Stock Code : 2506

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated financial statements and Independent Auditors’ Report

For the Years Ended December 31, 2020 and 2019

Address: No. 495, Guangfu South Road, Xinyi District, Taipei City 110, Taiwan Telephone: +886 (2) 2722-5051

The reader is advised that these parent company only financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

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Ⅰ．Cover
Ⅱ．Table of Contents
Ⅲ．Statement
Ⅳ．Independent Auditor’s Report
Ⅴ．Consolidated Balance Sheet
Ⅵ．Consolidated Statements of Comprehensive Income
Ⅶ．Consolidated Statements of Changes in Equity
Ⅷ．Consolidated Statements of Cash Flow
Ⅸ．Notes to Consolidated Financial Statements
1. Company History
2. Approval Date and Procedures of The Financial Statements
3. New Standards, Amendments and Interpretations Adopted
4. Summary of Significant Accounting Policies
5. Significant Accounting Assumptions and Judgments, and Major Sources of
Estimation Uncertainty
6.Explanation of Significant Accounts
7.Related-Party Transactions
8.Pledged Assets
9.Commitments and Contingencies
10. Losses Due to Major Disasters
11. Subsequent Events
12. Other
13. Other Disclosures
A. Information on Significant Transactions
B. Information on Investees
C. Information on Investments in China
D. Information of Main Shareholders
(14) Segment Information Page(s)

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`Ⅰ．`Cover `Ⅱ．`Table of Contents `Ⅲ．`Statement `Ⅳ．`Independent Auditor’s Report `Ⅴ．`Consolidated Balance Sheet `Ⅵ．`Consolidated Statements of Comprehensive Income `Ⅶ．`Consolidated Statements of Changes in Equity `Ⅷ．`Consolidated Statements of Cash Flow `Ⅸ．`Notes to Consolidated Financial Statements 1. Company History 2. Approval Date and Procedures of The Financial Statements 3. New Standards, Amendments and Interpretations Adopted 4. Summary of Significant Accounting Policies 5. Significant Accounting Assumptions and Judgments, and Major Sources of Estimation Uncertainty `6.`Explanation of Significant Accounts `7.`Related-Party Transactions `8.`Pledged Assets `9.`Commitments and Contingencies 10. Losses Due to Major Disasters 11. Subsequent Events 12. Other 13. Other Disclosures A. Information on Significant Transactions B. Information on Investees C. Information on Investments in China D. Information of Main Shareholders (14) Segment Information	Page(s)
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Statement

For the fiscal year of 2020 (From Jan. 1, 2020 to Dec. 31, 2020), the companies which should be included in the consolidated financial statements of the Company pursuant to the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those should be included pursuant to the International Financial Reporting Standards 10. The affiliates’ consolidated financial statements that should already be disclosed on the supra parent company have already been disclosed in the consolidated financial statements of the Company. Therefore, the Company will not prepare separate consolidated financial statements for associates.

Hereby declare

Company Name: Pacific Construction Co., Ltd.

Chairman: Liu I-Yee Date: March 25, 2021

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Independent Auditor’s Report

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

Opinion

We have audited the consolidated balance sheet of Pacific Construction Co., Ltd. (Pacific Construction Group) and its subsidiaries for the years ended December 31, 2020 and 2019. The related consolidated statements of comprehensive income, consolidated statements of changes in equity, consolidated statements of cash flow for the years ended December 31, 2020 and 2019, and notes to consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of the other auditors (see Other Matters), the consolidated financial statements present fairly, in all material respects, the financial position of the Group for the years ended December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Financial Reporting Standards and International Accounting Standards, interpretations and notices approved and effective upon promulgation by the Financial Supervisory Commission.

Basis for Opinion

We conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China, we conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Furthermore. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of Financial Statements section of our report. We are independent of the Pacific Construction Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. 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.

1. Revenue recognition

Please refer to Note (4)(17) for the accounting policy of revenue recognition. Information of revenue recognition details are shown in Note (6)(21) of the Consolidated financial statements

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Description of Key Audit Matters

Pacific Construction Group’s main operating revenue sources are income from department stores and rental income from investment properties. The risk of material misstatement is associated with the truthfulness of revenue recognition. While operating revenue involves the management’s operating performance, the management may fail to recognize revenue earlier or defer the recognition of revenue to achieve the expected net profit, resulting in a material misstatement of operating revenue. Accordingly, the revenue recognition test is one of the significant evaluations performed by us in our audit of the consolidated financial statement of Pacific Construction Group.

Auditing Procedures Performed

Our principal audit procedures of the above key audit matters include:

‧ Understand the process and internal controls of the Sales and Collection Cycle and assess the controls to prevent and detect errors and fraud in revenue recognition.
‧ Perform a cut-off test on Sale of the Properties and Lease Revenue to assess whether the former revenue is recognized in the appropriate period.
‧ Perform a verification test on revenue recognition by randomly reviewing relevant documents, including lease contractual terms and conditions, real estate sales contract and Real estate transfer registration. These will be verified with the general entry to assess whether the revenue recognition policy of Pacific Construction Co., Ltd. complies with applicable bulletins.
‧ Understand and test the control mechanism of department store’s self-operating, and counter collection and revenue recognition operating procedures of Pacific Construction Group.
‧ Randomly check and understand the contractual terms and conditions to test whether the draw rate complies with the contractual terms and conditions and whether the revenue statements transferred by the information system are correct, recorded and collected in time.
‧ Evaluate whether Pacific Construction Group’s revenue recognition policy for department stores complies with applicable bulletins.

2. Inventory Valuation

Please refer to Note 4(8) and 5 for the accounting policy of inventory valuation, as well as the estimation and assumption uncertainty of the valuation of inventory, respectively. Information of estimation of the valuation of inventory are disclosed in Note 6(5) of the consolidated financial statements.

Description of Key Audit Matters:

The Construction Department's inventory is an important asset of Pacific Construction Group, accounting for approximately 41% of total assets. Inventory is valued in accordance with IAS 2 as the net realizable value of Pacific Construction Group's inventory of the Construction Department is based on management's estimates of future sales prices and construction costs and is likely to be affected by political and economic situations. Where the net realizable value is not properly assessed, it may result in a misstatement in the financial statements. Accordingly, the inventory valuation test is one of the significant evaluations performed by us in our audit of the consolidated financial statement of Pacific Construction Group.

Auditing Procedures Performed:

We obtained information on the net realizable value of Pacific Construction Group’s inventory and reassessed the net realizable value reassessment of homes for sales by randomly reviewing sold

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contracts from previously disclosed information, with reference to the most recent property price registered by the Ministry of the Interior, or obtaining quotes from nearby transactions or obtaining quotes from nearby transactions. In terms of the net realizable value of construction sites, land and buildings under construction, we acquired and randomly checked the Company's investment return analysis or appraisal report and compared the investment return analysis with market conditions to assess whether the net realizable value of inventories is fairly presented.

Other Matters

We did not audit certain subsidiary’s financial statements included in the consolidated financial statements of Subsidiary’s of Pacific Construction Group using the equity method; they were audited by the other auditors.

Our audits, our opinion on the consolidated financial statements of Subsidiary’s of Pacific Construction Group, are based solely on the other auditors' audit reports. The total assets of the above-mentioned subsidiaries as of December 31, 2019 accounted for 7% of the combined assets, and the net operating income from January 1 to December 31, 2019 accounted for 0% of consolidated net operating income. In addition, some of the financial reports of Pacific Construction Group's investments using the equity method, we did not audit about it, they were audited by other accountants. Our audits, our opinion on the consolidated financial statements of Pacific Construction Group, are based solely on the other auditors' audit reports. The amount in investments in certain investees accounted for using the equity method for the years ended December 31, 2019 and 2020 accounted for 0% and 5% of the total consolidated assets and liabilities, respectively. The shares of subsidiaries, affiliates and joint ventures accounted for using the equity method accounted for (1,199)% and 61% of the consolidated net (loss) income before income taxes for January 1 to December 31, 2019 and 2020, respectively.

We have audited and expressed an unqualified opinion on the parent company only financial statements of Pacific Construction Co., Ltd. as of and for the years ended December 31, 2020 and 2019.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers International Financial Reports Standards, International Accounting Standards interpretations, and announcements of interpretations recognized and published by the Financial Supervisory Commission and maintain necessary internal control and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

Those in charge of governance (including members of the Audit Committee) are responsible for overseeing the reporting process of Pacific Construction Group’s.

Auditor’s 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 misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected

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to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

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 to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than the one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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 Pacific Construction Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Pacific Construction Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause Pacific Construction Co., Ltd. to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence on the financial information of business entities within the Group in order to express an opinion on the consolidated financial statements. The independent auditor is responsible for guiding, supervising, and implementing the Group's audit and is responsible for forming an opinion on the Group's audit.

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

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

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

KPMG

Taipei, Taiwan (Republic of China)

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Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Balance Sheet

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2020 Amount ％ $ 945,251 7 116,028 1 25,317 - 150 - 28,490 - 5,955,988 41 928,622 6 246,764 2 11,104 - 53,654 - 39,738 -	December 31, 2019 Amount ％ 541,486 3 95,368 1 5,294 - 8,760 - 32,281 - 7,204,898 45 - - 148,293 1 29,154 - 137,877 1 64,040 - 8,267,451 51 2,220,858 14 893,705 6 1,807,663 11 139,632 1 2,013,372 13 - - 3,332 - 428,153 3 14,992 - 156,257 1 11,959 - 7,689,923 49 15,957,374 100	December 31, 2019 Amount ％ 541,486 3 95,368 1 5,294 - 8,760 - 32,281 - 7,204,898 45 - - 148,293 1 29,154 - 137,877 1 64,040 - 8,267,451 51 2,220,858 14 893,705 6 1,807,663 11 139,632 1 2,013,372 13 - - 3,332 - 428,153 3 14,992 - 156,257 1 11,959 - 7,689,923 49 15,957,374 100
	Amount
	541,486 95,368 5,294 8,760 32,281 7,204,898 - 148,293 29,154 137,877 64,040
8,351,106 57	8,267,451	51
2,231,043 15 - - 1,769,448 12 100,627 1 1,955,583 14 2,286 - 2,736 - - - 9,977 - 64,657 1 10,168 -	2,220,858 893,705 1,807,663 139,632 2,013,372 - 3,332 428,153 14,992 156,257 11,959	14 6 11 1 13 - - 3 - 1 -
6,146,525 43	7,689,923	49
$ 14,497,631 100	15,957,374	100

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Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Balance Sheet (Continued)

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2020 Amount % $ 702,070 5 518,488 4 430,393 3 861,039 6 10,200 - 11,923 - 333,702 2 300,000 2 959,057 7 20,592 - 4,147,464 29 260,000 2 1,258,412 9 1,821 - 89,040 1 21,120 - 84,857 - 17,787 - 1,733,037 12 5,880,501 41 3,870,000 27 371,732 2 1,221,329 8 55,134 - 689,476 5 178,413 1 609,624 4 (193,207) (1) 6,802,501 46 1,814,629 13 8,617,130 59 $ 14,497,631 100	December 31, 2020 Amount % $ 702,070 5 518,488 4 430,393 3 861,039 6 10,200 - 11,923 - 333,702 2 300,000 2 959,057 7 20,592 - 4,147,464 29 260,000 2 1,258,412 9 1,821 - 89,040 1 21,120 - 84,857 - 17,787 - 1,733,037 12 5,880,501 41 3,870,000 27 371,732 2 1,221,329 8 55,134 - 689,476 5 178,413 1 609,624 4 (193,207) (1) 6,802,501 46 1,814,629 13 8,617,130 59 $ 14,497,631 100	December 31, 2019	December 31, 2019
Amount $ 702,070 518,488 430,393 861,039 10,200 11,923 333,702 300,000 959,057 20,592		Amount 1,960,566 826,633 398,559 889,651 23,371 15,165 323,407 - 673,432 23,109	%
			12 5 3 6 - - 2 - 4 -
4,147,464	29	5,133,893	32
260,000 1,258,412 1,821 89,040 21,120 84,857 17,787	2 9 - 1 - - -	560,000 1,369,558 1,057 125,608 22,990 87,143 63,441	4 9 - 1 - - -
1,733,037	12	2,229,797	14
5,880,501	41	7,363,690	46
3,870,000 371,732 1,221,329 55,134 689,476 178,413 609,624 (193,207)	27 2 8 - 5 1 4 (1)	3,870,000 371,732 1,221,329 51,436 747,110 162,953 618,594 (193,207)	24 2 8 - 5 1 4 (1)
6,802,501 1,814,629	46 13	6,849,947 1,743,737	43 11
8,617,130	59	8,593,684	54
$ 14,497,631	100	15,957,374	100

(See accompanying Notes to Consolidated Financial Statements)

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Pacific Construction Co., Ltd. and Subsidiaries Consolidated Statements of Comprehensive Income For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars)

2020	％ 100 69	2019
Amount $ 2,949,552 2,042,997		Amount 834,419 467,152	％
			100 56
906,555	31	367,267	44
164,169 325,596 442,218	6 11 15	123,213 320,310 (15,747)	15 38 (2)
931,983	32	427,776	51
1,872	-	387	-
(23,556)	(1)	(60,122)	(7)
1,461 186,418 (137,908) - 41,394	- 6 (5) - 1	3,438 84,538 (119,663) 29 84,713	- 10 (14) - 10
91,365	2	53,055	6
67,809 33,415	1 1	(7,067) 42,065	(1) 5
34,394	-	(49,132)	(6)
667 (4,815) -	- - -	(4,051) 70,475 -	- 8 -
(4,148)	-	66,424	8
15,460 -	1 -	(33,807) -	(4) -
15,460	1	(33,807)	(4)
11,312	1	32,617	4
$ 45,706	1	(16,515)	(2)
$ (54,669) 89,063	(3) 3	(90,762) 41,630	(11) 5
$ 34,394	-	(49,132)	(6)
$ (47,446) 93,152	(2) 3	(78,706) 62,191	(9) 7
$ 45,706	1	(16,515)	(2)
$ (0.15)		(0.25)
$ (0.15)		(0.25)

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Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

		Equityattributable t	Equityattributable t	Equityattributable t	o owners ofparent	o owners ofparent			Non- controlling interests 1,702,337	Total equity
Ordinary share capital	Capital surplus	Retained earnings			Total Other equityinterest		Treasury shares	Total equity attributable to owners of parent 6,990,280
					Exchange differences resulting from translating the financial statements of foreign operations Unrealized gains (losses) from financial assets measured at FVTOCI 196,760 558,609 - - (33,807) 50,323 (33,807) 50,323 - - - - - - - - - 9,662 162,953 618,594 - - 15,460 (8,970) 15,460 (8,970) - - - - 178,413 609,624
		Legal reserve	Special reserve	Unappropria ted retained earnings
										8,692,617
$ 3,870,000	371,439	1,203,040	61,298				(193,207)
				922,341 (90,762) (4,460) (95,222) (18,289) 9,862 (61,920) - (9,662) 747,110 (54,669) 733 (53,936) (3,698) - 689,476
					196,760 - (33,807) (33,807) - - - - - 162,953 - 15,460 15,460 - - 178,413
- -	- -	- -	- -			- 50,323	- -	(90,762) 12,056	41,630 20,561	(49,132) 32,617
-	-	-	-			50,323	-	(78,706)	62,191	(16,515)
- - - - -	- - - 293 -	18,289 - - - -	- (9,862) - - -			- - - - 9,662	- - - - -	- - (61,920) 293 -	- - (21,102) 311 -	- - (83,022) 604 -
3,870,000 - -	371,732 - -	1,221,329 - -	51,436 - -			618,594 - (8,970)	(193,207) - -	6,849,947 (54,669) 7,223	1,743,737 89,063 4,089	8,593,684 34,394 11,312
-	-	-	-			(8,970)	-	(47,446)	93,152	45,706
- -	- -	- -	3,698 -			- -	- -	- -	- (22,260)	- (22,260)
$ 3,870,000	371,732	1,221,329	55,134			609,624	(193,207)	6,802,501	1,814,629	8,617,130

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Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flow

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Net loss before tax for the period Adjustment items: Adjustments to reconcile profit (loss) Depreciation expense Amortization expense Expected credit (losses) gains Interest expense Interest revenue Dividend income Share of profit of associates and joint ventures accounted for using equity method Loss (gains) of disposal and scrapping of property, plant and equipment Proceeds from disposal of Impairment loss of Investment property Proceeds from disposal of investments accounted for using equity method Impairment loss of Investment property Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Notes & accounts receivable Other receivables Inventory Other current financial assets Other current assets Refundable deposits for construction projects Non-current net defined benefit assets Incremental costs to obtaining a contract Total changes in operating assets Changes in operating liabilities: Contractual liabilities Notes and accounts payable Other payables Other financial liabilities Other current liabilities Non-current net defined benefit liability Total changes in operating liabilities Total changes in operating assets and liabilities Cash inflow (outflow) generated from operations Interest received Interest paid Income tax paid Net cash flows from (used in) operating activities	2020 $ 67,809 132,182 4,073 442,218 137,908 (1,461) (24,234) (41,394) (5,930) (1,872) (46,838) 6,000	2019 (7,067) 131,314 4,339 (15,776) 119,663 (3,438) (51,547) (84,713) 747 (387) - -
	600,652	100,202
	(25,727) (28,894) 1,252,701 26,387 84,223 18,050 6,240 24,302	52,357 10,613 (325,577) 4,829 (7,070) - (624) -
	1,357,282	(265,472)
	(308,145) 31,834 (28,317) 5,099 393 (2,427)	78,061 (40,146) (27,365) (8,922) 415 (5,500)
	(301,563)	(3,457)
	1,055,719	(268,929)
	1,724,180 1,461 (138,203) (45,226)	(175,794) 3,438 (150,315) (30,273)
	1,542,212	(352,944)

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Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flow (Continued)

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) investing activities: Proceeds from disposal of financial assets at FVTOCI Proceeds from disposal of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal property, plant and equipment Proceeds from disposal of Investment property Other financial assets Deferred credit Dividends received Other operating assets Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Proceeds from Short-term loans Repayments of Short-term loans Proceeds from Long-term loans Repayments of Long-term loans Lease principal repayment Cash dividend payment Changes in non-controlling interests Net cash outflows (inflows) from financing activities Effects of exchange rate changes on cash and cash equivalents Increase (Decrease) in cash and cash equivalents for the period Beginning cash and cash equivalents Closing cash and cash equivalents	2020	2019 9,970 - (42,975) 717 9,017 23,127 (736) 51,547 (12,496)
	- 4,985 (36,541) 7,085 7,778 (33,258) 2,667 24,234 (4,111)
	(27,161)	38,171
	897,645 (1,851,569) 118,571 (248,663) (13,189) - (22,260)	703,930 (365,025) 168,736 (313,286) (13,867) (61,920) (21,102)
	(1,119,465)	97,466
	8,179 403,765 541,486	8,862 (208,445) 749,931
	$ 945,251	541,486

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Pacific Construction Co., Ltd. and Subsidiaries Notes to Consolidated Financial Statements

For the Years Ended December 31, 2020 and 2019

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

1. Company History

Pacific Construction Co., Ltd. (hereinafter referred to as “the Company”) was established on June 14, 1967. On February 2, 1980, the Company began listing and trading with approval of the Financial Supervisory Commission, Securities and Futures Bureau. Its primary businesses are contracting civil construction projects, land development and housing construction, housing and building development and rental, construction material manufacturing, precast housing, agency and trading of various construction materials and their export business.

