance on December 31	2021	2020
	$ 3,903 (1,575)	2,635 1,268
	$ 2,328	3,903

(7) Actuarial assumption

The main actuarial assumptions used by the Consolidated Company at the end of the financial reporting period are as follows:

the financial reporting period are as follows:
Discount rate Future salary increase	2021.12.31	2020.12.31
	0.55% 1.75%	0.80% 2.00%

Based on the actuarial report, the Consolidated Company is expected to make a contribution payment of NT$582,000 to the defined benefit plans for the one-year period after the reporting date of 2021.

The weighted average lifetime of the defined benefit plans is 11.4 years.

(8) Sensitivity analysis

The impact of changes in the main actuarial assumptions to be adopted on the reporting date of December 31, 2021 and 2020 on the present value of defined benefit obligations is as follows:

December 31, 2021 Discount rate (change of 0.25%) Future salary increase (change of 1%) December 31, 2020 Discount rate (change of 0.25%) Future salary increase (change of 1%)	Impact on defined benefit obligations	Impact on defined benefit obligations
	Increase	Decrease
	$ (570) 2,441 (638) 2,748	589 (2,171) 662 (2,427)

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

The above sensitivity analysis is based on the impact of changes in a single assumption when other assumptions remain unchanged. In practice, the changes in assumptions may be interlinked. Sensitivity analysis is consistent with the method used to calculate net defined benefit liabilities on the balance sheet.

The methods and assumptions used in the preparation of sensitivity analysis in this period are the same as those in the previous period.

Defined Contribution Plan

The Consolidated Company's defined contribution plan contributes 6% of the worker's monthly wage to the individual labor pension accounts at the Bureau of Labor Insurance per the provisions of the Labor Pension Act. Under this plan, the Consolidated Company contributes a fixed amount to the Bureau of Labor Insurance, and there is no legal or constructive obligation to pay the additional amount.

The cost of the pension contributions to the Bureau of Labor Insurance for the years ended December 31, 2021 and 2020 amounted to NT$22,558,000 and NT$22,253,000, respectively.

Short-term compensated absences

Details of employee benefit liabilities of the Consolidated Company are as follows:

Short-term compensated absences	2021.12.31 $ 13,842	2020.12.31 15,057

(12) Income Tax

The details of income tax expenses of the Consolidated Company in 2021 and 2020 are as follows:

as follows:
Current income tax expenses Accrued in current year Adjustments to income tax expenses of previous period Surtax on unappropriated earnings Deferred tax expense Occurrence and reversal of temporary differences Income tax expenses	2021	2020
	$ 184,462 58 9,659	164,674 (1,905) 3,554
	194,179	166,323
	(11,624)	(10,575)
	$ 182,555	155,748

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

The relationship between the income tax expense and the profit before tax of the Consolidated Company in 2021 and 2020 is adjusted as follows:

Profit before tax Income tax calculated according to the domestic tax rate of the location of the Company Adjustments to income tax expenses of previous period Surtax on unappropriated earnings Tax exemption profit Others Total	2021 $ 923,047	2020 782,192 156,438 (1,905) 3,554 (3,390) 1,051
	184,609 58 9,659 (7,394) (4,377)
	$ 182,555	155,748

Deferred tax assets
(1) Unrecognized deferred tax assets

Items not recognized as deferred tax assets by the Consolidated Company are as follows:

Deductible temporary difference	2021.12.31 $ 803	2020.12.31 803

(2) Recognized deferred tax assets

The changes in deferred tax assets in 2021 and 2020 are as follows:

Provisions $ 30,068 6,253	Cumulativ e compensat ed absences 3,007 (243)	Impairmen t loss - 3,639	Others 1,560 1,975	Total 34,635 11,624
$ 36,321	2,764	3,639	3,535	46,259
$ 20,491 9,577	2,905 102	- -	664 896	24,060 10,575
$ 30,068	3,007	-	1,560	34,635

The Consolidated Company's business income tax declaration has been approved by the collection authority until 2019, except that Jiequn Investment Co., Ltd. has been approved to 2020.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(13) Capital and other equity

As of December 31, 2021 and 2020, the total authorized capital stock of the Company is NT$1,200,000,000; the total number of shares is 120,000,000 with a par value of NT$10 per share, and the number of issued shares is 106,036,000. The payment of all issued shares has been collected.

Capital surplus

Details of capital surplus was as follows:

been collected. Capital surplus Details of capital surplus was as follows:
Shares premium Premium on conversion of convertible bonds Changes in the equity net value of associates and joint ventures recognized by the equity method Unclaimed dividends after effective period Others	2021.12.31	2020.12.31
	$ 383,109 130,766 2,568 521 1,437	383,109 130,766 2,568 414 1,437
	$ 518,401	518,294

In accordance with the Company Act, realized capital surplus can only be distributed to shareholders based on their original shareholding percentage as new shares or cash dividends after offsetting losses. The realized capital surplus referred to in the preceding paragraph includes the overage from the issuance of shares over the par value and the proceeds from the receipt of gifts. In accordance with the provisions of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the capital surplus may be capitalized, and the combined amount of any portions capitalized may not exceed 10% of the paid-in capital each year.

2. Retained earnings

The Company's Articles of Association stipulates that the Company's earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, and a special reserve shall be set aside in accordance with applicable laws and regulations. The remaining balance, if any, can be distributed to the shareholders as dividends, and bonus dividends according to the distribution plan proposed by the Board of Directors and submitted to the shareholders' meeting for approval.

The Company will develop towards contracting large-scale constructions and strive for growth and innovation. To continuously maintain sufficient capital to meet the needs of the business, and to take into account the cash required for shareholders, the Company's future cash dividend ratio will be no less than 20% of the total cash and share dividends to be distributed in the current year.

