KTC — Annual Report 2020

Aug 23, 2021

• I. Name, Title and Contact Details of Company's Spokesperson and Deputy Spokesperson:
• (I) Name: Ching-Heng Chou, Jui-Li Chen
• (II) Title: Assistant Vice President, Manager
• (III) Telephone Number: (07)558-6368
• (IV) E-mail address: bruce@kingtown.com.tw
• II. Address and Telephone Numbers of Company's Headquarters, Branches and Factories:
• (I) Headquarters Address: 12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City 813017, Taiwan (R.O.C.)
• (II) Headquarters Telephone Number: (07)558-6368
• (III) Branches: N/A
• (IV) Factories: N/A
• III. Name, Address, Website and Telephone Number of the Share Registrar:
• (I) Name: Stock Management Service Department, Taishin International Bank
• (II) Address: B1, No. 96, Sec. 1, Jianguo N. Rd., Zhongshan Dist., Taipei City 104496, Taiwan (R.O.C.)
• (III) Website: http://www.taishinbank.com.tw/
• (IV) Telephone Number: (02)2504-8125
• IV. Names, Accounting Firm, Address, Website and Telephone Number of Independent Auditors in the Most Recent Year:
• (I) Names: CPA, Hielleen Chang and CPA, Angela Chuang
• (II) CPA Firm: ShineWing Taiwan
• (III) Address: 21F.-1, No. 91, Zhongshan 2nd Rd., Qianzhen Dist., Kaohsiung City 806612, Taiwan (R.O.C.)
• (IV) Website: http://www.moorestephens.com.tw/
• (V) Telephone Number: (07)332-2003
• V. Overseas Securities Exchange Where the Company's Securities are Listed and Method of Inquiry:
• (I) Name of Overseas Securities Exchange: None.
• (II) Method of Inquiry: None.
• VI. Corporate Website: http://www.kingtown.com.tw/

2020 Annual Report Table of Contents

I. 2020 Operation Result	2
II. Outline of 2021 Business Plan	4
III. Future Development Strategies	4
IV. Effect of external competition, the legal environment, and the overall business
environment	5
I. Organizational System	10
II. Information on the Company's Directors, Supervisors,	President, Vice
Presidents, Assistant Vice Presidents, and the Supervisors of All Divisions and
Branch Units	13
III. Remuneration Paid During the Most Recent Fiscal Year	to Directors,
Supervisors, President, and Vice Presidents	19
IV. Implementation of Corporate Governance	25
V. Information on CPA Professional Fees	49
VI. Information on Replacement of CPAs .	49
VII. The Company's Chairman, President, or Any Managerial Officer in Charge of
Finance or Accounting Matters Holding a Position at the Company's CPA Firm
or at an Affiliated Enterprise of Such Firm during the Most Recent Fiscal Year
	49
VIII.Any Transfer of Equity Interests and/or Pledge of or Change in Equity Interests
During the Most Recent Fiscal Year and up to the Date of Publication of the
Annual Report by a Director, Supervisor, Managerial Officer, or Shareholder
with a Stake of More than 10 Percent	50
IX. Relationship Among the Company's Ten Shareholders Where One Is a Related
Party, a Spouse or a Relative within the Second Degree of Kinship of Another
	52
X. Total Number of Shares and Total Equity Stake Held in any Single Enterprise
by the Company, Its Directors and Supervisors, Managerial Officers, and Any
Companies Controlled Either Directly or Indirectly by the Company	54
I. Sources of Capital	55
II. Shareholder Structure	57
III. Shareholding Distribution Status	57

IV.	List of Major Shareholders 58
V.	Share Prices for the Past Two Fiscal Years, with Company Net Worth Per Share,
	Earnings Per Share, Dividends Per Share, and Related Information 59
VI.	Company's Dividend Policy and Implementation Thereof 60
VII.	Effect upon Business Performance and Earnings Per Share of any Stock
	Dividend Distribution Proposed or Adopted at the Most Recent Shareholders'
	Meeting 61
	VIII.Compensation of Employees, Directors, and Supervisors 63
IX.	Share Repurchases 65
X.	Corporate Bonds 66
XI.	Preferred Shares 66
XII.	Global Depository Shares 66
	XIII.Employee Stock Options and New Restricted Employee Shares 66
	XIV.Issuance of New Shares in Connection with Mergers or Acquisitions or with
	Transfer of Shares of Other Companies (Including Mergers, Acquisitions and
	Spin-off) 66
XV.	Implementation of the Company's Capital Allocation Plans 66
I.	Business Activities 67
II.	Analysis of the Market as well as Production and Sales Situation 69
III.	Employees 76
IV.	Environmental Protection Expenditure 77
V.	Labor Relations 78
VI.	Important Contracts 79
I.	Condensed Balance Sheets and Statements of Comprehensive Income for the
	Past Five Fiscal Years 81
II.	Financial Analyses for the Past Five Fiscal Years 87
III.	Supervisor or Audit Committee's Review Report for the Most Recent Fiscal
	Year's Financial Statement 91
IV.	Financial Statements for the Most Recent Fiscal Year 92
V.	Audited Parent Company Only Financial Statements for the Years Ended
	December 31, 2020 and 2019 190
VI.	Financial Difficulties Experienced by the Company and Its Affiliates and Their
	Impact on the Company's Financial Position 305
I.	Financial Position 306

Financial Performance 307
Cash Flows 308
Effect Upon Finance and Business of Any Major Capital Expenditures During
the Most Recent Fiscal Year 308
Company Reinvestment Policy for the Most Recent Fiscal Year, Main Reasons
for Profits/Losses Generated Thereby, Plan for Improving Re-investment
Profitability, and Investment Plans for Coming Year 308
Risk Analysis and Assessment 308
Other Important Matters 309
Information on the Company's Affiliates 310
Private Placement of Securities During the Most Recent Fiscal Year and up to
the Date of Publication of the Annual Report 320
Holding or Disposal of Shares in the Company by the Company's Subsidiaries
During the Most Recent Fiscal Year and up to the Date of Publication of the
Annual Report. 320
Other Supplementary Information . 320
Any Events in the Most Recent Year and as of the Date of this Annual Report
that had Significant Impacts on Shareholders' Right or Security Prices as Stated
in Subparagraph 2, Paragraph 3, Article 36 of the Securities and Exchange Act
320
VII.

Letter to Shareholders

Dear Shareholders,

The outbreak of COVID-19 in early 2020 was confirmed in Taiwan only after the Chinese New Year. There are currently 1,062 confirmed cases in Taiwan, with a cumulative total of 11 deaths. Taiwan's epidemic prevention measures are working well, allowing the country to survive this wave of disasters without major disruptions to economic activities. Despite this, the real estate market has been affected to varying degrees, and Kaohsiung has generally not been affected much, with a certain number of transactions in the first purchase market, but with the total price pulling up, the number of transactions is relatively lower, which is not much changed from before the outbreak.

From the land sale in 2020 the COVID-19 epidemic has little impact on the real estate market. In particular, the sixth bid of the "Residence 3" base located in the living area of Kaohsiung University, with an area of about 1,219.73 pings and a base price of NT\$2.049 billion per ping, was finally awarded at NT\$295,100 per ping for a total price of NT\$359 million, with a premium of 43.96%. The high premium rate of land for sale indicates that confidence in the future market is still high.

In March 2021, the Kaohsiung Municipal Government held nine land tenders with a total area of 3,915 pings and a reserve price of NT\$1,252,850,000, of which the Taipei developer acquired 1,861 pings of land for Kaohsiung University for \$880,000,000, a premium of 53.11%. The 1,115 ping of land in the 87th rezoning area of Okayama was purchased by the developer for a total of NT\$658,988,000 with a premium rate of 47%, both new highs in the area. In early 2021, under the atmosphere of government intervention, the land tender market was still very strong.

The number of land and housing transfers in Kaohsiung City grew by 26.79% and 20.11% respectively in the first quarter, which is quite surprising in the context of the government intervention. With the increasing difficulty in controlling the cost of construction, a number of pre-sale cases called for the closure of the housing market, waiting for the completion of homes for sale, which can be seen that the real estate market is still hot, but also because of the cost factor, the number of pre-sale cases become less.

Although House and Land Transactions 2.0 is confirmed to be launched on July 1, the Company will continue to launch products that cater to the market. Recently, Ren De has acquired a lot of land in Tainan because it is optimistic about the development of Tainan. The 16,000-plus pings of industrial land acquired by Ren De is in view of the demand for factory offices for technology factories in Tainan and will be developed into a smart technology park. There are many successful cases in North Central Taiwan, but few such cases have been launched in South Taiwan, so the development progress of this park has attracted the attention of the market.

The Company's project status for this year is that there is no project completion in 2021 and the Company will rely on sales of remaining homes as the main source of revenue.

(Source of the above data: Directorate General of Budget, Accounting and Statistics of the Executive Yuan, Construction and Planning Agency of Minister of the Interior, Land Adminstration Bureau of Kaohsiung City Government)

2020 Business Report and Summary of 2021 Business Plan are as follows:

I. 2020 Operation Result:

(I) Implementation Results of 2020 Business Plan:

The net operating income for 2020 was NT\$8,667,849 thousand, an increase of NT\$2,677,650 thousand from the net operating income of NT\$5,990,199 thousand for 2019, and the net income before tax was NT\$1,932,924 thousand, with a net income before tax rate of 22.31%.

(II) Implementation of forecast:

The Company did not publicly disclose any financial forecasts for 2021 and therefore this analysis is not reported.

					Unit: NT\$ thousand
	Item		2020	2019	Rate of change (%)
	Sales revenue			8,667,849 5,990,199	44.70%
	Gross profit			2,983,725 2,591,376	15.14%
	Operating profit			2,174,701 1,944,932	11.81%
Financial receipts	Finance costs		245,689	203,514	20.72%
and expenditures	Profit or loss before tax			1,932,924 1,803,234	7.19%
	Profit or loss after tax			1,684,892 1,656,570	1.71%
	Total comprehensive income			1,684,676 1,655,840	1.74%
	Return on assets (ROA) (%)		5.50	5.26	4.56%
Profitability	Return on equity (ROE) (%)		12.00	13.16	-8.81%
		Operating profit	58.59	50.54	15.93%

(III) Financial Position and Profitability Analysis:

As a % of paid-in capital	Income before tax	52.07	46.86	11.12%
Net profit margin (%)		19.45	27.65	-29.66%
	Earnings per share (NT\$)		4.48 4.31	3.94%

1. Financial receipts and expenditures

The substantial increase in operating income in 2020 resulted in a significant decrease in the amount of inventories, net cash inflow from operating activities of NT\$5,126,007 thousand, net cash outflow from investing activities of NT\$33,134 thousand, net cash outflow from financing activities of NT\$4,862,626 thousand, and the total gearing ratio decreased from 62.78% in 2019 to 54.71% in 2020. The interest expense for the year of 2020 was NT\$245,689 thousand, representing an increase of NT\$42,175 thousand (20.72%) from NT\$203,514 thousand for the year of 2019, primarily due to the decrease in the proportion of interest as a result of the gradual completion of construction in progress.

1. Profitability analysis

The operating profit for the year 2020 was NT\$2,174,701 thousand and the operating profit-to-paid-in capital ratio was 58.59%, representing an increase of NT\$229,769 thousand as compared to NT\$1,944,932 thousand for the 2019; Net profit after tax was NT\$1,684,892 thousand and net profit margin was 19.45%, representing an increase of NT\$28,322 thousand as compared to NT\$1,656,570 thousand in 2019; Return on assets was 0.24% higher than that of 2019, while return on equity was 1.16% lower than that of 2019.

(IV) Research and Development:

In respect of land development, the Group will develop professionally and aggressively, select areas with potential for development, conduct data collection and land acquisition, etc., and the Company's professional land developer will cooperate with architects and agents to respond to and study relevant laws and regulations at all times, so as to cope with changes in the market. Currently, the land development regions are concentrated in Kaohsiung City and Tainan City.

In terms of construction technology and residential quality, efforts will be made to improve the quality of site management and the construction of high value-added residential products, with a view to shortening the construction period, improving gross profit and creating a better reputation; The software segment will strengthen cooperation with building management companies to improve the quality of building residence.

• II. Outline of 2021 Business Plan:
• (I) Operating Guidelines:
  • 1. The main business policy is to maintain a stable project size and carefully select land for sales.
  • 1. Improving the gross profit of individual cases and enhancing overall competitiveness has always been an important direction of the Company.
  • 1. To identify the real estate market suitable for the Company to enter.
  • 1. Based on the Company's mission to a city, houses built should be integrated with the city to show the spirit of the city.
• (II) Sales Volume Forecast and Basis:

The Company has not published a financial forecast for the 110th year and there are no new cases completed in the 110th year.

• (III) Key Production and Distribution Policy:
• 1. Integrate market information to identify areas with potential and strong resistance to decline, and proactively carry out land development work, and grasp the advantages of buyers in the land transaction market to create maximum cost efficiency of land and added value of products to cope with the impact of the market downturn.
• 1. Develop quality residential properties, enhance the added value and competitiveness of the Company's products, respond to current consumption trends and mitigate the extent of the depreciation of the house price.
• 1. Strengthen post-sales maintenance services and building management for projects, establish closer interaction with residents and enhance the added value of building management.
• III. Future Development Strategies:
• (I) We will closely observe the impact of the COVID-19 epidemic on the political and economic environment of Taiwan and whether it will further affect the development of the real estate market.

• (II) The Company focuses on developing land near the Tainan area, the North Kaohsiung Ciaotou Science Park, Nanzhi and Kaohsiung University areas, and the multi-functional economic and trade park to drive sales and increase profits through public construction and landscaping.

• (III) Focusing on the demand of Tainan factory offices, the Company will develop the Tainan Smart Technology Park.

• (IV) Invested in the leisure hotel and tourism industry, and has now established a subsidiary, H2O Hotel Co., Ltd.
• IV. Effect of external competition, the legal environment, and the overall business environment:
• (I) Impacts from External Competition

The Company's main project area is the Greater Kaohsiung area, and most of the external competitors are small and medium-sized builders, and the Company has the advantage of leading the market price and product direction in the main project area, so the external competitive environment has little impact on the Company.

(II) Impact of Regulatory Environment

Recently, the government has been taking frequent actions to intervene the housing market, and House and Land Transactions version 2.0 will be launched in July 2021, which is expected to have a certain degree of impact on the real estate market for investment purchases.

(III) Impact of overall operation environment

According to the statistic of Directorate General of Budget, Accounting and Statistics, the domestic economy will grow at a rate of 3.11% in 2020, a slight increase from 2.96% in 2019. Despite the global spread of the COVID-19 epidemic in 2020, Taiwan's performance is still remarkable. Therefore, it is not difficult to understand the strong performance of Taiwan's housing market in 2020.

The Company does not have any completion sales project in 2021.

Although there is no new completion project in 2021, the Company's revenue from January to March is NT\$1,464,233 thousand, which is only 15.12% lower than the same period last year. It seems that the COVID-19 epidemic has not had much impact on the real estate market so far in 2020. The Company will focus on remaining home sales with 12 online sales in 2021, which will be the main source of revenue in 2021. It is expected that in 2021, against the backdrop of the government's continued crackdown on the housing market, it should be difficult for the real estate market to escape the impact of government policies in the short term, but the Company will still strengthen its online sales to maintain the level of operating revenue. The estimated economic growth rate for this year can reach 4.64%, plus the current market capital is still loose and interest rates are still low, which is still favorable for the real estate market this year. When the vaccination reaches the level of mass immunization, it is expected that normal economic activities will resume at the end of the year and the country will be reopened, which will have a huge positive impact on the real estate market.

We hope the above report will be supported by our shareholders.

We wish you all good fortune and health.

Chairman: Tsai, Tien-Tsan Manager: Chen, Tien-Chin Accounting Officer: Liang, Su-Ying

Company Profile

• I. Company Profile
• (I) Date of Incorporation: September 13, 1985
• (II) Company History:

Year	Month	Major Events
1985	9	The Company was originally established at No. 23, Ln. 80, Linquan St., Lingya Dist., Kaohsiung City 802042, Taiwan (R.O.C.) with a capital of NT\$1,000,000. The main business was to commission contractors for the construction of public housing and commercial buildings.
1985	10	Raised capital to NT\$30,000,000 through a cash capital increase of NT\$29,000,000 to improve financial status and expand business.
1986	5	Moved to 11F., No. 153, Guangzhou 1st St., Lingya Dist., Kaohsiung City 802578, Taiwan (R.O.C.) due to business needs.
1987	8	Moved to 5F., No. 291, Qixian 1st Rd., Xinxing Dist., Kaohsiung City 800009, Taiwan (R.O.C.) due to business needs.
1988	6	Moved to 13F.-2, No. 182, Zhongzheng 2nd Rd., Xinxing Dist., Kaohsiung City 800206, Taiwan (R.O.C.) due to business needs.
1990	4	Raised capital to NT\$80,000,000 through a cash capital increase of NT\$50,000,000.
1990	5	Raised capital to NT\$198,000,000 through a cash capital increase of NT\$118,000,000.
1990	5	Moved to 10F., No. 391, Bo'ai 1st Rd., Sanmin Dist., Kaohsiung City 807353, Taiwan (R.O.C.) due to business needs.
1991	3	Renamed as Wei-Cheng Construction Co., Ltd.
1991	4	Raised capital to NT\$400,000,000 through capitalization of earnings of NT\$30,000,000 and a cash capital increase of NT\$172,000,000.
1991	12	Raised capital to NT\$450,160,000 through capitalization of earnings of NT\$50,160,000.
1992	5	Submitted the listing application to the Taiwan Stock Exchange (TWSE).
1992	8	Raised capital to NT\$515,433,200 through capitalization of earnings of NT\$65,273,200.
1993	4	The listing application was approved by TWSE's Listing Review Committee.
1993	6	Raised capital to NT\$658,195,370 through capitalization of earnings of NT\$142,762,170.
1994	6	The listing application was approved by the Securities and Exchange Commission, Ministry of Finance (MOF).
1994	7	Raised capital to NT\$814,832,680 through capitalization of earnings of NT\$156,637,310.

Year	Month	Major Events
1995	5	Raised capital to NT\$999,832,680 through a cash capital increase of NT\$185,000,000.
1995	7	Raised capital to NT\$1,351,477,740 through capitalization of earnings of NT\$351,645,060.
1996	10	Issued the first secured corporate bond of NT\$400,000,000.
1999	5
1999	6	Moved to 16F.-2, No. 120, Zhongzheng 1st Rd., Lingya Dist., Kaohsiung City 802312, Taiwan (R.O.C.) due to business needs.
1999	10	Raised capital to NT\$1,486,625,510 through capitalization of capital surplus of NT\$135,147,770.
2000	06	Renamed as King's Town Construction Co., Ltd.
2005	08	Raised capital to NT\$2,237,601,260 through capitalization of earnings and employee bonus of NT\$750,975,750.
2006	10	Raised capital to NT\$2,689,735,130 through capitalization of earnings and employee bonus of NT\$452,133,870.
2007	07	Raised capital to NT\$2,961,481,580 through capitalization of earnings and employee bonus of NT\$271,746,450.
2008	02	Reduced capital to NT\$2,911,631,580 after canceling the second buyback of treasury shares for capital reduction of NT\$49,850,000.
2008	07	As the former President, Mr. Liang-Tian Zhou, applied for retirement, Mr. Zhao-Sen Liu was appointed the President effective July 1, 2008.
2008	08	Raised capital to NT\$3,208,496,330 through capitalization of earnings and employee bonus of NT\$296,864,750.
2008	12	Reduced capital to NT\$3,108,496,330 after canceling the third buyback of treasury shares for capital reduction of NT\$100,000,000.
2009	10	Reduced capital to NT\$3,058,496,330 after canceling the first buyback of treasury shares for capital reduction of NT\$50,000,000.
2010	09	Raised capital to NT\$3,306,577,290 through capitalization of earnings and employee bonus of NT\$248,080,096.
2011	10	Raised capital to NT\$3,577,272,620 through capitalization of earnings and employee bonus of NT\$270,695,330.
2012	09	Raised capital to NT\$3,759,261,550 through capitalization of earnings and employee bonus of NT\$181,988,930.
2015	04	Established the subsidiary, H2O Hotel Co., Ltd., with a capital of NT\$12,000,000.
2015	09	Raised capital to NT\$3,838,202,290 through capitalization of earnings and employee bonus of NT\$78,940,740.
2016	09	The subsidiary, H2O Hotel Co., Ltd., raised capital to NT\$20,000,000 through a cash capital increase of NT\$8,000,000.
2017	07	Moved to 12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City 813017, Taiwan (R.O.C.) due to business needs.
2018	01	The subsidiary, H2O Hotel Co., Ltd., raised capital to NT\$100,000,000 through a cash capital increase of NT\$80,000,000.

Year	Month	Major Events
		The subsidiary, H2O Hotel Co., Ltd., raised capital to
2019	01	NT\$180,000,000 through a cash capital increase of NT\$80,000,000.
		The subsidiary, H2O Hotel Co., Ltd., raised capital to
2020	01	NT\$250,000,000 through a cash capital increase of NT\$70,000,000.
		Reduced capital to NT\$3,748,463,720 after canceling the fourth
2020	07	buyback of treasury shares for capital reduction of NT\$100,000,000.
		Reduced capital to NT\$370,657,372 after canceling the fifth
2020	10	buyback of treasury shares for capital reduction of NT\$41,890,000.
		Raised capital to NT\$3,711,930,980 through capitalization of
2020	10	employee compensation of NT\$5,357,260.
		The subsidiary, H2O Hotel Co., Ltd., raised capital to
2020	12	NT\$320,000,000 through a cash capital increase of NT\$70,000,000.

Department		Job Description
		President Office Business analysis, market research and product planning.
Audit Office		Planning and execution of internal audits, execution of non-routine audits, and supervision and tracking of self-assessments on the internal control system.
IT Office		Daily operation of computers, elimination of computer issues, and the planning and maintenance of information system for each business.
Shareholder Services Office Investor Relations (IR)	and general investors.	General shareholders' affairs, organizations of the Board meeting and shareholders' meeting, management of daily operations of TWSE-listed company, affairs associated with capital increase, shareholders' inquiries or shareholders' affairs stipulated by the government agencies. Press releases and media relationships. Affairs associated with investor relations, including the responses to and the handling of investment inquiries from juridical persons
	Procurement Section	Contracting and procurement relating to construction works and materials.
Construction	After-sales services after the handover of property, maintenance Maintenance of unsold properties, and delivery of customers' opinions and Section feedbacks from after-sale services collected and classified for the future improvements of the Construction Management Sector.
Department	Construction Management Sector	Monitoring of construction quality and progress, and close collaboration with the Procurement Section and the Design & Pricing Section.
	Design & Pricing Section	Confirmation of construction drawings and materials, and preparation of construction budgets and financial statements.
Sales	Marketing Sector	Research and analysis of products in the market, formulation and implementation of marketing plans, filing and management of customer information, and management and sales of unsold properties.
Department	Sales Section	Completion of contracting procedures with customers, handling of bank loans on behalf of customers, affairs associated with handover of properties, handling and delivery of customer inquiries, and processing of utility bills and taxes on unsold properties.
Finance	Review, maintenance and preparation of accounting-related Accounting documents, books and statements, and filing of input and output Section VAT and profit-seeking enterprise income tax.
Department	Cashier Section	Petty cash payments; preparation of daily statements of bank deposits, cashflows, bonds and commercial papers; projections and balances of funds available; operations of cash receipts, check issuance and payment, allocation of funds.
The establishment, implementation, review and improvement of the systems; the planning and implementation of employee Human recruitment, appointment, dismissal, promotion, reward and Administration Resources punishment, leaves, performance appraisal, attendance, Department Section education and training; labor and health insurance and related insurances; employee salary payments; other personnel management matters.

	General Affairs Section	Receipt, sorting and keeping of newspapers and periodicals; management and maintenance of communication and photocopying systems, etc.; convention and recording of company meetings; procurement of general supplies; and management and maintenance of corporate assets as well as new buildings of the Company.
		Handling of external affairs and legal issues.
	Customer Service Section	Customer service, customer complaint handling, and customer satisfaction survey.
Planning	Planning Section	Coordination of marketing planning for properties, promotion and supervision of marketing activities of contracted advertising firms, implementation of sales/advertisement planning of unsold houses, and maintenance of corporate website.
Department	Advertising Section	Coordination of sales/advertisement of properties, establishment of sales centers, contracting of model houses, utilization, contracting, use of advertising media, and the execution of SP activities.
Land Development Department		Assessment of land development value, formulation of acquisition and construction plans, calculation and allocation of areas, and participation in asset management and allocation of land under urban land consolidation. Investigation and analysis of new real estate projects and existing markets.

• II. Information on the Company's Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and the Supervisors of All Divisions and Branch Units
• (I) Directors and Supervisors:

◎Directors and Supervisors - (1)

															April 27, 2021
							Shareholding When Elected		Current Shareholding		Spouse & Minor Shareholding	Major	Concurrently Position Other		Kinship	Are Spouses or within the Second Degree of Executives, Directors or Supervisors who
Title	Nationality/Place of Registration	Name (Gender)	Elected Date	Term	Date First Elected	Shares	Shareholding %	Shares	Shareholding %	Shares	Shareholding %	Experience (Education)	Company and Held at the Companies Other	Title	Name	Relationship
Directors —	R.O.C.	Investment Co., Tian Lai Ltd.	June 24, 2020	3 years	June 19, 2008	33,566,502	8.93%	49,652,072	13.38%	-	-	-	-	-	-	-
Representative, Corporate Chairman 1 3 —	R.O.C.	Representative of Tien-Tsan Tsai (Corporate Tian Lai) (Male)	-	-	-	-	-	85,577,838	23.05%	20,209,951	5.44%	Senior high school	of Jing Cheng Representativ Construction e, Chairman Corporate Co., Ltd.	Representative of Corporate Assistant of Chairman Director Special	Yao-Hung Mei-Yun Hsueh Tsai Tsai	First-degree relative Spouse
Representative, Corporate Director	R.O.C.	Representative of Hsueh (Female) Mei-Yun Tsai (Corporate Tian Lai)	-	-	-	-	-	20,209,951	5.44%	85,577,838	23.05%	Senior high school	None	Representative of Corporate Assistant of Chairman Director Special	Yao-Hung Tien-Tsan Tsai Tsai	First-degree relative Spouse
Representative, Corporate Director	R.O.C.	Representative of Tien-Chin Chen (Corporate Tian Lai) (Male)	-	-	-	-	-	96,740	0.03%	0	0.00%	Master's degree	None	-	-	-
Representative, Corporate Director	R.O.C.	Representative of Shih-Hsiung Li (Corporate Tian Lai) (Male)	-	-	-	-	-	65,743	0.02%	11,241	0.00%	Bachelor's degree	Construction Chieh Chih Director of Co., Ltd.	-	-	-

-	-
-	-
-	-
Construction Chairman of Hung Bau Co., Ltd.	-
Senior high school	Bachelor's degree
0.00%	0.00%
0	0
0.37%	0.00%
1,386,582	0
0.36%	0.00%
1,386,582	0
June 28, 2017	June 22, 2018
3 years	3 years
June 24, 2020	June 24, 2020
Ming-Te Chang (Male)	Yao-Kuo Wu (Male)
R.O.C.	R.O.C.
Independent Director	Independent Director

Note 1: The aforementioned Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and the Supervisors of all divisions and branch units did not have shareholdings by nominees.

Note 2: The Company did not have the following situation: Chairman and President or persons with equivalent positions (the top managerial officer) were the same person or were in a spousal relationship or within first degree of kinship.

Table 1: Major shareholders of corporate shareholders	May 1, 2021
Name of Corporate Shareholder	Major shareholders of corporate shareholders (shareholding over 10%)
Tian Lai Investment Co., Ltd.	Chen-Jung Li (33.00%), I-Ying Chen (32.35%), Opus One Capital Ltd. (30.93%)
	May 1, 2021 Table 2: Major shareholders of the "Major shareholders of corporate shareholders" in Table 1
Name of Corporate Shareholder	Major shareholders of corporate shareholders (shareholding over 10%)
Opus One Capital Ltd	Execorp Limited (100.00%)

May 1, 2021		Concurrently Other Public Serves as an Independent Companies Number of Individual where the Director	0	0	0	0	0	0
		12	✓	✓	✓	✓	✓	✓
		11	✓	✓	✓	✓	✓	✓
		10			✓	✓	✓	✓
		9	✓	✓	✓	✓	✓	✓
		8		✓	✓		✓	✓
	Independence Status (Note 1)	7			✓	✓	✓	✓
		6	✓	✓	✓	✓	✓	✓
		5			✓	✓	✓	✓
		4					✓	✓
		3			✓	✓	✓	✓
		2			✓		✓	✓
		1		✓			✓	✓
		or Accounting, Law, Finance, Having Work Experience in Necessary for or Otherwise the Areas of Commerce, the Business	✓	✓	✓	✓	✓	✓
	qualification requirements, together with at least Meets one of the following professional five years of work experience	A Judge, Public Certified Public Professional or Accountant, or Certificate in a Specialist who and Has Been Necessary for Has Passed a Examination Prosecutor, the Business Awarded a Profession Technical Attorney, National Other	-	-	-	-	-	-
		Other Academic in a Department An Instructor or Higher Position Business Needs Accounting, or of Commerce, Law, Finance, Related to the Junior in a Public or Department College or University College, Private	-	-	-	-	-	-
	Qualification	Name	Tien-Tsan Tsai	Mei-Yun Tsai Hsueh	Tien-Chin Chen	Shih-Hsiung Li	Ming-Te Chang	Yao-Kuo Wu

Note: The codes under Independence Status in the table above represent the follows:

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

(2) Not a Director or Supervisor of the Company or any of its affiliates. (Not applicable in cases where the person is an Independent Director appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or the laws of the country where the business is located by, and concurrently serve as such at, the Company, its parent company,

◎Directors and Supervisors - (2)

	subsidiary, or subsidiaries that belong to the same parent company.)
(3)	Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or nominee arrangement,
	in an aggregate amount of 1% or more of the Company's total number of issued shares or ranks among the Company's top ten shareholders.
(4)	Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of managerial officers in (1) or
	of any of the persons in (2) and (3).
(5)	Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the Company's total number of issued
	shares, ranks among the Company's top five shareholders, or appoints representatives to be the Company's directors or supervisors pursuant
	to Paragraph 1 or 2, Article 27 of the Company Act. (Not applicable in cases where the person is an Independent Director appointed in
	the laws accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or
	of the country where the business is located by, and concurrently serve as such at, the Company, its parent company, subsidiary, or subsidiaries
	that belong to the same parent company.)
(6)	Not a director, supervisor, or employee of a company whose majority of directorships or voting rights are controlled by a shareholder who
	also controls the majority of directorships or voting rights of the Company. (Not applicable in cases where the person is an Independent
	Director appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public
	Companies or the laws of the country where the business is located by, and concurrently serve as such at, the Company, its parent company,
	subsidiary, or subsidiaries that belong to the same parent company.)
(7)	Not a director, supervisor or employee of a company or institution whose chairman, president, or an officer of equivalent position is the same
	person as, or a spouse to, one of the persons holding the same positions in the Company. (Not applicable in cases where the person is an
	Independent Director appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance
	Matters for Public Companies or the laws of the country where the business is located by, and concurrently serve as such at, the Company, its
	parent company, subsidiary, or subsidiaries that belong to the same parent company.)
(8)	Not a director, supervisor, managerial officer, or shareholder with a shareholding of 5% or more of a specific company or institution that has
	a financial or business relationship with the Company. (Not applicable in cases where the specific company or institution owns 20% (inclusive)
	to 50% (exclusive) of the Company's total number of issued shares, and the person is an Independent Director appointed in accordance with
	country the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or the laws of the
	where the business is located by, and concurrently serve as such at, the Company, its parent company, subsidiary, or subsidiaries that belong
	to the same parent company)
(9)	Not a professional individual who, nor an owner, partner, director, supervisor, or managerial officer of a sole proprietorship, partnership,
	company, or institution that provides auditing services to the Company or its affiliates, or provides commerce, law, finance, accounting or
	spouse related services to the Company or its affiliates with a cumulative compensation under NT\$500,000 in the past two fiscal years, nor a
	thereof. However, this requirement is not applicable where members of the Remuneration Committee, Public Tender Offer Review Committee,
	or Special Committee for Merger/Acquisition perform duties pursuant to laws and regulations in association with the Securities and Exchange
	Act or the Business Mergers and Acquisitions Act.
	Not a spouse or a relative within the second degree of kinship to any other Director of the Company. (10)

• (11) Not being a person of any conditions defined in Article 30 of the Company Act.
• (12) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act.

(II) Information on the Company's President, Vice Presidents, Assistant Vice Presidents, and Supervisors of All Divisions and Branch Units:

April 27, 2021	Are Spouses or within the Managerial Officers Who Second Degree of Kinship	Relationship	-	-	-	-	-	-
		Name	-	-	-	-	-	-
		Title	-	-	-	-	-	-
	Concurrently Position Other	Held at Other Companies	None	None	None	None	None	None
	Experience Major	(Education)	Master's degree	degree (non completion) Bachelor's	Master's degree	High School Industrial	Bachelor's degree	Bachelor's degree
	Spouse & Minor Shareholding	Shareholding (%)	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
		Shares	0	0	0	0	0	0
	Shareholding	Shareholding (%)	0.03%	0.00%	0.03%	0.03%	0.00%	0.02%
		Shares	96,740	12,657	108,077	92,804	384	83,911
	Date Elected		2011/07/11	2020/07/01	2012/02/05	2018/05/24	2019/05/10	2011/09/01
	Name	(Gender)	Chen (Male) Tien-Chin	Chen (Male) Chin-Hsing	Kung (Male) Jui-Lung	Chia-Hung Huang (Male)	Zhou (Male) Jing-Heng	Su-Ying (Female) Lyang	Note 1: The aforementioned managerial officers did not have shareholdings by nominees.
	Nationality		R.O.C.	R.O.C.	R.O.C.	R.O.C.	R.O.C.	R.O.C.
	Title		President	President Vice	Assistant President Vice	Assistant President Vice	Assistant President Vice	Officer of Finance

• (III) Chairman and President or persons with equivalent positions (the top managerial officer) were the same person or were in a spousal relationship or within first degree of kinship: None.

III. Remuneration Paid During the Most Recent Fiscal Year to Directors, Supervisors, President, and Vice Presidents:

(I) Remuneration Paid to Directors and Independent Directors

	Remuneration	from Invested Companies Other than	or the Parent Subsidiaries	Company	None	None
As of December 31, 2020 (In Thousands of New Taiwan Dollars)	Ratio of Total	(A+B+C+D+E+F+G) to Net Income (%) Remuneration	Consolidated From All	Entities	0.46%	0.04%
			The	Company
			Consolidated From All Entities	Stock	513 0	-
	Relevant Remuneration Received by Directors who Are Also	Compensation (G) Employee (Note 1)	Company The	Cash Stock Cash	513 0	-
					0	-
	Employees	Severance Pay and Pension (F)	Consolidated From All	Entities
			The	Company		-
		and Allowances Salary, Bonus, (E)	Consolidated From All	Entities	2,112
			The	Company
	Ratio of Total	(A+B+C+D) to Net Income (%) Remuneration	Consolidated From All	Entities	0.31%	0.04%
			The	Company
		Allowances (D)	Consolidated From All	Entities	1,080	680
			The	Company
		Compensation to Directors (C)	Consolidated From All	Entities	0	0
			The	Company
	Remuneration to Directors	and Pension (B) Severance Pay	Consolidated From All	Entities	0	0
			The	Company
		Compensation (A) Base	Consolidated From All	Entities	4,103	0
			The	Company
		Name	(*Discharged)		Tsai, Mei-Yun Shih-Hsiung Tsai-Hsueh, Investment Tien-Tsan Tien-Chin Chen, and Co., Ltd.: Tian Lai Li	Yao-Kuo Wu (Discharged) I-Li Chuang Ming-Te Chang	Note 1: Employee compensation from earnings was the amount from 2020 earnings distribution proposal approved by the Board prior to the shareholders' meeting. The amount
		Title			Directors 9 1 — —	Independent Independent Independent Director Director Director

was calculated in accordance with the Company's rules on distribution of employee stock bonus.

Note 2: As the amount from the Company equaled the amount from All Consolidated Entities, only one number was presented for these two columns.

Note 3: Except for information disclosed above, remuneration paid for services rendered by Directors of the Company to all consolidated entities in the most recent year: None.

				As of December 31, 2020 (In Thousands of New Taiwan Dollars)
		Name of Directors
		Total of (A+B+C+D)		Total of (A+B+C+D+E+F+G)
Ranges	The Company	From All Consolidated	The Company	From All Consolidated
		Entities		Entities
		Representative of Tian Lai Investment Co., Ltd.:
		Mei-Yun Tsai-Hsueh; Representative of Tian Lai		Representative of Tian Lai Investment Co., Ltd.:
	Investment Co., Ltd.: Tien-Chin Chen;			Mei-Yun Tsai-Hsueh; Representatives of Tian Lai
Under NT\$1,000,000		Representatives of Tian Lai Investment Co., Ltd.:	Investment Co., Ltd.: Shih-Hsiung Li, Ming-Te
	Yao-Kuo Wu	Shih-Hsiung Li, Ming-Te Chang, I-Li Chuang,	Chang, I-Li Chuang, Yao-Kuo Wu
NT\$1,000,000 (inclusive) ~
NT\$1,999,999		-		-
NT\$2,000,000 (inclusive)~				Representative of Tian Lai Investment Co., Ltd.:
NT\$3,499,999		-	Tien-Chin Chen
NT\$3,500,000 (inclusive)~		Representative of Tian Lai Investment Co., Ltd.:		Representative of Tian Lai Investment Co., Ltd.:
NT\$4,999,999	Tien-Tsan Tsai		Tien-Tsan Tsai
NT\$5,000,000 (inclusive)~
NT\$9,999,999		-		-
NT\$10,000,000 (inclusive)~
NT\$14,999,999		-		-
NT\$15,000,000 (inclusive)~
NT\$29,999,999		-		-
NT\$30,000,000 (inclusive)~
NT\$49,999,999		-		-
NT\$50,000,000 (inclusive)~
NT\$99,999,999		-		-
NT\$100,000,000 and above		-		-
Total		5,863		8,488

Note 1: As the amount from the Company equaled the amount from All Consolidated Entities, only one number was presented for these two columns.

(II) Remuneration to Supervisors: The Company has established an Audit Committee to replace Supervisors.

(III) Remunerations to the President and Vice Presidents

												As of December 31, 2020 (In Thousands of New Taiwan Dollars)
			Salary (A)		Severance Pay and Pension (B)		Bonus and Allowance (C)	(D)	Employee Compensation (Note 1)	Remuneration (A+B+C+D) to Net Income (%) Ratio of Total		Remuneration from Invested
Title	Name	The	Consolidated From All	The	Consolidated From All	The	Consolidated From All	Company The	Consolidated From All Entities	The	Consolidated From All	Companies Other than Subsidiaries or the Parent
		Company	Entities	Company	Entities	Company	Entities	Stock Cash	Stock Cash	Company	Entities	Company
President	Tien-Chin Chen
President Vice	(Discharged) Chin-Chung Chuang		3,964		938		0	1,178 0	1,178 0		0.36%	None
President Vice	Chin-Hsing Chen
	employee stock bonus distribution where the closing price (NT\$34.5) on the day immediately preceding the Board meeting (i.e., March 23) was used. Note 1: Employee compensation was the amount of employee compensation approved by the Board. It was calculated pursuant to the Company's rules of

Note 2: As the amount from the Company equaled the amount from All Consolidated Entities, only one number was presented for these two columns.

As of December 31, 2020 (In Thousands of New Taiwan Dollars) Range of Remuneration Paid to the President and Vice Presidents Name of President and Vice President The Company From All Consolidated Entities Under NT\$1,000,000 - NT\$1,000,000 (inclusive) ~ NT\$1,999,999 Chin-Hsing Chen NT\$2,000,000 (inclusive)~NT\$3,499,999 Tien-Chin Chen, Chin-Chung Chuang NT\$3,500,000 (inclusive)~NT\$4,999,999 NT\$5,000,000 (inclusive)~NT\$9,999,999 - NT\$10,000,000 (inclusive)~NT\$14,999,999 - NT\$15,000,000 (inclusive)~NT\$29,999,999 - NT\$30,000,000 (inclusive)~NT\$49,999,999 - NT\$50,000,000 (inclusive)~NT\$99,999,999 - NT\$100,000,000 and above -

Total 6,080

(IV) Name and distribution of employee compensation to managerial officers:

	Title	Name	Stock	Cash	Total	Ratio of Total Remunerations to Net Income (%)
	President	Tien-Chin Chen
M an ag	Vice President	Chin Chung Chuang (Retired)
er ia l O ffi ce rs	Vice President	Chin-Hsing Chen
	Assistant Vice President	Jui-Lung Kung	2,555	0	2,555	0.15%
	Assistant Vice President	Chia-Hung Huang
	Assistant Vice President	Jing-Heng Zhou
	Officer of Accounting

(In Thousands of New Taiwan Dollars) As of May 1, 2021

Note 1: Employee compensation was the amount of employee compensation approved by the Board. It was calculated pursuant to the Company's rules of employee stock bonus distribution where the closing price (NT\$34.5) on the day immediately preceding the Board meeting (i.e., March 23) was used.

• (V) Analysis of remuneration paid to Directors, Supervisors, President and Vice Presidents by the Company and all consolidated entities in the past two fiscal years as a percentage of net income in the parent company only or individual financial statements:
• 1. Except for travel and special allowances, the Company did not pay remuneration to Directors and Supervisors during the past two years.
• 1. Remunerations paid to Directors, Supervisors, President, and Vice President accounted for 0.36% and 0.48% of the consolidated and parent company only net income for 2020 and 2019, respectively. There was no significant change in the percentages.
• (VI) Remuneration policy, standards and composition, procedures and the correlation with operation performance and future risks:
• 1. The remunerations paid by the Company to the Directors, Supervisors, President, and Vice President are determined based on the industry level. At present, remunerations are not paid to Directors and Supervisors. They are only entitled to monthly travel allowance of NT\$10,000 and

special allowance of NT\$20,000 each.

1. Pursuant to Paragraph 2, Article 16 of the Articles of Incorporation, the Board is authorized to determine the remuneration to Directors and Supervisors based on the industry average. The amount of travel allowances to Directors and Supervisor are determined by the Board. Compensations to Directors and Supervisors for their performance of duties shall be paid regardless of whether the Company has made profits. Thus, except for compensations for performance of duties, remunerations are not paid to Directors and Supervisors when the Company made losses for the year.

IV. Implementation of Corporate Governance

(I) Board of Directors' Meeting status:

Board of Directors' Meeting Status

A total of 11 Board meetings (the 12th-term and the 13th-term) were convened in 2020. The attendance status of the Directors and Supervisors was as follows:

Title	Name	Attendance in Person	Attendance by Proxy	Attendance Rate (%)	Remarks
Chairman	Tian Lai Investment Co., Ltd. Representative: Tien-Tsan Tsai	11	0	100.00%	11 meetings to attend
Directors	Tian Lai Investment Co., Ltd. Representative: Mei-Yun Tsai Hsueh	7	0	63.64%	11 meetings to attend
Directors	Tian Lai Investment Co., Ltd. Representative: Tien-Chin Chen	10	1	100.00%	11 meetings to attend
Directors	Tian Lai Investment Co., Ltd. Representative: Shih-Hsiung Li	11	0	100.00%	11 meetings to attend
Independent Director	Ming-Te Chang	11	0	100.00%	11 meetings to attend
Independent Director	I-Li Chuang	6	0	100.00%	6 meetings to attend
Independent Director	Yao-Kuo Wu	10	0	90.91%	11 meetings to attend

Other matters:

• I. With regard to the operation of the Board, if any of the following circumstances occur, the dates, terms of the meetings, contents of motions, all Independent Directors' opinions and the Company's handling of such opinions shall be specified:
• (1) Matters specified in Article 14-3 of the Securities and Exchange Act: None.
• (2) Except for items specified above, other resolutions on which an Independent Director expresses objection or reservation, either by a recorded statement or in writing. None.
• II. For situations where Directors recuse themselves from any motion due to conflict of interest, the Directors' names, contents of motions, causes for the recusal, and participation in voting shall be specified.

None.

III. TWSE-listed and TPEx-listed companies shall disclose the frequency, period, scope, method, and details of the self (or peer) performance assessment of the Board, and fill out Table II Performance Assessment of the Board. The Company commenced assessments in 2020 and disclosed the assessment results in the 2020 annual report. IV. Objectives of strengthening the functionality of the Board of Directors (e.g., to establish an Audit Committee, to enhance information transparency, etc.) in the current year and the most recent year and evaluation of the execution thereof. The Company has created the position of Independent Director to improve the functions of the Board.

In addition, Independent Directors are appointed to form the Audit Committee, which takes over the functions of Supervisors. The Company operates under the organization and system of the Audit Committee.

Performance Assessment of the Board:

				December 31, 2020
Frequency	Period	Scope	Method	Details
Annually	Assessed the Board performance for the period between January 1, 2020 to December 31, 2020.	Entire Board Individual Board members Functional committees	Self assessment by the Board	(1) Performance assessment on the Board: it shall at least include the level of participation in corporate operations, quality of Board decisions, composition and structure of the Board, election and continuing education of Directors, and internal control. (2) Performance assessment on individual Board members: it shall at least include command over corporate goals and mission, understanding of Directors' duties, level of participation in corporate operations, internal relationship management and communication, specialty and continuing education of Directors, and internal control. (3) Performance assessment on functional committees: level of participation in corporate operations, understanding of functional committees' duties, quality of functional committees' decisions, composition of the functional committees and election of members, and internal control.
				Rating on overall operation: Excellent
		Individual Board members Functional committees	Self assessment by the Directors	(1) Performance assessment on individual Board members: it shall at least include command over corporate goals and mission, understanding of Directors' duties, level of participation in corporate operations, internal relationship

		management and communication, specialty and continuing education of Directors, and internal control. (2) Performance assessment on functional committees: level of participation in corporate operations, understanding of functional committees' duties, quality of functional committees' decisions, composition of the functional committees and election
		of members, and internal control. Rating on overall operation: Excellent

(II) Operation of the Audit Committee or the Supervisor's participation in the Board operation:

A total of six (A) meetings were convened in 2020. The attendance status of Independent Directors was as follows:

Title	Name	Attendance in Person (B)	Attendance by Proxy	Attendance Rate (%) (B/A) (Note)	Remarks
Independent Director a	Ming-Te Chang	6	0	100.00%
Independent Director b	I-Li Chuang (Discharged in July 2020)	3	0	100.00%	3 meetings to attend
Independent Director c	Yao-Kuo Wu	6	0	100.00%

Other matters: I. Matters specified in Article 14-5 of the Securities and Exchange Act, and resolutions which were not approved by the Audit Committee but were approved by two-thirds or more of all Directors in 2020, the date and session of the Board meeting, contents of motions, Committee resolution and actions taken concerning opinions of the Committee shall be specified.

None.

II. For situations where Independent Directors recuse themselves from any motion due to conflict of interest, the Independent Directors' names, contents of motions, causes for the recusal, and participation in voting shall be specified.

None.

III. Communications between the Independent Directors and the internal audit officer and CPAs (e.g., matters concerning the finance and business of the Company, and the means and outcomes of communication).

The Company's Independent Directors maintain smooth communications with the internal audit officer and CPAs. Opinions concerning finance and business are exchanged on a regular basis. The fine interactions are important mechanisms in monitoring the current status of the Company. Irregularities identified would be reported immediately to the Board. Contacts and communications are mostly done via letters, e-communications and emails.

Note:

• * Where an Independent Director was relieved from duties before the end of the fiscal year, the date of his/her discharge shall be specified in the "Remarks" column. His/her attendance rate (%) shall be calculated on the basis of the number of meetings called and the actual number of meetings he/she attended, during his/her term of office.
• * Where an election is held to fill the vacancies of Independent Directors before the end of the fiscal year, please list both the incoming and the outgoing Independent Directors and specify if they are former, newly elected, or re-elected Independent Directors as well as the by-election date. The attendance rate (%) shall be calculated on the basis of the number of meetings called and the actual number of meetings attended.

(III) Corporate governance implementation status and deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies and reasons thereof

				Implementation Status	Deviations from
					the Corporate
					Governance Best
					Practice Principles
	Evaluation Item	Yes	No	Description	for TWSE/TPEx
					Listed Companies
					and Reasons
					Thereof
I.	Has the Company established and disclosed its code of practice on corporate governance based on the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies"?	✓		The Company has formulated the "Corporate Governance Best-Practice Principles".	-
II. (I)	Ownership structure and shareholders' rights Does the Company have internal operation procedures to handle shareholders' suggestions, concerns, disputes and litigations? If yes, have these procedures been implemented accordingly?	✓		The Company has internal operation procedures to handle shareholders' suggestions, concerns, disputes and litigations. All shareholders' suggestions, concerns, and disputes are handled by the spokesperson and deputy spokesperson.	-
(II)	Does the Company possess a list of major shareholders and ultimate	✓		The Company possesses a list of major shareholders and ultimate owners of these major

			Implementation Status	Deviations from
				the Corporate
				Governance Best
				Practice Principles
Evaluation Item				for TWSE/TPEx
	Yes	No	Description	Listed Companies
				and Reasons
				Thereof
owners of these major			shareholders.
shareholders?
(III) Does the Company build and execute risk	✓		Transactions between the Company and its affiliates are
management and firewall			conducted in accordance with
mechanism between itself			relevant regulations under
and affiliates? (IV) Does the Company have	✓		proper risk management. The Company has internal
internal rules to prevent			rules to prevent insiders from
insiders from using undisclosed information			using undisclosed information to trade securities.
to trade securities?
III. Composition and
responsibilities of the Board (I) Has the Company		✓	The Company has yet to
established a			formulate a diversification
diversification policy for the composition of its			policy for Board members.
Board of Directors and
has it been implemented
accordingly? (II) Other than Remuneration		✓	It has yet to set up other
and Audit Committees			functional committees.
which are required by laws, does the Company
plan to set up other
Functional Committees? (III) Has the Company	✓		The Company has established
formulated rules and			the Methods for Performance	-
methods for the			Assessment of the Board of
performance assessment of the Board of Directors			Directors and the assessment methods thereof. The 2020
and evaluate the Board			performance assessment of the
performance every year? Is the outcome of the			Board has been completed.
performance assessment
submitted to the Board of Directors and used as a
reference for the
remuneration and re
election nomination of individual Director?
(IV) Has the Company	✓		The Company regularly
periodically evaluated the			assesses the independence of

			Implementation Status	Deviations from
				the Corporate
				Governance Best
				Practice Principles
Evaluation Item				for TWSE/TPEx
	Yes	No	Description
				Listed Companies
				and Reasons
				Thereof
independence of its CPAs?			the CPAs. At present, the Company's CPAs have met the
			independence criteria.
IV. Has the TWSE/TPEx company	✓		The Company has created the
allocated a sufficient number of			position of chief corporate
qualified corporate governance staff and appointed a chief			governance officer in May 2021 and plans to establish the
corporate governance office to			Corporate Governance
take charge of affairs related to			Department with exclusively
corporate governance			(or concurrently) dedicated
(including but not limited to providing information required			personnel in charge of corporate governance related
for Directors and Supervisors to			matters.	-
perform their functions,
assisting Directors and Supervisors in regulatory
compliance, handling matters
related to Board and
shareholders' meetings
according to the law, and producing minutes of the Board
and shareholders' meetings)?
V. Has the Company established	✓		The Company maintains an
communication channels and set up a dedicated section on its			open communication channel with stakeholders of the
website for stakeholders			Company and respects and
(including but not limited to			protects the interests of both
shareholders, employees,			parties.	-
customers, and suppliers)? Has the Company responded to
concerns of stakeholders
regarding important corporate
social responsibility (CSR) issues in a proper manner?
VI. Has the Company appointed a	✓		The Company has appointed
professional shareholder			the Stock Management Service
service agency to handle matters associated with			Department, Taishin International Bank to organize	-
shareholders' meetings?			the shareholders' meetings.
VII. Information disclosure
(I) Has the Company	✓		The Company has established a
established a corporate website to disclose			corporate website disclosing information regarding the
information regarding the			Company's finance, business

			Implementation Status	Deviations from
				the Corporate
				Governance Best
				Practice Principles
Evaluation Item				for TWSE/TPEx
	Yes	No	Description	Listed Companies
				and Reasons
				Thereof
Company's finance, business and corporate governance status?			and corporate governance.
(II) Does the Company have	✓		Shareholder Services Office is
other information			currently responsible for the collection and disclosure of
disclosure channels (e.g.,			corporate information and has
maintaining an English language website,			implemented the spokesperson
designating people to			system. Investor conferences
handle information			are held when the need arises.
collection and disclosure,
appointing spokesperson, webcasting investor
conference on the
corporate website)?
(III) Does the Company		✓	At present, the Company has	In the future, the Company will
publicly announce and file its annual financial report			not been able to publicly announce and file its annual	accelerate the
within two months after			financial report within two	internal annual
the end of the financial			months after the end of the	closing process as well as the
year, and its financial			financial year due to operations. However, the	CPA audits for
reports of the first three quarters as well as the			financial reports of the first	earlier
operational status of each			three quarters as well as the	announcement
month prior to the			operational status of each month are publicly announced	and filing of annual financial
prescribed deadlines?			and filed prior to the prescribed	report.
			deadlines.
VIII. Does the Company have other			Motivated by a sense of
important information to facilitate a better			mission towards a city, the Company believes that
understanding of the			buildings shall be integrated
Company's corporate			with the city and demonstrate
governance practices (including but not limited to			the city's spirit. This is the fundamental responsibility of
rights and welfare of	✓		the Company.	-
employees, investor relations,			Committed to green buildings
supplier relations, rights of stakeholders, continuing			and smart buildings, themed buildings and aesthetic
education of directors and			buildings are the Company's
supervisors, the			goals and contribute to the
implementation of risk management policies and risk			beauty of the city.

			Implementation Status	Deviations from
				the Corporate
				Governance Best
				Practice Principles
Evaluation Item	Yes	No	Description	for TWSE/TPEx
				Listed Companies
				and Reasons
				Thereof
evaluation measures, the implementation of customer policies, and liability insurance for directors and supervisors provided by the Company)?
IX. (Not applicable for the excluded companies) None.			Improvements made in the most recent fiscal year in response to the results of corporate governance evaluation conducted by the Corporate Governance Center of the Taiwan Stock Exchange Corporation, and improvement measures and plans for items yet to be improved.

(IV) The composition and operations of the Remuneration Committee:

1. Professional Qualifications and Independence Analysis of the

			Remuneration Committee Members
	Qualification		Meets one of the following professional qualification requirements, together with at least five years of work experience			Independence Criteria	(Note 2)
Title (Note 1)	Name	An instructor or higher position in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the Company in a public or private junior college, college or university	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist who Has Passed a National Examination and Has Been Awarded a Certificate in a Profession Necessary for the Business	Has work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the Company		1 2 3 4 5 6 7 8 9 10				Number of Other Public Companies in Which the Individual is Concurrently Serving as a Remuneration Committee Member	Remarks
Others	Ming-Te Chang			✓		✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓				None
Others	Yao-Kuo Wu			✓		✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓				None
Others	Chuang, Chi Hsiung			✓		✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓				None

Note 1: For the title, please fill in director, independent director, or others.

Note 2: Please check "✓" the corresponding boxes if the members meet the following conditions during the two years prior to the nomination and during the term of office.

• (1) Not an employee of the Company or any of its affiliates.
• (2) Not a Director or Supervisor of the Company or any of its affiliates. (Not applicable in cases where the person is an Independent Director appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or the laws of the country where the business is located by, and concurrently serve as such at, the Company, its parent company, subsidiary, or subsidiaries that belong to the same parent company.)
• (3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or nominee arrangement, in an aggregate amount of 1% or more of the Company's total number of issued shares or ranks among the Company's top ten shareholders.
• (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of managerial officers in (1) or of any of the persons in (2) and (3).
• (5) Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the Company's total number of issued shares, ranks among the Company's top five shareholders, or appoints representatives to be the Company's directors or supervisors pursuant to Paragraph 1 or 2, Article 27 of the Company Act. (Not applicable in cases where the person is an Independent Director appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or the laws of the country where the business is located by, and concurrently serve as such at, the Company, its parent company, subsidiary, or subsidiaries that belong to the same parent company.)
• (6) Not a director, supervisor, or employee of a company whose majority of directorships or voting rights are controlled by a shareholder who also controls the majority of directorships or voting rights of the Company. (Not applicable in cases where the person is an Independent Director appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or the laws of the country where the business is located by, and concurrently serve as such at, the Company, its parent company, subsidiary, or subsidiaries that belong to the same parent company.)
• (7) Not a director, supervisor or employee of a company or institution whose chairman, president, or an officer of equivalent position is the same person as, or a spouse to, one of the persons holding the same positions in the Company. (Not applicable in cases where the person is an Independent Director appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or the laws of the

country where the business is located by, and concurrently serve as such at, the Company, its parent company, subsidiary, or subsidiaries that belong to the same parent company.)

• (8) Not a director, supervisor, managerial officer, or shareholder with a shareholding of 5% or more of a specific company or institution that has a financial or business relationship with the Company. (Not applicable in cases where the specific company or institution owns 20% (inclusive) to 50% (exclusive) of the Company's total number of issued shares, and the person is an Independent Director appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or the laws of the country where the business is located by, and concurrently serve as such at, the Company, its parent company, subsidiary, or subsidiaries that belong to the same parent company)
• (9) Not a professional individual who, nor an owner, partner, director, supervisor, or managerial officer of a sole proprietorship, partnership, company, or institution that provides auditing services to the Company or its affiliates, or provides commerce, law, finance, accounting or related services to the Company or its affiliates with a cumulative compensation under NT\$500,000 in the past two fiscal years, nor a spouse thereof. However, this requirement is not applicable where members of the Remuneration Committee, Public Tender Offer Review Committee, or Special Committee for Merger/Acquisition perform duties pursuant to laws and regulations in association with the Securities and Exchange Act or the Business Mergers and Acquisitions Act.
• (10) Not being a person of any conditions defined in Article 30 of the Company Act.

2. Operation of the Remuneration Committee

• I. The Company's Remuneration Committee comprises three members.
• II. Term of current Committee members: June 24, 2020 to June 23, 2023. The Remuneration Committee held two (A) meetings in 2020. The attendance status was as follows:

Title	Name	Attendance in Person (B)	Attendance by Proxy	Attendance Rate (%) (B/A) (Note)	Remarks
Convener	Ming-Te	2	0	100.0%
	Chang
Member	I-Li Chuang	1	0	100.0%
	(Discharged)				1 meeting to attend
Member	Yao-Kuo	2	0	100.0%
	Wu
Member	Chuang,	1	0	100.0%
	Chi-Hsiung				1 meeting to attend

Other matters:

I. If the Board decline to adopt or modify a recommendation of the Remuneration Committee, the date and session of the Board meeting, contents of motions, resolution and actions taken by the Company regarding the Committee's opinions shall be specified (if the compensation package approved by the Board is better than the recommendation made by the Committee, please specify the discrepancy and its reason).

None.

II. As to the resolutions of the Remuneration Committee, if a member expresses any objection or reservation, either by a recorded statement or in writing, the date and session of the committee meeting, contents of motions, all members' opinions and actions taken regarding the opinions shall be specified.

None.

(V) Performance in Corporate Social Responsibility and Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies and Reasons Thereof:

				Implementation Status	Deviations from the Corporate Social
	Evaluation Item	Yes	No	Description	Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
I.	Has the Company conducted risk assessments on environmental, social and corporate governance issues related to the Company's operations in accordance with the materiality principle, and formulate relevant risk management policies or strategies?			The Company has conducted risk assessments on environmental, social and corporate governance issues related to the Company's operations in accordance with the materiality principle, and formulate relevant risk management policies and strategies.	None.
II.	Does the Company have an exclusively (or concurrently) dedicated CSR unit with senior management being authorized by the Board to handle relevant issues and report to the Board?	✓		At present, the Company's Administration Department is the concurrently dedicated unit for the promotion of CSR activities.	None.
III.	Environmental issues (I) Does the Company establish an environmental management system designed to fit industry characteristics?	✓		The Company is in a relatively simple industry where environmental management is undertaken by the downstream contractors. At present, the environmental management system complies with the
	(II) Is the Company committed to improving the efficiency of various resources and utilizing renewable materials that have low environmental impacts?	✓		requirements. The Company and downstream contractors utilize resources with efficiency and adopt recycled materials which have low environmental impact.	None.
	(III) Does the Company assess the present and future potential risks and opportunities of climate change for the entity, and takes countermeasures to respond to climate-related issues?	✓		The impact of climate change on the Company remains insignificant. The Company regularly assesses the potential risks and opportunities, at present and in the future, arising from climate change.
	(IV) Does the Company calculate its greenhouse gas (GHG) emissions, water consumption and	✓		The Company has from time to time promoted its policy on carbon and GHG reductions with developments towards

			Implementation Status	Deviations from the Corporate Social
Evaluation Item	Yes	No	Description	Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
total waste weight in the past two years, and formulate policies for energy conservation, reductions of carbon, GHG and water consumption, or other waste management?			green buildings. It has yet to calculate its GHG emissions, water consumption and total waste weight in the past two years.
IV. Social issues (I) Has the Company formulated appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?	✓		The Company abides by laws and regulations and acknowledges the international principles of basic labor rights to protect employees' legitimate rights and recruitment policy, establish the welfare system and adopt proper management approaches
(II) Has the Company formulated and implemented reasonable employee welfare measures (including remuneration, leaves and other benefits), and properly reflected the operating performance or achievements in the	✓		and procedures. The Company has formulated and implemented reasonable employee welfare measures and regularly assessed employee performance which is reflected in employee compensation.	None.
employee remuneration? (III) Has the Company provided employees with a safe and healthy working environment with regular safety and health education?	✓		The Company has provided employees with a safe and healthy working environment with regular safety and health education.
(IV) Has the Company established effective career development training programs for its employees?	✓		The Company has established effective career development training programs for its employees and implemented the programs continuously.
(V) Has the Company complied with related regulations and international standards in terms of customer health and safety, customer privacy, marketing and	✓		There are relatively few regulations and international standards where the Company's marketing and labeling of products and services are concerned. As for customer health and safety and customer

			Implementation Status	Deviations from the Corporate Social
Evaluation Item	Yes	No	Description	Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
labeling of products and services, and formulate relevant consumer protection policies and complaint procedures? (VI) Has the Company formulated supplier management policies that require suppliers to follow relevant regulations on issues such as environmental protection, occupational safety and health, or labor rights, and the implementation results?	✓		privacy, the Company has always stressed the importance that products and services shall meet all requirements and demanded full compliance thereof. Also, relevant consumer protection policies and complaint procedures have been formulated. The Company's contracts with suppliers contain clauses where the Company is entitled to terminate or rescind the contracts at any time if the supplier has violated the CSR policy and the violation resulted in a significant negative impact on the environment and society.
V. Has the Company referred to the internationally accepted report preparation standards or guidelines for its preparation of CSR or other reports which disclose the Company's non financial information? Have the aforementioned reports obtained a third-party assurance or verification statement? VI.		✓	The Company has not referred to internationally accepted report preparation standards or guidelines for its preparation of CSR reports which disclose the Company's non-financial information. If the Company has established its CSR principles according to "Corporate Social Responsibility	The Company will refer to internationally accepted report preparation standards for its preparation of CSR report in the near future for shareholders' reference.