2. Approval Date and Procedures of the Financial Statements

3. Application of New and Revised Accounting Standards and Interpretations:

(1) Impact of adoption of new, revised or amended standards and interpretations endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”).

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

‧ Amendments to IFRS 3 "Definition of a Business"
‧Amendments to IFRS 9, IAS 39, and IFRS 7 "Changes in Interest Rate Indicators"
‧Amendments to IAS 1 and IAS 8 "Definition of Material"
‧Amendments to IFRS 16 "COVID-19-Related Rent Concessions"
(2) The impact of IFRS endorsed by FSC but not yet effective

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

‧Amendments to IFRS 4 "Temporary Exemption from Applying IFRS 9"
‧Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 "Interest Rate Benchmark Reform - Phase 2"
(3) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The Group assesses that the adoption of the following new amendments, but have not yet to be endorsed by the FSC:, would not have a significant impact on its consolidated financial statements:

‧Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture"
“ ” “ ”
‧IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts
‧Amendments to IAS 1 "Classify Liabilities as Current or Non-current"
‧Amendments to IAS 16 "Property, Plant and Equipment - Proceeds before Intended Use"

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

‧Amendments to IAS 37 "Onerous Contracts - Cost of Fulfilling a Contract"
‧Annual Improvement s to IFRS Standards 2018 – 2020 Cycle
‧Amendments to IFRS 3 "Reference to the Conceptual Framework"
“ ”
‧Amendments to IAS 1 Disclosure of Accounting Policies
“ ”
‧Amendments to IAS 8 Definition of Accounting Estimates

4. Summary of Significant Accounting Policies

The significant accounting policies presented in the consolidated financial statements are summarized as follows and have been applied consistently to all periods presented in these financial statements.

(1) Statement of compliance

The Group’s accompanying consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (the “Regulations”) and the IFRSs, IASs, IFRIC Interpretations, and SIC Interpretations endorsed and issued into effect by the FSC (collectively as “Taiwan-IFRSs”).

(2) Basis of preparation

(i) Basis of measurement

The accompanying consolidated financial statements have been prepared on a historical cost basis except for the following items in the balance sheets:

1) Financial instruments measured at fair value through profit or loss (including derivative financial instruments and contingent consideration measured at fair value);
2) Net defined benefit liabilities (assets) are recognized as the present value of the defined benefit obligation less the fair value of the plan assets and the effect of the asset ceiling mentioned in note 4(18).
(ii) Functional and presentation currency

The functional currency of each Group entity is determined based on the primary economic environment in which the entity operates. The Group’s consolidated financial statements are presented in New Taiwan dollars, which is the Company’s functional currency. Except when otherwise indicated, all financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

(3) Basis of consolidation

(i) Principles of preparation of the consolidated financial statements

The accompanying consolidated financial statements incorporate the financial statements of the Company and its controlled entities (the subsidiaries) in which the Company is exposed, or has right, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. All significant inter-company transactions, balances and resulting unrealized income and loss are eliminated on consolidation. Total comprehensive income (loss) of a subsidiary is attributed to the shareholders of the Company and the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

When necessary, financial statements of subsidiaries are adjusted to align the accounting policies with those adopted by the Company.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The difference between the adjustment of the non-controlling interests and the fair value of the consideration paid or received is recognized in equity and attributed to the shareholders of the Company.

When the Consolidated Company loses control over a subsidiary, the assets (including goodwill) and liabilities of the former subsidiary and non-controlling interests are eliminated from the consolidated financial statements at the carrying amount at the date of loss of control. Any investment retained in the former subsidiary is recognized at its fair value at the date when control is lost. The gain or loss on disposal is the difference between: (1) the aggregate of the fair value of the consideration received and the fair value of any investment retained in the former subsidiary at the date when control is lost. And (2), the aggregate carrying amount in assets (including goodwill) and liabilities of subsidiaries and noncontrolling interests at the date when control is lost. All amounts previously recognized in other comprehensive income in relation to that subsidiary should be accounted for on the same basis as would be required if the Consolidated Company had directly disposed of the related assets or liabilities.

(ii) Subsidiaries included in the consolidated financial statements

Subsidiaries included in the consolidated financial statements include:

Investor	Name of Subsidiary	Business nature	Percentage of Ownership (%)	Percentage of Ownership (%)	Description
			December 31, 2020	December 31, 2019
The Company The Company The Company The Company	Hong Kong Pacific Holdings Hong Kong Pacific Construction Co., Ltd. (Note 1) Tai-Tou Construction Co., Ltd. Pacific Realtor Co., Ltd.	Investments, Trading Construction projects, or acts as an agency for civil engineering, construction, plumbing, electrical and air-conditioning, and decoration projects General business Real estate agency	100.00% 100.00% 100.00% 48.50%	100.00% 100.00% 100.00% 48.50%	Subsidiaries in which the Company directly holds more than 50% of the ordinary shares Subsidiaries in which the Company directly holds more than 50% of the ordinary shares Subsidiaries in which the Company directly holds more than 50% of the ordinary shares Subsidiaries in which the Company directly holds less than 50% of

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Investor	Name of Subsidiary	Business nature	Percentage of Ownership (%)	Percentage of Ownership (%)	the ordinary shares but has control over Description
			December 31, 2020	December 31, 2019
The Company The Company Tai-Tou Construction Co., Ltd. Hong Kong Pacific Holdings	Pacific Department Stores Co., Ltd. Pacific Freshlife Industrial Company Limited (Note 2) Chun-Tse Asset Management Co., Ltd. Beijing Tai-Kong Consulting Services Co., Ltd.	Department Store Retail sale of Agricultural Products Management Consulting Services Management Consulting Services	48.45% - % 100.00% 100.00%	48.45% 99.95% 100.00% 100.00%	Subsidiaries in which the Company directly holds less than 50% of the consolidated shareholding but has control over Subsidiaries in which the Company directly holds more than 50% of the ordinary shares Subsidiaries in which the Company directly holds more than 50% of the ordinary shares Subsidiaries in which the Company directly holds more than 50% of the ordinary shares

Note 1: The Company has been approved to become an inactive company by the general meeting held in December 2016 in accordance with the Hong Kong Companies Ordinance.
Note 2: The subsidiary handled liquidation matters resolved by the shareholders’ meeting held in September 2016. The relevant liquidation procedures of the court were completed on August 6, 2019.
(iii) List of subsidiaries which are not included in the consolidated financial statements::

Although the Company directly and directly owns 50% of Taifu Recreation Co., Ltd., the Company does not have the right to hold more than half of the voting rights at the board of directors of the investment company, which is controlled by the board of directors. In accordance with IFRS 10, it is not included in the consolidated financial statements.

The Consolidated Company sold all the shares of Taifu Recreation Co., Ltd. in June 2020.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(4) Foreign currencies

Currencies transaction

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

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

(1) Fair value through other comprehensive income equity investment;
(2) A financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or
(3) Qualifying cash flow hedges to the extent that the hedge is effective.

2. Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the Company’s functional currency at exchange rates of the reporting date. Except when an economy is identified as highly inflationary, the income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to the Company’s functional currency at average rate. Foreign currency differences are recognized in other comprehensive income, and presented in the foreign currency translation differences in equity.

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

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

(5) Classification of current and non-current assets and liabilities

Except for the construction segment, which usually has a business cycle longer than one year, the criteria for distinguishing between current and non-current for the other segment of the Consolidated Company are as follows:

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

An asset is classified as current under one of the following criteria, and all other assets are classified as noncurrent:

It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
It holds the asset primarily for the purpose of trading;
It expects to realize the asset within twelve months after the reporting period; or
The asset is cash and cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current:

It expects to settle the liability in its normal operating cycle;
It holds the liability primarily for the purpose of trading;
The liability is due to be settled within twelve months after the reporting period; or
The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not impact its classification.

(6) Cash and cash equivalents

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

(7) Financial instruments

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

Financial assets

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

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

1) Financial assets measured at amortized cost

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

‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

2) Fair value through other comprehensive income (“FVOCI”)

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

‧ it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition, the Consolidated Company is able to make an irrevocable election to present subsequent changes in the fair value of investments in equity instruments that is not held for trading in other comprehensive income. This election is made on an instrument-by-instrument basis.

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

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

Dividend income derived from equity investments is recognized on the date that the Group ’ s right to receive the dividends is established (usually the ex-dividend date).

3) Impairment of financial assets

The Consolidated Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, financial assets measured at amortized cost, notes and accounts receivable, other receivable, guarantee deposit paid and other financial assets).

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

‧ debt securities that are determined to have low credit risk at the reporting date; and
‧ other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables are always measured at an amount equal to lifetime ECL.

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

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Consolidated Company considers a financial asset to be in default when the financial asset is more than a year past due or the borrower is unlikely to pay its credit obligations to the Consolidated Company in full.

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

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

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

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

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

‧ significant financial difficulty of the borrower or issuer;
‧ a breach of contract such as a default or being more than a year past due;
‧ the lender of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
‧ it is probable that the borrower will enter bankruptcy or other financial reorganization; or

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

‧ the disappearance of an active market for a security because of financial difficulties.

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

The gross carrying amount of a financial asset is written off when the Consolidated Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual accounts, the Consolidated Company’s policy is writing off the total carrying amount in financial assets when they are past due for more than a certain period based on the past recovery experience of similar assets. For corporate accounts, the Consolidated Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Consolidated Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Consolidated Company’s procedure for recovery of amounts due.

4) Derecognition of financial assets

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

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

Financial liabilities and equity instruments
1) Classification of debt or equity

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

2) Classification of debt or equity

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

3) Treasury shares

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

4) Financial liabilities

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

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

5) Derecognition of financial liabilities

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

financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

6) Offsetting of financial assets and liabilities

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

(8) Inventory

The original cost of construction inventories is the expenditure necessary in bringing the inventories to a saleable or production-ready condition and location. When the cost of inventory exceeds the net realizable value, the cost must be written down to its net realizable value, and the amount in the writedown recognized as the cost of goods sold in the period in which it occurs. The net realizable value is determined as follows:

1) Land for construction: The net realizable value is based on estimated selling price (based on current market conditions) less estimated selling expenses.
2) Construction in process: The net realizable value is based on the estimated selling price (based on current market conditions) less costs to be incurred to completion and selling expenses.
3) Property for sale: Net realizable value is the estimated selling price (based on current market conditions) less the estimated costs to be incurred in the sale of the properties.
4) Merchandise inventory: Net realizable value includes the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(9) Non-current assets held for sale

Non-current assets or disposal groups comprising assets and liabilities that are expected to be recovered primarily through a sale transaction, rather than through continuing use, are reclassified as non-current assets held for sale. Immediately before the initial classification of the non-current assets (or disposal groups) as held for sale, the carrying amount of the assets (or all the assets and liabilities in the group) is measured in accordance with the Group’s applicable accounting policies. Thereafter, the assets are measured at the lower of their carrying amount and fair value, less, costs to sell. Any impairment loss on a disposal group will first be allocated to goodwill, and then the remaining balance of impairment loss is allocated to assets and liabilities on a pro rata basis, except for the assets within the scope of IAS ’ 36 – Impairment of Assets, which are continue to be measured in accordance with the Group s accounting policies. Impairment losses on assets initially classified as held for sale and any subsequent gains or losses on re-measurement are recognized in profit or loss; nevertheless, the reversal gains are not recognized in excess of any cumulative impairment loss.

Intangible assets and property, plant and equipment are no longer amortized or depreciated when they are classified as held for sale. Besides, the equity method of accounting is discontinued from the date when equity-method investments are classified as held for sale.

(10) Investment in associates

Associates are those entities in which the Consolidated Company has significant influence, but not control or join control, over their financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition, less, any accumulated impairment losses.

The parent-company-only consolidated financial statements include the Consolidated Company’s share of the profit or loss and other comprehensive income of equity-accounted investees after adjustments to align the accounting policies with those of the Consolidated Company from the date that significant influence commences until the date that significant influence ceases. When changes in an associate’s equity are not recognized in profit or loss or other comprehensive income of the associate and such changes do not affect the Consolidated Company’s ownership percentage of the associate, the Consolidated Company recognizes the change in equity attributable to its share of the associate as capital surplus in proportion to its equity in the associate.

Unrealized gains and losses arising from transactions between the Consolidated Company and its associates are recognized in the financial statements only to the extent of the unrelated investor's interests in the associates.

When the Consolidated Company’s share of losses exceeds its interest in associates, the carrying amount of the investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Consolidated Company has an obligation or has made payments on behalf of the investee.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(11) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition and subsequently at cost less accumulated depreciation and accumulated impairment losses. Depreciation expense is calculated based on the depreciation method, useful life, and residual value which are the same as those adopted for property, plant and equipment. Cost includes costs directly attributable to the acquisition of investment property. The cost of self-constructed investment property includes raw materials and direct labor, any other costs directly attributable to bringing the investment property to be capable of operating, and borrowing capitalized costs.

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

The rental income of an investment property is recognized in other income on a straight-line basis over the lease term. Lease incentives granted are recognized as part of lease income over the lease term.

When the purpose of investment properties is changed and reclassified as property, plant and equipment, the reclassification is based on the carrying amount at the time of the change of purpose.

(12) Property, plant and equipment

1)Recognition and measurement

Property, plant and equipment are recognized and measured at cost, less accumulated depreciation and eventual impairment. Cost includes expenses that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes raw materials and direct labor, a directly attributable cost to bringing the asset to its intended location and use, the cost of dismantling and removal and site restoration, and the cost of borrowings to capitalize the eligible assets.

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

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

2) Subsequent cost

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

3) Depreciation

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Land is not depreciated.

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

iods are as follows:
Buildings	3`～`60 years
Machinery and equipment	3`～`20 years
Other equipment	3`～`17 years

Depreciation method, useful life and residual value at each reporting date are reviewed by the Consolidated Company. If expectations differ from previous estimates, appropriate adjustments are made when necessary, and any change is accounted for prospectively as a change in accounting estimate.

(13) Lease

1) Identifying a lease

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

(1) the contract involves the use of an identified asset this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified,
(2) the customer has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
(3) the customer has the right to direct the use of the asset throughout the period of use only if either:
the customer has the right to direct how and for what purpose the asset is used throughout the period of use;
the relevant decisions about how and for what purpose the asset is used are predetermined and:
－ the customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
－ the customer designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

2) As a lessee

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

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

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

(1) fixed payments; including in-substance fixed payments;
(2) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(3) there is a change in future lease payments arising from the change in an index or rate;
(4) payments for purchase or termination options that are reasonably certain to be exercised.
(5) there is any lease modifications

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

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

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

For short-term leases or leases of low-value underlying assets for certain land, buildings and structures, office equipment and transportation equipment, The Consolidated Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Sale and leaseback transactions are assessed in accordance with IFRS 15 to determine whether the transfer of an asset by the seller-lessee satisfies the requirements of IFRS 15. If the asset is judged as a sale, the asset is derecognized, and the part of the right that has been transferred to the seller-lessee is recognized as profit or loss. The lessee accounting model is applied to the leaseback transaction and the right-to-use asset is measured at the original carrying amount in the leased back portion. If it is judged that the requirements for the disposal of sales are not met, it will be treated as financing.

The Consolidated Company chooses to apply the practical expedient to its rent concessions that fit all the following criteria without assessing if they are lease modifications.

(1) Rent concessions occurring as a direct consequence of the covid-19 pandemic;

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(2) The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
(3) Any reduction in lease payments affects only payments originally due on or before 30 June 2021; and
(4) There is no substantive change to other terms and conditions of the lease.

With the application of practical expedient, the amount of changes in lease payments that arise from rent concessions are recognized in profit or loss for the reporting period.

3) As a lessor

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

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

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

The Consolidated Company recognizes a finance lease receivable at an amount equal to its net investment in the lease. Initial direct costs, such as lessors to negotiate and arrange a lease, are included in the measurement of the net investment. The lessor recognizes the interest income over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor’s net investment in the lease. The Consolidated Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other income’.

(14) Intangible assets

1) Recognition and measurement

The Consolidated Company's acquisition of other intangible assets with finite useful lives and nondetermined service life is measured at cost less accumulated amortization and accumulated impairment losses.

2) Subsequent expenditure

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

3) Amortization

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

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

Computer software 2～5 years

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

(15) Impairment of non-financial assets

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

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

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

If the recoverable amount in an individual asset or cash-generating unit is less than its carrying amount, the Consolidated Company must recognize an impairment loss.

An impairment loss is recognized immediately in profit or loss. It reduces the carrying amount in the amortized goodwill of the cash-generating unit first. It then reduces the carrying amount in each asset in proportion to the carrying amount in each other asset in the unit.

Non-financial assets other than goodwill are reversed only to the extent that the carrying amount in the asset (excluding depreciation or amortization), determined when the asset was not recognized for the prior impairment loss.