(1) Legal reserve

When there is no loss in the Company, the legal reserve will be used to issue new shares or cash dividends upon resolution by the Shareholders' Meeting, to the limit of the part of the reserve that has exceeded 25% of the paid-in capital.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(2) Earnings distribution

The 2020 and 2019 distribution of earnings were resolved at the shareholders' meeting on July 1, 2021 and June 15, 2020, respectively. The dividends distributed to owners are as follows:

		2020		2019	2019
	Dividend rate			Dividend
		(NT$)	Amount	rate (NT$)	Amount
Dividends to common
shareholders:
Cash dividend	$	3.6	381,728	3.0	318,107
Other equity interest (net	after	tax)
				Unrealized gains
				and losses from
				financial assets at
					fair value
				through other
				comprehensive
					income
Balance as of January 1, 2021				$	144,653
Unrealized gain (loss) from financial assets			measured at fair value
through other comprehensive income					84,544
Balance on December 31,	2021			$	229,197
Balance on January 1, 2020				$	126,159
Unrealized gain (loss) from financial assets			measured at fair value
through other comprehensive income					18,494
Balance on December 31,	2020			$	144,653

Other equity interest (net after tax)

(14) Earnings per Share

The basic and diluted earnings per share of the Company in 2021 and 2020 are calculated as follows:

Basic earnings per share Net profit attributable to ordinary equity holders of the Company Weighted average number of ordinary shares outstanding	2021	2020
	$ 740,476	626,440
	106,036	106,036
	$ 6.98	5.91

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

Diluted earnings per share Net profit attributable to ordinary equity holders of the Company Weighted average number of ordinary shares outstanding Impact of potential ordinary shares with the dilution effect Influence of potentially diluted shares - employee compensation Weighted average number of common shares outstanding (after adjusting the impact of diluting potential common shares) (15) Revenue from Contracts with Clients 1. Disaggregation of revenue Timing of revenue recognition: Gradually transferred constructions over time Gradually transferred services over time 2. Contract balances 2021.12.31 Notes and accounts receivable (including related parties) $ 1,832,422 Less: Loss allowance (7,551) Total $ 1,824,871 Contract asset-construction $ 2,159,046 Less: Loss allowance - Total $ 2,159,046 Contract liability-construction $ 444,657	2021	2020
	$ 740,476	626,440
	106,036 938	106,036 711
	106,974	106,747
	$ 6.92	5.87
	2021	2020
	$ 10,765,320 7,002	14,123,630 6,999
	$ 10,772,322	14,130,629
	2020.12.31	2020.1.1 3,040,963 - 3,040,963 1,594,708 - 1,594,708 988,111
$ 1,832,422 (7,551)	2,828,300 -
$ 1,824,871	2,828,300
$ 2,159,046 -	1,441,162 -
$ 2,159,046	1,441,162
$ 444,657	1,525,341

Please refer to Note 6 (4) for the disclosure of accounts receivable and their impairment.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

The changes in contract assets and contract liabilities are mainly due to the difference between the time when the Consolidated Company transfers commodity or services to clients to meet the performance obligations and the time when clients pay. Therefore, there was no other material change in 2021 and 2020.

(16) Remuneration to employees, Directors and Supervisors

The Company's Articles of Association stipulates that, after annual earnings first offset against any deficit, a minimum of 0.5% shall be allocated as employee remuneration and a maximum of 2% as Directors' and Supervisors' remuneration. However, profits must first be taken to offset against cumulative losses if any.

The Company's estimated remuneration of employees in 2021 and 2020 are NT$49,810,000 and NT$33,223,000 respectively, and those of Directors and Supervisors are NT$19,602,000 and NT$16,611,000 respectively. That is based on the Company's profit before tax before deducting remuneration of employees, Directors, and Supervisors during the period multiplied by the remuneration distribution ratio of employees, Directors, and Supervisors stipulated in the Articles of Association of the Company as the estimated basis, and reported as the operating costs and operating expenses in 2021 and 2020. There is no difference between the remuneration of the employees, Directors, and Supervisors allocated by the aforesaid resolution of the Board of Directors and the amount estimated in the parent company only financial statements for 2021 and 2020. For relevant information, please refer to the Market Observation Post System (MOPS).

(17) Non-operating income and expenses
Interest income

The details of income tax expenses of the Consolidated Company in 2021 and 2020 are as follows:

as follows:
Loans and receivables Bank deposits Other income	2021	2020
	$ 5,352 2,596 2,087	7,953 327 -
	$ 10,035	8,280

2. Other income

Details of other income of the Consolidated Company in 2021 and 2020 are as follows:

Dividend income Rental income Other income	2021	2020
	$ 28,584 11 513	18,131 11 4,173
	$ 29,108	22,315

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

Other gains or losses

Details of other gains and losses of the Consolidated Company in 2021 and 2020 are as follows:

follows:
Gains (or losses) on financial assets measured at fair value through profit or loss Gains on disposal of property, plant and equipment Gain on lease modification Impairment loss Other expenses	2021	2020
	$ 34,684 33 58 (18,618) (1,074)	(6,095) - - - (9,072)
	$ 15,083	(15,167)

Financial costs

Details of the financial cost of the Consolidated Company in 2021 and 2020 are as follows:

Interest expense Bank loans Others	2021	2020
	$ 1,172 285	2,721 288
	$ 1,457	3,009

(18) Financial Instruments
Credit risk
- (1) Credit risk exposure

The carrying amount of financial assets represents the maximal amount of credit risk exposure.

(2) The concentration of credit risk

The revenues of the Consolidated Company in 2021 and 2020 are derived from the sales to domestic clients; the clients of the Consolidated Company are concentrated in the construction industry and public works, but mainly companies in the Group, creditworthy companies and government agencies. Therefore, no material concentration of credit risk is found in the evaluation of the Consolidated Company. The Consolidated Company still regularly evaluates the possibility of recovery of accounts receivable and provides the allowance for bad debts also the loss of bad debts is within the expectation of the management.