Best Practice Principles for TWSE/TPEx Listed Companies", please describe the operational status and difference:

The Company has established the "Corporate Social Responsibility Best-Practice Principles" and proceeded accordingly.

VII. Other important information to facilitate a better understanding of the Company's CSR practices: The Company has always been committed to the structural safety of buildings. We collaborated with the Building Safety Certification Association on the Riverbank project, which was the first one in central and southern Taiwan to obtain the Building Safety Certification. Through the third-party inspection and certification of the Building Safety Certification Association, the project had complete records on reinforcement fixing, the most crucial part of the construction project, and concrete quality. It fully realized structural safety and quality control.

(VI) Performance in Ethical Management and Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx-Listed Companies and Reasons Thereof:

			Implementation Status	Deviations from the Ethical Corporate
Evaluation Item		Yes	No	Description	Management Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
I. and schemes (I) (II)	Establishment of ethical corporate management policies Has the Company formulated ethical corporate management policies approved by the Board of Directors and clearly expressed relevant policies and actions as well as the Board and senior management's commitment to implement these policies in the Company's internal rules and external documents? Has the Company established an assessment mechanism for risk arising from unethical conducts, regularly analyzed and assessed operating activities with higher risks of unethical conduct within its business, and formulated preventive schemes accordingly, which at least contain preventive measures for conducts set forth in Paragraph 2, Article 7 of the "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies"? (III) Has the Company had clear statements regarding relevant procedures, conduct guidelines, disciplinary measures and compliant system in the preventive schemes, and	✓ ✓ ✓		The Company has formulated ethical corporate management policies approved by the Board and clearly expressed relevant policies and actions as well as the Board and senior management's commitment to implement these policies in the annual report. The Company has established an assessment mechanism for risk arising from unethical conducts, regularly analyzed and assessed operating activities with higher risks of unethical conduct within its business. For conducts set forth in Paragraph 2, Article 7 of the "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies" and operating activities with higher risks of unethical conducts, we have preventive rules and designs in the internal control system. The Company has established the Principles of Business Ethics with clear statements regarding relevant procedures, conduct guidelines, disciplinary measures and compliant system and proceeded accordingly.	None.

				Implementation Status	Deviations from the Ethical Corporate
	Evaluation Item	Yes	No	Description	Management Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	implemented them accordingly and regularly review these schemes?
II.	Implementation of ethical
	corporate management
	(I) Does the Company review	✓		The Company avoids
	the counterparty's history			transacting with parties having
	of ethical conduct and			records of unethical conduct.
	include the compliance of business ethics as a clause
	in the contract?
	(II) Has the Company	✓		The Audit Office is designated
	established an exclusively			to promote ethical conduct
	dedicated department			concurrently and reports its
	under the Board of Directors to promote			operation to the Board.
	ethical conducts and
	report regularly (at least
	once per year) its ethics
	policies and preventive
	schemes for unethical conducts as well as
	implementation status to
	the Board?
	(III) Has the Company	✓		The Company has established
	established policies to			an internal control system for	None.
	prevent conflicts of interest, provided			related party transactions to prevent conflicts of interest and
	appropriate			provided appropriate
	communication channels			communication channels. The
	and thoroughly			Shareholder Services Office is
	implemented the policies?			the exclusively dedicated unit.
	(IV) Has the Company	✓		The Company has established
	established effective accounting and internal			effective accounting and internal control systems for the
	control systems for the			implementation of ethical
	implementation of ethical			corporate management. Their
	corporate management			operations and audits are
	and had the internal audit			carried out pursuant to relevant
	unit formulating relevant			rules.
	audit plans based on the assessment outcome of
	risk associated with
	unethical conducts? Has
	the Company then
	performed audits on the
	compliance with the
	preventive schemes for

				Implementation Status	Deviations from the Ethical Corporate
	Evaluation Item	Yes	No	Description	Management Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
(V)	unethical conducts accordingly, or entrust the CPAs to conduct the audits? Has the Company regularly held internal and external education and training sessions on ethical corporate management?	✓		The Company has regularly held internal and external education and training sessions on ethical corporate management.
III. (I) (II)	Implementation of the whistle blowing system Has the Company established specific whistle-blowing and reward systems, set up conveniently accessible whistle-blowing channels, and assigned appropriate and dedicated individuals for the accused party? Has the Company established standard operating procedures for investigating the reported incidents, actions to be taken upon the completion of an investigation, and confidentiality	✓ ✓		The whistle-blowing channels are under the supervision of the Audit Office. The disciplinary measures and compliant system have operated smoothly at present. The Company has established standard operating procedures and confidentiality mechanisms for investigating the reported incidents.	None.
(III)	mechanisms? Has the Company established measures to protect whistleblowers from retaliation?	✓		The Company has established measures to protect whistleblowers from improper treatment.
IV. disclosure	Enhancement on information Has the Company disclosed its ethical corporate management principles and the results of its implementation on the corporate website and MOPS?	✓		The Company has set up the corporate website and disclosed relevant information on ethical corporate management.	None.
V.				If the Company has established its own ethical corporate management principles based on the "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies", please describe the implementation and any deviations from the Principles: The Company operates in accordance with its "Principles of Business Ethics."
VI. etc.):				Other important information to facilitate a better understanding of the Company's ethical corporate management (e.g., the Company reviews and revises its Principles of Business Ethics,

			Implementation Status	Deviations from the Ethical Corporate
Evaluation Item	Yes No		Description	Management Best Practice Principles for TWSE/TPEx Listed Companies
				and Reasons Thereof
1. The Company belongs to the building industry. Our transactions with customers have always complied with government laws and regulations and protected the customers' rights and interests. Ethical corporate management is an important issue to the fundamentals of the industry.
2. In recent years, the government has been committed to promoting the safety of property transactions. Besides establishing the template for property contracts, it moves forward towards ethical corporate management. The Company will follow suit to ease consumers' concerns in property acquisition.

• (VII) The Company's Corporate Governance Best-Practice Principles and relevant rules are available at the corporate website (http://www.kingtown.com.tw/).
• (VIII) Other important information to facilitate a better understanding of the Company's corporate governance practices: None.

(IX) Status of internal control system:

1. Statement of Internal Control King's Town Construction Co., Ltd.

Statement of Internal Control System

Date: March 24, 2021

The Company hereby states the results of the self-assessment of the internal control system for 2020 as follows:

• I. The Company acknowledges that the Board and management are responsible for establishing, implementing, and maintaining an adequate internal control system. The Company has established the system. The internal control system is designed to provide reasonable assurance for the effectiveness and efficiency of the operations (including profitability, performance and protection of assets), reliability, timeliness, and transparency of reporting, and compliance with applicable standards, laws and regulations.
• II. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three objectives mentioned above. Moreover, the effectiveness of an internal control system may be subject to changes in the environment or circumstances. However, the internal control system of the Company has self-monitoring mechanisms in place, and the Company will take corrective action against any defects identified.
• III. The Company evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the "Regulations"). The criteria adopted by the Regulations identify five key components of internal control based on the process of management: 1. control environment, 2. risk assessment, 3. control activities, 4. information and communication, and 5. monitoring. Each constituent element includes a certain number of items. For more information on such items, refer to the Regulations.
• IV. The Company has adopted the aforesaid assessment items for the internal control system to determine whether the design and implementation of the internal control system are effective.
• V. Based on the findings of the evaluation mentioned in the preceding paragraph, the Company believes that, as of December 31, 2020, its internal control system (including its supervision of subsidiaries), as well as its internal controls to monitor the achievement of its objectives concerning operational effectiveness and efficiency; reliability, timeliness and transparency of financial reporting; and compliance with applicable laws and regulations, were effective in design and operation, and reasonably assured the achievement of the above-mentioned objectives.
• VI. This Statement will be an essential content of the Company's annual report and prospectus

and will be publicly disclosed. Any falsehood or concealment with regard to the above contents will entail legal liability under Articles 20, 32, 171 and 174 of the Securities and Exchange Act.

VII. This Statement has been approved in the Board of Directors' meeting on March 24, 2021, with 0 of the 5 attending Directors expressing objectives, and the remainder all affirming the content of this Statement.

King's Town Construction Co., Ltd.

Chairman: Signature

President: Signature

• 1. CPA's Audit Report on Internal Control System: N/A.
• (X) Any penalties imposed upon the Company or internal personnel by laws, or punishment imposed by the Company on internal personnel for violation of the Company's internal control system regulations, details on the punishment if it might have a significant impact on the shareholders' equity or security prices, major defects and corrective action thereof during the most recent fiscal year and up to the date of publication of the annual report: None.
• (XI) Major resolutions of shareholders' meeting and Board meetings during the most recent fiscal year and up to the date of publication of the annual report:

Date	Major Resolutions
	1. Approved the change of audit officer.
	2. Discussed the 2019 year-end bonus of the Company's
2020/1/15	managerial officers.
Board meeting	3. Amended some articles of the Company's "Procedures for
	Acquisition or Disposal of Assets."
	1. Carried out 4th buyback of treasury shares pursuant to
2020/3/13	Subparagraph 3, Paragraph 1, Article 28-2 of the Securities
Board meeting	and Exchange Act and repurchased 10,000,000 registered
	common shares of the Company.
	1. Approved the 2019 Statement of Internal Control System.
	2. Amended some articles of the Company's "Internal Control
	System."
	3. Ratification of consolidated and parent company only financial statements for the years ended December 31, 2019.
2020/3/25	4. Establish the "Corporate Governance Best-Practice
Board meeting	Principles."
	5. Amended some articles of the Company's "Corporate Social
	Responsibility Best-Practice Principles."
	6. Amended some articles of the Company's "Procedures and
	Guidelines of Business Ethics."
	7. Matters associated with 2020 shareholders' meeting.
	1. Reviewed the list of candidates for the election of Directors
	(including Independent Directors) in the 2020 shareholders''
2020/5/13	meeting.
Board meeting	2. 2019 earnings distribution. 3. 2019 distribution of employee compensation and
	remunerations to Directors and Supervisors.
	1. For the 4th buyback of treasury shares where a total of
	10,000,000 registered common shares of the Company was
2020/6/19	repurchased, the record date of capital reduction was resolved
Board meeting	per approval from the Financial Supervisory Commission.
	2. Carried out 5th buyback of treasury shares and repurchased
	5,000,000 registered common shares of the Company.
2020/6/24	1. Amended some articles of the Company's "Procedures for
Shareholders'	Acquisition or Disposal of Assets." 2. Election of Directors.
meeting	3. Released new Directors and their representatives from non-

January 1, 2020 ~ May 1, 2021
-------------------------------	--	--	--	--

Date	Major Resolutions
	compete restrictions.
2020/6/24 Board meeting	Elected the representative of Tian Lai Investment Co., Ltd., Mr. Tien-Tsan Tsai, as the Chairman.
2020/7/15 Board meeting	The bid for Land Parcel No. 10, 12 and 14, Xingnan Section, Qianzhen District, Kaohsiung City from the Southern Region Branch, National Property Administration, MOF.
2020/8/12 Board meeting	1. Amended some articles of the Company's "Internal Control System." 2. Appointed members of the 2nd-term Remuneration Committee. 3. Submitted the application of urban renewal business and rights transfer plan for Land Parcel No. 698-1, Fuhe Section, Lingya District, Kaohsiung City
2020/9/15 Board meeting	The bid for Land Parcel No. 43, Xinyi Section, Gangshan District, Kaohsiung City from the Land Administration Bureau, Kaohsiung City Government.
2020/9/24 Board meeting	1. For the 5th buyback of treasury shares where a total of 4,189,000 registered common shares of the Company was repurchased, the record date of capital reduction was resolved per approval from the Financial Supervisory Commission. 2. Determined the record date for the 2020 distribution of employee stock bonuses and discussed the 2020 employee compensation to managerial officers. 3. Increased remunerations to Directors and Independent Directors.
2020/11/12 Board meeting	1. Amended some articles of the Company's "Internal Control System." 2. 2021 annual audit plan. 3. Signed a construction contract with the Company's related party, Bai Hong Construction Co., Ltd., for the Land Parcel No. 163, Xindu Section, Sanmin District, Kaohsiung City. 4. Signed a construction contract with the Company's related party, Chieh Chih Construction Co., Ltd., for the Land Parcel No. 2747, Aiqun Section, Qianzhen District, Kaohsiung City. 5. Acquired the Phase II Urban Land Consolidation Project of Xianbei, North District, Tainan City from a non-related party.
2020/12/16	1. Cash capital increase for the subsidiary, H2O Hotel Co., Ltd. 2. Acquired land at Yuguang Section, Anping District, Tainan City from a non-related party. 3. Acquired the Private Urban Land Consolidation Project I of Caohu, Annan District, Tainan City from a non-related party. 4. Terminated the sales contracts signed on November 16, 2020 for the 14 lots of properties including Land Parcel No. 16, Guangxian Section, North District, Tainan City.
2021/1/27	Discussed the 2020 year-end bonus of the managerial officers.
2021/2/4	Acquired Land Parcel No. 1, Longdong Section, Gushan District, Kaohsiung City from a related party.
2021/3/24	1. 2020 Statement of Internal Control System. 2. Ratification of consolidated and parent company only financial statements for the years ended December 31, 2020.

Date	Major Resolutions
	3. 2020 distribution of earnings, employee compensation and
	remunerations to Directors and Supervisors.
	4. Reviewed the list of candidates for the by-election of
	Independent Directors in the 2021 shareholders'' meeting.
	5. Matters associated with 2021 shareholders' meeting.
	6. Amended some articles of the Company's "Rules and
	Procedures of Shareholders' Meeting."
	7. Amended some articles of the Company's "Rules and
	Procedures of Board of Directors' Meeting."
	8. Amended some articles of the Company's "Audit Committee
	Charter."
	9. Established the Methods for Performance Assessment of the
	Board of Directors.
	10. Acquired land at Kanjiao N. Section, Rende District, Tainan
	City from a non-related party.

• (XII) Details of dissenting opinion expressed by a Director or Supervisor, either by a recorded statement or in writing, with respect to a major resolution passed by the Board during the most recent fiscal year and up to the date of publication of the annual report: None.
• (XIII)A summary of resignation or discharge of Chairman, President and officers of accounting, finance, internal audit, corporate governance and research and development during the most recent fiscal year and up to the date of publication of the annual report: None.

V. Information on CPA Professional Fees:

Name of CPA Firm	Name of CPA		Audit Period	Remarks
ShineWing Taiwan	Angela Chuang	Hielleen Chang	2020/01/01~2020/12/31

Range of CPA Professional Fees

Unit: In Thousands of New Taiwan Dollars

Range	Category of Fees	Audit Fees	Non-audit Fees	Total
1	Under NT\$2,000,000	1,650	422	2,072
2	NT\$2,000,000 (inclusive) ~ NT\$3,999,999	-	-	-
3	NT\$4,000,000 (inclusive)~ NT\$5,999,999	-	-	-
4	NT\$6,000,000 (inclusive)~ NT\$7,999,999	-	-	-
5	NT\$8,000,000 (inclusive)~ NT\$9,999,999	-	-	-
6	NT\$10,000,000 and above	-	-	-

• (I) Non-audit fees paid to CPAs, CPA's accounting firms and their affiliates exceeding 25% of the audit fees: None.
• (II) When the company changes its accounting firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year, the reduction in the amount of audit fees, reduction percentage, and reason(s) thereof shall be disclosed: None.
• (III) When the audit fees paid for the current fiscal year are lower than those for the previous fiscal year by 15 percent or more, the reduction in the amount of audit fees, reduction percentage, and reason(s) thereof shall be disclosed: None.
• VI. Information on Replacement of CPAs: None.

• VII. The Company's Chairman, President, or Any Managerial Officer in Charge of Finance or Accounting Matters Holding a Position at the Company's CPA Firm or at an Affiliated Enterprise of Such Firm during the Most Recent Fiscal Year: None.

• VIII. Any Transfer of Equity Interests and/or Pledge of or Change in Equity Interests During the Most Recent Fiscal Year and up to the Date of Publication of the Annual Report by a Director, Supervisor, Managerial Officer, or Shareholder with a Stake of More than 10 Percent

• ◎ Changes in Equity Interests of Directors, Supervisors, Managerial Officers and Major Shareholders

(In Shares)
		2020	By April 27, 2020
Title	Name	Net Change in	Net Change in	Net Change in	Net Change in
		Shareholding	Shares Pledged	Shareholding	Shares Pledged
	Representatives
	of Tian Lai
	Investment
Director/ Major	Co., Ltd.: Tien
shareholders with	Tsan Tsai,
10%	Mei-Yun Tsai	0	0	0	0
shareholdings or	Hsueh, Tien
more	Chin Chen, and
	Shih-Hsiung Li
	(Date elected:
	June 28, 2017)
Representative of
Director/ Major
shareholders with	Tien-Tsan Tsai	0	22,000,000	0	8,500,000
10%
shareholdings or
more
Representative of	Mei-Yun Tsai	0	0	0	0
Director	Hsueh
Representative of Director/President	Tien-Chin Chen	14,078	0	0	0
Representative of
Director	Shih-Hsiung Li	0	0	0	0
Independent	Ming-Te
Director	Chang	0	0	0	0
Independent	I-Li Chuang
Director	(Discharged)	0	0	N/A	N/A
Independent
Director	Yao-Kuo Wu	0	0	0	0
	Chin-Chung
Vice President	Chuang	5,187	0	N/A	N/A
	(Discharged)
	Chin-Hsing
Vice President	Chen	8,722	0	0	0
Assistant Vice	Jui-Lung Kung	9,825	0	0	0
President
Assistant Vice	Chia-Hung	9,914	0	0	0

			2020	By April 27, 2020
Title	Name	Net Change in	Net Change in	Net Change in	Net Change in
		Shareholding	Shares Pledged	Shareholding	Shares Pledged
President	Huang
Assistant Vice	Jing-Heng
President	Zhou	9,300	0	(18,000)	0
Officer of
Finance and		8,114	0	0	0
Accounting
Shareholders with
10%	Tian Gang
Shareholdings or	Investment	0	0	27,500,000	20,000,000
More	Co., Ltd.

Note: As there was no transfer of equity interests or pledge of equity interests between related parties, no disclosure was required.

IX. Relationship Among the Company's Ten Shareholders Where One Is a Related Party, a Spouse or a Relative within the Second Degree of Kinship of Another

								April 27, 2021
Name		Current Shareholding	Spouse & Minor Shareholding		Shareholding By Nominees		Names and relationship of top ten shareholders who are related parties as defined in no. 6 of the statement of financial accounting standards, spouses or within second degree of kinship to each other		Remarks
	Shares	Shareholding (%)	Shares	Shareholding (%)	Shares	Shareholding (%)	Name	Relationship
		23.05					Mei-Yun Tsai-Hsueh	Spouse
Tien-Tsan Tsai	85,577,838		20,209,951	5.44	-	-		First-degree relative by consanguinity	Corporate Representative - Director of the Company, major shareholder
							Mei-Hui Chen	Second degree relative by affinity
Tian Gang							Mei-Yun	Responsible
Investment Co.,	63,328,801	17.06	-	-	-	-	Tsai-Hsueh	person	Major shareholder
Ltd.							Tien-Tsan
Tian Gang Investment Co.,							Tsai	Spouse First-degree
Ltd.								relative by consanguinity
Responsible	20,209,951	5.44	85,577,838	23.05	-	-		Second	-
person: Mei-Yun							Mei-Hui Chen	degree relative by consanguinity
Tsai-Hsueh
Tian Lai Investment Co.,	49,652,072	13.38	-	-	-	-	-	-	Director of the
Ltd.									Company
Responsible							Tien-Tsan Tsai	First-degree relative by affinity
person of Tian Lai							Mei-Yun	First-degree relative by
Investment Co.,	438,429	0.12	703,382	0.19	-	-	Tsai-Hsueh	affinity Second	-
Ltd.: I-Ying Chen								degree relative by affinity
Chieh Chih
Construction	31,501,513	8.49	-	-	-	-	-	-	Affiliate of the Company
Co., Ltd.
Responsible
person of Chieh	589,635	0.16	11,533,354	3.11	-	-	-	-	-
Chih Construction Co., Ltd.: Hsien

Relationship between Top Ten Shareholders

Tsung Wang
Chiung -Ting Tsai	23,616,339	6.36	0	0.00	-	-	Tien -Tsan Tsai Mei -Yun Tsai -Hsueh	First -degree relative by consanguinity First -degree relative by consanguinity	First -degree relative to corporate representative - Director of the Company
Mei -Yun Tsai - Hsueh	20,209,951	5.44	85,577,838	23.05	-	-	Tien -Tsan Tsai	Spouse First -degree relative by consanguinity	Corporate Representative - Director of the Company
Xin Rui Investment Co., Ltd.	17,786,434	4.79	-	-	-	-	-	-	-
Responsible person of Xin Rui Investment Co., Ltd.: I-Li Chuang	0	0.00	-	-	-	-	-	-	-
Jin Cheng Construction Co., Ltd.	11,653,324	3.14	-	-	-	-	-	-	-
Responsible person of Jin Cheng Construction Co., Ltd.: Chun -Chun Chiu	304,748	0.08	-	-	-	-	-	-	-
Mei -Hui Chen	11,533,354	3.11	589,635	0.16	-	-	Tien -Tsan Tsai Mei -Yun Tsai -Hsueh	Second - degree relative by affinity Second - degree relative by consanguinity	Second -degree relative to corporate representative - Director of the Company
Chin -Chueh Chen	3,261,149	0.88	96,899	0.03	-	-	-	-	-

X. Total Number of Shares and Total Equity Stake Held in any Single Enterprise by the Company, Its Directors and Supervisors, Managerial Officers, and Any Companies Controlled Either Directly or Indirectly by the Company

						(In Shares; %)
Investee (Note)	Investment by the Company			Investments of the Directors, Supervisors, Managerial Officers, and Any Companies Controlled Either Directly or Indirectly by the Company	Total
	Shares	Shareholding (%)	Shares	Shareholding (%)	Shares	Shareholding (%)
H2O Hotel Co., Ltd.	32,000,000	100.00%	0	0.00	32,000,000	100.00%
Hua Zhi Venture Capital Co., Ltd.	8,152	1.63%	0	0.00%	8,152	1.63%

Note: Investments accounted for under the equity method.

Capital and Shares

I. Sources of Capital

		Authorized Capital		Paid-in Capital			Remarks
Year/ Month	Issued Price	Number of shares (In shares)	Amount (In Thousands of NT\$)	Number of shares (In shares)	Amount (In Thousands of NT\$)	Source of Capital	Capital Increase by Assets Other than Cash	Others
1985/09	NT\$10,000	100	1,000	100	1,000	Initial capital	None
1985/10	NT\$10,000	3,000	30,000	3,000	30,000	Cash capital increase of NT\$29,000,000	None
1990/04	NT\$10,000	8,000	80,000	8,000	80,000	Cash capital increase of NT\$50,000,000	None
1990/05	NT\$10	19,800,000	198,000	19,800,000	198,000	Cash capital increase of NT\$118,000,000	None
1991/04	NT\$10	40,000,000	400,000	40,000,000	400,000	Capitalization of earnings of NT\$30,000,000, Cash capital increase ofNT\$172,000,000	None
1991/12	NT\$10	45,016,000	450,160	45,016,000	450,160	Capitalization of earnings of NT\$50,160,000	None
1992/08	NT\$10	70,000,000	700,000	51,543,320	515,433	Capitalization of earnings of NT\$65,273,200	None
1993/06	NT\$10	70,000,000	700,000	65,819,537	658,195	Capitalization of earnings of NT\$142,762,170	None
1994/07	NT\$10	100,000,000	1,000,000	81,483,268	814,833	Capitalization of earnings of NT\$156,637,310	None
1995/05	NT\$10	200,000,000	2,000,000	99,983,268	999,833	Cash capital increase of NT\$185,000,000	None
1995/07	NT\$10	200,000,000	2,000,000	135,147,774	1,351,478	Capitalization of earnings of NT\$351,645,060	None
1999/10	NT\$10	200,000,000	2,000,000	148,662,551	1,486,626	Capitalization of capital surplus of NT\$135,147,770	None
2005/06	NT\$10	370,000,000	3,700,000	223,760,126	2,237,602	Capitalization of earnings of NT\$750,975,750	None
2006/08	NT\$10	370,000,000	3,700,000	268,973,513	2,689,735	Capitalization of earnings of NT\$452,133,870	None
2007/07	NT\$10	370,000,000	3,700,000	296,148,158	2,961,481	Capitalization of earnings of NT\$271,746,450	None
2008/02	NT\$10	370,000,000	3,700,000	291,163,158	2,911,631	Capital reduction via treasury shares of NT\$49,850,000	None
2008/08	NT\$10	370,000,000	3,700,000	320,849,633	3,208,496	Capitalization of earnings of	None

			Authorized Capital		Paid-in Capital	Remarks
Year/ Month	Issued Price	Number of shares (In shares)	Amount (In Thousands of NT\$)	Number of shares (In shares)	Amount (In Thousands of NT\$)	Source of Capital	Capital Increase by Assets Other than Cash	Others
						NT\$296,864,750
2008/12	NT\$10	370,000,000	3,700,000	310,849,633	3,108,496	Capital reduction via treasury shares of NT\$100,000,000	None
2009/10	NT\$10	370,000,000	3,700,000	305,849,633	3,058,496	Capital reduction via treasury shares of NT\$50,000,000	None
2010/09	NT\$10	370,000,000	3,700,000	330,657,729	3,306,577	Capitalization of earnings of NT\$248,080,096	None
2011/10	NT\$10	450,000,000	4,500,000	357,727,262	3,577,273	Capitalization of earnings of NT\$270,695,330	None
2012/09	NT\$10	450,000,000	4,500,000	375,926,155	3,759,261	Capitalization of earnings of NT\$181,988,930	None
2015/10	NT\$10	450,000,000	4,500,000	383,820,229	3,838,202	Capitalization of earnings of NT\$78,940,740	None	Approved by Jin Guan Zheng-Fa Zi No. 1040029174 on July 31, 2015
2016/11	NT\$10	450,000,000	4,500,000	384,004,658	3,840,047	Capitalization of employee bonus of NT\$1,844,290	None	-
2017/09	NT\$10	450,000,000	4,500,000	384,270,732	3,842,707	Capitalization of employee bonus of NT\$2,660,740	None	-
2018/10	NT\$10	450,000,000	4,500,000	384,654,922	3,846,549	Capitalization of employee bonus of NT\$3,841,900	None	-
2019/08	NT\$10	450,000,000	4,500,000	384,846,372	3,848,464	Capitalization of employee bonus of NT\$1,914,500	None	-
2020/07	NT\$10	450,000,000	4,500,000	374,846,372	3,748,464	Capital reduction via treasury shares of NT\$100,000,000	None	-
2020/10	NT\$10	450,000,000	4,500,000	370,657,372	3,706,574	Capital reduction via treasury shares of NT\$41,890,000	None	-
2020/10	NT\$10	450,000,000	4,500,000	371,193,098	3,711,931	Capitalization of employee bonus of NT\$5,357,260	None	-

Share Type		Authorized Capital
	Outstanding Shares	Unissued Shares	Total	Remarks
Registered common shares	371,193,098 shares	78,806,902 shares	450,000,000 shares	Listed shares

Note: The Company did not offer nor issue securities by shelf registration. Such information was not disclosed.

II. Shareholder Structure

April 27, 2021

Structure Number	Government Agencies	Financial Institutions	Other institutional shareholders	Domestic Natural Persons	Foreign Institutions and Natural Persons	Total
Number of shareholders	0	3	21	7,751	55	7,830
Shareholding (shares)	0	108,113	177,056,195	188,417,874	5,610,916	371,193,098
Shareholding (%)	0.00%	0.03%	47.70%	50.76%	1.51%	100.00%

Note: The Company did not have shares held by enterprises of Mainland China. Such information was not disclosed.

III. Shareholding Distribution Status

Number of	Shareholding	Shareholding (%)
4,592		0.28%
2,298		1.35%
403		0.77%
140		0.47%
85		0.40%
80		0.54%
39		0.37%
32		0.40%
68		1.33%
41		1.54%
22		1.56%
7		0.94%
6		1.04%
1		0.27%
16		88.74%
7,830		100.00%
	Shareholders	(shares) 1,046,523 5,013,438 2,851,311 1,743,284 1,491,391 1,994,488 1,383,406 1,476,368 4,929,837 5,728,289 5,786,571 3,482,683 3,866,072 1,000,000 329,399,437 371,193,098

Par value of NT\$10 per share April 27, 2021

Note: The Company did not issue preferred shares. Such information was not disclosed.

IV. List of Major Shareholders:

		April 27, 2021
Shareholding Name of Major Shareholders	Shareholding (shares)	Shareholding (%)
Tien-Tsan Tsai	85,577,838	23.05%
Tian Gang Investment Co., Ltd.	63,328,801	17.06%
Tian Lai Investment Co., Ltd.	49,652,072	13.38%
Chieh Chih Construction Co., Ltd.	31,501,513	8.49%
Chiung-Ting Tsai	23,616,339	6.36%
Mei-Yun Tsai-Hsueh	20,209,951	5.44%
Xin Rui Investment Co., Ltd.	17,786,434	4.79%
Jin Cheng Construction Co., Ltd.	11,653,324	3.14%
Mei-Hui Chen	11,533,354	3.11%
Chin-Chueh Chen	3,261,149	0.88%

Note: Disclosure of top ten shareholders.

V. Share Prices for the Past Two Fiscal Years, with Company Net Worth Per Share, Earnings Per Share, Dividends Per Share, and Related Information:

						(In NT\$)
						For the Three
			Year	2020	2019	Months Ended
Item						March 31, 2021
Market	Highest			43.00	32.00	39.60
Price per Share (Note 1)	Lowest			24.90	24.35	33.55
	Average			35.01	28.16	35.92
Net Worth	Before distribution			39.50	34.88	40.51
per Share (Note 2)	After distribution			39.50	34.88	40.51
Earnings per share (EPS)	Weighted average no. of shares (In shares)			371,193,098	384,846,372	371,193,098
	EPS (Note 3)		Before adjustment	\$4.48	\$4.31	\$1.01
			After adjustment	\$4.48	\$4.31	\$1.01
	Cash dividends			-	-	-
	Stock		Stock dividends from retained earnings	-	-	-
Dividends per Share	dividends		Stock dividends from capital surplus	-	-	-
	Accumulated undistributed dividends (Note 4)			-	-	-
		Price/earnings ratio (Note 5)			6.53	35.56
Return on			Price/dividend ratio (Note 6)	7.81 -	-	-
Investment	Cash dividend yield rate
	(Note 7)			-	-	-

* In the case of stock dividends from capitalized retained earnings or capital surplus, information on market price and cash dividends adjusted retrospectively by the number of shares distributed shall be disclosed.

Note 1: Please identify the highest and the lowest market price of common share each year and calculate the average market price of each year based on the trading value and volume of each year.

Note 2: Please provide the information based on the number of issued shares at the end of the year and with reference to distribution (including the capitalization of employee bonus) resolved in the shareholders' meeting of the following year.

Note 3: If it is necessary to make retrospective adjustments due to stock dividends, EPS before and after the adjustment shall be disclosed.

Note 4: If the terms and conditions under which the equity securities are issued provided that the dividends retained in the year may be accumulated until the year in which there are earnings available for distribution, the accumulated undistributed dividends as of the end of the year shall be disclosed.

Note 5: Price/earnings ratio = Average closing price per share for the year/EPS.

Note 6: Price/dividend ratio = Average closing price per share for the year/Cash dividend per share.

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

Note 8: Please identify the net worth per share and EPS available in the latest quarterly financial information audited (reviewed) by CPAs before the date of publication of the Annual Report, and the information available until the date of publication of the annual report in the other sections.

— 59 —

VI. Company's Dividend Policy and Implementation Thereof:

◎Dividend policy:

In accordance with Article 25 of the Articles of Incorporation, annual earnings of the Company, if any, shall be appropriated for tax payment, accumulated loss compensation, legal and special reserves, employee bonus and remuneration to Directors and Supervisors. The Board shall determine the amount of dividends based on the remaining balance, if any, together with undistributed earnings of prior years. If the distributable earnings per share are less than NT\$0.5, the Company may decide not to carry out the distribution.

The percentage of cash dividends in the aforementioned distribution proposal shall not be less than 10% of the total amount distributed. The percentage shall be determined by the Board after considering the financial condition of the Company. However, no cash dividend shall be paid when the debt ratio in the annual financial statements of the year exceeds 50%.

The resolution against dividend distribution is not subject to this provision.

◎Dividend distribution proposal: The shareholders' meeting had

resolved not to distribute dividends.

◎Changes to dividend policy:

The shareholders' meeting had not amended the Company's dividend policy. There is currently no plan to change such policy.

VII. Effect upon Business Performance and Earnings Per Share of any Stock Dividend Distribution Proposed or Adopted at the Most Recent Shareholders' Meeting

Item		Year	2021 (Estimation)
		Paid-in capital at the beginning (in thousands of NT\$)	3,711,931
	Cash dividend per share (\$NT)		0.00
Cash and stock dividend	earnings (shares)	Stock dividend from capitalized retained	0.00 (Note 2)
in 2020	surplus (shares)	Stock dividend from capitalized capital	0.00
		Operating income (in thousands of NT\$)
Changes in operating performance	income year-over-year	Ratio of increase (decrease) in operating
		Net income after tax (in thousands of NT\$)
	after tax year-over-year	Ratio of increase (decrease) in net income
	EPS (NT\$)
	over-year	Ratio of increase (decrease) in EPS year
		Average annual return on investment (reciprocal of annual price/earnings ratio)	(Note 1)
	Where capitalized	Proforma EPS
Proforma EPS	earnings were distributed as cash dividends instead	Pro-forma average annual return on investment
and price/earnings		Proforma EPS
ratio	Where capital surplus was not capitalized	Pro-forma average annual return on investment
	Where capital	Proforma EPS

Effect upon Business Performance, EPS and Return on Equity of Stock Dividend Distribution

|--|

Note:

• 1. Not applicable as the Company did not disclose the complete financial forecasts for 2021.
• 1. The 2020 earnings distribution proposal is pending approval from the shareholders' meeting.
• 1. Where capitalized earnings were distributed as cash dividends instead, Proforma EPS
• = [Net income after tax Imputed interest expense arising from cash dividends* x (1 Tax rate)]/(Total number of issued shares at the end of the current year - Number of shares from earnings appropriation**)

Imputed interest expense arising from cash dividends* = Amount of capitalized earnings x interest rate of one-year general loan

Number of shares from earnings appropriation**: The increase in number of shares after the earnings appropriation of the previous year

1. Average price/earnings ratio of the year = Average market price per share of the year / EPS in the annual financial statements

VIII. Compensation of Employees, Directors, and Supervisors

• (I) The percentages or ranges of compensation to employee, Directors and Supervisors as set forth in the Company's Articles of Incorporation: Pursuant to Article 25 of the Articles of Incorporation, annual earnings of the Company, if any, shall be first appropriated to pay taxes and offset losses of prior years before allocating 10% of the remaining earnings to legal reserve until the accumulated legal reserve has equaled the Company's paid-in capital. Next, the special reserve shall be appropriated or reversed based on the Company's needs and pursuant to applicable laws and regulations. The remaining balance, if any, shall be appropriated for employee bonus at a percentage not lower than 1% and for remuneration to Directors and Supervisor at a percentage not exceeding 2%.
• (II) The accrual basis of compensation to employees and remuneration to Directors and Supervisors, the calculation basis for number of shares distributed as employee compensation and the accounting treatments for difference between the amount actually paid and accrued:
• 1. Compensation to employees was accrued at 1% of the net income before tax and remuneration to Directors and Supervisors was not accrued for in 2020.
• 1. The Company planned to issue new shares for employee bonuses of NT\$19,524,435. The number of shares to be issued was calculated based on the closing price of NT\$34.50 on the day immediately preceding the Board's resolution on new share issuance (i.e., March 23). A total of 565,925 shares were issued. Amount less than one share was distributed in the form of cash.
• 1. The proposed distribution amount of NT\$19,524,435 was not different from the accrued amount.
• (III) Information on the Board's resolution concerning remuneration:
• 1. With regard to compensation to employees in the form of cash or stocks and remuneration to Directors and Supervisors, please disclose the difference, its causes and actions taken if the amount is different from the one recognized in the financial statements. None.
• 1. The amount of employee compensation distributed in stocks, and as a percentage of the sum of net income in the parent company only or individual financial statements for the current period and total employee compensation.

The proposed amount of employee compensation distributed in stocks of NT\$19,524,435 was 1.15% to the sum of net income in the parent company only or individual financial statements for the current period and total employee compensation.

• (IV) The actual payment of compensation to employees and remuneration to Directors and Supervisors in the previous fiscal year (including the number of shares, amount and share price) and the difference, its causes and actions taken where the amount is different from the one recognized in the financial statements:
• 1. The Company did not distribute 2019 remuneration to Directors and Supervisors in 2020.
• 1. In 2020, the Company distributed 2019 compensation to employees of NT\$18,214,685. The number of shares issued was calculated based on the closing price of NT\$34.00 on the day immediately preceding the Board's resolution on new share issuance (i.e., May 12, 2020). A total of 535,726 shares were issued. Amount less than one share was distributed in the form of cash.
• 1. The amount was the same as the one recognized in the financial statement.

IX. Share Repurchases

(I) Transactions completed:

As of May 1, 2021

	Forth	Fifth
Batch Number	(Completed on May 15,	(Completed on August
	2020)	21, 2020)
	Maintain company	Maintain company
Purpose	credit and shareholders'	credit and shareholders'
	rights	rights
Period	2020/03/16~2020/05/15	2020/06/22~2020/08/21
	Between NT\$20.00 and	Between NT\$26.00 and
Price range	NT\$35.00 per share	NT\$38.00 per share
Type and quantity of	10,000,000 registered	4,189,000 registered
shares repurchased	common shares	common shares
Amount of shares	NT\$310,789,663	NT\$152,968,949
repurchased
Ratio of actual number of
shares repurchased to
planned number of the	100.00%	83.78%
repurchase (%)
Number of shares	10,000,000 shares	4,189,000 shares
cancelled and transferred
Cumulative number of	0 share	0 share
company shares held
Ratio of cumulative
number of company
shares held to total	0.00%	0.00%
number of issued shares
(%)

(II) Transactions ongoing: None.

X.	Corporate Bonds:
	None.

• XI. Preferred Shares: None.
• XII. Global Depository Shares: None.
• XIII. Employee Stock Options and New Restricted Employee Shares: None.
• XIV. Issuance of New Shares in Connection with Mergers or Acquisitions or with Transfer of Shares of Other Companies (Including Mergers, Acquisitions and Spin-off):

None.

• XV. Implementation of the Company's Capital Allocation Plans:
• (I) Plan details: None.
• (II) Implementation status: None.

Operational Highlights

• I. Business Activities
• (I) Business scope
  • 1. Principal business and sales proportion
  • (1) Commission contractors to build public housing and commercial buildings for lease or sale.
  • (2) Specific area development
  • (3) Regular hotel
  • (4) The 2020 consolidated operating revenue composed of sales of shop top housing and residential buildings (97.15%), tourist hotel business (2.58%) and rental and other income (0.27%).
  • 1. Major products (services)
  • (1) Construction of commercial buildings, residential buildings and parking spaces for sale.
  • (2) Construction of commercial buildings and residential buildings for lease.
  • 1. New products (services) underway None.
  • (II) Industry overview
  • 1. Industry status and development:

In Taiwan, the real estate industry is one with less access to raw materials. As the nation is located on an island with limited area and a high population density, the industry has always enjoyed stable demand. The current status has not changed much.

For more than two decades, as national income continues to grow, consumers' demand for residential quality has increased, which is evidenced by the demand for real estate. Both first-time homebuyer and replacement demand have risen as the real purchasing power recovers. In recent years, the expansion of the technology industry in area and scale leads to soaring property prices. The phenomenon is quite obvious especially in Tainan and Kaohsiung during the past two years. The trend will continue for the next five years.

In the long run, as the growth of the domestic property market gradually stabilizes, the market shall progress to a more mature phase.

• 1. Relationship amongst upstream, midstream, and downstream: Profits of the building industry mainly come from controls over land and construction costs, and the level of understanding of the economic fluctuations in the property market. As the raw material, land is categorized as upstream. It is given to and utilized by the contractors, which is the midstream. Both are key costs in the building industry. Downstream of the property market mainly consists of real estate marketing agencies and broking agencies. The building investment industry and real estate marketing agencies used to have tight long-term business relationships in the past. As for broking agencies, with the advantages of multiple stores, they have also worked closely with the property market on project sales.
• 1. Product development trend and competition: Currently, the property market in Kaohsiung focuses on residential real estate. As for the Company, the majority of operating revenue stems from residential properties and in the short run, that would remain our product focus. We will start to assess the commercial building market and introduce projects when the opportunity arises.
• (III) Technology and R&D
• 1. R&D expenses during the most recent fiscal year and up to the date of publication of the annual report: None.
• 1. Technology and products successfully developed during the most recent fiscal year and up to the date of publication of the annual report: None.
• (IV) Long-term and short-term business development plans
• 1. Short-term business development plan: Taking into account the Company's capital size, human resources conditions, rate of return on individual projects, and capital turnover efficiency, our short-term business focus will be on the investments of residential constructions at the Greater Kaohsiung and Tainan area. Besides optimizing operation efficiency, the Company can enjoy stable growth.
• 1. Long-term business development plan: The Company will continue to launch residential products in the Greater Kaohsiung and Tainan area. Moreover, we will persistently explore development opportunities in the leisure real estate market and the

tourist hotel business.

• II. Analysis of the Market as well as Production and Sales Situation
• (I) Market analysis:
  • 1. Sales distribution of main products (services) by region: The sales regions cover Kaohsiung City, Tainan County and Pingtung City/County.

The Company's investments in construction projects by geographical distribution since 1992 are as follows:

Area	Project	Product Type	Units
	Shangdi	Residential-commercial building	44 units
	Houyi New Home	Residential-commercial building	42 units
	Weicheng VIP	Residential-commercial building	153 units
	Phuket	Residential-commercial building	189 units
	Franklin	Residential-commercial building	314 units
	King's Lodge	Residential building	35 units
	Splendid	Residential-commercial building	77 units
	King's Rose Garden	Residential-commercial building	172 units
	King's Love	Residential-commercial building	224 units
	Louvre	Private residence	119 units
	Prague Phase I	Townhouse	36 units
	Prague Phase II	Townhouse	12 units
	Miro	Residential-commercial building	123 units
	Love by Love River D Block	Townhouse	55 units
	Van Gogh	Residential building	99 units
	Yadu	Residential-commercial building	134 units
	Love by Love River A Block	Residential-commercial building	92 units
	Love by Love River B Block	Shop top housing	72 units
	Townhouse
	Renoir	Residential-commercial building	144 units
	Affluent	Townhouse	4 units
	Sweet Home	Residential-commercial building	164 units
	Love World	Townhouse, commercial building	106 units
	Villa Village	Shop top housing	99 units
	Rodin	Private residence	81 units
	Love by Love River B Block	Residential-commercial building	150 units
	Residence
	Modern King's	Residential-commercial building	225 units
	King's New World	Residential-commercial building	79 units
	Cambridge	Residential building	243 units
	King's Boutique Home King's 101	Residential building Residential building	118 units 174 units
Kaohsiung City	Vienna	Residential-commercial building	156 units
	King's VIP	Residential-commercial building	163 units
	Caesar	Residential building	148 units
	King's Paris	Residential-commercial building	159 units
	Star in Southern Seas	Residential-commercial building	192 units
	King's Bird of Paradise	Residential-commercial building	129 units
	Mozart	Residential building	197 units
	Museum of Fine Arts	Private residence	267 units
	Purple Palace	Residential-commercial building	273 units
	New York New York	Residential building	185 units
	King's Classic	Residential-commercial building	178 units
	Modern Elegance	Residential-commercial building	133 units
	Maldives	Residential building	199 units
	Fore-HSR	Residential-commercial building	175 units
	King's Xiadu I	Residential-commercial building	55 units
	King's Xiadu II	Residential-commercial building	106 units
	Shining Hotel	Residential-commercial building	193 units
	One World I	Private residence	559 units
	Dome	Residential-commercial building	109 units
	Dear King's Town	Residential-commercial building	226 units
	King's CBD	Office building	45 units
	King's Grand Tower	Residential-commercial building	122 units
	King's Four Seasons	Private residence, shop top	459 units
		housing
	Huashang	Residential-commercial building	209 units
	Lake Cube	Private residence	74 units
	Mandala	Residential-commercial building	76 units
	Water Forest	Private residence	238 units
	Le Dome	Private residence	156 units
	Lohas	Private residence	168 units
	The Peak	Private residence	53 units
	King's Park	Residential-commercial building	126 units

	Yuanshan Garden Villa	Private residence	195 units
	King's Hanshin Online	Private residence	55 units
	Exquisite Palace	Residential-commercial building	366 units
	King's Mansion	Residential-commercial building	284 units
	Riverbank	Residential-commercial building	57 units
	Elegance	Private residence	106 units
	King's E SKY	Residential-commercial building	157 units
	Weicheng World View	Residential-commercial building	252 units
	Dasanyuan	Residential-commercial building	320 units
	Weicheng Metro Camp	Residential-commercial building	591 units
	King's Living Mall	Residential-commercial building	163 units
	King's All	Residential-commercial building	131 units
Kaohsiung City	King's Garden	Residential-commercial building	113 units
(formerly the Kaohsiung County	Tropical Island	Residential-commercial building	293 units
area)	Palm Villa	Shop top housing	28 units
	Luxury Villa	Townhouse	26 units
	Palm Villa Phase III	Shop top housing	20 units
	Beverly	Shop top housing	62 units
	Love for Nature	Residential-commercial building	129 units
	Lush Garden	Residential building	114 units
	Pingtung Weicheng	Residential-commercial building	343 units
Pingtung City/County	Childhood Sweetheart	Residential-commercial building	213 units
	Grand Academy	Residential-commercial building	62 units
	Pingtung Imperial City	Residential-commercial building	137 units
Tainan City (formerly	Ciali Weicheng (Phase I-III)	Shop top housing, townhouse	114 units
the Tainan County
area)

Projects by Geographical Distribution (in units)

2. Market share

The Company has operated in the property market of southern Taiwan for many years and has accomplished considerable projects and masterpieces. We have also established a good reputation and enjoyed a relatively high market share.

• 1. Future market supply and demand and prospect:
• (1) According to the monthly statistical reports from the Construction and Planning Agency, the residential building construction licenses were issued for 14,082 units in Kaohsiung in 2020, a decrease of 7,405 units (34.46%) from the 21,487 units in 2019. The total floor area covered by the licenses issued was 1,935,000 M2 in 2020, a drop of 36.95% from the 3,068,828 M2 in 2019. Based on these data, the number of residential building construction licenses issued did not increase. In fact, it declined year-over-year. Thus, we have not seen a significant increase in the future supply. Moreover, the residential building usage licenses were issued for 14,085 units in 2020, a significant increase of 6,568 units (87.38%) compared to the 7,517 units in 2019. The total floor area covered by the licenses issued was 2,344,125 M2 in 2020, a surge of 95.06% compared to the 1,201,740 M2 in 2019. The supply of newly completed property soared in 2020.
• (2) Although the COVID-19 wreaked havoc early this year, the pandemic has slowed down at present. It dost not have much impact on property purchases.
• 1. Competitive advantage and favorable and unfavorable factors for longterm development and countermeasures:
• (1) Competitive advantage:
  • ①Reputation from diligent work over the years.
  • ②Professional after-sales service which is well received by customers.
  • ③With abundant resources and a strong and excellent team of subcontractors, the Company needs not worry about quality and progress control.
  • ④The Company has outstanding talents with low turnover rate.
• (2) Favorable factors for long-term development:
  • ①Public works promote regional prosperity:

Several major public constructions such as Port of Kaohsiung Intercontinental Container Terminal (ICT), Kaohsiung Music Center, Kaohsiung Port Cruise Terminal, Kaohsiung Light Rail, KMRT Yellow Line, construction of Green Corridors after Kaohsiung Railway Underground Project, redeveloping 205th Arsenal munitions factory, and Asia's New Bay Area that are either completed or under construction, will boost the property market in the Greater Kaohsiung area and improve the entire property market.

②Sufficient funds and low interest rates:

Hot money continues to pour in and the U.S. plans to implement unlimited QE and create a low interest rate environment. As for Taiwan, under Central Bank's monetary policy to keep interest

rates low, there are abundant market funds and interest rates have stayed low.

(3) Unfavorable factors for long-term development:

Difficulties in acquiring prime land:

Land is the fundamental material for construction. Taiwan has limited land for development as the majority of land area consists of hills or high mountains. Moreover, after years of development, land available becomes even more scarce.

• (4) Countermeasures:
• ①Explore suitable land:

Initiate projects at regions with potential for value enhancement and resistance to price erosion in the metropolitan areas to cope with the impact of market downturn and meet the customers' demand concerning the living environment.

②Seize the selling opportunities:

Monitor changes in the market constantly and seize selling opportunities to avoid price competitions with its peers.

③Design quality products:

There are popular items even in a bear market. As long as the Company can launch products that meet market demand and enhance the added value of the products, it can thrive in times of adversity.

④Reduce operating costs:

Improve the quality of worksite management in order to shorten the construction period and increase the gross profit.

⑤Strengthen R&D work:

Conduct preliminary surveys and analyses on potential regions in the future to get a head start, and stay aware of changes in markets other than the Greater Kaohsiung area.

• (II) Main applications and production process of key products
• 1. Main applications:

Key products of the Company can be categorized into townhouses, residential buildings and commercial buildings. They are built for sale or leased as residences, offices or shops.

1. Production process:

The production process is rather complex. It involves a wide range of industries, such as concrete, cement, reinforcement steel, sanitary facilities, utility devices, aluminum doors and windows, tiles, landscape design and gardening. The site manager of the contractor is responsible for the construction planning and quality control of associated subcontractors. The Company would assign employees to perform unscheduled inspections on the construction status to deliver the best quality.

The process is illustrated below:

• (III) Supply of key raw materials
• 1. Construction sites:

The Company's projects are mostly in Kaohsiung City and Tainan City, which have a relatively large area for construction purposes. Thus, we have sufficient land resources. Moreover, the release of public land for bidding is favorable to land acquisition.

1. Construction work:

The Company mostly commissions Chieh Chih Construction Co., Ltd., Bai Hong Construction Co., Ltd. and other construction companies for construction works. Chieh Chih Construction Co., Ltd. and Bai Hong Construction Co., Ltd. are Grade-A construction companies. The quality, progress and source of materials of their construction work are assured.

◎The above suppliers of key raw material are affiliates of the Company. The source of supply is stable and we do not expect major changes.

(IV) Name of top ten suppliers/customers in the past two fiscal years with total purchase/revenue and percentages:

						As of May 1, 2021
		2020		2019		For the Three Months Ended March 31, 2021
Year Name	Amount (In Thousands of NT\$)	Percentage to Annual Net Purchase (%)	Amount (In Thousands of NT\$)	Percentage to Annual Net Purchase (%)	Amount (In Thousands of NT\$)	Percentage to Net Purchase in the First Quarter of 2021 (%)
Chieh Chih Construction Co., Ltd. (Concluded as having controlling or subordinate relation)	238,109	21.65%	943,137	17.21%	76,194	5.59%
Bai Hong Construction Co., Ltd. (Concluded as having controlling or subordinate relation)	280,364	25.49%	720,347	13.14%	95,241	6.99%
Others	581,350	52.86%	3,818,260	69.65%	1,191,225	87.42%
Net purchase	1,099,823	100.00%	5,481,744	100.00%	1,362,660	100.00%

1. Names of major suppliers in the past two fiscal years with purchase amount and percentages:

2. 1. Names of major customers in the past two fiscal years with sales amount and percentages: The Company did not have customers accounted for 10% or more of the annual sales in the past two fiscal years.
3. (V) Production output and value in the past two fiscal years:

						December 31, 2020
Year		2020			2019
	Capacity	Output Area	Output Value	Capacity	Output Area	Output Value
Main		(Ping)	(in thousands		(Ping)	(in thousands
Products			of NT\$)			of NT\$)
Townhouse	-	-	-	-	0	0
Residential
building	-	6,045.34	1,278,720	-	77,898.06	11,822,658
Total	-	6,045.34	1278720	-	77,898.06	11,822,658

(VI) Sales volume and value in the past two fiscal years:

				December 31, 2020
Year		2020	2019
Main Products	Sales Volume (Ping)	Sales value (In Thousands of NT\$)	Sales Volume (Ping)	Sales value (In Thousands of NT\$)
Townhouse	-	-	-	-
Residential building	32,598.70	8,420,604	21,220.45	5,719,192
Land	-	-	-	-
Lease revenue	-	23,689	-	14,722
Hospitality revenue	-	223,556	-	256,285
Total	32,598.70	8,667,849	21,220.45	5,990,199

III. Employees:

Employees Information in the Past Two Fiscal Years and up to the Date of Publication of the Annual Report

				As of May 1, 2021
	Year	2020	2019	As of May 1, 2021
	General employees	32	35	34
No. of Employees	Engineering employees	2	2	2
	Total	34	37	36
Average age		50.56	49.62	51.42
	Average year of services	18.63	17.85	18.53
	PhD	0%	0%	0%
Percentage	Master's degree	17.65%	13.51%	16.67%
for each	Bachelor's degree	70.59%	75.68%	72.22%
education level	Senior high school	11.76%	10.81%	11.11%
	Below senior high school	0%	0%	0%

degree Senior high

school Below senior

high school

Percentage for Each Education Level of Employees

IV. Environmental Protection Expenditure

• (I) Any losses suffered by the Company in the most recent fiscal year and up to the date of publication of the annual report due to environmental pollution incidents (including any compensation paid and any violations of environmental protection laws or regulations found in environmental audits, of which the disposition dates, disposition reference numbers, the articles and details of law violated, and the content of the dispositions shall be specified), and disclosures on an estimate of possible expenses that could incur currently or in the future and countermeasures being or to be taken: None.
• (II) Action plans (including improvement measures) and expected spending:

Strengthen environment management at and landscape the construction site.

V. Labor Relations

• (I) Employee welfare and benefits, continuing education, training, and retirement plans and the implementation status thereof, agreements between labor and management, and measures taken to safeguard employee rights:
• 1. Employee welfare and benefits, continuing education, and training and the implementation status thereof The Company established the Employee Welfare Committee (EWC) per Official Letter Gao-Shi-Lao-III-Zi No. 000494 (1992) issued by the Labor Affairs Bureau of Kaohsiung City Government on January 17, 1992. Also, the Company established the EWC of King's Group with affiliates, Jing Cheng Construction Co., Ltd., Nan Jing Construction Co., Ltd., Chieh Chih Construction Co., Ltd., and Bai Hong Construction Co., Ltd., on January 20, 2006. EWC operates in accordance with the Organization Regulations on Employee Welfare Committee promulgated by the Ministry of the Interior. Welfares stipulated in the Organization Regulations are as follows:
  2. (1) The Company contributes 0.1% of sales and 0.5% of employee salaries as welfare funds on a monthly basis.
  3. (2) Welfare fund is used for cash gifts on important festivals, company trips, cash gifts for weddings and festivals, subsidies for funerals, allowance for childbirth, continuing education and training, emergency relief, recreational and club activities, etc.
  4. (3) The EWC prepares an annual activity plan and carries it out accordingly.
  5. (4) A comprehensive vocation system.
  6. (5) Employee bonus scheme and employee stock purchase plan.
• 1. Retirement system

Retirement rules are stipulated in the personnel management rules and approved by the Labor Affairs Bureau of Kaohsiung City Government. The Company makes monthly contributions to the designated retirement account to optimize employee protection. The Company has maintained a harmonious labor relation and has not had any loss incurred due to industrial disputes.

• 1. Labor-management agreement The Company has maintained a harmonious labor relation and has not had industrial disputes. Thus, there has been no labor-management agreement.
• 1. Measures taken to safeguard employee rights EWC is the complaint channel for issues concerning employee rights. Complaints raised by employees are reviewed in EWC meetings. The operation has been smooth.

• (II) Any losses suffered by the Company in the most recent fiscal year and up to the date of publication of the annual report due to industrial disputes: None.

• (III) An estimate of possible expenses that could incur currently or in the future and countermeasures being or to be taken

The Company has 36 employees. We have maintained harmonious labor relations and have no industrial disputes.

VI. Important Contracts:

Nature	Counterparty	Duration	Major Contents	Restrictive Covenants
Construction work of Project "Elegance"	Bai Hong Construction Co., Ltd.	Signed on September 14, 2013	Contract sum: NT\$938,885 thousand Upon agreement, the contract sum was amended to NT\$1,049,885 thousand in December 2019	Construction reserve fund of 10% Two-year warranty
Construction work of Project "King's Mansion"	Bai Hong Construction Co., Ltd.	Signed on September 26, 2013	Contract sum: NT\$1,849,460 thousand Upon agreement, the contract sum was amended to NT\$1,709,460 thousand in December 2019	Construction reserve fund of 10% Two-year warranty
Construction work of Project "Exquisite Palace"	Chieh Chih Construction Co., Ltd.	Signed on December 11, 2013	Contract sum: NT\$3,232,565 thousand Upon agreement, the contract sum was amended to NT\$2,988,565 thousand in December 2019	Construction reserve fund of 10% Two-year warranty
Structural work of Project "King's Hanshin Online"	Chieh Chih Construction Co., Ltd.	Signed on February 1, 2016	Contract sum: NT\$344,712 thousand Upon agreement, the contract sum was amended to NT\$352,212 thousand in March 2019	Performance bond of 10% Five-year warranty
Structural work of Project "King's E SKY"	Bai Hong Construction Co., Ltd.	Signed on August 1, 2016	Contract sum: NT\$260,110 thousand	Performance bond of 10% Five-year warranty
Structural work of Project "Riverbank"	Chieh Chih Construction Co., Ltd.	Signed on August 1, 2016	Contract sum: NT\$136,128 thousand Upon agreement, the contract sum was amended to NT\$148,127.5 thousand in March 2019	Performance bond of 10% Five-year warranty
Renovation work of Project "King's	Chieh Chih Construction Co.,	Signed on March 24,	Contract sum: NT\$273,168 thousand	Performance bond of 10%

Nature	Counterparty	Duration	Major Contents	Restrictive Covenants
Hanshin Online"	Ltd.	2017	Upon agreement, the contract sum was amended to NT\$266,168 thousand in March 2019	Five-year warranty
Renovation work of Project "King's E SKY"	Bai Hong Construction Co., Ltd.	Signed on February 1, 2018	Contract sum: NT\$205,350 thousand	Performance bond of 10% Five-year warranty
Renovation work of Project "Riverbank "	Chieh Chih Construction Co., Ltd.	Signed on December 25, 2017	Contract sum: NT\$120,113 thousand Upon agreement, the contract sum was amended to NT\$126,812.5 thousand in March 2019	Check for performance bond of 10% Five-year warranty
Construction work of Project "Heart of World"	Chieh Chih Construction Co., Ltd.	Signed on November 18, 2020	Contract sum: NT\$2,014,000 thousand	Check for performance bond of 10% Five-year warranty
Construction work of Land Parcel No. 163, Xindu Section	Bai Hong Construction Co., Ltd.	Signed on November 18, 2020	Contract sum: NT\$880,200 thousand	Performance bond of 10% Five-year warranty

Note: Contracts above were still valid and/or will expire in the most recent fiscal year up to the date of publication of the annual report.

