Stock Code: 2506

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated financial statements and Independent Auditors' Report

For the Years Ended December 31, 2025 and 2024

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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	Page(s)
I · Cover	1
II · Table of Contents	2
III · Statement	3
IV · Independent Auditor’s Report	4
V · Consolidated Balance Sheet	5
VI · Consolidated Statements of Comprehensive Income	6
VII · Consolidated Statements of Changes in Equity	7
VIII · Consolidated Statements of Cash Flow	8
IX · Notes to Consolidated Financial Statements
1. Company History	9
2. Approval Date and Procedures of The Financial Statements	9
3. New Standards, Amendments and Interpretations Adopted	9~11
4. Summary of Significant Accounting Policies	11~28
5. Significant Accounting Assumptions and Judgments, and Major Sources of Estimation Uncertainty	28~30
6. Explanation of Significant Accounts	30~63
7. Related-Party Transactions	64~66
8. Pledged Assets	66
9. Commitments and Contingencies	66~69
10. Losses Due to Major Disasters	69
11. Subsequent Events	69
12. Other	69
13. Other Disclosures
A. Information on Significant Transactions	69~71
B. Information on Investees	72
C. Information on Investments in China	73
14. Segment Information	73~75

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Statement

For the fiscal year of 2025 (From Jan. 1, 2025 to Dec. 31, 2025), 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 10, 2026

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, 2025 and 2024. The related consolidated statements of comprehensive income, consolidated statements of changes in equity, consolidated statements of cash flow for the years ended December 31, 2025 and 2024, 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 accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2025 and 2024, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit of the consolidated financial statements as of in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants. 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 year ended December 2025. 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.

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Revenue recognition

Please refer to Note4(17) for the accounting policy of revenue recognition. Information of revenue recognition details are shown in Note 6 (20) of the Consolidated financial statements

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 Group. complies with applicable bulletins.
Inventory Valuation

Please refer to Note 4(8) and 5(2) 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 35% 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.

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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 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, 2025 and 2024 accounted for 18% and 17% of the total consolidated assets respectively, and the net operating income on December 31, 2025 and 2024 accounted for Consolidated net operating income is all 0%.

Pacific Construction Group’s has prepared its parent-company-only financial statements as of and for the years ended December 31, 2025 and 2024, on which we have issued an unmodified opinion plus other matters for reference.

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 in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards in the Republic of China, we exercise

professional judgment and 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 2025 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)

March 10, 2026

Pacific Construction Co., Ltd. and Subsidiaries
Consolidated Balance Sheet
December 31, 2025 and 2024
(Expressed in Thousands of New Taiwan Dollars)

Assets	December 31, 2025		December 31, 2024
		Amount	%	Amount	%
Current assets:
1100	Cash and cash equivalents (Note 6(1))	$ 634,606	4	687,368	6
1120	Current financial assets at FVTOCI (Note 6(2))	1,613,129	12	1,396,509	10
1170	Accounts receivable, net (Note 6(3), (20) and 7)	9,678	-	12,861	-
1200	Other receivables (Note 6(4) and 7)	9,130	-	8,727	-
1300	Inventory - merchandising business	31,049	-	37,711	-
1320	Inventory (applicable to the construction industry) (Note 6(5), 8 and 9)	5,162,642	35	4,812,450	34
1476	Other current financial assets (Note 6(7),8 and 9)	1,365,290	9	1,370,249	10
1478	Refundable deposits for construction projects (Note 9)	970	-	970	-
1479	Other current assets, others	50,305	-	45,096	-
1480	Current assets recognized as incremental costs to obtain contract with customers	34,113	-	40,991	-
		8,910,912	60	8,412,932	60
Non-current assets:
1517	Non-current financial assets at FVTOCI (Note 6(2) and 8)	2,180,192	15	2,148,874	15
1550	Non-current financial assets at FVTOCI (Note 6(2) and 8)	2,996	-	-	-
1600	Property, plant and equipment (Note 6(8) and 8)	2,010,929	14	2,060,393	14
1755	Right-to-use assets (Note 6(9), (14) and 8)	115,207	1	130,704	1
1760	Investment property, net (Note 6(10),7 and 8)	1,315,338	9	1,279,916	9
1780	Intangible assets	9,993	-	13,175	-
1840	Deferred tax assets (Note 6(17))	5,550	-	2,139	-
1975	Non-current net defined benefit assets (Note 6(16))	30,488	-	27,042	-
1980	Non-current other financial assets (Note 8)	56,226	1	159,762	1
1990	Other non-current assets, others	4,428	-	4,858	-
		5,731,347	40	5,826,863	40
Total Assets		$ 14,642,259	100	14,239,795	100