(3) Credit risk of receivables

Please refer to Note 6(4) for credit risk exposure information of notes and accounts receivable.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

2. Liquidity risk

The following table shows the contractual maturity of financial liabilities, including estimated interest but excluding the impact of net amount agreements.

Carrying amount $ 200,000 283,891 4,142,887 295,238 1,854 5,106	Contractual cash flows 201,400 283,891 4,142,887 295,238 1,877 6,184	Within 1 year 201,400 283,891 2,176,173 295,238 1,877 -	1-3 years - - 1,966,714 - - 1,543	3-5 years - - - - - 393	Over 5 years - - - - - 4,248
$ 4,928,976	4,931,477	2,958,579	1,968,257	393	4,248
$ 150,000 335,247 3,749,899 315,681 2,159 9,722	151,100 335,247 3,749,899 315,681 2,652 10,601	151,100 335,247 1,855,504 315,681 2,652 -	- - 1,894,395 - - 4,474	- - - - - 1,682	- - - - - 4,445
$ 4,562,708	4,565,180	2,660,184	1,898,869	1,682	4,445

The Consolidated Company does not expect that the occurrence timing of cash flow analyzed on due date would arrive significantly earlier, or the actual amount would significantly vary.

3. Interest Rate Analysis

The risk of interest rate exposure on the financial assets and financial liabilities of the Consolidated Company is described in the liquidity risk management of this note.

The following sensitivity analysis is determined by the interest rate risk exposure of derivative and non-derivative instruments on the reporting date. For floating rate liabilities, the analysis method presumes that the amount of outstanding liabilities on the reporting date is outstanding throughout the year. The rate of change used in reporting the interest rate to the key management within the Consolidated Company is 0.5% increase or decrease in the interest rate, which also signifies the management's evaluation of the reasonable range of likely fluctuations in the interest rate.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

4. Other Price Risk

On the reporting date, if the price of equity securities fluctuates (two periods of analysis are based on the same basis, assuming that other variable factors remain unchanged), the impact on the comprehensive profit and loss items is as follows:

Securities price on the reporting date Up by 10% Down by 10%	2021 After-tax other comprehensive income $ 44,257	After-tax profit or loss 8,072	2020 After-tax other comprehensive income 35,755	After-tax profit or loss 4,404
	$ (44,257)	(8,072)	(35,755)	(4,404)

Fair Value Information
(1) Type and fair value of financial instruments

Financial assets and liabilities measured at fair value through profit or loss and financial assets measured at fair value through other comprehensive income are measured at fair value on a repeatability basis. The carrying amount and fair value of various types of financial assets and financial liabilities (including fair value level information, then again the carrying amount of financial instruments not measured by fair value is a reasonable approximation, and the fair value of equity instrument investment lease liabilities without quotation in the active market that cannot be reliably measured, the fair value is not required to be disclosed according to regulations) are listed as follows:

	2021.12.31	2021.12.31	2021.12.31
Carrying amount		Fairvalue
	Level 1	Level 2	Level 3	Total
$ 80,722	80,722	-	-	80,722
$ 449,201	442,568	-	6,633	449,201
$ 4,024,912 1,824,871 310,140 22,324	- - - -	- - - -	- - - -	- - - -
6,182,247	-	-	-	-
$ 6,712,170	523,290	-	6,633	529,923

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

	2021.12.31	2021.12.31	2021.12.31
Carrying amount		Fair value
	Level 1	Level 2	Level 3	Total
	- - - - -	- - - - -	- - - - -	- - - - -
$ 4,928,976	-	-	-	-

	2020.12.31	2020.12.31	2020.12.31
Carrying amount		Fair value
	Level 1	Level 2	Level 3	Total
$ 44,039	44,039	-	-	44,039
$ 363,370	357,545	-	5,825	363,370
$ 4,108,192 2,828,300 201,785 11,171	- - - -	- - - -	- - - -	- - - -
7,149,448	-	-	-	-
$ 7,556,857	401,584	-	5,825	407,409
	- - - - -	- - - - -	- - - - -	- - - - -
$ 4,562,708	-	-	-	-

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(2) Quantitative information of fair value measurement of material unobservable inputs (Level 3)

The fair value measurement of the Consolidated Company is classified as Level 3, mainly including financial assets measured at fair value through other comprehensive income and is conducted through the income approach.

(3) Fair value evaluation technique of financial instruments measured at fair value

Non-derivative financial instruments

If a financial instrument has a quoted price in an active market, then the active market quotation shall be the fair value. The market price of the major Exchanges and the market price of popular central government bonds judged and released by the Taipei Exchange, which is the basis of the fair values of TWSE/TPEx listed equity instruments and debt instruments with active market quotations.

If the public quotation of a financial instrument can be obtained from an exchange, broker, underwriter, industry association, pricing service agency or competent authority in a timely and frequent manner, and the price represents the actual and regular fair market transactions, then the financial instrument has an active market quotation. If the above conditions are not met, the market is deemed not active. Generally speaking, large difference in buying and selling price, significant increase of buying and selling price, and few transactions are indexes of market not active.

If the financial instruments held by the Consolidated Company fit into an active market, their fair values are listed according to the categories and attributes as follows :

The stock of a TWSE/TPEx listed company is a financial asset with standard terms and traded in an active market, and its fair value is determined by reference to the market quotation.

In addition to the aforementioned financial instruments with an active market, the fair value of other financial instruments is acquired by valuation technique or by reference to the counterparty quotes. The fair value acquired through valuation technique can refer to the current fair value, the discounted cash flow method or other valuation techniques for financial instruments with similar substantive conditions and characteristics in essence, including the market information available on the combined reporting date using the model (such as the reference yield curve of the OTC market and the average quotation of Reuters commercial promissory note rate).