Financial Information

• I. Condensed Balance Sheets and Statements of Comprehensive Income for the Past Five Fiscal Years
• (I) Condensed balance sheets
  • 1. IFRSs (Consolidated)

							(In Thousands of New Taiwan Dollars)
					Financial Information for the Past Five Fiscal Years		Financial
Item	Year	2020	2019	2018	2017	2016	Information for the Three Months Ended March 31, 2021 (Note 1)
Current assets		31,278,021	34,845,997	32,137,827	31,422,477	30,837,130	30,942,709
Property, plant and equipment		802,258	862,082	912,786	986,519	720,610	785,782
Intangible assets		169,290	173,523	177,349	181,627	183,240	168,190
Other assets		129,645	181,001	84,076	81,303	53,829	134,791
Total assets		32,379,214	36,062,603	33,312,038	32,671,926	31,794,809	32,031,472
Current	Before distribution	10,728,951	15,246,621	15,401,138	15,820,838	16,950,819	10,130,751
liabilities	After distribution	10,728,951	15,246,621	15,401,138	15,820,838	16,950,819	10,130,751
Non-current liabilities		6,988,048	7,393,196	6,149,410	4,827,420	3,603,610	6,863,707
Total	Before distribution	17,716,999	22,639,817	21,550,548	20,648,258	20,554,429	16,994,458
liabilities	After distribution	17,716,999	22,639,817	21,550,548	20,648,258	20,554,429	16,994,458
shareholders of the parent	Equity attributable to	14,662,215	13,422,786	11,761,490	12,023,668	11,240,380	15,037,014
Share capital		3,711,931	3,848,464	3,846,549	3,842,707	3,840,047	3,711,931
Capital surplus		0	40,015	36,474	31,614	27,835	0
Retained	Before distribution	10,950,284	9,534,307	7,878,467	8,149,347	7,372,498	11,325,083
earnings	After distribution	10,950,284	9,534,307	7,878,467	8,149,347	7,372,498	11,325,083
Other equity interest		0	0	0	0	0	0
Treasury stock		0	0	0	0	0	0
Non-controlling interest		0	0	0	0	0	0

Total	Before distribution	14,662,215	13,422,786	11,761,490	12,023,668	11,240,380	15,037,014
equity	After distribution	14,662,215	13,422,786	11,761,490	12,023,668	11,240,380	15,037,014

Note 1: Financial information for the three months ended March 31, 2021 was reviewed by CPAs, Angela Chuang and Hielleen Chang, of ShineWing Taiwan.

Note 2: Numbers after distribution in the table above were determined based on resolutions of the shareholders' meeting of the following year.

							(In Thousands of New Taiwan Dollars)
				Financial Information for the Past Five Fiscal Years			Financial Information for the
Item	Year	2020	2019	2018	2017	2016	Three Months Ended March 31, 2021 (Note 1)
Current assets		31,179,718	34,751,912	32,031,785	31,319,833	30,833,356	-
equipment	Property, plant and	2,476	3,247	4,523	5,576	190	-
Intangible assets		166,676	170,714	175,171	179,163	182,812	-
Other assets		914,810	1,015,634	957,905	1,015,356	770,257	-
Total assets		32,263,680	35,941,507	33,169,384	32,519,928	31,786,615	-
Current	Before distribution	10,614,125	15,126,233	15,261,193	15,669,549	16,942,625	-
liabilities	After distribution	10,614,125	15,126,233	15,261,193	15,669,549	16,942,625	-
Non-current liabilities		6,987,340	7,392,488	6,146,701	4,826,711	3,603,610	-
Total	Before distribution	17,601,465	22,518,721	21,407,894	20,496,260	20,546,235	-
liabilities	After distribution	17,601,465	22,518,721	21,407,894	20,496,260	20,546,235	-
parent	Equity attributable to shareholders of the	14,662,215	13,422,786	11,761,490	12,023,668	11,240,380	-
Share capital		3,711,931	3,848,464	3,846,549	3,842,707	3,840,047	-
Capital surplus		0	40,015	36,474	31,614	27,835	-
Retained	Before distribution	10,950,284	9,534,307	7,878,467	8,149,347	7,372,498	-
earnings	After distribution	10,950,284	9,534,307	7,878,467	8,149,347	7,372,498	-
	Other equity interest	0	0	0	0	0	-

2. IFRSs (Parent company only)

Treasury stock		0	0	0	0	0	-
Non-controlling		0	0	0	0	0	-
interest
	Before
Total	distribution	14,662,215	13,422,786	11,761,490	12,023,668	11,240,380	-
equity	After distribution	14,662,215	13,422,786	11,761,490	12,023,668	11,240,380	-

Note 1: The Company did not prepare parent company only financial statements for the three months ended March 31, 2021.

Note 2: Numbers after distribution in the table above were determined based on resolutions of the shareholders' meeting of the following year.

(II) Condensed statements of comprehensive income

						(In Thousands of New Taiwan Dollars)
Year				Financial Information for the Past Five Fiscal Years		Financial Information for the
Item	2020	2019	2018	2017	2016	Three Months Ended March 31, 2021 (Note 1)
Operating revenue	8,667,849	5,990,199	3,297,861	4,184,936	2,620,841	1,433,628
Gross profit	2,983,725	2,591,376	1,179,447	1,572,625	1,176,295	583,860
Operating income	2,174,701	1,944,932	662,903	989,070	763,888	454,161
Non-operating
income and	(241,777)	(141,698)	(115,923)	(132,600)	(127,826)	(40,693)
expenses
Net income	1,932,924	1,803,234	546,980	856,470	636,062	413,468
(loss) before tax
Net income from
continuing	1,684,892	1,656,570	497,247	774,994	571,534	374,799
operations
Loss from
discontinued	0	0	0	0	0	0
operations
Net income
(loss)	1,684,892	1,656,570	497,247	774,994	571,534	374,799
Other
comprehensive	(216)	(730)	414	1,855	(1,560)	0
income (after tax)

1. IFRSs (Consolidated)

Total
comprehensive	1,684,676	1,655,840	497,661	776,849	569,974	374,799
income
Net income
attributable to	1,684,676	1,655,840	497,661	776,849	569,974	374,799
shareholders of
the parent
Net income
attributable to
non-controlling	0	0	0	0	0	0
interests
Total
comprehensive
income
attributable to	1,684,676	1,655,840	497,661	776,849	569,974	374,799
shareholders of
the parent
Total
comprehensive
income
attributable to	0	0	0	0	0	0
non-controlling
interests
Earnings per
share (EPS)	4.48	4.31	1.29	2.02	1.49	1.01

Note 1: Financial information for the three months ended March 31, 2021 was reviewed by CPAs, Angela Chuang and Hielleen Chang, of ShineWing Taiwan.

2. IFRSs (Parent company only)

(In Thousands of New Taiwan Dollars)

Year		Financial Information for the Past Five Fiscal Years				Financial Information for the
Item	2020	2019	2018	2017	2016	Three Months Ended March 31, 2021 (Note 1)
Operating revenue	8,488,200	5,5804,813	3,160,868	4,131,667	2,620,841	-
Gross profit	2,912,827	2,508,946	1,129,254	1,529,651	1,176,295	-
Operating income	2,245,367	1,999,424	740,427	1,074,111	772,141	-
Non-operating income and expenses	(312,449)	(196,170)	(200,248)	(212,620)	(134,679)	-
Net income (loss) before tax	1,932,918	1,803,254	540,179	861,491	637,462	-
Net income from continuing operations	1,684,892	1,656,570	497,247	774,994	571,534	-
Loss from discontinued operations	0	0	0	0	0	-
Net income (loss)	1,684,892	1,656,570	497,247	774,994	571,534	-
Other comprehensive income (after tax)	(216)	(730)	414	1,855	(1,560)	-
Total comprehensive income	1,684,676	1,655,840	497,661	776,849	569,974	-
Net income attributable to shareholders of the parent		-	-	-	-	-
Net income attributable to non controlling interests		-	-	-	-	-
Total comprehensive income attributable to shareholders of the parent		-	-	-	-	-

Total
comprehensive
income attributable		-	-	-	-	-
to non-controlling
interests
Earnings per share
(EPS)	4.48	4.31	1.29	2.02	1.49	-

Note 1: The Company did not prepare parent company only financial statements for the three months ended March 31, 2021.

Note 2: The amounts of capitalized interest in each year are as follows:

Year	Amount (In Thousands of NT\$)
2016	191,424
2017	175,627
2018	185,924
2019	139,955
2020	42,182

(III) Names of CPAs and audit opinions for the past five fiscal years:

Year	Name of CPA Firm	CPA	Audit Opinion
2016	Tiaoho & Co.	Angela Chuang, Hielleen Chang (Note 1)	An Unqualified Opinion
2017	Tiaoho & Co.	Angela Chuang, Hielleen Chang	An Unqualified Opinion
2018	ShineWing Taiwan (Note 2)	Angela Chuang, Hielleen Chang	An Unqualified Opinion
2019	ShineWing Taiwan	Angela Chuang, Hielleen Chang	An Unqualified Opinion
2020	ShineWing Taiwan	Angela Chuang, Hielleen Chang	An Unqualified Opinion

Note 1: The CPA was changed due to administrative adjustments within the CPA firm.

Note 2: The Company's CPA firm changed from Tiaoho & Co. to ShineWing Taiwan as the former joined the latter.

II. Financial Analyses for the Past Five Fiscal Years:

(I) Financial analyses:

1. IFRSs (Consolidated)

	Year		Financial Analyses for the Past Five Fiscal Years
Item		2020	2019	2018	2017	2016	March 31, 2021
	Debt Ratio	54.72	62.78	64.69	63.20	64.65	53.06
Financial Structure %	Long-term Fund to Property, Plant and Equipment Ratio	2,682.96	2,379.92	1,935.86	1,640.10	1,957.74	2,787.12
	Current Ratio	291.53	228.55	208.67	198.61	181.92	305.43
Solvency %	Quick Ratio	15.18	3.99	1.73	2.55	1.86	7.40
	Times Interest Earned	7.57	5.84	2.12	3.07	2.33	5.07
	Average Collection Turnover (Times)	55.78	68.73	225.74	196.52	136.63	9.48
	Days Sales Outstanding	6.54	5.31	1.62	1.86	2.67	38.50
	Inventory Turnover (Times)	0.18	0.10	0.07	0.09	0.05	0.03
Operating Performance	Average Payment Turnover (Times)	4.32	2.36	1.63	1.74	0.80	0.94
	Average Inventory Turnover Days	2,027.77	3,650.00	5,214.28	4,055.55	7,300.00	12,659.36
	Property, Plant and Equipment Turnover (Times)	10.42	6.75	3.42	4.74	4.41	1.82
	Total Assets Turnover (Times)	0.27	0.17	0.10	0.13	0.08	0.04
	Return on Total Assets (%)	5.50	5.25	1.84	2.80	2.22	1.28
	Return on Equity (%)	12.00	13.16	4.18	6.66	5.22	2.52
Profitability	Net Income before Income Tax to Paid-in Capital Ratio (%)	52.07	46.86	14.22	22.29	16.56	11.14
	Net Margin (%)	19.44	27.65	15.08	18.52	21.81	26.14
	EPS (NT\$)	4.48	4.31	1.29	2.02	1.49	1.02
	Cash Flow Ratio (%)	47.78	0.36	Note 2	Note 2	Note 2	5.46
Cash Flows	Cash Flow Adequacy Ratio (%)	84.60	0.67	Note 2	Note 2	Note 2	118.46
	Cash Flow Reinvestment Ratio (%)	23.48	0.26	Note 2	Note 2	Note 2	2.50
	Operating Leverage	1.07	1.09	1.26	1.23	1.23	122.46
Leverage	Financial Leverage	1.13	1.12	1.26	1.18	1.23	111.05

Reasons for significant changes in financial ratios in the past two fiscal years:

1. Quick Ratio: The increase of 280.45% from 3.99% in 2019 to 15.18% in 2020 was mainly due to a significant decrease of NT\$4,517,670 thousand in current liabilities in 2020.

2. Inventory Turnover: The increase of 80.00% from 0.10% in 2019 to 0.18% in 2020 was mainly due to an increase of 67.24% in the cost of revenue in 2020. 3. Average Payment Turnover: The increase of 83.05% from 2.36 times in 2019 to 4.32 times in 2020 was mainly due to an increase of 67.24% in the cost of revenue in 2020.

3. Average Inventory Turnover Days: The decrease of 44.44% from 3,650.00 days in 2019 to 2,027.77 days in 2020 was mainly due to an increase in inventory turnover.

4. Property, Plant and Equipment Turnover: The increase of 54.37% from 6.75 times in 2019 to 10.42 times in 2020 was mainly due to an increase of 44.70% in net revenue in 2020.

5. Total Assets Turnover: The increase of 58.82% from 0.17 times in 2019 to 0.27 times in 2020 was mainly due to an increase of 44.70% in net revenue in 2020.

6. Cash Flow Ratio: The increase of 13,172.22% from 0.36% in 2019 to 47.78% in 2020 was mainly due to an increase of 9,272.50% in net cash provided by operating activities in 2020.

7. Cash Flow Adequacy Ratio: The increase of 12,526.87% from 0.67% in 2019 to 84.60% in 2020 was due to the same reason as the increase in cash flow ratio. 9. Cash Flow Reinvestment Ratio: The increase of 8,930.77% from 0.26% in 2019 to 23.48% in 2020 was due to the same reason as the increase in cash flow

ratio. Note 1: The financial information above has been audited by CPAs.

Note 2: As net cash provided by operating activities was a negative number, the ratio was not calculated.

	Year		Financial Analyses for the Past Five Fiscal				For the Three Months Ended
Item				Years			March 31,
		2020	2019	2018	2017	2016	2021 (Note 3)
	Debt Ratio	54.56	62.65	64.54	63.03	64.64	-
Financial Structure %	Long-term Fund to Property, Plant and Equipment Ratio	2,869.26	2,521.84	2,020.73	1,710.30	1,972.25	-
	Current Ratio	293.76	229.75	209.89	199.88	181.99	-
Solvency %	Quick Ratio	14.51	3.47	1.12	2.00	1.85	-
	Times Interest Earned	7.60	5.87	2.10	3.09	2.33	-
	Average Collection Turnover (Times)	56.47	72.39	399.45	220.73	136.63	-
	Days Sales Outstanding	6.46	5.04	0.91	1.65	2.67	-
	Inventory Turnover (Times)	0.18	0.10	0.07	0.09	0.05	-
Operating Performance	Average Payment Turnover (Times)	4.29	2.31	1.58	1.74	0.80	-
	Average Inventory Turnover Days	2,027.77	3,650.00	5,214.28	4,055.55	7,300.00	-
	Property, Plant and Equipment Turnover (Times)	10.86	6.88	3.42	4.82	4.43	-
	Total Assets Turnover (Times)	0.26	0.16	0.10	0.13	0.08	-
	Return on Total Assets (%)	5.51	5.26	1.85	2.80	2.22	-
	Return on Equity (%)	12.00	13.16	4.18	6.66	5.22	-
Profitability	Net Income before Income Tax to Paid-in Capital Ratio (%)	52.07	46.86	14.04	22.42	16.60
	Net Margin (%)	19.85	28.54	15.73	18.76	21.81	-
	EPS (NT\$)	4.49	4.31	1.29	2.02	1.49	-

2. IFRSs (Parent company only)

	Cash Flow Ratio (%)	48.74	0.62	Note 2	Note 2	Note 2	-
	Cash Flow Adequacy Ratio (%)	87.14	1.15	Note 2	Note 2	Note 2	-
Cash Flows	Cash Flow Reinvestment Ratio (%)	24.83	0.47	Note 2	Note 2	Note 2	-
	Operating Leverage	1.06	1.08	1.20	1.14	1.22	-
Leverage	Financial Leverage	1.12	1.11	1.23	1.17	1.23	-

Reasons for significant changes in financial ratios in the past two fiscal years:

• 1. Quick Ratio: The increase of 318.16% from 3.47% in 2019 to 14.51% in 2020 was mainly due to a significant decrease of NT\$4,512,108 thousand in current liabilities in 2020.
• 1. Inventory Turnover: The increase of 80.00% from 0.10% in 2019 to 0.18% in 2020 was mainly due to an increase of 69.16% in the cost of revenue in 2020.
• 1. Average Payment Turnover: The increase of 85.71% from 2.31 times in 2019 to 4.29 times in 2020 was mainly due to an increase of 69.16% in the cost of revenue in 2020.
• 1. Average Inventory Turnover Days: The decrease of 44.44% from 3,650.00 days in 2019 to 2,027.77 days in 2020 was mainly due to an increase in inventory turnover.
• 1. Property, Plant and Equipment Turnover: The increase of 57.85% from 6.88 times in 2019 to 10.86 times in 2020 was mainly due to an increase of 46.23% in net revenue in 2020.
• 1. Total Assets Turnover: The increase of 62.50% from 0.16 times in 2019 to 0.26 times in 2020 was mainly due to an increase of 46.23% in net revenue in 2020.
• 1. Cash Flow Ratio: The increase of 7,761.29% from 0.62% in 2019 to 48.74% in 2020 was mainly due to an increase of 5,458.07% in net cash provided by operating activities in 2020.

• Cash Flow Adequacy Ratio: The increase of 7477.39% from 1.15% in 2019 to 87.14% in 2020 was due to the same reason as the increase in cash flow ratio.

• Cash Flow Reinvestment Ratio: The increase of 5,182.98% from 0.47% in 2019 to 24.83% in 2020 was due to the same reason as the increase in cash flow ratio.

Note 1: The financial information above has been audited by CPAs.

Note 2: As net cash provided by operating activities was a negative number, the ratio was not calculated.

Note 3: The Company did not prepare parent company only financial statements for the three months ended March 31, 2021. Financial analysis was done based on the consolidated financial statements.

(II) Formulas of financial analysis

*IFRSs

1. Financial structure

• (1) Debt Ratio = Total Liabilities / Total Assets
• (2) Long-term Fund to Property, Plant and Equipment Ratio = (Equity + Noncurrent Liabilities) / Net Property, Plant and Equipment

2. Solvency

• (1) Current Ratio = Current Assets / Current Liabilities
• (2) Quick Ratio = (Current Assets Inventories Prepaid Expenses) / Current Liabilities
• (3) Times Interest Earned = Income before Interest and Taxes / Interest Expenses

3. Operating performance

• (1) Average Collection Turnover (includes accounts receivable and notes receivable from operations) = Net Revenue / Average Trade Receivables (includes accounts receivable and notes receivable from operations)
• (2) Days Sales Outstanding = 365 / Average Collection Turnover
• (3) Inventory Turnover = Cost of Revenue / Average Inventory
• (4) Average Payment Turnover (includes accounts payable and notes payable from operations) = Cost of Revenue / Average Trade Payables (includes accounts payable and notes payable from operations)
• (5) Average Inventory Turnover Days = 365 / Inventory Turnover
• (6) Property, Plant and Equipment Turnover = Net Revenue / Average Net Property, Plant and Equipment
• (7) Total Assets Turnover = Net Revenue / Average Total Assets

4. Profitability

• (1) Return on Total Assets = (Net Income (Loss) + Interest Expenses * (1 Tax Rate)) / Average Total Assets
• (2) Return on Equity = Net Income (Loss) / Average Equity
• (3) Net Margin = Net Income (Loss) / Net Revenue
• (4) EPS = (Net Income Attributable to Owners of the Parent Company Preferred Stock Dividend) / Weighted Average Number of Issued Shares

5. Cash flows

• (1) Cash Flow Ratio = Net Cash Provided by Operating Activities / Current Liabilities
• (2) Cash Flow Adequacy Ratio = Five-year Sum of Cash from Operations / Fiveyear Sum of Capital Expenditures, Inventory Additions, and Cash Dividend
• (3) Cash Flow Reinvestment Ratio = (Net Cash Provided by Operating Activities - Cash Dividends) / (Gross Property, Plant and Equipment + Long-term Investments + Other Non-current Assets + Working Capital)

6. Leverage:

• (1) Operating Leverage = (Net Operating Revenue Variable Cost) / Operating Income
• (2) Financial Leverage = Operating Income / (Operating Income Interest Expenses)

III. Supervisor or Audit Committee's Review Report for the Most Recent Fiscal Year's Financial Statement

Audit Committee's Review Report

The Board of Directors has prepared the Company's 2020 business report, financial statements and earnings distribution proposal. The financial statements were audited by ShineWing Taiwan with independent auditors' reports issued. The above-mentioned business report, financial statements, and earnings distribution proposal have been reviewed and determined to be accurate by the Audit Committee. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report.

To

2021 Annual Shareholder's Meeting of King's Town Construction Co., Ltd.

King's Town Construction Co., Ltd. Convener of the Audit Committee: Ming-Te Chang

March 24, 2021

IV. Financial Statements for the Most Recent Fiscal Year

Declaration of Consolidated Financial Statements of Affiliates

In 2020 (from January 1 to December 31, 2020), pursuant to "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises," the Company's entities that shall be included in preparing the Consolidated Financial Statements of Affiliates and the Parent-Subsidiary Consolidated Financial Statements for International Financial Reporting Standards (IFRS) 10 are the same. Moreover, the disclosure information required for the Consolidated Financial Statements of Affiliates has been fully disclosed in the aforementioned Parent-Subsidiary Consolidated Financial Statements; hence, a separate Consolidated Financial Statements of Affiliates will not be prepared.

Sincerely,

King's Town Construction Co., Ltd.

Responsible person: Tsai, Tien-Tsan

March 24, 2021

Independent Auditors' Report

March 24, 2021

(2021) ShineWing Taiwan Audit Report No. 017

To: King's Town Construction Co., Ltd.

Audit opinion

We have audited the accompanying consolidated balance sheet of King's Town Construction Co., Ltd. and its subsidiaries as of December 31, 2019 and 2018, and the related consolidated statements of comprehensive income, changes in shareholders equity, cash flows for the years then ended, and notes of the consolidated financial statements (including a summary of significant accounting policies).

In our opinion, based on our audits and other auditors' reports (please refer to the Other Matters section), the Consolidated Financial Statements mentioned above have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, as well as the International Financial Reporting Standards (IFRSs), International Accounting Standards (IAS), law and regulation reviews and their announcements recognized and announced by the Financial Supervisory Commission in all material aspects, and are considered to have reasonably expressed the consolidated financial conditions of King s Town Construction Co., Ltd. and its subsidiaries as of December 31, 2020 and 2019, as well as the consolidated financial performance and consolidated cash flows from January 1 to December 31, 2020 and 2019.

Basis for Opinions

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. We are independent of King's Town Construction Co., Ltd. and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of the other auditors, we believed that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Consolidated Financial Statements of King's Town Construction Co., Ltd. and its subsidiaries for the year ended December 31, 2019. These matters were addressed in the context of our audit of the Consolidated Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Consolidated Financial Statements of King's Town Construction Co., Ltd. and its subsidiaries for the year ended December 31, 2019 are stated as follows:

Inventory evaluation

Refer to Note IV(X) to the consolidated financial statements for accounting policies regarding inventory valuation; Note V(I) for the uncertainty of accounting estimates and assumptions regarding inventory valuation; and Note VI(V) for details of inventory accounting subjects.

The inventories of King's Town Construction Co., Ltd. and its subsidiaries are material to the consolidated balance sheet. Inventories are evaluated in accordance with IFRS, IAS, and IFRIC Interpretations, and SIC Interpretations as endorse by the Financial Supervisory Commission. Inventories are stated at the lower of cost or net realizable value. The net realizable value of the real estate is not easily determined because of factors such as supply and demand in the domestic real estate market, natural disasters, government policies and economic conditions. Therefore, we have identified inventory evaluation as one of the key audit matters for the year.

Our auditing procedures include, but are not limited to, considering the vulnerability of sales prices to changes in external market factors, inquiring into the selling prices of neighboring areas or evaluating whether the selling prices of units sold have decreased; comparing the actual selling prices of properties for sale with the original inventory costs to assess the impairment of inventory values, and reviewing comparative market analysis of newly acquired land for development to assess whether the net realizable value of inventories is fairly stated.

Recognition of revenue from the sale of real estate

Refer to Note IV(XIX) for the accounting policies on revenue and cost recognition and Note VI(XXI) to the parent company only financial statements for the details of revenue recognition.

Revenue from the sale of real estate in the construction industry is recognized when the transfer of title to the real estate is completed and the actual delivery of the real estate is made. The appropriateness of the timing of revenue recognition is material to the financial statements as a whole. Since there are many parties involved in the sale of real estate, and considering that many people are involved in the interdepartmental aggregation and transmission of transfer and delivery information and that there may be gaps in the periods, we have recognized the revenue from the sale of real estate of King's Town Construction Co., Ltd. and its subsidiaries as one of the key audit matters for the year.

We conducted our audits to test the effectiveness of the design and implementation of internal control systems over the revenue and collection processes of King's Town Construction Co. Ltd. and its subsidiaries. We also reviewed the appropriateness of the vesting period of the proceeds from the sale of real estates for the period immediately preceding and following the period end date to ensure that the proceeds from the sale of premises meet the criteria for revenue recognition.

Other Matters - Parent company only financial statements

King's Town Construction Co. Ltd. has also compiled Individual Financial Statements for 2020 and 2019, and they have also received an unqualified audit opinion from our CPA for your reference.

Other Matters - Adoption of other independent accountants

The financial reports for some of the investees listed in King's Town Construction Co. Ltd. and its subsidiaries' Consolidated Financial Statements pursuant to the equity method have not been audited by this CPA and were inspected by other CPAs. Therefore, the opinions on the consolidated financial statements listed above concerning the amount listed in the financial statements of such companies and the relevant information disclosed in Note XIII are based on the audit reports of the other CPAs. The amounts of investment accounted for using the equity method in the aforementioned companies are NT\$15,566 thousand and NT\$14,786 thousand as of December 31, 2020, and 2019, which constitute 0.02% and 0.04% of consolidated total assets, respectively. For the aforementioned companies, the recognized comprehensive income are NT\$5,777 thousand and NT\$5,552 thousand for the years ended December 31, 2020, and 2019, which constitute 0.34% of consolidated total comprehensive income.

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

The Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers , and IFRS, IAS, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as the management determines is necessary to enable the preparation of the consolidated financial statements to be free from significant misstatement whether due to fraud or error.

In preparing the consolidated financial statements, the management is responsible for assessing the ability of King's Town Construction Co. Ltd. and its subsidiaries as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management either intends to liquidate King's Town Construction Co. Ltd. and its subsidiaries or to create operations, or has no realistic alternative but to do so.

The governance unit of King's Town Construction Co. Ltd. and its subsidiaries (including the Audit Committee or supervisors) is responsible for supervising the financial reporting process.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

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

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

• 1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design, and perform audit procedures responsive risks, and obtain evidence that is sufficient and appropriate to provide a basis of our opinion. The risk of not detecting a significant misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• 1. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control effective in King's Town Construction Co., Ltd. and its subsidiaries.
• 1. Evaluate the appropriateness of accounting policies used and the reasonability of accounting estimates and related disclosures made by the management
• 1. Conclude the appropriateness of the use of the going concern basis of accounting by the management, and based on the audit evidence obtained, whether a significant uncertainty exists related to events or conditions that may cast significant doubt on King's Town Construction Co., Ltd. and its subsidiaries and its ability to continue as a going concern. If we conclude that a significant uncertainty exists, we are required to draw attention in auditor's report to the related disclosures in the consolidated financial statements or, if such disclosure are inappropriate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor's report. However, future events or conditions may cause King's Town Bank Co., Ltd. and its subsidiaries to cease to continue as a going concern.
• 1. Evaluate the overall expression, structure, and content of the consolidated financial statements (including related notes) and whether the consolidated financial statements include the relevant transactions and events expressed adequately.

• Obtain sufficient and appropriate audit evidence for the consolidated financial information of the King's Town Construction Co. Ltd. and its subsidiaries to express an opinion on the consolidated financial statements. We are responsible for guiding, supervising, and implementing of the group audit. We remain solely responsible for our opinion.

We communicate the following events with the governance unit, including the planned scope and audit time, as well as major audit findings (including significant deficiencies of internal control identified during the audit process).

We also provide a statement to the governance unit that the personnel of the CPA Firm who are subject to the regulation of independence are indeed complying with the independence requirements in accordance with the Code of Professional Ethics. Also, they communicate to the governance unit all relationships and matters (including related protective measures) that may be considered as affecting our independence.

We use the matters communicated with the governance unit to decide the Key Audit Matters for the audit of the 2020 consolidated financial statements of King's Town Construction Co., Ltd., and its subsidiaries. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

ShineWing Taiwan CPA: Chuang, Shu-Yuan

CPA: Chang, Jui-Ling

Financial Supervisory Commission Approval No.	Financial Supervisory Commission Approval No.
FSC Letter Jin-Guan-Zheng-Shen No.	FSC Letter Jin-Guan-Zheng-Shen No.
1070345892	1070345892

11XX	Current assets
1110	Financial assets at fair value through profit or loss
1180	Net trade receivables
1210	Other receivables
1476	Other financial assets
15XX	-current assets Non
1755	Net right
1930	Long
15xx	Total non

			December 31, 2020		December 31, 2019
	Assets	Note	Amount	%	Amount	%
11XX	Current assets
1100	Cash and cash equivalents	IV, VI(I)	\$624,909	1.93	\$394,662	1.10
1110	current - Financial assets at fair value through profit or loss	IV, VI(II)	89,930	0.28	87,400	0.24
1150	Net notes receivable	IV, VI(III)	40,159	0.12	56,710	0.16
1170	Net trade receivables	IV, VI(III)	105,997	0.33	55,657	0.16
1173	Net installment receivables	IV, VI(III)	0	0.00	195	0.00
1180	related parties - Net trade receivables	IV, VI(III), VII	2	0.00	10	0.00
1200	Other receivables	IV, VI(IV)	750,063	2.32	96	0.00
1210	related parties - Other receivables	IV, VI(IV), VII	277	0.00	325	0.00
1220	Current tax assets	IV, VI(XXVI)	2,556	0.01	0	0.00
1320	Inventories	IV, VI(V), VIII	29,186,432	90.13	33,672,307	93.37
1470	Other current assets	VI(VI)	471,217	1.46	576,566	1.60
1476	current - Other financial assets	VI(VII), VIII	6,479	0.02	2,069	0.00
11XX	Total current assets		\$31,278,021	96.60	\$34,845,997	96.63
15XX	-current assets Non
1510	Financial assets at fair value through profit and loss	IV, VI(II)	\$82	0.00	\$82	0.00
1550	Investments accounted for using the equity method	IV, VI(VIII)	15,566	0.05	14,786	0.04
1600	Property, plant, and equipment	IV, VI(IX)	802,258	2.48	862,082	2.39
1755	-of-use assets Net right	IV, VI(X)	62,731	0.19	64,245	0.18
1780	Intangible assets	IV, VI(XI)	169,290	0.52	173,523	0.48
1840	Deferred tax assets	IV, VI(XXVI)	16,959	0.05	11,294	0.03
1920	Refundable deposits	VIII	34,307	0.11	38,594	0.11
1930	-term notes and trade receivable Long	IV, VI(III)	0	0.00	52,000	0.14
15xx	-current assets Total non		\$1,101,193	3.40	\$1,216,606	3.37
1xxx	Total assets		\$32,379,214	100.00	\$36,062,603	100.00
		(Continued)

Consolidated Balance Sheets As of December 31, 2020 and 2019

		December 31, 2020		December 31, 2019
Liabilities and equity	Note	Amount	%	Amount	%
Current liabilities 21XX
Short-term borrowings 2100	IV, VI(XII), VII, VIII	\$4,488,806	13.86	\$4,955,779	13.74
Short-term bills payable 2110	VI(XII), VII, VIII	4,208,307	13.00	4,278,153	11.86
Contract liabilities - current 2130	VI(XXI), VII	515,086	1.59	490,496	1.36
Notes payable 2150	IV	80,309	0.25	15,041	0.04
Notes payable - related parties 2160	IV, VII	120,006	0.37	120,652	0.33
Trade payables 2170	IV	40,901	0.13	64,952	0.18
Trade payables - related parties 2180	IV, VII	784,797	2.42	1,405,606	3.90
Other payables 2200		72,930	0.23	85,508	0.24
Other payables - related parties 2220	VII	208	0.00	214	0.00
Current tax liabilities 2230	IV	156,680	0.48	73,990	0.21
Provisions - current 2250	IV, VI(XIII)	35,817	0.11	31,504	0.09
Lease liabilities - current 2280	VI(XVI)	1,062	0.00	1,044	0.00
Other current liabilities - others 2399		966	0.00	193	0.00
Long-term borrowings due within one operating cycle 2322	VI(XV), VII, VIII	135,833	0.42	3,634,000	10.08
Collection 2335	VI(XIV), VII	87,243	0.27	89,489	0.25
Total current liabilities 21XX		\$10,728,951	33.13	\$15,246,621	42.28
Non-current liabilities 25XX
Long-term borrowings 2540	VI(XV), VII, VIII	\$6,862,034	21.19	\$7,094,055	19.67
Deferred tax liabilities 2570	VI(XXVI)	38,408	0.12	73,275	0.20
Lease liabilities - non-current 2580	VI(XVI)	62,628	0.19	63,690	0.18
Net defined benefit liabilities - non-current 2640	IV, VI(XXIV)	21,392	0.07	24,632	0.07
Deposits received 2645	IV, VI(XVII), VII	3,586	0.01	137,544	0.38
Total non-current liabilities 25xx		\$6,988,048	21.58	\$7,393,196	20.50
Total liabilities 2XXX		\$17,716,999	54.71	\$22,639,817	62.78
Equity 3XXX
Share capital - ordinary shares 3110	VI(XVIII)	\$3,711,931	11.46	\$3,848,464	10.67
Paid-in capital - ordinary shares premium 3211	VI(XIX)	0	0.00	40,015	0.11
Retained earnings 3300
Legal reserve 3310	VI(XX)	\$1,371,436	4.24	1,205,779	3.34
Special reserve 3320	VI(XX)	0	0.00	0	0.00
Unappropriated earnings 3350	VI(XXV)	9,578,848	29.59	8,328,528	23.10
Total retained earnings 3300		\$10,950,284	33.83	\$9,534,307	26.44
Total equity 3XXX		\$14,662,215	45.29	\$13,422,786	37.22
Total liabilities and equity		\$32,379,214	100.00	\$36,062,603	100.00

(Please refer to the accompanying notes in the financial report)

	Consolidated Statements of Comprehensive Income As of December 31, 2020 and 2019 Unit: NT\$ thousand
					2020		2019
Code		Account titles		Note	Amount	%	Amount	%
4000	Operating revenue
4110	Sales revenue				\$8,669,611	100.02	\$5,990,199	100.00
4170	Sales returns				(1,762)	(0.02)	0	0.00
4100	Net sales			VI(XXI)	\$8,667,849	100.00	\$5,990,199	100.00
5000	Operating costs				(5,684,124)	(65.58)	(3,398,823)	(56.74)
5900	Gross profit				\$2,983,725	34.42	\$2,591,376	43.26
6000	Operating expenses			VI(XXVII)
6100	Selling and marketing expenses				(\$657,796)	(7.59)	(466,879)	(7.79)
6200	General and administrative expenses				(151,228)	(1.74)	(179,565)	(3.00)
6000	Total operating expenses				(\$809,024)	(9.33)	(\$646,444)	(10.79)
6900	Operating income				\$2,174,701	43.76	\$1,944,932	32.47
7000	Non-operating income and expenses
7100	Interest income				\$218	0.00	\$285	0.00
7010	Other income			VI(XX)	16,426	0.19	15,906	0.27
7020	Other gains and losses			VI(XXII)	(18,509)	(0.21)	40,073	0.67
7050	Finance costs			VI(XXIII)	(245,689)	(2.83)	(203,514)	(3.40)
7060		Share of profit or loss of associates and joint ventures accounted for using the equity method		VI(VIII)	5,777	0.07	5,552	0.09
7000	Total non-operating income and expenses				(\$241,777)	(2.78)	(\$141,698)	(2.37)
7900	Income before tax				\$1,932,924	40.98	\$1,803,234	30.10
7950	Income tax expense			IV, VI(XXVI)	(248,032)	(2.86)	(146,664)	(2.45)
8200	Current net income				\$1,684,892	38.12	\$1,656,570	27.65
8300	Other comprehensive income
8310	Items not reclassified to profit or loss
8311	Remeasurements of defined benefit plans			IV, VI(XXIV)	(\$270)	0.00	(\$912)	(0.02)
8349	Incomes tax expense (gain) related to titles not subject to reclassification			IV, VI(XXVI)	(54)	0.00	(182)	(0.00)
8300	Other comprehensive income (after tax)				(\$216)	0.00	(\$730)	(0.02)
8500	Total comprehensive income				\$1,684,676	38.12	\$1,655,840	27.63
9750	Basic earnings per share (NT\$)			IV, VI(XXVII)	\$4.48		\$4.31
9850	Diluted earnings per share (NT\$)			IV, VI(XXVII)	\$4.48		\$4.30
			(Please refer to the accompanying notes in the financial report)
	Chairperson: Tianye Investment Co., Ltd.	Representative: Tsai, Tien-Tsan	Manager: Chen, Tien-Chin		Accountant Officer: Liang, Su-Ying

— 100 —

	Consolidated Statements of Changes in Equity
King's Town Construction Co., Ltd.

From January 1 to December 31, 2020 and 2019 Unit: NT\$ thousand

	Ledger Account				Retained earnings
Code	Summary	Share capital	Capital surplus	Legal reserve	Unappropriated earnings	Total	Total equity
A1	Balance as of January 1, 2019	\$3,846,549	\$36,474	\$1,156,054	\$6,722,413	\$7,878,467	\$11,761,490
B1	Legal reserve			49,724	(49,724)	0	0
B9	Employee compensation to capital increase	1,915	3,541			0	5,456
D1	Net income in 2019				1,656,570	1,656,570	1,656,570
D3	Other comprehensive income in 2019				(730)	(730)	(730)
D5	Total comprehensive income in 2019				\$1,655,840	\$1,655,840	\$1,655,840
Z1	Balance as of December 31, 2019	\$3,848,464	\$40,015	\$1,205,778	\$8,328,529	\$9,534,307	\$13,422,786
A1	Balance as of January 1, 2020	\$3,848,464	\$40,015	\$1,205,778	\$8,328,529	\$9,534,307	\$13,422,786
B1	Legal reserve			165,658	(165,658)	0	0
B9	Employee compensation to capital increase	5,357	12,858			0	18,215
D1	Net income in 2020				1,684,892	1,684,892	1,684,892
D3	Other comprehensive income in 2020				(216)	(216)	(216)
D5	Total comprehensive income in 2020				\$1,684,676	\$1,684,676	\$1,684,676
L1	Treasury stock repurchase
L3	Cancellation of treasury shares	(141,890)	(52,873)		(\$268,699)	(268,699)	(463,462)
Z1	Balance as of December 31, 2020	\$3,711,931	\$0	\$1,371,436	\$9,578,848	\$10,950,284	\$14,662,215
	Note: Employee compensation of NT\$19,524 thousand and NT\$18,215 thousand for 2020 and 2019, respectively, have been deducted from statements of comprehensive income.

(Please refer to the accompanying notes in the financial report)

King's Town Construction Co., Ltd. and subsidiaries Consolidated Statements of Cash Flows From January 1 to December 31, 2020 and 2019 Unit: NT\$ thousand

52,320 Cash and cash equivalent at the beginning of the period (5,552) Decrease in refundable deposits 4,994 Acquisition of intangible assets (39,935) Increase in refundable deposits Treasury stock repurchase cost (\$2,523,464) Decrease in deposits received 231,971 Increase in deposits received equity method 67,751 335,096 400,667 (285) (815) \$1,932,924 69,482 1,471 4,770 7,599 4,313 245,689 10,365 \$336,984 \$68,551 4,485,875 105,349 \$3,859,742 \$64,622 24,690 16,513 (5,777) (218) (710) (50,114) (749,919) (644,860) (1,573) (3,510) Loss on disposal of property, plant, and equipment (including scrapping and transfer to cost Share of profit or loss of associates accounted for using the equity method Net loss (gain) on financial assets at fair value through profit or loss Total revenue, expense and loss that do not affect the cash flows: Revenue, expense and loss that do not affect the cash flows: Increase (decrease) in other current liabilities Decrease in net defined benefit liabilities Decrease (increase) in other receivables Decrease (increase) in notes receivable Increase in contract liabilities - current (Gain) Loss on disposal of investments Changes in operating assets and liabilities Increase (decrease) in trade payable Decrease (increase) in inventories Total net changes in operating assets Decrease in other current assets Net change in operating liabilities Net changes in operating assets Increase in trade receivables Gain (loss) in notes payable Cash flow from operating activities: Increase in other payables Current year net profit before tax Amortization expenses Depreciation expenses Increase in provisions Dividend income Interest expenses Interest income of goods sold) Adjustment items:	Cash dividends received from long-term investments accounted for using the \$1,803,234 Acquisition of financial assets at fair value through profit or loss Disposal of financial assets at fair value through profit or loss (Increase) Decrease in other financial assets - current (2,601,261) Repayment of the principal portion of lease liabilities 6,540 Recovery of financial assets for capital reduction 1,449 Acquisition of property, plant, and equipment 203,514 Net cash outflow from investing activities (\$108,710) Repayments of short-term bills payable Proceeds from short-term bills payable Repayments of short-term borrowings 586 Repayments of long-term borrowings (291) Cash flows from financing activities: (46,050) Proceeds from long-term borrowings \$237,370 Proceeds from short-term borrowing Cash flow from investing activities:	2,432 375 4,819 2,540 89 2 28,279,200 25,841,800 (\$47,465) (18,111) (1,168) (3,107) (\$59,596) \$22,997,05 (27,006,48 1) (26,047,80 159,987 4,997 8,871 2,598 0 (\$183,079) (4,410) (17,037) (477) (4,584) (\$33,134) \$24,334,94 (24,801,91 4) (28,346,20
		3,962,000 8,465,487 0) 0)
		(4,096,035 ) (7,692,188 )
		2,554 (1,026) 0 (1,044)
		(573) (133,958)
		0 (463,462)
	(\$6,138) Net cash inflow from financing activities	\$154,978 (\$4,862,62 6)
	19,524 Increase in current cash and cash equivalent	\$230,247 \$150,074
	(1,607) Cash and cash equivalent at the end of the period	244,588 \$624,909 \$394,662 394,662
\$799,862 (\$544,118) Total net changes in operating liabilities
(\$1,723,602) \$3,315,624 Total net changes in operating assets and liabilities
\$317,002 \$5,585,532 Cash inflow (outflow) from operating activities
284 815 218 710 Dividend received Interest received
(204,763) (58,646) (252,078) (208,375) Income tax paid Interest paid
\$54,692 \$5,126,007 Net cash inflow (outflow) from operating activities

(Please refer to the accompanying notes in the financial report)

Notes to Consolidated Financial Statements 2020 and 2019 (In Thousands of New Taiwan Dollars, unless otherwise specified)

1. Company History

King's Town Construction Co., Ltd (hereinafter referred to as the "Company") was incorporated in 1985. The place of registration are located at 12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City/ The Company started trading on Taiwan Stock Exchange Corporation on October 18, 1994. The Company's consolidated financial statements consist of the Company and the Company's subsidiaries (hereinafter collectively referred to as the "Consolidated Company"), which are mainly engaged in residential and building development, lease and sale, development of specific professional areas, zoning and rezoning agency business, and tourist hotel business.

1. Approval Date and Procedures of the Financial Statements

The consolidated financial statements were approved for publication by the Board of Directors on March 24, 2021.

• 1. Application of New, Revised, and Amended Standards and Interpretations
• a. Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) as endorsed by the Financial Supervisory Commission ("FSC") are as follows:

International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations applicable endorsed by the FSC in 2020:

New Standards, Interpretations		Effective Date of
and Amendments	Major Amendments	Issuance by the IASB
 Amendments to IFRS 3 "Definition of a Business"	These amendments clarify IFRS 3 - Business Combinations to improve the definition of a business. The amendments will help companies to identify whether the transaction should be handled as a business consolidation or as acquisition of asset. IFRS 3 will continue to adopt market participant's view point in deciding whether an activity or asset combination acquired is a business, including clarifying the minimum requirement of a business, adding guidance to help companies to evaluate whether the acquisition process is substantial, and reducing definition of business and production.	January 1, 2020
 Amendment to IAS 1 and	The amendments can be	January 1, 2020

	New Standards, Interpretations		Effective Date of
	and Amendments	Major Amendments	Issuance by the IASB
	IAS 8 "Definition of	attributable to the redefinition of
	Material"	material information as:
		Information is material if
		omitting, misstating or obscuring
		it could reasonably be expected
		to influence the decisions that
		the primary users of general
		purpose financial statements
		make on the basis of those
		financial statements, which
		provide financial information
		about a specific reporting entity.
		These amendments clarify that
		materiality is based on the nature
		of the information, and a
		company shall see whether
		information is material on its
		own or when consolidated with
		other information in the financial
		statements. If it can be
		reasonably expected to influence
		the decisions that the primary
		users of the financial statements
		make, then misstatement of
		information will be material.
	Amendments to IFRS 9,	This amendment targets all	January 1, 2020
	IAS 39, and IFRS 7	hedging relationships directly
	"Changes in Interest Rate	influenced by the interest rate
	Indicators"	benchmark reform, and a few
		exceptions to the rule have also
		been included. When uncertainty
		arises from the timing or amount
		of cash flow from the benchmark
		basis of the hedged item or
		hedge instrument due to the
		interest rate benchmark reform,
		the hedging relationship will be
		directly influenced. Therefore, a
		company shall apply the
		exceptions to all hedging
		relationships directly affected by
		interest rate benchmark reform.
	Amendments to IFRS 16	This amendment provides	20191月1日
	"Covid-19-Related Rent	lessees with the option to be
	Concessions"	exempt from the assessment of
		whether the rent reduction
		associated with the new
		coronavirus is a lease
		modification, and lessees may
		elect to be treated as a lease
		payment change other than a
		lease modification.
		The practical expedient applies
		only to rent reductions that are
		directly attributable to the new
		coronavirus and meet all of the
		following conditions: the change
		in lease payments results in a

New Standards, Interpretations		Effective Date of
and Amendments	Major Amendments	Issuance by the IASB
	modified lease consideration that
	is substantially equal to or less
	than the lease consideration prior
	to the change; and the reduction
	is limited to lease payments that
	were originally due by June 30,
	2021. If the lease payments are
	reduced up to and including June
	30, 2021, but the rent is
	increased after June 30, 2021
	(i.e., deferred rent payments),
	this condition will still apply;
	there are no material changes to
	other terms or conditions of the
	lease.

The Consolidated Company evaluates that the application of the newly endorsed IFRSs will not have a material impact on the consolidated financial statements.

• b. Effects of not yet applying the newly-announced and revised IFRSs endorsed by FSC:
• 1) New, revised, and amended standards and interpretations of IFRSs endorsed by the FSC and are applicable in 2021:

	New Standards,
	Interpretations and		Effective Date of Issuance by
	Amendments	Major Amendments	the IASB
	Amendments to IFRS 4 "Temporary Exemption from Applying IFRS 9" Use this segment	IFRS 9 governs the accounting for financial instruments and is effective after January 1, 2018. However, for insurers that are primarily engaged in insurance activities and have not previously applied any version of IFRS 9, IFRS 4 provides a temporary exemption that allows, but does not require, insurers to apply IAS 39 "Financial Instruments: Recognition and Measurement", instead of IFRS 9 before January 1, 2023.	January 1, 2021
	Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 "Interest Rate Benchmark Reform - Phase II"	The impacts of Interest Rate Benchmark Reform - Phase II on the financial statements include: A. Regarding cash flows of financial instruments, the carrying amounts thereof will not be derecognized or adjusted due to the changes in the reform. Instead, changes result directly from interbank offered rates (IBORs) will be accounted for by updating the effective interest rates.	January 1, 2021

New Standards,
Interpretations and		Effective Date of Issuance by
Amendments	Major Amendments	the IASB
	B. If a hedging relationship is
	subject to hedging accounting,
	the hedging relationship will
	still be subject to hedging
	accounting regardless of
	changes in the requirements of
	the reform; and
	C. The Company is required to
	disclose the risks arise from
	the reform and the
	Consolidated Company's risk
	management in the transition.

• 2) The Consolidated Company assessed the effects of adopting the aforementioned standards and interpretations, and has found no significant effects on the Company's financial position and financial performance.
• c. Effects of IFRSs issued by IASB but not yet endorsed by FSC:
• 1) The following new, amended, revised standards and interpretation of IFRSs that have been issued by IASB but not yet endorsed by the FSC:

	New Standards,
	Interpretations and		Effective Date of Issuance by
	Amendments	Major Amendments	the IASB
	Amendments to IAS 1 "Disclosure of Accounting Policies"	The major amendments to IAS 1 include: Require companies to disclose their significant accounting policies rather than their material accounting policies; clarify that accounting policy information related to transactions, other events or circumstances that are not material and do not require disclosure of such information; and clarify that all accounting policy information that is not related to a transaction, other event or circumstance that is material is material to the company's	January 1, 2023
	Amendments to IAS 8 "Definition of Accounting Estimates"	financial statements. The amendment introduces a new definition of an accounting estimate that clarifies that an accounting estimate is a monetary amount in the financial statements that is subject to measurement uncertainty. The amendment also clarifies the relationship between accounting policies and accounting estimates by	January 1, 2023

	New Standards,
	Interpretations and		Effective Date of Issuance by
	Amendments	Major Amendments	the IASB
	Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and Its Associate or Joint Venture"	specifying that a company is required to establish accounting estimates for the purposes of the accounting policies it applies. This project addresses the acknowledged inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures, in dealing with the loss of control of a subsidiary that is contributed	To be determined by IASB
		to an associate or joint venture. IAS 28 states that when non-monetary assets are contributed in exchange for an interest in an associate or a joint venture, the share of gains or losses shall be eliminated in accordance with the treatments of a downstream transaction. However, IFRS 10 requires a full recognition of gains or losses arising from the loss of control of a subsidiary. These amendments prohibit the aforementioned regulations from IAS 28; when the loss of control of a business, as defined in IFRS 3 occurs, a full gain or loss should be recognized. This amendment also amends IFRS 10 so that gains or losses arising from the sale or contribution of an investor and its associates or
		joint ventures that do not constitute a subsidiary as defined in IFRS 3 are recognized only to the extent that they are not attributable to the investor's share.
	IFRS 17 "Insurance Contracts" and amendments to IFRS 17 "Insurance Contracts"	This standard provides a comprehensive model to insurance contracts, including all accounting treatment (recognition, measurement, expression, and disclosure principle). The core of the standard is general, and under this model, initial recognition measures the insurance contract group by the combination of the cash flow	January 1, 2023

New Standards,
Interpretations and		Effective Date of Issuance by
Amendments	Major Amendments	the IASB
	from performance obligation
	and contract service margin,
	wherein the performance
	obligation cash flow includes:
	Estimated future cash flow;
	Adjustments that reflect the
	time value of money and the
	financial risks (within the
	estimation range of the future
	cash flow that does not
	include financial risk)
	associated with future cash
	flows; and Adjustment of non
	financial risks.
	The carrying amount of the
	insurance contract group at
	the end of each reporting
	period is the sum of the
	remaining security liabilities
	and the claims liabilities
	incurred.
	In addition to the general
	model, the standard also
	provides specific applicable
	methods with contracts
	characterized by direct
	participation (variable fee
	method) and simplified short
	term contract method
	(premium allocation
	approach).
	IFRS 17 was issued in May
	2017 and it was amended in
	June 2020. The amendments
	include deferral of the date of
	initial application of IFRS 17
	by two years to annual
	beginning on or after 1
	January 2023 (from the
	original effective date of 1
	January 2021); provide
	additional transition reliefs;
	simplify some requirements to
	reduce the costs of applying
	IFRS 17 and revise some
	requirements to make the
	results easier to explain. IFRS
	17 replaces an interim
	standard - IFRS 4 Insurance
	Contracts - from annual
	reporting periods beginning
	on or after 1 January 2023.
 Amendments to IAS 1	This amendment targets	January 1, 2023
"Liabilities classified as	sections 69-76 in IAS 1 -
current or non-current"	Presentation of Financial
	Statements concerning the
	classification of liability as

	New Standards,
	Interpretations and		Effective Date of Issuance by
	Amendments	Major Amendments	the IASB
	Amendments to IAS 16 "Property, Plant and Equipment: Proceeds before Intended Use"	either current or non-current. The amendments prohibit a company from deducting from the cost of property, plant, and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such	January 1, 2022
	Amendments to IAS 37 "Onerous Contracts - Cost of Fulfilling a Contract"	sales proceeds and related cost in profit or loss. The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The " cost of fulfilling a contract" includes the incremental cost of	January 1, 2022
	Amendments to IFRS 3 "Updating a Reference to the Conceptual Framework"	performance and other costs directly related to fulfilling a contract. The amendments updated IFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March	January 1, 2022
	Annual Improvements to IFRS Standards 2018 - 2020	2018. The amendments also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential "day 2" gains or losses arising for liabilities and contingent liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework. Amendment to IFRS 1 The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences. Amendment to IFRS 9 Financial Instruments The amendment clarifies the fees a company includes when assessing whether the terms of	January 1, 2022

New Standards,
Interpretations and		Effective Date of Issuance by
Amendments	Major Amendments	the IASB
	a new or modified financial
	liability are substantially
	different from the terms of the
	original financial liability.
	Amendment to Illustrative
	Examples Accompanying
	IFRS 16 Leases
	The amendment to Illustrative
	Example 13 accompanying
	IFRS 16 modifies the
	treatment of lease incentives
	relating to lessee's leasehold
	improvements.
	Amendment to IAS 41
	The amendment removes a
	requirement to exclude cash
	flows from taxation when
	measuring fair value thereby
	aligning the fair value
	measurement requirements in
	IAS 41 with those in other
	IFRS Standards.

• 2) The Company has continued to assess the effects of amendments to other standards and interpretations on its financial conditions and performance. Related impacts will be disclosed upon completion of the assessment.
• 1. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. Unless otherwise specified, the policies shall be applicable to all reporting periods presented.

a. Compliance Statement

The consolidated financial reports are prepared in accordance with the " "Regulations Governing the Preparation of Financial Reports by Securities Issuers," IFRS, IAS, and IFRIC Interpretations, and SIC Interpretations as endorse by the FSC.

• b. Basis of Preparation

• 1) Except for the following significant items, these consolidated financial statements have been prepared on the historical cost basis:

  • a) Financial assets and liabilities at fair value through profit or loss are measured at fair value.
  • b) Defined benefit liability derived from retirement plan assets less the present value of net defined benefit obligation.

• 2) When preparing consolidated financial statements, the Company adopts the equity method for investments in subsidiaries and associates. The current profit or loss, other comprehensive income, and equity in the consolidated financial statements are the same as the current profit or loss, other comprehensive income and equity attributable to the owners of the Consolidated Company in the consolidated financial statements of the Consolidated Company, and there is no difference in accounting treatment between the basis of consolidation.

• 3) Functional currency and presentation currency

The Consolidated Company takes the currency of the main economic environment in which each business operates as its functional currency. The Consolidated Financial Statements are presented in the New Taiwan dollar, the Consolidated Company's functional currency. All financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

• c. Basis of Consolidation
• 1) Principles in the preparation of the Consolidated Financial Statements
  • a) All subsidiaries are included in the Consolidated Company's consolidated financial statements. 1. Subsidiaries refer to all entities controlled by the Consolidated Company. The Consolidated Company controls an entity when the Consolidated Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Consolidated Company obtains control of the subsidiaries and ceases when the Consolidated Company loses control of the subsidiaries.
  • b) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Consolidated Company are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Consolidated Company.
  • c) Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, namely transactions with owners in their capacity as owners. The difference between the adjustment amount of noncontrolling interests and the fair value of consideration paid or collected shall be directly recognized in equity.
  • d) When the Consolidated Company loses control over its subsidiary, the remaining investments in its former subsidiary shall be remeasured at fair value, and are treated as the fair value of the financial assets at initial recognition or the cost of

investment in associates or joint ventures at initial recognition. The difference between fair value and carrying amount is recognized in current profit or loss. The Consolidated Company shall account for all amounts recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Consolidated Company had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in other comprehensive income would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Consolidated Company reclassifies the gain or loss from equity to profit or loss when it loses control of the subsidiary.

2) Subsidiaries included in the consolidated financial statements:

				Percentage of shareholding (%)
		Principal
Name of		Business	Business	December	December
Investor	Name of Subsidiary	Operation	Location	31, 2020	31, 2019
The	H2O Hotel Co., Ltd. (H2O	Hotel business,	Taiwan	100%	100%
Company	Hotel)	restaurant	Kaohsiung
		business	City

• 3) Subsidiaries not included in the consolidated financial statements: None.
• 4) Adjustments for subsidiaries with different balance sheet dates: None.
• 5) If the subsidiary's ability to transfer capital to the parent company is materially restricted, the nature and extent of the restriction: None.
• 6) Contents of subsidiaries' holding of securities issued by the parent company: None.
• 7) Subsidiaries that have non-controlling interests that are material to the Consolidated Company: None.
• d. Foreign Currency Trading
• 1) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.
• 2) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the end of the reporting period. Exchange differences arising upon re-translation on the balance sheet date are recognized in profit or loss.
• 3) The balances of non-monetary assets and liabilities denominated in foreign currencies are adjusted at the exchange rates prevailing at the end of the reporting period. If the

balances are measured at fair value through profit or loss, the resulting exchange differences are recognized in profit or loss; if the balances are measured at fair value through profit or loss, the resulting exchange differences are recognized in other comprehensive income items; if the balances are not measured at fair value, they are measured at the historical exchange rates at the dates of initial transactions.

e. Standards for Assets and Liabilities Classified as Current and Non-current

The Consolidated Company is engaged in the construction of houses for sale by contractors, and its business cycle is longer than one year. As such, assets and liabilities related to the construction business are classified as current or non-current by reference to its normal operating cycle; the operating cycle is based on a three-year period. In addition to the above paragraph:

• 1) Assets that meet one of the following criteria are classified as current assets:
• a) Assets that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle.
• b) Assets held primarily for trading purposes.
• c) Assets that are expected to be realized within 12 months after the end of the reporting period.
• d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the end of the reporting period.

The Consolidated Company classifies all the assets that do not meet the abovementioned criteria as non-current.

• 2) Liabilities that meet one of the following criteria are classified as current liabilities:
• a) Liabilities that are expected to be settled within the normal operating cycle.
• b) Assets held primarily for trading purposes.
• c) Payment is expected to be due within 12 months after the end date of the reporting period.
• d) Liabilities with a repayment schedule that cannot be unconditionally deferred till at least 12 months after the end date of the reporting period.

The Consolidated Company classifies all liabilities that do not meet the above conditions as non-current.

f. Cash and Cash Equivalents

Cash includes inventory cash and current 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 that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

g. Financial Instruments

Financial assets and liabilities will be recognized in the consolidated balance sheets when the Consolidated Company becomes a party to the contract of the financial instrument.

When showing the original financial assets and liabilities, if their fair value was not assessed based on profit or loss, it is the fair value plus the cost of transaction, that is, of its acquisition or issuance of the financial assets or financial liabilities. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

h. Financial Liabilities

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.

1) Types of measurement

Financial assets held by the Consolidated Company are classified as financial assets at fair value through profit or loss, financial assets at amortized cost, and investments in equity instruments at fair value through other comprehensive income.

a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets mandatorily measured at fair value through profit or loss and financial assets designated as at fair value through profit or loss. Financial assets mandatorily measured at fair value through profit or loss include equity instrument investments not designated by the Consolidated Company to be measured at fair value through other comprehensive income, and debt instrument investments not subject to classification as measured at amortized cost or to be measured at fair value through other comprehensive income.

Financial assets at fair value through profit or loss are measured at fair value; any re-measurement profit or loss (including any dividends or interests derived from such financial assets) is recognized in profit or loss. Please refer to Note XII for the determination of fair value.

b) Financial assets at amortized cost

When the Consolidated Company's investments in financial assets satisfy the following two conditions simultaneously and they are not designated as at fair value through profit or loss, they are classified as financial assets at amortized cost:

• i. Financial assets held based on the business model of collecting contract cash flow.
• ii. The terms of the contract of the financial assets generate a cash flow on a specified date that is solely for the payment of interest on the principal and the amount of principal outstanding.

Subsequent to initial recognition, such assets (including cash and cash equivalents, notes receivable, trade receivable (including installment receivable, long-term notes receivables and trade receivable), other receivables (including related parties) and refundable deposits) that are measured at amortized cost) equal to the gross carrying amount as determined using the effective interest method less any impairment loss; any interest income, foreign exchange gain or loss and impairment loss are recognized in profit or loss. When derecognition, gain or loss is recognized in profit and loss.

Interest income is calculated at the value of effective interest rate times the gross carrying amount of financial assets.

c) Financial assets at fair value through other comprehensive income

A debt investment is measured at fair value through other comprehensive income/(loss) if it meets both of the following conditions and is not designated as at fair value through profit or loss:

• i. The objective of the Consolidated Company's business model is achieved both by collecting contractual cash flows and selling financial assets.
• ii. The terms of the contract of the financial assets generate a cash flow on a specified date that is solely for the payment of interest on the principal and the amount of principal outstanding.

The Consolidated Company may, at initial recognition, make an irrevocable decision to designate an equity instrument that is neither held for trading to be measured at fair value through other comprehensive income. Subsequent changes in fair value are reported in other comprehensive income. The preceding selection is made on an instrument-by-instrument basis.

They are recognized initially at fair value plus directly attributable transaction costs and subsequently measured at fair value. Foreign currency translation profit and loss on investments in debt instruments, interest income and impairment losses calculated using the effective interest method, and dividend income from investment in equity instruments (except those expressly specified as recovery of parts of the investment cost) are recognized in profit or loss. Changes in the other carrying amount are recognized based on the unrealized profits and losses on financial assets measured at fair value through other comprehensive profit and loss. When performing derecognition, the cumulative profit or loss of investments in debt instruments are reclassified from equity to profit or loss; the cumulative profit or loss of investments in equity instruments are reclassified from equity to retained earnings and not to profit or 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).

2) Impairment of financial assets

The Consolidated Company evaluates credit losses based on expected credit loss at the end of each reporting period for financial assets (including cash and cash equivalents, notes receivable and trade receivable (including installment receivable, long-term notes receivable and trade receivable), other receivables (including related parties) and refundable deposits, investments in debt instruments at fair value through other comprehensive income, and impairment losses on contract assets.