- (16) Provision for Liabilities Excise Duty

Provisions for liabilities are recognized when the Consolidated Company has a present obligation as a result of a past event, and a transfer of economic benefits will probably be required to settle the obligation and the amount in the obligation can be reliably estimated. The provision for liabilities is discounted at a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liabilities. The amortization of the discount is recognized as an interest expense.

When purchasing the asset, or using the asset for purposes other than the production of inventories during a specific period, the original estimated cost of dismantling and removing the asset and restoring the site arising from the acquisition of the asset or the use of the asset for purposes other than the production of inventory during a specific period should be recognized as interest expense annually at the original discount rate. The carrying amount should be increased until the asset is removed from service at the end of its useful life. At this time, the carrying amount is accumulated to the estimated cost of removal from service.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(17) Revenue Recognition

1) Revenue from customer contracts

Revenue is measured as the consideration to which the Company expects to be entitled in exchange for the transfer of goods and services. The Consolidated Company recognizes revenue when the performance obligation is satisfied by transferring control over a customer's good or service. The Consolidated Company's major revenue items are described as follows:

(1) Land development and property sale

The Consolidated Company develops and sells residential real estate and often pre-sells real estate during or before construction. The Consolidated Company recognizes revenue when the control of the real estate is transferred. Due to contractual restrictions, such real estate is not usually used for other purposes by the Consolidated Company. However, after completion of delivery or transfer of legal title of the real estate to the customer, the Consolidated Company has an enforceable right to payment for performance completed to date. Accordingly, the Consolidated Company recognizes revenue at the point of completion of transferring the legal title of the property or real estate to the customer.

Revenue is measured based on the transaction price of a contractual agreement. Upon selling a completed house, in most cases, consideration may be received upon the transfer of legal title to real estate; in few cases, payment may be deferred in accordance with contractual agreements, but the deferral period should not exceed 12 months. Accordingly, the transaction price is not adjusted to reflect the impact of the significant financial components. In the case of pre-sale of real estate, payment is usually received between the signing of the contract and the transfer of the real estate to the customer in installments. Where the contract contains a significant financial component, the transaction price is adjusted during the period to reflect the effects of the time value of money according to the interest rate of the proposed project borrowing. The amounts received in advance are recognized as contract liabilities. When the effect of the time value of money adjustment is judged to be necessary, interest expense and contract liabilities are recognized. Accumulated contract liabilities are reclassified as income when a property is transferred to customers.

Some contracts contain multiple deliverables, such as the sale of residential real estate and decorating services - decorating services are deemed as a separate performance obligation, and the transaction price is apportioned on a stand-alone selling price basis. If there is no observable price, the stand-alone selling price is estimated based on the expected cost and profit. Decorating services are recognized as revenue at the point of completion of the service.

(2) Customer loyalty program

The Consolidated Company uses customer loyalty programs to incentivize customers to buy goods or services. Customers buying goods or services are granted customer points, which can be redeemed for awards such as discounted goods or services. The Consolidated Company considers that these points provide customers with important rights that would not have incurred if the contract had not been obtained, and therefore the commitment to provide points to customers is a performance obligation. The Consolidated Company appends the product's transaction price and those points on a relative stand-alone selling price basis. Based on historical

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

experience, management estimates the stand-alone selling price of each point based on the discount given when the point is redeemed and the possibility of redemption. The stand-alone selling price when it is sold based on the retail price of the product. The Consolidated Company recognizes contract liabilities on the aforementioned basis at the sale of products and reclassified as revenue when these points are transferred or expired.

(3) Service

The Consolidated Company provides business management services and recognizes relevant revenue in which financial reporting of services is performed. Fixed-price contracts are recognized as revenue based on the ratio of services actually rendered to total services as of the reporting date. This ratio is determined by the ratio of incurred costs to the estimated total cost of the transaction.

If circumstances change, revenues, costs and completion will be revised and the changes will be reflected in gains and losses in the period of the change in which the management is informed of.

Under a fixed-price contract, customers pay a set amount according to the agreed schedule. When the amount paid exceeds the amount paid for the services rendered, a contract asset is recognized; when the amount paid exceeds the amount paid for the services rendered, a contract liability is recognized.

(4) Brokerage income

The Consolidated Company is engaged in real estate agency and brokerage. Associated revenue is recognized when a service is rendered during a financial reporting period. Revenue from a fixed-price contract is recognized based on the actual service contract services rendered as of the reporting date.

(5) Lease income

Lease income generated from investment property is recognized over the lease term on a straightline basis. Lease incentives given are considered part of the total lease income and are recognized as a reduction of lease income over the lease term on a straight-line basis. Revenue from a property sublease is recognized as lease income from investment properties under operating income.

(6) Special revenue from department store counters

When the Consolidated Company acts as an agent rather than a principal in a transaction, revenue is recognized on the net commission basis received.

(7) Hotel service provision

The Consolidated Company provides hotel room accommodation, catering and other labor services, and recognizes related income during the financial reporting period for the provision of labor services.

Some contracts contain multiple delivery items, most of which are simple projects that do not include integrated services and can be executed by other parties, so they are regarded as a separate performance obligation, and the transaction price is shared on the basis of the stand-alone selling

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

price. If there is no directly observable price, estimate the stand-alone selling price based on expected cost plus profit

(8) Financial components

The Consolidated Company expects that the time interval between the transfer of a good or service from all customer contracts to customers and when customers pay for the goods or services will not exceed one year. Therefore, the Consolidated Company does not adjust the time value of money of the transaction price.

2. Cost of customer contracts

(1)Incremental costs of obtaining a contract

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

The Consolidated Company adopts the practical expedient method of the Standard. If the incremental cost of obtaining a contract is recognized as an asset and the asset is amortized over a period of one year or less, the incremental cost is recognized as an expense when incurred.

(18) Employee Benefit

1. Defined contribution plan

The contribution obligation of the defined contribution pension plan is recognized as an expense over the period of service provided by the employees.

2. Def

The consolidated company's net obligation for defined benefit plans is calculated by discounting the present value of future benefit amounts earned by employees for current or prior service, deduct the fair value of any plan assets.

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

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Consolidated Company determines the net interest expense (income) on the net defined benefit liability ( asset ) for the period by applying the discount rate used to measure the

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

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

3. Short-term employee benefits

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

(19) Income Taxes

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

The c onsolidated c ompany's judged that the interest or penalties related to income tax (including uncertain tax treatment) do not meet the definition of income tax, the accounting treatment of International Accounting Standard No. 37 is applied.

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

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

1) Assets and liabilities that are initially recognized from non-business combination transactions, with no effect on net income or taxable gains (losses).
2) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Consolidated Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
3) taxable temporary differences arising on the initial recognition of goodwill.

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

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

1) if the entity has the legal right to settle tax assets and liabilities on a net basis; and

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

2) the taxing of deferred tax assets and liabilities fulfill one of the below scenarios:
(i) levied by the same taxing authority; or
(ii) levied by different taxing authorities, but where each such authority intend to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation; or where the timing of asset realization and debt liquidation is matched.

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

(20) Earnings per share

Disclosures are made of basic and diluted earnings per share attributable to ordinary equity holders of the consolidated company. The basic earnings per share is calculated based on the profit attributable to the ordinary shareholders of the Consolidated Company divided by weighted average number of ordinary shares outstanding. The diluted earnings per share is calculated based on the profit attributable to ordinary shareholders of the Company, divided by weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares. Potential dilutive ordinary shares of the Consolidated Company include stock dividends to employees.

(21) Operating segments

The operating segment, which is a component of the Consolidated Company, engages in operating activities that earn revenue and incurs expenses, including revenues and expenses relating to transactions with other Consolidated Company components. The operating results of all operating segments are reviewed regularly by the Consolidated Company's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. For which discrete financial information is available.

5. Significant Accounting Assumptions and Judgments, and Major Sources of Estimation Uncertainty

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

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

The accounting policies involve significant judgment and have a material effect on the amounts recognized in the financial statements as follows:

～ 29 ～

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(1) Rental period

The decision on the lease term is the non-cancellable period of the lease and the lessee can reasonably determine the period covered by the option to exercise the lease extension, and the lessee can reasonably determine the period covered by the option to not exercise the lease termination option. When assessing whether the lessee exercises the aforementioned options, the combined company considers all relevant facts and circumstances that will generate economic incentives for the lessee. It will be reassessed when there are subsequent major events or circumstances that are within the lessee’s control and will affect whether it can reasonably determine whether to exercise or not exercise the option. When there is a change in the assessment during the lease period, the lease liability is re-evaluated and the right-of-use asset is adjusted. Please refer to Note 6 (10) for details.

(2) Judgment on Lease

The consolidated company leases the land rights and houses. Since the contract involves the use of an identified asset, the right to obtain all economic benefits during the entire period of use; and the right to direct the use of the identified asset. Accordingly, the merging company determined that the contract was a lease, and the merging company recognized the right-to-use assets and lease liabilities on the lease start date. Please refer to Note 6 (10) for details.

(3) Judgment on whether the Consolidated Company has substantial control over its subsidiaries

The Consolidated Company holds less than half of the voting rights of Pacific Realtor and Pacific Department Stores Co., Ltd. However, it considers that the remaining shares of these companies are extremely fragmented, and the level of participation of other shareholders in past shareholders' meetings indicates that the Consolidated Company has the practical ability to direct the relevant activities unilaterally. Also, there is no indication that there is an agreement among other shareholders to make collective decisions. Accordingly, the Consolidated Company deems Pacific Realtor and Pacific Department Store Co., Ltd. as its subsidiaries. Please refer to Note 6(8).

(4) Judgment of Commission Income Principal and Agent

The Consolidated Company’s role in commission income (the counter net income ) transactions is an agent rather than a principal as the Consolidated Company assesses that it does not have control over specific commodities prior to transferring them to customers. The following judgmental factors are taken into account:

1) the Consolidated Company is not obligated to provide the goods when the supplier is unable to transfer the goods to the customer or responsible for the goods' acceptability.
2) the Consolidated Company does not promise to obtain goods from suppliers before customers purchase them, and nor does the Consolidated Company have any responsibility for damaged goods or returned goods.
3) the Consolidated Company shall not adjust the sales price set by the supplier by more than 1%.

The following assumptions and estimated uncertainties have a significant risk of causing significant adjustments to the book value of assets and liabilities in the next financial year, and have reflected the impact of the new crown virus epidemic. The relevant information is as follows;

～ 30 ～

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

1) Allowance for losses on accounts receivable

The allowance for losses on the Consolidated Company's accounts receivable is estimated based on the assumption of default risk and expected loss rate. The Consolidated Company considers historical experience, current market conditions and forward-looking estimates at each reporting date in determining assumptions and input selected when calculating impairments. For details associated with assumptions and inputs, please refer to Note 6(3).

2) Valuation of Inventory

As inventories are measured at the lower of cost or net realizable value, the evaluation of the Consolidated Company’s net realizable value of inventories at the reporting date is based on estimates of future market sales prices and constructions costs which are prone to be affected by changes in the political and economic environment, resulting in significant changes in net realizable value. For details of the valuation of inventory, please refer to Note 6(5).

Valuation process

The Consolidated Company's accounting policies and disclosures include adopting fair value measurements for its financial and non-financial assets and liabilities. The Consolidated Company has established an internal control system for fair value measurement. The internal control system includes establishing a valuation team responsible for reviewing all significant fair value measurements (including Level 3 fair values). The team reports directly to the CFO. The valuation team reviews significant unobservable inputs and makes adjustments regularly. If external third-party information (such as a broker or pricing service) is used to measure fair value inputs, the valuation team will evaluate the evidence provided by the third party to support the inputs to determine whether the valuation and its fair value hierarchy classification meet the requirements of IFRS.

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

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

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

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

Further information on the assumptions used to measure fair value

For details associated with the assumptions used to measure fair value, please refer to Note 6(25) – Financial Instruments,

6. Summary of Significant Accounting Titles

(1) Cash and cash equivalents

and cash equivalents
Petty cash Demand deposit and Check deposit Deposit account Cash and cash equivalents in the Consolidated Cash Flows Statements	December 31, 2020 $ 19,556 863,695 62,000	December 31, 2019
		13,860 437,017 90,609
	$ 945,251	541,486

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

1) For the disclosed information on the interest rate risk and sensitivity analysis of the financial assets and liabilities of the group, please refer to Note 6(25).
(2) Financial Assets at Fair Value through Other Comprehensive Income (“FVTOCI”)

Equity instruments measured at FVTOCI: Listed (OTC) stocks - domestic Unlisted (OTC) stocks - domestic (Note) Total	December 31, 2020 $ 139,480 2,091,563	December 31, 2019 168,960 2,051,898
	$ 2,231,043	2,220,858

Note: The above-mentioned stocks deducting unrealized deferred credits were all NT$49,733,000 in December 31, 2019 and 2020.
1) The equity instrument investment held by the group is a long-term strategic investment and not held for trading purposes, so it has been designated to be measured at fair value through other comprehensive income.
2) The group through the aforementioned investments in equity instruments designated as measured at fair value through other comprehensive income, the group’s recognized dividend income for 2020 and 2019 totaled NT$24,234 thousand and NT$51,547 thousand, respectively.
3) In 2020, no strategic investments were disposed of and the accumulated gains and losses during the period were not transferred to equity. On August 27, 2019, the group sold Gabriel Industrial Co. that was designated as measured at fair value through other comprehensive income to increase working capital. After tax, the disposal price was NT$9,970 thousand with an accumulated loss on disposal of NT$9,662 thousand. Therefore, the aforementioned accumulated benefit on disposal has been transferred from other equity interests to retained earnings.
4) For market risk information, please refer to Note 6(25).
5) For details of the above financial assets pledged as collaterals for bank loans and financing guarantees pledged. Please refer to Note 8.
(3) Notes receivable and Account receivable

Notes receivable - arising from operations Accounts receivable - measured at amortized cost Less: Allowance for losses	December 31, 2020 $ 15,233 181,987 (81,192)	December 31, 2019 15,436 153,727 (73,795)
	$ 116,028	95,368

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

December 31, 2020	December 31, 2020	Loss allowance Provision 45 6,457 3,324 71,366
Gross carrying amount $ 73,885 46,422 3,822 73,091	Weighted- average loss
$ 197,220		81,192
		Loss allowance Provision 225 18 265 73,287
Gross carrying amount $ 76,286 16,550 504 75,823	Weighted- average loss
	0.29% 0.11% 52.58% 96.66%
$ 169,163		73,795

The changes of loss allowance of notes receivable and accounts receivable of the group is as follows:

Balance at beginning of the year Impairment losses recognized Impairment loss reversed (Note) Amounts written off Reclassification Gains and losses from foreign currency translation Balance at end of the year	2020	2019 106,257 1,139 (16,886) (15,055) (1,603) (57)
	$ 73,795 5,067 - (1,108) 3,569 (131)
	$ 81,192	73,795

Note: NT$10,858 thousand is the Pacific Water Township funds, as a 100% allowance has been made for more than two years, the recovered part of this period will be reversed.

The above financial assets were not pledged or guaranteed for the years ended December 31, 2019 and 2020.

(4) Other receivables (Include long-term)

Other receivables(Include long-term)—loans of funds Other receivables(Include long-term)—Other Less: Allowance for losses	December 31, 2020 $ 1,024,724 2,001,522 (3,000,779)	December 31, 2019 1,069,695 1,968,277 (2,595,765)
	$ 25,467	442,207

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The Consolidated Company’s other accounts receivable allowance for losses debt changes for 2020 and 2019 are as follows:

and 2019 are as follows:
Balance at beginning of the year Impairment losses recognized (Note) Impairment loss reversed Amounts written off Gains and losses from foreign currency translation Reclassification Balance at end of the year	2020 $ 2,595,765 437,151 - (1) (28,567) (3,569)	2019 2,645,114 - (29) (39,607) (11,316) 1,603
	$ 3,000,779	2,595,765

Note: Evaluation of other receivables of Beijing Tai-Yun Building Co., Ltd. in the 2020, please refer to Note 6(6) and 9(3)3.

(5) Inventory - construction

Buildings and land held for sale Land held for construction Construction in progress Total Less: Allowance for inventory write-down Net Inventory expected to be recovered in more than 12 months	December 31, 2020 $ 1,934,782 3,160,057 2,212,629	December 31, 2019 1,334,014 3,270,559 3,997,681
	7,307,468 (1,351,480)	8,602,254 (1,397,356)
	$ 5,955,988	7,204,898
	$ 5,161,613	5,372,467

1) As of December 31, 2020 and 2019, the inventories of the group had been pledged as collateral for bank borrowings, please refer to Note 8.
2) Some parts of Wanli UFO Village, Wanli Section, Erchong River, Lihe Section in Xinyi District and Yongping Section in Shilin District have already entered an appointment agreement and trust deed agreement with trustees and will be transferred to The group at an appropriate time.
3) Agricultural land under the trust under a trust deed is the agricultural land be developed for construction. An appointment agreement and trust deed agreement have been entered into with trustees and transferred to the group after the land title is changed.
4) For the years ended December 31, 2020 and 2019, the capitalization of interest on construction in progress by the group, please refer to Note 6(24).
5) Allowance to reduce inventory

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Changes in the allowance to reduce inventory to market for 2020 and 2019 are as follows:

Balance on January 1 Reversal benefits for recognized impairment loss es Balance on December 31	2020 $ 1,397,356 (45,876)	2019
		1,400,077 (2,721)
	$ 1,351,480	1,397,356

The Consolidated Company’s reversal benefits of impairment losses were due to the sale of certain inventories in the group in 2020 and 2019. Factors that caused the net realizable value to be lower than cost have disappeared, resulting in an increase in net realizable value and the recognition of a decrease in operating costs.

(6) Non-current assets held for sale

The Consolidated Company passed a resolution of the board of directors on December 15, 2020 to sell the equity of Beijing Tai-Yun Building Co., Ltd., an affiliated company evaluated by the equity method, and classified it as non-current for sale in accordance with International Financial Reporting Standards 5 Assets, based on the lower of their book value and fair value minus the cost of sale, are transferred to the amount of non-current assets to be sold NT$928,622 thousand; transfer will also be listed after assessing the recovery progress of the group’s other receivable claims The impairment loss of US$14,564,000 (NT$419,670,000), please refer to Note 9(3)3 for the relevant information.