If the financial instruments held by the Consolidated Company do not fit into the active market, their fair values are listed according to the categories and attributes as follows :

The equity instrument without public quotation: The discounted cash flow model is used to estimate fair value. Its main assumption is that the expected future cash flow of the investee will be measured by discounting the rate of return, reflecting the time value of money and investment risk.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

The equity instrument without public quotation: The market comparable company approach is used to estimate the fair value. Its main assumption is based on the estimated earnings before tax, interest, depreciation, and amortization of the investee and the earnings multiplier derived from the market quotation of comparable TWSE/TPEx listed companies. This estimate has adjusted the discount effect of the lack of market liquidity of the equity securities.

(4) Details of changes in Level 3

Measured at fair value through other comprehensive income	Measured at fair value through other comprehensive income	Total 5,825 6,633
Equity instruments without public quotes $ 5,825	Bond investment -
$ 6,633	-
$ 5,920	-	5,920
$ 5,825	-	5,825

The above total profit or loss is reported in "unrealized valuation profit (loss) of financial assets measured at fair value through other comprehensive income." Among them, the assets still held on December 31, 2021 and 2020 are as follows:

2021 2020 Total profit or loss Recognized in other comprehensive income (under unrealized valuation gains and losses from "financial assets at fair value through other comprehensive income") $ 808 (95)

(19) Financial Risk Management

1. Outline

The Consolidated Company is exposed to the following risks due to the use of financial instruments:

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

The notes convey the aforementioned various risk exposure of the Consolidated Company and the objectives, policies, and procedures for the measurement and risk management of the Consolidated Company. For further quantitative disclosure, please refer to the notes in the consolidated financial report.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

Risk Management Framework
(1) Risk management policies:

In the process of operation, enterprises often encounter many uncertain factors that may threaten their operations. In order to perceive and control them as early as possible and reduce the losses caused by the occurrence of risks, a good risk management policy is essential. The Board of Directors of the Consolidated Company establishes the overall risk management policy in line with the operating strategy, operating environment and department plan. Its main subjects include the aspects of the environment, internal and external operational flow, and strategic decision-making, etc. Furthermore, the Board of Directors shall put forward risk management reports on the resolutions, deliverables, supervision, and subsequent execution process of various risk management issues. So when the future operation and management encounter similar or the same problems, it can refer to the experience and propose better solutions.

(2) Organizational structure of risk management:

Each hierarchy level or department of the Consolidated Company shall be responsible for the risks. Once the situation is found to be wrong, it shall promptly report to the auditing office or the senior executive and seek solutions as soon as possible. The decision-maker shall also take action within the shortest time.

The organizational structure of risk management of the merged company is as follows:

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Name of Scope of Responsibilities
Organization
The Board of Establish risk management policies
Directors
Ensure the effective operation and resource allocation of risk
management mechanism
Senior Implement risk management decisions of the Board of Directors
Management
Coordinate risk management affairs across departments
Auditing Conduct daily risk management audit
Office
Supervise risk management activities and report the
implementation to the Board of Directors and Supervisors
Other Consolidate the implementation results of risk management
Departments activities
Conduct daily risk management operations
Determine the risk category depending on environmental
changes, and propose the undertaking plan
----- End of picture text -----

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

3. Credit risk

Credit risk refers to the risk of financial loss due to the failure of the Consolidated Company's clients or counterparties of financial instruments to perform their contractual obligations. It mainly comes from the accounts receivable from clients and securities investment of the Consolidated Company.

(1) Accounts receivable and other receivables

The credit risk exposure of the Consolidated Company is primarily affected by the individual circumstances of each client. The management also considers the statistical data of the Consolidated Company's client base, including the default risk of the client's industry and country, as these factors may affect the credit risk. In order to reduce the credit risk of receivables, the Consolidated Company continuously assesses the financial status of its clients and requires the counterparty to provide collaterals or guarantees when necessary.

(2) Investment

The credit risks of bank deposits, fixed-income investments, and other financial instruments are measured and monitored by the financial department of the Consolidated Company. Given that the trading counterpart and the contract performing party of the Consolidated Company are financial institutions, corporate organizations, and government agencies with good credit, there is no material credit risk because there is no significant doubt about the contract performance.

4. Liquidity risk

Liquidity risk refers to the risk that the Consolidated Company is unable to deliver cash or other financial assets to settle financial liabilities and fails to perform relevant obligations. The method of managing the liquidity of the Consolidated Company is to ensure that the Consolidated Company has sufficient circulating capital to pay for its due liabilities under normal and stressful conditions, without any risk of unacceptable loss or damage to the reputation of the Consolidated Company.

Generally speaking, the Consolidated Company ensures that there is sufficient cash to meet the needs of expected operating expenses, including the performance of financial obligations, but excluding the potential impact that cannot be reasonably expected under extreme circumstances, such as natural disasters. Moreover, the unused comprehensive loan facilities (including NTD loans, letters of credit, and commercial paper facilities) of the Consolidated Company on December 31, 2021 and 2020 totaled NT$4,662,680,000 and NT$4,488,003,000.

5. Market Risk

Market risk refers to the risk that changes in market prices, such as exchange rate, interest rate, and equity instrument price will affect the earnings of the Consolidated Company or the value of the financial instruments it holds. The goal of market risk management is to control the market risk to an acceptable extent and optimize the return on investment.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(1) Interest rate risk

The policy of the Consolidated Company is to ensure that the risk of borrowing interest rate fluctuation is based on fixed interest rates. To achieve this goal, part of this is through the signing of fixed interest rate instruments, and part is through the borrowing floating interest rates, and the use of interest rate swap contracts is attributed to avoid the cash flow variability due to interest rate fluctuations.