Allowances shall be appropriated for notes receivable, trade receivables, and other receivables for expected credit losses for the duration of their existence. Financial assets at amortized cost and investments in debt instruments measured at fair value through other comprehensive income/(loss) are first evaluated to determine whether there is a significant increase in credit risk since original recognition. If there is no significant increase, an allowance for loss is recognized based on the expected credit losses for the 12 months following the reporting date, and if there is a significant increase, an allowance for loss is recognized based on the expected credit losses arising from all probable defaults during existence period.

The expected credit loss is the weighted average credit loss determined by the risk of default. The 12-month expected credit losses represent the expected credit losses arising from the possible default of the financial instrument in the 12 months after the reporting date, and the expected credit losses during the lifetime represent the expected credit losses arising from all possible defaults of the financial instrument during the expected existence period.

At the end of each reporting period, the Consolidated Company assesses whether there is a credit impairment on financial assets measured at amortized cost and on investments in debt instruments measured at fair value through other comprehensive income/(loss). When there is one or more events arising that will bring unfavorable influence to expected future cash flow, there is already credit impairment to the financial asset. The evidence for credit impairment of financial assets includes the observable data for the following events:

• a) Material financial hardship for borrower or issuer;
• b) Default, such as arrearage or delinquency for more than 365 days;
• c) Compromise made by Consolidated Company to borrower that would not be considered before, because of economic or contract reason related to borrower's financial difficulty;
• d) The borrower is most likely to file for bankruptcy or conduct other financial arrangement; or
• e) Disappearance of active market for the financial asset due to financial difficulty.

Through the loss allowance account, the carrying amount of all financial assets is reduced for the impairment loss, except for the investment in debt instruments measured at FVTOCI for which the impairment loss is recognized in other comprehensive income and does not reduce the carrying amount.

3) Derecognition of financial assets

The Consolidated Company derecognizes the financial assets when the contractual rights to the cash inflow from the asset expire or when the company transfers all the risks and rewards of ownership of the financial assets to other enterprises substantially.

On derecognition of a financial asset measured at amortized cost, the difference between the asset's carrying amount and the sum of the consideration received is recognized in profit or loss. On derecognition of an equity instrument measured at fair value through other comprehensive income/(loss), the cumulative gain or loss is transferred directly to retained earnings and is not reclassified to profit or loss.

• i. Classification Tools for Financial Liabilities and Equity
• 1) Financial liabilities and equity instruments

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

2) Equity instruments

Equity instruments refer to any contracts containing the consolidated company's residual interest after subtracting liabilities from assets.

Equity instruments issued by the Consolidated Company are recognized based on the price obtained less direct issuance costs.

The repurchase of equity instruments issued by the Consolidated Company is recognized in equity as a deduction. The purchase, sale, issuance, or write-off of the consolidated company's equity instruments are not recognized in profit or loss.

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 at fair value through profit or loss are measured at fair value, and the related net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest income and foreign currency profit or loss are recognized as 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 terms of financial liabilities are modified and there is a significant difference in the cash flow of the revised liabilities, the original financial liabilities will be derecognized and new financial liabilities will be recognized at fair value based on the revised terms.

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

5) Offsetting of financial assets and liabilities

The Consolidated Company presents financial assets and liabilities on a net basis when the Consolidated Company has the legally enforceable right to offset and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

j. Inventories

1) Construction Inventories

Inventories consist of land and construction in progress, properties held for sale, construction sites and prepaid land. Prepaid land is transferred to construction sites upon transfer of ownership, and construction sites are transferred to land and buildings under construction upon active development. Upon completion of the construction, the sold portion is transferred to operating costs and the unsold portion is transferred to land held for sale, using the construction area ratio, when revenue is recognized from the sale of the premises.

Inventories are measured at the lower of cost or net realizable value and are compared on a line-by-line basis to determine the lower of cost or net realizable value. The cost includes all necessary expenditures and capitalized borrowing costs to get an asset in place and in conditions ready for use.

The net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to make the sale. The measurement of net realizable value is as follows:

• a) Construction sites: The net realizable value is calculated on the basis of the expected selling price judged by the management based on the current market conditions, less cost of construction completion and selling expenses, or the most recent estimated market value (based on land development analysis approach or comparison approach).
• b) Construction-in-progress: The net realizable value is calculated on the basis of the expected selling price (based on the current market conditions) less cost of construction completion and selling costs.
• c) Buildings and land held for sale: The NRV is the estimated selling price (with reference to the management authority's estimation based on prevailing market conditions) less estimated costs to be incurred in selling the properties and selling expenses.
• 2) Hotel and restaurant inventories

Inventory is measured by the lower of cost and net realizable value. The cost is the weighted average of all costs necessary to get an asset in place and in conditions ready for use. When comparing the comparative cost and the net realizable price to determine which is lower, the item-by-item comparison method is adopted. The net realizable value refers to the balance of the estimated selling price in the normal course of business less the selling expenses.

• k. Investment/ Associates Accounted for Using The Equity Method
• 1) Associates are all entities over which the Consolidated Company has significant influence but no control. In general, it is presumed that an investor has significant influence if the investor holds directly or indirectly 20% or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.
• 2) The Consolidated Company's share of its associates' post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Consolidated Company's share of losses in an associate equals or exceeds its interest in the associate (including any other unsecured receivables) the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
• 3) When changes in an associate's equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Company's shareholding percentage of the associate, the Consolidated Company recognizes change in ownership interests in the associate in "capital surplus" in proportion to its shareholding.
• 4) Unrealized gains or losses on transactions between the Consolidated Company and its associates are eliminated to the extent of the Consolidated Company's interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates are adjusted, when necessary, to remain consistent with those of the Consolidated Company.
• 5) If the Consolidated Company does not subscribe to new shares issued by an associate in proportion to its shareholding percentage in the associate and results in a change in its investment percentage (while still maintains significant influence), the changes in net equity would be adjusted through "capital surplus" and "investments accounted for under the equity method". If the above condition causes a decrease in the Consolidated Company's ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.
• 6) When the change in the equity of the associates is not due to profit or loss and other comprehensive profit or loss items, and does not affect the Company's shareholding ratio, the Company will recognize the change in the relevant ownership interest based on the shareholding ratio. Therefore, the recognized additional paid-in capital will be

transferred to profit or loss proportionally to the disposal amount when the associate is subsequently disposed.

• 7) When the Consolidated Company disposes its investment in an associate and loses significant influence over this associate, the accounting treatment for amounts previously recognized in other comprehensive income in relation to the associate are the same as the one required if the relevant assets or liabilities were directly disposed of. That is, if gain/loss previously recognized in other comprehensive income will be reclassified to profit or loss upon disposal of relevant assets or liabilities, such gain/loss will be reclassified from equity to profit or loss when the Company loses significant influence over the associate. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
• 8) The Consolidated Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired in accordance with IAS 28 - Investment in Related Companies and Joint Ventures. If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the "share of profit or loss of an associate" in the statement of comprehensive income in accordance with IAS 36 - Impairment of Assets. In case the aforementioned recoverable amount adopts the useful value of the investment, the Consolidated Company will determine the relevant useful value based on the following estimates:
• a) The share of the present value of the estimated cash flows generated by the associates of the Consolidated Company, including the cash flows generated by the associates due to the operation and the final disposal of the investment; or
• b) The present value of the expected dividends and future cash flows generated from the investment disposed ultimately.

Since goodwill component item that construes the carrying amount of the investment in associates is not separately recognized; hence, the Company is not required to undertake the test for goodwill impairment as stipulated in IFRS 36 - Impairment of Assets.

Upon the loss of significant impact on associates, the Consolidated Company has the retained investment amount measured and recognized at fair value. Upon the loss of significant impact, the difference between the book value of the investment in associate and the fair value of the retained investment plus the proceeds from the disposal is recognized as profit or loss.

• l. Property, Plant and Equipment
• 1) Recognition and measurement

Property, plant and equipment are recognized and measured at cost, less accumulated depreciation and accumulated impairment. Cost includes expenditure that is directly attributed to the acquisition of the asset. The cost of self-constructed assets includes raw materials and direct labor, any other directly attributable costs to bring the asset to a serviceable condition for its intended use, the cost of dismantling and removing the item and restoring the site, and the cost of borrowings to capitalize the eligible assets.

When property, plant and equipment contain different components, and it is more appropriate to adopt different depreciation rate or method when it is significant when compared with the total cost, they are deemed as independent items (main components) for treatment.

The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized as profit or loss.

2) Reclassification to investment property

When real estate for self-use meets the definition of investment real estate and there is evidence of change in use, the real estate should be reclassified as investment real estate at the carrying amount at the time of the change in use, and the mere change in management's intent to use the real estate is not evidence of change in use.

3) Subsequent costs

Subsequent expenditure for property, plant and equipment is capitalized only when it is probable that the future economic benefits associated with the expenditure will flow to the Company. The carrying amount of those parts that are replaced is derecognized. Ongoing repairs and maintenance for property, plant and equipment are expensed as incurred.

4) Depreciation

The depreciation is calculated in straight-line method by capital cost less scrap value based on service years, and evaluated according to individual material components. If the service years of one component are different from other parts, this part will be separately recognized as depreciation. The depreciation charge for each period shall be recognized in profit or loss.

The useful lives of the Consolidated Company's major assets are as follows

Housing and Construction	5 ~ 45 years
Machinery	2 ~ 10 years
Office Equipment	3 ~ 10 years
Other Equipment	2 ~ 20 years
(Business facilities adopt Inventory Method)

Depreciation methods, useful lives, and residual values are audited at each reporting date. If expectations differ from the previous estimates, the change is accounted for as a change in accounting estimate.

m. Leases

1) Identifying a lease

The Consolidated Company assesses whether the contract is (or includes) a lease on the date of its establishment. If a contract is signed to have the control over the use of identified assets transferred for a period of time in exchange for a consideration, it is (or includes) a lease. In order to assess whether a contract is signed to have the control over the use of identified assets transferred for a period of time, the Consolidated Company assesses whether there are the following two factors throughout the period of use:

• a) rights to nearly all economic benefits of the identified asset have been received; and
• b) the control over the right to use the identified asset.

For contracts that are (or include) leases, the Consolidated Company will treat each lease component in the contract individually, and to separately treat them from the non-lease components in the contracts. Where a contract includes a lease component and one or more additional lease or non-lease components, the company allocates the consideration in the contract to the lease component on the basis of the relative separate price of each lease component and the aggregate separate price of non-lease components. The comparison single unit price of the lease and non-lease components will be decided upon the prices separately received by the lessor (or supplier) for such components. If observable single unit prices are not readily available, the Company will maximize the use of observable information to estimate their respective single unit prices.

2) Where the Consolidated Company is a lessee:

Except that the lease payments of the low value subject-matter assets and short-term leases applicable to recognition exemption are recognized as expenses on a straightline basis during the lease period, other leases are recognized as right-of-use assets and lease liabilities on the lease commencement date.

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.

Right-of-use assets are subsequently depreciated on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the Consolidated Company regularly assesses whether the right-of-use asset is impaired and treats any impairment loss that has occurred, as well as cooperating to adjust the right-of-use asset when the lease liability is remeasured.

Lease liabilities are measured at the present value of the lease payments outstanding at the inception date of the lease. If the implicit interest rate of lease is easy to determine, the interest rate is used to discount the lease payment. If the interest rate is not easy to determine, the Consolidated Company's incremental borrowing rate shall be used.

The lease payments comprise as follows:

• a) fixed payments, including in-substance fixed lease payments;
• b) Variable lease payments dependent upon certain indicators or rates are measured by the indicators or rates used at the inception of the lease;
• c) amounts expected to be payable by the lessee under residual value guarantees;
• d) an option to purchase the underlying asset if it is reasonably certain to be exercised, and penalty payments for terminating the lease.

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

• a) changes in future lease payments resulting from changes in an index or a rate used to determine those payments;
• b) changes in the amounts expected to be payable under a residual value guarantee;
• c) changes in the assessment of the purchase option;
• d) change in the assessment of the lease term resulting from extension or termination of the exercise of the purchase option; or

e) lease modifications of the underlying asset, scope, and other terms and conditions.

When the lease liability is remeasured due to the aforementioned changes in the index or rate used to determine lease payments, changes in the residual value guarantee amount, and changes in the evaluation of purchase, extension or termination options, 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 remaining remeasured amount is recognized in profit or loss.

The changes in (iv) and (v) decreases the scope of a lease. When a lease modification decreases the scope of a lease, the carrying value of the right-of-use asset is decreased to reflect partial of full termination of the lease liability, and any gain or loss resulting from the aforementioned derecognition is immediately recognized in profit or loss.

The Consolidated Company records right-of-use assets and lease liabilities defined as not investment properties in a single line item in the consolidated balance sheets.

3) Where the Consolidated Company is a lessor:

A lease is classified as a finance lease when the terms of the lease transfer substantially all the risks and rewards incidental to the ownership of the subject asset to the lessee; otherwise, it is classified as an operating lease.

If the Consolidated Company is a sublessor, it will handle the main lease and sub-lease transactions separately, and use the right-of-use assets generated by the main lease to evaluate the classification of the sub-lease transactions. If the main lease is a shortterm lease and the recognition exemption applies, the sublease transaction should be classified as an operating lease.

Under finance leases, lease payments include lease payments that depend on changes in indices or rates. Net investment in leases is measured at the present value of lease receivables plus original direct costs and expressed as finance lease receivables. Financing income is allocated to each accounting period to reflect the fixed rate of return on the unexpired net lease investment of the Consolidated Company in each period.

Under operating leases, lease payments after deducting lease incentives are recognized as revenue on a straight-line basis over the relevant lease term. The initial direct costs arising from acquisition of operating leases is added to the carrying amount of the underlying assets; and an expense is recognized for the lease on a straight-line basis over the lease term.

n. Intangible Assets

The intangible assets acquired by the Consolidated Company are measured at cost less accumulated amortization and accumulated impairment.

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenses are recognized as profit or loss upon occurrence.

Intangible assets are amortized on a straight-line basis over their estimated useful lives from the time they reach a serviceable condition as follows.

Land use right: 50 years (according to the contract) Computer software: 3 ~ 10 years Image design: 15 years

The residual value, amortization period, and amortization method for an intangible asset with a finite useful life shall be audited at least annually at each fiscal year-end. Any change shall be accounted for as a change in accounting estimate.

o. Impairment of Non-financial Assets

The Consolidated Company assesses at the end of each reporting period whether there is any indication that the carrying amount of non-financial assets (other than inventories and deferred income tax assets) may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.

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.

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

If the recoverable amount of individual asset or the cash-generating unit is lower than its carrying amount, the carrying amount of the asset or the cash-generating unit shall be reduced to the recoverable amount and the impairment loss shall be recognized immediately in loss for the year.

If an impairment loss is reversed subsequently, the carrying amount of the individual asset or cash generating unit is raised to its recoverable amount, provided that the increased carrying amount shall not exceed the carrying amount that would have been determined had no impairment loss been recognized in prior years. The reversed impairment loss is recognized immediately in profit or loss for the year.

p. Trade and Notes Payables

Trade and notes payables are obligations to be paid for raw materials, goods or services obtained from suppliers in the normal course of business. They are measured at fair value on initial recognition and subsequently measured at amortized cost using the effective interest method, except for short-term accounts payable and notes that are unpaid interest, which are subsequently measured at the original invoice amount because the effect of discounting is immaterial.

q. Provisions

Provisions are recognized when the Consolidated Company has a present legal or constructive obligation as a result of past events, and it is probable that the Company will be required to settle the obligation and the amount of the obligation can be reliably estimated.

Provisions are measured at the best estimate including risks and uncertainties of the expenditure required to settle the obligation on the last day of the reporting period. If provisions are measured at the estimated cash flows to settle the present obligation, the carrying amount of such provisions is equivalent to the present value of such cash flows.

The provision for warranty is estimated based on the contractual agreements and management's best estimate (based on historical warranty experience) of future economic outflows resulting from the project maintenance and warranty obligations.

r. Deposits Received

The deposits received by the Consolidated Company are mainly for the purpose of ensuring the performance of construction contracts under the construction contracts. Deposits received are recognized as deposits when cash is received and are refunded when the guarantee contract is fulfilled.

s. Revenue and cost recognition

1) Sales of premises

The Consolidated Company is principally engaged in the construction and sales of property, and the recognition of revenue is based on the transferring of property ownership. For the contracted sales of residential units, due to contract restrictions, the Consolidated Company usually does not apply the piece of real estate to other purposes. Consequently, revenue is recognized upon either transfer of legal ownership or delivery of the piece of real estate to customers, whichever occurs first in the reporting period, despite that the other occurs in the subsequent period.

Revenue is measured based on the transaction price of the contractual agreements. When sales happen after construction is completed, in most cases, consideration is made upon transfer of legal ownership; however, in some cases, payment of accounts may be deferred under contractual agreements, and if a material financial component is included, the transaction price is adjusted to reflect the impact of the material financial component. When sales happen before construction is completed, consideration is payable in installments during the period from signing a contract to transfer of legal ownership of the real property. If a significant financing component is included in the contract, the installments are discounted at the interest rate of the construction loan to reflect the effect of time value of money. Prepayments are recognized as a contract liability, and discounts reflecting the effect of time value of money are recognized as interest expenses and contract liabilities. The accumulated contract liabilities are reclassified as revenue upon the transfer of legal ownership.

2) Accommodation and hospitality revenue

The Consolidated Company provides hospitality services and accommodations, etc. If services provided by the Consolidated Company exceed a customer's payables, a contract asset is recognized. If the customer's payables exceed the services rendered, a contract liability is recognized.

• a) Hospitality services are recognized when the product is sold to customers. Payment of transaction price is due immediately when the products are purchased by customers.
• b) Accommodation is recognized as revenue in the reporting period in which the services are rendered to customers. The customer pays the contract price according to the agreed payment schedule.
• 3) Financial composition

The Consolidated Company's sales contract of pre-sale homes contains provisions for advance payment from customers, and the time between advance receipt and commodity ownership transfer is longer than one year. According to IFRS 15, if the Consolidated Company judges that there are significant financing components in an individual pre-sale home contract, it shall adjust the amount of the commitment consideration and recognize the interest cost. In addition, IFRS 15 states that companies should determine the significance of the financing component only at the contract level, rather than the financial level at the portfolio level.

4) Rental revenue

Revenue from lease is recognized when an asset is actually used in lease, provided that it is probable the economic benefits will flow to the Consolidated Company and the amount of revenue can be measured reliably. The related costs are recognized in line with revenues.

5) Incremental costs of obtaining a contract

If the Consolidated Company expects to recover the incremental cost for acquiring the customer contract, the cost will be recognized as asset. The incremental cost of acquiring contract is cost that will arise in acquiring customer contract and will not arise otherwise. The contract acquisition cost no matter the contract will happen or not is recognized as expense, unless the cost is explicitly collectable from customer no matter the contract is acquired or not.

If the increment cost of acquiring contract is recognized by asset and the asset amortization period is within one year by Consolidated Company using practical expediency method, the incremental cost will be recognized as expense upon occurrence.

• t. Borrowing costs
• 1) Borrowing costs directly attributable to the acquisition or construction of a qualifying asset are included as part of the cost of the asset until substantially all of the activities necessary to bring the asset to its intended state of use have been completed.

Special loans, such as investment income from temporary investments prior to capitalization, are deducted from the cost of loans eligible for capitalization.

Except for the above, other borrowing costs are recognized in profit and loss in the year they are incurred.

• 2) Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. When there is no evidence of the possibility that some or all the facility will be drawn down, the fee is recognized as a prepayment and amortized over the period of the facility to which it relates.
• u. Employee Benefit
• 1) Defined contribution plans

Obligations for contributions to defined contribution pension plan are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

2) Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Consolidated Company's net obligation in respect of a defined benefit pension plan is calculated separately for each plan by estimating the amount discounted to present value of the future benefit that employees have earned in return for their service in the current and prior periods. The fair value of any plan assets are deducted. The calculation is performed annually by a qualified actuary using the projected unit credit method. The discount rate is the yield on the reporting date on corporate bonds or government bonds that have maturity dates approximating the terms of the Consolidated Company's obligations and are denominated in the same currency in which the benefits are expected to be paid.

The costs of defined benefits under the defined benefit pension plan include service cost, net interest, and the remeasurement amount. The cost of services (including the cost of services of the current period) and the net interest of the net defined benefit liabilities (assets) are recognized as employee benefit expenses. Remeasurement (comprising actuarial gains and losses, and return on plan assets net of interests) is recognized in other comprehensive income and included in retained earnings, and is not recycled to profit or loss in subsequent periods, costs related to prior service costs are recognized immediately in profit or loss.

Net defined benefit liabilities (assets) are the deficit of the contribution made according to the defined benefit pension plan. A net defined benefit asset shall not exceed the present value of the contributions to be refunded from the plan, or the reductions in future contributions.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognized in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognized immediately in profit or loss.

3) Short-term employee benefits

The obligation for short-term employee benefits is measured on undiscounted basis, and recognized as expense at the time of provision of relevant services.

For expected payment amount under short-term cash bonus or bonus plan, if the consolidated company undertakes current obligation of legal or constructive payment for the previous provision of services by employees and the obligation can be reliably estimated, the amount is recognized as liability.

v. Income Tax

Income tax expenses include the tax in the current year and deferred income tax. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

Current taxes include tax payables and tax deduction receivables on taxable income (deficits) for the year calculated using the statutory tax rate on the reporting date or the actual legislative tax rate, as well as tax adjustments related to prior years. The additional business income tax levied on the undistributed earnings is recognized as income tax expense on the date when the distribution of earnings is resolved in the Shareholders' Meeting.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. The temporary difference for the following conditions will not be recognized as deferred income tax:

• 1) Assets and liabilities that are initially recognized but are not related to a business combination which have no effect on net income or taxable gains (losses) at the time of the transaction.
• 2) Temporary differences arising from equity investments in subsidiaries or joint ventures where there is a high probability that such temporary differences will not reverse.
• 3) Initial recognition of goodwill.

Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities may be offset against each other if the following criteria are met:

• 1) The entity has the legal right to settle tax assets and liabilities on a net basis; and
• 2) The taxing of deferred tax assets and liabilities fulfils one of the scenarios below:
• a) Levied by the same taxing authority; or
• b) Levied by different taxing authorities, but where each such authority intends to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation, or where the timing of asset realization and debt liquidation is matched.

A deferred tax asset is recognized for the carry-forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the benefit of part or the deferred tax asset will be utilized, or to reverse a reduction to the extent that it becomes probable that sufficient taxable income will be available.

w. Earnings per share

The Consolidated Company presents the basic and diluted earnings per share of shareholders of common stock equity. The basic earnings per share are calculated based on the profit attributable to the ordinary shareholder of the Consolidated Company divided by the weighted average number of ordinary shares outstanding. The diluted earnings per share is calculated based on the profit attributable to ordinary shareholders of the Consolidated Company, divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. The Consolidated Company's employee bonus allotment shares, which have not been approved by the shareholders' meeting and may be issued in shares, are potential common shares.

x. Government grants

Government grants are recognized at their fair value only when there is reasonable assurance that the Company will comply with any conditions attached to the grants and the grants will be received. Government grants to compensate the Consolidated Company's expense are recognized as profit or loss on a systematic basis when the expense occurs.

y. Segment information

An operating segment is a component of the Consolidated Company that engages in business activities from which it may earn revenues and incur expenses. Operating results of the operating segment are regularly reviewed by the Consolidated Company's chief operating decision-maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

z. Dividend distribution

Dividends are recorded in the Consolidated Company's financial statements in the period in which they are approved by the Consolidated Company's shareholders. Cash dividends are recorded as liabilities. Stock dividends are recorded as stock dividends to be distributed and reclassified to ordinary shares on the base date of new share issuance.

aa. Treasury shares

Issued shares repurchased by the company are recognized in "treasury stock" as a deduction to equity based on the amount of consideration paid during share buyback (including directly attributable costs). If the disposal price of treasury stock is higher than the carrying amount, the difference is recognized as capital reserve-treasury stock transaction; if the disposal price is lower than the carrying amount, the difference will offset the capital reserve arising out of transaction of the same type of treasury stock; if insufficient, the retained earnings will be debited. The carrying amount of treasury stock is calculated by weighted averaging according to reason of recovery.

In writing off treasury stock, the capital reserve will be debited according to equity ratio-for shares issuance premium and capital, if the carrying amount is higher than the sum of face value and shares issuance premium, the difference will offset the capital reserve arising out of the same type of treasury stock; if insufficient, the retained earnings will be offset; if the carrying amount is lower than the sum of face value and shares issuance premium, the capital reserve arising out of transaction of the same type of treasury stock will be credited.

5. Main Source of Significant Accounting Judgment, Estimation, and Assumption Uncertainties

The preparation of these consolidated financial statements requires management to make critical judgments for applying the Consolidated Company's accounting policies with critical assumptions and estimates concerning future events. If there is any difference between any significant accounting estimates and assumption made and actual results, the historical experience and other factors will be taken into account in order to continue assessment and adjustment. Such 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. Please see below for the description of significant accounting judgments, estimation and assumption uncertainties.

a. Valuation of inventories

As inventories are stated at the lower of cost and net realizable value, the Consolidated Company shall determine the net realizable value of inventories at the end of the reporting period using judgments and estimates.

The Consolidated Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value at the end of the reporting period, and writes down the cost of inventories to the net realizable value. This inventory valuation is based on inventory nature, inquiries into the selling prices of neighboring regions or the selling prices of units sold, and is therefore subject to significant changes.

b. Impairment assessment of assets

In the process of evaluating the potential impairment of tangible and intangible assets other than goodwill, the Consolidated Company is required to make subjective judgments in determining the independent cash flows, useful lives, expected future income, and expenses related to the specific asset groups considering of the nature of the industry. Any changes in these estimates based on changed economic conditions or business strategies and could result in significant impairment charges.

c. Provisions

Provisions are provisions for post-sale warranty liabilities, which are the present value of the Consolidated Company's management's best estimate of future economic outflows resulting from warranty obligations. The estimates are based on contractual agreements and management's historical warranty experience, and are subject to adjustment due to construction materials, construction methods or other events that affect product quality. These estimates are primarily based on economic outflows over the future warranty period and are subject to change.

d. Realizability of deferred income tax assets

Deferred income tax assets are recognized only to the extent that it is probable that future taxable income will be available against which the deductible temporary differences can be utilized. Assessment of the realizability of deferred income tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. The global economic environment and industry environment transition and decree changes may incur significant adjustment of deferred tax assets.

• 1. Descriptions of Material Accounting Items
• a. Cash and cash equivalent

Item	December 31, 2020	December 31, 2019
Cash on hand and petty cash	\$2,039	\$736
Demand deposits	572,746	393,882
Checking deposits	50,124	44
Total	\$624,909	\$394,662

• 1) The Consolidated Company possesses good credit with financial institutions, and contacts with several financial institutions to diversify credit risk, anticipated possibility of default is very low, the exposure cash amount on maximum credit risks at the end of the reporting period is same as cash equivalents.
• 2) 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 XII.
• b. Financial assets at fair value through profit or loss

Item	December 31, 2020	December 31, 2019
Current
Domestic listed stocks	\$89,930	\$87,400
Non-current - 2020	December 31, 2019	December 31, 2019

• 1) The Consolidated Company's investment in domestic unlisted stocks has been designated as investments at fair value through profit or loss.
• 2) The Consolidated Company recognized a valuation loss of NT\$7,599 thousand in 2020 and a valuation gain of NT\$39,935 thousand in 2019, plus a loss of NT\$10,365 thousand in 2020 and a gain of NT\$291 thousand in 2019 from disposal of financial assets at fair value through profit or loss.
• 3) The Consolidated Company has disclosed the credit and interest rate risks associated with financial instruments in Note XII.
• 4) None of the financial assets of the Consolidated Company has been pledged as collateral.

c. Receivables

Item	December 31, 2020	December 31, 2019
Notes receivable
Measured at amortized cost
Less than 1 year	\$40,159	\$56,710
Over 1 year	0	52,000
Total	\$40,159	\$108,710
Trade receivables
Measured at amortized cost
Less than 1 year	\$106,019	\$55,679
Less: Allowance for doubtful accounts -	(22)	(22)
Trade receivables
Total	\$105,997	\$55,657
Trade receivables - related parties
Measured at amortized cost
Less than 1 year	\$2	\$10
Installment receivables
Less than 1 year	\$0	\$195
Over 1 year	0	0
Total	\$0	\$195

• 1) The Consolidated Company's long-term notes receivable and long-term installment receivable of more than one year are classified as non-current assets.
• 2) The installment receivables from the Consolidated Company provide customers with installment payments for the final payment of their homes over a period of approximately one to three years, and a second mortgage is created on each of the homes as security for the payments.
• 3) The Consolidated Company's long-term notes receivable of more than one year represent advance payments from customers for decoration work. The period of one to three years is due to the time required for design and construction for the purchase of the rough housing units, and revenue is recognized upon completion and acceptance of the decoration.
• 4) The Consolidated Company applies the simplified approach on the estimation of expected credit losses for all notes receivable (including long-term notes receivable) and trade receivables (including installment receivables), that is, a loss allowance is recognized based on the lifetime of expected credit losses. To measure the expected credit losses, notes and accounts receivables were grouped based on shared characteristics of credit risk on remaining payments before due date, and forwardlooking information was incorporated as well. The expected credit loss of notes receivable (including long-term notes receivable) and trade receivables (including installment receivables) of the Consolidated Company is as follows:

	December 31, 2020
	Carrying amount of notes
	receivable (including
	long-term notes	Weighted	Allowance for
	receivable) and trade	average expected	expected credit losses during the
	receivables (including	credit loss ratio	period
	long-term installment
	receivables)
Not overdue	\$146,158	0%	\$0
Less than 60 days	0	0%	0
Over 365 days	22	100%	22
Total	\$146,180		\$22

— 136 —

	December 31, 2019
	Carrying amount of notes
	receivable (including long	Weighted	Allowance for
	term notes receivable) and	average expected credit loss ratio	expected credit
	trade receivables (including		losses during the
	long-term installment		period
	receivables)
Not overdue	\$164,530	0%	\$0
Less than 60 days	42	0%	0
Over 365 days	22	100%	22
Total	\$164,594		\$22

The changes in the allowance for losses on notes and trade receivables of the Consolidated Company were as follows

	December 31, 2020	December 31, 2019
Beginning balance	\$22	\$22
Increase in the current period	0	0
Ending balance	\$22	\$22

• 5) The majority of the credit period of the Consolidated Company's receivables is the date of transfer of ownership of the premises to the bank, or the date of credit card payment for the premises and credit card payment for food and beverage services and room accommodations to the bank. The Consolidated Company is in the construction and tourism industry and has a large and unrelated customer base, so the concentration of credit risk is limited. Please refer to Note XII for related credit risk information.
• 6) The Consolidated Company's notes receivable (including long-term notes receivable) and trade receivables (including installment receivables) were not discounted or provided as collaterals.
• d. Other receivables

Item	December 31, 2020	December 31, 2019
Other receivables - related parties	\$277	\$325
Other receivables	750,063	96
Total	\$750,340	\$421

• 1) Other receivables related parties are the receivables from landlords for their share of sales and related parties for their share of expenses.
• 2) The Consolidated Company's other receivables were assessed not to be impaired and were not past due.
• e. Inventories

Item	December 31, 2020	December 31, 2019
Buildings held for sale	\$7,612,198	\$10,040,381
Land held for sale	3,067,455	4,579,585
Land under construction	2,018,413	2,663,463
Construction in progress	694,670	747,836
Land held for construction	15,648,922	15,648,922
Prepayment for land	140,281	0
Other inventories (Food & Beverage, etc.)	5,035	4,953
Less: Provision for loss of inventory	(542)	(12,833)
Total	\$29,186,432	\$33,672,307
Item	December 31, 2020	December 31, 2019

1) Buildings held for sale
Wistron Financial Building	\$0	\$10,536
Mandala (Ji Jing)	21,194	30,820
Xiande Section No. 826	15,262	15,262
King's Town Hyatt	801,104	884,033
Hua Shang	114,478	114,478
Hu Li Fang	0	15,862
Tian Feng	145,518	145,014
Ju Dan	323,529	402,600
King's Town	2,233,297	2,356,373
Yuashan Compound	0	13,015
Shi Shang King's Town	249,997	455,958
King's Town Garden	1,003,595	1,482,476
Yue He Di	131,661	202,526
Mei Shu Huang Ju	1,953,523	3,123,915
Yiwen Court	614,443	787,111
Xiang King's Town	4,194	0
Other projects	403	402
Total	\$7,612,198	\$10,040,381
Less: Provision for loss of inventory	(403)	(6,466)
Net	\$7,611,795	\$10,033,915

	Item	December 31, 2020	December 31, 2019
2)	Land held for sale
	Wistron Financial Building	\$0	\$13,273
	Mandala (Ji Jing)	16,657	24,223
	Xiande Section No. 826	6,247	6,247
	King's Town Hyatt	58,510	65,958
	Hu Li Fang	0	7,374
	Tian Feng	62,443	62,443
	Ju Dan	194,866	248,664
	King's Town	235,794	253,410
	Yuashan Compound	0	9,062
	Shi Shang King's Town	164,196	300,458
	King's Town Garden	521,512	813,211
	Yue He Di	128,525	201,851
	Mei Shu Huang Ju	1,341,896	2,146,941
	Yiwen Court	332,401	426,331
	Xiang King's Town	4,269	0
	Other projects	139	139
	Total	\$3,067,455	\$4,579,585
	Less: Provision for loss of inventory	(139)	(6,367)
	Net	\$3,067,316	\$4,573,218

	Item	December 31, 2020
	Land under construction and	Land under	Construction in
3)	construction in progress	construction	progress	Total
	Fuhe Section No. 698-1	\$353,729	\$76,007	\$429,736
	Xindu Section No. 321, 163-1, 164	693,265	258,844	952,109
	Aiqun No. 246, 5 in total (King's Town World of Heart)	971,419	359,819	1,331,238
	Total	\$2,018,413	\$694,670	\$2,713,083

Item		December 31, 2019
4)	Land under construction and construction in progress	Land under construction	Construction in progress	Total
	Xinzhuang No. 92, 95 (Xiang King's Town)	\$645,050	\$533,259	\$1,178,309
	Fuhe Section No. 698-1	353,729	65,855	419,584
	Xindu Section No. 321, 163-1, 164	693,265	53,129	746,394
	Aiqun No. 246, 5 in total (King's Town World of Heart)	971,419	95,593	1,067,012
	Total	\$2,663,463	\$747,836	\$3,411,299

Item	December 31, 2020	December 31, 2019
5) Land held for construction
Kaohsiung Chenggong Section No. 84	\$14,533	\$14,533
Kaohsiung Chenggong Section No. 60-1, 62-64	540,267	540,267
Kaohsiung Longzhong Section No. 191	370,653	370,653
Kaohsiung Longzhong Section No. 129-3, 129-4	1,610,110	1,610,110
Kaohsiung Longzhong Section No. 128-4, etc., 3 in total	716,926	716,926
Kaohsiung Chenggong Section No. 74, 78	28,397	28,397
Kaohsiung Chenggong Section No. 70	13,805	13,805
Kaohsiung Chenggong Section No.83	19,016	19,016
Kaohsiung Qinghai No. 229	4,278,594	4,278,594
Kaohsiung Aiqun No. 2738-2	30,279	30,279
Kaohsiung Qinghai No. 126	685,719	685,719
Kaohsiung Qinghai No. 127	662,012	662,012
Kaohsiung Qinghai No. 128	379,145	379,145
Kaohsiung Longzhong Section No. 128-3	52,266	52,266
Kaohsiung Bohsiao Section No. 1140, 7 in total	655,287	655,287
Kaohsiung Lantian Middle Section No. 30-2 Kaohsiung Xingnan Section No. 11	\$757,742 259,585	\$757,742 259,585
Kaohsiung Longzhong Section No. 22	1,998,033	1,998,033
Kaohsiung Xinmin No. 160	792,708	792,708
Kaohsiung Xinmin No. 159	828,072	828,072
Transferable land and deformed land	955,773	955,773
Total	\$15,648,922	\$15,648,922
Item	December 31, 2020	December 31, 2019
5) Prepayment for land
Tainan Anan District, Caohu Phase I	\$50,033	\$0
Tainan Yuguang Section No. 880, 3 in total	35,023	0
Kaohsiung Chenggong Section No. 73	8,880	0
Kaohsiung Qiaotou Shixing Section No. 924	1,400	0
Kaohsiung Qiaotou Shixing Section 925, 3 in total	10,000	0
Kaohsiung Qiaotou Shixing Section 927, 3 in total	9,250	0
Kaohsiung Qiaotou Shixing Section 928, 3 in total	11,495	0
Kaohsiung Qiaotou Shixing Section 967	660	0
Kaohsiung Qiaotou Shixing Section 968	4,260	0
Kaohsiung Chenggong Section No. 79	8,880	0
Kaohsiung Qiaotou Shixing Section 867	400	0
Subtotal	\$140,281	\$0

6) Other inventories

Item	December 31, 2020	December 31, 2019
Food	\$3,378	\$3,125
Beverage	1,657	1,828
Subtotal	\$5,035	\$4,953

• 7) The above-listed premises under construction are residential buildings and translucent houses built in Kaohsiung City. The amount of interest capitalized in construction in progress was NT\$42,126 thousand and NT\$133,144 thousand in 2020 and 2019, respectively.
• 8) The land purchased or sold in Kaohsiung City and Tainan City is recorded as prepaid land at the time of signing the contract and paying for each installment and is transferred to the land for future construction after the transfer. The amount of interest capitalized for operating sites and prepaid land was NT\$56 thousand and NT\$6,811 thousand in 2020 and 2019, respectively.
• 9) Please refer to Note VIII to the financial statements for the pledge of premises for sale, premises under construction and construction sites.
• 10) Cost of goods sold related to inventories amounted to NT\$5,580,329 thousand and NT\$3,295,374 thousand in 2020 and 2019, respectively; neither of which included NT\$12,291 thousand and NT\$9,300 thousand of inventory write-down benefit in 2020 and 2019, respectively.

Item	December 31, 2020	December 31, 2019
Prepaid expenses	\$431,977	\$421,074
Supplies inventories	4,211	4,331
Input tax	513	6,203
Tax overpaid retained for offsetting
the future tax payable	25,919	133,724
Tax refunds	14	0
Payments on behalf of others	8,583	11,234
Total	\$471,217	\$576,566

f. Other current assets

• 1) Prepaid expenses consist of prepayments for various services, costs related to construction in progress and insurance premiums.
• 2) Supplies inventory is the balance of supplies used in guest rooms and restaurants.

g. Other financial assets - current

Item	December 31, 2020	December 31, 2019
Restricted bank deposits	\$6,479	\$2,069

Other financial assets-current are pledged by the Consolidated Company as collateral for bank deposits in the form of a performance trust for prepayment of gift certificates issued by the Consolidated Company, please refer to Note VIII.

h. Investments accounted for using the equity method

	December 31, 2020		December 31, 2019
Name of Investee	Amount	Shareholding	Amount	Shareholding
Associate
Yangmin International Catering Co., Ltd.	\$15,566	40%	\$14,786	40%

• 1) In 2016, the Consolidated Company invested in Yangmin International Catering Co., Ltd. at a cost of NT\$8,000 thousand, which is mainly engaged in the operation of Chinese and Western restaurants. Investments accounted for using the equity method are recognized on the basis of the investee's share of the financial statements audited by other accountants during the same period. As of December 31, 2020 and 2019, the balance of investments amounted to NT\$15,566 thousand and NT\$14,786 thousand, representing 0.05% and 0.04% of the total consolidated assets, respectively. The share of interest in associates recognized under the equity method amounted to NT\$5,777 thousand and NT\$5,552 thousand for 2020 and 2019, respectively, accounting for 0.34% of the consolidated profit or loss.
• 2) Associate
• a) The basic information of the Consolidated Company's associates is as follows.

			%
Name of Investee	Main Operation Locations	Principal Business Operation	December 31, 2020	December 31, 2019
Yangmin International Catering Co., Ltd.	Taiwan	Catering business	40%	40%

b) Aggregate financial information of the Consolidated Company's associates is as follows.

Balance Sheet

	Yangmin International Catering Co., Ltd.
	December 31, 2020	December 31, 2019
Current assets	\$40,814	\$34,990
Non-current assets	11,105	11,730
Current liabilities	(13,004)	(9,755)
Non-current liabilities	0	0
Net assets	\$38,915	\$36,965

Comprehensive Income Statement

Yangmin International Catering Co., Ltd.
December 31, 2020	December 31, 2019
\$86,295	\$88,785
\$42,992	\$43,620
\$14,443	\$13,881
\$0	\$0
\$14,443	\$13,881
\$4,997	\$4,819

i. Property, plant and equipment

						Prepayments for equipment and outstanding
	Housing and Construction	Machinery	Office Equipment	Other Equipment	Operating equipment	work	Total
Cost
2020.01.01	\$973,094	\$1,266	\$8,130	\$33,017	\$13,644	\$9,235	\$1,038,386
Increase	1,461	1,355	264	6,366	2,511	402	12,359
Disposal and obsolescence	0	0	(493)	(163)	(1,194)	0	(1,850)
Re-classification	0	4,942	0	4,031	2	(9,049)	(74)
Others	(2,684)	0	0	0	(263)	0	(2,947)
2020.12.31	\$971,871	\$7,563	\$7,901	\$43,251	\$14,700	\$588	\$1,045,874
2019.01.01	\$971,760	\$1,006	\$8,130	\$29,716	\$12,243	\$0	\$1,022,855
Increase	1,334	260	0	3,301	2,850	9,235	16,980
Disposal and obsolescence	0	0	0	0	(1,412)	0	(1,412)
Others	0	0	0	0	(37)	0	(37)
2019.12.31	\$973,094	\$1,266	\$8,130	\$33,017	\$13,644	\$9,235	\$1,038,386
Accumulated depreciation and impairment
2020.01.01	\$162,774	\$304	\$3,998	\$9,228	\$0	\$0	\$176,304
Depreciation	61,180	570	1,618	4,600	0	0	67,968
Disposal and obsolescence	0	0	(493)	(163)	0	0	(656)
2020.12.31	\$223,954	\$874	\$5,123	\$13,665	\$0	\$0	\$243,616
2019.12.31	\$101,931	\$160	\$2,319	\$5,659	\$0	\$0	\$110,069
Depreciation	60,843	144	1,679	3,569	0	0	66,235
2019.12.31	\$162,774	\$304	\$3,998	\$9,228	\$0	\$0	\$176,304
Net carrying amount
2020.12.31	\$747,917	\$6,689	\$2,778	\$29,586	\$14,700	\$588	\$802,258
2019.12.31	\$810,320	\$962	\$4,132	\$23,789	\$13,644	\$9,235	\$862,082
2019.01.01	\$869,829	\$846	\$5,811	\$24,057	\$12,243	\$0	\$912,786

a) In July 2012, the Consolidated Company entered into a land right deed with the Kaohsiung City Government for the establishment of land rights at Lot 22, Longbei Section, Kaohsiung City for a period of 50 years for the construction of a tourist hotel, which was completed in May 2017. The building was classified as investment property in the Company's individual financial statements and a lease agreement was signed with a subsidiary on January 18, 2017 for the operation of the tourist hotel business by the subsidiary, which is the property, plant and equipment of the Consolidated Company.

• b) Prepayments for equipment and outstanding work from January 1 to December 31, 2020 were separately reclassified to intangible assets of NT\$60 thousand and reclassified to expense of NT\$14 thousand.
• c) Please refer to Note VIII to the financial statements for the guarantees provided by property, plant and equipment.
• d) Please refer to Note VI(XVI) for information on property, plant and equipment and land and premises for sale held by the Consolidated Company that are leased to others under operating leases.
• j. Right-of-use assets
• 1) Major lease activities and terms
  • a) The Consolidated Company acquired the land right of the Kaohsiung Municipal Government located at No. 22, Longbei Section, Gushan District for the construction of a tourist hotel for a period of 50 years and agreed that the Consolidated Company shall not assign, mortgage, lease or lend the land to others for construction use except with the prior consent of the Kaohsiung Municipal Government, and upon the termination of the continuance period, the Consolidated Company shall have no contractual preferential rights to acquire all the leased land.
• 2) Below is the carrying amounts of right-of-use assets and their recognized depreciation expenses:

	Land
Cost of right-of-use assets
Balance as of January 1, 2020	\$65,760
Balance as of December 31, 2020	\$65,760
Balance as of January 1, 2019	\$0
Impacts of retrospective application of IFRS 16	65,760
Balance as of January 1, 2019 after adjustment	\$65,760
Balance as of December 31, 2019	\$65,760
Depreciation of right-of-use assets
Balance as of January 1, 2020	\$1,515
Current depreciation	1,514
Balance as of December 31, 2020	\$3,029
Balance as of January 1, 2019	\$0
Current depreciation	1,515
Balance as of December 31, 2019	\$1,515
Carrying amount
December 31, 2020	\$62,731
December 31, 2019	\$64,245

3) Please refer to Note VI(XVII) for the description of lease liabilities.

k. Intangible assets

	Land use rights	Other intangible assets	Total
Cost
Balance as of January 1, 2020	\$200,020	\$5,891	\$205,911
Increase	0	477	477
Re-classification	0	60	60
Derecognition maturity	0	(766)	(766)
Balance as of December 31, 2020	\$200,020	\$5,662	\$205,682
Balance as of January 1, 2019	\$200,020	\$4,830	\$204,850
Increase	0	1,168	1,168
Derecognition maturity	0	(108)	(108)
Balance as of December 31, 2019	\$200,020	\$5,890	\$205,910
Accumulated amortization
Balance as of January 1, 2020	\$30,002	\$2,386	\$32,388
Amortization	4,001	769	4,770
Derecognition maturity	0	(766)	(766)
Balance as of December 31, 2020	\$34,003	\$2,389	\$36,392
Balance as of January 1, 2019	\$26,002	\$1,499	\$27,501
Amortization	4,000	994	4,994
Derecognition maturity	0	(108)	(108)
Balance as of December 31, 2019	\$30,002	\$2,385	\$32,387
Net carrying amount
Balance as of December 31, 2020	\$166,017	\$3,273	\$169,290
Balance as of December 31, 2019	\$170,018	\$3,505	\$173,523
Balance as of January 1, 2019	\$174,018	\$3,331	\$177,349

1) Amortization expense for the Consolidated Company's intangible assets for 2020 and 2019 is reported in the following items

Item	2020	2019
Manufacturing overheads	\$2,801	\$2,800
Operating expenses	1,969	2,194
Total	\$4,770	\$4,994

2) In July 2012, the Consolidated Company entered into a land right deed with the Kaohsiung City Government for the establishment of the land at Lot 22, Sec. 22, Longbei, Kaohsiung City, with a royalty amount of \$200,020 thousand for the period from July 2012 to July 2062 for the operation of a tourist hotel.

• 3) As of the end of each reporting period, none of the intangible assets of the Consolidated Company has been pledged as collateral.
• l. Short-term borrowings/ Short-term bills payable

	December 31, 2020	December 31, 2019
1) Short-term borrowings
Secured loans	\$4,488,806	\$4,954,779
Credit loans	0	1,000
Total	\$4,488,806	\$4,955,779
Unused limit - short-term borrowings	\$2,047,854	\$1,001,881
Interest rate range Secured loans	1.387%~1.585%	1.545%~1.975%
Repayment period	2021.01.01~112.05.25	2020.1.2~2020.11.20
2) Short-term bills payable	\$4,213,000	\$4,280,000
Less: Discount on short-term bills payable	(4,693)	(1,847)
Net	\$4,208,307	\$4,278,153
Unused limit - short-term bills payable	\$2,384,000	\$1,507,000
Interest rate range
Short-term bills payable	1.498%~1.82%	0.688%~1.959%

The Consolidated Company pledged its own assets and related parties' real estate and stocks as collateral for bank loans and commercial paper, please refer to Notes VII and VIII.

m. Provisions - current

	Warranty provision
Balance as of January 1, 2020	\$31,504
Newly increased liability provision for the period	4,313
Balance as of December 31, 2020	\$35,817
Balance as of January 1, 2019	\$24,964
Newly increased liability provision for the period	6,540
Balance as of December 31, 2019	\$31,504

Provisions represents post-sale warranty expenses. The provision for warranty is based on historical experience and management's judgment of the present value of estimated future economic outflows, which are expected to be incurred within five years after the completion of the housing units.

n. Collection

borrowings

	Item	December 31, 2020			December 31, 2019
	Land collections		\$9,045		\$23,021
	Building collections		20,960		31,531
	Decoration collections		26,400		9,200
Total	Collections - others		30,838 \$87,243		25,737 \$89,489
o.	Long-term borrowings
Nature of borrowings	Borrowing period, repayment method and interest rate range		December 31, 2020		December 31, 2019
Long-term bank borrowings
Secured borrowings	From March 2020 to December 2028, interest is payable monthly, in one lump sum at maturity, at a floating rate of 1.73% as of December 31, 2020		\$1,765,000		\$0
Secured borrowings	From June 2019 to June 2026, interest is payable monthly, in one lump sum at maturity with floating interest rates ranging from 1.7% to 1.75% and 1.95% to 2% as of December 31, 2020 and 2019 respectively.			694,000	694,000
Secured borrowings	Original from January 3, 2012 to January 3, 2016, then extended to January 3, 2020, then extended to January 3, 2024, interest is payable monthly, in one lump sum at maturity with floating interest rates of 1.54% and 1.9% as of December 31, 2020 and 2019.			272,000	272,000
Secured borrowings	The borrowing period is 15 years from July 2017 to July 2033 (including a grace period of 2 years). Interest is payable monthly during the grace period and the principal is repayable at the end of the grace period by the interest method with a floating interest rate of 1.54% and 1.85% on December 31, 2020 and 2019, respectively. Borrowings due within one year were NT\$45,847 thousand and NT\$0 thousand as of December 31, 2020 and 2019, respectively.			576,881	621,855
Secured borrowings	From May 2019 to November 2023, interest is payable monthly in a lump sum at maturity with floating interest rates of 1.45% and 1.7% as of December 31, 2020 and 2019, respectively.			530,000	530,000
Secured			\$1,300,000		\$0

— 147 —

Nature of borrowings	Borrowing period, repayment method and interest rate range	December 31, 2020	December 31, 2019
	From March 2020 to March 2025, interest is payable monthly in a lump sum at a floating rate of 1.45% as of December 31, 2020
Secured borrowings	From October 2019 to October 2022, interest is payable monthly in a lump sum at maturity with floating interest rates of 1.43% and 1.68% as of December 31, 2020 and 2019, respectively.	550,000	550,000
Secured borrowings	From November 2019 to November 2022, interest is payable monthly in a lump sum at maturity with floating interest rates of 1.43% and 1.68% as of December 31, 2020 and 2019, respectively.	50,000	50,000
Secured borrowings	From January 2020 to January 2023, interest is payable monthly in a lump sum at a floating rate of 1.43% as of December 31, 2020	75,000	0
Secured borrowings	From November 2019 to November 2022, interest is payable monthly in a lump sum at maturity with floating interest rates of 1.43% and 1.68% as of December 31, 2020 and 2019, respectively.	545,000	545,000
Secured borrowings	From January 2020 to January 2023, interest is payable monthly in a lump sum at a floating rate of 1.43% as of December 31, 2020	50,000	0
Secured borrowings	Interest is payable monthly from July 2019 to July 2021, with at least NT\$50,000 thousand of principal repayable on the date one year from the date of initial drawdown and the remainder due in one lump sum, at floating interest rates of 1.55% and 1.7% as of December 31, 2020 and 2019, respectively. Borrowings due within one year were transferred to NT\$89,986 thousand as of December 31, 2020.	89,986	255,700
Secured borrowings	From June 2020 to June 2023, interest is payable monthly, in one lump sum at maturity, at a floating rate of 1.606649% as of December 31, 2020	\$500,000	\$0
Secured borrowings	The borrowing was originally recorded as a short term borrowing from January 2012 to August 2017 and was extended to May 2019 in 2014, and was subsequently extended to June 2021 due to business needs. Therefore, it is transferred to long-term loans. Interest is payable monthly, in one lump sum at maturity at a floating rate, which was fully repaid in June 2020, with an interest rate of 2.10% to 2.15% as of December 31, 2019.	0	2,133,070

Nature of borrowings	Borrowing period, repayment method and interest rate range	December 31, 2020	December 31, 2019
Secured borrowings	The borrowing was originally granted from June 2013 to October 2016 and was extended in June 2016 to June 2020. Interest is payable monthly, in one lump sum at maturity at a floating rate, which was fully repaid in March 2020, with an interest rate of 2.215179% as of December 31, 2019.	0	2,530,000
Secured borrowings	From September 2017 to September 2020, interest is payable monthly, in one lump sum at maturity at a floating rate, which was fully repaid in May 2020, with interest rates of 1.85% to 1.9% as of December 31, 2019.	0	480,000
Secured borrowings	From March 2019 to June 2021, interest is payable monthly, in one lump sum at maturity at a floating rate, which was fully repaid in April 2020 with an interest rate of 2% as of December 31, 2019.	0	599,430
Secured borrowings	The borrowing was originally from October 2014 to October 2019, and was extended in February 2016 to October 2021, with an additional loan of NT\$172,000 thousand within the line of credit on March 21, 2017; interest is paid monthly, with the principal repaid at least 70% of the sale price of the premises and the remaining principal repaid in one lump sum at maturity, at a floating interest rate, and was fully repaid in March 2020, with an interest rate of 2.0201% at December 31, 2019.	\$0	\$1,115,000
Credit loans	From October 2018 to October 2020, interest is paid monthly and the principal is repaid in equal quarterly installments at a variable rate, which was fully repaid in September 2020, with an interest rate of 1.6% as of December 31, 2019.	0	350,000
Credit loans	From February 2018 to February 2020, interest is payable monthly, in one lump sum at maturity at a floating rate of 1.975% as of December 31, 2019, respectively.	0	2,000

Nature of borrowings	Borrowing period, repayment method and interest rate range	December 31, 2020	December 31, 2019
Total		\$6,997,867	\$10,728,055
	Less: Net long-term borrowings due within one year or one operating cycle Use this segment	(135,833)	(3,634,000)
Net		\$6,862,034	\$7,094,055
Unused limit		\$1,560,000	\$3,941,945

Long-term bank borrowings were secured by the Consolidated Company's own assets and real estate and stocks provided by related parties; please refer to Notes VII and VIII for details.

p. Lease agreements

1) The Consolidated Company's lease liabilities are as follows

	December 31, 2020	December 31, 2019
Current	1,062	1,044
Non-current	62,628	63,690

Please refer to Note XII for maturity analysis.

The Consolidated Company has no material issuance, repurchase or repayment of lease liabilities due to the addition or release of leases in 2020 and from January 1 to December 31, 2020 and 2019.

The amount of leases recognized in profit or loss was as follows

	2020	2019
Interest expense – lease obligations payable	\$1,110	\$1,128
Short-term lease expenses	\$9,846	\$8,024
Expense on leases with low-value underlying assets	\$791	\$230

The amounts recognized in the statements of cash flows are:

	2020	2019
Total cash flows on lease	\$12,738	\$14,261

The Consolidated Company selects to apply recognition exemptions to leases of vehicles and low-value business machines that qualify as short-term leases, and does not recognize the related right-of-use assets and lease liabilities for the said leases.

• 2) Lessor lease (recorded as operating income)
• a) The Consolidated Company leases investment properties, premises for sale and construction sites, which are classified as operating leases because almost all the risks and remuneration attached to the ownership of the underlying assets have not been transferred.
• b) The Consolidated Company recognized rental income based on operating lease contracts (recorded as operating income) of NT\$23,689 thousand and nT\$14,722 thousand for the years from January 1, to December 31, 2020 and 2019.
• c) The maturity analysis of lease payments under operating leases of the Consolidated Company to report the total undiscounted lease payments to be received in the future is presented as follows:

	December 31, 2020	December 31, 2019
Within 1 year	\$14,208	\$13,473
1 to 5 years	20,536	19,699
Over 5 years	11,198	9,547
Non-discounted future cash flows of lease	\$45,942	\$42,719

d) The Consolidated Company has two signed leases that are not included in the above table. The lease for the period from October 1, 2019 to February 28, 2035 is currently in litigation with the lessee as described in Note IX, and the other lease for the period from January 1, 2020 to January 31, 2030 has not been determined by agreement and the official commencement date, therefore, neither lease has been collected since it was signed and therefore is not included in the above table.

q. Deposits received

	December 31, 2020	December 31, 2019
Construction contract performance deposits	\$0	\$133,958
Lease deposits	3,586	3,586
Total	\$3,586	\$137,544

• r. Share capital
• 1) As of December 31, 2020 and December 31, 2019, the Consolidated Company's total authorized share capital was NT\$4,500,000 thousand, with a par value of NT\$10 per share, and its paid-in capital were NT\$3,711,931 thousand and NT\$3,848,464 thousand, respectively, with 371,193 thousand and 384,846 thousand common shares issued, respectively, and payments for all issued shares have been received. Quantities of the Consolidated Company's outstanding ordinary shares at the beginning and end of the periods were deemed reconciled as follows: (Unit: thousand shares)

	2020	2019
January 1	384,846	384,655
Cancellation of repurchase treasury shares	(14,189)	0
Capital increase by employee bonus	536	191
December 31	371,193	384,846

• 2) On May 13, 2020, the Consolidated Company resolved by the Board of Directors to issue 535,736 new shares by transferring employees' remuneration of \$18,215 thousand, and the number of shares issued was calculated based on the closing price on the day before the board of directors' resolution. This capital increase was reported to the Financial Supervisory Commission on September 14, 2020, and the board of directors resolved on September 24, 2020, that the base date for the capital increase is September 25, 2020.
• 3) On March 13, 2020, the Consolidated Company resolved by the Board of Directors to repurchase 10,000 thousand shares of the Company's ordinary shares. The repurchased shares will be canceled, and on June 19, 2020, the Board of Directors resolved to set June 29, 2020 as the base date for the capital reduction, and the change of registration was completed on July 23, 2020.
• 4) On June 19, 2020, the Consolidated Company's board of directors resolved to repurchase 5,000 thousand shares of the Company's common stock. The repurchased shares will be canceled and the actual number of repurchased shares is 4,189 thousand, and on September 24, 2020, the board of directors resolved to set September 25, 2020 as the base date for the capital reduction, and the change was registered on October 21, 2020.
• 5) On June 27, 2019, the Consolidated Company resolved at the shareholders' meeting to issue 191,450 new shares by transferring \$5,456 thousand of employees' remuneration,

and the number of shares issued was calculated based on the closing price on the day before the resolution of the board of directors. This capital increase has been approved by the Financial Supervisory Commission on July 11, 2019, and the board of directors resolved the base date of capital increase to be August 1, 2019, and the change of registration was completed on August 30, 2019.

• 6) Treasury shares
• a) The reason for share re-acquisition and movements in the number of treasury stock are as follows:

	Name of the			December 31, 2020
Year of repurchase	Company holding the shares	Reason for share re acquisition	Thousand shares	Carrying amount
4th time	The Company	Maintain the Company's credit and shareholders' rights and interests, and handle the cancellation of shares	10,000	310,543
5th time	The Company	Maintain the Company's credit and shareholders' rights and interests, and handle the cancellation of shares	4,189	152,919
		Cancel	(14,189)	(463,462)
	Total		0	0

There was no such situation on December 31, 2019.

• b) According to the Securities and Exchange Act, the number of shares outstanding repurchased by the Company shall not exceed 10% of the number of issued shares, and the total amount repurchased shall not exceed the sum of the Company's retained earnings, share premium, and realized capital surplus.
• c) Treasury shares held by the Consolidated Company may be neither pledged nor assigned rights in accordance with the Securities and Exchange Act
• d) On June 19, 2020, the Consolidated Company's Board of Directors resolved to repurchase 5,000 thousand shares of treasury shares in accordance with Article 28-2 of the Securities and Exchange Act to protect the Company's credit and shareholders' rights. 4,189 thousand shares were actually repurchased from June 22 to August 21, 2009, at an average purchase price of NT\$36.52 per share. On September 24, 2020, the Board of Directors resolved to cancel 4,189 thousand shares of treasury shares repurchased at a cost of NT\$152,919 thousand, using September 25, 2020 as the base date for capital reduction. Based on March 31, 2020, the maximum number of shares that the Consolidated Company may

repurchase is 37,484.6 thousand shares and the maximum amount of shares to be purchased is NT\$9,987,685 thousand.