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

Associates Other non-current liabilities	December 31, 2020 $ - $ -	December 31, 2019 893,705 48,321

In June 2020, the Consolidated Company will dispose of Tai-Fu Recreation Co., Ltd. for NT$0 (NT$1 deducted from tax), and recognize the disposal of investment benefits of NT$48,321,000, which have been included in the "Other gains and losses" in the consolidated income statement." under.

In June 2020, the Consolidated Company disposes of part of the shares of GOOD TV Broadcasting Corp., causing its shareholding ratio to drop from 23.53% to 17.65% and losing significant influence on it. The disposal price is NT$4,985 thousand. Its disposal loss of NT$1,483,000 has been included in the “Other gains and losses” item of the consolidated income statement. The remaining equity is transferred to financial assets at FVTOCI-non-current NT$15,000 thousand.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

2. Associates

Information on affiliates that are significant to the group:

Associates Name Nature of relationship with the group Principal places of business / Country of registration	Ratio of ownership rights and voting rights
	December 31, 2020 December 31, 2019
Beijing Tai-Yun Building Co. , Ltd. (Note) Wholesale and retail commercial facilities within the planning area of development, construction, sales and leases China	47.50% 47.50%

Note: The Consolidated Company was approved by the board of directors on December 15, 2020. It plans to sell its equity in Beijing Tai-Yun Building Co., Ltd. The book value of the equity investment is transferred to the non-current assets for sale, please detailed note 6 (6).

Summarized financial information of the group’s significant associates is as follows - the financial information has been adjusted from the amounts included in the IFRS consolidated financial statements of each associate to reflect the fair value adjustments by the group when obtaining the associate’s equity interest and adjustments for differences in accounting policies:

Summarized financial information of Beijing Tai-Yun Building Co., Ltd.

Jan.~Nov., 2020	December 31, 2019 $ 800,107 2,493,904 (1,346,611) (111,340)	December 31, 2019
	$ 1,836,060
	$ 872,129
		2019
$ -		-
		482,195
		178,329 (67,913)
		110,416
		-
		110,416

Note 1: For other revenue, please refer to Note 9.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The Consolidated Company’s share of net assets of associate at the beginning of the period Total comprehensive income attributable to the group for the period Reclassification to Non-current assets held for sale The group's share of net assets of associate at the end of the period	2020 $ 872,129 56,493 (928,622) $ -	2019 819,681 52,448 -
		872,129

Summarized financial information of the group’s individually insignificant associates under the equity method is as follows - the financial information is included in the group's consolidated financial statements:

Carrying amount of individually insignificant joint ventures' equity (Note) Attributable to the Group: Net income (loss) of continuing business units for the period Other comprehensive income Total comprehensive income	December 31, 2020 $ - Jan.-Jun., 2020 $ (107) - $ (107)	December 31, 2019 21,576
		2019
		7 - 7

Note: During the current period, the Consolidated Company disposes part of the equity of affiliated companies that adopt the equity method, resulting in the loss of significant influence and reclassification to financial assets at FVTOCI non-current.

3. Guarantee

For the years ended December 31, 2019 and 2020, the group’s investments accounted for using the equity method were not pledged as collateral.

(8) Subsidiaries with material non-controlling interests

Subsidiaries with material non-controlling interests to the Consolidated Company are as follows:

Name of Subsidiary	Principal places of business / Country of registration	Percentage of ownership interest and voting right of non-controlling interests December 31, 2020 December 31, 2019 51.55% 51.55%
		December 31, 2020
Pacific Department Stores Co., Ltd.	R.O.C.

The following combined financial information, prepared in conformity with the Regulations and IFRSs approved by the FSC, reflects any adjustments to the fair value at the acquisition date and adjustments to accounting policy differences. The amount of inter-company transactions before elimination are as follows:

Combined financial information on Pacific Department Stores Co., Ltd.:

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

December 31, 2020 $ 148,030 3,941,528 (231,041) (176,204)	December 31, 2020 $ 148,030 3,941,528 (231,041) (176,204)	December 31, 2019 103,187 3,981,537 (418,545) (25,943) 3,640,236 1,749,587 2019 398,970

$ 3,682,313
$ 1,785,570
	2020
		74,974 32,531
		107,505
		38,647
		2019 49,895 32,255 (88,724)
		(6,574)

(9) Property, plant, and equipment

In 2020 and 2019, details of changes in cost, depreciation, and impairment loss of property, plant, and equipment of the group are as follows:

Land $ 1,126,896 - (71) - (10,867) -	Buildings 1,273,870 - (361) - (22,453) -	Machinery Equipment 112,757 8,430 (5,807) - - -	Other Equipment 254,418 23,865 (615) 18,090 - 195	Constructi on in Progress 13,844 4,246 - (18,090) - -	Total 2,781,785 36,541 (6,854) - (33,320) 195
$ 1,115,958	1,251,056	115,380 158,927 12,773 (1,604) (57,339)	295,953	-	2,778,347
$ 1,146,441 - - (19,545)	1,321,113 - - (47,243)		245,023 16,358 (6,963) -	- 13,844 - -	2,871,504 42,975 (8,567) (124,127)
$ 1,126,896	1,273,870	112,757	254,418	13,844	2,781,785

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Land	Buildings	Machinery Equipment	Other Equipment	Construction in Progress	Total
$ 4,722 - - - - $ 4,722 $ 4,722 - - - $ 4,722 $ 1,111,236 $ 1,141,719 $ 1,122,174	694,674 23,987 (235) (14,640) -	93,660 7,897 (5,000) - -	181,066 23,037 (464) - 195	- - - - - - - - - - - - - 13,844	974,122 54,921 (5,699) (14,640) 195
	703,786	96,557	203,834		1,008,899
	675,004 24,535 - (4,865)	146,290 5,651 (942) (57,339)	165,104 22,123 (6,161) -		991,120 52,309 (7,103) (62,204)
	694,674	93,660	181,066 92,119 79,919 73,352		974,122
	547,270	18,823			1,769,448
	646,109	12,637			1,880,384
	579,196	19,097			1,807,663

For the years ended December 31, 2020 and 2019, details of bank loans and financing guarantees pledged , please refer to Note 8.
The group decided to lease its self-used building to a third party in 2019, and has reclassified the cost of such property as an investment property at the cost of the change of use.
(10) Right-of-use assets

Details of changes in cost and depreciation of Land Surface Rights, Buildings and construction and transport equipment of the group are as follows:

Land Surface Rights Cost of right-of-use assets: Balance on January 1, 2020 $ 105,880 Additions - Changes in future lease payment (19,413) Reclassification to Property, plant and equipment - Other - Balance on December 31, 2020 $ 86,467 Balance on January 1, 2019 $ 115,899	Buildings and Construction	Transportation equipment
	44,739 364 - - (8,389) 36,714 -	3,379 - - (195) - 3,184 2,717
$ 86,467
$ 115,899

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Land Surface Rights - t (10,019)	Buildings and Construction	Transportation equipment	Total
	44,739 - 44,739 8,714 7,738 - (1,131) 15,321 - 8,714 8,714 21,393 - 36,025	662 - 3,379 729 726 (195) - 1,260 - 729 729 1,924 2,717 2,650	45,401 (10,019) 153,998 14,366 12,698 (195) (1,131) 25,738 - 14,366 14,366 100,627 118,616 139,632
$ 105,880
$ 4,923 4,234 - -
$ 9,157
$ - 4,923
$ 4,923
$ 77,310
$ 115,899
$ 100,957

For the years ended December 31, 2020 and 2019, details of bank loans and financing guarantees pledged, please refer to Note 8.

(11) Investment property

Investment properties include the group's self-held assets and office buildings leased to third parties as operating leases. The initial non-cancellable period of the leased investment properties is two months to twenty-one years, while some lessees have the option to extend the period at the end of the lease. Details of changes in the group's investment properties:

Self-owned assets Land and Improvement Buildings and Construction Cost or deemed cost: Balance on January 1, 2020 $ 436,477 3,176,267 Reclassification from Property, plant and equipment 10,867 22,453 Disposal and scrap (5,637) (51,624) Balance on December 31, 2020 $ 441,707 3,147,096	Self-owned assets Land and Improvement Buildings and Construction Cost or deemed cost: Balance on January 1, 2020 $ 436,477 3,176,267 Reclassification from Property, plant and equipment 10,867 22,453 Disposal and scrap (5,637) (51,624) Balance on December 31, 2020 $ 441,707 3,147,096	Self-owned assets Land and Improvement Buildings and Construction Cost or deemed cost: Balance on January 1, 2020 $ 436,477 3,176,267 Reclassification from Property, plant and equipment 10,867 22,453 Disposal and scrap (5,637) (51,624) Balance on December 31, 2020 $ 441,707 3,147,096	Total 3,612,744 33,320 (57,261)
	$ 441,707	3,147,096	3,588,803

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Self-owned assets	Self-owned assets	Total 3,497,247 124,127 (8,630)
	Buildings and Construction 3,071,685 104,582 -
$ 436,477	3,176,267	3,612,744
	1,599,372 64,563 14,640 6,000 (51,355)	1,599,372 64,563 14,640 6,000 (51,355)
$ -	1,633,220	1,633,220
	1,472,529 64,639 62,204	1,472,529 64,639 62,204
$ -	1,599,372	1,599,372
$ 441,707	1,513,876	1,955,583
$ 425,562	1,599,156	2,024,718
$ 436,477	1,576,895	2,013,372
		$ 2,748,226
		$ 2,570,820

Due to the decline in the market price of investment real estate in 2020, an impairment loss of NT$6,000 thousand is recognized, and other benefits and losses are accounted for.
The fair value of investment properties is determined on the basis of a valuation of an independent appraiser (with relevant professional qualification and should have recent experience in the location and category of the investment property evaluated). The valuation is mostly performed based on the weighted average of the income method and the comparative method.

～ 41 ～

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Investment properties include a number of commercial properties leased to others. Each lease contract includes an initial non-cancellable term of two months to twenty-one years. The subsequent lease renewals can be negotiated with the lessee. Also, the group decided to lease its self-used buildings to others; therefore, property, plant and equipment have been transferred under investment property. For more details, please refer to Note 6(9).
For the years ended December 31, 2020 and 2019, The group entered into a trust contract with its employees due to participating in the land development project. The group designated them as the nominees of the land and building ownership registration. In order to ensure the preservation of the group's assets, the group has registered the property right with notice and all titles are kept by the group.
For the years ended December 31, 2020 and 2019, details of bank loans and financing guarantees pledged, please refer to Note 8.

(12) Short-term loans

The Consolidated Company’s Short-term borrowings details were as follows:

Unsecured bank loans Secured bank loans Total Unused credit lines Range of interest rates	December 31, 2020 $ 20,000 682,070 $ 702,070 $ 690,936 1.3%~3.44%	December 31, 2019 - 1,960,566
		1,960,566
		591,272
		1.68%~5.03%

For the Consolidated Company’s pledged assets as Secured for bank loans, please refer to Note 8.

(13) Long-term loans

The Consolidated Company’s Long-term loans details, conditions, and provisions were as follows:

	December 31, 2020	December 31, 2020	Amount $ 2,021,945 195,524
Currency	Range of interest rates	Maturity
NTD RM	1.50%~2.75% 2.15%~3.57%	2021~2023 2022~2034
			2,217,469 (959,057)
			$ 1,258,412
			$ 102,451

～ 42 ～

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

	December 31, 2019	December 31, 2019	Amount $ 46,488 1,816,768 4,977 174,757
Currency	Range of interest rates	Maturity
NTD NTD USD RM	2.5% 1.68%~3.00% 3.67% 4.72%~5.40%	2022 2020~2022 2020 2020~2035
			2,042,990 (673,432)
			$ 1,369,558
			$ 460,775

For the Consolidated Company’s pledged assets as Secured for bank loans, please refer to Note 8.

(14) Corporate bonds payable

The details of the group bonds payable were as follows:

Amount in the issuance of domestic ordinary corporate bonds Less: current portion Ending balance: bonds payable	December 31, 2020 $ 560,000 (300,000)	December 31, 2019 560,000 -
	$ 260,000	560,000

To increase working capital and repay bank loans, the group’s board of directors’ meetings held on March 27, 2017 and May 20, 2016 resolved to issue its first secured ordinary corporate bonds in 2017 and first secured ordinary corporate bonds in 2016. A total amount in NT$260,000 thousand was issued on April 7, 2017 and NT$300,000 thousand on June 8, 2016, both with a period of five years.

1.The the Consolidated Company's domestic secured ordinary corporate bond obligations for the years ended December 31, 2020 and 2019 are as follows:

Item The first secured ordinary corporate bonds in 2017 Total Issuance NT$260,000 thousand Date of Issue April 7,2017 Coupon Rate 1.15% Issuance Period April 7,2017~April 7,2022 Guarantee Agency Taiwan Cooperative Bank Trustee Jih Sun International Bank, Ltd. Repayment Method The group may repay the principal of the corporate bonds in one lump sum at the expiration of five years from the date of issuance.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Item

The first secured ordinary corporate bonds in 2016

Total Issuance NT$300,000 thousand Date of Issue June 8, 2016 Coupon Rate 1.15% Issuance Period June 8, 2016~June 8, 2021 Guarantee Agency Taiwan Cooperative Bank Trustee Jih Sun International Bank, Ltd. Repayment Method The group may repay the principal of the corporate bonds in one lump sum at the expiration of five years from the date of issuance.

(15) Lease Liabilities

The carrying amount in the group’s lease liabilities:

Current Non-current	December 31, 2020 $ 11,923 $ 89,040	December 31, 2019 15,165
		125,608

For maturity analysis, please refer to Note 6(25) - Financial Instruments.

Amounts recognized in profit or loss are as follows:

Interest expense on lease liabilities Gains on subleasing right-to-use assets Expenses of short-term leased Expenses to low-value leases assets`(`Low-value leases that do not include short-term leases)	2020 $ 2,725	2019
		3,541 31,499 4,865 777
	$ 25,986
	$ 3,929
	$ 1,240

Amounts recognized in the cash flow statements are as follows:

Total cash outflow from leases	2020	2019 23,050
	$ 21,083

The Consolidated Company leases Land Surface Rights for a period of 50 years. The group leases buildings and structures for department store operations for a period of 5 years. Lease payments for certain contracts are calculated based on changes in local price indices.

The period for some of the group’s leased land, offices, employee dormitories, office equipment and transportation equipment are generally one to three years. These leases are short-term or low-value subject leases. The group elects to apply for the recognition exemption and does not recognize its related right-of-use assets and lease liabilities.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(16) Operating Leases

Lessor leases

The group leases its investment properties and subsidiary machinery and equipment. These are classified as operating leases as nearly all the risks and rewards of ownership of the underlying assets have not been transferred. Please refer to Note 6(9) Investment Property.

An analysis of matured lease payments based on the total undiscounted lease payments to be received after the reporting date:

Under 1 year One to two years Two to three years Three to four years Four to five years More than five years Total undiscounted lease payments	December 31, 2020 $ 154,719 97,110 60,862 41,887 35,978 182,274 $ 572,830	December 31, 2019 175,991 124,491 92,436 63,022 44,298 216,800
		717,038

For lease income generated from investment property for 2020 and 2019, please refer to Note 6(21); expenses generated from maintenance and leasing totaled NT$159,747 thousand and NT$195,586 thousand, respectively.

(17) Employee benefits

1.Defined benefit plans

Reconciliation of defined benefit obligations at present value and plan assets at fair value were as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit net liability Net defined benefit assets Net defined benefit liability	December 31, 2020 $ 116,053 (104,910)	December 31, 2019 127,642 (119,644)
	$ 11,143	7,998
	$ 9,977	14,992
	$ 21,120	22,990

The group makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average salary for the six months prior to retirement.

1) Composition of plan assets

The group allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Labor Pension Fund Supervisory Committee. With regard to the utilization of the funds, minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with interest rates offered by local banks.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The balance of the group labor pension reserve account in the Bank of Taiwan amounted to $104,910 thousands as of reporting date. For information on the utilization of the labor pension fund assets including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

In 2020, the subsidiary settled its pension and cancelled the labor pension reserve account of the Bank of Taiwan, and received the Labor Retirement Reserve Fund cheque of NT$6,820 thousand for the settlement of the account via Xin Lao Gei Zi No. 10950152241 on July 1, 2020. Therefore, as of December 31, 2020, the balance of the labor pension reserve account of the subsidiary's Bank of Taiwan has been zero.

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

The group's movements in the present value of defined benefit obligations for 2020 and 2019 were as follows:

Defined benefit obligations on January 1 Current service cost and interest Net defined benefit liability (asset) remeasurement - Actuarial gains and losses from experience adjustments - Actuarial gains and losses from changes in demographic assumptions - Actuarial gains and losses from changes in financial assumptions Upfront service costs and benefits from repayment Benefit paid by the plan Defined benefit obligations on December 31	2020 $ (127,642) (1,709) 1,177 (16) (4,469) 532 16,074	2019 (122,586) (2,053) (4,446) (52) (3,585) - 5,080
	$ (116,053)	(127,642)

3) Movements of the fair value of defined benefit plan assets

The group's movements in the fair value of the defined benefit plan assets for 2020 and 2019 were as follows:

s follows:
Fair value of plan assets on January 1 Interest revenue Net defined benefit liability (asset) remeasurement - Return on plan assets (excluding current interest) Contributions paid by the employer Benefits planned to be paid Settle the amount returned to the company Plan asset liquidation or reduction of payment Fair value of plan assets on December 31	2020 $ 119,644 821 3,976 4,468 (16,074) (6,820) (1,105)	2019 112,515 1,101 4,032 7,076 (5,080) - -
	$ 104,910	119,644

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(4) Expenses recognized in profit or loss

The group’s expenses recognized in profit or loss for 2020 and 2019 were as follows:

Service costs for the period Net interest of net liabilities (asset) for defined benefit obligations Early service cost and liquidation profit and loss Construction in Progress Selling expenses Administrative expenses	2020 $ 805 83 573	2019 881 71 -
	$ 1,461	952
	$ 171 281 1,009	156 220 576
	$ 1,461	952

(5) Actuarial assumptions

The group determines the present value of defined benefit obligations at the end of the financial reporting date. The material actuarial assumptions are as follows:

Discount rate Future salary increase rate	December 31, 2020 0.30%～0.35% 2.00%	December 31, 2019
		0.70%～0.75% 2.00%

The expected allocation payment to be made by the group to the defined benefit plans for the oneyear period after the reporting date is NT$983 thousands.