(2) Other market price risks

The Consolidated Company has the risk of exposure in equity price due to the equity securities investment of TWSE/TPEx listed companies. The equity investment is not held for trading but a strategic investment. The Consolidated Company has not actively traded such investments, and the managing personnel of the Consolidated Company manage the risks by holding different risk investment portfolios.

(20) Capital management

The goal of the capital management of the Consolidated Company is to ensure the ability to sustain operation to continuously offer the shareholders' remuneration and other stakeholders' interests and to maintain the best capital structure to reduce the cost of capital.

In order to maintain or recapitalize structure, the Consolidated Company may adjust the dividends paid to the shareholders, refund of capital reduction to shareholders, issue new shares, or sell assets to settle the liabilities.

The Consolidated Company is the same as its peers and uses debt to capital ratio as the foundation of capital control. The ratio is calculated by dividing net indebtedness over the capitalization. Net indebtedness is the total liabilities, shown in the balance sheets, less cash and cash equivalents. Capitalization is the entire component of equity (that is, equity, capital surplus, retained earnings, other equity, and non-controlling equity) plus net indebtedness.

The capital management strategy of the Consolidated Company in 2021 is consistent with that in 2020, to ensure financing at a reasonable cost. The debt to capital ratios at December 31, 2021 and 2020 are as follows:

31, 2021 and 2020 are as follows:
Total Liabilities Less: Cash and cash equivalents Net liabilities Total Equity Adjusted capital Debt-to-capital ratio	2021.12.31		2020.12.31
	$ 5,766,604 (4,024,912)		6,364,378 (4,108,192)
	1,741,692 3,511,139		2,256,186 3,069,278
	$ 5,252,831		5,325,464
		33%	42%

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

7. Related-Party Transactions

(1) The parent company and the ultimate controlling party

Kindom Development Co., Ltd. is the parent company of the Consolidated Company and the ultimate controller of the Group to which it belongs and holds 34.18% of the outstanding ordinary shares of the Consolidated Company. Kindom Development Co., Ltd. has prepared consolidated financial statements for public use.

(2) Names and relation of related parties

The related parties which have trading with the Consolidated Company within the period of the financial report are as follows:

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Name of related parties Relationship with the Consolidated Company
----- End of picture text -----

Kindom Development Co., Ltd.	The parent company of the Company
Kindom Yu San Education	The entity's chairman is the first-degree relatives of
Foundation	the Company's Directors

(3) Significant transactions with related parties
Sales of services to related parties

The substantial sales amount of the Consolidated Company to related party were as follows:

follows:
Parent company - Kindom Development Co., Ltd.	Nature Engineerin g constructio n		2021
		Total contract amount $ 10,935,738	Valuated amount 7,358,430	Current valuation amount 2,444,757	Income recognized in the current period 2,828,862

Parent company - Kindom Development Co., Ltd.	Nature Engineerin g constructio n		2020
		Total contract amount $ 17,709,729	Valuated amount 11,592,336	Current valuation amount 5,733,902	Income recognized in the current period 5,304,012

(1) The constructions contracted by the Consolidated Company from the related parties are compliant to the outsourcing regulations of the related parties, plus a reasonable management fee and profit in accordance with the project budget, and after the price comparison and negotiation procedures, the contract prices are determined after they are submitted to the supervisors for approval.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(2) From January 1 to December 31 in 2021 and 2020, the gross profit margin of the constructions contracted by the Consolidated Company from non-related parties was approximately 1.92% to 25.87% and 19.92% to 19.90%, and that of the related parties was about 3.74% to 4.64% and 3.74% to 4.94%, respectively.
Receivables from related parties and contract assets

The Consolidated Company's receivables from related parties and contract assets are as follows:

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

Type of related
Accounting items parties 2021.12.31 2020.12.31
Notes receivable Parent company - $ - 1,119,596
Kindom
Development Co.,
Ltd.
Accounts Receivable Parent company - 820,009 769,260
Kindom
Development Co.,
Ltd.
Contract assets Parent company - 205,758 131,468
Kindom
Development Co.,
Ltd.
Contract assets (retention Parent company - 16,746 19,774
receivables) Kindom
Development Co.,
Ltd.
$ 1,042,513 2,040,098
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For 2021 and 2020, the collection period of the group from related parties was 50% due immediately, 50% due in 60 days, and 100% due in 90 days; one assessment was performed on general cases in a month, 100% due immediately, or 100% due in 30 days, or 100% due in 90 days.

3. Endorsements/guarantees

On December 31, 2021 and 2020, the Consolidated Company is the joint partner and joint debtor of parent company Kindom Development Co., Ltd. for cooperative development and construction, with the amount of NT$28,384,000.

4. Leases

In 2021 and 2020, the Consolidated Company leased to parent company Kindom Development Co., Ltd. office building and signed a tenancy agreement concerning the rental market of offices in neighboring areas. The total contract value is NT$294,000 per month. The rental income for both 2021 and 2020 was NT$3,360,000.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

The Consolidated Company leased office building from its parent company Kindom Development Co., Ltd., with a total contract value of NT$575,000 per month for both 2021 and 2020. The rental expense for 2021 and 2020 is NT$6,571,000 and NT$2,952,000, respectively.