• e) On March 13, 2020, the Consolidated Company's Board of Directors resolved to repurchase 10,000 thousand shares of treasury stock in accordance with Article 28-2 of the Securities and Exchange Act to protect the Company's credit and shareholders' rights, and the repurchase was executed in full from March 16 to May 15, 2020, at an average purchase price of NT\$31.05 per share. On June 19, 2020, the board of directors resolved to cancel 10,000 thousand shares of treasury shares repurchased at a cost of NT\$310,543 thousand, using June 29, 2020 as the base date for capital reduction. Based on the calculation as of September 30, 2019, the maximum number of shares of the Company that the Consolidated Company may repurchase is 38,484.6 thousand shares and the maximum amount of shares to be purchased is NT\$9,102,770 thousand.
• f) On June 19, 2020 and September 24, 2020, the Consolidated Company's board of directors resolved to cancel 10,000 thousand and 4,189 thousand shares of treasury shares repurchased, reducing capital by NT\$100,000 thousand and NTNT\$41,890 thousand, respectively, with the base dates of June 29, 2020 and September 25, 2020, respectively, and after the cancellation of 10,000 thousand and 4,189 thousand shares issued, the number of common shares outstanding was 371,193 thousand. The difference between the carrying amount and the par value of treasury shares is adjusted to the capital surplus in proportion to the cancellation, and any deficit is then transferred to retained earnings.
• s. Capital surplus

	December 31, 2020	December 31, 2019
Shares premium	\$40,015	\$36,474
Capital premium from previous year's employee bonuses	12,858	3,541
Cancellation of treasury shares transactions	(52,873)	0
Net	\$0	\$40,015

According to the Company Act, additional paid-in capital including the income derived from issuing shares at a premium and from endowments, in addition to being used to covering deficit, where there is no accumulated deficit in a company, shall be distributed by issuing new shares to shareholders in proportion to the number of shares being held or by cash. In addition, according to relevant provisions of the Securities Exchange Act, when allocating capital from the aforementioned additional paid-in capital, the combined capitalized amount each year shall not exceed 10 percent of the paid-up capital. A company shall not use the additional paid-in capital to make good its capital loss, unless the surplus reserve is insufficient to make good such loss.

t. Retained earnings

Based on the Articles of Incorporation, the annual earnings of the Company shall be first appropriated to pay taxes and offset accumulated losses before allocating 10% of the remaining earning to the legal reserve (not applicable where accumulated legal reserve has reached the amount required by law and regulations) and a special reserve in accordance to CMP's operating needs and pursuant to the applicable law and regulations. Any retained earnings available for distribution together with accumulated undistributed retained earnings may be proposed by the Board of Directors to appropriate and be resolved at the Annual General Meeting. The percentage of cash dividends shall not be less than 10% of the total amount distributed. The percentage shall be determined by the board of directors after considering the financial condition of the Company, except that no cash dividends may be paid when the debt ratio in the annual financial statements exceeds 50%. The ratio of stock dividends and cash dividends mentioned in the preceding paragraph shall be adjusted according to the relevant laws and regulations and regulations. The adjustment shall be proposed by the Board of Directors and submitted to the shareholders' meeting for resolution. Please refer to Note VI(XXV) for the employee compensation distribution policy set forth in the Articles of Incorporation.

1) Legal reserve

According to the Company Act, after-tax surplus profits shall first set aside 10% of said profits as legal reserve, unless legal reserve equals to the paid-in capital. Legal reserve may be used to offset deficit. The legal reserve shall be exclusively used to cover accumulated deficit, to issue new stocks or distribute cash to shareholders in proportion to their share ownership. The use of legal reserve for the issuance of stocks or cash dividends to shareholders in proportion to their share ownership is permitted provided that the balance of such reserve exceeds 25% of the Corporation's paid-in capital.

2) Special reserve

When the Consolidated Company distributes its earnings, it should set aside from the earnings of the current period and the accumulated unappropriated earnings a special reserve which is equivalent to the amount of the net reductions of other equity in the current period. If the distributed earnings was appropriated from the accumulated unappropriated earnings of prior periods, a special reserve which is equivalent to the amount of the distribution should be appropriated. If subsequently there is a reversal of the reductions in other equity interest, earnings can be distributed from the reversal.

3) Dividend distribution

The shareholders' meetings approved the distribution of earnings for years ended December 31, 2019 and 2018 on June 24, 2020 and June 27, 2019 as follows:

4) The proposal of distribution of earnings for 2020 was approved by the Company's board of directors on March 24, 2021, but has not yet been resolved by the shareholders' meeting; the proposal is as follows:

		2020
		Amount	Dividends per share (NT\$)
Legal reserve		\$168,468
Cash dividend		0	\$0
u. Operating revenue
	2020		2019
Land revenue	\$4,207,699		\$2,976,146
Building revenue	4,212,905		2,743,046
Lease revenue	23,689		14,722
Accommodation service revenue	88,606		130,870
Catering service revenue	134,950		125,415
Total	\$8,667,849		\$5,990,199
1) Revenue breakdown	2020		2019
Major regional markets
Taiwan	\$8,667,849		\$5,990,199
Major products/ service
Premises revenue	\$8,420,604		\$5,719,192
Lease revenue	23,689		14,722
Catering service revenue	134,950		125,415
Accommodation service revenue	88,606		130,870
Total	\$8,667,849		\$5,990,199
	2020		2019

Timing of revenue
recognition:
At a fixed point in time	\$8,556,986	\$5,847,174
Performance obligations fulfilled over time	110,863	143,025
Total	\$8,667,849	\$5,990,199

2) Contract liabilities - current

	December 31, 2020	December 31, 2019
Sale of premises	\$494,825	\$475,689
Rental premises	878	40
Room and catering services	8,454	6,727
Advances from gift card	10,929	8,040
Total	\$515,086	\$490,496

Changes in contract liabilities are mainly due to timing difference between performance obligations and customer payment.

The Consolidated Company's contracts for the sale of pre-sale premises and advances from gift cards contain provisions for pre-receipt of payments from customers, and the time interval between the pre-receipt and the transfer of merchandise control is longer than one year. According to IFRS 15, contract liabilities related to sales of pre-sale of premises and advances from gift cards contracts were recognized.

The amount from the opening contract liabilities recognized in operating income was NT\$374,657 thousand and NT\$46,849 thousand from January 1 to December 31, 2020 and 2019, respectively.

v. Interest income

2020	2019
\$151	\$198
67	87
\$218	\$285
2020	2019
\$710	\$815
9,016	0
6,700	15,091
\$16,426	\$15,906

x. Other gains and losses

	2020	2019
Exchange gains	\$3	\$22
Disposal of financial assets at fair value through profit or loss	(10,365)	291
Gain (loss) on valuation of financial assets at fair value through profit or loss	(7,599)	39,935
Others	(548)	(175)
Total	(\$18,509)	\$40,073
y. Finance costs
	2020	2019
Interest expenses
Bank borrowings	\$286,761	\$342,341
Lease liabilities	1,110	1,128
Less: Capitalization of interest	(42,182)	(139,955)
Finance costs	\$245,689	\$203,514

z. Post-retirement benefit plans

1) Defined contribution plans

The Consolidated Company's retirement plan under the Labor Pension Act is a defined contribution retirement plan. The Consolidated Company contributes 6% of employees' monthly salaries to the individual accounts of the Bureau of Labor Insurance. Under the plan, the Consolidated Company has no legal or constructive obligation to make additional financial contributions after making fixed contributions to the Bureau of Labor Insurance. The Consolidated Company recognized an expense of NT\$5,701 thousand and NT\$5,020 thousand in the consolidated statements of comprehensive income in 2020 and 2019, respectively.

	2020	2019
Selling and marketing expenses - Retirement benefits expenses	\$2,150	\$1,706
General and administrative expenses - Retirement benefits expenses	\$1,797	\$1,857
Operating costs - Retirement benefits expenses	\$1,754	\$1,457

2) Defined benefit plans

In compliance with the requirements set forth in the Labor Standards Act, the Company has stipulated a defined benefit pension plan, which is applicable to the years of service rendered by regular employees prior to, and after (if employees elect to continue to apply the Labor Standards Act), the implementation of the Labor Pension Act on July 1, 2005. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Consolidated Company sets aside 2% of the employee's total salary each month as pension funds and deposit it to the designated account under the name of the Labor Pension Funds Supervisory Committee at the Bank of Taiwan. Before the end of each year, the Consolidated Company shall assess the balance in the designated account. If the total available amount of the appropriation is less than the amount required for the payment of pensions to all the employees who are eligible to retire in the following year, calculated according to the above method, the Consolidated Company will make up the deficiency in one single appropriation before the end of March in the following year.

a) The amount of retirement benefits expenses recognized in the consolidated statement of income for the defined benefit plans were as followed:

	2020	2019
Service costs for the current period	\$534	\$516
Net interest on defined benefit liabilities (assets)	245	283
Recognized in profit or loss	\$779	\$799
Remeasurements
Compensation on plan assets (excluding net
interest on net defined benefit liabilities (assets))	(\$814)	(\$732)
Actuarial losses (gains) - experience adjustments	18	1,271
Actuarial losses (gains) - changes in financial assumptions	1,066	373
Recognized in other comprehensive income	\$270	\$912

b) Retirement benefits expenses recognized in profit or loss for the aforementioned defined benefit plans were included as follows:

	2020	2019
Selling and marketing expenses	\$65	\$63
General and administrative expenses	714	736
Total	\$779	\$799

c) The amounts recognized in the consolidated balance sheet for obligations from defined benefit plans were as follows:

	December 31, 2020	December 31, 2019
Present value of defined benefit obligation	\$45,532	\$49,528
Fair value of plan assets	(24,140)	(24,896)
Net defined benefit liabilities	\$21,392	\$24,632

d) The changes in the present value of the defined benefit obligation were as follows:

	2020	2019
Beginning balance	\$49,528	\$46,894
Service costs for the current period	534	516
Interest expenses	416	474
Remeasurements
Actuarial losses (gains) - experience adjustments	18	1,271
Actuarial losses (gains) - changes in financial assumptions	1,066	373
Benefits paid on plan assets	(6,030)	0
Ending balance	\$45,532	\$49,528

e) Change in fair value of plan assets were as follows:

	2020	2019
Fair value of plan assets at the beginning of the
period	\$24,896	\$21,567
Expected return on plan assets	171	191
Remeasurements of plan assets (excluding net
interest included in net defined benefit liabilities	814	732
(assets))
Contribution by the employer	3,351	2,406
Actual payment of employee benefits	(5,092)	0
Fair value of plan assets at the end of the period	\$24,140	\$24,896

f) The fund asset of the Consolidated Company's defined benefit pension plan (hereinafter referred to as the "Fund") is entrusted to the Bank of Taiwan, which manages, or entrusts others to manage, the Fund in accordance with entrusted items enumerated in Article 6 of the "Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund" (i.e. deposit in domestic or foreign institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, and investment in domestic or foreign real estate and its securitization products) to the extent of limitations on investment percentage and amount as stipulated in the Fund's annual utilization plan. The status of utilization of the Fund is subject to supervision by the Labor Pension Fund Supervisory Committee. 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. In case any deficiency in the earnings arises, Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Consolidated Company is not entitled to participate in the operation and management of the fund, it is not possible to disclose the classification of the fair value of the plan assets in accordance with paragraph 142 of IAS 19. For the composition of the fair value of the fund in total as of the years ended December 31, 2020, and 2019, please refer to the various labor pension utilization reports issued by the government.

The Consolidated Company's contributions to the pension funds were deposited with Bank of Taiwan, were as follows:

December 31, 2020	December 31, 2019
\$24,140	\$24,896

g) The present value of the Consolidated Company's defined benefit obligations is calculated by certified actuaries. The major assumptions on the assessment date were as follows:

	December 31, 2020	December 31, 2019
Discount rate	0.625%	1.000%
Growth rate of future salary	2.000%	2.000%

If changes occur in major actuarial assumptions with other assumptions unchanged, the present value of defined benefit obligations will increase (decrease) as follows:

	December 31, 2020	December 31, 2019
Discount rate
Increase by 0.25%	(\$716)	(\$743)
Decrease by 0.25%	\$734	\$772
Expected salary increase rate
Increase by 0.25%	\$702	\$746
Decrease by 0.25%	(\$692)	(\$719)

The Consolidated Company is expected to make a contribution payment of NT\$283 thousand to the defined benefit plans for the one year period after the reporting date of 2020.

The weighted average period of the defined benefit plan is 10.11 years.

The maturity analysis of the pension payments is as
follows:
Under 1 year	\$10,364
1 to 2 years	914
2 to 5 years	8,732
Over 5 Years	17,427
	\$37,437

aa. Employee bonus and remuneration to directors

The Company's Articles of Incorporation stipulates that, after annual earnings first offset against any deficit, a minimum of 1% shall be allocated as employee compensation and a maximum of 2% as directors' remuneration. When there are accumulated losses (including adjustments to unappropriated earnings), the Company shall offset the appropriate amounts before remuneration. The distribution can be made in the form of cash or stocks for employees. The Board of Directors shall resolve to distribute in the form of shares or cash to employees who meet specific criteria, and the distribution of employee compensation and remuneration to directors and supervisors shall be reported to the shareholders' meeting.

The amounts provided for employee compensation were NT\$19,524 thousand and NT\$18,215 thousand for 2020 and 2019, and the amounts provided for directors' compensation were both NT\$0 thousand, which were estimated by multiplying the Company's net income before income taxes for the period before employee and directors' compensation by one percent of employee compensation as specified in the Company's Articles of Incorporation, and remuneration to directors was NT\$0 thousand and was reported as operating expenses for the period.

On March 24, 2021, the Board of Directors resolved to distribute NT\$19,524 thousand for employee compensation and \$0 for director's remuneration for 2020, and on March 25, 2010, the Board of Directors resolved to distribute NT\$18,215 thousand for employee compensation and NT\$0 for director compensation for 2019. There was no difference from the amounts recognized as expenses in 2020 and 2019.

The aforementioned amounts are distributed in shares and the number of shares is calculated based on the closing price on the day before the Board of Directors' resolution.

For information on the Company's remunerations for employees and directors as resolved by the Board of Directors, please visit the "Market Observation Post System".

• bb. Income tax
• 1) Income tax expense

Major components of income tax expenses were as follows:

	2020	2019
Current income tax expenses
Incurred this year
Income Tax	\$107,967	\$51,592
Land value increment tax	108,590	58,460
Unappropriated earnings	74,509	22,397
Tax refunds from previous years	(2,556)	0
Deferred tax

Occurrence and reversal of temporary differences	(40,478)	14,215
Income tax expense	\$248,032	\$146,664

2) Reconciliation of income tax expense to accounting profit.

		2020	2019
	Accounting profit	\$1,932,924	\$1,803,234
	Tax at the applicable tax rate	\$386,584	\$360,647
	Effect of income tax adjustment items
	Items to be increased (decreased) when determining taxable income	(698)	651
	Valuation loss (gain) on financial assets	1,520	(7,987)
	Tax-exempt proceeds from land	(276,296)	(279,799)
	Tax-exempt income from marketable securities	2,073	369
	Land value increment tax	(21,718)	(11,692)
	Losses recognized under the equity method	11,223	9,674
	Deferred selling and marketing expenses	5,455	38
	Warranty provision	863	1,308
	Loss deduction credit for the first ten years	(1,039)	(21,617)
	Occurrence and reversal of temporary differences	(40,478)	14,215
	10% levy on unappropriated earnings	74,509	22,397
	Other income taxes (land value increment tax)	108,590	58,460
	Tax refunds from prior year	(2,556)	0
	Income tax expense	\$248,032	\$146,664
3)	Income tax recognized in other comprehensive income
		2020	2019

Deferred income tax gains (expense)
Related to defined benefit plan
remeasurement	(\$54)	(\$182)

			Recognized in
		Recognized	other
	Balance on	in profit or	comprehensive	Balance on
	January 1	loss	income	December 31
a) January 1 to
December 31,
2020 i. Deferred tax
assets
Prepayments	\$47	\$5,456	\$0	\$5,503
Warranty
provision	6,301	863	0	7,164
payable
Net defined
benefit	4,926	(702)	54	4,278
liabilities -
non-current
Differences
in employee	20	(6)	0	14
benefit tax
recognition
Total deferred tax	\$11,294	\$5,611	\$54	\$16,959
assets
ii. Deferred tax
liabilities
Inventories	\$73,275	(\$34,867)	\$0	\$38,408
b) January 1 to
December 31,
2019
i. Deferred tax
assets Prepayments	\$85	(\$38)	\$0	\$47
Allowance
for doubtful	2	(2)	0	0
accounts
Loss
carryforwards	21,617	(21,617)	0	0
Warranty
provision	4,993	1,308	0	6,301
payable
Net defined
benefit liabilities -	5,065	(321)	182	4,926
non-current
Differences
in employee	0	20	0	20

4) The breakdown of deferred income tax assets and liabilities was as follows:

benefit tax recognition
Total deferred tax assets	\$31,762	(\$20,650)	\$182	\$11,294
ii. Deferred tax liabilities
Inventories	\$79,710	(\$6,435)	\$0	\$73,275
Investment properties	0	0	0	0
Total deferred tax liabilities	\$79,710	(\$6,435)	\$0	\$73,275

5) Items regarding deductible temporary differences not recognized as deferred tax assets, unused tax losses, and unused tax credits:

	December 31, 2020	December 31, 2019
Loss carryforwards	\$39,845	\$32,263

• 6) The Company's business income tax settlement and declaration up until 2018 have been approved.
• 7) As of December 31, 2020, the Consolidated Company's undeducted loss carryforwards and final deductible year are shown below.

Year of	Loss amount	Deducted amount	Undeducted	Final year tax credits
occurrence			balance	are due
2015	\$2,230	\$0	\$2,230	2025
2016	19,239	(11,003)	8,236	2026
2017	122,462	(51,872)	70,590	2027
2018	96,004	(50,410)	45,594	2028
2019	34,666	0	34,666	2029
2020	37,908	0	37,908	2030
Total	\$312,509	(\$113,285)	\$199,224

cc. Summary of employment, depreciation, operating costs, depletion and amortization expenses incurred during the period by function

		2020			2019
By function By nature	Operation costs	Operation expenses	Total	Operation costs	Operation expenses	Total
Employee benefit expenses
Salary expenses	34,972	113,871	148,843	29,999	109,025	139,024
Labor and health insurance expenses	3,579	9,436	13,015	3,084	8,811	11,895
Retirement benefits expenses	1,754	4,726	6,480	1,457	4,362	5,819
Remuneration to Directors	0	1,760	1,760	0	1,680	1,680
Other employee benefits	1,656	11,816	13,472	2,029	9,290	11,319
Depreciation expenses	46,116	23,366	69,482	45,662	22,089	67,751
Depletion expenses	0	0	0	0	0	0
Amortization expenses	2,801	1,969	4,770	2,800	2,194	4,994

The numbers of employees of the Consolidated Company for the years ended December 31, 2020, and 2019 were 231 and 224, respectively. Among which the numbers of directors who were not part-time employees were 4 and 5, respectively.

dd. Earnings per share

	2020	2019
Basic earnings per share (Unit: NT\$)	\$4.48	\$4.31
Diluted earnings per share (Unit: NT\$)	\$4.48	\$4.30
The calculation of earnings per share and the weighted-average number of common shares outstanding were as follows:
	2020	2019
Profit attributable to the holders of ordinary shares of the Company	\$1,684,892	\$1,656,570
Weighted average number of ordinary shares outstanding used for calculation of basic	2020	2019
earnings per share (in thousands)	375,895	384,734
Effect of potentially dilutive ordinary shares: Employee Remuneration	496	587
Weighted average number of ordinary shares outstanding used for calculation of diluted earnings per share (in thousands)
	376,391	385,321

If the Consolidated Company chooses to offer employee compensation or share profits in the form of cash or stock, while calculating diluted earnings per share, and assuming that the compensation is paid in the form of stock, the dilutive potential common shares will be included in the weighted average number of outstanding shares to calculate diluted earnings per share. Weighted average number of ordinary shares outstanding used for calculation of diluted earnings per share (thousand shares) The dilutive effect of such potential common shares shall continue to be considered when calculating diluted earnings per share before the number of shares to be distributed as employee compensation is approved in the following year.

For the calculation of basic earnings per share, the number of shares is included in the weighted-average number of common shares outstanding for the year resolved at the stockholders' meeting when the number of shares issued as compensation to employees for the previous year is determined. Moreover, since the employee compensation transfer is no longer a gratuitous stock allotment, no retroactive adjustment is made in the calculation of basic and diluted earnings per share.

ee. Additional information regarding cash flows

	2020	2019
Increase in property, plant, and equipment	\$12,359	\$16,981
Net decrease in payables for equipment construction	4,678	1,130
Cash paid during the year	\$17,037	\$18,111

ff. Changes in liabilities from financing activities

Reconciliation of liabilities from financing activities was as follows:

	2020.1.1	Cash flows	2020.12.31
Short-term borrowings	\$4,955,779	(\$466,973)	\$4,488,806
Face value of short-term bills payable	4,280,000	(67,000)	4,213,000
Long-term borrowings	10,728,055	(3,730,188)	6,997,867
Deposits received	137,544	(133,958)	3,586
Liabilities from the financing activities	\$20,101,378	(\$4,398,119)	\$15,703,259
	2019.1.1	Cash flows	2019.12.31
Short-term borrowings	\$8,965,208	(\$4,009,429)	\$4,955,779
Face value of short-term bills payable	4,486,000	(206,000)	4,280,000
Long-term borrowings	6,358,603	4,369,452	10,728,055
Deposits received	135,563	1,981	137,544
Liabilities from the financing activities	\$19,945,374	\$156,004	\$20,101,378

7. Related Party Transactions

a. Names of related parties and their relationship

Name	Relationship with the Consolidated Company
Chieh Chih Construction Co., Ltd. Baihong Construction Co., Ltd.	Relative within the second degree of kinship of the Chairman of the Company is the Chairman of such company. The Company's Chairman is the supervisor of such company
Meiyun S. Tsai Yangmin International	Spouse of the chairman of the Company
Catering Co., Ltd.	Associate of the Company
Chen, Mei-Hui	Relative within the second degree of kinship of the Chairman of the Company
Wang, Hsien-Tsung	Relative within the second degree of kinship of the Chairman of the Company
Chen, Chin-Hsing	Vice President of Land Development Department

• b. Significant transactions with related parties:
• 1) Sales

	2020		2019
Name	Amount	Percentage of sales of the Consolidated Company	Amount	Percentage of sales of the Consolidated Company
Chieh Chih
Construction Co.,	\$551	0.01%	\$201	0.00%
Ltd.
Baihong
Construction Co.,	571	0.01%	212	0.00%
Ltd.
Yangmin
International	4,072	0.05%	4,053	0.07%
Catering Co., Ltd.
Other related parties	15,027	0.17%	14,196	0.24%
Total	\$20,221	0.24%	\$18,662	0.31%

a) The sales of premises to related parties were made at normal market prices. The sales of premises to other related parties in 2020 and 2019 amounted to NT\$14,306 thousand and NT\$13,969 thousand, respectively, which were paid upon the transfer of the properties, and the remaining catering revenues were collected within 30 to 90 days.

b) The related party Yangmin International Catering Co., Ltd. entered into leases with the Consolidated Company in 2020 and 2019 as follows.

		The lease details are as follows:

Lessee	Lease subject	Lease period	Rental charged per lease term	Rental revenue
2020
Yangmin International Catering Co., Ltd.	1F., No. 366, Minghua Rd., Gushan Dist., Kaohsiung City	2016/08/09 ~ 2021/12/31	The monthly rental income of NT\$354 thousand (including business tax) is calculated on a monthly basis and is collected by bank remittance, with an interest rate	\$4,053
	(Restaurant)		of NT\$7 for the deposit.
2019
Yangmin International Catering Co., Ltd.	1F., No. 366, Minghua Rd., Gushan Dist., Kaohsiung City	2016/08/09 ~ 2021/12/31	The monthly rental income of NT\$354 thousand (including business tax) is calculated on a monthly basis and is collected by bank remittance, with an interest rate of NT\$7 for the deposit.	\$4,053

2) Contracting work (Purchases)

Chieh Chih Construction Co., Ltd. and Baihong Construction Co., Ltd. are related parties of the Consolidated Company, and the Consolidated Company's projects are contracted by these two companies. The contract price is based on the cost of the two companies plus appropriate profit, and the payment terms are similar to those of a general contractor, but the actual date of cashing the notes is subject to the Company's capital situation.

a) In 2020 and 2019, the Consolidated Company entrusted Chien-Chih Construction Co., Ltd. to contract for various construction sites, accounting for 21.65% and 17.21% of the Consolidated Company's total contracted work amount, respectively, and the contract prices and current shipments were as follows:

		Purchases
Site name	Contract price (including tax)	2020	2019
Qinghai 61.63 (Mei Shu Huang Ju)	\$2,988,565	\$0	\$792,940
Xinhua Section No. 59 (Shi Shang King's Town)	618,380	0	82,718
Ming Ren Section No. 4 (Yue He Di)	274,940	0	67,479
Ai Qun No. 2748. 5 in total (King's Town World of Heart)	2,014,000	238,109	0
Total		\$238,109	\$943,137

b) In 2020 and 2019, the Consolidated Company entrusted EPILEDS Construction Co., Ltd. with the contracted construction projects, accounting for 25.49% and 13.14% of the total contracted construction amount of the Consolidated Company, respectively. The contract price and the current purchase price were as follows:

		Purchases
Site name	Contract price (including tax)	2020	2019
Lin De Guan No. 1135, 1135-1 (Yi Wen Court)	\$1,049,885	\$0	\$216,359
Xin Guang Section No. 356 (King's Town Garden)	1,709,460	0	308,724
Xin Zhuang Section No. 92, 95 (Xiang King's Town)	465,460	89,884	195,264
Xin Du Section No. 321, 163-1, 164		190,480	0
Total		\$280,364	\$720,347

3) Trade receivables, other receivables, payments on behalf of others, note payables, trade payables, other payables, contract liabilities-current, premises payment collection, collection, and deposits received.

		December 31, 2020		December 31, 2019
	Name of project and related party	Balance	Percentage	Balance	Percentage
a)	Trade receivables Baihong Construction Co., Ltd.	\$2	0.002%	\$10	0.02%
b)	Other receivables Meiyun S. Tsai Yangmin International Catering Co., Ltd.	\$240 37	0.030% 0.005%	\$285 40	67.70% 9.50%
	Total	\$277	0.035%	\$325	77.20%
	Other receivables represent receivables from landlords' share of selling expenses and payments on behalf of associates.
c)	Payments on behalf of others Other related parties	\$0	0.00%	\$226	2.00%
d)	Notes payable Chieh Chih Construction Co., Ltd. Baihong Construction Co., Ltd. Total	\$75,004 45,002 \$120,006	37.44% 22.47% 59.91%	\$72,872 47,780 \$120,652	53.70% 35.21% 88.91%
e)	Trade payables Chieh Chih Construction Co., Ltd. Baihong Construction Co., Ltd. Total	\$398,863 385,934 \$784,797	48.31% 46.74% 95.05%	\$845,519 560,087 \$1,405,606	57.50% 38.09% 95.59%
f)	Other payables Yangmin International Catering Co., Ltd.	\$208	0.28%	\$214	0.25%
g)	Contract liabilities - current Baihong Construction Co., Ltd. Chieh Chih Construction Co., Ltd. Other related parties Total	\$19 35 117 \$171	0.004% 0.007% 0.023% 0.034%	\$30 43 304 \$377	0.00% 0.01% 0.06% 0.07%
h)	Building collections Chieh Chih Construction Co., Ltd.	\$5,360	6.14%	\$0	0.00%
i)	Land collections Chieh Chih Construction Co., Ltd.	\$3,285	3.77%	\$0	0.00%
j)	Deposits received Chieh Chih Construction Co., Ltd. Baihong Construction Co., Ltd. Yangmin International Catering Co., Ltd. Total	\$0 0 708 \$708	0.00% 0.00% 19.74% 19.74%	\$87,412 46,546 708 \$134,666	63.55% 33.84% 0.51% 97.90%

Deposits received represent construction contract performance deposits and lease deposits.

4) Lease expenses

	Price payment
Rental expenses	2020	2019
Other related parties	\$1,029	\$1,029

The lease details are as follows:

Lessor	Lease subjects	Lease period	Rental charged per lease term	Lease expenses
2020 King's Town Construction Co., Ltd.	12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City	2017/07/01 ~ 2020/06/30 2020/07/01~ 2023/06/30	The monthly rental income of NT\$90 thousand (including business tax) is calculated on a monthly basis and is paid by bank remittance.	\$1,029
2019 King's Town Construction Co., Ltd.	12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City	2017/07/01 ~ 2020/06/30	The monthly rental income of NT\$90 thousand (including business tax) is calculated on a monthly basis and is paid by bank remittance.	\$1,029

• 5) Others
• a) The Chairman of the Consolidated Company and other related parties provided the Company with loans from banks secured by their own assets, amounting to NT\$1,672,146 thousand and NT\$2,257,465 thousand as of December 31, 2020 and 2019, respectively.
• b) The Chairman of the Consolidated Company and other related parties provided the Company with their own assets to issue commercial paper to Bills Finance Corporation in the amount of NT\$970,000 thousand and NT\$2,247,200 thousand as of December 31, 2020 and 2019, respectively.
• c) The Chairman and his spouse of the Consolidated Company provided land at Qinghai Lot No. 216 and the Consolidated Company's construction site, Qinghai Lot No. 229, as joint mortgages to banks and issued commercial promissory notes for NT\$1,765,000 and NT\$0, respectively, and commercial promissory notes for NT\$1,765,000 and NT\$0, respectively, as of December 31, 2020 and December 31, 2019.

• d) In 2020 and 2019, the Consolidated Company collected water and garbage removal fees from a related party, Yangmin International Catering Co. The decrease in utilities was NT\$293 thousand and \$346 thousand, and the decrease in garbage collection was NT\$123 thousand and NT\$120 thousand, respectively.

• e) The Consolidated Company's related party, Baihong Construction Co., Ltd. provided guaranteed promissory notes for the projects, which were recorded as NT\$134,566 thousand and NT\$42,177 thousand in 2020 and 2019, respectively.

• f) The Consolidated Company's related party, Chien-Chih Construction Co., Ltd. provided guaranteed promissory notes for the construction work, which were recorded as NT\$288,812 thousand and NT\$0 thousand in 2020 and 2019, respectively.
• g) The Company and other related parties provided the land at Lin De Guan Section Lot No. 1135 and 1135-1, Ling Ya District, Kaohsiung City, as urban renewal construction sites, and the Company is responsible for their construction The parties entered into an urban renewal rights exchange agreement, in which the other related parties share 26.23% of the total value of the land and the Company shares the remaining 73.77%. The Company also paid NT\$372 thousand to the other related parties for the difference in price. The abovementioned portion of the urban renewal rights exchanged by the Company and the difference in price paid by the Company is included in the land for sale in Yi Wen Court.

6) Information on remuneration to the management

	2020	2019
Short-term employee benefits	\$30,982	\$31,392

8. Pledged Assets

The carrying values of the Consolidated Company's assets pledged as collateral for loans and short-term notes issued were as follows:

Name of assets	Secured subject	December 31, 2020	December 31, 2019
Buildings and land held for sale	Collateralized borrowing and issuance of commercial promissory notes	\$2,987,486	\$11,035,047
Construction in progress	Collateralized borrowing and issuance of commercial promissory notes	2,283,347	2,991,715
Land held for construction	Collateralized borrowing and issuance of commercial promissory notes	14,534,853	14,534,853
Property, plant, and equipment	Secured borrowings	747,691	810,320
Other financial assets - current	Advances from gift card performance guarantee	6,479	2,069
Refundable deposits	Disaster management guarantee	24,977	24,977
Total		\$20,584,833	\$29,398,981

• 1. Significant Contingent Liabilities and Unrecognized Contract Commitments
• a. As of December 31, 2020, the Consolidated Company's construction-in-progress contracts are described in detail in VII. Related Party Transactions (II) Purchase; the amount paid for the contracts (including tax) was NT\$450,018 thousand and the amount outstanding was NT\$2,444,182 thousand.
• b. Residents are dissatisfied with the Consolidated Company due to the construction of a gas station next to Shui Senlin. Wang, Sung-Ling and other residents filed a lawsuit against the Consolidated Company for damages in the amount of NT\$33,175 thousand. On March 5, 2019, the Taiwan District Court of Qiaotou ruled in favor of the Consolidated Company, but the other party appealed and the amount requested was changed to NT\$14,730 thousand, and the appeal was dismissed by the Taiwan High Court on June 30, 2020.
• c. In 2019, the Consolidated Company leased the premises for sale on first basement level and the first and second level of Hua Shang Building to a fitness company, which caused dissatisfaction of the residents and convened the 2019 second temporary meeting of the subowners, and amended its management regulations to prohibit the establishment of specific industries, including gymnasiums. The Consolidated Company believes that it has infringed upon the Consolidated Company's right to use its assets; therefore, it filed a civil lawsuit against the "Hua Shang Building Management Committee" to confirm that the resolution shown by the defendant "Hua Shang Building Management Committee" at the 2019 second temporary meeting of the owners of the Hua Shang Building on November 23, 2019 is invalid. The case (Case No. 1202 of 2020) is currently being heard by the District Court in Qiaotou, Taiwan. The outcome of the case is still pending in court.
• d. In 2019, the Consolidated Company leased premises for sale on the first basement level and the first and second level of Hua Shang Building to World Fitness Asia Limited (H.K.) Taiwan Branch. As a result, the Taiwan branch of Hong Kong Business World Fitness Co., Ltd. was unable to operate due to a dispute arising from the residents' dissatisfaction with the Consolidated Company's failure to lease the land to the fitness company in accordance with the original market use. The company filed a lawsuit against the Consolidated Company for damages in the amount of NT\$39,632 thousand, including NT\$18,367 thousand, NT\$720 thousand for the refund of the deposit and NT\$20,545 thousand for the loss of the member who failed to fulfill the membership agreement. The case (Case No. 233) is currently being heard by the Kaohsiung District Court in Taiwan and has not yet been heard, and the outcome of the case is still pending.
• e. In 2020, the Consolidated Company leased premises for sale on the first basement level and the first and second level of Hua Shang Building to World Fitness Asia Limited (H.K.) Taiwan Branch. As a result, the Taiwan branch of Hong Kong Business World Fitness Co., Ltd. was unable to operate due to a dispute arising from the residents' dissatisfaction with the Consolidated Company's failure to lease the land to the fitness company in accordance with the original market use. Therefore, a lawsuit was filed against World Fitness Asia

Limited (H.K.) Taiwan Branch, seeking NT\$1,045 thousand in rent and NT\$3,150 thousand in restitution damages, totaling NT\$4,195 thousand. The outcome of the case is still pending in the court.

• f. The Consolidated Company leased premises for sale on the first basement level and the first and second level of Hua Shang Building to a fitness company. As a result, the residents were dissatisfied that the Consolidated Company was failed to lease the land to the fitness company in accordance with the original market use.. The management committee of the Hua Shang Building filed an administrative lawsuit against the Kaohsiung City Government. Requesting the Kaohsiung City Government to revoke the decision of January 4, 2019 to approve the letter of change of commercial use of the second floor of the Hua Shang Building and the appeal inadmissible. If an unfavorable decision is obtained, it may affect the right to use the assets of the Consolidated Company. The case (formerly known as Case No. 118 of 2020) is currently under review by the Supreme Administrative Court and the outcome is still pending in the court.
• g. The Consolidated Company was the litigation agent for the first trial of a lawsuit for damages for repair of building damage between Kaicheng Construction Co., Ltd. and Wujia Ruichun Community Management Committee. The management committee requested NT\$1,000 thousand for damages against the Company. The case (Case No. 1126, of 2020) is currently being heard by the Kaohsiung District Court in Taiwan, and the outcome of the case is pending in the court.
• 1. Significant Disaster Loss

No such event.

1. Significant Subsequent Events

After the end of the Consolidated Company's reporting period as of December 31, 2020, as of the closing date of the accountants' fieldwork, there were no significant subsequent events affect the change in financial position as of December 31, 2020.

• 1. Others
• a. Capital Risk Management

The objective of the Company's capital management is to ensure that the Consolidated Company can continue as a going concern, that an optimal capital structure is maintained to lower the cost of capital, and that returns are provided to stockholders. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, issue new shares or sell assets to reduce debt. The Company regulates the borrowing amount based on the progress of the project and the funds required for the operation.

b. Financial instruments

1) The carrying amounts of the Company's financial instruments not measured at fair value (including cash and cash equivalents, notes receivables, trade receivables, other receivables, other financial assets, refundable deposits, bank borrowings, short-term bills payable, notes payable, trade payables, other payables, leasing liabilities and deposits received) are the reasonable approximation of fair value. For a fair value of financial instruments measured at fair value, please refer to Note VI(II). Details of the financial instruments are disclosed in each of the individual notes.

	December 31, 2020	December 31, 2019
Financial assets
Financial assets at fair value through profit or loss
Domestic listed stocks	\$89,930	\$87,400
Domestic unlisted stocks	\$82	\$82
Financial assets at amortized cost
Cash and cash equivalents	\$624,909	\$394,662
Net notes receivable and trade receivables (including related parties)	146,158	112,377
Net installment receivables	0	195
Other receivables (including related parties)	750,340	421
Other financial assets (including current and non current)	6,479	2,069
Refundable deposits	34,307	38,594
Long-term notes and trade receivable	0	52,000
Subtotal	\$1,562,193	\$600,318
Total	\$1,652,205	\$687,800
Financial liabilities
Measured at amortized cost
Short-term borrowings	\$4,488,806	\$4,955,779
Short-term bills payable	4,208,307	4,278,153
Notes payable and trade payables (including related parties)	1,026,013	1,606,251
Other payables (including related parties)	73,138	85,722
Long-term borrowings (including long-term borrowing due within one operating cycle)	6,997,867	10,728,055
Lease liabilities (including current)	63,690	64,734
Deposits received	3,586	137,544
Total	\$16,861,407	\$21,856,238

2) Financial risk management policy

a) The Consolidated Company's daily operations are subject to a number of financial risks, including market risk (including interest rate risk and price risk), credit risk and liquidity risk. The Consolidated Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Consolidated Company's financial position and financial performance.

• b) Financial risk management of the Consolidated Company is carried out by its finance department based on the policies approved by the Board of Directors. Through cooperation with the Consolidated Company's operating units, the finance department is responsible for identifying, evaluating and hedging financial risks.
• c) The Company does not undertake derivatives for hedging financial risks.
• 3) Significant financial risks and degrees of financial risks
• a) Market risks
  • i. Price risks

The Consolidated Company is exposed to the price risk of equity instruments because the investments held by the Consolidated Company are classified as financial assets at fair value through profit or loss in the Company's balance sheet. The Company is not exposed to price risks from products. To manage the price risk of investments in equity instruments, the Consolidated Company diversifies its portfolio with its diversification method based on limits set by the Consolidated Company.

The Consolidated Company's investments in equity securities comprise foreign and domestic listed stocks. The prices of equity securities change due to the change in the future value of investee companies. If the price of these equity instruments had increased or decreased by 10%, with all other factors held constant, the increase or decrease in net income after tax for 2020 and 2019 would have been NT\$8,993 thousand and NT\$8,740 thousand, respectively, from the gain or loss on equity instruments measured at fair value through profit or loss.

ii. Interest risks

The Consolidated Company's interest rate risks come from short-term borrowings, financing commercial paper and long-term borrowings. Loans with floating interest rates expose the Consolidated Company to cash flow interest rate risks, of which a portion is offset by the cash held with floating interest rates. Borrowings issued at fixed rates exposed the Consolidated Company to fair value interest rate risk. During the years ended December 31, 2020 and 2019, the Consolidated Company's borrowings at floating interest rate were denominated in the NTD.

The Consolidated Company simulates a number of scenarios and analyzes interest rate risk, including consideration of refinancing, extending contracts of existing positions, and other available financings to calculate the impact of changes in specific interest rates on profit or loss.

Based on the simulations performed, the impact on post-tax profit of a 0.1% shift would be a maximum increase or decrease of NT\$1,196 thousand and NT\$944 thousand for 2020 and 2019, respectively. The simulation is done on a quarterly basis to verify that the maximum loss potential is within the limit given by the management.

• b) Credit risks
• i. Credit risk refers to the risk of financial loss of the Consolidated Company arising from default by clients or counterparties of financial instruments on the contractual obligations. Credit risk mainly derives from cash and cash equivalents, derivative financial instruments, and deposits within banks and financial institutions, as well as trade receivables not yet collected in cash and committed transactions. Only banks and financial institutions with an independent credit rating of at least "A" can be accepted for trading by the Consolidated Company.
• ii. The Consolidated Company's trade receivables mainly consist of amounts due from customers before the handover of properties. The Consolidated Company has assessed no significant credit risk because these amounts are due before the handover of properties. The other part is due from customers for providing accommodation and catering-related services. The credit quality of this part is evaluated by taking into account the customer's financial position, past experience and other factors.
• iii. The Consolidated Company classifies customers' trade receivables and installment receivable based on customer characteristics. Using the simplified approach of preparation matrix, the Company estimates the expected credit loss and adjusts the loss rate established by historical and current information during a specific period to assess the allowance loss of installments receivable. The Company's assessed credit impairment losses on December 31, 2020 and 2019 were not significant.
• iv. No written-off debts with recourse existed as of December 31, 2020 and 2019.
• c) Liquidity risks
• i. The cash flow forecast is performed by each operating entity of the Consolidated Company and compiled by the Consolidated Company's finance department. The Consolidated Company's finance department monitors rolling forecasts of the Consolidated Company's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Consolidated Company does not breach

borrowing limits or covenants (where applicable) on any of its borrowing facilities.

ii. The following table presents the Consolidated Company's non-derivative financial liabilities grouped by the relevant maturity dates, which are analyzed based on the remaining period from the end of the reporting period to the contractual maturity date. The contractual cash flow amounts disclosed in the table below are undiscounted amounts.

Non-derivative financial liabilities	Within 6 months	6 to 12 months	1 to 3 years	Over 3 years
December 31, 2020
Short-term borrowings	\$1,824,660	\$2,184,146	\$480,000	\$0
Short-term bills payable	4,208,307	0	0	0
Notes payable and trade
payables (including related parties)	439,649	22,112	564,252	0
Other payables	72,496	40	546	56
Provisions - current	3,390	3,086	13,233	16,108
Long-term borrowings
(including due within	22,835	112,998	2,393,839	4,468,195
one operating cycle)
Lease liabilities	529	533	2,180	60,448
(including current)
December 31, 2019
Short-term borrowings	\$2,955,659	\$2,000,120	\$0	\$0
Short-term bills payable	4,278,153	0	0	0
Notes payable and trade
payables (including	975,098	33,541	597,612	0
related parties)
Other payables	85,722	0	0	0
Provisions - current	3,995	2,907	9,513	15,089
Long-term borrowings
(including due within one operating cycle)	2,979,000	655,000	5,248,200	1,845,855
Lease liabilities (including current)	520	524	2,142	61,548

• d) Information on fair value
• i. The different levels of inputs used in the valuation techniques for measuring the fair value of financial and non-financial instruments have been defined as follows:
  • Level 1I: The quoted price in an active market for identical assets or liabilities available to the enterprise at the measurement date. A market is regarded as active where transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Consolidated Company's investments in listed stocks, beneficiary certificates, and derivatives with quoted prices in an

active market are all Level 1 inputs.

• Level 2: The inputs are observable for the asset or liability, either directly or indirectly, excluding quoted prices included within Level 1. The fair values of certain derivative instruments and equity instruments invested by the Consolidated Company are all Level 2 inputs.
• Level 3: The unobservable input value of an asset or liability. The Consolidated Company's investments in certain derivative instruments and investments in equity instruments with no active market are all level 3 inputs.

	Equity instruments without public quotes
December 31, 2020 (i.e. January 1, 2020)	\$82
December 31, 2019 (i.e. January 1,2019)	\$82

• ii. For financial instruments with active markets, their fair value is measured at the market quoted prices on balance sheet date. When quoted prices can be obtained immediately and regularly from stock exchanges and regulatory agencies, and such quoted prices represent actual and regular market transactions under normal conditions, the markets are deemed active markets. The quoted market prices of financial assets held by the Consolidated Company are the closing price or net asset value, and these instruments are included in Level 1. Level 1 instruments mainly include equity instruments, which are classified as Financial assets at fair value through profit or loss - current.
• iii. Below states the information on the Consolidated Company's financial instruments measured at fair value that have been classified in accordance with the nature, characteristics, risks and fair values of assets or liabilities as of December 31, 2020 and 2019:

		December 31, 2020
	Level 1	Level 2	Level 3	Total
Assets
Repetitive fair value
Financial assets at fair value through profit or
loss - current
Domestic listed stocks	\$89,930	\$0	\$0	\$89,930
Financial assets at fair value through profit or
loss - non-current
Domestic unlisted stocks (Venture Capital	0	0	82	82
Fund)
Total	\$89,930	\$0	\$82	\$90,012
		December 31, 2019
	Level 1	Level 2	Level 3	Total
Assets
Repetitive fair value
Financial assets at fair value through profit or
loss - current
Domestic listed stocks	\$87,400	\$0	\$0	\$87,400
Financial assets at fair value through profit or
loss - non-current
Domestic unlisted stocks (Venture Capital
Fund)	0	0	82	82
Total	\$87,400	\$0	\$82	\$87,482

iv. The methods and assumptions used by the Consolidated Company to measure fair value are explained as follows:

• (i) The fair value of the Consolidated Company's domestic listed stocks and beneficiary certificates are input based on the closing price and net value of the market price, respectively (i.e. Level 1).
• (ii) 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 current fair value of financial instruments obtained through valuation techniques, discounted cash flow method or other valuation techniques, including the use of models based on market information available at the end of the reporting period (i.e. Level 2).
• (iii) In addition to the financial instruments in Level 1 and Level 2 mentioned above, the acquisition cost of the financial instruments is used as an input (i.e., Level 3).
• (iv) In 2020 and 2019, there was no transfer between Level 1 and Level 2 fair value measurement.
• (v) In 2020 and 2019, there was no transfers into or out of Level 3.

13. Supplementary Disclosure

a.		Information on significant transactions was as follow:

No.	Summary	Description
1	Loaning to others.	None
2	Endorsements/guarantees to others.	None
3	Marketable securities held at the end of the period. (Excluding investment in Subsidiaries, Associates and Joint Ventures)	Table I
4	Cumulative amount of the stock of the same marketable securities purchased or sold totaling NT\$300 million or more than 20% of the paid-in capital.	None
5	Acquisition of real estate totaling NT\$300 million or more than 20% of the paid-in capital.	Table II
6	Disposal of real estate totaling NT\$300 million or more than 20% of the paid-in capital.	None
7	Purchases or sales with related parties totaling NT\$100 million or more than 20% of the paid-in capital.	Table III
8	Receivables from related party totaling NT\$100 million or more than 20% of the paid-in capital.	None
9	Engaging in derivatives trading.	None
10	Business relationships and significant intercompany transactions.	Table IV

(TABLE I)

King's Town Construction Co., Ltd.

Marketable securities held (excluding investments in subsidiaries) December 31, 2020 Unit: NT\$ thousand

	Remark
	Fair value	\$89,930	*
	Shareholding Ratio (%)	0.145%	1.63%
Ending balance Carrying amount		\$89,930	\$82
	Number of shares (shares)	3,400,000	8,152
	Ledger account	through profit or Financial assets current at fair value loss -	Financial assets through profit at fair value and loss
	Relationship with issuer of securities	None	None
	Type and name of securities	shares (ordinary Tatung - shares)	Huazhi Venture Capital
Securities	company holding	King's Town	Construction Co., Ltd.

*Huazhi Venture Capital was not fair valued because the amount was not material.

(TABLE II)

King's Town Construction Co., Ltd.

Acquisition of real estate totaling NT\$300 million or more than 20% of the paid-in capital: Unit: NT\$ thousand

agreements Other Land held for Land held for acquisition Purpose of construction construction and usage for business for business operations operations status Basis or reference for price Real estate valuation report Real estate valuation report by professional valuation by professional valuation setting firm firm Amount Information on prior transaction if the - - Transfer counterparty is related date - - Relationship with the issuer - - Owner - -
Relationship Company with the None None
Counterpart Natural Chung, Natural Chung, person person Chun Chun y
Actual payment Actual payment and outstanding of NT\$50,000 of NT\$145,000 notes payable of NT\$35,000 collection Payment status
\$348,090 NT\$395,000 Transaction amount
2020.12.17 2020.12.17 occurrence Date of
etc., Anping District, Cost equivalent land District, Tainan City No. 880, 895, 897, in the rezoning of Yuguang Section self-administered municipal land at Name of property Caohu, Annan Tainan City	(I)
King's Town Construction King's Town Construction Acquirer of real estate Co., Ltd. Co., Ltd.

The transfer of the above two pieces of land is not yet completed in December 2020, therefore, recorded as land prepayment.

(TABLE III)

King's Town Construction Co., Ltd.

Purchases or sales with related parties totaling NT\$100 million or more than 20% of the paid-in capital: Unit: NT\$ thousand

		Remark
	trade receivable (payable) Percentage of total notes/ Notes and trade receivable (payable) Balance		37.44% 48.31%	22.47% 46.74%
			Trade payables Notes payable \$398,863 \$75,004	Trade payables Notes payable \$385,934 \$45,002
	terms different from	Payment term	-	-
Transaction with	others	Unit price	-	-
	Payment term Percentage of total purchase/(sales)		Subject to contract	Subject to contract
Transaction details			21.65%	25.49%
		Amount	\$238,109	\$280,364
		Purchase (sale)	Purchases	Purchases
		Relationship	Relative within the Chairman of such second degree of Chairman of the Company is the kinship of the company.	supervisor of such Chairman is the The Company's company
		Counterparty	Construction Chieh Chih Co., Ltd.	Construction Baihong Co., Ltd.
		Name of company	King's Town Construction Co., Ltd.	King's Town Construction Co., Ltd.

(TABLE IV)

King's Town Construction Co., Ltd.

Business relationships and significant intercompany transactions January 1 to December 31, 2020 Unit: NT\$ thousand

	Percentage of the	consolidated net revenue	or total assets		0.55%		7.51%
Intercompany transactions		Trading terms			Monthly contractual payments		Monthly contractual payments
		Amount			\$47,961		\$2,433,092
		Account name			Sales revenue		Right-of-use assets
	Nature of	relationship			Parent to subsidiary		Subsidiary to parent
	Name of	counterparty		H2O Hotel Co., Ltd.	(H2O Hotel)	King's Town	Construction Co.,	Ltd.
	Name of Company			King's Town Construction	Co., Ltd.		H2O Hotel Co., Ltd. (H2O	Hotel)

King's Town Construction Co., Ltd.

b. Information on reinvestment (excluding the investee companies in the Mainland China):

Name of			Main business	Initial investment amount		Ending balance			Profit (Loss) of	Investment
Investor	Name of Investee	Location	activities	Ending balance for the current period	End of last year	Shares (in thousand)	Percentage (%)	Carrying amount	investee for the period	profit (loss) recognized	Remark
Company The	H2O Hotel Co., Ltd.	Rd., Gushan Dist., No. 366, Minghua Kaohsiung City	Restaurants Hotel	\$320,000	\$250,000	32,000	100%	\$54,570	(\$69,215)	(\$56,115)	I
(H2O Hotel) H2O Hotel Co., Ltd.	Catering Co., Ltd. International Yangmin	2F., No. 51, Ln. 69, Zhongshan Dist., Jingye 2nd Rd., Taipei City	Restaurants	\$8,000	\$8,000	320	40%	\$15,566	\$14,443	\$5,777	I
	Note I:	The Company recognized a loss share of NT\$69,215 thousand in the investee company. In addition, due to the lease of real estate to a subsidiary, H2O Hotel Co., Ltd., the leasing

c. Disclosure of information on investments in Mainland China:

Consolidated Company's share of benefit recognized under the equity method by NT\$13,100 thousand.

subsidiary was classified as a right-of-use asset and lease liability under IFRS 16 as of January 1, 2019, while the Consolidated Company was classified as an operating lease, resulting in a difference in profit or loss recognition, which affected the Consolidated Company's share of profit recognized using the equity method. The difference affected the

The Consolidated Company has no investment in Mainland China.

Name of major shareholders	Shareholding (shares)	Shareholding
Tsai, Tien-Tsan	85,577,838	23.05%
Tiangang Investment Co., Ltd.	63,328,801	17.06%
Tianye Investment Co., Ltd.	49,652,072	13.37%
Chien-Chih Construction Co., Ltd.	31,501,513	8.48%
Tsai	23,616,339	6.36%
Meiyun S. Tsai	20,209,951	5.44%

d. Information on major shareholders

• 1) The major shareholders in this table are shareholders holding more than 5% of the common and preference shares that have completed delivery of non-physical registration (including treasury shares) on the last business day of each quarter calculated by the Taiwan Depository & Clearing Corporation. However, the share capital recorded in the Company's financial report and the number of shares actually delivered by the company without physical registration may differ due to calculation basis.
• 2) For the above are shares entrusted by the shareholders, the information thereto shall base on the shares disclosed by the individual trust account of opened by the trustees. For information on shareholders, who declare to be insiders holding more than 10% of shares in accordance with the Securities and Exchange Act, and their shareholdings include their shareholdings plus their delivery of trust and shares with the right to make decisions on trust property, please refer to MOPS.

14. Operating Segment Financial Information

a. Operating segment

The management of the Consolidated Company evaluates performance and allocates resources on a company-wide basis and identifies the Company and its subsidiaries as the respective reportable segments.

The information is provided to the main business decision-makers to allocate resources and to evaluate the performance of each department, focusing on the category of product or service delivered or provided. In accordance with IFRS 8, "Operating Segments," the Company is only a single division that sells housing and land; H2O Hotel, a subsidiary established on April 16, 2015, is engaged in hotel and restaurant operations, and the accounting policies of the operating segments are all the same as those described in the summary of significant accounting policies in Note IV.

b. The amounts of the Consolidated Company's reportable segments' revenues, gains and losses, assets and liabilities and the reconciliation to the Consolidated Company's corresponding amounts are summarized as follows:

			2020
	King's Town Construction	H2O Hotel	Adjustments and elimination	Total
Revenue
Net revenue from external customers	\$8,440,239 \$223,555			\$4,055 \$8,667,849
Net intersegment revenue	47,961	2,372	(50,333)	0
Total revenue	\$8,488,200 \$225,927		(\$46,278)	\$8,667,849
Interest income	\$208	\$10	\$0	\$218
Interest expenses	244,175	28,991	(27,477)	245,689
Depreciation (including manufacturing)	64,064	65,383	(59,965)	69,482
Investment profit or loss recognized under the equity method	(56,115)	5,777	56,115	5,777
Significant revenue, expense and loss:
Profit/(loss) on financial assets at fair value through profit or loss
	(7,599)	0	0	(7,599)
Profit/(loss) on sales of marketable securities	(10,365)	0	0	(10,365)
Dividend income	710	0	0	710
Government subsidy income	0	9,016	0	9,016
Other income	5,382	29,175	(27,857)	6,700
Reportable segment profit or loss	\$1,684,892 (\$69,215)			\$69,215 \$1,684,892

			2019
	King's Town Construction	H2O Hotel	Adjustments and elimination	Total
Revenue
Net revenue from external customers	\$5,729,861	\$256,285	\$4,053	\$5,990,199
Net intersegment revenue	74,952	1,829	(76,781)	0
Total revenue	\$5,804,813	\$258,114	(\$72,728)	\$5,990,199
Interest income	\$277	\$8	\$0	\$285
Interest expenses	201,879	29,419	(27,784)	203,514
Depreciation (including manufacturing)	63,736	62,793	(58,778)	67,751
Investment profit or loss recognized under the equity method	(48,373)	5,552	48,373	5,552
Significant revenue, expense and loss:
Profit on financial assets at fair value through profit or loss
	39,935	0	0	39,935
Dividend income	815	0	0	815
Other income	12,869	2,222	0	15,091
Reportable segment profit or loss	\$1,656,570	(\$61,478)	\$61,478	\$1,656,570
Reportable segment assets
December 31, 2020			\$32,263,680 \$2,603,544 (\$2,488,010) \$32,379,214
December 31, 2019			\$35,941,507 \$2,656,092 (\$2,534,996) \$36,062,603

c. Regional information: The main operating region is Taiwan, so there is no geographical information to disclose.

d. Product information

Products and service	2020	2019
Land revenue	\$4,207,699	\$2,976,146
Building revenue	4,212,905	2,743,046
Lease revenue	23,689	14,722
Room revenue	88,606	130,870
Catering revenue	134,950	125,415
Total	\$8,667,849	\$5,990,199

e. Important customer information:

The Consolidated Company's sales to an individual customer accounted for more than 10% of net operating revenues in 2020 and 2019:

None

V. Audited Parent Company Only Financial Statements for the Years Ended December 31, 2020 and 2019

Independent Auditors' Report

March 24, 2021

(2021) ShineWing Taiwan Audit Report No. 012

To: King's Town Construction Co., Ltd.

Audit opinion

We have audited the accompanying parent company only balance sheet of King's Town Construction Co., Ltd. and its subsidiaries as of December 31, 2019 and 2018, and the related parent company only statements of comprehensive income, changes in shareholders equity, cash flows for the years then ended, and notes of the parent company only financial statements (including a summary of significant accounting policies).

In our opinion, the Parent Company Only Financial Statements mentioned above have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, as well as the International Financial Reporting Standards (IFRSs), International Accounting Standards (IAS), law and regulation reviews and their announcements recognized and announced by the Financial Supervisory Commission in all material aspects, and are considered to have reasonably expressed the parent company only financial conditions of King s Town Construction Co., Ltd. as of December 31, 2020 and 2019, as well as the parent company only financial performance and parent company only cash flows from January 1 to December 31, 2020 and 2019.

Basis for Opinions

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the parent company only financial statements are free of material misstatement. We are independent of King's Town Construction Co., Ltd. and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with the Norm. We believed that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Parent Company Only Financial Statements of King's Town Construction Co., Ltd. for the year ended December 31, 2019. These matters were addressed in the context of our audit of the Parent Company Only Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Parent Company Only Financial Statements of King's Town Construction Co., Ltd. for the year ended December 31, 2019 are stated as follows:

Inventory evaluation

Refer to Note IV(IX) to the parent company only financial statements for accounting policies regarding inventory valuation; Note V(II) for the uncertainty of accounting estimates and assumptions regarding inventory valuation; and Note VI(V) for details of inventory accounting subjects.

The inventories of King's Town Construction Co., Ltd. are material to the parent company only balance sheet. Inventories are evaluated in accordance with IFRS, IAS, and IFRIC Interpretations, and SIC Interpretations as endorse by the Financial Supervisory Commission. Inventories are stated at the lower of cost or net realizable value. The net realizable value of the real estate is not easily determined because of factors such as supply and demand in the domestic real estate market, natural disasters, government policies and economic conditions. Therefore, we have identified inventory evaluation as one of the key audit matters for the year.

Our auditing procedures include, but are not limited to, considering the vulnerability of sales prices to changes in external market factors, inquiring into the selling prices of neighboring areas or evaluating whether the selling prices of units sold have decreased; comparing the actual selling prices of properties for sale with the original inventory costs to assess the impairment of inventory values, and reviewing comparative market analysis of newly acquired land for development to assess whether the net realizable value of inventories is fairly stated.

Recognition of revenue from the sale of real estate

Refer to Note IV(XIX) for the accounting policies on revenue and cost recognition and Note VI(XXI) to the parent company only financial statements for the details of revenue recognition.

Revenue from the sale of real estate in the construction industry is recognized when the transfer of title to the real estate is completed and the actual delivery of the real estate is made. The appropriateness of the timing of revenue recognition is material to the financial statements as a whole. Since there are many parties involved in the sale of real estate, and considering that many people are involved in the interdepartmental aggregation and transmission of transfer and delivery information and that there may be gaps in the periods, we have recognized the revenue from the sale of real estate of King's Town Construction Co., Ltd. as one of the key audit matters for the year.

We conducted our audits to test the effectiveness of the design and implementation of internal control systems over the revenue and collection processes of King's Town Construction Co. Ltd. We also reviewed the appropriateness of the vesting period of the proceeds from the sale of real estates for the period immediately preceding and following the period end date to ensure that the proceeds from the sale of premises meet the criteria for revenue recognition.

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

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

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

The governance unit of King's Town Construction Co. Ltd. (including the Audit Committee or supervisors) is responsible for supervising the financial reporting process.

Auditors' Responsibilities for the Audit of the Parent Company Only Financial Statements

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

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

• 1. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design, and perform audit procedures responsive risks, and obtain evidence that is sufficient and appropriate to provide a basis of our opinion. The risk of not detecting a significant misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• 1. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control effective in King's Town Construction Co., Ltd. and its subsidiaries.
• 1. Evaluate the appropriateness of accounting policies used and the reasonability of accounting estimates and related disclosures made by the management
• 1. Conclude the appropriateness of the use of the going concern basis of accounting by the management, and based on the audit evidence obtained, whether a significant uncertainty exists related to events or conditions that may cast significant doubt on King's Town Construction Co., Ltd. and its ability to continue as a going concern. If we conclude that a significant uncertainty exists, we are required to draw attention in auditor's report to the related disclosures in the parent company only financial statements or, if such disclosure are inappropriate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor's report. However, future events or conditions may cause King's Town Bank Co., Ltd. to cease to continue as a going concern.
• 1. Evaluate the overall expression, structure, and content of the parent company only financial statements (including related notes) and whether the parent company only financial statements include the relevant transactions and events expressed adequately.
• 1. Obtain sufficient and appropriate audit evidence for the parent company only financial information of the King's Town Construction Co. Ltd. to express an opinion on the parent company only financial statements. We are responsible for guiding, supervising, and implementing of the group audit. We remain solely responsible for our opinion.

We communicate the following events with the governance unit, including the planned scope and audit time, as well as major audit findings (including significant deficiencies of internal control identified during the audit process).

We also provide a statement to the governance unit that the personnel of the CPA Firm who are subject to the regulation of independence are indeed complying with the independence requirements in accordance with the Code of Professional Ethics. Also, they communicate to the governance unit all relationships and matters (including related protective measures) that may be considered as affecting our independence.