The weighted-average lifetime of the defined benefit plan is 8-11 years.

6) Sensitivity analysis

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

Balance on December 31, 2020 Discount rate Future salary increase rate Balance on December 31, 2019 Discount rate Future salary increase rate	Defined benefitobligation Increased by 0. 25% Decreased by 0. 25% (2,805) 2,903 2,848 (2,767) (3,199) 3,298 3,160 (3,113)
	Increased by 0. 25% (2,805) 2,848 (3,199) 3,160

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

The method and assumption used in the sensitivity analysis is consistent with prior period.

～ 46 ～

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

2. Defined contribution plan

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

According to the regulations of the Employees’ Social Security Act for the defined contribution plan for the group’s Malaysian branch, a rate of 13% of the employees’ monthly wage is a contribution to the personal account of SOCSO. Under such a plan, after the group contributes a fixed amount to the Bureau of Labor Insurance, there is no legal or constructive obligation for the group to pay additional amounts.

For 2020 and 2019, the Consolidated Company contributed NT$6,886 thousand and NT$6,778 thousand, respectively, to the Bureau of Labor Insurance under the Defined Contribution Pension expense.

(16) Income Tax

1. Income tax expense

Details of the group’s income tax expenses for 2020 and 2019 are as follows:

Current income tax expense Incurred during the period Additional surtax on unappropriated earnings Adjustment for prior periods Land value increment tax Deferred income tax expense Occurrence and reversal of temporal differences	2020 $ 17,713 1,454 (12,145) 25,033	2019 23,421 14,711 154 2,190
	32,055	40,476
	1,360	1,589
	$ 33,415	42,065

A reconciliation of the group’s income tax expenses and net (losses) income before tax for 2020 and 2019 is as follows:

2019 is as follows:
Net (loss) income before tax Income tax calculated using the domestic tax rate where the group operates Effects on tax rate difference in foreign jurisdictions Non-deductible expenses Tax-free income Investment gains or losses recognized under the equity method Current tax losses on unrecognized deferred income tax assets Changes in unrecognized temporary differences Early (high) underestimation Past (over) under estimates	2020 $ 67,809 13,562 20,154 13,092 (63,452) (8,279) (6,423) (7,753) (12,145)	2019 (7,067)
		(1,413) 1,621 6,963 (5,127) (16,943) 26,213 (3,486) 154

～ 47 ～

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Additional surtax on unappropriated earnings Land value increment tax Other Total	2020 1,454 25,033 58,172	2019 14,711 2,190 17,182
	$ 33,415	42,065

3. Deferred tax assets and liabilities

(1) Unrecognized deferred tax liabilities

For the years ended December 31, 2019 and 2018, no-deferred tax liabilities were recognized for temporary differences associated with investments in subsidiaries as the group could control the timing of the reversal of the temporary differences and is fairly confident that the temporary differences will not reverse in the foreseeable future. Its relevant amounts are as follows:

Foreign Investment gains or losses recognized under the equity method	December 31, 2020 $ 20,478	December 31, 2019 90,786

(2) Unrecognized deferred tax assets

The group unrecognized deferred tax assets are as follows:

Deferred credit Bad debtdisallowance Unrealized Impairment loss on assets Lease liabilities Unused tax losses carryforwards Other	December 31, 2020 $ 27,414 374,049 17,617 - 160,553 38,919 $ 618,552	December 31, 2019 37,481 370,179 16,457 231 273,953 20,017
		718,318

Under the ROC tax laws, approved tax losses can be carried forward for 10 years to offset future taxable profits. These assets are not recognized as deferred income tax assets. It is not probable for the group to have sufficient taxable income in the future to allow for these temporary differences.

As of December 31, 2020, the expiration period for abovementioned unrecognized deferred tax assets of unused tax losses carryforwards were as follows:

Year of assessment 2011 2012 2013 2014 2017 2018 2019 2020	Unrecognized deferred tax assets $ 99,929 251,988 177,913 49,583 72,722 52,859 97,513 257 $ 802,764	Expiration inyear
		2021 2022 2023 2024 2027 2028 2029 2030

～ 48 ～

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(3) Recognized deferred tax assets / liabilities

Changes in deferred tax assets (liabilities) for 2019 and 2018:

Deferred tax assets	Deferred tax assets	Deferred tax assets	Deferred tax liabilities
Defined Benefit Plans $ 840 (486)	Other	Total
			Other
	2,492 (110)	3,332 (596)	(1,057) (764)
$ 354	2,382	2,736	(1,821)
$ 1,940 (1,100)	2,658 (166)	4,598 (1,266)	(734) (323)
$ 840	2,492	3,332	(1,057)

4. Income tax verification

(1) The group’s income tax returns up to 2018 have been verified by the tax authorities.

(2) Except for the group Chun-Tse Asset Management Co., Ltd., which has been verified by the tax authorities until 2019, the income tax returns of the group’s subsidiaries up to 2017 in Taiwan have been verified by the tax authorities.

(19) Capital and Other equity interests

As of December 31, 2020 and 2019, the Company’s authorized common stock consisting of 1,600,000 thousand shares with a par value of 10 New Taiwan dollar per share amounted to NT$16,000,000 thousand of which 387,000 thousand shares were issued. Among these, 86,500 thousand shares ordinary shares for each year were privately placed. All issued shares were paid up upon issuance.

1. Capital surplus

The Company's balance of capital surplus is as follows:

Conversion premium for bonds payable Treasury shares transactions Difference arising from subsidiary’s equity Other	December 31, 2020 $ 350,720 19,018 199 1,795	December 31, 2019 350,720 19,018 199 1,795 371,732
	$ 371,732

As required by the Company Act, the capital surplus must first be used to make up for losses before new shares or cash can be issued to shareholders in proportion to the realized capital surplus. The realized capital surplus referred to in the preceding paragraph includes the proceeds from the share issuance in excess of the par value of the proceeds from donations. In accordance with the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the capital surplus may be allocated from capital. The total allocation amount each year may not exceed 10% of the paid-in capital.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

2. Retention of surplus

In accordance with the Company's Articles of Incorporation, if there are any earnings in the final accounts, income taxes must be paid as required by the law. After previous losses have been made up, 10% of the legal reserve shall be set aside, and according to applicable regulations and competent authorities, distributable earnings are accumulated from the special reserve appropriated or reversed, and the accumulated distributable earnings of the previous year with the distributable earnings of the year.

On June 12, 2020, the company's general meeting of shareholders passed a resolution to amend the company's articles of association, stipulating that the distribution of surplus or loss allowance can be made after the end of each half year. If there is any surplus in the semi-annual final accounts, it should be distributed in accordance with the above procedures It.

The above-mentioned cumulative distributable surplus shall be distributed by the board of directors. When new shares are issued, it shall be submitted to the shareholders meeting for distribution after a resolution. When cash is issued, it shall be in accordance with Article 240, Item 5 of the Company Law. Authorize the board of directors to distribute with more than two-thirds of the directors and the resolutions approved by more than half of the directors, and report to the shareholders meeting. The distribution of cash and stock dividends shall be limited to 30% to 100%. However, the Company must also take into account the future business and major capital expenditure plans and shall reserve the necessary funds as a priority before the distribution of dividends.

Give the Company is in a mature and stable stage of its corporate life cycle. However, it is in a volatile industrial environment and able to cope with the economy and market changes. The Company adopts a residual dividend policy to distribute cash and stock dividends by taking into account its business plans, profitability and investment capital needs. The cash dividend ratio is limited to no less than 20% of the total cash and dividends distributed in the year. However, when the earnings distributed to shareholders for the year does not exceed NT$1 per share, when the debt ratio exceeds 50%, the earnings may be distributed entirely by stock dividends.

(1) Statutory surplus

Where there is no loss in the Company, the shareholders’ meeting may resolve to distribute new shares or cash from the legal reserve. However, only the portion of legal reserve which exceeds 25 percent of the paid-in capital may be distributed.

(2) Special reserve

In accordance with FSC. Certificate. Issue. Tzi No. 1010012865 Letter issued on April 6, 2012, when the Company allocates distributable earnings, the difference between the net decrease in other stockholders’ equity and the balance of the special reserve is added to the special reserve from profit or loss for the period and prior period's undistributed retained earnings. The decrease in other shareholders' equity accumulated in prior periods is not distributable from the special reserve from undistributed retained earnings of prior periods. If there is a reversal of the decrease in the amount in other shareholders’ equity later, earnings may be distributed accordingly.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

In accordance with FSC. Certificate. Issue. Tzi No. 1010047490 Letter issued on November 21, 2012, the difference between the market value of a subsidiary’s shares and the carrying amount in the parent’s shares at the end of the period shall not be distributed as a special reserve based on the ratio of the shares being held. If the market price recovers later, the amount may be transferred to a special reserve in proportion to the number of shares being held.

The annual general meetings held on June 12, 2020 and June 13, 2019 resolved to special reserve appropriated of NT$3,698 thousand and reversal of special reserve NT$9,862 thousand, respectively, for the motion of offset losses for 2019 and earnings distribution for 2018.

(3) Earnings distribution

The annual general meetings held on June 12, 2020 and June 13, 2019 resolved the motion of offset losses for 2019 and earnings distribution for 2018. The amounts of dividends distributed to owners are as follows:

Common stock dividends per share: Cash	2018	2018
	Amount per share (dollars)	Amount 61,920
	$ 0.16

3.Treasury shares

Subsidiaries holding the Company’s treasury stock:

Number of the Company shares the subsidiaries hold Carrying amounts Stock market price	December 31, 2020 25,444 $ 193,207 $ 253,422	December 31, 2019 25,444 193,207 284,973

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

4.Other equity interests

Exchange differences resulting from translating the financial statements of foreign operations Unrealized gains(losses) from investments in equity instruments measured at FVTOCI Balance on January 1, 2020 $ 162,953 618,594 Exchange differences on foreign operations 15,460 - Unrealized gains (losses) from investments in financial assets measured at FVTOCI - (8,970) Balance on December 31, 2020 $ 178,413 609,624 Balance on January 1, 2019 $ 196,760 558,609 Exchange differences on foreign operations (33,807) - Unrealized gains (losses) from investments in financial assets measured at FVTOCI - 50,323 Proceeds from disposal of equity instruments measured at FVTOCI - 9,662 Balance on December 31, 2019 $ 162,953 618,594 5.Controlling interest 2020 Balance at beginning of the year $ 1,743,737 Controlling Net interest 89,063 Remeasurements of the defined benefit plan (66) Unrealized gains (losses) from investments in financial assets measured at FVTOCI 4,155 `S`ubsidiary Cash dividend payment toControlling interest (22,260) Other - Balance at end of the year $ 1,814,629	Exchange differences resulting from translating the financial statements of foreign operations Unrealized gains(losses) from investments in equity instruments measured at FVTOCI Balance on January 1, 2020 $ 162,953 618,594 Exchange differences on foreign operations 15,460 - Unrealized gains (losses) from investments in financial assets measured at FVTOCI - (8,970) Balance on December 31, 2020 $ 178,413 609,624 Balance on January 1, 2019 $ 196,760 558,609 Exchange differences on foreign operations (33,807) - Unrealized gains (losses) from investments in financial assets measured at FVTOCI - 50,323 Proceeds from disposal of equity instruments measured at FVTOCI - 9,662 Balance on December 31, 2019 $ 162,953 618,594 5.Controlling interest 2020 Balance at beginning of the year $ 1,743,737 Controlling Net interest 89,063 Remeasurements of the defined benefit plan (66) Unrealized gains (losses) from investments in financial assets measured at FVTOCI 4,155 `S`ubsidiary Cash dividend payment toControlling interest (22,260) Other - Balance at end of the year $ 1,814,629	Total
		781,547 15,460 (8,970)
		788,037 755,369 (33,807) 50,323 9,662 781,547
		2019 1,702,337 41,630 409 20,152 (21,102) 311 1,743,737

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(20) Earnings per share

1.Basic loss “per” share

The Group’s basic earnings per share for 2020 and 2019 was calculated using the net loss attributable to equity holders of the Company's ordinary shares and the weighted-average number of common shares outstanding. The related calculations are as follows:

Net losses attributable to equity holders of the Company's ordinary shares Weighted-average number of outstanding ordinary shares	2020 $ (54,669) 361,556 $ (0.15)	2019
		(90,762)
		361,556
		(0.25)

2. Diluted loss per share

The diluted earnings per share were calculated based on the net profit attributable to equity holders of the Company’s ordinary shares and the weighted-average number of ordinary shares outstanding after adjusting the dilutive effect of all potential ordinary shares for 2020 and 2019. The related calculations are as follows:

Net losses attributable to equity holders of the Company's ordinary shares Weighted-average number of outstanding ordinary shares Dilutive effects on potential ordinary shares Employee compensation	2020 $ (54,669) 361,556 Note 361,556 $ (0.15)	2019
		(90,762)
		361,556
		Note 361,556
		(0.25)

Note: With anti-dilution, it is therefore not included in the calculation of diluted earnings per share.

(21) Revenue from contracts with customers
1.Disaggregation of revenue

		2020
Constructi on Segment $ 2,253,414 -	Leasing Segment 60,209 -	Departm ent Store Segment 375,185 -	Property Manage ment Segment 86,586 174,158	Total
				2,775,394 174,158
$ 2,253,414	60,209	375,185	260,744	2,949,552

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

		2020
Constructi on Segment $ 2,169,669 - - 83,678 67	Leasing Segment - 60,209 - - -	Departm ent Store Segment - 17,826 357,359 - -	Property Manage ment Segment 71,180 174,250 - - 15,314	Total 2,240,849 252,285 357,359 83,678 15,381
$ 2,253,414	60,209	375,185	260,744	2,949,552
$ 152,897 -	66,239 -	398,721 -	6,999 209,563	624,856 209,563
$ 152,897	66,239	398,721	216,562	834,419
$ 42,645 - - 110,195 57	- 66,239 - - -	- 18,978 379,743 - -	- 209,662 - - 6,900	42,645 294,879 379,743 110,195 6,957
$ 152,897	66,239	398,721	216,562	834,419

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

2. Contract balances

Contract balances
Notes receivable Accounts receivable Less: Allowancefor losses Total Contractual liabilities`-`Sales of Real Estate Contractual liabilities`-`voucher Contractual liabilities`-`Other Total	December 31, 2020 $ 15,233 181,987 (81,192) $ 116,028 $ 497,222 13,984 7,282 $ 518,488	December 31, 2019 15,436 153,727 (73,795) 95,368 802,797 14,219 9,617 826,633	January 1, 2019 19,297 218,938 (106,257)
			131,978
			724,957 23,615 -
			748,572

The Consolidated Company has launched a customer loyalty program to stimulate sales of department store products. When customers spend NT$100 or for a single purchase, the Consolidated Company will award 1 point, and these points and be redeemed for gifts or product coupons.

For the years ended December 31, 2020 and 2019, the Consolidated Company’s deferred revenues were NT$1,705 thousand and NT$4,719 thousand, respectively, recorded as contract liabilities-current. The amounts represent the fair value of the consideration received or receivable from the original sale of products attributable to points given but not yet converted.

The Consolidated Company’s role in commission income transactions of department stores’ counters is an agent rather than a principal. Management considers the following judgment factors:

The Consolidated Company does not acquire ownership of products and is not responsible for the sale of products.
The Consolidated Company does not hold the right to adjust the sales prices of suppliers.
The Consolidated Company only receives a fixed percentage of commission on the products sold from department stores’ counters.

For the disclosure of notes and accounts receivable and impairment losses, please refer to Note 6(3).

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(20) Costs

Details of the group costs for 2020 and 2019 are as follows:

department stores costs Lease cost Construction costs Commission costs Other Operating costs Gain from price recovery of inventory	2020 $ 149,982 159,747 1,719,720 50,400 9,024 (45,876) $ 2,042,997	2019
		150,922 195,586 45,235 75,120 3,010 (2,721)
		467,152

(23) Remuneration to Employees, Directors and Supervisors

As stipulated in the Company’s Articles of Incorporation, 1% to 2% of the annual profit shall be allocated as remuneration to employees. The distribution of remuneration in shares or cash is resolved by the board of directors’ meeting, and these employees must be employees of the controlling or subordinate companies who meet certain requirements. No more than 2% of the annual profit shall be allocated in cash as remuneration to directors by resolving the Board of Directors. The motion of distribution of remuneration to employees and directors shall be proposed to the shareholders’ meeting.

However, where there are accumulated losses, the Company shall first retain a certain amount before allocating remuneration to Employees and Directors as referred to in the preceding paragraph.

The company has operating losses in both 2020 and 2019, and there is no need to estimate the remuneration of employees and directors.

There is no difference between the company's 2019 and 2018 employees, directors, and supervisors' compensation amount and the actual distribution situation. Relevant information can be found on MOPS.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(24) Non-operating income and expenses

1.Other gains and losses

Details of the Consolidated Company's other gains and losses are as follows:

Foreign currency exchange gains or losses Loss (gains) of disposal of property, plant and equipment Proceeds from disposal share of profit of subsidiaries, associates and joint ventures accounted for using equity method Gains on disposal of investment property Royalty revenue Dividend income Proceeds from disposal of trademarks`收入` Other gains and losses	2020 $ 28,368 5,930 46,838 (6,000) 12,140 24,234 54,992 19,916 $ 186,418	2019 7,985 (747) - - 13,897 51,547 - 11,856
		84,538

2.Finance costs

Details of the Consolidated Company’s financial costs are as follows:

Interest expense Lease liabilities interest Less: Capitalization of interests Capitalization rate	2020 $ 135,183 2,725 -	2019 146,547 3,541 (30,425) 119,663 2.69%~3.25%
	$ 137,908
	-

(25) Financial Instruments

1. Credit risk

(1) Exposure of credit risk

The carrying amount of financial assets represents the maximum amount exposed to credit risk.