Others
- (1) In 2021 and 2020, the Consolidated Company donated NT$6,000,000 and NT$5,500,000 to Kindom Yu San Education Foundation, a syndicate legal entity, for the promotion of the foundation's business.
- (2) In 2021 and 2020, the group entered into a professional service contract with Kindom Development Co., Ltd., the parent company, for the provision of engineering research, recommendation, and education by the group at a total contract price of NT$1,060,000 and NT$963,000, which was fully settled as of December 31, 2021.
(4) Key management personnel transactions

Remuneration to major management personnel includes:

Short-term Employee Benefits Benefits after retirement	2021	2020
	$ 111,765 246	101,269 185
	$ 112,011	101,454

8. Pledged Assets

Details of the carrying value of pledged assets by the Consolidated Company were as follows:

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

Name of assets Pledge guarantee object 2021.12.31 2020.12.31
Other financial assets - Loan facilities collaterals and $ 179,276 168,484
current construction guarantees
Property, plant, and Loan facilities collaterals 53,200 53,200
equipment - net
Net amount of investment Loan facilities collaterals 95,121 95,353
property
$ 327,597 317,037
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9. Significant Contingent Liabilities and Unrecognized Contract Commitments

(1) Significant unrecognized contract commitments:
On December 31, 2021 and 2020, the total amounts of material construction contracts by the Consolidated Company were NT$46,613,096,000 and NT$44,164,036,000 respectively, and the payments received according to the contract were NT$7,741,953,000 and NT$19,796,069,000, respectively.
Approved by the Board of Directors on December 27, 2021, and December 30, 2020, the Consolidated Company committed to donate NT$9,000,000 and NT$6,000,000 to the Kindom Yu San Education Foundation in 2022 and 2021 for the promotion of the foundation's business.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(2) Contingent liability

In relation to the construction project under Project Code 061M,the Company was asked for the joint damages amounted to NT$ 20,131 thousand; however, due to the lack of evidence, the case is currently undergoing mediation procedures.

10. Significant Disaster Loss: None.

11. Significant Events after the End of the Financial Reporting Period: None.

12. Others

(1) The function of employee benefits, depreciation, depletion, and amortization are summarized as follows:

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

Function 2021 2020
Operating Operating Total Operating Operating Total
costs expenses costs expenses
Nature
Employee benefits
expenses
Salaries and wages $ 468,964 192,456 661,420 492,997 187,774 680,771
Labor insurance and 36,251 9,871 46,122 35,926 9,325 45,251
national health
insurance
Pension expenses 16,388 6,140 22,528 16,428 5,809 22,237
Other employee 1,565 8,289 9,854 1,027 13,545 14,572
benefits expenses
Depreciation 5,189 14,505 19,694 3,466 8,614 12,080
expense
Depletion expenses - - - - - -
Amortization - - - - - -
expenses
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13. Disclosure Notes

(1) Information on Material Transactions

In 2021, under Regulations Governing the Preparation of Financial Reports by Securities Issuers, information related to material transactions should be disclosed by the

Consolidated Company is as the following:

Loan of funds to others: none.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

2. Endorsement/guarantees for others:

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

Unit: NT$ thousand
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----- Start of picture text -----

Subject of The ratio of
Name of endorsements/guarantees endorsement/Limit on Maximum Outstanding Endorsement endorsement accumulated endorsementMaximum Endorsement/guarantees Endorsement/guarantees Endorsement
No. endorsement/guarantee provider Company name Relationship(Note 1) provided for a single partyguarantees (Note 2) balance for this period Endorsements/guarantees - Ending expenditureActual secured by the guarantee property amount the net value of the latest amount to guarantee financial / guarantee (Note 2) amount provided by subsidiaries to parent company provided by subsidiariescompany to parent subsidiary in provided to /guarantee China
statements
0 Kedge Kindom Parent/Subsidiary $ 7,021,866 14,192 14,192 14,192 - 0.40% 7,021,866 - Y -
Construction Development Company
Co., Ltd. Co., Ltd.
1 Dingtian Kindom Parent/Subsidiary 48,073 14,192 14,192 14,192 - 29.52% 48,073 - Y -
Construction Development Company
Co., Ltd. Co., Ltd.
1 〃 Kedge 〃 7,210,955 1,376,500 1,376,500 1,376,500 - 2,863.35% 14,421,910 - Y -
Construction
Co., Ltd.
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Note 1. Listed below are 7 types of relationship between the endorser and the endorsee, simply indicating the type will do:
(1) A company with which the Company has business relationship.
(2) A company in which the Company directly or indirectly holds more than 50% of the voting shares.
(3) A company that directly or indirectly holds more than 50% of the voting shares in the Company.
(4) Companies in which the Company holds directly or indirectly 90% or more of the voting rights.
(5) Where a company fulfills its contractual obligations by providing mutual endorsements for another company in the same industry or for joint builders for purposes of undertaking a construction project.
(6) Where all capital contributing shareholders make endorsements for their jointly invested company in proportion to their shareholding percentages.
(7) Where companies in the same industry provide among themselves joint and several securities for a performance bond of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.
Note 2. 1. the Company's endorsement method is that the total amount of external endorsements shall not exceed 200% of the net value of the Company's latest financial statements, and the endorsement amount for a single enterprise shall not exceed 200% of the net value of the Company's latest financial statements. The aggregate amount of endorsements/guarantees on all construction projects shall not exceed 10 times of its net equity as stated in its latest financial statement, and the aggregate amount of endorsements/guarantees on a single construction project shall not exceed 5 times of its net equity as stated in its latest financial statements.
The endorsement method of Dingtian Construction Co., Ltd. is that the total amount of external endorsement shall not exceed 100% of the net value of the latest financial statements of the Company, and the endorsement amount for a single enterprise shall not exceed 100% of the net value of the latest financial statements of the Company. The aggregate amount of endorsements/guarantees on all construction projects shall not exceed 300 times of its net equity as stated in its latest financial statement, and the aggregate amount of endorsements/guarantees on a single construction project shall not exceed 150 times of its net equity as stated in its latest financial statements.
Note 3. The above transactions have been written off at the time of preparation of the consolidated financial statements.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

Securities held at the end of the period (excluding investment in subsidiaries, associates and interest in joint ventures):