We use the matters communicated with the governance unit to decide the Key Audit Matters for the audit of the 2020 parent company only financial statements of King's Town Construction Co., Ltd. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

ShineWing Taiwan CPA: Chuang, Shu-Yuan

CPA: Chang, Jui-Ling

Financial Supervisory Commission Approval No.	Financial Supervisory Commission Approval No.
FSC Letter Jin-Guan-Zheng-Shen No.	FSC Letter Jin-Guan-Zheng-Shen No.
1070345892	1070345892

Parent Company Only Balance Sheets As of December 31, 2020 and 2019 Unit: NT\$ thousand

			December 31, 2020		December 31, 2019
	Assets	Note	Amount	%	Amount	%
11XX	Current assets
1100	Cash and cash equivalents	IV, VI(I)	\$547,398	1.70	\$318,370	0.89
1110	current - Financial assets at fair value through profit or loss	IV, VI(II)	89,930	0.28	87,400	0.24
1150	Net notes receivable	IV, VI(III)	40,159	0.12	56,710	0.16
1170	Net trade receivables	IV, VI(III)	101,517	0.31	50,004	0.14
1173	Net installment receivables	IV, VI(III)	0	0.00	195	0.00
1200	Other receivables	IV, VI(IV)	750,063	2.32	66	0.00
1210	related parties - Other receivables	IV, VI(IV), VII	240	0.00	285	0.00
1220	Current tax assets	IV, VI(XXVIII)	2,556	0.01	0	0.00
1320	Inventories	IV, VI(V), VIII	29,181,397	90.45	33,667,354	93.67
1470	Other current assets	VI(VI), VII	466,458	1.45	571,528	1.59
11XX	Total current assets		\$31,179,718	96.64	\$34,751,912	96.69
15XX	-current assets Non
1510	Financial assets at fair value through profit and loss	IV, VI(II)	\$82	0.00	\$82	0.00
1550	Investments accounted for using the equity method	IV, VI(VII)	54,570	0.17	40,685	0.11
1600	Property, plant, and equipment	IV, VI(VIII)	2,476	0.01	3,247	0.01
1755	-of-use assets Net right	IV, VI(IX), VIII	62,731	0.19	64,245	0.18
1760	Net investment properties	IV, VI(X), VII, VIII	747,691	2.32	810,320	2.26
1780	Intangible Assets	IV, VI(XI)	166,676	0.52	170,714	0.48
1840	Deferred tax assets	IV, VI(XXV)	16,945	0.05	11,274	0.03
1920	Refundable deposits		32,791	0.10	37,028	0.10
1930	-term notes and trade receivable Long	IV, VI(III)	0	0.00	52,000	0.14
15xx	-current assets Total non		\$1,083,962	3.36	\$1,189,595	3.31
1xxx	Total assets		\$32,263,680	100.00	\$35,941,507	100.00
		(Continued)

King's Town Construction Co., Ltd. Parent Company Only Balance Sheets As of December 31, 2020 and 2019 Unit: NT\$ thousand

13.79 11.74 1.32 0.04 0.34 0.13 3.91 0.16 0.00 0.21 0.09 0.00 10.11 0.25 42.09 19.74 0.20 0.18 0.07 0.38 20.57 62.66 10.71 0.11 3.35 0.00 23.17 26.52 37.34 100.00 % \$4,954,780 4,220,179 475,730 14,940 120,652 48,298 1,405,606 58,104 35 73,989 31,504 1,044 3,632,000 89,372 \$15,126,233 \$7,094,055 73,275 63,690 24,632 136,836 \$7,392,488 \$22,518,721 \$3,848,464 40,015 1,205,778 0 8,328,529 \$9,534,307 \$13,422,786 \$35,941,507 Amount 13.91 12.88 1.54 0.25 0.37 0.08 2.43 0.15 0.00 0.49 0.11 0.00 0.42 0.27 32.90 21.27 0.12 0.19 0.07 0.01 21.66 54.56 11.50 0.00 4.25 0.00 29.69 33.94 45.44 100.00 % \$4,488,806 4,154,322 495,703 80,224 120,006 24,886 784,797 48,658 422 156,680 35,817 1,062 135,833 86,909 \$10,614,125 \$6,862,034 38,408 62,628 21,392 2,878 \$6,987,340 \$17,601,465 \$3,711,931 0 1,371,436 0 9,578,848 \$10,950,284 \$14,662,215 \$32,263,680 Amount IV, VI(XII), VII, VIII VI(XV), VII, VIII VI(XV), VII, VIII IV, VI(XVII), VII VI(XII), VII, VIII IV, VI(XXVI) VI(XXI), VII VI(XIV), VII IV, VI(XIII) VI(XXVIII) IV, VI(XX) VI(XXVII) VI(XVIII) VI(XVI) VI(XVI) VI(XIX) VI(XX) IV, VII IV, VII Note VII IV IV IV Long-term borrowings due within one operating cycle non-current ordinary shares premium Liabilities and equity related parties related parties Net defined benefit liabilities - related parties ordinary shares non-current current Unappropriated earnings Total non-current liabilities current Short-term bills payable Total liabilities and equity Total retained earnings Short-term borrowings Long-term borrowings Deferred tax liabilities Current tax liabilities Total current liabilities Contract liabilities - current Non-current liabilities Retained earnings Deposits received Special reserve Lease liabilities - Lease liabilities - Trade payables - Other payables - Legal reserve Paid-in capital - Notes payable - Trade payables Current liabilities Other payables Share capital - Notes payable Total liabilities Provisions - Collection Total equity Equity 2XXX 3XXX 3XXX 21XX 21XX 25XX 2100 2110 2130 2150 2160 2170 2180 2200 2220 2230 2250 2280 2322 2335 2540 2570 2580 2640 2645 25xx 3110 3211 3300 3310 3320 3350 3300		December 31, 2020	December 31, 2019

(Please refer to the accompanying notes in the financial report)

Code			2020		2019
	Account titles	Note	Amount	%	Amount	%
4000	Operating revenue
4110	Sales revenue		\$8,489,962	100.02	\$5,804,813	100.00
4170	Sales returns		(1,762)	(0.02)	0	0.00
4190	Sales discounts and allowances			0.00 0	0	0.00
4100	Net sales	VI(XXI)	\$8,488,200	100.00	\$5,804,813	100.00
5000	Operating costs		5,575,373	65.68	3,295,867	56.78
5900	Gross profit		\$2,912,827	34.32	\$2,508,946	43.22
6000	Operating expenses	VI(XXIX)
6100	Selling and marketing expenses		538,200	6.34	340,777	5.87
6200	General and administrative expenses		129,260	1.52	168,745	2.91
6000	Total operating expenses		\$667,460	7.86	\$509,522	8.78
6900	Operating income		\$2,245,367	26.45	\$1,999,424	34.45
7000	Non-operating income and expenses
7100	Interest income	VI(XXII)	\$207	0.00	\$277	0.00
7010	Other income	VI(XXIII)	6,092	0.07	13,725	0.24
7020	Other gains and losses	VI(XXIV)	(18,458)	(0.22)	40,079	0.69
7050	Finance costs	VI(XXV)	(244,175)	(2.88)	(201,879)	(3.48)
7070	Share of profit or loss of subsidiaries, associates, and joint ventures accounted for using the equity method	VI(VII)	(56,115)	(0.66)	(48,372)	(0.83)
7000	Total non-operating income and expenses		(\$312,449)	(3.69)	(\$196,170)	(3.38)
7900	Income before tax		\$1,932,918	22.76	\$1,803,254	31.07
7950	Income tax expense (gain)	IV, VI(XXVIII)	(248,026)	(2.92)	(146,684)	(2.53)
8200	Current net income		\$1,684,892	25.68	\$1,656,570	33.60
8300	Other comprehensive income
8310	Items not reclassified to profit or loss
8311	Remeasurements of defined benefit plans	IV, VI(XXVI)	(\$270)	(0.00)	(\$912)	(0.02)
8349	Incomes tax expense (gain) related to titles not subject to reclassification	IV, VI(XXVIII)	(54)	(0.00)	(182)	(0.00)
8300	Other comprehensive income (after tax)		(\$216)	(0.00)	(\$730)	(0.02)
8500	Total comprehensive income		\$1,684,676	25.68	\$1,655,840	33.58
9750	Basic earnings per share (NT\$)	IV, VI(XXX)	\$4.48		\$4.31
9850	Diluted earnings per share (NT\$)	IV, VI(XXX)	\$4.48		\$4.30

King's Town Construction Co., Ltd.

Parent Company Only Statements of Changes in Equity From January 1 to December 31, 2020 and 2019 Unit: NT\$ thousand

	Ledger Account				Retained earnings
Code	Summary	Share capital	Capital surplus	Legal reserve	Unappropriated earnings	Total	Total equity
A1	Balance as of January 1, 2019	\$3,846,549	\$36,474	\$1,156,054	\$6,722,413	\$7,878,467	\$11,761,490
B1	Legal reserve			49,724	(49,724)	0	0
B9	Employee compensation to capital increase	1,915	3,541			0	5,456
D1	Net income in 2019				1,656,570	1,656,570	1,656,570
D3	comprehensive income in 2019 Other				(730)	(730)	(730)
D5	Total comprehensive income in 2019				\$1,655,840	\$1,655,840	\$1,655,840
Z1	Balance as of December 31, 2019	\$3,848,464	\$40,015	\$1,205,778	\$8,328,529	\$9,534,307	\$13,422,786
A1	Balance as of January 1, 2020	\$3,848,464	\$40,015	\$1,205,778	\$8,328,529	\$9,534,307	\$13,422,786
B1	Legal reserve			165,658	(165,658)	0	0
B9	Employee compensation to capital increase	5,357	12,858			0	18,215
D1	Net income in 2020				1,684,892	1,684,892	1,684,892
D3	comprehensive income in 2020 Other				(216)	(216)	(216)
D5	Total comprehensive income in 2020				\$1,684,676	\$1,684,676	\$1,684,676
L1	Treasury stock repurchase						0
L3	Cancellation of treasury shares	(141,890)	(52,873)		(\$268,699)	(268,699)	(463,462)
Z1	Balance as of December 31, 2020	\$3,711,931	\$0	\$1,371,436	\$9,578,848	\$10,950,284	\$14,662,215
	Note: Employee compensation of NT\$19,524 thousand and NT\$18,215 thousand for 2020 and 2019, respectively, have been deducted from statements of comprehensive income.

(Please refer to the accompanying notes in the financial report)

	January 1 to December 31, 2020	January 1 to December 31, 2019
Cash flow from operating activities:			Cash flow from investing activities:
Current year net profit before tax	\$1,932,918	\$1,803,254	Acquisition of financial assets at fair value through profit or loss	(\$183,079)	(\$47,465)
Adjustment items:			Disposal of financial assets at fair value through profit or loss	159,987	2,432
Revenue, expense and loss that do not affect the cash flows:			Acquisition of investment accounted for using the equity method	(70,000)	(70,000)
Depreciation expenses	64,064	63,736	Acquisition of property, plant, and equipment	(611)	(102)
Amortization expenses	4,317	4,558	Acquisition of intangible assets	(279)	(101)
Net loss (gain) on financial assets at fair value through profit or loss	7,599	(39,935)	Increase in refundable deposits	(4,634)	(2,547)
Share of profit or loss of subsidiaries accounted for using the equity
method	56,115	48,372	Decrease in refundable deposits	8,871	2,540
Increase in provisions	4,313	6,540	Acquisition of investment properties	(1,268)	(8,531)
Interest expenses	244,175	201,879	Recovery of financial assets for capital reduction	2,598	89
Interest income	(207)		(277) Net cash outflow from investing activities	(\$88,415)	(\$123,685)
Dividend income	(710)	(815)
(Gain) Loss on disposal of investments	10,365	(291)
Total revenue, expense and loss that do not affect the cash flows:	\$390,031		\$283,767 Cash flows from financing activities:
Changes in operating assets and liabilities			Proceeds from short-term borrowings	\$24,334,940	\$22,995,052
Net changes in operating assets			Proceeds from short-term bills payable	(24,800,914)	(27,005,480)
Repayments of short-term borrowings	\$68,551	(\$108,710)	Proceeds from short-term bills payable	28,057,200	25,618,800
Increase in trade receivables	(51,318)	(48,776)	Repayments of short-term bills payable	(28,120,200)	(25,798,800)
Decrease (increase) in other receivables	(749,952)	631	Proceeds from long-term loans	3,962,000	8,465,487
Decrease (increase) in inventories	4,485,957	(2,600,900)	Proceeds from long-term borrowings	(7,690,188)	(4,088,035)
Decrease in other current assets	105,070	228,319	Increase in deposits received	0	2,554
Total net changes in operating assets	\$3,858,308	(\$2,529,436)	Decrease in deposits received	(133,958)	(572)
Net change in operating liabilities			Treasury stock repurchase cost	(463,462)	0
Gain (loss) in notes payable	\$64,638	(\$4,518)	Repayment of the principal portion of lease liabilities	(1,044)	(1,026)
Increase (decrease) in trade payable	(644,221)		331,247 Net cash inflow from financing activities	(\$4,855,626)	\$187,980
Increase in contract liabilities - current	19,973	399,464
Increase in other payables	15,423	19,422
Increase (decrease) in other current liabilities	(2,463)		52,206 Increase in current cash and cash equivalent	\$229,028	\$157,368
Decrease in net defined benefit liabilities	(3,509)		(1,606) Cash and cash equivalent at the beginning of the period	318,370	161,002
Total net changes in operating liabilities	(\$550,159)		\$796,215 Cash and cash equivalent at the end of the period	\$547,398	\$318,370
Total net changes in operating assets and liabilities	\$3,308,149	(\$1,733,221)
Cash inflow (outflow) from operating activities	\$5,631,098	\$353,800
Interest received	208	276
Dividend received	710	815
Interest paid	(250,572)	(203,172)
Income tax paid	(208,375)	(58,646)
Net cash inflow (outflow) from operating activities	\$5,173,069	\$93,073

Parent Company Only Statements of Cash Flows From January 1 to December 31, 2020 and 2019 Unit: NT\$ thousand Share of profit or loss of subsidiaries accounted for using the equity method Chairperson: Tianye Investment Co., Ltd. Representative: Tsai, Tien-Tsan Manager: Chen, Tien-Chin Accountant Officer: Liang, Su-Ying

(Please refer to the accompanying notes in the financial report)

— 198 —

Notes to Parent Company Only Financial Statements 2020 and 2019 (In Thousands of New Taiwan Dollars, unless otherwise specified)

1. Company History

King's Town Construction Co., Ltd (hereinafter referred to as the "Company") was incorporated in 1985. The place of registration are located at 12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City/ The Company started trading on Taiwan Stock Exchange Corporation on October 18, 1994. The Company mainly engages in residential and building development, lease and sale, development of specific professional areas and zoning and rezoning agency business.

1. Approval Date and Procedures of the Financial Statements

The parent company only financial statements were approved for publication by the Board of Directors on March 24, 2021.

• 1. Application of New, Revised, and Amended Standards and Interpretations
• a. Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) as endorsed by the Financial Supervisory Commission ("FSC") are as follows:

International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations applicable endorsed by the FSC in 2020:

New Standards, Interpretations and Amendments	Major Amendments	Effective Date of Issuance by the IASB
 Amendments to IFRS 3 "Definition of a Business"	These amendments clarify IFRS 3 - Business Combinations to improve the definition of a business. The amendments will help companies to identify whether the transaction should be handled as a business consolidation or as acquisition of asset. IFRS 3 will continue to adopt market participant's view point in deciding whether an activity or asset combination acquired is a business, including clarifying the minimum requirement of a business, adding guidance to help companies to evaluate whether the acquisition process is substantial, and reducing definition of business and production.	January 1, 2020
 Amendment to IAS 1 and IAS 8 "Definition of	The amendments can be attributable to the redefinition of	January 1, 2020

	New Standards, Interpretations		Effective Date of
	and Amendments	Major Amendments	Issuance by the IASB
	Material"	material information as:
		Information is material if
		omitting, misstating or obscuring
		it could reasonably be expected
		to influence the decisions that
		the primary users of general
		purpose financial statements
		make on the basis of those
		financial statements, which
		provide financial information
		about a specific reporting entity.
		These amendments clarify that
		materiality is based on the nature
		of the information, and a
		company shall see whether
		information is material on its
		own or when parent company
		only with other information in
		the financial statements. If it can
		be reasonably expected to
		influence the decisions that the
		primary users of the financial
		statements make, then
		misstatement of information will
		be material.
	Amendments to IFRS 9,	This amendment targets all	January 1, 2020
	IAS 39, and IFRS 7	hedging relationships directly
	"Changes in Interest Rate	influenced by the interest rate
	Indicators"	benchmark reform, and a few
		exceptions to the rule have also
		been included. When uncertainty
		arises from the timing or amount
		of cash flow from the benchmark
		basis of the hedged item or
		hedge instrument due to the
		interest rate benchmark reform,
		the hedging relationship will be
		directly influenced. Therefore, a
		company shall apply the
		exceptions to all hedging
		relationships directly affected by
		interest rate benchmark reform.
	Amendments to IFRS 16	This amendment provides	January 1, 2019
	"Covid-19-Related Rent	lessees with the option to be
	Concessions"	exempt from the assessment of
		whether the rent reduction
		associated with the new
		coronavirus is a lease
		modification, and lessees may
		elect to be treated as a lease
		payment change other than a
		lease modification.
		The practical expedient applies
		only to rent reductions that are
		directly attributable to the new
		coronavirus and meet all of the
		following conditions: the change
		in lease payments results in a

New Standards, Interpretations and Amendments	Major Amendments	Effective Date of Issuance by the IASB
	modified lease consideration that
	is substantially equal to or less
	than the lease consideration prior
	to the change; and the reduction
	is limited to lease payments that
	were originally due by June 30,
	2021. If the lease payments are
	reduced up to and including June
	30, 2021, but the rent is
	increased after June 30, 2021
	(i.e., deferred rent payments),
	this condition will still apply;
	there are no material changes to
	other terms or conditions of the
	lease.

The Company evaluates that the application of the newly endorsed IFRSs will not have a material impact on the parent company only financial statements.

• b. Effects of not yet applying the newly-announced and revised IFRSs endorsed by FSC:
• 1) New, revised, and amended standards and interpretations of IFRSs endorsed by the FSC and are applicable in 2021:

	New Standards,
	Interpretations and		Effective Date of Issuance by
	Amendments	Major Amendments	the IASB
	Amendments to IFRS 4 "Temporary Exemption from Applying IFRS 9" Use this segment	IFRS 9 governs the accounting for financial instruments and is effective after January 1, 2018. However, for insurers that are primarily engaged in insurance activities and have not previously applied any version of IFRS 9, IFRS 4 provides a temporary exemption that allows, but does not require, insurers to apply IAS 39 "Financial Instruments: Recognition and Measurement", instead of IFRS 9 before January 1, 2023.	January 1, 2021
	Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 "Interest Rate Benchmark Reform - Phase II"	The impacts of Phase II Interest Rate Benchmark Reform on the financial statements include: A. Regarding cash flows of financial instruments, the carrying amounts thereof will not be derecognized or adjusted due to the changes in the reform. Instead, changes result directly from interbank offered rates (IBORs) will be accounted for by updating the effective interest rates. B. If a hedging relationship is subject to hedging accounting,	January 1, 2021

New Standards, Interpretations and		Effective Date of Issuance by
Amendments	Major Amendments	the IASB
	the hedging relationship will
	still be subject to hedging
	accounting regardless of
	changes in the requirements of
	the reform; and
	C. The Company is required to
	disclose the risks arise from
	the reform and the Company's
	risk management in the
	transition.

• 2) The Company assessed the effects of adopting the aforementioned standards and interpretations, and has found no significant effects on the Company's financial position and financial performance.
• c. Effects of IFRSs issued by IASB but not yet endorsed by FSC:
• 1) The following new, amended, revised standards and interpretation of IFRSs that have been issued by IASB but not yet endorsed by the FSC:

	New Standards,
	Interpretations and		Effective Date of Issuance by
	Amendments	Major Amendments	the IASB
	Amendments to IAS 1 "Disclosure of Accounting Policies"	The major amendments to IAS 1 include: Require companies to disclose their significant accounting policies rather than their material accounting policies; clarify that accounting policy information related to transactions, other events or circumstances that are not material and do not require disclosure of such information; and clarify that all accounting policy information that is not related to a transaction, other event or circumstance that is material is material to the company's financial statements.	January 1, 2023
	Amendments to IAS 8 "Definition of Accounting Estimates"	The amendment introduces a new definition of an accounting estimate that clarifies that an accounting estimate is a monetary amount in the financial statements that is subject to measurement uncertainty. The amendment also clarifies the relationship between accounting policies and accounting estimates by specifying that a company is required to establish accounting estimates for the purposes of the accounting	January 1, 2023

	New Standards, Interpretations and Amendments	Major Amendments	Effective Date of Issuance by the IASB
	Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and Its Associate or Joint Venture"	policies it applies. This project addresses the acknowledged inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures, in dealing with the loss of control of a subsidiary that is contributed to an associate or joint venture. IAS 28 states that when non-monetary assets are contributed in exchange for an interest in an associate or a joint venture, the share of gains or losses shall be eliminated in accordance with the treatments of a downstream transaction. However, IFRS 10 requires a full recognition of gains or losses arising from the loss of control of a subsidiary. These amendments prohibit the aforementioned regulations from IAS 28; when the loss of control of a business, as defined in IFRS 3 occurs, a full gain or loss should be recognized. IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors' interests in the associate or joint	To be determined by IASB
	IFRS 17 "Insurance Contracts" and amendments to IFRS 17 "Insurance Contracts"	venture. This standard provides a comprehensive model to insurance contracts, including all accounting treatment (recognition, measurement, expression, and disclosure principle). The core of the standard is general, and under this model, initial recognition measures the insurance contract group by the combination of the cash flow from performance obligation and contract service margin,	January 1, 2023

New Standards, Interpretations and		Effective Date of Issuance by
Amendments	Major Amendments wherein the performance obligation cash flow includes: Estimated future cash flow; Adjustments that reflect the time value of money and the financial risks (within the estimation range of the future cash flow that does not include financial risk) associated with future cash flows; and Adjustment of non financial risks. The carrying amount of the insurance contract group at the end of each reporting period is the sum of the remaining security liabilities and the claims liabilities incurred. In addition to the general model, the standard also provides specific applicable methods with contracts characterized by direct participation (variable fee method) and simplified short term contract method (premium allocation approach). IFRS 17 was issued in May 2017 and it was amended in June 2020. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim standard - IFRS 4 Insurance	the IASB
 Amendments to IAS 1 "Liabilities classified as current or non-current"	Contracts - from annual reporting periods beginning on or after 1 January 2023. This amendment targets sections 69-76 in IAS 1 - Presentation of Financial Statements concerning the	January 1, 2023

classification of liability as either current or non-current.

	New Standards,
	Interpretations and		Effective Date of Issuance by
	Amendments	Major Amendments	the IASB
	Amendments to IAS 16 "Property, Plant and Equipment: Proceeds	The amendments prohibit a company from deducting from the cost of property,	January 1, 2022
	before Intended Use"	plant, and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related cost in profit or loss.
	Amendments to IAS 37 "Onerous Contracts - Cost of Fulfilling a Contract"	The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The " cost of fulfilling a contract" includes the incremental cost of performance and other costs directly related to fulfilling a contract.	January 1, 2022
	Amendments to IFRS 3 "Updating a Reference to the Conceptual Framework"	The amendments updated IFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The amendments also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential "day 2" gains or losses arising for liabilities and contingent liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework.	January 1, 2022

New Standards, Interpretations and Amendments Major Amendments  Annual Improvements to Amendment to IFRS 1 The IFRS Standards 2018 - amendment simplifies the 2020 application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences. Amendment to IFRS 9 Financial Instruments The amendment clarifies the fees a company includes when assessing whether the terms of a new or modified financial	Effective Date of Issuance by the IASB January 1, 2022
liability are substantially different from the terms of the original financial liability. Amendment to Illustrative Examples Accompanying IFRS 16 Leases The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee's leasehold improvements. Amendment to IAS 41 The amendment removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in IAS 41 with those in other

2) The Company has continued to assess the effects of amendments to other standards and interpretations on its financial conditions and performance. Related impacts will be disclosed upon completion of the assessment.

1. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these parent company only financial statements are set out below. Unless otherwise specified, the policies shall be applicable to all reporting periods presented.

a. Compliance Statement

The parent company only financial reports are prepared in accordance with the " "Regulations Governing the Preparation of Financial Reports by Securities Issuers," IFRS, IAS, and IFRIC Interpretations, and SIC Interpretations as endorse by the FSC.

• b. Basis of Preparation
• 1) Except for the following significant items, these parent company only financial statements have been prepared on the historical cost basis:
  • a) Financial assets and liabilities at fair value through profit or loss are measured at fair value.
  • b) Defined benefit liability derived from retirement plan assets less the present value of net defined benefit obligation.
• 2) When preparing parent company only financial statements, the Company adopts the equity method for investments in subsidiaries and associates. The current profit or loss, other comprehensive income, and equity in the parent company only financial statements are the same as the current profit or loss, other comprehensive income and equity attributable to the owners of the Company in the parent company only financial statements of the Company, and there is no difference in accounting treatment between the basis of consolidation.
• 3) Functional currency and presentation currency

The Company takes the currency of the main economic environment in which each business operates as its functional currency. The Parent Company Only Financial Statements are presented in the New Taiwan dollar, the Company's functional currency. All financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

• c. Foreign Currency Trading
• 1) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.
• 2) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the end of the reporting period.

Exchange differences arising upon re-translation on the balance sheet date are recognized in profit or loss.

• 3) The balances of non-monetary assets and liabilities denominated in foreign currencies are adjusted at the exchange rates prevailing at the end of the reporting period. If the balances are measured at fair value through profit or loss, the resulting exchange differences are recognized in profit or loss; if the balances are measured at fair value through profit or loss, the resulting exchange differences are recognized in other comprehensive income items; if the balances are not measured at fair value, they are measured at the historical exchange rates at the dates of initial transactions.
• d. Standards for Assets and Liabilities Classified as Current and Non-current

The Company is engaged in the construction of houses for sale by contractors, and its business cycle is longer than one year. As such, assets and liabilities related to the construction business are classified as current or non-current by reference to its normal operating cycle; the operating cycle is based on a three-year period. In addition to the above paragraph:

• 1) Assets that meet one of the following criteria are classified as current assets:
• a) Assets that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle.
• b) Assets held primarily for trading purposes.
• c) Assets that are expected to be realized within 12 months after the end of the reporting period.
• d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the end of the reporting period. The Company classifies all the assets that do not meet the above-mentioned criteria as non-current.
• 2) Liabilities that meet one of the following criteria are classified as current liabilities:
• a) Liabilities that are expected to be settled within the normal operating cycle.
• b) Assets held primarily for trading purposes.
• c) Payment is expected to be due within 12 months after the end date of the reporting period.
• d) Liabilities with a repayment schedule that cannot be unconditionally deferred till at least 12 months after the end date of the reporting period. The Company classifies all liabilities that do not meet the above conditions as non-current.
• e. Cash and Cash Equivalents

Cash includes inventory cash and current 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 that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

f. Financial Instruments

Financial assets and liabilities will be recognized in the parent company only balance sheets when the Company becomes a party to the contract of the financial instrument.

When showing the original financial assets and liabilities, if their fair value was not assessed based on profit or loss, it is the fair value plus the cost of transaction, that is, of its acquisition or issuance of the financial assets or financial liabilities. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

g. Financial Liabilities

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 Company shall be consistently on the trade date or the settlement date.

1) Types of measurement

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

a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets mandatorily measured at fair value through profit or loss and financial assets designated as at fair value through profit or loss. Financial assets mandatorily measured at fair value through profit or loss include equity instrument investments not designated by the Company to be measured at fair value through other comprehensive income, and debt instrument investments not subject to classification as measured at amortized cost or to be measured at fair value through other comprehensive income.

Financial assets at fair value through profit or loss are measured at fair value; any re-measurement profit or loss (including any dividends or interests derived from such financial assets) is recognized in profit or loss. Please refer to Note XII for the determination of fair value.

b) Financial assets at amortized cost

When the Company's investments in financial assets satisfy the following two conditions simultaneously and they are not designated as at fair value through profit or loss, they are classified as financial assets at amortized cost:

i. Financial assets held based on the business model of collecting contract cash flow.

ii. The terms of the contract of the financial assets generate a cash flow on a specified date that is solely for the payment of interest on the principal and the amount of principal outstanding.

Subsequent to initial recognition, such assets (including cash and cash equivalents, notes receivable, trade receivable (including installment receivable, long-term notes receivables and trade receivable), other receivables (including related parties) and refundable deposits) that are measured at amortized cost) equal to the gross carrying amount as determined using the effective interest method less any impairment loss; any interest income, foreign exchange gain or loss and impairment loss are recognized in profit or loss. When derecognition, gain or loss is recognized in profit and loss.

Interest income is calculated at the value of effective interest rate times the gross carrying amount of financial assets.

c) Financial assets at fair value through other comprehensive income

A debt investment is measured at fair value through other comprehensive income/(loss) if it meets both of the following conditions and is not designated as at fair value through profit or loss:

• i. The objective of the Company's business model is achieved both by collecting contractual cash flows and selling financial assets.
• ii. The terms of the contract of the financial assets generate a cash flow on a specified date that is solely for the payment of interest on the principal and the amount of principal outstanding.

The Company may, at initial recognition, make an irrevocable decision to designate an equity instrument that is neither held for trading to be measured at fair value through other comprehensive income. Subsequent changes in fair value are reported in other comprehensive income. The preceding selection is made on an instrument-by-instrument basis.

They are recognized initially at fair value plus directly attributable transaction costs and subsequently measured at fair value. Foreign currency translation profit and loss on investments in debt instruments, interest income and impairment losses calculated using the effective interest method, and dividend income from investment in equity instruments (except those expressly specified as recovery of parts of the investment cost) are recognized in profit or loss. Changes in the other carrying amount are recognized based on the unrealized profits and losses on financial assets measured at fair value through other comprehensive profit and loss. When performing derecognition, the cumulative profit or loss of investments in debt instruments are reclassified from equity to profit or loss; the cumulative profit or loss of investments in equity instruments are reclassified from equity to retained earnings and not to profit or loss.

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

2) Impairment of financial assets

The Company evaluates credit losses based on expected credit loss at the end of each reporting period for financial assets (including cash and cash equivalents, notes receivable and trade receivable (including installment receivable, long-term notes receivable and trade receivable), other receivables (including related parties) and refundable deposits, investments in debt instruments at fair value through other comprehensive income, and impairment losses on contract assets.

Allowances shall be appropriated for notes receivable, trade receivables, and other receivables for expected credit losses for the duration of their existence. Financial assets at amortized cost and investments in debt instruments measured at fair value through other comprehensive income/(loss) are first evaluated to determine whether there is a significant increase in credit risk since original recognition. If there is no significant increase, an allowance for loss is recognized based on the expected credit losses for the 12 months following the reporting date, and if there is a significant increase, an allowance for loss is recognized based on the expected credit losses arising from all probable defaults during existence period.

The expected credit loss is the weighted average credit loss determined by the risk of default. The 12-month expected credit losses represent the expected credit losses arising from the possible default of the financial instrument in the 12 months after the reporting date, and the expected credit losses during the lifetime represent the expected credit losses arising from all possible defaults of the financial instrument during the expected existence period.

At the end of each reporting period, the Company assesses whether there is a credit impairment on financial assets measured at amortized cost and on investments in debt instruments measured at fair value through other comprehensive income/(loss). When there is one or more events arising that will bring unfavorable influence to expected future cash flow, there is already credit impairment to the financial asset. The evidence for credit impairment of financial assets includes the observable data for the following events:

• a) Material financial hardship for borrower or issuer;
• b) Default, such as arrearage or delinquency for more than 365 days;
• c) Compromise made by the Company to borrower that would not be considered before, because of economic or contract reason related to borrower's financial difficulty;
• d) The borrower is most likely to file for bankruptcy or conduct other financial arrangement; or
• e) Disappearance of active market for the financial asset due to financial difficulty.

Through the loss allowance account, the carrying amount of all financial assets is reduced for the impairment loss, except for the investment in debt instruments measured at FVTOCI for which the impairment loss is recognized in other comprehensive income and does not reduce the carrying amount.

3) Derecognition of financial assets

The Company derecognizes the financial assets when the contractual rights to the cash inflow from the asset expire or when the company transfers all the risks and rewards of ownership of the financial assets to other enterprises substantially.

On derecognition of a financial asset measured at amortized cost, the difference between the asset's carrying amount and the sum of the consideration received is recognized in profit or loss. On derecognition of an equity instrument measured at fair value through other comprehensive income/(loss), the cumulative gain or loss is transferred directly to retained earnings and is not reclassified to profit or loss.

• h. Classification Tools for Financial Liabilities and Equity
• 1) Financial liabilities and equity instruments

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

2) Equity instruments

Equity instruments refer to any contracts containing the Company's residual interest after subtracting liabilities from assets.

Equity instruments issued by the Company are recognized based on the price obtained less direct issuance costs.

The repurchase of equity instruments issued by the Company is recognized in equity as a deduction. The purchase, sale, issuance, or write-off of the Company's equity instruments are not recognized in profit or loss.

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 at fair value through profit or loss are measured at fair value, and the related net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest income and foreign currency profit or loss are recognized as 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 Company derecognizes financial liabilities when the contractual obligations have been fulfilled, canceled or matured. When the terms of financial liabilities are modified and there is a significant difference in the cash flow of the revised liabilities, the original financial liabilities will be derecognized and new financial liabilities will be recognized at fair value based on the revised terms.

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

5) Offsetting of financial assets and liabilities

The Company presents financial assets and liabilities on a net basis when the Company has the legally enforceable right to offset and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

i. Inventories

Inventories consist of land and construction in progress, properties held for sale, construction sites and prepaid land. Prepaid land is transferred to construction sites upon transfer of ownership, and construction sites are transferred to land and buildings under construction upon active development. Upon completion of the construction, the sold portion is transferred to operating costs and the unsold portion is transferred to land held for sale, using the construction area ratio, when revenue is recognized from the sale of the premises.

Inventories are measured at the lower of cost or net realizable value and are compared on a line-by-line basis to determine the lower of cost or net realizable value. The cost includes all necessary expenditures and capitalized borrowing costs to get an asset in place and in conditions ready for use.

The net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to make the sale. The measurement of net realizable value is as follows:

• 1) Construction sites: The net realizable value is calculated on the basis of the expected selling price judged by the management based on the current market conditions, less cost of construction completion and selling expenses, or the most recent estimated market value (based on land development analysis approach or comparison approach).
• 2) Construction-in-progress: The net realizable value is calculated on the basis of the expected selling price (based on the current market conditions) less cost of construction completion and selling costs.
• 3) Buildings and land held for sale: The NRV is the estimated selling price (with reference to the management authority's estimation based on prevailing market conditions) less estimated costs to be incurred in selling the properties and selling expenses.

j. Investment Accounted for Using The Equity Method

The Company has adopted the equity method for investments in subsidiaries. Subsidiaries refer to entities controlled by the Company.

Under the equity method, the investment is initially recognized at cost. The carrying amount of investment is adjusted thereafter for the post-acquisition changes in the Company's share of profit or loss and other comprehensive income and profit distribution of the subsidiaries. In addition, the Company also recognizes changes in other interests in subsidiaries in proportion to the Company's ownership.

When a change in the Company's ownership interests in a subsidiary does not cause it to lose control of the subsidiary, it shall be accounted for as an equity transaction. The difference between the carrying amount of the investments and the fair value of the consideration paid or received is recognized directly in equity.

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

When the Company's share of losses of a subsidiary exceeds its equity in said subsidiary (which includes any carrying amount of the investment accounted for by the equity method and long-term equity that, in substance, forms part of the Company's net investment in said subsidiary), the Company continues recognizing its share of further losses.

The unrealized profit or loss in downstream transactions between the Company and the subsidiary shall be eliminated in the parent company only financial statements. The gains and losses arising from the countercurrent and side current transactions between the Company and its subsidiaries shall be recognized in the parent company only financial statements only to the extent not related to the Company's equity in the subsidiaries.

• k. Property, Plant and Equipment
• 1) Recognition and measurement

Property, plant and equipment are recognized and measured at cost, less accumulated depreciation and accumulated impairment. Cost includes expenditure that is directly attributed to the acquisition of the asset. The cost of self-constructed assets includes raw materials and direct labor, any other directly attributable costs to bring the asset to a serviceable condition for its intended use, the cost of dismantling and removing the item and restoring the site, and the cost of borrowings to capitalize the eligible assets.

When property, plant and equipment contain different components, and it is more appropriate to adopt different depreciation rate or method when it is significant when compared with the total cost, they are deemed as independent items (main components) for treatment.

The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized as profit or loss.

2) Reclassification to investment property

When real estate for self-use meets the definition of investment real estate and there is evidence of change in use, the real estate should be reclassified as investment real estate at the carrying amount at the time of the change in use, and the mere change in management's intent to use the real estate is not evidence of change in use.

3) Subsequent costs

Subsequent expenditure for property, plant and equipment is capitalized only when it is probable that the future economic benefits associated with the expenditure will flow to the Company. The carrying amount of those parts that are replaced is derecognized. Ongoing repairs and maintenance for property, plant and equipment are expensed as incurred.

4) Depreciation

The depreciation is calculated in straight-line method by capital cost less scrap value based on service years, and evaluated according to individual material components. If the service years of one component are different from other parts, this part will be separately recognized as depreciation. The depreciation charge for each period shall be recognized in profit or loss.

The useful lives of the Company's major assets are as follows

Office Equipment	3 ~ 5 years
Other Equipment	5 years

Depreciation methods, useful lives, and residual values are audited at each reporting date. If expectations differ from the previous estimates, the change is accounted for as a change in accounting estimate.

l. Leases

1) Identifying a lease

The Company assesses whether the contract is (or includes) a lease on the date of its establishment. If a contract is signed to have the control over the use of identified assets transferred for a period of time in exchange for a consideration, it is (or includes) a lease. In order to assess whether a contract is signed to have the control over the use of identified assets transferred for a period of time, the Company assesses whether there are the following two factors throughout the period of use:

a) rights to nearly all economic benefits of the identified asset have been received; and

b) the control over the right to use the identified asset.

For contracts that are (or include) leases, the Company will treat each lease component in the contract individually, and to separately treat them from the nonlease components in the contracts. Where a contract includes a lease component and one or more additional lease or non-lease components, the company allocates the consideration in the contract to the lease component on the basis of the relative separate price of each lease component and the aggregate separate price of non-lease components. The comparison single unit price of the lease and non-lease components will be decided upon the prices separately received by the lessor (or supplier) for such components. If observable single unit prices are not readily available, the Company will maximize the use of observable information to estimate their respective single unit prices.

2) Where the Company is a lessee:

Except that the lease payments of the low value subject-matter assets and short-term leases applicable to recognition exemption are recognized as expenses on a straightline basis during the lease period, other leases are recognized as right-of-use assets and lease liabilities on the lease commencement date.

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.

Right-of-use assets are subsequently depreciated on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-ofuse asset or the end of the lease term. In addition, the Company regularly assesses whether the right-of-use asset is impaired and treats any impairment loss that has occurred, as well as cooperating to adjust the right-of-use asset when the lease liability is remeasured.

Lease liabilities are measured at the present value of the lease payments outstanding at the inception date of the lease. If the implicit interest rate of lease is easy to determine, the interest rate is used to discount the lease payment. If the interest rate is not easy to determine, the Company's incremental borrowing rate shall be used.

The lease payments comprise as follows:

• a) fixed payments, including in-substance fixed lease payments;

• b) Variable lease payments dependent upon certain indicators or rates are measured by the indicators or rates used at the inception of the lease;

• c) amounts expected to be payable by the lessee under residual value guarantees;

• d) an option to purchase the underlying asset if it is reasonably certain to be exercised, and penalty payments for terminating the lease.

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

• a) changes in future lease payments resulting from changes in an index or a rate used to determine those payments;
• b) changes in the amounts expected to be payable under a residual value guarantee;
• c) changes in the assessment of the purchase option;
• d) change in the assessment of the lease term resulting from extension or termination of the exercise of the purchase option; or
• e) lease modifications of the underlying asset, scope, and other terms and conditions.

When the lease liability is remeasured due to the aforementioned changes in the index or rate used to determine lease payments, changes in the residual value guarantee amount, and changes in the evaluation of purchase, extension or termination options, 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 remaining remeasured amount is recognized in profit or loss.

The changes in (iv) and (v) decreases the scope of a lease. When a lease modification decreases the scope of a lease, the carrying value of the right-of-use asset is decreased to reflect partial of full termination of the lease liability, and any gain or loss resulting from the aforementioned derecognition is immediately recognized in profit or loss.

The Company records right-of-use assets and lease liabilities defined as not investment properties in a single line item in the balance sheets.

3) Where the Company is a lessor:

A lease is classified as a finance lease when the terms of the lease transfer substantially all the risks and rewards incidental to the ownership of the subject asset to the lessee; otherwise, it is classified as an operating lease.

If the Company is a sublessor, it will handle the main lease and sub-lease transactions separately, and use the right-of-use assets generated by the main lease to evaluate the classification of the sub-lease transactions. If the main lease is a short-term lease and the recognition exemption applies, the sublease transaction should be classified as an operating lease.

Under finance leases, lease payments include lease payments that depend on changes in indices or rates. Net investment in leases is measured at the present value of lease receivables plus original direct costs and expressed as finance lease receivables. Financing income is allocated to each accounting period to reflect the fixed rate of return on the unexpired net lease investment of the Company in each period.

Under operating leases, lease payments after deducting lease incentives are recognized as revenue on a straight-line basis over the relevant lease term. The initial direct costs arising from acquisition of operating leases is added to the carrying amount of the underlying assets; and an expense is recognized for the lease on a straight-line basis over the lease term.

m. Investment Properties

Investment property is real estate held for rent or for capital appreciation or both (including real estate under construction for such purposes). Investment property also includes land that has not yet been determined for future use. and is considered to be held for capital appreciation.

Investment property is initially measured at costs (including transaction costs) and is subsequently measured at costs less accumulated depreciation and accumulated impairment losses.

The Company provides depreciation on a straight-line basis, which is the balance of the asset cost less the residual value over the estimated useful life of the investment real estate. The useful life of investment property buildings and construction is 5 to 45 years.

The cost of self-constructed investment property includes the cost of raw materials and construction, any other costs directly attributable to bringing the investment property to a serviceable condition, and the capitalized cost of borrowings.

Investment property is derecognized when it is disposed of or permanently ceased to be used and no future economic benefits are expected from the disposal. The amount of gain or loss arising from the derecognition of investment property is the difference between the net disposal price and the carrying amount of the asset and is recognized in profit or loss for the period.

When the use of investment property is changed, the reclassification is based on the carrying amount of the property at the time of the change of use.

n. Intangible Assets

The intangible assets acquired by the Company are measured at cost less accumulated amortization and accumulated impairment.

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenses are recognized as profit or loss upon occurrence.

Intangible assets are amortized on a straight-line basis over their estimated useful lives from the time they reach a serviceable condition as follows.

Land use rights:	50 years (according to the contract)
Computer software:	3 ~ 10 years

The residual value, amortization period, and amortization method for an intangible asset with a finite useful life shall be audited at least annually at each fiscal year-end. Any change shall be accounted for as a change in accounting estimate.

o. Impairment of Non-financial Assets

The Company assesses at the end of each reporting period whether there is any indication that the carrying amount of non-financial assets (other than inventories and deferred income tax assets) may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.

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.

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

If the recoverable amount of individual asset or the cash-generating unit is lower than its carrying amount, the carrying amount of the asset or the cash-generating unit shall be reduced to the recoverable amount and the impairment loss shall be recognized immediately in loss for the year.

If an impairment loss is reversed subsequently, the carrying amount of the individual asset or cash generating unit is raised to its recoverable amount, provided that the increased carrying amount shall not exceed the carrying amount that would have been determined had no impairment loss been recognized in prior years. The reversed impairment loss is recognized immediately in profit or loss for the year.

p. Trade and Notes Payables

Trade and notes payables are obligations to be paid for raw materials, goods or services obtained from suppliers in the normal course of business. They are measured at fair value on initial recognition and subsequently measured at amortized cost using the effective interest method, except for short-term accounts payable and notes that are unpaid interest, which are subsequently measured at the original invoice amount because the effect of discounting is immaterial.

q. Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, and it is probable that the Company will be required to settle the obligation and the amount of the obligation can be reliably estimated.

Provisions are measured at the best estimate including risks and uncertainties of the expenditure required to settle the obligation on the last day of the reporting period. If provisions are measured at the estimated cash flows to settle the present obligation, the carrying amount of such provisions is equivalent to the present value of such cash flows.

The provision for warranty is estimated based on the contractual agreements and management's best estimate (based on historical warranty experience) of future economic outflows resulting from the project maintenance and warranty obligations.

r. Deposits Received

The deposits received by the Company are mainly for the purpose of ensuring the performance of construction contracts under the construction contracts. Deposits received are recognized as deposits when cash is received and are refunded when the guarantee contract is fulfilled.

• s. Revenue and cost recognition
• 1) Sales of premises

The Company is principally engaged in the construction and sales of property, and the recognition of revenue is based on the transferring of property ownership. For the contracted sales of residential units, due to contract restrictions, the Company usually does not apply the piece of real estate to other purposes. Consequently, revenue is recognized upon either transfer of legal ownership or delivery of the piece of real estate to customers, whichever occurs first in the reporting period, despite that the other occurs in the subsequent period.

Revenue is measured based on the transaction price of the contractual agreements. When sales happen after construction is completed, in most cases, consideration is made upon transfer of legal ownership; however, in some cases, payment of accounts may be deferred under contractual agreements, and if a material financial component is included, the transaction price is adjusted to reflect the impact of the material financial component. When sales happen before construction is completed, consideration is payable in installments during the period from signing a contract to transfer of legal ownership of the real property. If a significant financing component is included in the contract, the installments are discounted at the interest rate of the construction loan to reflect the effect of time value of money. Prepayments are recognized as a contract liability, and discounts reflecting the effect of time value of money are recognized as interest expenses and contract liabilities. The accumulated contract liabilities are reclassified as revenue upon the transfer of legal ownership.

2) Financial composition

The Company's sales contract of pre-sale homes contains provisions for advance payment from customers, and the time between advance receipt and commodity ownership transfer is longer than one year. According to IFRS 15, if the Company judges that there are significant financing components in an individual pre-sale home contract, it shall adjust the amount of the commitment consideration and recognize the interest cost. In addition, IFRS 15 states that companies should determine the significance of the financing component only at the contract level, rather than the financial level at the portfolio level.

3) Rental revenue

Revenue from lease is recognized when an asset is actually used in lease, provided that it is probable the economic benefits will flow to the Company and the amount of revenue can be measured reliably. The related costs are recognized in line with revenues.

4) Incremental costs of obtaining a contract

If the Company expects to recover the incremental cost for acquiring the customer contract, the cost will be recognized as asset. The incremental cost of acquiring contract is cost that will arise in acquiring customer contract and will not arise otherwise. The contract acquisition cost no matter the contract will happen or not is recognized as expense, unless the cost is explicitly collectable from customer no matter the contract is acquired or not.

If the increment cost of acquiring contract is recognized by asset and the asset amortization period is within one year by Company using practical expediency method, the incremental cost will be recognized as expense upon occurrence.

• t. Borrowing costs
• 1) Borrowing costs directly attributable to the acquisition or construction of a qualifying asset are included as part of the cost of the asset until substantially all of the activities necessary to bring the asset to its intended state of use have been completed.

Special loans, such as investment income from temporary investments prior to capitalization, are deducted from the cost of loans eligible for capitalization.

Except for the above, other borrowing costs are recognized in profit and loss in the year they are incurred.

2) Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. When there is no evidence of the possibility that some or all the facility will be drawn down, the fee is recognized as a prepayment and amortized over the period of the facility to which it relates.

• u. Employee Benefit
• 1) Defined contribution plans

Obligations for contributions to defined contribution pension plan are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

2) Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company's net obligation in respect of a defined benefit pension plan is calculated separately for each plan by estimating the amount discounted to present value of the future benefit that employees have earned in return for their service in the current and prior periods. The fair value of any plan assets are deducted. The calculation is performed annually by a qualified actuary using the projected unit credit method. The discount rate is the yield on the reporting date on corporate bonds or government bonds that have maturity dates approximating the terms of the Company's obligations and are denominated in the same currency in which the benefits are expected to be paid.

The costs of defined benefits under the defined benefit pension plan include service cost, net interest, and the remeasurement amount. The cost of services (including the cost of services of the current period) and the net interest of the net defined benefit liabilities (assets) are recognized as employee benefit expenses. Remeasurement (comprising actuarial gains and losses, and return on plan assets net of interests) is recognized in other comprehensive income and included in retained earnings, and is not recycled to profit or loss in subsequent periods, costs related to prior service costs are recognized immediately in profit or loss.

Net defined benefit liabilities (assets) are the deficit of the contribution made according to the defined benefit pension plan. A net defined benefit asset shall not exceed the present value of the contributions to be refunded from the plan, or the reductions in future contributions.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognized in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognized immediately in profit or loss.

3) Short-term employee benefits

The obligation for short-term employee benefits is measured on undiscounted basis, and recognized as expense at the time of provision of relevant services.

For expected payment amount under short-term cash bonus or bonus plan, if the Company undertakes current obligation of legal or constructive payment for the previous provision of services by employees and the obligation can be reliably estimated, the amount is recognized as liability.

v. Income Tax

Income tax expenses include the tax in the current year and deferred income tax. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

Current taxes include tax payables and tax deduction receivables on taxable income (deficits) for the year calculated using the statutory tax rate on the reporting date or the actual legislative tax rate, as well as tax adjustments related to prior years. The additional business income tax levied on the undistributed earnings is recognized as income tax expense on the date when the distribution of earnings is resolved in the Shareholders' Meeting.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. The temporary difference for the following conditions will not be recognized as deferred income tax:

• 1) Assets and liabilities that are initially recognized but are not related to a business combination which have no effect on net income or taxable gains (losses) at the time of the transaction.
• 2) Temporary differences arising from equity investments in subsidiaries or joint ventures where there is a high probability that such temporary differences will not reverse.
• 3) Initial recognition of goodwill.

Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities may be offset against each other if the following criteria are met:

• 1) The entity has the legal right to settle tax assets and liabilities on a net basis; and

• 2) The taxing of deferred tax assets and liabilities fulfils one of the scenarios below:

• a) Levied by the same taxing authority; or

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

A deferred tax asset is recognized for the carry-forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the benefit of part or the deferred tax asset will be utilized, or to reverse a reduction to the extent that it becomes probable that sufficient taxable income will be available.

w. Segment information

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses.

x. Earnings per share

The Company presents the basic and diluted earnings per share of shareholders of common stock equity. The basic earnings per share are calculated based on the profit attributable to the ordinary shareholder of the Company divided by the weighted average number of ordinary shares outstanding. The diluted earnings per share is calculated based on the profit attributable to ordinary shareholders of the Company, divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. The Company's employee bonus allotment shares, which have not been approved by the shareholders' meeting and may be issued in shares, are potential common shares.

y. Dividend distribution

Dividends are recorded in the Company's financial statements in the period in which they are approved by the Company's shareholders. Cash dividends are recorded as liabilities. Stock dividends are recorded as stock dividends to be distributed and reclassified to ordinary shares on the base date of new share issuance.

z. Treasury shares

Issued shares repurchased by the company are recognized in "treasury stock" as a deduction to equity based on the amount of consideration paid during share buyback (including directly attributable costs). If the disposal price of treasury stock is higher than the carrying amount, the difference is recognized as capital reserve-treasury stock transaction; if the disposal price is lower than the carrying amount, the difference will offset the capital reserve arising out of transaction of the same type of treasury stock; if insufficient, the retained earnings will be debited. The carrying amount of treasury stock is calculated by weighted averaging according to reason of recovery.

In writing off treasury stock, the capital reserve will be debited according to equity ratiofor shares issuance premium and capital, if the carrying amount is higher than the sum of face value and shares issuance premium, the difference will offset the capital reserve arising out of the same type of treasury stock; if insufficient, the retained earnings will be offset; if the carrying amount is lower than the sum of face value and shares issuance premium, the capital reserve arising out of transaction of the same type of treasury stock will be credited.

1. Main Source of Significant Accounting Judgment, Estimation, and Assumption Uncertainties

The preparation of these parent company only financial statements requires management to make critical judgments for applying the Company's accounting policies with critical assumptions and estimates concerning future events. If there is any difference between any significant accounting estimates and assumption made and actual results, the historical experience and other factors will be taken into account in order to continue assessment and adjustment. Such 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. Please see below for the description of significant accounting judgments, estimation and assumption uncertainties.

a. Valuation of investment properties

In evaluating the impairment of investment properties, the Company uses the income method of the valuation method to calculate rents based on the useful life of the property and uses the discount factor to capitalize the real estate price as the basis for evaluation. Any changes in the market, changes in economic conditions, obsolescence, physical damage, interest rates, etc., may cause changes in the future.

b. Valuation of inventories

As inventories are stated at the lower of cost and net realizable value, the Company shall determine the net realizable value of inventories at the end of the reporting period using judgments and estimates.

The Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value at the end of the reporting period, and writes down the cost of inventories to the net realizable value. This inventory valuation is based on inventory nature, inquiries into the selling prices of neighboring regions or the selling prices of units sold, and is therefore subject to significant changes.

c. Provisions

Provisions are provisions for post-sale warranty liabilities, which are the present value of the Company's management's best estimate of future economic outflows resulting from warranty obligations. The estimates are based on contractual agreements and management's historical warranty experience, and are subject to adjustment due to construction materials, construction methods or other events that affect product quality. These estimates are primarily based on economic outflows over the future warranty period and are subject to change.

d. Realizability of deferred income tax assets

Deferred income tax assets are recognized only to the extent that it is probable that future taxable income will be available against which the deductible temporary differences can be utilized. Assessment of the realizability of deferred income tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. The global economic environment and industry environment transition and decree changes may incur significant adjustment of deferred tax assets.

• 1. Descriptions of Material Accounting Items
• a. Cash and cash equivalent

Item	December 31, 2020	December 31, 2019
Cash on hand and petty cash	\$78	\$50
Demand deposits	497,196	318,276
Checking deposits	50,124	44
Total	\$547,398	\$318,370

• 1) The Company possesses good credit with financial institutions, and contacts with several financial institutions to diversify credit risk, anticipated possibility of default is very low, the exposure cash amount on maximum credit risks at the end of the reporting period is same as cash equivalents
• 2) For the disclosed information on the interest rate risk and sensitivity analysis of the financial assets and liabilities of the Company, please refer to Note XII.
• b. Financial assets at fair value through profit or loss

Item	December 31, 2020	December 31, 2019
Current
Domestic listed stocks	\$89,930	\$87,400
Non-current	December 31, 2020	December 31, 2019
Domestic unlisted stocks (venture capital)	\$82	\$82

• 1) The Company's investment in domestic unlisted stocks has been designated as investments at fair value through profit or loss.
• 2) The Company recognized a valuation loss of NT\$7,599 thousand in 2020 and a valuation gain of NT\$39,935 thousand in 2019, plus a loss of NT\$10,365 thousand in 2020 and a gain of NT\$291 thousand in 2019 from disposal of financial assets at fair value through profit or loss.
• 3) The Company has disclosed the credit and interest rate risks associated with financial instruments in Note XII.
• 4) None of the financial assets of the Company has been pledged as collateral.
• Item December 31, 2020 December 31, 2019 Notes receivable Measured at amortized cost Less than 1 year \$40,159 \$56,710 Over 1 year 0 52,000 Total \$40,159 \$108,710 Trade receivables Measured at amortized cost Less than 1 year \$101,539 \$50,026 Less: Allowance for doubtful accounts - Trade receivables (22) (22) Total \$101,517 \$50,004 Installment receivables Measured at amortized cost Less than 1 year \$0 \$195 Over 1 year 0 0 Total \$0 \$195

• c. Note and trade receivables

• 1) The Company's long-term notes receivable and long-term installment receivable of more than one year are classified as non-current assets.

• 2) The installment receivables from the Company provide customers with installment payments for the final payment of their homes over a period of approximately one to three years, and a second mortgage is created on each of the homes as security for the payments.
• 3) The Company's long-term notes receivable of more than one year represent advance payments from customers for decoration work. The period of one to three years is due

to the time required for design and construction for the purchase of the rough housing units, and revenue is recognized upon completion and acceptance of the decoration.

4) The Company applies the simplified approach on the estimation of expected credit losses for all notes receivable (including long-term notes receivable) and trade receivables (including installment receivables), that is, a loss allowance is recognized based on the lifetime of expected credit losses. To measure the expected credit losses, notes and accounts receivables were grouped based on shared characteristics of credit risk on remaining payments before due date, and forward-looking information was incorporated as well. The expected credit loss of notes receivable (including longterm notes receivable) and trade receivables (including installment receivables) of the Company is as follows:

Carrying amount of notes receivable (including long-term notes receivable) and trade receivables (including long-term	Weighted average expected credit loss ratio	Allowance for expected credit losses during the period
\$141,676	0%	\$0
0	0%	0
22	100%	22
\$141,698		\$22
Carrying amount of notes receivable (including long-term notes receivable) and trade receivables (including long-term	Weighted average expected credit loss ratio	Allowance for expected credit losses during the period
		\$0
	0%
22	100%	0 22
	installment receivables) installment receivables) \$158,867 42	December 31, 2020 December 31, 2019 0%

The changes in the allowance for losses on notes and trade receivables of the Company were as follows

	December 31, 2020	December 31, 2019
Beginning balance	\$22	\$22
Increase in the current period	0	0
Ending balance	\$22	\$22

• 5) The majority of the credit period of the Company's receivables is the date of transfer of ownership of the premises to the bank, or the date of credit card payment for the premises and credit card payment for food and beverage services and room accommodations to the bank. The Company is in the construction and tourism industry and has a large and unrelated customer base, so the concentration of credit risk is limited. Please refer to Note XII for related credit risk information.
• 6) The Company's notes receivable (including long-term notes receivable) and trade receivables (including installment receivables) were not discounted or provided as collaterals.
• d. Other receivables

Item	December 31, 2020	December 31, 2019
Other receivables - related parties	\$240	\$285
Other receivables	750,063	66
Total	\$750,303	\$351

• 1) Other receivables related parties are the receivables from landlords for their share of sales and related parties for their share of expenses.
• 2) The Company's other receivables were assessed not to be impaired and were not past due.
• e. Inventories

Item	December 31, 2020	December 31, 2019
Buildings held for sale	\$7,612,198	\$10,040,381
Land held for sale	3,067,455	4,579,585
Land under construction	2,018,413	2,663,463
Construction in progress	694,670	747,836
Land held for construction	15,648,922	15,648,922
Prepayment for land	140,281	0
Less: Provision for loss of inventory	(542)	(12,833)
Total	\$29,181,397	\$33,667,354

Item	December 31, 2020	December 31, 2019
1) Buildings held for sale
Wistron Financial Building	\$0	\$10,536
Mandala (Ji Jing)	21,194	30,820
Xiande Section No. 826	15,262	15,262
King's Town Hyatt	801,104	884,033
Hua Shang	114,478	114,478
Hu Li Fang	0	15,862
Tian Feng	145,518	145,014
Ju Dan	323,529	402,600
King's Town	2,233,297	2,356,373
Yuashan Compound	0	13,015
Shi Shang King's Town	249,997	455,958
King's Town Garden	1,003,595	1,482,476

Yue He Di	131,661	202,526
Mei Shu Huang Ju	1,953,523	3,123,915
Yiwen Court	614,443	787,111
Xiang King's Town	4,194	0
Other projects	403	402
Total	\$7,612,198	\$10,040,381
Less: Provision for loss of inventory	(403)	(6,466)
Net	\$7,611,795	\$10,033,915

Item	December 31, 2020	December 31, 2019
2) Land held for sale
Wistron Financial Building	\$0	\$13,273
Mandala (Ji Jing)	16,657	24,223
Xiande Section No. 826	6,247	6,247
King's Town Hyatt	58,510	65,958
Hu Li Fang	0	7,374
Tian Feng	62,443	62,443
Ju Dan	194,866	248,664
King's Town	235,794	253,410
Yuashan Compound	0	9,062
Shi Shang King's Town	164,196	300,458
King's Town Garden	521,512	813,211
Yue He Di	128,525	201,851
Mei Shu Huang Ju	1,341,896	2,146,941
Yiwen Court	332,401	426,331
Xiang King's Town	4,269	0
Other projects	139	139
Total	\$3,067,455	\$4,579,585
Less: Provision for loss of inventory	(139)	(6,367)
Net	\$3,067,316	\$4,573,218

	Item		December 31, 2020
3)	Land under construction and construction in progress	Land under construction	Construction in progress	Total
	Fuhe Section No. 698-1	\$353,729	\$76,007	\$429,736
	Xindu Section No. 321, 163-1, 164	693,265	258,844	952,109
	Aiqun No. 246, 5 in total (King's Town World of Heart)	971,419	359,819	1,331,238
	Total	\$2,018,413	\$694,670	\$2,713,083

Item		December 31, 2019
3) Land under construction and	Land under	Construction in
construction in progress	construction	progress	Total
Xinzhuang No. 92, 95 (Xiang King's Town)	\$645,050	\$533,259	\$1,178,309
Fuhe Section No. 698-1	353,729	65,855	419,584
Xindu Section No. 321, 163-1,	693,265	53,129	746,394
164
Aiqun No. 246, 5 in total (King's Town World of Heart)	971,419	95,593	1,067,012
Total	\$2,663,463	\$747,836	\$3,411,299
Item	December 31, 2020		December 31, 2019
4) Land held for construction
Kaohsiung Chenggong Section No.
84		\$14,533	\$14,533
Kaohsiung Chenggong Section No.
60-1, 62-64		540,267	540,267
Kaohsiung Longzhong Section No.		370,653	370,653
191
Kaohsiung Longzhong Section No.		1,610,110	1,610,110
129-3, 129-4 Kaohsiung Longzhong Section No.
128-4, etc., 3 in total		716,926	716,926
Kaohsiung Chenggong Section No.
74, 78		28,397	28,397
Kaohsiung Chenggong Section No.		13,805	13,805
70
Kaohsiung Chenggong Section No.83		19,016	19,016
Kaohsiung Qinghai No. 229		4,278,594	4,278,594
Kaohsiung Aiqun No. 2738-2		30,279	30,279
Kaohsiung Qinghai No. 126		685,719	685,719
Kaohsiung Qinghai No. 127		662,012	662,012
Kaohsiung Qinghai No. 128		379,145	379,145
Kaohsiung Longzhong Section No.
128-3		52,266	52,266
Kaohsiung Bohsiao Section No.		655,287	655,287
1140, 7 in total
Kaohsiung Lantian Middle Section		757,742	757,742
No. 30-2
Kaohsiung Xingnan Section No. 11 Kaohsiung Longzhong Section No.		259,585	259,585
22		\$1,998,033	\$1,998,033
Kaohsiung Xinmin No. 160		792,708	792,708
Kaohsiung Xinmin No. 159		828,072	828,072
Transferable land and deformed
land		955,773	955,773
Total		\$15,648,922	\$15,648,922
Item		December 31, 2020	December 31, 2019

5)	Prepayment for land
	Tainan Anan District, Caohu Phase I	\$50,033	\$0
	Tainan Yuguang Section No. 880, 3 in total	35,023	0
	Kaohsiung Chenggong Section No. 73	8,880	0
	Kaohsiung Qiaotou Shixing Section No. 924	1,400	0
	Kaohsiung Qiaotou Shixing Section 925, 3 in total	10,000	0
	Kaohsiung Qiaotou Shixing Section 927, 3 in total	9,250	0
	Kaohsiung Qiaotou Shixing Section 928, 3 in total	11,495	0
	Kaohsiung Qiaotou Shixing Section 967	660	0
	Kaohsiung Qiaotou Shixing Section 968	4,260	0
	Kaohsiung Chenggong Section No. 79	8,880	0
	Kaohsiung Qiaotou Shixing Section 867	400	0
	Subtotal	\$140,281	\$0

• 6) The above-listed premises under construction are residential buildings and translucent houses built in Kaohsiung City. The amount of interest capitalized in construction in progress was NT\$42,126 thousand and NT\$133,144 thousand in 2020 and 2019, respectively.
• 7) The land purchased or sold in Kaohsiung City and Tainan City is recorded as prepaid land at the time of signing the contract and paying for each installment and is transferred to the land for future construction after the transfer. The amount of interest capitalized for operating sites and prepaid land was NT\$56 thousand and NT\$6,811 thousand in 2020 and 2019, respectively.
• 8) Please refer to Note VIII to the financial statements for the pledge of premises for sale, premises under construction and construction sites.
• 9) Cost of goods sold related to inventories amounted to NT\$5,511,5989 thousand and NT\$3,227,704 thousand in 2020 and 2019, respectively; neither of which included NT\$12,291 thousand and NT\$9,300 thousand of inventory write-down benefit in 2020 and 2019, respectively.
• f. Other current assets

Item	December 31, 2020	December 31, 2019
Prepaid expenses	\$431,447	\$420,442
Input tax	513	6,203
Tax overpaid retained for offsetting the future tax payable	25,919	133,724
Tax refunds	14	0
Payments on behalf of others	8,565	11,159
Total	\$466,458	\$571,528

Prepaid expenses consist of prepayments for various services, costs related to construction in progress and insurance premiums.

g. Investments accounted for using the equity method

	December 31, 2020		December 31, 2019
Name of Investee	Amount	Shareholding	Amount	Shareholding
H2O Hotel Co., Ltd.	\$54,570	100%	\$40,685	100%

1) The Company invests in subsidiaries using the equity method. The basic information of the subsidiaries is as follows.