(2) Concentration of credit risk

Given the Consolidated Company has a large customer group and does not have a significant concentration of transactions with a single customer. It has scattered sales regions, there is no concern of the credit risk of accounts receivable being significantly concentrated. In an effort to reduce the credit risk, the Consolidated Company also assesses the financial situation of its customers regularly. The Consolidated Company does not usually require customers to provide collaterals.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(3) Credit risk of accounts receivable

For the credit risk exposure information on notes receivable and accounts receivable, please refer to Note 6(3). For other financial assets measured at amortized cost, including other receivables, please refer to the allowance for losses for the 2020 and 2019 at Note 6(4).

Financial assets above are with low credit risk, therefore, allowances for losses are measured based on the expected credit loss amount for 12 months.

2. Liquidity risk

The following is a table showing expiration dates of contracts, including estimated interests but excluding the effects on netting agreements.

Carrying amounts	Contract Cash flow	Within 1year	1-3years	3-5years	More than 5 years 53,653 - - 71,233
$ 2,919,539 560,000 1,937,620 100,963	3,050,455 565,288 1,937,620 118,548	1,506,216 304,493 1,937,620 13,568	1,444,647 260,795 - 18,489	45,939 - - 15,258
$ 5,518,122	5,671,911	3,761,897	1,723,931	61,197	124,886
$ 4,003,556 560,000 1,664,309 140,773	4,240,607 571,728 1,664,309 165,564	1,371,411 6,440 1,577,166 17,332	2,784,580 565,288 87,143 30,886	30,779 - - 22,369	53,837 - - 94,977
$ 6,368,638	6,642,208	2,972,349	3,467,897	53,148	148,814

The Consolidated Company is not expecting that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

3. Marketing risk

(1) Currency risk

The Consolidated Company’s significant exposure to foreign currency risk was as follows:

follows:
Financial assets Monetary items USD JPY RMB Non-monetary items USD Financial liabilities Monetary items USD HKD	December 31, 2020			December 31, 2019
	Foreign currency	Exchange rate	NTD	Foreign currency	Exchange rate	NTD
			118,107 3,431 33,936 163,190 - 619,514			148,161 795 32,674 171,785 4,977 649,238
	$ 4,147 12,431 7,748 5,730 - 168,667	28.48 0.276 4.380 28.48 - 3.673		4,942 2,881 7,581 5,730 166 168,677	29.98 0.276 4.310 29.98 29.98 3.849

(2) Sensitivity analysis

The Consolidated Company exchange rate risk is mainly due to foreign-currencydenominated cash and cash equivalents, accounts receivable, other receivables, bank borrowings and other payables, etc., which foreign exchange gains and losses arise upon translation. When NTD decreased or increased by 5% against the USD, HKD, JPY and CNY, for the years ended December 31, 2020 and 2019 with all other factors held constant, the net income would have increased or decreased by NT$23,202 thousand and NT$23,629 thousand, respectively. The same basis was used for the analysis for both periods.

(3) As the Consolidated Company deals with diverse foreign currencies, gains or losses on foreign exchange were summarized as a single amount. For the years ended December 31, 2020 and 2019, the foreign exchange losses, including both realized and unrealized, amounted to NT$28,368 thousand and NT$7,985 thousand, respectively.

4. Interest rate risk

The interest risk exposure from financial assets and liabilities has been disclosed in the note of liquidity risk management.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The following sensitivity analysis is based on the risk exposure to interest rate on the derivative and non-derivative financial instruments on the reporting date. Regarding the liabilities with variable interest rates, the analysis is on the basis of the assumption that the amount of liabilities outstanding at the reporting date were outstanding throughout the year. The rate of change is expressed as the interest rate increase or decrease by 0.5%, when reporting to management internally, which also represents the assessment of the Consolidated Company’s management for the reasonably possible interval of interest rate change.

Assuming all other variable factors remaining constant, if the interest rate had increased or decreased by 0.5%, the impact to the Net profit would be as follows for the years ended December 31, 2020 and 2019 would have increased or decreased by NT$11,678 thousand and NT$16,014 thousand , mainly due to The Consolidated Company floating-rate loans.

5. Other price risk

If there are changes in the prices of equity securities (The same basis was used for the analysis for both periods and other variable factors held constant was assumed), the effect on the comprehensive income items would have been as follows:

2020 Comprehensive Income (Loss) (net of tax) Net Income (Loss) (net of tax) $ 22,310 - $ (22,310) -	2019	2019
Comprehensive Income (Loss) (net of tax) $ 22,310	Comprehensive Income (Loss) (net of tax) 22,209 (22,209)	Net Income (Loss) (net of tax)
		-
$ (22,310)		-

6. Fair value information

(1) The Consolidated Company's financial assets measured at FVTOCI are measured at fair value on a recurring basis. The carrying amounts and fair values (including fair value hierarchy information, but information on reasonable approximation of fair value on the carrying amount in financial assets not carried at fair values and lease liabilities are not required to be disclosed by regulations) of all types of financial assets and financial liabilities are listed as follows:

liabilities are listed as follows:
Financial Assets at FVTOCI Financial Assets at FVTOCI		December 31, 2020			Total 2,231,043 Total 2,220,858
	Carrying amounts $ 2,231,043		Fairvalue
		Level 1 139,480	Level 2 -	Level 3 2,091,563

	Carrying amounts $ 2,220,858		Fairvalue
		Level 1 168,960	Level 2 -	Level 3 2,051,898

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

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

2.1) Financial assets and liabilities measured at amortized cost.

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

3) Valuation techniques for financial instruments measured at fair value
3.1) Non-derivative financial instruments

If a quoted price is in an active market for a financial instrument, the quoted price is used as the fair value in an active market. Market prices announced by major exchanges and popular bonds judged by the TPEx are the basis for the fair value of listed equity instruments and debt instruments with active market quotations.

If quotations of financial instruments are regularly obtained from an exchange, broker, underwriter, industry association, pricing service or competent authority in a timely manner, and the prices represent actual and frequent fair market transactions. Such financial instruments have an active market for quotations. If the above criteria are not met, the market is deemed inactive. Generally, a large bid-ask spread, a significant increase in the bid-ask spread, or a low trading volume are all indicators of an inactive market.

If the financial instrument held by the Consolidated Company has an active market (TWSE or TPEx listed companies whose financial assets have standard terms and conditions that are traded in an active market), its fair value is determined by taking reference from quoted market prices.

Except for the aforementioned financial instruments with active markets, the fair values of the remaining financial instruments are obtained using valuation techniques or by taking reference from quoted prices of counter-parties. A fair value obtained through a valuation technique may be calculated by taking reference from the current fair value of other financial instruments with substantially similar conditions and characteristics, discounted cash flow method or other valuation techniques, including model calculations based on market information available at the reporting date (e. g. TEPx’s yield curves and Reuters’ average quotations for the rate of promissory notes). If the financial instrument held by the Consolidated Company has no active markets, their types and characteristics are listed as follows:

Equity instruments without quoted prices: The fair value is estimated using a discounted cash flow model. The main assumption is measured by discounting the expected future cash flows of the investee at a return rate to reflect the time value of money and investment risk.
Equity instruments without quoted prices: The fair value is estimated using the market comparable company method. The main assumption is measured by the estimated earnings before interest, depreciation and amortization of the investees and the earnings multiplier derived from the quoted market prices of comparable listed (OTC) companies. These estimates have been adjusted for the discount effect of the lack of marketability of the equity securities.

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Notes to Consolidated Financial Statements (Continued)

(4) Any transfers between Level 1 and Level 2: None.
(5) Details of changes in Level 3

Balance on January 1, 2020 Recognized in other comprehensive income Reclassification Balance on December 31, 2020 Balance on January 1, 2019 Recognized in other comprehensive income Disposal Balance on December 31, 2019	Unquoted equity instruments measured at FVTOCI $ 2,051,898 24,665 15,000
	$ 2,091,563
	$ 2,025,933 35,627 (9,662)
	$ 2,051,898

The above stated total gains or losses are reported in "Other gains and losses" and "Unrealized valuation gains (losses) on financial assets at FVTOCI. "Among these, assets still being held in 2020 and 2019 by:

Total profit (losses) recognized: Recognized in other comprehensive income (reported in “Unrealized gain (loss) on valuation of financial assets measured at fair value through other comprehensive income”)	2020 $ 24,665	2019
		35,627

(6) Quantitative information on fair value measurements using significant unobservable inputs (Level 3)

The fair value measurements of the Consolidated Company are classified as Level 3. It mainly includes financial assets measured at FVTOCI - equity securities investment. Most of the Consolidated Company’s fair values are classified as Level 3 with one significant unobservable input. Only investments in equity instruments without an active market have more than one significant unobservable inputs. Significant unobservable inputs to investments in equity instruments without an active market are not correlated with each other as they are independent of each other.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The quantified information for significant unobservable inputs was as follows:

Item Financial assets at FVTOCI - equity investment without an active market Financial assets at FVTOCI - equity investment without an active market	Valuation Technique Discounted cash flow method Net Assets value method	Significant unobservable inputs `‧`Long-term revenue growth rate (for the years ended December 31, 2020 and 2019 were 0.5% and 1%, respectively. ) `‧`Weighted average cost of funds rate (at 7.23% for the year ended 2020 and 6.61% for the year ended 2019) `‧`Lack-of-Marketability discount rate (both at 7% for the years ended December 31, 2020 and 2019) `‧`Net Assets value	Inter-relationships between significant unobservable inputs and fair value
			`‧`The higher the weighted average cost of capital and lack of marketability discounts, the lower the fair value `‧`The higher the long- term revenue growth rate, the higher the fair value `‧`The higher the Net Assets value, the higher the Fair value

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(7) Sensitivity analysis for fair value of financial instruments using level 3 inputs

The Consolidated Company’s fair value measurement on financial instruments is reasonable. However, the measurement would be different if different valuation models or valuation parameters are used. For financial instruments using level 3 inputs, if the valuation parameters changed, the impact on other comprehensive income or loss are as follows:

Balance on December 31, 2020 Financial Assets at FVTOCI Equity investments without an active market Balance on December 31, 2019 Financial Assets at FVTOCI Equity investments without an active market	Inputs	Move up or down	Other comprehensive income	Other comprehensive income
			Favorable change	Unfavorabl e change
	Liquidity discount Liquidity discount	1% 1%	22,719 22,484	(22,719) (22,484)

The favorable and unfavorable changes reflect the movement of the fair value, in which the fair value is calculated by using the different unobservable inputs in the valuation technique. The table above shows the effects of one unobservable input, without considering the inter-relationships with another unobservable input for financial instrument, if there are one or more unobservable inputs.

(26) Financial risk management

1. Overview

The Consolidated Company is exposed to the following risks arising from financial instruments:

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

In this note expressed the information on risk exposure and objectives, policies and procedures of risk measurement and management of the Consolidated Company. For detailed information, please refer to the related notes of each risk.

Risk management structure

The board of directors takes full responsibility in setting up and supervising the Consolidated Company’s risk management structure. The board of directors has given full authority to the management to develop and control the Consolidated Company’s risk management policy. The management regularly reports its operations to the board of directors.

The Consolidated Company’s risk management policy's establishment is to identify and analyze the risks faced by the Consolidated Company and to further set appropriate risk limits and controls while monitoring compliance with risks and risk limits. The risk management policy and system are reviewed regularly to reflect changes in market conditions and Consolidated Company’s operations. Through training, management

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

guidelines and operating procedures, the Consolidated Company has developed a disciplined and constructive control environment so that all employees understand their roles and obligations.

The Consolidated Company’s audit committee monitors how management monitors compliance with the Consolidated Company’s risk management policy and procedures while also reviewing the appropriateness of related risk management structure for the Consolidated Company's risks. Internal auditors assist the Consolidated Company's audit committee in playing the monitoring role. These internal auditors perform regular and unscheduled reviews on risk management controls and procedures which also report the results to the board of directors and the audit committee.

3. Credit risk

Credit risk arises if a customer or other counterparty to a financial instrument fails to meet its contractual obligations. It arises mainly from accounts receivable from customers from the Consolidated Company's operating activities and bank deposits and other financial instruments arising from investment activities. Operational credit risk and financial credit risk are managed separately.

(1) Accounts receivable and other receivables

The Consolidated Company's internal control system has established a credit policy. According to the policy, the Consolidated Company must analyze each new customer's credit rating individually before granting the standard payment and delivery terms and conditions. The Consolidated Company’s review and control mechanism include historic customer transactions, external rating bank’s notes. A procurement limit is established on a customer-by-customer basis, representing the maximum uncollected amounts not subject to management approval. This limit is reviewed regularly.

Given the Consolidated Company has a large customer group and does not have a significant concentration of transactions with a single customer. It has scattered sales regions, there is no concern of the credit risk of accounts receivable being significantly concentrated. Also, the Consolidated Company is engaged in the development and sale of properties to general individuals, and payments are primarily made by remittances, notes and bank financing, so the related credit risk is considerably low.

Additionally, the Consolidated Company’s construction projects are carried out based on the operating measures of company construction projects. Construction counterparties the Consolidated Company constructs out to have a sound reputation with their construction capacities meeting the regulations; therefore, the Consolidated Company is able to fully grasp the quality and progress of the construction project. Other receivables are mainly landlords and related parties and are assessed to be repayable by the debtors; therefore, the Consolidated Company has no significant credit risk in other receivables.

(2) Financial credit risk

The credit risk of bank deposits, fixed-income investments and other financial instruments are measured and supervised by the Consolidated Company’s Finance Department. There are no major performance concerns as the counter-parties and the performing parties of the Consolidated Company are banks and financial institutions, corporative organizations and government agencies with investment grade or above, so there are no major credit risks.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(3) Guarantee

The Consolidated Company’s policy stipulates that it can only provide financial guarantees to subsidiaries with at least 50% ownership with a certain amount set out. As of the years ended December 31, 2020 and 2019, the Consolidated Company provided no endorsements/guarantees.

4. Liquidity risk

The Consolidated Company's liquidity risk is that it is unable to deliver cash or other financial assets to settle financial liabilities and unable to perform related obligations. The Consolidated Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Consolidated Company’s reputation.

The remaining contractual maturity analysis of the Consolidated Company's financial liabilities during the agreed repayment period is prepared based on the earliest possible date on which the Consolidated Company could be required to repay its financial liabilities and the undiscounted cash flows of the equivalent interest.

The Consolidated Company's liquidity risk management does not consider the repayment of financial liabilities using investments in equity instruments. The number of floating-rate instruments for the above financial assets and liabilities may change due to the floating rate and the reporting period's end. In addition, the Consolidated Company’s unused borrowings for the years ended December 31, 2020 and 2019 were NT$793,387 thousand and NT$1,052,047 thousand, respectively.

5. Market risk

Market risk affects the Consolidated Company's earnings or the value of financial instruments due to changes in market prices, such as changes in exchange rates, interest rates, and prices of equity instruments. The objective of market risk management is to manage market risk to a tolerable level and to optimize investment returns.

(1) Exchange rate risk

The Consolidated Company is exposed to exchange rate risk arising from bank deposits that are not denominated in the functional currency of the group. However, based on conservative and prudent principles, the Consolidated Company does not use hedging instruments to hedge exchange rate risk.

The cash inflows and outflows of subsidiaries have a natural hedging effect.

For the sensitivity analysis of foreign currency exchange rate risks, please refer to Note 6(25).

(2) Interest rate risk

The Consolidated Company's policy is to review and control the optimal interest rate portfolios of financial liabilities by management to control the risk of interest rate fluctuations of the Company’s finances.

The Consolidated Company’s interest rate risk mainly comes from its floating-rate loans. The Consolidated Company assesses that the interest rate level in the environment where it operates has been stable in recent years and should not cause significant interest rate risks.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

For the sensitivity analysis of interest rate risk, please refer to Note 6(25).

(3) Other market price risk

The Consolidated Company holds equity securities investments that generate equity price risk. The equity investment is not held for trading but is a strategic investment. The Consolidated Company is not actively trading these investments, so they should not lead to a significant market rise.

For the sensitivity analysis of the price of equity instruments, please refer to Note 6(25).

(27) Capital management

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

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

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

The Company’s capital management strategy for 2020 and 2019 was consistent. By being consistent, it means maintaining a certain debt-to-capital ratio, ensuring that financing was available at a reasonable cost. The debt-to-capital ratios for the years ended December 31, 2020 and 2019 are as follows:

ailableat a reasonable cost. The debt-to-capital ratios for t nd 2019 are as follows:	he years ended De	cember 31, 2020
Total liabilities Less: Cash and cash equivalents Net liabilities Total equity Capital after adjustment Debt-to-equity ratio	December 31, 2020 $ 5,880,501 (945,251) 4,935,250 8,617,130 $ 13,552,380 36%	December 31, 2019 7,363,690 (541,486)
		6,822,204 8,593,684
		15,415,888
		44%

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Notes to Consolidated Financial Statements (Continued)

(28) Fund-raising Activities for Non-cash Transactions

Details of the Consolidated Company’s non-cash transaction financing activities for 2020 and 2019 are as follows:

January 1, 2020 $ 140,773	Cash Flow (13,189)	Non-Cash Changes Exchange Rate Changes Other (736) (25,885)	December 31, 2020 100,963
		Exchange Rate Changes (736)
January 1, 2019 $ 118,616	Cash Flow (13,867)	Non-Cash Changes Exchange Rate Changes Other (245) 36,269	December 31, 2019 140,773
		Exchange Rate Changes (245)

7. Related-Party Transactions

(1) Names and relationship with related parties

The following are entities that have had transactions with the group's subsidiaries and related-party during the periods covered in the parent company only financial statements.