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Pacific Construction Co., Ltd. and Subsidiaries
Consolidated Balance Sheet (Continued)
December 31, 2025 and 2024
(Expressed in Thousands of New Taiwan Dollars)

Liabilities and Equity	December 31, 2025		December 31, 2024
		Amount	%	Amount	%
Current liabilities:
2100	Short-term loans (Note 6(11))	$ 1,549,280	11	1,319,240	9
2130	Current contract liabilities (Note 6(20) and 9)	512,469	3	406,455	3
2150	Notes and accounts payable (Note 7)	423,609	3	416,053	3
2200	Other payables (Note 7)	949,739	7	995,998	7
2230	Current tax liabilities	149,566	1	110,663	1
2280	Current lease liabilities (Note 6(9) and (14))	21,649	-	18,982	-
2305	Other current financial liabilities	315,902	2	315,522	3
2321	Current portion of corporate bonds matured or recalled (Note 6(13))	284,500	2	34,500	-
2322	Long-term borrowings, current portion (Note 6(12))	62,480	-	61,388	-
2399	Other current liabilities, other	12,195	-	12,974	-
		4,281,389	29	3,691,775	26
Non-Current liabilities:
2530	Bonds payable (Note 6(13))	161,000	1	445,500	3
2540	Long-term loans (Note 6(12))	233,318	2	242,963	2
2570	Deferred tax liabilities(Note 6(17))	1,033	-	752	-
2580	Non-current lease liabilities (Note 6(9) and (14))	105,095	1	119,024	1
2640	Non-current net defined benefit liability (Note 6(16))	1,495	-	2,413	-
2645	Deposits received	121,708	1	110,611	1
2670	Other non-current liabilities, other	16,014	-	16,473	-
		639,663	5	937,736	7
Total liabilities		4,921,052	34	4,629,511	33
Equity attributable to owners of parent (Note 6 (18)):
3110	Ordinary share	3,870,000	27	3,870,000	27
3200	Capital surplus	409,909	3	399,732	3
3310	Legal reserve	1,372,775	9	1,296,436	9
3320	Special reserve	54,518	-	67,462	-
3350	Retained earnings-unappropriated	1,482,516	10	1,690,797	12
3410	Exchange differences resulting from translating the financial statements of foreign operations	292,494	2	289,171	2
3420	Unrealized gains (loss) from investments in financial assets measured at FVTOCI	509,988	3	277,077	2
3500	Treasury shares	(193,207)	(1)	(193,207)	(1)
	Total equity attributable to owners of parent	7,798,993	53	7,697,468	54
36xx	Non-controlling interest (Note 6(6) and (18))	1,922,214	13	1,912,816	13
Total equity		9,721,207	66	9,610,284	67
Total liabilities and equity		$ 14,642,259	100	14,239,795	100

(See accompanying Notes to Consolidated Financial Statements.)

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars)