				Percentage of all
				ownership interest and
				voting rights held by the
			Company
Name of Investee	Main Operation Locations	Principal Business Operation	December 31, 2020	December 31, 2019
H2O Hotel Co., Ltd.	Taiwan	Hotel catering business	100%	100%

2) Aggregate financial information of the Company's associates is as follows.

Balance Sheet

	H2O Hotel Co., Ltd.
	December 31, 2020 December 31, 2019
Current assets	\$98,650	\$94,107
Non-current assets	2,504,894	2,561,985
Current liabilities	(162,438)	(168,006)
Non-current liabilities	(2,412,742)	(2,460,507)
Net assets	\$28,364	\$27,579

Comprehensive Income Statement

	H2O Hotel Co., Ltd.
	December 31, 2020	December 31, 2019
Net Operating Revenue	\$225,927	\$258,114
Gross profit	\$49,273	\$90,053
Net Income	(\$69,215)	(\$61,478)
Other comprehensive income/(loss) (after tax)	\$0	\$0
Total comprehensive income	(\$69,215)	(\$61,478)

• 3) The investment income or loss recognized under the equity method is based on the financial statements of the subsidiaries for the same period audited by a certified public accountant, and the share of investment income or loss is recognized based on the holding period. In December 2020 and December 2019, H2O Hotel Co., Ltd. increased its capital by cash in the amount of NT\$70,000 thousand, all of which was invested by the Company. The investment cost of the investment in H2O Hotel Co., Ltd. was NT\$320,000 thousand and NT\$250,000 thousand as of December 31, 2020 and 2019, respectively. The share of loss recognized for the subsidiary was NT\$69,215 thousand and NT\$61,478 thousand in 2020 and 2019, respectively.
• 4) The Company leases real estate to its subsidiary, H2O Hotel Co., Ltd. which is classified as a right-of-use asset and lease liability under IFRS 16 as of January 1, 2019, while the Company is classified as an operating lease, resulting in a difference in profit or loss recognition, the amount of which affects the Company's share of

benefit recognized using the equity method in 2020 and 2019, respectively The difference affects the Company's share of benefit recognized under the equity method by NT\$13,100 thousand and NT\$13,106 thousand in 2020 and 2019, respectively.

h. Property, plant and equipment

	Office Equipment	Other Equipment	Total
Cost
2020.01.01	\$5,748	\$783	\$6,531
Increase	0	611	611
Disposal and obsolescence	(493)	(163)	(656)
2020.12.31	\$5,255	\$1,231	\$6,486
2019.01.01	\$5,748	\$681	6,429
Increase	0	102	102
2019.12.31	\$5,748	\$783	\$6,531
Accumulated depreciation and impairment
2020.01.01	\$2,861	\$423	\$3,284
Depreciation	1,177	205	1,382
Disposal and obsolescence	(493)	(163)	(656)
2020.12.31	\$3,545	\$465	\$4,010
2019.01.01	\$1,629	\$277	\$1,906
Depreciation	1,232	146	1,378
2019.12.31	\$2,861	\$423	\$3,284
Net carrying amount
2020.12.31	\$1,980	\$766	\$2,476
2019.12.31	\$2,887	\$360	\$3,247
2019.01.01	\$4,119	\$404	\$4,523

The Company didn't pledge any property, plant and equipment as collateral.

• i. Right-of-use assets
• 1) Major lease activities and terms

The Company acquired the land right of the Kaohsiung Municipal Government located at No. 22, Longbei Section, Gushan District for the construction of a tourist hotel for a period of 50 years and agreed that the Company shall not assign, mortgage, lease or lend the land to others for construction use except with the prior consent of the Kaohsiung Municipal Government, and upon the termination of the continuance period, the Company shall have no contractual preferential rights to acquire all the leased land.

2) Below is the carrying amounts of right-of-use assets and their recognized depreciation expenses:

Land

Cost of right-of-use assets

Balance as of January 1, 2020	\$65,760
Balance as of December 31, 2020	\$65,760
Balance as of January 1, 2019	\$0
Impacts of retrospective application of IFRS 16	65,760
Balance as of January 1, 2019 after adjustment	\$65,760
Balance as of December 31, 2019	\$65,760
Depreciation of right-of-use assets
Balance as of January 1, 2020	\$1,515
Current depreciation	1,514
Balance as of December 31, 2020	\$3,029
Balance as of January 1, 2019	\$0
Current depreciation	1,515
Balance as of December 31, 2019	\$1,515
Carrying amount
Balance as of December 31, 2020	\$62,731
Balance as of December 31, 2019	\$64,245

3) Please refer to Note VI(XVI) for the description of lease liabilities.

j. Investment properties

	Land	Buildings	Total
Cost
2020.01.01	\$0	\$973,094	\$973,094
Purchase	0	1,223	1,223
Reversal with other payables	0	(2,684)	(2,684)
2020.12.31	\$0	\$971,633	\$971,633
2019.01.01	\$0	\$971,760	\$971,760
Purchase	0	1,334	1,334
2019.12.31	\$0	\$973,094	\$973,094

	Land	Buildings	Total
Accumulated
depreciation
2020.01.01	\$0	\$162,774	\$162,774
Current depreciation	0	61,168	61,168
2020.12.31	\$0	\$223,942	\$223,942
2019.01.01	\$0	\$101,931	\$101,931
Current depreciation	0	60,843	60,843
2019.12.31	\$0	\$162,774	\$162,774
Impairment
2020.01.01	\$0	\$0	\$0
2020.12.31	\$0	\$0	\$0
2019.01.01	\$0	\$0	\$0
2019.12.31	\$0	\$0	\$0
Net carrying amount
2020.12.31	\$0	\$747,691	\$747,691
2019.12.31	\$0	\$810,320	\$810,320
2019.01.01	\$0	\$869,829	\$869,829

1) Investment real estate - buildings were acquired from the Kaohsiung City Government for the construction of a tourist hotel at Longbei Section No. 22, and leased to a subsidiary upon completion. The rental income from investment real estate and direct operating expenses were as follows:

	January 1 to	January 1 to
	December 31, 2020	December 31, 2019
Rental income from investment properties	\$46,429	\$74,286
(recorded as operating income) Direct	75,826	76,571
operating expenses from investment properties
that generate rental income in the current

period

• 2) The fair value of investment property buildings as of December 31, 2020 and 2019 was NT\$2,203,554 thousand and NT\$2,225,046 thousand, respectively, which was valued based on the discounted amount of investment property rental income.
• 3) Please refer to Note VIII to the financial statements for the guarantees provided by investment properties.
• 4) Please refer to Note VI(XVI) for information on investment properties and land held by the Company for construction and premises for sale that are leased to others under operating leases.

k. Intangible assets

	Land use rights	Other intangible assets	Total
Cost
Balance as of January 1, 2020	\$200,020	\$2,116	\$202,136
Increase	0	279	279
Derecognition maturity	0	(766)	(766)
Balance as of December 31, 2020	\$200,020	\$1,629	\$201,649
Balance as of January 1, 2019	\$200,020	\$2,123	\$202,143
Increase	0	101	101
Derecognition maturity	0	(108)	(108)
Balance as of December 31, 2019	\$200,020	\$2,116	\$202,136
Accumulated amortization and impairment Balance as of January 1,	\$30,002	\$1,420	\$31,422
2020
Amortization	4,001	316	4,317
Derecognition maturity	0	(766)	(766)
Balance as of December 31, 2020	\$34,003	\$970	\$34,973
Balance as of January 1, 2019	\$26,002	\$970	\$26,972
Amortization	4,000	558	4,558
Derecognition maturity	0	(108)	(108)
Balance as of December 31, 2019	\$30,002	\$1,420	\$31,422
Net carrying amount
Balance as of December 31, 2020	\$166,017	\$659	\$166,676
Balance as of December 31, 2019	\$170,018	\$696	\$170,714
Balance as of January 1, 2019	\$174,018	\$1,153	\$175,171

1) Amortization expense for the Company's intangible assets for 2020 and 2019 is reported in the following items

Item	2020	2019
Other operating costs	\$4,001	\$4,000
Operating expenses	316	558
Total	\$4,317	\$4,558

• 2) In July 2012, the Company entered into a land right deed with the Kaohsiung City Government for the establishment of the land at Lot 22, Sec. 22, Longbei, Kaohsiung City, with a royalty amount of \$200,020 thousand for the period from July 2012 to July 2062 for the operation of a tourist hotel.
• 3) As of the end of each reporting period, none of the intangible assets of the Company has been pledged as collateral.
• l. Short-term borrowings/ Short-term bills payable

1) Short-term borrowings	December 31, 2020	December 31, 2019
Secured loans	\$4,488,806	\$4,954,780
Unused limit - short-term borrowings	\$2,047,854	\$1,001,880
Interest rate range
Secured loans	1.387%~1.585%	1.545%~1.8585%
Repayment period	2021.01.01~112.05.25	2020.01.02~2020.11.20
2) Short-term bills payable	\$4,159,000	\$4,222,000
Less: Discount on short-term bills payable	(4,678)	(1,821)
Net	\$4,154,322	\$4,220,179
Unused limit - short-term bills payable	\$2,238,000	\$1,415,000
Interest rate range
Short-term bills payable	1.498%~1.623%	0.688%~1.959%

The Company pledged its own assets and related parties' real estate and stocks as collateral for bank loans and commercial paper, please refer to Notes VII and VIII.

m. Provisions - current

	Warranty provision
Balance as of January 1, 2020	\$31,504
Newly increased liability provision for the period	4,313
Balance as of December 31, 2020	\$35,817
Balance as of January 1, 2019	\$24,964
Newly increased liability provision for the period	6,540
Balance as of December 31, 2019	\$31,504

Provisions represents post-sale warranty expenses. The provision for warranty is based on historical experience and management's judgment of the present value of estimated future economic outflows, which are expected to be incurred within five years after the completion of the housing units.

n. Collection

	Item		December 31, 2020	December 31, 2019
	Land collections		\$9,045	\$23,021
	Building collections		20,960	31,531
	Decoration collections		26,400	9,200
	Collections - others		30,504	25,620
Total			\$86,909	\$89,372
o.	Long-term borrowings
Nature of borrowings	Borrowing period, repayment method and interest rate range		December 31, 2020	December 31, 2019
Long-term bank borrowings
Secured	From March 2020 to December	2028,	\$1,765,000	\$0
borrowings	interest is payable monthly, in one lump sum at maturity, at a floating rate of 1.73% as of December 31, 2020
Secured borrowings	From June 2019 to June 2026, interest is payable monthly, in one lump sum at		694,000	694,000
	maturity with floating interest rates ranging from 1.7% to 1.75% and 1.95% to 2% as of December 31, 2020 and 2019 respectively.
Secured	Original from January 3, 2012 to January 3,		272,000	272,000
borrowings	2016, then extended to January 3, 2020, then extended to January 3, 2024, interest is payable monthly, in one lump sum at maturity with floating interest rates of 1.54% and 1.9% as of December 31, 2020 and 2019.
Secured borrowings	The borrowing period is 15 years from July 2017 to July 2033 (including a grace period of 2 years). Interest is payable monthly during the grace period and the principal is repayable at the end of the grace period by the interest method with a floating interest rate of 1.54% and 1.85% on December 31, 2020 and 2019, respectively. Borrowings due within one year were thousand and NT\$0 thousand December 31, 2020 and 2019, respectively.	NT\$45,847 as of	576,881	621,855
Secured borrowings	From May 2019 to November 2023, interest is payable monthly in a lump sum at maturity with floating interest rates of 1.45% and 1.7% as of December 31, 2020 and 2019, respectively.		530,000	530,000

Nature of borrowings	Borrowing period, repayment method and interest rate range	December 31, 2020	December 31, 2019
Secured borrowings	From March 2020 to March 2025, interest is payable monthly in a lump sum at a floating rate of 1.45% as of December 31, 2020	\$1,300,000	\$0
Secured borrowings	From October 2019 to October 2022, interest is payable monthly in a lump sum at maturity with floating interest rates of 1.43% and 1.68% as of December 31, 2020 and 2019, respectively.	550,000	550,000
Secured borrowings	From November 2019 to November 2022, interest is payable monthly in a lump sum at maturity with floating interest rates of 1.43% and 1.68% as of December 31, 2020 and 2019, respectively.	50,000	50,000
Secured borrowings	From January 2020 to January 2023, interest is payable monthly in a lump sum at a floating rate of 1.43% as of December 31, 2020	75,000	0
Secured borrowings	From November 2019 to November 2022, interest is payable monthly in a lump sum at maturity with floating interest rates of 1.43% and 1.68% as of December 31, 2020 and 2019, respectively.	545,000	545,000
Secured borrowings	From January 2020 to January 2023, interest is payable monthly in a lump sum at a floating rate of 1.43% as of December 31, 2020	50,000	0
Secured borrowings	Interest is payable monthly from July 2019 to July 2021, with at least NT\$50,000 thousand of principal repayable on the date one year from the date of initial drawdown and the remainder due in one lump sum, at floating interest rates of 1.55% and 1.7% as of December 31, 2020 and 2019, respectively. Borrowings due within one year were transferred to NT\$89,986 thousand as of December 31, 2020.	89,986	255,700
Secured borrowings	From June 2020 to June 2023, interest is payable monthly, in one lump sum at maturity, at a floating rate of 1.606649% as of December 31, 2020	\$500,000	\$0
Secured borrowings	The borrowing was originally recorded as a short-term borrowing from January 2012 to August 2017 and was extended to May 2019 in 2014, and was subsequently extended to June 2021 due to business needs. Therefore, it is transferred to long-term loans. Interest is payable monthly, in one lump sum at maturity at a floating rate, which was fully	0	2,133,070

Nature of	Borrowing period, repayment method and	December 31,	December 31,
borrowings	interest rate range	2020	2019
	repaid in June 2020, with an interest rate of 2.10% to 2.15% as of December 31, 2019.
Secured	The borrowing was originally granted from	0	2,530,000
borrowings	June 2013 to October 2016 and was extended
	in June 2016 to June 2020. Interest is payable
	monthly, in one lump sum at maturity at a floating rate, which was fully repaid in
	March 2020, with an interest rate of
	2.215179% as of December 31, 2019.
Secured	From September 2017 to September 2020,	0	480,000
borrowings	interest is payable monthly, in one lump sum at maturity at a floating rate, which was fully
	repaid in May 2020, with interest rates of
	1.85% to 1.9% as of December 31, 2019.
Secured	From March 2019 to June 2021, interest is	0	599,430
borrowings	payable monthly, in one lump sum at
	maturity at a floating rate, which was fully repaid in April 2020 with an interest rate of
	2% as of December 31, 2019.
Secured borrowings	The borrowing was originally from October 2014 to October 2019, and was extended in	\$0	\$1,115,000
	February 2016 to October 2021, with an
	additional loan of NT\$172,000 thousand
	within the line of credit on March 21, 2017;
	interest is paid monthly, with the principal repaid at least 70% of the sale price of the
	premises and the remaining principal repaid
	in one lump sum at maturity, at a floating
	interest rate, and was fully repaid in March 2020, with an interest rate of 2.0201% at
	December 31, 2019.
Credit loans	From October 2018 to October 2020, interest	0	350,000
	is paid monthly and the principal is repaid in
	equal quarterly installments at a variable rate, which was fully repaid in September
	2020, with an interest rate of 1.6% as of
	December 31, 2019.
Total		\$6,997,867	\$10,726,055
	Less: Net long-term borrowings due within one year or	(135,833)	(3,632,000)
Net	one operating cycle Use this segment	\$6,862,034	\$7,094,055
Unused limit		\$1,560,000	\$3,864,945

Long-term bank borrowings were secured by the Company's own assets and real estate and stocks provided by related parties; please refer to Notes VII and VIII for details.

p. Lease agreements

1) The Company's lease liabilities are as follows

	December 31, 2020	December 31, 2019
Current	1,062	1,044
Non-current	62,628	63,690

Please refer to Note XII for maturity analysis.

The Company has no material issuance, repurchase or repayment of lease liabilities due to the addition or release of leases in 2020 and from January 1 to December 31, 2020 and 2019.

2) The amount of leases recognized in profit or loss was as follows

	2020	2019
Interest expense – lease obligations payable	\$1,110	\$1,128
Short-term lease expenses	\$7,491	\$8,024
Expense on leases with low value underlying assets	\$215	\$230
The amounts recognized in the statements of cash flows are:
	2020	2019
Total cash flows on lease	\$9,779	\$10,932

The Company selects to apply recognition exemptions to leases of vehicles and lowvalue business machines that qualify as short-term leases, and does not recognize the related right-of-use assets and lease liabilities for the said leases.

• 3) Lessor lease (recorded as operating income)
• a) The Company leases investment properties, premises for sale and construction sites, which are classified as operating leases because almost all the risks and remuneration attached to the ownership of the underlying assets have not been transferred.
• b) The Company recognized rental income based on operating lease contracts (recorded as operating income) of NT\$23,689 thousand and NT\$14,722 thousand for the years from January 1, to December 31, 2020 and 2019.
• c) The maturity analysis of lease payments under operating leases of the Company to report the total undiscounted lease payments to be received in the future is presented as follows:

	December 31, 2020	December 31, 2019
Within one year	\$71,305	\$85,682
1 to 5 years	34,437	101,740
Over 5 years	14,398	16,167
Non-discounted future cash flows of lease	\$120,140	\$203,589

• d) The Company has two signed leases that are not included in the above table. The lease for the period from October 1, 2019 to February 28, 2035 is currently in litigation with the lessee as described in Note IX, and the other lease for the period from January 1, 2020 to January 31, 2030 has not been determined by agreement and the official commencement date, therefore, neither lease has been collected since it was signed and therefore is not included in the above table.
• q. Deposits received

	December 31, 2020	December 31, 2019
Construction contract performance deposits	\$0	\$133,958
Lease deposits	2,878	2,878
Total	\$2,878	\$136,836

• r. Share capital
• 1) As of December 31, 2020 and December 31, 2019, the Company's total authorized share capital was NT\$4,500,000 thousand, with a par value of NT\$10 per share, and its paid-in capital were NT\$3,711,931 thousand and NT\$3,848,464 thousand, respectively, with 371,193 thousand and 384,846 thousand common shares issued, respectively, and payments for all issued shares have been received. Quantities of the Company's outstanding ordinary shares at the beginning and end of the periods were deemed reconciled as follows: (Unit: thousand shares)

	2020	2019
January 1	384,846	384,655
Cancellation of repurchase treasury shares	(14,189)	0
Capital increase by employee bonus	536	191
December 31	371,193	384,846

2) On May 13, 2020, the Company resolved by the Board of Directors to issue 535,736 new shares by transferring employees' remuneration of \$18,215 thousand, and the number of shares issued was calculated based on the closing price on the day before the board of directors' resolution. This capital increase was reported to the Financial Supervisory Commission on September 14, 2020, and the board of directors resolved on September 24, 2020, that the base date for the capital increase is September 25, 2020.

• 3) On March 13, 2020, the Company resolved by the Board of Directors to repurchase 10,000 thousand shares of the Company's ordinary shares. The repurchased shares will be canceled, and on June 19, 2020, the Board of Directors resolved to set June 29, 2020 as the base date for the capital reduction, and the change of registration was completed on July 23, 2020.
• 4) On June 19, 2020, the Company's board of directors resolved to repurchase 5,000 thousand shares of the Company's common stock. The repurchased shares will be canceled and the actual number of repurchased shares is 4,189 thousand, and on September 24, 2020, the board of directors resolved to set September 25, 2020 as the base date for the capital reduction, and the change was registered on October 21, 2020.
• 5) On June 27, 2019, the Company resolved at the shareholders' meeting to issue 191,450 new shares by transferring \$5,456 thousand of employees' remuneration, and the number of shares issued was calculated based on the closing price on the day before the resolution of the board of directors. This capital increase has been approved by the Financial Supervisory Commission on July 11, 2019, and the board of directors resolved the base date of capital increase to be August 1, 2019, and the change of registration was completed on August 30, 2019.
• 6) Treasury shares
• a) The reason for share re-acquisition and movements in the number of treasury stock are as follows:

		Reason for	December 31, 2020
Year of repurchase	Name of the Company holding the shares	share re acquisition	Thousand shares	Carrying amount
4th time	The Company	Maintain the Company's credit and shareholders' rights and interests, and handle the cancellation of shares	10,000	\$310,543

5th time	The Company	Maintain the Company's credit and shareholders' rights and interests, and handle the cancellation of shares	4,189	152,919
	Total	Cancel	(14,189) \$0	(463,462) \$0

There was no such situation on December 31, 2019.

• b) According to the Securities and Exchange Act, the number of shares outstanding repurchased by the Company shall not exceed 10% of the number of issued shares, and the total amount repurchased shall not exceed the sum of the Company's retained earnings, share premium, and realized capital surplus.
• c) Treasury shares held by the Company may be neither pledged nor assigned rights in accordance with the Securities and Exchange Act
• d) On June 19, 2020, the Company's Board of Directors resolved to repurchase 5,000 thousand shares of treasury shares in accordance with Article 28-2 of the Securities and Exchange Act to protect the Company's credit and shareholders' rights. 4,189 thousand shares were actually repurchased from June 22 to August 21, 2009, at an average purchase price of NT\$36.52 per share. On September 24, 2020, the Board of Directors resolved to cancel 4,189 thousand shares of treasury shares repurchased at a cost of NT\$152,919 thousand, using September 25, 2020 as the base date for capital reduction. Based on March 31, 2020, the maximum number of shares that the Company may repurchase is 37,484.6 thousand shares and the maximum amount of shares to be purchased is NT\$9,987,685 thousand.
• e) On March 13, 2020, the Company's Board of Directors resolved to repurchase 10,000 thousand shares of treasury stock in accordance with Article 28-2 of the Securities and Exchange Act to protect the Company's credit and shareholders' rights, and the repurchase was executed in full from March 16 to May 15, 2020, at an average purchase price of NT\$31.05 per share. On June 19, 2020, the board of directors resolved to cancel 10,000 thousand shares of treasury shares repurchased at a cost of NT\$310,543 thousand, using June 29, 2020 as the base date for capital reduction. Based on the calculation as of September 30, 2019, the maximum number of shares of the Company that the Company may repurchase is 38,484.6 thousand shares and the maximum amount of shares to be purchased is NT\$9,102,770 thousand.
• f) On June 19, 2020 and September 24, 2020, the Company's board of directors resolved to cancel 10,000 thousand and 4,189 thousand shares of treasury shares repurchased, reducing capital by NT\$100,000 thousand and NTNT\$41,890 thousand, respectively, with the base dates of June 29, 2020 and September 25, 2020, respectively, and after the cancellation of 10,000 thousand and 4,189 thousand shares issued, the number of common shares outstanding was 371,193 thousand. The difference between the carrying amount and the par value of treasury shares is adjusted to the capital surplus in proportion to the cancellation, and any deficit is then transferred to retained earnings.

s. Capital surplus

	December 31, 2020	December 31, 2019
Shares premium	\$40,015	\$36,474
Capital premium from previous year's employee bonuses	12,858	3,541
Cancellation of treasury shares transactions	(52,873)	0
Net	\$0	\$40,015

According to the Company Act, additional paid-in capital including the income derived from issuing shares at a premium and from endowments, in addition to being used to covering deficit, where there is no accumulated deficit in a company, shall be distributed by issuing new shares to shareholders in proportion to the number of shares being held or by cash. In addition, according to relevant provisions of the Securities Exchange Act, when allocating capital from the aforementioned additional paid-in capital, the combined capitalized amount each year shall not exceed 10 percent of the paid-up capital. A company shall not use the additional paid-in capital to make good its capital loss, unless the surplus reserve is insufficient to make good such loss.

t. Retained earnings

Based on the Articles of Incorporation, the annual earnings of the Company shall be first appropriated to pay taxes and offset accumulated losses before allocating 10% of the remaining earning to the legal reserve (not applicable where accumulated legal reserve has reached the amount required by law and regulations) and a special reserve in accordance to CMP's operating needs and pursuant to the applicable law and regulations. Any retained earnings available for distribution together with accumulated undistributed retained earnings may be proposed by the Board of Directors to appropriate and be resolved at the Annual General Meeting. The percentage of cash dividends shall not be less than 10% of the total amount distributed. The percentage shall be determined by the board of directors after considering the financial condition of the Company, except that no cash dividends may be paid when the debt ratio in the annual financial statements exceeds 50%. The ratio of stock dividends and cash dividends mentioned in the preceding paragraph shall be adjusted according to the relevant laws and regulations and regulations. The adjustment shall be proposed by the Board of Directors and submitted to the shareholders' meeting for resolution. Please refer to Note VI(XXV) for the employee compensation distribution policy set forth in the Articles of Incorporation.

1) Legal reserve

According to the Company Act, after-tax surplus profits shall first set aside 10% of said profits as legal reserve, unless legal reserve equals to the paid-in capital. Legal reserve may be used to offset deficit. The legal reserve shall be exclusively used to cover accumulated deficit, to issue new stocks or distribute cash to shareholders in proportion to their share ownership. The use of legal reserve for the issuance of stocks or cash dividends to shareholders in proportion to their share ownership is permitted provided that the balance of such reserve exceeds 25% of the Corporation's paid-in capital.

2) Special reserve

When the Company distributes its earnings, it should set aside from the earnings of the current period and the accumulated unappropriated earnings a special reserve which is equivalent to the amount of the net reductions of other equity in the current period. If the distributed earnings was appropriated from the accumulated unappropriated earnings of prior periods, a special reserve which is equivalent to the amount of the distribution should be appropriated. If subsequently there is a reversal of the reductions in other equity interest, earnings can be distributed from the reversal.

3) Dividend Distribution

The shareholders' meetings approved the distribution of earnings for years ended December 31, 2019 and 2018 on June 24, 2020 and June 27, 2019 as follows:

4) The proposal of distribution of earnings for 2020 was approved by the Company's board of directors on March 24, 2021, but has not yet been resolved by the shareholders' meeting; the proposal is as follows:

	2020
	Amount	Dividends per share (NT\$)
Legal reserve	\$168,468
Cash dividend	\$0	\$0

For related information, please visit the Market Observation Post System or other channels.

u. Operating revenue

	2020	2019
Land revenue	\$4,208,689	\$2,976,146
Building revenue	4,213,677	2,743,046
Lease revenue	67,596	85,621
Return and discount of premises revenue	(1,762)	0
Total	\$8,488,200	\$5,804,813

1) Revenue breakdown

	2020	2019
Major regional markets
Taiwan	\$8,488,200	\$5,804,813
	2020	2019
Major products/ service
Premises revenue	\$8,420,604	\$5,719,192
Lease revenue	67,596	85,621
Total	\$8,488,200	\$5,804,813
	2020	2019
Timing of revenue recognition:
At a fixed point in time	\$8,420,604	\$5,719,192
Performance obligations fulfilled over time	67,596	85,621
Total	\$8,488,200	\$5,804,813
2) Contract liabilities - current
	2020	2019

Sale of premises	\$494,825	\$475,690
Rental premises	878	40
Total	\$495,703	\$475,730

Changes in contract liabilities are mainly due to timing difference between performance obligations and customer payment.

The Company's contracts for the sale of pre-sale premises and advances from gift cards contain provisions for pre-receipt of payments from customers, and the time interval between the pre-receipt and the transfer of merchandise control is longer than one year. According to IFRS 15, contract liabilities related to sales of pre-sale of premises and advances from gift cards contracts were recognized.

The amount from the opening contract liabilities recognized in operating income was NT\$374,657 thousand and NT\$46,849 thousand from January 1 to December 31, 2020 and 2019, respectively.

v. Interest income

	2020	2019
Interest on bank deposits	\$145	\$190
Other interest income	62	87
Total interest income	\$207	\$277
w. Other income
	2020	2019
Dividend income	\$710	\$815
Other income - others	5,382	12,910
Total	\$6,092	\$13,725
x. Other gains and losses
	2020	2019
Gain (loss) on disposal of
financial assets at fair value	(\$10,365)	\$291
through profit or los
Gain (loss) on valuation of
financial assets at fair value
through profit or loss
	(7,599)	39,935
Others	(494)	(147)
Total	(\$18,458)	\$40,079
y. Finance costs
	2020	2019
Interest expenses	\$286,357	\$341,834
Bank borrowings
Less: Capitalization of interest	(42,182)	(139,955)
Finance costs	\$244,175	\$201,879

z. Post-retirement benefit plans

1) Defined contribution plans

The Company's retirement plan under the Labor Pension Act is a defined contribution retirement plan. The Company contributes 6% of employees' monthly salaries to the individual accounts of the Bureau of Labor Insurance. Under the plan, the Company has no legal or constructive obligation to make additional financial contributions after making fixed contributions to the Bureau of Labor Insurance. The Company recognized an expense of NT\$1,141 thousand and NT\$1,154 thousand in the parent company only statements of comprehensive income in 2020 and 2019, respectively.

	2020	2019
Selling and marketing expenses - Retirement benefits expenses	\$170	\$126

General and administrative expenses
- Retirement benefits expenses	\$971	\$1,028

2) Defined benefit plans

In compliance with the requirements set forth in the Labor Standards Act, the Company has stipulated a defined benefit pension plan, which is applicable to the years of service rendered by regular employees prior to, and after (if employees elect to continue to apply the Labor Standards Act), the implementation of the Labor Pension Act on July 1, 2005. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company sets aside 2% of the employee's total salary each month as pension funds and deposit it to the designated account under the name of the Labor Pension Funds Supervisory Committee at the Bank of Taiwan. Before the end of each year, the Company shall assess the balance in the designated account. If the total available amount of the appropriation is less than the amount required for the payment of pensions to all the employees who are eligible to retire in the following year, calculated according to the above method, the Company will make up the deficiency in one single appropriation before the end of March in the following year.

a) The amount of retirement benefits expenses recognized in the parent company only statement of income for the defined benefit plans were as followed:

	2020	2019
Service costs for the current period	\$534	\$516
Net interest on defined benefit liabilities (assets)	245	283
Recognized in profit or loss	\$779	\$799
Remeasurements
Compensation on plan assets (excluding net interest on net defined benefit liabilities (assets))	(\$814)	(\$732)
Actuarial losses (gains) - experience adjustments	18	1,271
Actuarial losses (gains) - changes in financial assumptions	1,066	373
Recognized in other comprehensive income	\$270	\$912

b) Recognized in other comprehensive income

	2020	2019
Selling and marketing expenses	\$65	\$63
General and administrative expenses	714	736
Total	\$779	\$799

c) The amounts recognized in the parent company only balance sheet for obligations from defined benefit plans were as follows:

	December 31, 2020	December 31, 2019
Present value of defined benefit obligation	\$45,532	\$49,528
Fair value of plan assets	(24,140)	(24,896)
Net defined benefit liabilities	\$21,392	\$24,632

d) The changes in the present value of the defined benefit obligation were as follows:

	2020	2019
Beginning balance	\$49,528	\$46,894
Service costs for the current period	534	516
Interest expenses	416	474
Remeasurements
Payment
Actuarial losses (gains) - experience adjustments	18	1,271
Actuarial losses (gains) - changes in financial assumptions	1,066	373
Benefits paid on plan assets	(6,030)	0
Ending balance	\$45,532	\$49,528

e) Change in fair value of plan assets were as follows:

	2020	2019
Fair value of plan assets at the beginning of the period	\$24,896	\$21,567
Expected return on plan assets	171	191
Remeasurements of plan assets (excluding net
interest included in net defined benefit liabilities	814	732
(assets))
Contribution by the employer	3,351	2,406
Actual payment of employee benefits	(5,092)	0
Fair value of plan assets at the end of the period	\$24,140	\$24,896

f) The fund asset of the Company's defined benefit pension plan (hereinafter referred to as the "Fund") is entrusted to the Bank of Taiwan, which manages, or entrusts others to manage, the Fund in accordance with entrusted items enumerated in Article 6 of the "Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund" (i.e. deposit in domestic or foreign institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, and investment in domestic or foreign real estate and its securitization products) to the extent of limitations on investment percentage and amount as stipulated in the Fund's annual utilization plan. The status of utilization of the Fund is subject to supervision by the Labor Pension Fund Supervisory Committee. 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 twoyear time deposits with the interest rates offered by local banks. In case any deficiency in the earnings arises, Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company is not entitled to participate in the operation and management of the fund, it is not possible to disclose the classification of the fair value of the plan assets in accordance with paragraph 142 of IAS 19. For the composition of the fair value of the fund in total as of the years ended December 31, 2020, and 2019, please refer to the various labor pension utilization reports issued by the government.

The Company's contributions to the pension funds were deposited with Bank of Taiwan, were as follows:

December 31, 2020	December 31, 2019
\$24,140	\$24,896

g) The present value of the Company's defined benefit obligations is calculated by certified actuaries. The major assumptions on the assessment date were as follows:

	December 31, 2020	December 31, 2019
Discount rate	0.625%	1.000%
Growth rate of future salary	2.000%	2.000%

If changes occur in major actuarial assumptions with other assumptions unchanged, the present value of defined benefit obligations will increase (decrease) as follows:

	December 31, 2020	December 31, 2019
Discount rate
Increase by 0.25%	(\$716)	(\$743)
Decrease by 0.25%	\$734	\$772
Expected salary increase rate
Increase by 0.25%	\$702	\$746
Decrease by 0.25%	(\$692)	(\$719)

With other assumptions unchanged, above sensitivity analysis analyzes effects of changes in single assumption. In practice, many changes in assumptions may be linked together. The sensitivity analysis is consistent with the methodology used to calculate the net pension liability on the balance sheet.

The Company is expected to make a contribution payment of NT\$283 thousand to the defined benefit plans for the one year period after the reporting date of 2020.

The weighted average period of the defined benefit plan is 10.11 years.

The maturity analysis of the pension payments is as follows:

Under 1 year	\$10,364
1 to 2 years	914
2 to 5 years	8,732
Over 5 Years	17,427
	37,437

aa. Employee bonus and remuneration to directors

The Company's Articles of Incorporation stipulates that, after annual earnings first offset against any deficit, a minimum of 1% shall be allocated as employee compensation and a maximum of 2% as directors' remuneration. When there are accumulated losses (including adjustments to unappropriated earnings), the Company shall offset the appropriate amounts before remuneration. The distribution can be made in the form of cash or stocks for employees. The Board of Directors shall resolve to distribute in the form of shares or cash to employees who meet specific criteria, and the distribution of employee compensation and remuneration to directors and supervisors shall be reported to the shareholders' meeting.

The amounts provided for employee compensation were NT\$19,524 thousand and NT\$18,215 thousand for 2020 and 2019, and the amounts provided for directors' compensation were both NT\$0 thousand, which were estimated by multiplying the Company's net income before income taxes for the period before employee and directors' compensation by one percent of employee compensation as specified in the Company's Articles of Incorporation, and remuneration to directors was NT\$0 thousand and was reported as operating expenses for the period.

On March 24, 2021, the Board of Directors resolved to distribute NT\$19,524 thousand for employee compensation and \$0 for director's remuneration for 2020, and on March 25, 2010, the Board of Directors resolved to distribute NT\$18,215 thousand for employee compensation and NT\$0 for director compensation for 2019. There was no difference from the amounts recognized as expenses in 2020 and 2019.

The aforementioned amounts are distributed in shares and the number of shares is calculated based on the closing price on the day before the Board of Directors' resolution.

For information on the Company's remunerations for employees and directors as resolved by the Board of Directors, please visit the "Market Observation Post System".

bb. Income tax

1) Income tax expense

Major components of income tax expenses were as follows:

	2020	2019
Current income tax expenses
Incurred this year
Income Tax	\$107,967	\$51,592
Land value increment tax	108,590	58,460
Unappropriated earnings	74,509	22,397
Tax refunds from previous years	(2,556)	0
Deferred tax
Occurrence and reversal of temporary
differences	(40,484)	14,235
Income tax expense	\$248,026	\$146,684

2) Reconciliation of income tax expense to accounting profit.

	2020	2019
Accounting profit	\$1,932,918	\$1,803,254
Tax at the applicable tax rate	\$386,584	\$360,651
Effect of income tax adjustment items
Items to be increased (decreased) when determining taxable income	(698)	647
Valuation loss (gain) on financial assets	1,520	(7,987)
Tax-exempt proceeds from land	(276,296)	(279,799)
Tax-exempt income from marketable securities	2,073	369
Land value increment tax	(21,718)	(11,692)
Deferred selling and marketing expenses	5,455	38
Losses recognized under the equity method	11,223	9,674
Warranty provision	863	1,308
Losses deferred in future years and (offset)	(1,039)	(21,617)
Occurrence and reversal of temporary differences	(40,484)	14,235
10% levy on unappropriated earnings	74,509	22,397
Other income taxes (land value increment tax)	108,590	58,460
Tax refunds from previous years	(2,556)	0
Income tax expense	\$248,026	\$146,684
3) Income tax recognized in other comprehensive income
	2020	2019
Deferred income tax gains (expense)
Related to defined benefit plan remeasurement	(\$54)	(\$182)

4) The breakdown of deferred income tax assets and liabilities was as follows:

Balance on	Recognized in	Recogniz	Balance on
January 1	profit or loss	ed in	December 31

			other comprehe nsive income
a) January 1 to December 31,
2020
i. Deferred tax assets Prepayments	\$47	\$5,456	\$0	\$5,503
Warranty provision payable	6,301	863	0	7,164
Net defined benefit liabilities - non-current	4,926	(702)	54	4,278
Total deferred tax assets	\$11,274	\$5,617	\$54	\$16,945
ii. Deferred tax liabilities Inventories	\$73,275	(\$34,867)	\$0	\$38,408
b) January 1 to December 31,
2019 i. Deferred tax assets
Prepayments	\$85	(\$38)	\$0	\$47
Allowance for doubtful accounts	2	(2)	0	0
Loss carryforwards	21,617	(21,617)	0	0
Warranty provision payable	4,993	1,308	0	6,301
Net defined benefit liabilities - non-current	5,065	(321)	182	4,926
Total deferred tax assets	\$31,762	(\$20,670)	\$182	\$11,274
ii. Deferred tax liabilities
Inventories	\$79,710	(\$6,435)	\$0	\$73,275

5) The Company's business income tax settlement and declaration up until 2018 have been approved..

6) As of December 31, 2020, the Company's undeducted loss carryforwards and final deductible year are shown below.

Year of	Loss	Deducted amount in the	Current deducted	Final year tax credits
occurrence	amount	previous year	amount	are due
2016	\$11,003	(\$11,003)	\$0	2026
2017	51,872	(51,872)	0	2027
2018	50,410	(45,213)	5,197	2028
Total	\$113,285	(\$108,088)	\$5,197

cc. Summary of employment, depreciation, operating costs, depletion and amortization expenses incurred during the period by function

By function		2020			2019
By nature	Operation Costs	Operation Expenses	Total	Operation Costs	Operation Expenses	Total
Employee benefit
expenses
Salary expenses	0	56,281	56,281	0	56,239	56,239
Labor and health
insurance	0	3,498	3,498	0	3,245	3,245
expenses
Retirement	0	1,920	1,920	0	1,953	1,953
benefits expenses
Remuneration to	0	1,760	1,760	0	1,680	1,680
Directors
Other employee	0	9,764	9,764	0	7,048	7,048
benefits
Depreciation	62,682	1,382	64,064	62,358	1,378	63,736
expenses
Depletion expenses	0	0	0	0	0	0
Amortization	4,001	316	4,317	4,000	558	4,558
expenses

1) Additional information on the number of employees and employee benefit expenses for 2020 and 2019 is as follows:

	2020	2019
Number of employees	39	42
Number of directors who do not serve as employees	4	5
Average employee benefit expenses	\$2,042	\$1,851
Average employee salary expenses	\$1,608	\$1,520
Average adjustment of employee salary expenses	5.79%

• 2) The Company has established the Audit Committee to replace the supervisors in accordance with the regulations, therefore, no supervisors' remuneration has been recognized.
• 3) Compensation policy of the Company: Directors and managers are remunerated according to their business performance, risk-taking and contribution level, with reference to the usual industry standard; the salaries of the Company's employees are based on their academic background, professional knowledge and skills, professional experience, and personal performance, and are flexibly varied according to operational conditions to motivate and retain outstanding employees; the annual salary adjustment is based on the employee's value and accumulation, and the salary adjustment items and amounts are prepared respectively.

dd. Earnings per share

	2020	2019
Basic earnings per share (Unit: NT\$)	\$4.48	\$4.31
Diluted earnings per share (Unit: NT\$)	\$4.48	\$4.30
The calculation of earnings per share and the weighted-average number of common shares outstanding were as follows:
	2020	2019
Profit attributable to the holders of ordinary shares of the Company	\$1,684,892	\$1,656,570
	2020	2019
Weighted average number of ordinary shares
outstanding used for calculation of basic
earnings per share (in thousands)
	375,895	384,734
Effect of potentially dilutive ordinary shares:
Employee Remuneration	496	587
Weighted average number of ordinary shares
outstanding used for calculation of diluted
earnings per share (in thousands)
	376,391	385,321

If the Company chooses to offer employee compensation or share profits in the form of cash or stock, while calculating diluted earnings per share, and assuming that the compensation is paid in the form of stock, the dilutive potential common shares will be included in the weighted average number of outstanding shares to calculate diluted earnings per share. Weighted average number of ordinary shares outstanding used for calculation of diluted earnings per share (thousand shares) The dilutive effect of such potential common shares shall continue to be considered when calculating diluted earnings per share before the number of shares to be distributed as employee compensation is approved in the following year.

For the calculation of basic earnings per share, the number of shares is included in the weighted-average number of common shares outstanding for the year resolved at the stockholders' meeting when the number of shares issued as compensation to employees for the previous year is determined. Moreover, since the employee compensation transfer is no longer a gratuitous stock allotment, no retroactive adjustment is made in the calculation of basic and diluted earnings per share.

ee. Additional information regarding cash flows

Investment activities with only partial cash payment:

	2020	2019
Increase in investment properties	\$1,223	\$1,334
Net decrease in payables for construction	45	7,197
Cash paid during the year	\$1,268	\$8,531

ff. Changes in liabilities from financing activities

Reconciliation of liabilities from financing activities was as follows:

	2020.1.1	Cash Flows	2020.12.31
Short-term borrowings	\$4,954,780	(\$465,974)	\$4,488,806
Face value of short-term bills payable	4,222,000	(63,000)	4,159,000
Long-term borrowings	10,726,055	(3,728,188)	6,997,867
Deposits received	136,836	(133,958)	2,878
Liabilities from the financing activities	\$20,039,671	(\$4,391,120)	\$15,648,551
	2019.1.1	Cash Flows	2019.12.31
Short-term borrowings	\$8,965,208	(\$4,010,428)	\$4,954,780
Face value of short-term bills payable	4,402,000	(180,000)	4,222,000
Long-term borrowings	6,348,603	4,377,452	10,726,055
Deposits received	134,854	1,982	136,836
Liabilities from the financing activities	\$19,850,665	\$189,006	\$20,039,671

7. Related Party Transactions

a. Names of related parties and their relationship

Name	Relationship with the Company
Chieh Chih Construction Co.,	Relative within the second degree of kinship of the Chairman of the
Ltd.	Company is the Chairman of such company.
Baihong Construction Co., Ltd.	The Company's Chairman is the supervisor of such company
Meiyun S. Tsai	Spouse of the chairman of the Company
H2O Hotel Co., Ltd.	Subsidiary of the Company
Yangmin International Catering Co., Ltd.	Associate of the Company
Chen, Mei-Hui	Relative within the second degree of kinship of the Chairman of the Company
Wang, Hsien-Tsung	Relative within the second degree of kinship of the Chairman of the Company
Chen, Chin-Hsing	Vice President of Land Development Department

• b. Significant transactions with related parties:
• 1) Sales

		2020		2019
Name		Amount	Percentage of sales of the Company	Amount	Percentage of sales of the Company
Sale of premises Other related parties		\$14,306	0.17%	\$13,969	0.24%
	The sales of premises to related parties were made at normal market prices. The sales of premises to other related parties in 2020 and 2019 amounted to NT\$14,306 thousand and NT\$13,969 thousand, respectively, which were paid upon the transfer of the properties, and the remaining catering revenues were collected within 30 to 90 days.
2)	Lease revenue
H2O Hotel Co., Ltd.	a) and staff quarters of H2O Hotel Co., Ltd.	\$47,961	0.57%	\$74,953 The Company and H2O Hotel Co., Ltd. entered into a lease agreement for the use of investment properties, premises for sale and construction sites for the business	1.29%
	b) The lease details are as follows:
Lessee	Lease subject		Lease period	Rental charged per lease term	Rental revenue
2020 H2O Hotel Co., Ltd.	1F., No. 366, Minghua Rd., Gushan Dist., Kaohsiung City (Longbei Section No. 22)	2017/02/01 ~ 2019/01/31	2019/02/01~2022/01/31	The monthly rental income of NT\$6,500 thousand (including business tax) is calculated on a monthly basis and is collected by bank remittance. (Rent will be reduced by half from April to December 2020 due to the epidemic) The monthly rental	\$46,429 366
H2O Hotel Co., Ltd.	8 levels at No. 300, Funong Rd., Gushan Dist., Kaohsiung City, 1 building in total (Longzhong Section No. 128-3)		2017/05/01~2019/01/31 2019/02/01~2022/01/31	income of NT\$32 thousand (including business tax) is calculated on a monthly basis and is collected by bank remittance.
H2O Hotel Co., Ltd.	No. 620, Meishu E. 2nd Rd., Gushan Dist., Kaohsiung City (Mei Shu Huang Ju)	period)	2019/09/01~2027/08/31 (2019/09/01~2019/10/3 1 free during decoration	The rent will be calculated from November 1, 2019 at NT\$158	1,128

H2O Hotel Co., Ltd. Total	No. 623, Mengzi Rd., Zuoying Dist., Kaohsiung City (King's Town Garden)	2020/09/01~2027/08/31	thousand per month (including business tax) and the rental income will be calculated on a monthly basis, all of which will be collected by bank remittance. (Rent will be reduced by half from April to December 2020 due to the epidemic) The monthly rental income of NT\$10 thousand (including business tax) is calculated on a monthly basis and is collected by bank remittance.	38 \$47,961
2019			The monthly rental	\$74,286
H2O Hotel Co., Ltd.	1F., No. 366, Minghua Rd., Gushan Dist., Kaohsiung City (Longbei Section No. 22)	2017/02/01 ~ 2019/01/31 2019/02/01~2022/01/31 (Renewed in July 2018)	income of NT\$6,500 thousand (including business tax) is calculated on a monthly basis and is collected by bank remittance.
H2O Hotel Co., Ltd.	8 levels at No. 300, Funong Rd., Gushan Dist., Kaohsiung City, 1 building in total (Longzhong Section No. 128-3)	2017/05/01~2019/01/31 2019/02/01~2022/01/31	The monthly rental income of NT\$32 thousand (including business tax) is calculated on a monthly basis and is collected by bank remittance.	366
H2O Hotel Co., Ltd.	No. 620, Meishu E. 2nd Rd., Gushan Dist., Kaohsiung City (Mei Shu Huang Ju)	2019/09/01~2027/08/31 (2019/09/01~2019/10/3 1 free during decoration period)	The rent will be calculated from November 1, 2019 at NT\$158 thousand per month (including business tax) and the rental income will be calculated on a monthly basis, all of which will be	301

Total \$74,953

3) Contracting work (Purchases)

Chieh Chih Construction Co., Ltd. and Baihong Construction Co., Ltd. are related parties of the Company, and the Company's projects are contracted by these two companies. The contract price is based on the cost of the two companies plus appropriate profit, and the payment terms are similar to those of a general contractor, but the actual date of cashing the notes is subject to the Company's capital situation.

a) In 2020 and 2019, the Company entrusted Chien-Chih Construction Co., Ltd. to contract for various construction sites, accounting for 21.65% and 17.21% of the Company's total contracted work amount, respectively, and the contract prices and current shipments were as follows:

			Purchases
Site name	Contract price (including tax)	2020	2019
Qinghai 61.63 (Mei Shu Huang Ju)	\$2,988,565		\$0 \$792,940
Xinhua Section No. 59 (Shi Shang King's Town)	618,380	0	82,718
Ming Ren Section No. 4 (Yue He Di)	274,940	0	67,479
Ai Qun No. 2748. 5 in total (King's Town World of Heart)	2,014,000	238,109	0

Total \$238,109 \$943,137

b) In 2020 and 2019, the Company entrusted EPILEDS Construction Co., Ltd. with the contracted construction projects, accounting for 25.49% and 13.14% of the total contracted construction amount of the Company, respectively. The contract price and the current purchase price were as follows:

			Purchases
Site name	Contract price (including tax)	2020	2019
Lin De Guan No. 1135, 1135-1 (Yi Wen Court)	\$1,049,885	\$0	\$216,359
Xin Guang Section No. 356 (King's Town Garden)	1,709,460	0	308,724
Xinzhuang No. 92, 95 (Xiang King's Town)	521,460	89,884	195,264
Xin Du Section No. 321.163 - 1.164	880,200	190,480	0
Total		\$280,364	\$720,347

4) Other receivables, payments on behalf of others, notes payable, trade payables, other payables, contract liabilities-current, premises payment collection, collection, and deposits received.

		December 31, 2020		December 31, 2019
	Name of project and related party	Balance	Percentage	Balance	Percentage
a)	Other receivables
	Meiyun S. Tsai	\$240	0.03%	\$285	81.20%

		December 31, 2020		December 31, 2019
	Other receivables represent receivables from landlords for
	their share of sales costs.
b)	Payments on behalf of
	others
	Other related parties	\$0	0.00%	\$226	2.03%
c)	Notes payable
	Chieh Chih Construction
	Co., Ltd.	\$75,004	37.46%	\$72,872	53.76%
	Baihong Construction	45,002	22.48%	47,780	35.25%
	Co., Ltd.
	Total	\$120,006	59.94%	\$120,652	89.01%
d)	Trade payables
	Chieh Chih Construction
	Co., Ltd.	\$398,863	49.26%	\$845,519	58.15%
	Baihong Construction
	Co., Ltd.	385,934	47.66%	560,087	38.52%
	Total	\$784,797	96.92%	\$1,405,606	96.67%
e)	Other payables
	H2O Hotel Co., Ltd.	\$348	0.71%	\$22	0.04%
	Yangmin International
	Catering Co., Ltd.	74	0.15%	13	0.02%
	Total	\$422	0.86%	\$35	0.06%
f)	Contract liabilities -
	current
	Other related parties	\$0	0.00%	\$195	0.04%
g)	Building collections
	Chieh Chih Construction
	Co., Ltd.	\$5,360	9.95%	\$0	0.00%
h)	Land collections
	Chieh Chih Construction	\$3,285	3.78%	\$0	0.00%
	Co., Ltd.

i) Deposits received

	December 31, 2020		December 31, 2019
Chieh Chih Construction
Co., Ltd.	\$0	0.00%	\$87,412	63.88%
Baihong Construction
Co., Ltd.	0	0.00%	46,546	34.02%
Total	\$0	0.00%	\$133,958	97.90%

Deposits received represent construction contract performance deposits.

5) Lease expenses

			Price payment
		Rental expenses	2020	2019
	Other related parties		\$1,029	\$1,029
	The lease details are as follows:
Lessor	Lease subjects	Lease period	Rental charged per lease term	Lease expenses
2020 King's Town Construction Co., Ltd.	12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City	2017/07/01 ~ 2020/06/30 2020/07/01~ 2023/06/30	The monthly rental income of NT\$90 thousand (including business tax) is calculated on a monthly basis and is paid by bank remittance.	\$1,029
2019 King's Town Construction Co., Ltd.	12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City	2017/07/01 ~ 2020/06/30	The monthly rental income of NT\$90 thousand (including business tax) is calculated on a monthly basis and is paid by bank remittance.	\$1,029

• 6) Others
• a) The Chairman of the Company and other related parties provided the Company with loans from banks secured by their own assets, amounting to NT\$1,672,146 thousand and NT\$2,257,465 thousand as of December 31, 2020 and 2019, respectively.
• b) The Chairman of the Company and other related parties provided the Company with their own assets to issue commercial paper to Bills Finance Corporation in the amount of NT\$970,000 thousand and NT\$2,247,200 thousand as of December 31, 2020 and 2019, respectively.
• c) The Chairman and his spouse of the Company provided land at Qinghai Lot No. 216 and the Company's construction site, Qinghai Lot No. 229, as joint mortgages to banks and issued commercial promissory notes for NT \$1,765,000 and NT\$0, respectively, and commercial promissory notes for NT\$1,765,000 and NT\$0, respectively, as of December 31, 2020 and December 31, 2019.
• d) The Company's investment in subsidiaries is described in Note VI(IX).
• e) In 2020 and 2019, the Company paid the related party, H2O Hotel Co., Ltd., expenses such as hospitality and venue fees, which were recorded as NT\$134 thousand and NT\$0 thousand for advertising, NT\$2,320 thousand and NT\$1,629 thousand for social networking, and NT\$35 thousand and NT\$393 thousand for miscellaneous expenses, respectively.
• f) The Company's related party, Baihong Construction Co., Ltd. provided guaranteed promissory notes for the projects, which were recorded as NT\$134,566 thousand and NT\$42,177 thousand in 2020 and 2019, respectively.
• g) The Company's related party, Chien-Chih Construction Co., Ltd. provided guaranteed promissory notes for the construction work, which were recorded as NT\$288,812 thousand and NT\$0 thousand in 2020 and 2019, respectively.
• h) The Company and other related parties provided the land at Lin De Guan Section Lot No. 1135 and 1135-1, Ling Ya District, Kaohsiung City, as urban renewal construction sites, and the Company is responsible for their construction The parties entered into an urban renewal rights exchange agreement, in which the other related parties share 26.23% of the total value of the land and the Company shares the remaining 73.77%. The Company also paid NT\$372 thousand to the other related parties for the difference in price. The abovementioned portion of the urban renewal rights exchanged by the Company and the difference in price paid by the Company is included in the land for sale in Yi Wen Court.
• 7) Information on remuneration to the management

	2020	2019
Short-term employee benefits	\$25,150	\$25,594

8. Pledged Assets

The carrying values of the Company's assets pledged as collateral for loans and short-term notes issued were as follows:

Name of assets	Secured subject	December 31, 2020	December 31, 2019
Buildings and	Collateralized borrowing and
land held for	issuance of commercial	\$2,987,486	\$11,035,047
sale	promissory notes
Construction in	Collateralized borrowing and
	issuance of commercial	2,283,347	2,991,715
progress	promissory notes
Land held for	Collateralized borrowing and
construction	issuance of commercial	14,534,853	14,534,853
	promissory notes
Investment	Secured borrowings	747,691	810,320
properties
Refundable	Supermarket and disaster	24,977	24,977
deposits	management deposits
Total		\$20,578,354	\$29,396,912

• 1. Significant Contingent Liabilities and Unrecognized Contract Commitments
• a. As of December 31, 2020, the Company's construction-in-progress contracts are described in detail in VII. Related Party Transactions (II) Purchase; the amount paid for the contracts (including tax) was NT\$450,018 thousand and the amount outstanding was NT\$2,444,182 thousand.
• b. Residents are dissatisfied with the Company due to the construction of a gas station next to Shui Senlin. Wang, Sung-Ling and other residents filed a lawsuit against the Company for damages in the amount of NT\$33,175 thousand. On March 5, 2019, the Taiwan District Court of Qiaotou ruled in favor of the Company, but the other party appealed and the amount requested was changed to NT\$14,730 thousand, and the appeal was dismissed by the Taiwan High Court on June 30, 2020.
• c. In 2019, the Company leased the premises for sale on first basement level and the first and second level of Hua Shang Building to a fitness company, which caused dissatisfaction of the residents and convened the 2019 second temporary meeting of the sub-owners, and amended its management regulations to prohibit the establishment of specific industries, including gymnasiums. The Company believes that it has infringed upon the Company's right to use its assets; therefore, it filed a civil lawsuit against the "Hua Shang Building Management Committee" to confirm that the resolution shown by the defendant "Hua Shang Building Management Committee" at the 2019 second temporary meeting of the owners of the Hua Shang Building on November 23, 2019 is invalid. The case (Case No. 1202 of 2020) is currently being heard by the District Court in Qiaotou, Taiwan. The outcome of the case is still pending in court.
• d. In 2019, the Company leased premises for sale on the first basement level and the first and second level of Hua Shang Building to World Fitness Asia Limited (H.K.) Taiwan Branch.

As a result, the Taiwan branch of Hong Kong Business World Fitness Co., Ltd. was unable to operate due to a dispute arising from the residents' dissatisfaction with the Company's failure to lease the land to the fitness company in accordance with the original market use. The company filed a lawsuit against the Company for damages in the amount of NT\$39,632 thousand, including NT\$18,367 thousand, NT\$720 thousand for the refund of the deposit and NT\$20,545 thousand for the loss of the member who failed to fulfill the membership agreement. The case (Case No. 233) is currently being heard by the Kaohsiung District Court in Taiwan and has not yet been heard, and the outcome of the case is still pending.

• e. In 2020, the Company leased premises for sale on the first basement level and the first and second level of Hua Shang Building to World Fitness Asia Limited (H.K.) Taiwan Branch. As a result, the Taiwan branch of Hong Kong Business World Fitness Co., Ltd. was unable to operate due to a dispute arising from the residents' dissatisfaction with the Company's failure to lease the land to the fitness company in accordance with the original market use. Therefore, a lawsuit was filed against World Fitness Asia Limited (H.K.) Taiwan Branch, seeking NT\$1,045 thousand in rent and NT\$3,150 thousand in restitution damages, totaling NT\$4,195 thousand. The outcome of the case is still pending in the court.
• f. The Company leased premises for sale on the first basement level and the first and second level of Hua Shang Building to a fitness company. As a result, the residents were dissatisfied that the Company was failed to lease the land to the fitness company in accordance with the original market use.. The management committee of the Hua Shang Building filed an administrative lawsuit against the Kaohsiung City Government. Requesting the Kaohsiung City Government to revoke the decision of January 4, 2019 to approve the letter of change of commercial use of the second floor of the Hua Shang Building and the appeal inadmissible. If an unfavorable decision is obtained, it may affect the right to use the assets of the Company. The case (formerly known as Case No. 118 of 2020) is currently under review by the Supreme Administrative Court and the outcome is still pending in the court.
• g. The Company was the litigation agent for the first trial of a lawsuit for damages for repair of building damage between Kaicheng Construction Co., Ltd. and Wujia Ruichun Community Management Committee. The management committee requested NT\$1,000 thousand for damages against the Company. The case (Case No. 1126, of 2020) is currently being heard by the Kaohsiung District Court in Taiwan, and the outcome of the case is pending in the court.
• 1. Significant Disaster Loss

No such event.

1. Significant Subsequent Events

After the end of the Company's reporting period as of December 31, 2020, as of the closing date of the accountants' fieldwork, there were no significant subsequent events affect the change in financial position as of December 31, 2020.

• 1. XII. Others
• a. Capital Risk Management

The objective of the Company's capital management is to ensure that the Company can continue as a going concern, that an optimal capital structure is maintained to lower the cost of capital, and that returns are provided to stockholders. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, issue new shares or sell assets to reduce debt. The Company regulates the borrowing amount based on the progress of the project and the funds required for the operation.