Name of the Related-Party Relationship with the Group Xing-Long Investment Co., Ltd. The company’s directors are the same as the Company’s directors Pacific Er-Ben Management Co., Representative Director of the company's Ltd. Beijing Tai-Yun Building Co., Associates of the Consolidated Company Ltd. Pacific 88 Co., Ltd. Associates of the Consolidated Company Tai-Fu Recreation Co., Ltd. Associates of the Consolidated Company (Note5) Rakuya International Info. Co., Associates of the Consolidated Company Ltd. Pacific Venture Investment Other Related-Party Limited. United Pacific Multimedia Co., Other Related-Party (Note1) Ltd.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Name of the Related-Party Relationship with the Group

Shanghai Pacific Ocean House Other Related-Party Service Limited Company Pacific SOGO Department Store Other Related-Party Co., Ltd. Zhang, Qi-Guang Second-degree relatives of the company’s directors Guo, Shu-Ling Spouse of the company’s directors SOGO Department Stores Co., Substantial Related-Party of the Consolidated Company Ltd. Zhong-Yi Construction Unlimited Substantial Related-Party of the Consolidated Company Company Pacific Geotechnical Engineering Substantial Related-Party of the Consolidated Company Co., Ltd. Fu-Lai Asset Management Co., Substantial Related-Party of the Consolidated Company Ltd. Qi-Da Construction Manager Co., Substantial Related-Party of the Consolidated Company Ltd. (Note 4) Pacific International Villay Co., Substantial Related-Party of the Consolidated Company Ltd. (Note 6) Isabell Co., Ltd. Substantial Related-Party of the Consolidated Company (Note 3) Pacific Emerging Engineering Co., Substantial Related-Party of the Consolidated Company Ltd. (Note 2)

Note 1: United Pacific Multimedia Co., Ltd. was dissolved on June 28, 2018.
Note 2: The Consolidated Company’s legal representative was a legal representative of the company who left the position on August 13, 2019.
Note 3: The Consolidated Company’s legal representative was a director of the company who left the position on August 15, 2019.
Note 4: This company was dissolved on December 30, 2019 after merging with Fu-Lai Asset Management Co., Ltd.
Note 5: The consolidated company will sell all its shares in June 2020 and will not be included in related parties.
Note 6: The Consolidated Company’s legal representative was a director of the company who left the position on July 16, 2020.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(2) Significant transactions with related parties
1.Operating revenue

The Consolidated Company’s significant sales to related parties and their outstanding balances are as follows:

balances are as follows:
Name of the Related-Party	Sales
	2020 $ 213 -	2019
Other Related-Party Associates Total Name of the Related-Party Pacific 88 Co., Ltd. Other Related-Party Less: Allowance for losses Total		2,313 11
	$ 213	2,324
	Accounts receivable
	December 31, 2020 $ 49,460 3 ( 49,460)	December 31, 2019 49,460 10 ( 49,460) 10
	$ 3

Transaction prices are set based on the agreement of both parties; the collection terms are based on the contractual agreements, same as general transactions.

2. Debt situation

Details of the accounts receivable and accounts payable of Consolidated Company's related parties are as follows:

Name of the Related-Party Beijing Tai-Yun Building Co., Ltd. (Note) Associates - payment on behalf	Other receivables December 31, 2020 December 31, 2019 $ - 8,610 150 150 $ 150 8,760	Other receivables December 31, 2020 December 31, 2019 $ - 8,610 150 150 $ 150 8,760
	December 31, 2020 $ - 150 $ 150
		8,760

Note: NT$8,587 thousand is a capital loan, please refer to Note 7(2)3.

Note: NT$8,587 thousand is a capital loan, please refer	to Note 7(2)3.
Pacific Venture Investment Limited.	Other payables December 31, 2020 December 31, 2019 $ 619,514 648,784
	December 31, 2020 $ 619,514

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

3. Loaning to related parties

Actual expenditures of the Consolidated Company's loans to related parties are as follows:

Beijing Tai-Yun Building Co., Ltd. United Pacific Multimedia Co., Ltd. Total Less: Allowance for losses Net	Long-term receivables December 31, 2020 December 31, 2019 $ 853,324 889,708 171,400 171,400 1,024,724 1,061,108 (1,024,724) (632,955) $ - 428,153	Long-term receivables December 31, 2020 December 31, 2019 $ 853,324 889,708 171,400 171,400 1,024,724 1,061,108 (1,024,724) (632,955) $ - 428,153
	December 31, 2020 $ 853,324 171,400 1,024,724 (1,024,724) $ -
		1,061,108 (632,955)
		428,153

Note: As of December 31, 2020 and 2019, the company’s subsidiaries’ receivables from affiliated companies are all US$29,962 thousand, which are of the nature of longterm investment advances and are assessed by the consolidated company. After the recoverability of the funds, the allowance for losses is US$29,962 thousand and 15,398 thousand respectively.

4. Technical service income

The Consolidated Company’s significant royalty income and contract liabilities to related parties are as follows:

Shanghai Pacific Ocean House Service Limited Company Shanghai Pacific Ocean House Service Limited Company	Royalty revenue 2020 2019 $ 1,457 2,209 Prepayments (recorded as contract liabilities)	Royalty revenue 2020 2019 $ 1,457 2,209 Prepayments (recorded as contract liabilities)
	December 31, 2020 $ -	December 31, 2019 1,269

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

5. Prepayments

The Consolidated Company purchased club membership cards from Tai-Fu Entertainment Co. , Ltd to give to house buyers of Fei Cui Bay as a complimentary gift. For the years ended December 31, 2019, the Company had a balance of NT$391,428 thousand for both years, and a full valuation allowance was provided. In addition, in June 2020, the consolidated company sold all the shares of Tai-Fu Entertainment Co. , Ltd, which will not be included in related party transactions.

The conditions of the above-mentioned related party transactions are not significantly different from those of ordinary manufacturers.

6. Other

(1) The consolidated company signed a one-year financial consultant appointment contract with other related parties in May 2018. The total contract price is NT$2,520 thousand, and the amount of operating expenses in 2019 is NT$840 thousand.
(2) In 2020, the consolidated company signed a one-year special director appointment contract with other related parties. The total contract price is NT$960 thousand. The amount of operating expenses in the 2020 account is NT$320 thousand.
(3) The service fee and advertising fee paid by the merged company for entrusting other related parties to publish advertisements in 2020 and 2019 are NT$118 thousand and NT$100 thousand, respectively.
(3) Key management personnel transactions

Remuneration to key management personnel includes:

NT$100 thousand, respectively. Key management personnel transactions emuneration to key management personnel includes:
Short-term employee benefits Post-employment benefits	2020	2019
	$ 33,536 300	31,535 264
	$ 33,836	31,799

8. Pledged Assets

The carrying amount in the assets pledged as collateral by the Consolidated Company is as follows

Asset name	Pledge subject	December 31, 2020 $ 691,503 1,125,894 1,669,708 235,601	December 31, 2019 823,969 1,094,790 3,666,898 249,111
Buildings and land held for sale Land held for construction Construction in progress Other financial assets - current and non-current	Long-term, short-term loans Long-term, short-term loans and construction performance guarantee Long-term, short-term loans Long-term, short-term loans`、` Corporate bonds payable and construction performance guarantee

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Asset name	Pledge subject	December 31, 2020 52,938 1,649,665 77,310 1,907,580	December 31, 2019 144,554 1,691,993 100,957 1,908,296
Non-current financial assets at FVTOCI Property, plant and equipment Right-to-use assets Investment property, net Total	Long-term loans Long-term, short-term loans Long-term loans Long-term, short-term loans
		$ 7,410,199	9,680,568

9. Material Contingent Liabilities and Unrecognized Contractual Commitments

(1) Material unrecognized contractual commitments:
On December 31, 2020 and 2019, the total price of the purchase and sale contract signed by the Consolidated company for the pre-sale construction project, the remaining housing and construction land and the customer and the price received in accordance with the agreement are as follows:

follows:
Total contract price Amounts received	December 31, 2020 $ 1,379,253 $ 458,781	December 31, 2019 3,072,924
		750,792

For the years ended December 31, 2020 and 2019, the amounts of land purchase contracts entered into by the Consolidated Company and the amounts paid in accordance with the contracts are as follows:

tracts are as follows:
Total purchase contract price Price paid Allowance for losses	December 31, 2020 $ 3,680,098 $ 693,361 $ 677,414	December 31, 2019 3,680,098
		694,915
		677,414

The above allowance for loss failed due to the delay in completing the transfer process of the land purchase transactions. The group has resorted to legal proceedings and urged the counterparty of the contract to negotiate the follow-up performance of the contracts as soon as possible.

The details of the service contract signed by the merged company and the computer information company for the use of the online real estate management platform network system are as follows:

Total contract price Accumulated payment	December 31, 2020 $ 3,314 $ 2,762	December 31, 2019 3,314
		1,595

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Details of the Consolidated Company’s issuance of guarantee deposit notes are as follows:

Borrowings and issuance of commercial promissory notes Performance bond Contracting project Other Total	December 31, 2020 $ 1,494,750 381,780 69,000 806,750 $ 2,752,280	December 31, 2019 1,509,515 442,784 69,000 806,750
		2,828,049

The Company paid the joint construction deposit to the construction entity as the Consolidated Company entered into the joint construction:

Joint construction deposit	December 31, 2020 $ 11,104	December 31, 2019 29,154

According to the “Items to be recorded and not to be recorded in the contract for the finalization of gift certificates for goods (services) in the retail industry” promulgated by the Ministry of Economic Affairs, the Consolidated Company entered into a new gift certificate trust agreement with Yuanta Commercial Bank on December 24, 2013 to guarantee performance on all newly issued and printed certificates. For the years ended December 31, 2020 and 2019, the trust amounts of printed gift certificates totaled NT$15,029 thousand and NT$17,447 thousand, respectively (recorded as other financial assets - current).

(2) Other:

A. Claimed by the Securities and Futures Investors Protection Center (the “SFIPC”): It was alleged that the term Min-Chiang Chang was appointed as a corporate director of Pacific Electric Wire & Cable Co. , Ltd. (Pacific Electric Wire & Cable) by Pacific Construction Co. , Ltd. , it was passed or recognized that 6 persons including Hung-Chiu Hu prepared inaccurate financial statements from 1999 to 2002 which resulted in the authorized persons (investors of Pacific Electric Wire & Cable) of the SFIPC suffering damages for believing the financial statements prepared by Pacific Electric Wire & Cable and bought shares. According to regulations associated with the Securities and Exchange Act, Pacific Construction Co. , Ltd. and Min-Chiang Chang shall be liable for damages caused to authorized persons of the SFIPC (investors of Pacific Electric Wire & Cable). On July 18, 2017, the Consolidated Company reached a settlement agreement with the SFIPC. The Consolidated Company was willing to pay NT$34,500,000 as compensation. It was agreed that the Consolidated Company was to complete the payment within 40 months. While entering into the settlement agreement, the Consolidated Company provided 2,400,000 shares in installments as a guarantee for the settlement amount to Taiwan High Speed Rail Corporation. On July 18, 2017, 25% of the settlement amount was paid, and for the years ended December 31, 2020 and 2019, the settlement amounts the Consolidated Company was yet to pay were NT$0 and NT$1,992 thousand, respectively. The Taiwan high-speed rail stocks that provided guarantees in January 2020 have been released from the pledge, and the case has ended.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(3) Matters concerning the principal, interest calculation method, repayment plan of Beijing Tai-Yun Building Co., Ltd. and the resolution of equity-related disputes:
During the process of the construction and development in Beijing Tai-Yun Building Co., Ltd. by Hong Kong Pacific Holdings each entity provided an advance of appropriately of USD30 million to Beijing Tai-Yun Building Co., Ltd., including another shareholder, “National Foreign Trade Transportation Group,” which shared the same shareholder rights and obligations as Hong Kong Pacific Holdings.
“National Foreign Trade Transportation Group” sold its equity in Beijing Tai-Yun Building Co., Ltd. to a third party. The advance of approximately USD30 million provided by the group also settled at the same time. The board of directors of Hong Kong Pacific Holdings resolved that interest of 5. 5% (based on the Hong Kong loaning rate) on the aforementioned shareholder advances provided by Hong Kong Pacific Holdings shall be paid. A letter was sent out to notify Beijing Tai-Yun Building Co., Ltd. to comply with such a matter.
A board of directors’ meeting was held on June 3, 2016, with an interest payment plan proposed. However, as the proposed plan differed greatly from the above resolution, Hong Kong Pacific Holdings replied to Beijing Tai-Yun Building Co., Ltd. on June 17, 2016, stating that it could not accept the interest payment plan proposed by Beijing Tai-Yun Building Co., Ltd.. At present, in addition to requesting Beijing Tai-Yun Building Co., Ltd. to repay the principal and interest as proposed by Hong Kong Pacific Holdings, or assigning its staff to continue to negotiate, an attorney has also been appointed to take necessary legal procedures for above matters and equity-related disputes to ensure the rights and interests of the Consolidated Company. The balance of Hong Kong Pacific Holdings account receivable from Beijing TaiYun Building Co., Ltd. is US$29,962 thousand. As of December 31, 2020 and 2019, it has self-assessed and provided an allowance for losses of USD29,962 thousand and USD15,398 thousand; In accordance with conservative and prudent principles, the allowance for doubtful accounts will be recognized when the receivables are fully recovered in the future; interest income will be recognized upon its actual collection.
On the June 2015, Directors that were formally assigned to the subsidiary - Hong Kong Pacific Holdings by the Consolidated Company was suspected of failing to fulfill their loyalty obligation and duty of care, which resulted in borrowing and equity disputes between shareholders of the subsidiary and the investment company - Beijing Tai-Yun Building Co., Ltd.. These directors were also suspected of receiving disproportionate director’s remuneration from other associates. As a result, the Consolidated Company resolved to file a criminal complaint against the above directors and related personnel by the board of directors’ meeting held on October 13, 2018.

The criminal case is currently under investigation by the Taipei District Attorney’s Office and has been referred to the Bureau of Investigation of the Ministry of Justice. Based on the principle of non-disclosure of the investigation, the attorney thinks it is difficult to predict the litigation outcome at this time. However, as the case is not a pecuniary damage case, and if the Consolidated Company receives an unfavorable judgment or chooses not to prosecute the case, there should not be any pecuniary loss yet.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

On August 18, 2018, the board of directors of Beijing Tai-Yun Building Co., Ltd. resolved to continue the lease of Tai-Yun Building to Beijing Jun-Tai Department Store. However, according to the Articles of Incorporation of Beijing Tai-Yun Building Co., Ltd., operating policies, business plans and development plans must be approved by two-thirds of the directors present at the board meeting before implementation. Additionally, the attorney thinks that as Beijing Tai-Yun Building is the main asset of Beijing Tai-Yun Building Co., Ltd., the lease income generated from the building is the main source of revenue of Beijing Tai-Yun Building Co., Ltd.. Matters regarding the lease or renewal of the building's lease should be part of the company’s annual operating policy, business plan and development plan. Without prior legal resolution passed by the board of directors of Beijing Tai-Yun Building Co., Ltd., the company entered into a new lease agreement. The lease relationship with Jun-Tai Department Store no longer existed. However, the dispute over the lease relationship was pending a decision from the District Court ruling in China. During the period, if Beijing Jun-Tai Department Store paid related fees to Beijing Tai-Yun Building Co., Ltd., the amount may be in the nature of unjust enrichment or damages. Therefore, the Consolidated Company reported the above amount as other income for 2020 and 2019. Please refer to Note 6(6).
The Consolidated company filed an enforcement objection lawsuit with the Beijing No. 2 Intermediate People's Court regarding the right to know of shareholders of Hong Kong Pacific Holdings and Beijing Tai-Yun Building Co., Ltd., and the Beijing No. 2 Intermediate People's Court made a final ruling on October 14, 2020. The litigation request of Hong Kong Pacific Holdings was rejected, and the combined company is continuously evaluating the impact on the financial report.

10. Losses Due to Major Disasters : None.

11. Significant Subsequent Events

The Consolidated company is to issue domestic guaranteed ordinary corporate bonds on March 25, 2021 through a resolution of the board of directors. The issuance amount is NT$250,000 thousand, and the par value of each is NT$1,000 thousand. The issuance period is five years in total. The coupon rate 0.63%.