	2025		2024
		Amount	%	Amount	%
4000	Operating revenue (Note 6(20) and 7)	$ 1,137,730	100	1,441,466	100
5000	Operating costs (Note 6(14), (16), (21) and 7)	622,620	55	957,270	66
5900	Gross profit from operations	515,110	45	484,196	34
	Operating expenses (Note 6(3), (14), (16), (22) and 7):
6100	Selling expenses	125,690	11	130,643	9
6200	Administrative expenses	356,443	31	479,513	33
6450	Expected credit loss (Gain on reversal of impairment loss)	264	-	(684)	-
		482,397	42	609,472	42
6500	Net other income and expenses	586	-	4,154	-
	Net operating income(loss)	33,299	3	(121,122)	(8)
	Non-operating income and expenses:
7100	Interest revenue (Note 6(23))	21,295	2	136,079	9
7020	Other gains and losses (Note 6(2), (23) and 9)	194,389	17	192,235	13
7050	Finance costs (Note 6(14) and (23))	(72,098)	(6)	(75,125)	(5)
7055	Expected credit loss (Note 6(4))	1,182	-	887,669	62
		144,768	13	1,140,858	79
	Net income before tax from continuing operating department	178,067	16	1,019,736	71
7950	Less: Income tax expense (Note 6(17))	86,436	8	159,099	11
	Net income	91,631	8	860,637	60
8300	Other comprehensive income:
8310	Items that will not be reclassified subsequently to profit or loss
8311	Remeasurement of defined benefit plans	4,187	-	11,993	1
8316	Unrealized gains (losses) from equity instrument investments measured at FVTOCI	247,938	22	54,881	4
8349	Less: Income tax relating to those items not to be reclassified to profit or loss	-	-	-	-
	Total items that will not be reclassified subsequently to profit or loss	252,125	22	66,874	5
8360	Items that may be reclassified subsequently to profit or loss
8361	Exchange differences resulting from translating the financial statements of foreign operations	3,323	-	74,773	5
8399	Less: Income tax relating to those items to be reclassified to profit or loss	-	-	-	-
	Total items that may be reclassified subsequently to profit or loss	3,323	-	74,773	5
8300	Other comprehensive income	255,448	22	141,647	10
8500	Total comprehensive income	$ 347,079	30	1,002,284	70
	Profit attributable to:
8610	Owners of parent	$ 6,200	-	738,280	52
8620	Non-Controlling interest	85,431	8	122,357	8
		$ 91,631	8	860,637	60
	Total comprehensive income attributable to:
8710	Owners of parent	$ 246,148	21	878,299	61
8720	Non-Controlling interest	100,931	9	123,985	9
		$ 347,079	30	1,002,284	70
	Earnings per share (Note 6(19))
9750	Basic earnings per share (in NT$)	$	0.02		2.04
9850	Diluted earnings per share (in NT$)	$	0.02		2.03

(See accompanying Notes to Consolidated Financial Statements.)

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Statements of Changes in Equity

For the years ended December 31, 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars)

Equity Attributable to Owners of Parent

	Ordinary Share Capital	Capital Surplus	Retained Earnings			Total Other Equity Interest		Treasury Shares	Total Equity Attributable to Owners of Parent	Non-Controlling Interests	Total Equity
			Legal Reserve	Special Reserve	Unappropriated Retained Earnings	Exchange Differences Resulting from Translating the Financial Statements of Foreign Operations	Unrealized Gains (losses) from Financial Assets Measured at FVTOCI
Balance on January 1, 2024	$ 3,870,000	394,631	1,289,342	81,393	997,969	214,398	236,942	(193,207)	6,891,468	1,846,147	8,737,615
Net income	-	-	-	-	738,280	-	-	-	738,280	122,357	860,637
Other comprehensive income	-	-	-	-	10,069	74,773	55,177	-	140,019	1,628	141,647
Total comprehensive income	-	-	-	-	748,349	74,773	55,177	-	878,299	123,985	1,002,284
Appropriation and distribution of retained earnings:
Provision for legal reserve	-	-	7,094	-	(7,094)	-	-	-	-	-	-
Special reserve appropriated	-	-	-	(13,931)	13,931	-	-	-	-	-	-
Cash dividends of ordinary share	-	-	-	-	(77,400)	-	-	-	(77,400)	-	(77,400)
Cash dividends of the Company received by its subsidiaries	-	-	-	-	-	-	-	-	-	(57,329)	(57,329)
Dividends distributed to subsidiaries to adjust capital surplus	-	5,089	-	-	-	-	-	-	5,089	-	5,089
Changes in ownership interests in subsidiaries	-	12	-	-	-	-	-	-	12	13	25
Proceeds from disposal of equity instruments measured at FVTOCI	-	-	-	-	15,042	-	(15,042)	-	-	-	-
Balance on December 31, 2024	3,870,000	399,732	1,296,436	67,462	1,690,797	289,171	277,077	(193,207)	7,697,468	1,912,816	9,610,284
Net income	-	-	-	-	6,200	-	-	-	6,200	85,431	91,631
Other comprehensive income	-	-	-	-	3,714	3,323	232,911	-	239,948	15,500	255,448
Total comprehensive income	-	-	-	-	9,914	3,323	232,911	-	246,148	100,931	347,079
Appropriation and distribution of retained earnings:
Provision for legal reserve	-	-	76,339	-	(76,339)	-	-	-	-	-	-
Reversal Special reserve	-	-	-	(12,944)	12,944	-	-	-	-	-	-
Cash dividends of ordinary share	-	-	-	-	(154,800)	-	-	-	(154,800)	-	(154,800)
Cash dividends of the Company received by its subsidiaries	-	-	-	-	-	-	-	-	-	(91,533)	(91,533)
Dividends distributed to subsidiaries to adjust capital surplus	-	10,177	-	-	-	-	-	-	10,177	-	10,177
Balance on December 31, 2025	$ 3,870,000	409,909	1,372,775	54,518	1,482,516	292,494	509,988	(193,207)	7,798,993	1,922,214	9,721,207