Unit: NT$ thousand

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

End of period Maximum
company Holding Types and names of securities securities issuerRelationship with the Accounting item Number of (thousand shares Carrying amount Shareholding Ratio Fair value shareholding or contribution during the Remarks
shares) period
Kedge Shares - Kindom Kedge Financial assets measured 550 $ 20,763 0.10 % 20,763 0.10%
Construction Co., Development Co., Construction Co., at fair value through other
Ltd. Ltd. Ltd. is its comprehensive income -
subsidiary non-current
Jiequn Investment Shares - Fubon - Financial assets at fair 537 40,945 - % 40,945 - %
Co., Ltd. Financial Holding value through profit or
Co., Ltd. loss - current
〃 Shares - SinoPac - 〃 211 3,410 - % 3,410 - %
Financial Holdings
Co., Ltd.
〃 Shares - Kindom Jiequn Investment Financial assets measured 9,373 353,834 1.69 % 353,834 1.69%
Development Co., is the second-tier at fair value through other
Ltd. subsidiary of that comprehensive income -
company. non-current
〃 Shares - Fubon - 〃 11 657 - % 657 - %
Financial C Special
〃 Shares - Taiwan - 〃 405 - 0.78 % - 0.78%
Calcom
International
Computer Graphic
Co., Ltd.
Guanqing Shares - Kindom Guanqing 〃 1,768 66,731 0.32 % 66,731 0.32%
Electromechanical Development Co., Electromechanical
Co., Ltd. Ltd. is the second-tier
subsidiary of that
company.
〃 Shares - Fubon - 〃 10 583 - % 583 - %
Financial C Special
〃 Shares - Global - 〃 145 6,633 0.59 % 6,633 0.59%
Views-
Commonwealth
Publishing Co.
〃 Shares - Fubon - Financial assets at fair 477 36,367 - % 36,367 - %
Financial Holding value through profit or
Co., Ltd. loss - current
----- End of picture text -----

Accumulated to buy or sell the same marketable securities amount to NT$300 million or more than 20% of the paid-up capital: None.
The amount of property acquired reaches NT$300 million or more than 20% of the paid-in capital: none.
The amount of property disposal reaches NT$300 million or more than 20% of the paid-in capital: none.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

Where the amount of goods purchased or sold with related parties reaches NT$100 million or more than 20% of the paid-in capital: none.

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

Unit: NT$ thousand
Transaction situation The situation and reason Notes/accounts
for the difference receivable (or payable)
between the transaction
terms and the general
transaction
Purchases (Sales) Name of RelationshipPurchases/sales Amount As a Loan period Unit Price Loan period Balance Ratio to Remarks
Company transaction (Note) percentage total notes
counterpart of total and
purchase accounts
(sales) receivable
(payable)
Kedge Kindom An Contracting $ (2,444,757) (27.64)%Payment by Equivalent Slightly 836,755 29.46%
Construction Co., Development Co., investment installment to other longer than
Ltd. Ltd. company following the transactionsnormal
that contract is
evaluates equivalent to
Kedge the general
Construction transaction.
Co., Ltd. by
the equity
method
Kedge Dingtian Investee of Contracting 104,570 1.10%Payment by Equivalent Equivalent to (18,383) (0.42)%
Construction Co., Construction Co., Kedge installment to other other
Ltd. Ltd. Construction following the transactionstransactions
accounted contract is
for using the equivalent to
equity the general
method transaction.
〃 Guanqing 〃〃 170,686 1.79% 〃〃〃 (50,757) (1.16)%
Electromechanical
Co., Ltd.
Dingtian Kedge 〃〃 (104,570) (100.00)% 〃〃〃 18,383 100.00%
Construction Co., Construction Co.,
Ltd. Ltd.
Guanqing 〃〃〃 (170,686) (94.81)% 〃〃〃 50,757 67.46%
Electromechanical
Co., Ltd.
----- End of picture text -----

Note: It refers to the current valuation amount.

Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital:

Unit: NT$ thousand

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

Overdue receivables from related
The companies that Balance of Recovery amount
record such Name of transaction receivables Turnover parties of receivables from Provisions for
transactions as counterpart Relationship from related rate Treatment related parties loss allowance
receivables parties Amount Method after the period
Kedge Construction Kindom An investment $ 836,755 2.06 - - 95,354 -
Co., Ltd. Development Co., company that
Ltd. evaluates Kedge
Construction Co., Ltd.
by the equity method
----- End of picture text -----

Derivative financial instrument transactions: None.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

Business relationship and significant transactions between parent company and subsidiaries:

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

Transactions
Name of the
Nature of
No. Trader's name transaction Ratio to consolidated
counterpart Relationship Account Amount Terms of transaction total operating
revenue or total assets
0 Kedge Construction Co., Ltd. Guanqing 1 Contract liabilities $ 2,310 Equivalent to general 0.02%
Electromechanical Co., transactions
Ltd.
0 〃〃 1 Notes and accounts 50,757 〃 0.55%
payables
0 〃〃 1 Operating costs 160,595 〃 1.49%
0 〃 Dingtian Construction 1 Contract liabilities 1,622 〃 0.02%
Co., Ltd.
0 〃〃 1 Notes and accounts 18,383 〃 0.20%
payables
0 〃〃 1 Operating costs 98,734 〃 0.92%
1 Guanqing Electromechanical Kedge Construction 2 Contract assets 2,310 〃 0.02%
Co., Ltd. Co., Ltd.
1 〃〃 2 Notes and accounts 50,757 〃 0.55%
receivable
1 〃〃 2 Operating revenue 160,595 〃 1.49%
2 Dingtian Construction Co., 〃 2 Contract assets 1,622 〃 0.02%
Ltd.
2 〃〃 2 Notes and accounts 18,383 〃 0.20%
receivable
2 〃〃 2 Operating revenue 98,734 〃 0.92%
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Note 1. Instruction for numbering.