12. Other

Summary of employee benefits, depreciation, depletion and amortization expenses is as follows:

==> picture [428 x 157] intentionally omitted <==

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

Function 2020 2019
Operating Operating Operating Operating
Total Total
Nature Cost Expense Cost Expense
Employee benefit
expense
Salary expense 34,667 147,749 182,416 34,156 145,817 179,973
Labor and health 3,006 11,911 14,917 2,464 12,399 14,863
expense
Pension expense 1,479 6,868 8,347 1,107 6,623 7,730
Other Employee 2,092 11,814 13,906 2,354 9,293 11,647
benefit expense
Depreciation expense 87,917 44,265 132,182 93,297 38,017 131,314
Amortization expense 1,595 2,478 4,073 1,054 3,285 4,339
----- End of picture text -----

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

13. Other Disclosures

A. Information on Significant Transactions

In accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, information associated with significant transactions shall be disclosed by the Company for the years ended December 31, 2020 and 2019:

1. Loaning of fund to other parties:

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

(In Thousands of New Taiwan Dollars)
Whethe Collateral
Companies r or Natur Business Reasons Financing
that lend not a Highest Actual Interest e for transacti for short- Allowance limit for Aggregate
funds lend Accounting Related amount for Ending borrowing rate Finan on term for losses each financing
No. funds Lending object title -Party the period balance amount range cing amount financing Amount Name Value borrower limit
0 Pacific Hong Kong Other Yes 20,000 20,000 12,490 - % 2 - Operational - None - 680,250 2,721,000
Construction Pacific receivables turnaround
Co., Ltd. Holdings
2 Hong Kong Beijing Tai-Yun Long-term Yes 906,357 853,324 853,324 5.50% 2 - Operational 853,324 None - 29,885 119,540
Pacific Building Co., receivables turnaround
Holdings Ltd.
6 Pacific United Pacific Other No 171,400 171,400 171,400 - % 1 - - 171,400 None - 680,250 2,721,000
Department Multimedia Co., receivables
Stores Co., Ltd.
Ltd.
----- End of picture text -----

Note 1: Ceiling of loans are as follows:
(1) The aggregate amount in loans lent by a subsidiary shall not exceed 40% of the Company’s equity attributable to the parent.
(2) The restriction shall not apply to inter-company loans of funds between overseas companies in which the Company holds, directly or indirectly, 100% of the voting shares, nor to loans of a fund to the Company by any overseas company in which the Company holds, directly or indirectly, 100% of the voting shares. The aggregate amount in such loans to a single borrower shall not exceed 10% of the Company's most recent net worth of the financial statements or NT$30 million.
Note 2: The Company’s net worth mentioned above is based on the most recent review report audited by CPAs. Hong Kong Pacific Holdings calculate the net value based on the company's self-closing statement
Note 3: Description of the nature of loaning of funds
(1) Fill in “1” for a company with which it does business.
(2) Fill in “2” for those in need of short-term financing.
Note 4: The receivables were generated from operating activities and not from the loaning of funds. However, in accordance with ARDF’s letter No. 167 issued on July 9, 2004, the receivables from related parties were reclassified as other receivables - related parties for credit period exceeding the credit period of the accounts of non-relate parties.
Note 5: Improvement plans to address loaning parties not meeting criteria or the balance exceeding the limit due changes have been set out and approved by the board of directors and shall be handled in accordance with the regulations of the competent authorities.
Note 6: Due to the change in the repayment plan proposed by Beijing Tai-Yun to Hong Kong Pacific Holdings, in order to protect the interests of the company, the interest calculation and term agreement with Beijing Tai-Yun are still under negotiation. However, based on conservative and prudent principles, the amount may be recognized as interest income upon actual collection.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Providing endorsements/guarantees to other parties: None.
Marketable securities (excluding equity investments in subsidiaries, associates, and joint ventures) held at the reporting date:

(In Thousands of New Taiwan Dollars)

==> picture [418 x 432] intentionally omitted <==

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

Held By Types and Names of Relationship with Account Titles in End of the Period Current Remark
Securities the Securities Issuer Book (Thousand Shares Carrying Amount Shareholding Ratio Fair Value (Note 1) ShareholdiHighest
Shares) ng Ratio
Pacific Taiwan High Speed Rail None Non-current financial 2,400 76,080 0.04 % 76,080 0.04%
Construction Co., Corporation assets at
Ltd. FVTOCI
〃 Xin-Ye-Yong Development Investment 〃 2 - 18.17 % - 18.17%
Co., Ltd. businesses valuated
by fair
values
〃 Pacific Resources 〃〃 4,495 6,079 4.39 % 6,079 4.39%
Corporation
〃 Pacific SOGO Department 〃〃 9,519 212,757 1.15 % 212,757 1.15% Pledge of
Store Co., 2,369,000
Ltd. shares
Pacific stock - Pacific Construction The Company’s Non-current financial 24,836 222,717 6.42 % 222,717 6.42% Note 3
Department Co., Ltd. parent assets at
Stores Co., Ltd. FVTOCI
〃 stock - Taiwan High Speed None 〃 2,000 63,400 0.04 % 63,400 0.04%
Rail
Corporation
〃 stock - Pacific SOGO Investment 〃 85,031 1,900,450 10.27 % 1,900,450 10.27%
Department Store Co., businesses valuated
Ltd. by fair values
〃 stock - SOGO Department 〃〃 2,542 - 12.08 % - 12.08%
Stores Co., Ltd.
〃 stock - Pacific Life 〃〃 505 - 3.30 % - 3.30%
Development Co.,
Ltd.
〃 VCOOL Inc. 〃〃 27 991 0.27 % 991 0.27%
Pacific Realtor stock - Pacific Construction The Company’s 〃 608 6,054 0.16 % 6,054 0.15% Note 3
Co., Ltd. Co., Ltd. parent
〃 stock - Hong Kong Xian- Investment 〃 5,700 - 10.00 % - 10%
Hui Company businesses valuated
by fair values
〃 stock - Mi-Jia-Le 〃〃 2,000 - 8.58 % - 8.58%
Construction Co.,
Ltd.
〃 stock - Rakuya 〃〃 782 5,006 6.82 % 5,006 6.82%
International Info. Co.,
Ltd.
Taitou Xingye stock - Mi-Jia-Le 〃〃 1,213 - 5.21 % - 5.21%
Co., Ltd. Construction Co.,
Ltd.
〃 stock - GOOD TV 〃〃 1,500 16,013 17.65 % 16,013 Note 2
Broadcasting
Corp.
----- End of picture text -----

Note 1: Non-current financial assets at FVTOCI are disclosed at the closing price of the open market, the most recent audited net financial statements or appraisal report.

Note 2: Disposal of part of the equity in June, 2020, resulting in loss of significant influence, and reclassification to financial assets measured at fair value through other comprehensive gains and losses-non-current Note 3 ： When preparing the consolidated financial report, it has been written off

Marketable securities for which the accumulated purchase or sale amounts for the period exceed NT$ 300 million or 20% of the paid-in capital: None.
Acquisition of real estate at costs exceeding NT$ 300 million or 20% of the paid-in capital:

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

None.

Disposal of real estate at prices exceeding NT$ 300 million or 20% of the paid-in capital: None.
Receivables from related parties with amounts exceeding NTD 100 million or 20% of the paid-in capital: None.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Receivables from related parties with amounts exceeding NT$ 100 million or 20% of the paid-in capital:

==> picture [413 x 124] intentionally omitted <==

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

(In Thousands of New Taiwan Dollars)
Amounts Due from Related Receivables
Balance of Parties Amount
Companies with Receivables Collected from Provision
Accounts Counterparty from Related- Turnover Related-Parties Allowance
Receivable Name Relationship Parties Rate Amount Processing Method Subsequently for Loss
Pacific United Pacific Substantial related party 171,400 -% 171,400 - - (171,400)
Department Multimedia
Stores Co., Ltd. Co., Ltd.
Hong Kong Beijing Tai- The company is the 853,324 -% 853,324 A letter was sent to - (853,324)
Pacific Yun Building company's pending Tai-Yun to provide a
Holdings Co., equity investment- new repayment plan
Ltd. to be discussed.
----- End of picture text -----

9. Engaging in the trading in derivative instruments: None.

Business relationships and significant transactions between parent and subsidiaries:

==> picture [410 x 76] intentionally omitted <==

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

Relation Transactions
ship with
Trader The Ratio of
Relation Consolidated Total
No. Name of Trader Counterparty ship Title Amount Terms and Conditions Income or Assets
0 Pacific Construction Co., Hong Kong Pacific 1 Other receivables 46,235 Debt 0.29%
Ltd. Holdings
1 Hong Kong Pacific Pacific Construction 2 Accounts payable and 46,235 Debt 0.29%
Holdings Co., Ltd. other payables
----- End of picture text -----

Note 1: How to fill in:

Fill in “0” for parent company.
Subsidiaries are numbered sequentially by the company category, starting with “1. ”
Note 2: The relationship with the traders is classified as follows:
Parent company to subsidiary.
Subsidiary to parent company.
Subsidiary to subsidiary.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

B. Information on Investees (excluding investments in China)

Information on the Company's investees for 2020 is as follows:

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

(In Thousands of New Taiwan Dollars)
Sum of Initial Current
Investment Held at the End of Period Highest
End of the Shareholding Net Income Share of
Name of Name of End of the Previous Carrying Ratio (Losses) of Profits/Losse
Investor Investee Location Principal Business Period Year Shares Ratio Amounts Investee s of Investee Remark
Pacific Pacific Realtor Taiwan Introduction of housing 46,506 46,506 7,275 48.50% (19,675) 48.50% 4,752 32,835
Construction Co., leases and sales,
Co., Ltd. Ltd. etc.
〃 Pacific 〃 Building lease and 1,007,361 1,007,361 99,176 48.45% 1,578,248 48.45% 105,142 50,945 Note 1
Department sales, supermarket
Stores Co., operation, department
Ltd. store import and export,
etc.
〃 Hong Kong Investments, Trades 162,470 162,470 343,858 100.00% 298,849 100.00% (349,430) (349,430)
Pacific HK
Holdings
〃 Hong Kong 〃 Construction projects, 34,016 34,016 8,163 100.00% 26 100.00% (60) (60)
Pacific or acts as an agency for
Construction civil engineering,
Co., construction, plumbing,
Ltd. electrical and air-
conditioning, and
decoration projects,
etc.
〃 Tai-Fu Taiwan Operation of leases and - 197,500 - - % - 46.67% - - Note 2
Recreation sales of buildings,
Co., seaside recreation areas,
Ltd. beaches, and
amusement
parks
〃 Taitou Xingye 〃 Investment 210,000 210,000 22,600 100.00% 224,965 100.00% 4,488 2,445
Co., Ltd.
〃 Pacific 〃 Wholesale of Flowers - 19,990 - - % - 99.95% (26) (26) Note 3
Freshlife
Industrial
Company
Limited
Taitou XingyeGOOD TV 〃 Broadcasting - 20,000 - - % - 23.53% (457) (107) Note 4
Co., Ltd. Broadcasting Production, Satellite
Corp. Broadcasting
Television Program
Supplier
〃 Tai-Fu 〃 Operation of leases and - 15,000 - - % - 3.53% - - Note 2
Recreation sales of buildings,
Co., seaside recreation areas,
Ltd. beaches, and
amusement
parks
〃 Chun-Tse 〃 Management 180,000 180,000 18,000 100.00% 185,413 100.00% 5,776 5,776
Asset Consulting, Real Estate
Management Business
Co.,
Ltd.
Pacific PACIFIC 88 〃 Wholesale, Retail and 8,459 8,459 846 48.98% - 48.98% - - Investees
Department CO., trading of restaurant accounted
Stores Co., LTD. business, Daily for using
Ltd. essential and equity
department method
stores
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Note 1: Among these, 36,628 thousand shares were pledged as collateral for bank loans. Note 2 ： All sold in June,2020. Note 3 ： Liquidation was completed in August,2020. Note 4 ： Part of the equity was sold in June of the Republic of China, resulting in loss of significant influence, and was reclassified to financial assets measured at fair value through other comprehensive gains and losses-non-current

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 5: Except for investees invested using the equity method, the above investees have been written off in the preparation of the consolidated financial statements.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

C. Information on Investments in Mainland China:

1. Information on investments in Mainland China:

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

Unit: NT$ thousand / USD thousand
Name of the Principal Paid-In Investment Opening Investment Capital Closing Net The Mid-term Share of Carrying Investme
Investment in Item Shares Method Cumulative Transferred Cumulative Income Company’s highest Profits/Los Value of nt Income
China Capital Balance or Recovered During the Balance of (Losses) Directly or Shareholding ses of Investme Remitted
of Investment Current Period Investment Of Indirectly ratio Investee nts at the as of the
Capital Outward Recovered Capital Invested End of End of
Invested Remittance Invested Investee Shareholding the the Year
from Taiwan from Period
Taiwan
Beijing Tai- Wholesale 349,200 Note 1 165,870 - - 165,870 87, 47.50% 47.50% 41,501 928,622 -
Yun Building and retail (USD12,000) (USD5,700) (USD5,700)371 (Note 4)
Co., commercial (Note 2) (Note 2) (Note 2)
Ltd. facilities
within the
planning area
of
development,
construction,
sales and
leases
Beijing Tai- Business 437 Note 1 437 - - 437 100.00% 100.00% (3) 476 -
Kong management (USD15) (USD15) (USD15)(3)
Consulting consulting (Note 2) (Note 2) (Note 2)
Services Co.,
Ltd.
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Note 1: Invested in China through a company in a third region. Note 2: The actual amount in the original currency of investment multiplied by the closing exchange rate. Note 3: The investment income recognized this for the period was based on the financial statements audited by CPAs of an international accounting firm with a cooperative relationship with the Taiwanese accounting firm.

Note4: It was transferred to the non-current assets for sale under the item of Non-current assets on December 15, 2019 。

Limit for investing in China

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Cumulative Investment Investment Amounts Upper Limit on
Outflow from Taiwan as of Authorized by Investment Investment Authorized
December 31, 2020 Commission, MOEA by Investment
Commission, MOEA
USD 6,966 USD 6,966 4,081,501
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Note 4: Limit calculation: Net equity for the period × 60% = NTD6,802,501 thousand × 60% = NTD4,081,501 thousand.

Note 5: Shanghai Pacific Construction Co., Ltd. was liquidated on June 21, 2009. The liquidation balance was remitted to Hong Kong Pacific Construction Co., Ltd. and not yet remitted to Taiwan. As a result, the investment amount was not approved by the MOEAIC, less the capital of USD1,251 thousand.

Information on Significant Transactions: None.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

D. Information of Main Shareholders:

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Shares Holding of Shares
Name of Main Shareholders Shares Ratio
Chuang Mei Investment Co., Ltd. 35,522,000 9.17%
Pacific Department Stores Co., Ltd. 24,836,139 6.42%
Fong Fu International Development Co., Ltd. 20,999,771 5.42%
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14. Segment Information

(1) Information on reportable segment’s profit or loss, assets, liabilities and their measurement basis and reconciliation

The Consolidated Company uses the income (excluding extraordinary gains or losses and exchange gains or losses) before tax of each segment of the internal management report as the basis for allocating management resources as well as evaluating performance. As income tax, extraordinary gains or losses and exchange gains or losses are managed on a group basis. The Consolidated Company does not allocate income tax expenses (gains), extraordinary gains or losses and exchange gains or losses to reportable segments. In addition, not all reportable segments have material noncash items other than depreciation and amortization in profit or loss the amounts reported are consistent with the reports used by the operating decision maker.

Except for pension expenses of each operating segment that is recognized and measured based on cash paid to the pension plan, the accounting policy of the operating segment is the same as the “Summary of Important Accounting Policy” stated in Note 4.

Intersegment sales and transfers are deemed as third-party transactions. Measured at current market prices.

Information and reconciliation of the Consolidated Company’s operating segment:

		2020	2020
Construction Segment $ 2,253,414 10,903 852	Leasing Segment 60,209 7,046 -	Shopping Mall 375,185 250 187	Property Management Other 260,744 7,730 422 268,896 23,286 45,323 (247,742) 2,636,529 1,070,976	Adjustments and Elimination	Total 2,949,552 - 1,461
				- (25,929) - (25,929) - - 67,122 (461,951) (79,866)
$ 2,265,169	67,255	375,622			2,951,013
$ 110,833 16,656 $ 125,062	- 40,161 24,703	3,789 34,115 98,664			137,908 136,255 67,809
$ 8,098,478	135,017	4,089,558			14,497,631
$ 4,393,978	88,168	407,245			5,880,501

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

		2019	2019
Construction Segment $ 152,897 215 2,706	Leasing Segment 66,239 1,295 -	Shopping Mall 398,721 249 246	Property Management Other 216,562 - 486 217,048 23,154 47,370 84,713 191,447 893,705 3,438,469 2,699,479	Adjustments and Elimination	Total
					834,419 - 3,438
				- (1,759) - (1,759) - (2,166) - (9,270) - (551,946) (99,439)
$ 155,818	67,534	399,216			837,857
$ 91,695 14,434 - $ (256,591)	- 40,710 - 20,749	4,814 35,305 - 46,598			119,663 135,653 84,713 (7,067)
$ - $ 8,828,488	- 157,639	- 4,084,724			893,705 15,957,374
$ 4,199,955	119,207	444,488			7,363,690

(2) Regional information

The Consolidated Company’s regional information is as follows. Income is categorized based on the geographical location of customers, while non-current assets are categorized based on the geographical location of assets.

Region Revenues from external customers: Taiwan Sabah Non-current assets: Taiwan Sabah Total	2020 $ 2,775,394 174,158	2019 624,856 209,563
	$ 2,949,552	834,419
	$ 2,660,301 1,177,810	2,757,131 1,215,495
	$ 3,838,111	3,972,626

Other non-current assets include property, plant and equipment, investment property, intangible assets and other assets. However, financial instruments, deferred tax assets and net defined benefit assets are not excluded.

(3) Key Customer Information

As the Consolidated Company has a large customer base, there is no significant concentration of transactions with major customers.

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AI assistant

PCC — Annual Report 2020

52132_rns_2020-11-13_ffd1f4f3-dbc4-474e-a846-6cc89f3400ee.pdf

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated financial statements and Independent Auditors’ Report

Table of Contents

Statement

Independent Auditor’s Report

Opinion

Basis for Opinion

Key Audit Matters

2. Inventory Valuation

Auditing Procedures Performed:

Other Matters

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

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

KPMG

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Balance Sheet

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Balance Sheet (Continued)

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Pacific Construction Co., Ltd. and Subsidiaries Consolidated Statements of Comprehensive Income For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars)

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flow

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Consolidated Statements of Cash Flow (Continued)

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Pacific Construction Co., Ltd. and Subsidiaries Notes to Consolidated Financial Statements

For the Years Ended December 31, 2020 and 2019

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

1. Company History

2. Approval Date and Procedures of the Financial Statements

3. Application of New and Revised Accounting Standards and Interpretations:

4. Summary of Significant Accounting Policies

(1) Statement of compliance

(2) Basis of preparation

(3) Basis of consolidation

(4) Foreign currencies

2. Foreign operations

(5) Classification of current and non-current assets and liabilities

(6) Cash and cash equivalents

(7) Financial instruments

4) Derecognition of financial assets

2) Classification of debt or equity

3) Treasury shares

4) Financial liabilities

(8) Inventory

(9) Non-current assets held for sale

(10) Investment in associates

(11) Investment property

(12) Property, plant and equipment

1)Recognition and measurement

2) Subsequent cost

3) Depreciation

(13) Lease

1) Identifying a lease

2) As a lessee

3) As a lessor

(14) Intangible assets

1) Recognition and measurement

2) Subsequent expenditure

3) Amortization

(15) Impairment of non-financial assets

- (16) Provision for Liabilities Excise Duty

(17) Revenue Recognition

1) Revenue from customer contracts

(1) Land development and property sale

(2) Customer loyalty program

(3) Service

(4) Brokerage income

PCC Annual Report 2020