• b. Financial instruments
• 1) The carrying amounts of the Company's financial instruments not measured at fair value (including cash and cash equivalents, notes receivables, trade receivables, other receivables, other financial assets, refundable deposits, bank borrowings, short-term bills payable, notes payable, trade payables, other payables, leasing liabilities and deposits received) are the reasonable approximation of fair value. For a fair value of financial instruments measured at fair value, please refer to Note VI(II). Details of the financial instruments are disclosed in each of the individual notes.

	December 31,	December 31,
	2020	2019
Financial assets
Financial assets at fair value through profit or loss
Domestic listed stocks	\$89,930	\$87,400
Domestic unlisted stocks	\$82	\$82
Financial assets at amortized cost
Cash and cash equivalents	\$547,398	\$318,370
Net notes receivable and trade receivables (including related parties)	141,676	106,714
Net installment receivables	0	195
Other receivables (including related parties)	750,303	351
Refundable deposits	32,791	37,028
Long-term notes and trade receivable	0	52,000
Subtotal	\$1,472,168	\$514,658
Total	\$1,562,180	\$602,140
Financial liabilities
Measured at amortized cost
Short-term borrowings	\$4,488,806	\$4,954,780
Short-term bills payable	4,154,322	4,220,179
Notes payable and trade payables (including related parties)	1,009,913	1,589,496
Other payables (including related parties)	49,080	58,139
Long-term borrowings (including long-term borrowing due within one operating cycle)	6,997,867	10,726,055
Lease liabilities (including current)	63,690	64,733
Deposits received	2,878	136,836
Total	\$16,766,556	\$21,750,218

• 2) Financial risk management policy
• a) The Company's daily operations are subject to a number of financial risks, including market risk (including interest rate risk and price risk), credit risk and liquidity risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial position and financial performance.

• b) Financial risk management of the Company is carried out by its finance department based on the policies approved by the Board of Directors. Through cooperation with the Company's operating units, the finance department is responsible for identifying, evaluating and hedging financial risks.

• c) The Company does not undertake derivatives for hedging financial risks.

• 3) Significant financial risks and degrees of financial risks
• a) Market risks
  • i. Price risks

The Company is exposed to the price risk of equity instruments because the investments held by the Company are classified as financial assets at fair value through profit or loss in the Company's balance sheet. The Company is not exposed to price risks from products. To manage the price risk of investments in equity instruments, the Company diversifies its portfolio with its diversification method based on limits set by the Company.

The Company's investments in equity securities comprise foreign and domestic listed stocks. The prices of equity securities change due to the change in the future value of investee companies. If the price of these equity instruments had increased or decreased by 10%, with all other factors held constant, the increase or decrease in net income after tax for 2020 and 2019 would have been NT\$8,993 thousand and NT\$8,740 thousand, respectively, from the gain or loss on equity instruments measured at fair value through profit or loss.

ii. Interest risks

The Company's interest rate risks come from short-term borrowings, financing commercial paper and long-term borrowings. Loans with floating interest rates expose the Company to cash flow interest rate risks, of which a portion is offset by the cash held with floating interest rates. Borrowings issued at fixed rates exposed the Company to fair value interest rate risk. During the years ended December 31, 2020 and 2019, the Company's borrowings at floating interest rate were denominated in the NTD.

Based on the simulations performed, the impact on post-tax profit of a 0.1% shift would be a maximum increase or decrease of NT\$1,196 thousand and NT\$944 thousand for 2020 and 2019, respectively. The simulation is done on a quarterly basis to verify that the maximum loss potential is within the limit given by the management.

• b) Credit risks
• i. Credit risk refers to the risk of financial loss of the Company arising from default by clients or counterparties of financial instruments on the contractual obligations. Credit risk mainly derives from cash and cash equivalents, derivative financial instruments, and deposits within banks and financial institutions, as well as trade receivables not yet collected in cash and committed transactions. Only banks and financial institutions with an independent credit rating of at least "A" can be accepted for trading by the Company.
• ii. The Company's trade receivables mainly consist of amounts due from customers before the handover of properties. The Company has assessed no significant credit risk because these amounts are due before the handover of properties. The Company classifies customers' trade receivables and installment receivable based on customer characteristics. Using the simplified approach of preparation matrix, the Company estimates the expected credit

loss and adjusts the loss rate established by historical and current information during a specific period to assess the allowance loss of installments receivable. The Company's assessed credit impairment losses on December 31, 2020 and 2019 were not significant.

iii. No written-off debts with recourse existed as of December 31, 2020 and 2019.

• c) Liquidity risks
• i. The cash flow forecast is performed by each operating entity of the Company and compiled by the Company's finance department. The Company's finance department monitors rolling forecasts of the Company's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
• ii. The following table presents the Company's non-derivative financial liabilities grouped by the relevant maturity dates, which are analyzed based on the remaining period from the end of the reporting period to the contractual maturity date. The contractual cash flow amounts disclosed in the table below are undiscounted amounts.

Non-derivative financial liabilities	Within 6 months	6 to 12 months	1 to 3 years	Over 3 years
December 31, 2020
Short-term borrowings	\$1,824,660	\$2,184,146	\$480,000	\$0
Short-term bills payable	4,154,322	0	0	0
Notes payable and trade payables (including related parties)	423,550	22,112	564,251	0
Other payables	48,439	40	545	56
Provisions - current	3,390	3,086	13,233	16,108
Long-term borrowings (including due within one operating cycle)	22,835	112,998	2,393,839	4,468,195
Lease liabilities (including current)	529	533	2,180	60,448
December 31, 2019
Short-term borrowings	\$2,954,660	\$2,000,120	\$0	\$0
Short-term bills payable	4,220,179	0	0	0
Notes payable and trade payables (including related parties)	958,343	33,541	597,612	0
Other payables	58,139	0	0	0
Provisions - current	3,995	2,907	9,513	15,089
Long-term borrowings (including due within one operating cycle)	2,977,000	655,000	5,248,200	1,845,855
Lease liabilities (including current)	521	523	2,142	61,548

• d) Information on fair value
• i. The different levels of inputs used in the valuation techniques for measuring the fair value of financial and non-financial instruments have been defined as follows:
  • Level 1: The quoted price in an active market for identical assets or liabilities available to the enterprise at the measurement date. A market is regarded as active where transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company's investments in listed stocks, beneficiary certificates, and derivatives with quoted prices in an active market are all Level 1 inputs.
  • Level 2: The inputs are observable for the asset or liability, either directly or indirectly, excluding quoted prices included within Level 1. The fair values of certain derivative instruments and equity instruments invested by the Company are all Level 2 inputs.
  • Level 3: The unobservable input value of an asset or liability. The Company's investments in certain derivative instruments and investments in equity instruments with no active market are all level 3 inputs.

Details of changes in Level 3 fair value hierarchy

	Equity instruments without public quotes
December 31, 2020 (i.e. January 1, 2020)	\$82
December 31, 2019 (i.e. January 1,2019)	\$82

• ii. For financial instruments with active markets, their fair value is measured at the market quoted prices on balance sheet date. When quoted prices can be obtained immediately and regularly from stock exchanges and regulatory agencies, and such quoted prices represent actual and regular market transactions under normal conditions, the markets are deemed active markets. The quoted market prices of financial assets held by the Company are the closing price or net asset value, and these instruments are included in Level 1. Level 1 instruments mainly include equity instruments, which are classified as Financial assets at fair value through profit or loss - current.
• iii. Below states the information on the Company's financial instruments measured at fair value that have been classified in accordance with the nature, characteristics, risks and fair values of assets or liabilities as of December 31, 2020 and 2019:

Level 1	Level 2	Level 3	Total
\$89,930	\$0	\$0	\$89,930
		82	82
			\$90,012
Level 1	Level 2	Level 3	Total
\$87,400	\$0	\$0	\$87,400
		82	82
	\$89,930	\$0	December 31, 2020 \$82 December 31, 2019

• iv. The methods and assumptions used by the Company to measure fair value are explained as follows:
• (i) The fair value of the Company's domestic listed stocks and beneficiary certificates are input based on the closing price and net value of the market price, respectively (i.e. Level 1).
• (ii) 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 current fair value of financial instruments obtained through valuation techniques, discounted cash flow method or other valuation techniques, including the use of models based on market information available at the end of the reporting period (i.e. Level 2).
• (iii) In addition to the financial instruments in Level 1 and Level 2 mentioned above, the acquisition cost of the financial instruments is used as an input (i.e., Level 3).
• (iv)In 2020 and 2019, there was no transfer between Level 1 and Level 2 fair value measurement.
• (v) In 2020 and 2019, there was no transfers into or out of Level 3.

13. Supplementary Disclosure

a. Information on significant transactions was as follow:

No.	Summary	Description
1	Loaning to others.	None
2	Endorsements/guarantees to others.	None
3	Marketable securities held at the end of the period. (Excluding investment in Subsidiaries, Associates and Joint Ventures)	Table I
4	Cumulative amount of the stock of the same marketable securities purchased or sold totaling NT\$300 million or more than 20% of the paid-in capital.	None
5	Acquisition of real estate totaling NT\$300 million or more than 20% of the paid-in capital.	Table II
6	Disposal of real estate totaling NT\$300 million or more than 20% of the paid-in capital.	None
7	Purchases or sales with related parties totaling NT\$100 million or more than 20% of the paid-in capital.	Table III
8	Receivables from related party totaling NT\$100 million or more than 20% of the paid-in capital.	None
9	Engaging in derivatives trading.	None

(TABLE I)

King's Town Construction Co., Ltd.

Marketable securities held (excluding investments in subsidiaries) December 31, 2020 Unit: NT\$ thousand

Securities					Ending balance
company holding	Type and name of securities	Relationship with issuer of securities	Ledger account	Number of shares (shares)	Carrying amount	Shareholding Ratio (%)	Fair value	Remark
			Financial assets
	shares (ordinary Tatung -		at fair value
	shares)	None	through profit or	3,400,000	89,930	0.145%	89,930
King's Town			current loss -
Construction			Financial assets
Co., Ltd.			at fair value
	Huazhi Venture Capital	None	through profit	8,152	82	1.63%	*
			and loss

*Huazhi Venture Capital was not fair valued because the amount was not material.

(TABLE II)

Acquisition of real estate totaling NT\$300 million or more than 20% of the paid-in capital: Unit: NT\$ thousand

Other	agreement s
acquisition Purpose of	and usage status	Land held for construction for business operations	Land held for construction for business operations
Basis or	reference for price setting	valuation firm professional Real estate valuation report by	valuation firm professional Real estate valuation report by
	Amount	-	-
	Transfer date	-	-
Information on prior transaction if the counterparty is related	Relationship	with the issuer - -
	Owner	-	-
Relationship with	the Company	None	None
	Counterparty	Natural person Chung, Chun	Natural person Chung, Chun
Payment	collection status	\$35,000 Actual payment	Actual payment of outstanding notes NT\$50,000 and NT\$145,000 payable of
Transaction	amount	\$348,090	\$395,000
Date of	occurrence	2020.12.17	2020.12.17
	Name of property	Yuguang Section No. 880, 895, 897, etc., Anping District, Tainan City	Cost equivalent land District, Tainan City in the rezoning of self-administered municipal land at Caohu, Annan (I)
Acquirer of real	estate	Construction Co., King's Town Ltd.	Construction Co., King's Town Ltd.

The transfer of the above two pieces of land is not yet completed in December 2020, therefore, recorded as land prepayment.

(TABLE III)

King's Town Construction Co., Ltd.

Purchases or sales with related parties totaling NT\$100 million or more than 20% of the paid-in capital: Unit: NT\$ thousand

		Remark
Notes and trade receivable (payable)		Percentage of total notes/ trade receivable (payable)	37.46%	49.26%	22.48%	47.66%
		Balance	Notes payable \$75,004	Trade payables \$398,863	Notes payable \$45,002	Trade payables \$385,934
		Payment term		-	-
	Transaction with terms different from others	Unit price -		-
		Payment term		Subject to contract		Subject to contract
Transaction details		Percentage of total purchase/(sales)		21.65%		25.49%
		Amount	\$238,109		\$280,364
		Purchase (sale)		Purchases	Purchases
		Relationship	the second degree of kinship of the Relative within	Chairman of such Chairman of the Company is the company.		such company supervisor of
		Counterparty	Chieh Chih	Construction Co., Ltd.	Baihong	Construction Co., Ltd.
		Name of company	King's Town	Construction Co., Ltd.	King's Town	Construction Co., Ltd.

King's Town Construction Co., Ltd.

b. Information on reinvestment (excluding the investee companies in the Mainland China):

				Initial investment amount			balance Ending			Investment
Name of investor	Name of Investee	Location	Main business activities	balance for the current Ending period	End of last year	Shares (in thousand)	Percenta ge (%)	Carrying amount	investee for the period Profit (Loss) of	profit (loss) recognized	Remark
Company The	H2O Hotel Co., Ltd.	No. 366, Minghua Rd., Kaohsiung City Gushan Dist.,	Hotel and restaurant	\$320,000	\$250,000	32,000	100%	(\$54,570)	(\$69,215)	(\$56,115)	I
	Note I:	The Company recognized a loss share of NT\$69,215 thousand in the investee company. In addition, due to the lease of real estate to a subsidiary, H2O Hotel Co., Ltd., the leasing

c. Disclosure of information on investments in Mainland China: The Consolidated Company has no investment in Mainland China.

recognized under the equity method by NT\$13,100 thousand.

difference in profit or loss recognition, which affected the Company's share of profit recognized using the equity method. The difference affected the Company's share of benefit

Name of major shareholders	Shareholding (shares)	Shareholding
Tsai, Tien-Tsan	85,577,838	23.05%
Tiangang Investment Co., Ltd.	63,328,801	17.06%
Tianye Investment Co., Ltd.	49,652,072	13.37%
Chien-Chih Construction Co., Ltd.	31,501,513	8.48%
Tsai, Chiung-Ting	23,616,339	6.36%
Meiyun S. Tsai	20,209,951	5.44%

d. Information on major shareholders

• 1) The major shareholders in this table are shareholders holding more than 5% of the common and preference shares that have completed delivery of non-physical registration (including treasury shares) on the last business day of each quarter calculated by the Taiwan Depository & Clearing Corporation. However, the share capital recorded in the Company's financial report and the number of shares actually delivered by the company without physical registration may differ due to calculation basis.
• 2) For the above are shares entrusted by the shareholders, the information thereto shall base on the shares disclosed by the individual trust account of opened by the trustees. For information on shareholders, who declare to be insiders holding more than 10% of shares in accordance with the Securities and Exchange Act, and their shareholdings include their shareholdings plus their delivery of trust and shares with the right to make decisions on trust property, please refer to MOPS.
• 1. Operating Segment Financial Information

N/A

King's Town Construction Co., Ltd. Statements of Accounting Items 2020

(In Thousands of New Taiwan Dollars, unless otherwise specified)

Statements of significant accounting subjects
Item	Number/Index
Statements of assets, liabilities and equity Items
Statement of cash and cash equivalents	Statement I
Statement of financial assets at fair value through profit or loss - current	Statement II
Statement of financial assets at fair value through profit or loss - non current	Statement III
Statement of notes receivables	Statement IV
Statement of trade receivables	Statement V
Statement of other receivables	Statement VI
Statement of buildings and land held for sale	Statement VII
Statement of changes in construction in progress	Statement VIII
Statement of changes in land held for construction	Statement IX
Statement of prepaid premises	Statement X
Statement of other current assets	Statement XI
Statement of change in long-term equity investments accounted for using the equity method	Statement XII
Statement of change in property, plant and equipment	Note VI(VIII)
Statement of change in accumulated depreciation of property, plant and equipment	Note VI(VIII)
Statement of change in investment properties	Note VI(X)
Statement of change in accumulated depreciation of investment properties	Note VI(X)
Statement of change in intangible assets	Note VI(XI)
Statement of change in accumulated depreciation of intangible assets	Note VI(XI)
Statement of short-term loans	Statement XIII
Statement of short-term bills payable	Statement XIV
Statement of contract liabilities - current	Statement XV
Statement of notes payable	Statement XVI
Statement of trade payables	Statement XVII
Statement of other payables	Statement XVIII
Statement of provisions	Note VI(XIII)
Statement of collections	Note VI(XIV)
Statement of long-term borrowings	Statement XIX
Statement of lease liabilities	Statement XX
Statement of profit or loss items
Statement of operating revenue	Statement XXI
Statement of operating costs	Statement XXII
Statement of selling and marketing expenses	Statement XXIII
Statement of general and administrative expenses	Statement XXIV
Other operating income and expenses	Note VI (XXII ~ XXV)

STATEMENT I

King's Town Construction Co., Ltd.

Statement of cash and cash equivalents
As of December 31, 2020

Item	Summary	Amount	Remark
Cash	Cash on hand and petty cash	\$78
Bank deposits	Demand deposits	497,196
	Checking deposits	50,124
Total		\$547,398

STATEMENT II

King's Town Construction Co., Ltd.

Statement of financial assets at fair value through profit or loss - current As of December 31, 2020

Name of financial instruments	Summary	Number of shares (shares)	Face value (NT\$)	Acquisition costs		Fair value	Remark
					Unit price	Total amount
Tatung	Ordinary shares	3,400,000	\$10	\$97,529	\$26.45	\$89,930
Total				\$97,529
Less: Valuation adjustment				(7,599)
Net				\$89,930

STATEMENT III

King's Town Construction Co., Ltd.

Statement of change in financial assets at fair value through profit or loss - non-current As of December 31, 2020

Guaran	tee or	pledge	\$82 None
	Amo	unt
	Sharehol	ding	1.63%
Ending balance	Number of	shares	8,152
		Category	Ordinary shares
		Amount	\$0
Decrease in the current period	Number of	shares	-
	Amoun	t	\$0
Increase in the current period	Number of	shares	-
	Amo	unt	\$82
Beginning balance	Number of	shares	8,152
	Investee		Huazhi Venture Capital Co,, Ltd.

STATEMENT IV

King's Town Construction Co., Ltd.

Name of client	Summary	Amount	Remarks
Notes receivable
Non-related party
Mr. He	Operation	\$1,100
Mr. Li	Operation	3,600
Mr. Lai	Operation	15,000
Mr. Sun	Operation	4,500
Mr. Chuang	Operation	9,500
Mr. Chen	Operation	2,000
Mr. Huang	Operation	375
Mr. Yeh and Mr. Tsai (King's Town Hyatt)	Operation	3,214
Mr. Tsai (World of Heart)	Operation	870
Subtotal		\$40,159
Less: Allowance for doubtful accounts		0
Net notes receivable		\$40,159

STATEMENT V

King's Town Construction Co., Ltd.

Statement of trade receivables As of December 31, 2020

Name of client	Summary	Amount	Remarks
(1) Trade receivables:
Non-related party
Mr. Yeh	Operation	\$22
Mr. Huang (Shi Shang King's Town)	Operation	14,210
Mr. Tsao	Operation	25,000
Mr. Huang (Mei Shu Huang Ju)	Operation	19,220
Mr. Tsai	Operation	27,020
Mr. Hung	Operation	14,640
Mr. Wang	Operation	100
Mr. Chang	Operation	100
Mr. Weng	Operation	100
Mr. Huang (King's Town Garden)	Operation	100
Youting System	Rental income from Chenggong Section No. 60-1, 62, 63	220
Tongguli Engineering	Rental income from Longzhong Section No. 191	87
Bao Sheng Parking	Rental income from Xinmin No. 163 and Lan Tian Middle Section No. 30-2 and Longzhong Section No. 22, etc.	167
Ting Wang Technology	Rental income from Longzhong Section No. 128-4	44
American Institute in Taiwan	Rental Income from Ju Dan	270
Tingyi Technology	Rental income from Qinghai Section No. 127, 128	239
Subtotal		\$101,539
Less: Allowance for doubtful accounts		(22)
Net trade receivables		\$101,517

STATEMENT VI

King's Town Construction Co., Ltd.

Statement of trade receivables
As of December 31, 2020

Item	Summary	Amount	Remarks
Related party:
	Landlord's share of the cost of
Meiyun S. Tsai	decoration work, advertising, and other	\$240
	expenses receivables
Subtotal		\$240
Non-related parties:
Taiwan Power
Company	Photovoltaic revenue receivables	\$21
Mr. Chung	Termination receivables	750,000
Sun Young International	Display board receivables	38
Others	Interest receivable on fixed deposits	4
Subtotal		\$750,063
Total		\$750,303

STATEMENT VII

King's Town Construction Co., Ltd.

Statement of buildings and land held for sale As of December 31, 2020

			Amount
Item	Summary	Cost	Net realizable value	Guarantee or pledge
Mandala		\$37,851	\$113,938 None
Xiande Section No. 826		21,509	56,707 None
King's Town Hyatt		859,614	1,102,194 None
Hua Shang		114,478	295,740 None
Tian Feng (Original Breeze)		207,961	332,689 None
Ju Dan		518,395	791,896	Long-term borrowing due
				within the operating cycle
King's Town		2,469,091		6,948,298 Short-term borrowings
Yue He Di		260,186	335,179 None
Shi Shang King's Town		414,193	661,323 None
King's Town Garden		1,525,107	2,061,032 None
Mei Shu Huang Ju		3,295,419	4,036,478 None
Yiwen Court		946,844	1,254,367 None
Xiang King's Town		8,463	8,701 None
Other projects		542		0 None
Subtotal		\$10,679,653	\$17,998,542
Less: Allowance for reduction to market		(542)
Net		\$10,679,111

STATEMENT VIII

	Statement of changes in construction in progress King's Town Construction Co., Ltd.
	As of December 31, 2020
—
2 86
—

			Current increase		Current decrease
Construction name	Beginning balance	Land under construction	Construction costs	Capitalized interest	Completion and transfer out	Ending balance	Guarantee or pledge
Xinzhuang No. 92, 95 (Xiang King's Town)	\$1,178,309	\$0	\$40,977	\$5,382	(\$1,224,668)		\$0 None
Fuhe Section No. 698-1	419,584	0	3,187	6,965	0	429,736 None
Xindu Section No. 321, 163-1, 164, 320	746,394	0	193,111	12,604	0		952,109 Short-term borrowings
Ai Qun No. 2748. 5 in total (King's Town World of Heart)	1,067,012	0	247,051	17,175	0		1,331,238 Short-term borrowings
Total	\$3,411,299	\$0	\$484,326	\$42,126	(\$1,224,668)	\$2,713,083

STATEMENT IX

King's Town Construction Co., Ltd.

Statement of changes in land held for construction As of December 31, 2020

	Guarantee or pledge Ending	balance	\$14,533 None	540,267 Short-term borrowings	370,653 Short-term bills payable	0 1,610,110 Short-term borrowings	716,926 Short-term bills payable	28,397 None	13,805 None	19,016 None	Long-term borrowings and short term bills payable 0 4,278,594	30,279 None
Current decrease	Transferred to	construction in progress	\$0	0	0		0	0	0	0		0
Current increase	Capitalized	interest	\$0	0	0	0	0	0	0	0	0	0
	Land	costs	\$0	0	0	0	0	0	0	0	0	0
	Beginning	balance	\$14,533	540,267	370,653	1,610,110	716,926	28,397	13,805	19,016	4,278,594	30,279
	Construction name		Kaohsiung Chenggong Section No. 84	Kaohsiung Chenggong Section No. 60-1, 62-64	Kaohsiung Longzhong Section No. 191	Kaohsiung Longzhong Section No. 129-3, 129-4	Kaohsiung Longzhong Section No. 128-4, etc., 3 in total	Kaohsiung Chenggong Section No. 74, 78	Kaohsiung Chenggong Section No. 70	Kaohsiung Chenggong Section No.83	Kaohsiung Qinghai No. 229	Kaohsiung Aiqun No. 2738-2

STATEMENT IX

King's Town Construction Co., Ltd.

Statement of changes in land held for construction (Continued) As of December 31, 2020

	Guarantee or pledge	\$0 \$685,719 Long-term borrowings	662,012 Long-term borrowings	379,145 Long-term borrowings		655,287 Long-term borrowings	757,742 Short-term borrowings	259,585 Short-term bills payable	Long-term borrowings and short term bills payable	792,708 Long-term borrowings	828,072 Long-term borrowings
Ending	balance				52,266 None				0 1,998,033			955,773 None	\$15,648,9
Current decrease	construction in progress Transferred to		0	0	0	0	0	0		0	0	0	\$0
Current increase	Capitalized interest	\$0	0	0	0	0	0	0	0	0	0	0	\$0
	Land costs	\$0	0	0	0	0	0	0	0	0	0	0	\$0
Beginning	balance	\$685,719	662,012	379,145	52,266	655,287	757,742	259,585	1,998,033	792,708	828,072	955,773	\$15,648,922
	Construction name	Kaohsiung Qinghai No. 126	Kaohsiung Qinghai No. 127	Kaohsiung Qinghai No. 128	Kaohsiung Longzhong Section No. 128-4, etc., 3 in total	Kaohsiung Bohsiao Section No. 1140, 7 in total	Kaohsiung Lantian Middle Section No. 30-2	Kaohsiung Xingnan Section No. 11	Kaohsiung Longzhong Section No. 22	Kaohsiung Xinmin No. 160	Kaohsiung Xinmin No. 159	Transferable land and deformed land	Total

Statement of change in prepaid premises As of December 31, 2020

		Current increase				Current decrease
Name of project/construction	Beginning balance	Cost	Capitalized interest	Transfer of held for construction	Transfer of land under construction	Transaction cancellation refund	Transfer of land held for construction	Ending balance
Tainan Anan District, Caohu Phase I	\$0	\$50,000	\$33	\$0	\$0	\$0	\$0	\$50,033
Tainan Yuguang Section No. 880, 3 in total	0	35,000	23	0	0	0	0	35,023
Kaohsiung Chenggong Section No. 73	0	8,880	0	0	0	0	0	8,880
Kaohsiung Qiaotou Shixing Section No. 924	0	1,400	0	0	0	0	0	1,400
Kaohsiung Qiaotou Shixing Section 925, 3 in total	0	10,000	0	0	0	0	0	10,000
Kaohsiung Qiaotou Shixing Section 927, 3 in total	0	9,250	0	0	0	0	0	9,250
Kaohsiung Qiaotou Shixing Section 928, 3 in total	0	11,495	0	0	0	0	0	11,495
Kaohsiung Qiaotou Shixing Section 967	0	660	0	0	0	0	0	660
Kaohsiung Qiaotou Shixing Section 968	0	4,260	0	0	0	0	0	4,260
Kaohsiung Chenggong Section No. 79	0	8,880	0	0	0	0	0	8,880
Kaohsiung Qiaotou Shixing Section 867	0	400	0	0	0	0	0	400
Subtotal	\$0	\$140,225	\$56	\$0	\$0	\$0	\$0	\$140,281

Statement of other current assets As of December 31, 2020

Item	Summary	Amount	Remark
Prepaid expenses	Prepaid insurance premiums for buildings, group insurance, etc.	\$440
	Prepaid rent	329
	Prepaid construction expenses	359,029
	Prepaid architect design fee	61,801
	Prepaid network fee, permanent legal advisor fee and security service fee, etc.	9,848
Subtotal		\$431,447
Input tax	Business tax not yet filed at the end of December 2020	\$513
Tax overpaid retained
for offsetting the	Accumulated undeducted input business tax as of the end of December 2020	25,919
future tax payable
Tax refunds	Zero-rate tax refund	14
Payments on behalf	Taxes, donations, etc. payments on behalf	8,565
Subtotal		\$35,011
Total		\$466,458

STATEMENT XII

King's Town Construction Co., Ltd.

Long-term equity investments accounted for using the equity method As of December 31, 2020

	Guarantee or pledge	None
	Valuation basis	0.89 Equity method
Net equity	Unit price (Dollar)
	Total	\$28,364
	Amount	\$54,570
	Shareholding	100.00%
Ending balance	Shares (in thousand)	32,000
	Category	(\$69,215) Ordinary shares
	Investment (loss) gain
	Amount	\$0
Decrease in the current period	Number of shares (in thousands)	0
Share of profit	accordance with using the equity recognized method in IFRS 16 or loss	\$13,100
Increase in the current period	Amount	\$70,000
	Number of shares (in thousands)	7,000
	Amount	\$40,685
Beginning balance	Number of shares (in thousands)	25,000
	Investee	H2O Hotel Co., Ltd.

Statement of short-term loans
As of December 31, 2020

Type of Loans	Summary	Ending balance	Contract period	Interest rate range	Line of credit	Pledge or guarantee
Secured borrowings	Financial institution borrowings		\$894,000 2020/07/29-2021/07/29	1.580%		\$1,194,000 Land held for construction: Longzhong Section No. 129-3, 129-4
Secured borrowings	Financial institution borrowings		1,200,000 2020/11/20-2021/11/19	1.387%		1,200,000 Buildings held for sale Longzhong Section No. 27 (King's Town)
Secured borrowings	Financial institution borrowings		387,000 2020/11/25-2021/01/01	1.50%		1,365,000 Construction in progress: Aiqun Section No. 2761~64, 2768-1 and 2748, 5 in total (King's Town World of Heart)
Secured borrowings	Financial institution borrowings		720,000 2020/11/25-2021/01/01	1.500%		1,000,000 Premises provided by related parties
Secured borrowings	Financial institution borrowings		90,000 2020/12/02-2021/01/01	1.45%		100,000 Marketable securities provided by related parties
Secured borrowings	Financial institution borrowings	527,660	2020/12/02~2021/01/01	1.500%		527,660 Land held for construction: Lantian Middle Section No. 30-2
Secured borrowings	Financial institution borrowings	480,000	2020/06/15-2023/05/25	1.585%		480,000 Construction in progress: Xindu Section No. 321, 163-1, 164
Secured borrowings	Financial institution borrowings		90,146 2020/11/09-2021/11/09	1.500%		200,000 Marketable securities provided by related parties
Secured borrowings	Financial institution borrowings		100,000 2020/12/02-2021/06/02	1.49%		470,000 Land held for construction: Chenggong Section No. 60- 1, etc., 9 in total
Total		\$4,488,806			\$6,536,660

STATEMENT XIV

King's Town Construction Co., Ltd.

Statement of short-term bills payable

As of December 31, 2020

	Pledge or guarantee	Longzhong Section No. 128-4, etc., 3 in total Land held for construction -	399,246 Private land provided by related parties	169,891 Premises provided by related parties	399,974 Private land provided by related parties	Longzhong Land held for construction - Section No. 191
	Carrying amount	\$149,971				399,973
Unamortized discount on short-term bills	payable	\$29	754	109	26	27
	Issued amount	\$150,000	400,000	170,000	400,000	400,000
	Interest rate range	1.498%	1.500%	1.501%	1.500%	1.501%
	Contract period	Less than 1 year	Less than 1 year	Less than 1 year	Less than 1 year	Less than 1 year
	Guarantor/accepting institution	International Bills Finance Corp.	International Bills Finance Corp. (Guaranteed by O-Bank)	Taiwan Corporative Bills Finance Corp.	China Bills Finance Corp. Grand Bills
	Item	commercial paper Issuance of	commercial paper Issuance of	commercial paper Issuance of	commercial paper Issuance of

STATEMENT XV

King's Town Construction Co., Ltd.

Item	Summary	Amount	Remark
Sale of premises	King's Town	\$79,571
	Xiande Section No. 826	8,390
	King's Town Hyatt	76,812
	Yiwen Court	13,693
	Ju Dan	18,177
	Shi Shang King's Town	15,274
	Mei Shu Huang Ju	84,683
	King's Town Garden	53,427
	World of Heart	140,879
	Yue He Di	2,719
	Jing Wu Tong	1,200
	Subtotal	\$494,825
Rental premises	Tongguli Engineering	3
	Tingyi Technology	1
	Ting Wang Technology	3
	Bao Sheng Parking	79
	Tianhe International	3
	Lin Coffee	19
	American Institute in Taiwan	770
	Subtotal	\$878
	Total	\$495,703

Statement of contract liabilities - current As of December 31, 2020

STATEMENT XVI

King's Town Construction Co., Ltd.

Statement of notes payable As of December 31, 2020

Name of client	Summary	Amount	Remark
Related parties: Operation
Chieh Chih Construction Co., Ltd.	Construction	\$75,004
Baihong Construction Co., Ltd.	Construction	45,002
Subtotal		\$120,006
Non-related parties: Operation
SunYoung International	Sales commission	\$28,967
Darren design	Mock-up decoration project	7,596
Dian Cheng Engineering	Decoration and construction	5,715
Others		37,946 (Note)
Subtotal		\$80,224
Total		\$200,230

Note: The balance of each account did not exceed the amount of NT\$4,000 thousand.

STATEMENT XVII

King's Town Construction Co., Ltd.

Statement of trade payables As of December 31, 2020

Name of client	Summary	Amount	Remark
Related parties: Operation
Chieh Chih Construction Co., Ltd.	Construction	\$398,863
Baihong Construction Co., Ltd.	Construction	385,934
Subtotal		\$784,797
Non-related parties: Operation
Cheng He Design Engineering	Mock-up decoration project	\$5,880
Hsin-kao Gas	Gas engineering	10,251
Chain10 Architecture & Interior Design	Decoration engineering	3,540
		5,215	(Note)
Subtotal		\$24,886
Total		\$809,683

Note: The balance of each account did not exceed the amount of NT\$3,500 thousand.

STATEMENT XVIII

King's Town Construction Co., Ltd.

Statement of trade payables
As of December 31, 2020

Item	Summary	Amount	Remark
Salary payable	December salary and year-end bonus	\$9,190
Bonuses payable to employees	Employee compensation accruals for 2020	19,524
Retirement benefits expenses payable	December retirement benefits	97
Interest expense payable	December interest expense	9,431
Rental expenses payable	Photocopier rental	44
Others	Labor costs, labor and health insurance premiums, welfare payments, security fees, repair and maintenance fees, management fees, advertising fees and transportation costs, etc.	8,188	(Including trade payable from other related parties of NT\$422 thousand)
Subtotal		\$46,474
Other payables - other	Refund of settlement due and refund	\$849
Other payables - other	Refund of deposit for termination of contract payable	1,247
Other payables - other	Construction payables for investment properties	510
Subtotal		\$2,606
Total		\$49,080

Statement of long-term borrowings As of December 31, 2020

			Amount
Type of Loans	Summary	Due within one operating cycle	Due over one operating cycle	Total	Contract period	Interest rate range	Line of credit	Pledge or guarantee
Secured borrowings	Financial institution borrowings	\$0	\$1,765,000 \$1,765,0	00	2020.03.11- 117.12.31	1.73%		\$2,000,000 Land held for construction - Qinghai Section No. 229
Secured borrowings	Financial institution borrowings	0	694,000		694,000 2019.06.28~115.06. 30	1.70%~1.75%		1,169,000 Land held for construction - Longzhong Section No. 22
Secured borrowings	Financial institution borrowings	\$0	272,000	272,000	2020.01.03- 113.01.03	1.54%		272,000 Private land provided by related parties
Secured borrowings	Financial institution borrowings	45,847	531,034		576,881 2017.07.17~121.07. 17	1.54%		576,881 Investment properties Longbei Section No. 22
Secured borrowings	Financial institution borrowings	0	530,000		530,000 2019.05.16~112.11. 16	1.45%		880,000 Land held for construction - Bohsiao Section No. 1140
Secured borrowings	Financial institution borrowings	0	1,300,000 1,300,00	0	2020.03.12- 114.03.12	1.45%		1,300,000 Land held for construction - Qinghai Section No. 126~128
Secured borrowings	Financial institution borrowings	0	550,000		550,000 2019.10.17~111.10. 17	1.43%		635,000 Land held for construction - Xinmin No. 160
Secured borrowings	Financial institution borrowings	0	50,000		50,000 2019.11.19~111.11. 19	1.43%
Secured borrowings	Financial institution borrowings	0	75,000		75,000 2020.01.13~112.01. 13	1.43%
Secured borrowings	Financial institution borrowings	0	545,000		545,000 2019.11.01~111.11. 01	1.43%		635,000 Land held for construction - Xinmin No. 159
Secured borrowings	Financial institution borrowings	0	50,000		50,000 2020.01.02~112.01. 02	1.43%
Secured borrowings	Financial institution borrowings	89,986	0		89,986 2019.07.17~2021.07 .16	1.55%		89,986 Buildings held for sale: Ju Dan
Secured borrowings	Financial institution borrowings	0	500,000	500,000	2020.06.10- 112.06.10	1.606649%		1,000,000 Private land provided by related parties
Total		\$135,833	\$6,862,034 \$6,997,8	67			\$8,557,867
	Less: Long-term borrowings due within one operating cycle			(\$135,83 3)

Net long-term borrowings \$6,862,0

34

STATEMENT XX

King's Town Construction Co., Ltd.

Statement of lease liabilities As of December 31, 2020

		Amount
Creditor	Due within one year	Due over one year	Total	Contract period	Interest
Kaohsiung City Finance Bureau	\$1,062		\$62,628 \$63,690	Land leased from Kaohsiung City Finance Bureau for NT\$2,154 thousand per year and NT\$180 thousand per month for the lease period of 2012.8.7 to 2062.6.7	1.73% per annum

STATEMENT XXI

King's Town Construction Co., Ltd.

Statement of operating revenue
As of December 31, 2020

Item	Summary	Amount	Remark
Land revenue	Wistron Financial Building	\$6,852
	Mandala	32,928
	King's Town	312,587
	King's Town Hyatt	59,803
	Yiwen Court	159,784
	Ju Dan	138,060
	Hu Li Fang	16,000
	Shi Shang King's Town	267,245
	Mei Shu Huang Ju	1,536,585
	King's Town Garden	639,412
	Yuashan Compound	23,121
	Xiang King's Town	907,253
	Yue He Di	109,059
	Subtotal	\$4,208,689
Sales returns and discounts	Land for sale	(990)
		\$4,207,699

STATEMENT XXI

King's Town Construction Co., Ltd.

Item	Summary	Amount	Remark
Building revenue	Wistron Financial Building	4,350
	Mandala	\$20,907
	King's Town	298,670
	King's Town Hyatt	111,273
	Yiwen Court	241,710
	Ju Dan	107,848
	Hu Li Fang	15,238
	Shi Shang King's Town	256,138
	Mei Shu Huang Ju	1,539,167
	King's Town Garden	788,255
	Yuashan Compound	23,856
	Xiang King's Town	717,664
	Yue He Di	88,601
	Subtotal	\$4,213,677
Sales returns and discounts	Premises for sale	(772)
		\$4,212,905
Other operating revenue	Rental income	\$67,596

Statement of operating revenue (Continued) As of December 31, 2020

STATEMENT XXII

King's Town Construction Co., Ltd.

Statement of operating costs As of December 31, 2020

Subject name	Summary	Amount	Remark
Prepayment for land and buildings at the
beginning of the period		\$0
Purchase of land and buildings during
the period		140,281
Prepayment for land and buildings at the
end of the period		(140,281)
Transfer to land held for construction		\$0
Land held for construction at the
beginning of the period		15,648,922
Land held for construction at the end of		(15,648,922)
the period
Construction in progress - Land held for		\$0
construction
Construction project		467,980
Construction expenses		58,472
Construction costs		\$526,452
Construction in Progress at the		3,411,299
beginning of the period
Construction in Progress at the end of the period		(2,713,083)
Building costs		\$1,224,668
Buildings and land held for sale at the
beginning of the period		14,619,967
Buildings and land held for sale at the
end of the period		(10,679,653)
Add: Increase in renovation work during
the period		273,082
Payment for construction work and
repairs, etc.		17,093
Home appliances gift for customers		2,886
Project additions (reductions)		53,556
Less: Inventory decline loss rebounded		(12,291)
Construction costs		\$5,499,308
Other operating costs		\$76,065
Operating costs		\$5,575,373

Statement of selling and marketing expenses As of December 31, 2020

Subject name	Summary	Amount	Remark
Salary expenses		\$6,687
Postage & Telegram charge		58
Repairs and maintenance
expense		19,181
Advertising fee		317,596
Utility fee		15,643
Insurance fee		712
Tax expense		104,097
Food expenses		173
Commission expenses		5,316
Miscellaneous expenses		68,256
Service fees		246
Retirement benefit		235
Total		\$538,200

STATEMENT XXIV

King's Town Construction Co., Ltd.

Statement of general and administrative expenses As of December 31, 2020

Subject name	Summary	Amount	Remark
Salary expenses		\$51,354
Rental expenses		7,706
Stationery		889
Travel expense		32
Delivery expense		18
Postage & Telegram charge		779
Repairs and maintenance
expense		641
Advertising fee		327
Insurance fee		3,813
Entertainment expense		9,816
Tax expense		27,526
Depreciation		1,382
Amortization expense		316
Overtime allowance expense		174
Food expenses		867
Employee benefits		8,488
Training fee		24
Transportation fee		434
Sundry purchases		25
Service fees		2,417
Retirement benefit		1,685
Book fee		24
Miscellaneous expenses		10,523
Total		\$129,260

VI. Financial Difficulties Experienced by the Company and Its Affiliates and Their Impact on the Company's Financial Position:

None.

Review and Analysis of the Company's Financial Position and Financial Performance, and Listing of Risks

I. Financial Position:

Review and Analysis on Financial Position

Comparative Analysis on Financial Position

		(In Thousands of New Taiwan Dollars)
Year			Difference
Item	2020	2019	Amount	%
Current assets	31,278,021	34,845,997	-3,567,976	-10.24%
Financial assets at fair value through profit or loss - non current	82	82	0	-
Financial assets carried at cost - non-current	0	0	0	-
Investments accounted for using the equity method	15,566	14,786	780	5.28%
Property, plant and equipment	802,258	862,082	-59,824	-6.94%
Net right-of-use assets	62,731	64,245	-1,514	-2.36%
Intangible assets	169,290	173,523	-4,233	-2.44%
Other assets	51,266	101,888	-50,622	-49.68%
Total assets	32,379,214	36,062,603	-3,683,389	-10.21%
Current liabilities	10,728,951	15,246,621	-4,517,670	-29.63%
Non-current liabilities	6,988,048	7,393,196	-405,148	-5.48%
Total liabilities	17,716,999	22,639,817	-4,922,818	-21.74%
Share capital	3,711,931	3,848,464	-136,533	-3.55%
Capital surplus	0	40,015	-40,015	-100.00%
Retained earnings	10,950,284	9,534,307	1,415,977	14.85%
Total equity	14,662,215	13,422,786	1,239,429	9.23%

(In Thousands of New Taiwan Dollars)

Explanations on the analysis:

Reasons and impact of significant changes in asset, liability and equity in the past two fiscal years, and countermeasures:

(1) The year-over-year decrease of NT\$50,622 thousand (-49.68%) in other assets in 2020 was mainly due to the significant decrease in notes from customers of renovation work in 2020.

Countermeasures: As the aforementioned changes arose from normal operations, the Company did not have to take any actions.

Review and Analysis on Financial Performance

(In Thousands of New Taiwan Dollars)
Year	2020	2019	Increase	Changes (%)
Item			(Decrease)
Total operating revenue	8,669,611	5,990,199	2,679,412	44.73%
Less: Sales return and	(1,762)	0	-1,762	-
discount
Net operating revenue	8,667,849	5,990,199	2,677,650	44.70%
Cost of revenue	5,684,124	3,398,823	2,285,301	67.24%
Gross profit	2,983,725	2,591,376	392,349	15.14%
Operating expenses	809,024	646,444	162,580	25.15%
Operating Income	2,174,701	1,944,932	229,769	11.81%
Non-operating income	(241,777)	(141,698)	-100,079	70.63%
and expenses
Income before income tax	1,932,924	1,803,234	129,690	7.19%
of continuing operations
Income tax expense	248,032	146,664	101,368	69.12%
Net income of continuing	1,684,892	1,656,570	28,322	1.71%
operations
Other comprehensive	(216)	(730)	514	-70.41%
income
Total comprehensive	1,684,676	1,655,840	28,836	1.74%
income

Comparative Analysis on Financial Performance

Explanations on the analysis:

• 1. Analysis on variance in the past two fiscal years:
• (1) The year-over-year increase of NT\$2,679,412 thousand (+44.73%) in operating revenue in 2020 was mainly due to robust demand and the completion of multiple projects in 2020; thus, there was a substantial increase in operating revenue.
• (2) The year-over-year increases of 67.24% and 69.12% in cost of revenue and income tax expense respectively in 2020 were due to the same reason as (1).
• 1. Sales forecasts and bases: The Company did not compile financial forecasts in 2021. Please refer to #Page 2#.
• 1. Possible impact on the Company's finance and business in the future and countermeasures: None.

Review and Analysis on Cash Flows

Cash Flows Analysis

(In Thousands of New Taiwan Dollars)

Cash, Beginning	Net Cash	Net Increase	Cash Surplus		Remedies for Cash
of Year	Provided by	in Cash	(Shortage)		Shortage
	Operating
	Activities
				Investment	Financing
				Plan	Plan
\$394,662	\$5,126,007	\$230,247	\$624,909	(\$33,134)	(4,862,626)

I. Analysis on cash flow movements in 2020:

1. Operating activities: Due to significant growth in operating revenue in 2020, net cash provided by operating activities for the year increased substantially by NT\$5,126,007 thousand.

2. 1. Investing activities: The acquisition of financial assets at fair value through profit or loss of NT\$183,079 thousand resulted in net cash outflow from investing activities of NT\$33,134 thousand.
3. 1. Financing activities: A great amount of loan repayments resulted in net cash outflows from financing activities of NT\$4,862,626 thousand.
4. II. Improvement plans for liquidity shortage: None.
5. III. Liquidity analysis for 2021: The Company expects an increase in net cash provided by operating activities in 2021. Capital demand for construction in progress will decrease.
6. IV. Effect Upon Finance and Business of Any Major Capital Expenditures During the Most Recent Fiscal Year: None.
7. V. Company Reinvestment Policy for the Most Recent Fiscal Year, Main Reasons for Profits/Losses Generated Thereby, Plan for Improving Re-investment Profitability, and Investment Plans for Coming Year: As the individual amount of the Company's reinvestment cases did not exceed 5% of the Company's paid-in capital, analysis was not conducted.
8. VI. Risk Analysis and Assessment:

9. (I) Impacts of fluctuations in interest rates and foreign exchange rates and inflation on the Company's profitability and associated action plans:

   • 1. Since both the annual interest rates and the Company's average borrowing rates were at a relatively low point, the Company's borrowing costs were not subject to significant changes and burdens.
10. 1. As the Company targets the domestic market, changes in foreign exchange rates did not have a significant impact on the Company.
11. 1. Inflation did not have a significant impact on the Company's operation.
12. (II) The policies, main causes of gain or loss and associated action plans with respect to high-risk, highly-leveraged investment, lending funds to other parties, endorsement and guarantee and derivative trading:

The Company did not engage in high-risk, highly-leveraged investments, lending funds to other parties, nor derivative trading in 2020.

• (III) Future R&D plans and expected R&D expenditure: None.
• (IV) Impacts of changes in major domestic and overseas policies and regulations on the Company's finance and business and associated action plans: None.
• (V) Impacts of changes in technology and industry on Company's finance and business and associated action plans: None.
• (VI) Impacts of changes in corporate image on corporate risk management and associated action plans: None.
• (VII) Expected benefits and risks relating to merger and acquisition and associated action plans: None.
• (VIII)Expected benefits and risks relating to plant expansion and associated action plans: None.
• (IX) Risks relating to concentrated sources of sales or purchases and associated action plans: Purchases of the Company concentrated on the two construction companies: Chieh Chih Construction Co., Ltd. and Bai Hong Construction Co., Ltd. However, these two companies are affiliates of the Company, i.e., they are controlled by the Company. They both operate well at present and there is no purchase concentration risk. The Company did not have sales concentration.
• (X) Impact and risk of sale or transfer of a significant number of shares by the Directors, Supervisors or shareholders with over 10% of shareholding and associated action plans: None.
• (XI) Impact and risk of change in management and associated action plans:
• (XII) Litigations or non-litigations: None.

(XIII)Other important risks and countermeasures to be taken: None.

VII. Other Important Matters: None.

Special Disclosure

• I. Information on the Company's Affiliates:
• (I) Consolidated business report of the affiliates:
  • 1. Overview of the affiliates:
  • (1) Chart of the affiliates:

Tian Gang Investment Co., Ltd. (had 17.06% stake in the Company and 22.61% stake in Jing Cheng Construction Co., Ltd.); Tian Lai Investment Co., Ltd. (had 13.38% stake in the Company and 13.01% stake in Jing Cheng Construction Co., Ltd.); Jing Cheng Construction Co., Ltd., Chieh Chih Construction Co., Ltd., and Bai Hong Construction Co., Ltd. were concluded as having controlling or subordinate relation with the Company (pursuant to Article 369-3 of the Company Act.)

Name	Date of Incorporation	Address		Paid-in Capital Main Business / Products
Tian Gang Investment Co., Ltd.	1998/09/02	12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City 813017, Taiwan (R.O.C.)		220,000 H201010 Investment
Tian Lai Investment Co., Ltd.	1998/08/26	12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City 813017, Taiwan (R.O.C.)		323,200 H201010 Investment
Jing Cheng Construction Co., Ltd.	1992/05/28	12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City 813017, Taiwan (R.O.C.)	201,000	H701010 Housing and Building Development and Rental
Chieh Chih Construction Co., Ltd.	1981/12/24	12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City 813017, Taiwan (R.O.C.)		330,000 Contractors of civil and architectural engineering
Bai Hong Construction Co., Ltd.	1993/03/12	12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City 813017, Taiwan (R.O.C.)		201,000 Contractors of civil and architectural engineering
H2O Hotel Co., Ltd.	2015/04/16	No. 366, Minghua Rd., Gushan Dist., Kaohsiung City 804059, Taiwan (R.O.C.)		320,000 Hotel and restaurants

(2) Basic information on affiliates:

As of May 1, 2021 (In Thousands of New Taiwan Dollars)

(3) Information on common shareholders of entities concluded as having controlling or subordinate relation:

As of May 1, 2021 (In Thousands of New Taiwan Dollars, Shares, %)
Reason	Name	Shareholding	Shareholding Shareholding (%)	Date of Incorporation	Address	Paid-in Capital	Main Business Activities
Concluded pursuant to Article 369- 3 of the Company Act.	Tian Gang Investment Co., Ltd.	63,328,801	17.06%		12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City 813017, Taiwan (R.O.C.)		220,000 H201010 Investment
Concluded pursuant to Article 369- 3 of the Company Act.	Tian Lai Investment Co., Ltd.	49,652,072	13.38%		12F., No. 150, Bo'ai 2nd Rd., Zuoying Dist., Kaohsiung City 813017, Taiwan (R.O.C.)		323,200 H201010 Investment
Concluded pursuant to Article 369- 3 of the Company Act.	Tien-Tsan Tsai	85,544,838	23.05%	-	-	-	-
Concluded pursuant to Article 369-	Mei-Yun Tsai-Hsueh	20,209,951	5.44%	-	-	-	-

3 of the
Company
Act.

(4) Industries in which the affiliates operate and division of labor:

Name of Affiliate	Industry of Affiliate	Business Relation	Division of Labor
Tian Gang Investment Co., Ltd.	Investment	None	-
Tian Lai Investment Co., Ltd.	Investment	None	-
Jing Cheng Construction Co., Ltd.	Rental and sale of residences and buildings	None	Similar business activities with the Company but at a different region and with different target groups
Chieh Chih Construction Co., Ltd.	Contractors of civil and architectural engineering	Yes	Mainly undertakes commissioned building construction works for the Company and Jing Cheng
Bai Hong Construction Co., Ltd.	Contractors of civil and architectural engineering	Yes	Mainly undertakes commissioned building construction works for the Company and Jing Cheng
H2O Hotel Co., Ltd.	Hotel and restaurants	None	-

(5) Information on Directors, Supervisors, and Presidents of affiliates:

			(In Thousands of New Taiwan Dollars; Shares, %)
		Name or	Shareholding
Name	Title	Representative	Shares	Shareholding (%)
	Chairman	Mei-Yun Tsai Hsueh	380,000	1.73%
Tian Gang Investment Co., Ltd.	Directors	Tien-Tsan Tsai	620,000	2.82%
	Directors	Mei-Hui Chen	0	0.00%
	Supervisor	Yao-Hung Tsai	0	0.00%
	Chairman	I-Ying Chen	10,455,200	32.35%
Tian Lai Investment	Directors		0	0.00%
Co., Ltd.	Directors	Chin-Hsing Chen	0	0.00%
	Supervisor	Chia-Ling Tsai	155,800	0.48%
	Chairman	Representative of Xin Rui Investment Co., Ltd.: Tien-Tsan Tsai	4,919,569	24.48%
Jing Cheng	Directors	Representative of Xin Rui Investment Co., Ltd.: Yao-Hung Tsai	4,919,569	24.48%
Construction Co., Ltd.	Directors	Representative of Xin Rui Investment Co., Ltd.: I-Ying Chen	4,919,569	24.48%
	Supervisor	Representative of Tian Lai Investment Co., Ltd.: Ching Shun Ou	2,615,236	13.01%
Chieh Chih	Chairman	Hsien-Tsung Wang	20,200,000	61.21%

Construction Co., Ltd.		Representative of Jing Cheng
	Directors	Construction Co.,	11,050,000	33.48%
		Ltd.: Chia-Ling Tsai
		Representative of
		Jing Cheng
	Directors	Construction Co.,	11,050,000	33.48%
		Ltd.: Shih-Hsiung Li
	Supervisor	Chen-Jung Li	0	0.00%
	Chairman	Ching-Shun Ou	0	0.00%
Bai Hong	Directors	Hsien-Tsung Wang	0	0.00%
Construction Co., Ltd.	Directors	Yao-Hung Tsai	0	0.00%
	Superviso r	Tien-Tsan Tsai	6,100,000	30.35%
	Chairman	King's Town
		Construction Co.,
		Ltd.: Representative,	32,000,000	100.00%
		Mei-Yun Tsai
		Hsueh
		King's Town
		Construction Co.,
	Directors	Ltd.: Representative,	32,000,000	100.00%
H2O Hotel Co., Ltd.		Chiung-Ting Tsai
		King's Town
		Construction Co.,
	Directors	Ltd.: Representative,	32,000,000	100.00%
		I-Ying Chen
		King's Town
		Construction Co.,		100.00%
	Supervisor	Ltd.: Representative,	32,000,000
		Chia-Ling Tsai

2. Operational highlights of affiliates: Year: 2020

Name	Capital	Total Assets	Total liabilities	Net Worth	Operating revenue	Operating Income	Net Income (after-tax)	EPS (NT\$) (after-tax)
Tian Gang
Investment Co.,	220,000	5,596,511	1,816,702	3,779,809	71,075	3,922	1,015	\$0.05
Ltd.
Tian Lai
Investment Co.,	323,200	3,335,556	162,517	3,173,039	52,035	51,927	49,303	\$1.53
Ltd.
Jing Cheng
Construction	201,000	9,369,328	13,919,270	398,402	297,855	(201,852)	(202,855)	(\$10.09)
Co., Ltd.
Chieh Chih
Construction	330,000	2,419,298	1,352,050	1,067,298	555,125	(11,550)	4,137	\$0.13
Co., Ltd.
Bai Hong
Construction	201,000	5,326,107	1,361,153	3,964,954	801,822	1,278,046	(9,254)	(\$0.46)
Co., Ltd.

As of December 31, 2020 (In Thousands of New Taiwan Dollars)

Note: Numbers above were audited by CPAs.

(II) Affiliation reports:

Declaration:

Declaration

It is hereby declared that the affiliation report of King's Town Construction Co., Ltd. (the "Company") for the year ended December 31, 2020 is prepared by the Company in accordance with "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises". There are no significant inconsistencies between the information disclosed in the affiliation report and in the notes of financial statements for the above period.

Sincerely,

Company Name: King's Town

Construction Co., Ltd.

Responsible person: Tien-Tsan Tsai

May 1, 2021

CPA's review opinion:

Letter

Addressee: King's Town Construction Co., Ltd. (the Company)

• Subject: Opinions on whether the declaration issued by the Company's management for the 2020 affiliation report is reasonable in all material respects.
• Explanation: The Company's 2020 affiliation report has been prepared by its management with a declaration issued, stating that the said report is prepared according to the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" and the information disclosed within is not materially inconsistent with relevant information disclosed in the notes to the 2020 financial report.

In our opinion, the declaration issued by the Company's management for the 2020 affiliation reports is reasonable in all material respects.

ShineWing Taiwan

CPA: Angela Chuang

CPA: Hielleen Chang

March 24, 2021

— 316 —

1. Relationship between subordinate and controlling companies:

(In Shares) April 27, 2021

Name of Controlling	Basis for the		Shareholding and Pledged Shares of Controlling Company	Directors, Supervisors or Managerial Officers Appointed by the Controlling Company
Company	Control	Shareholding (shares)	Shareholding (%)	Pledged Shares	Title	Name
	Concluded as				Chairman Directors	Tian Lai Investment: Tien-Tsan Tsai Tian Lai Investment:
King's Town	having controlling or subordinate				Directors	Mei-Yun Tsai-Hsueh Tian Lai Investment: Tien-Chin Chen
Construction Co., Ltd.	relation pursuant to	-	-	-	Directors	Tian Lai Investment: Shih-Hsiung Li
	Article 369-3 of the				Independent Director Independent	Ming-Te Chang I-Li Chuang
	Company Act.				Director Independent	(Discharged) Yao-Kuo Wu
	Concluded as				Director Chairman	Mei-Yun Tsai-Hsueh
	having controlling or				Directors Directors	Tien-Tsan Tsai Mei-Hui Chen
Tian Gang Investment Co.,	subordinate relation	63,328,801	17.06%	0	Supervisor	Yao-Hung Tsai
Ltd.	pursuant to Article 369-3 of the
	Company Act.
	Concluded as having controlling or				Chairman Directors Directors	I-Ying Chen Chun-Chun Chiu Chin-Hsing Chen
Tian Lai Investment Co.,	subordinate relation	49,652,072	13.38%	0	Supervisor	Chia-Ling Tsai
Ltd.	pursuant to Article 369-3 of the
	Company Act. Concluded as				Chairman	Xin Rui Investment:
	having controlling or				Directors	Tien-Tsan Tsai Xin Rui Investment:
Jing Cheng Construction Co.,	subordinate relation	1,899,268	0.51%	0	Directors	Yao-Hung Tsai Xin Rui Investment:
Ltd.	pursuant to Article 369-3				Supervisor	I-Ying Chen Tian Lai Investment:
	of the Company Act.					Ching-Shun Ou
	Concluded as having				Chairman Directors	Hsien-Tsung Wang Jing Cheng
Chieh Chih	controlling or subordinate				Directors	Construction: Chia-Ling Tsai
Construction Co., Ltd.	relation pursuant to	31,501,513	8.49%	0	Supervisor	Jing Cheng Construction:
	Article 369-3 of the Company Act.					Shih-Hsiung Li Chen-Jung Li
Bai Hong	Concluded as	1,109,863	0.30%	0	Chairman	Ching-Shun Ou

Construction Co.,	having				Directors	Hsien-Tsung Wang
Ltd.	controlling or				Directors	Yao-Hung Tsai
	subordinate				Supervisor	Tien-Tsan Tsai
	relation
	pursuant to
	Article 369-3
	of the
	Company Act.
					Chairman	King's Town
						Construction:
					Directors	Mei-Yun Tsai-Hsueh
						King's Town
						Construction:
H2O Hotel Co.,	Subsidiary of	0	0.00%	0	Directors	Chiung-Ting Tsai
Ltd.	the Company					King's Town
					Supervisor	Construction:
						I-Ying Chen
						King's Town
						Construction:
						Chia-Ling Tsai

Note: When the controlling company of the subordinate company is a subordinate company of another company, relevant information of the latter company shall also be provided. The same rule applies where the latter company is the subordinate company of a different company, and so on.

1. Sales and Purchases:

(In Thousands of New Taiwan Dollars; %) Transaction with Controlling Company Terms with Controlling Company General Trading Terms Reason for Deviation Accounts/Notes Payable Overdue Accounts Receivables Remarks Purchases (Sales) Amount % to Total Purchases Gross Profit Unit Price (NT\$) Credit Term Unit Price (NT\$) Credit Term Ending Balance % to Total Accounts/Notes Receivable (Payable) Amount Action Taken Allowance for Doubtful Accounts Purchases 238,109 21.65% - - Subject to contract - - - Notes payable NT\$75,004 Accounts payable NT\$398,863 37.44% 48.31% 0 - 0 Chieh Chih Construction Co., Ltd. Purchases 280,364 25.49% - - Subject to contract - - - Notes payable NT\$45,002 Accounts payable 22.47% 46.74% 0 - 0 Bai Hong Construction Co., Ltd.

Note 1: In cases of advance receipts (prepayments), the reasons, contractual terms, amount and difference from the general trading terms shall be stated in the Remarks column.

NT\$385,934

Note 2: If the listed accounts are not applicable, please adjust accordingly. Where accounts are not available due to industry characteristics, the company is exempted from providing the information.

• 1. Property transactions: None.
• 1. Financing of funds: None.
• 1. Lease of assets: None.
• 1. Endorsements and guarantees: None.
• 1. Other significant transactions: None.

• II. Private Placement of Securities During the Most Recent Fiscal Year and up to the Date of Publication of the Annual Report: The Company did not engage in private placement of securities during the most recent fiscal year and up to the date of publication of the annual report.

• III. Holding or Disposal of Shares in the Company by the Company's Subsidiaries During the Most Recent Fiscal Year and up to the Date of Publication of the Annual Report: The Company does not have subsidiaries holding or disposing of shares in the Company at present.
• IV. Other Supplementary Information: None.
• V. Any Events in the Most Recent Year and as of the Date of this Annual Report that had Significant Impacts on Shareholders' Right or Security Prices as Stated in Subparagraph 2, Paragraph 3, Article 36 of the Securities and Exchange Act: None.