1. The parent company is numbered 0.
Subsidiaries are numbered in sequence, starting with Arabic numeral 1 according to company type.
Note 2. The type of relations with transaction party is marked as follows:
Parent company to subsidiary.
Subsidiary to parent company.
Note 3. The above transactions have been written off at the time of preparing the consolidated financial report.

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

(2) Information on Reinvestment

The information on the reinvestment of the Consolidated Company in 2021 is as follows:

Unit: thousand NTD/thousand shares

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

Name of Investee Location Principal Original investment Holdings at the end of the Maximum Net income Share of Remarks
investment business amount period shareholding (loss) of the profit/loss of
company or investee investee
End of this End of last Number Ratio Carrying contribution
period year of amount during the
Shares period
Kedge Jiequn Investment Taiwan General $ 163,935 163,935 16,396 99.98% 500,444 99.98% 38,059 38,050 Subsidiary
Construction Co., Co., Ltd. Investment
Ltd.
Kedge Guanqing Taiwan Electrical 81,326 81,326 7,747 99.96% 244,315 99.96% 20,864 20,856 〃
Construction Co., Electromechanical equipment
Ltd. Co., Ltd. installation
and fire safety
equipment
installation,
etc.
Jiequn Investment Dingtian Taiwan The 16,500 16,500 - 30.00% 14,422 30.00% (6,114) (1,834) Second-tier
Co., Ltd. Construction Co., comprehensive subsidiary
Ltd. construction
industry, etc.
Guanqing Dingtian Taiwan The 11,105 11,105 - 70.00% 33,651 70.00% (6,114) (4,280) 〃
Electromechanical Construction Co., comprehensive
Co., Ltd. Ltd. construction
industry, etc.
Dingtian ReadyCom Taiwan Information 15,000 15,000 1,400 46.67% 15,120 46.67% (11,543) (5,387) Investments
Construction Co., eServices Corp. software accounted
Ltd. services and for using
management equity
consultants, method
etc.
----- End of picture text -----

Note: The transactions of the above subsidiaries and second-tier subsidiaries have been written off at the time of preparing the consolidated financial statements.

(3) Information on Investments in Mainland China:
Relevant information incl. names and principal business of investees in Mainland China: None.
Limit of investment in Mainland China: None.
Material transactions with investee companies in Mainland China: None.
(4) Information on Major Shareholders:

Expressed in shares

Shareholding Name of Major Shareholders	Shareholding (shares)	Shareholding Ratio
Kindom Development Co.,Ltd.	36,247,768	34.18%
Yute Investment Co.,Ltd.	8,785,536	8.28%

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

14. Segment Information

The operation department of the Consolidated Company which should be reported is only the construction segment. The construction segment is mainly responsible for the integrated operation and maintenance of construction, management, and other overall works. The information on segment profit and loss, segment assets, and segment liabilities are consistent with the financial statements. Please refer to the consolidated balance sheets and consolidated statements of comprehensive income for details.

AI assistant

KEDGE — Annual Report 2021

52153_rns_2021-11-01_1e29916f-c39d-4373-95a9-1b0665efa72d.pdf

KEDGE CONSTRUCTION CO., LTD. and Subsidiaries

2021 and 2020

Table of Contents

Statement of Declaration

Independent Auditors' Report

Audit Opinion

Foundation of Audit Opinion

Key Audit Matters

Corresponding Audit Procedures:

Other Matters

Responsibilities of the Management and Governing Body for the Consolidated Financial Statements

Auditor's Responsibility for Auditing Consolidated Financial Statements

Notices to Readers

KEDGE CONSTRUCTION CO., LTD. and Subsidiaries

Consolidated Balance Sheets

As of December 31, 2021 and 2020

Unit: NT$ thousand

KEDGE CONSTRUCTION CO., LTD. and Subsidiaries Consolidated Statements of Comprehensive Income January 1 to December 31, 2021 and 2020

Unit: NT$ thousand

(Please see the Notes to the Consolidated Financial Statements)

KEDGE CONSTRUCTION CO., LTD. and Subsidiaries Consolidated Statements of Changes in Equity January 1 to December 31, 2021 and 2020

Unit: NT$ thousand

(Please see the Notes to the Consolidated Financial Statements)

KEDGE CONSTRUCTION CO., LTD. and Subsidiaries Consolidated Statements of Cash Flows January 1 to December 31, 2021 and 2020

Unit: NT$ thousand

KEDGE CONSTRUCTION CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements

2021 and 2020

(Unless otherwise stated, the unit for all amounts is in NT$ thousands.)

1. Company Overview

2. The Approval Date and Procedures of the Financial Report

4. Summary of Significant Accounting Policies

1. Financial Assets

LTD. and Subsidiaries (continued)

LTD. and Subsidiaries (continued)

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

(7) Investments in Associates

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

(11) Impairments of Non-financial Assets

(12) Provisions

(13) Revenue Recognition

1. Defined Contribution Plan

2. Defined Benefit Plan

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

LTD. and Subsidiaries (continued)

(16) Earnings per Share

(17) Segment Information

5. Significant Accounting Judgments and Key Sources of Estimation and Assumption Uncertainty

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(1) Revenue Recognition

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

6. Descriptions of Significant Accounting Items

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

1. Associates

2. Collateral

LTD. and Subsidiaries (continued)

(6) Property, Plant and Equipment

1. Impairment loss

2. Collateral

(7) Investment Property

(8) Short-term loans

(10) Operating lease

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO., LTD. and Subsidiaries (continued)

(11) Employee Benefits

1. Defined Benefit Plan

(1) Components of plan assets

LTD. and Subsidiaries (continued)

(12) Income Tax

Notes to the Consolidated Financial Statements of KEDGE CONSTRUCTION CO.,

LTD. and Subsidiaries (continued)

(13) Capital and other equity

2. Retained earnings

(1) Legal reserve

KEDGE Annual Report 2021