(See accompanying Notes to Consolidated Financial Statements.)

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flow

For the years ended December 31, 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars)

	2025	2024
Cash flows from operating activities:
Net before tax for the period	$ 178,067	1,019,736
Adjustment items:
Adjustments to reconcile profit (loss)
Depreciation expense	145,035	140,038
Amortization expense	5,881	4,975
Expected credit loss reversal of benefit	(918)	(888,353)
Interest expense	72,549	75,125
Interest revenue	(21,295)	(136,079)
Dividend income	(141,528)	(245,723)
Lease modifications loss	-	591
Loss (gain) of disposal and scrapping of property, plant and equipment	71	1,929
Intangible asset transfer expenses	-	7
Gains on disposals of investment property	(586)	(4,154)
Loss reversal benefit (reverse gain)	-	4,500
Other revenue	(437)	(437)
Total adjustments to reconcile profit (loss)	58,772	(1,047,581)
Changes in operating assets and liabilities:
Changes in operating assets:
Notes & accounts receivable	2,919	15,202
Other receivables	779	(7,463)
Inventories	(338,936)	221,738
Other current assets	(5,209)	5,907
Other current financial assets	(20,717)	(123,328)
Non-current net defined benefit assets	(177)	119
Incremental costs to obtaining a contract	6,877	(2,537)
Refundable deposits for construction projects	-	4,764
Total changes in operating assets	(354,464)	114,402
Changes in operating liabilities:
Contract liabilities	106,014	51,981
Notes and accounts payable	7,556	(54,894)
Other payables	(46,228)	82,901
Other financial liabilities	11,477	10,237
Other current liabilities	(779)	1,482
Total changes in operating liabilities	78,040	91,707
Total changes in operating assets and liabilities	(276,424)	206,109
Cash inflow generated from operations	(39,585)	178,264
Interest received	21,295	136,079
Interest paid	(77,173)	(77,876)
Income tax paid	(50,663)	(84,564)
Net cash flows from operating activities	(146,126)	151,903

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Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flow (Continued)

For the years ended December 31, 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars)

	2025	2024
Cash flows from (used in) investing activities:
Proceeds from financial assets instruments measured at FVTOCI	-	27,551
Investments accounted for using equity method	(2,996)	-
Acquisition of property, plant and equipment	(53,861)	(46,182)
Proceeds from disposal of property, plant and equipment	4	164
Acquisition of intangible assets	-	(9,699)
Acquisition of investment property	(54,737)	(52,892)
Proceeds from disposal of investment property	586	4,291
Other receivables - related parties	-	887,681
Other financial assets	129,212	(984,300)
Other non-current liabilities	(22)	(20)
Dividends received	141,528	245,723
Other operating assets	(2,269)	1,610
Net cash flows from investing activities	157,445	73,927
Cash flows from (used in) financing activities:
Decrease in short-term loans	230,040	(127,983)
Repay corporate debt	(34,500)	-
Proceeds from long-term loans	69,586	29,950
Repayments of long-term loans	(78,139)	(74,489)
Lease principal repayment	(17,650)	(17,715)
Cash dividends paid	(144,623)	(72,311)
Changes in non-controlling interests	(91,533)	(57,329)
Net cash flows from (used in) financing activities	(66,819)	(319,877)
Effect of exchange rate changes on cash and cash equivalents	2,738	78,637
Increase (decrease) in cash and cash equivalents	(52,762)	(15,410)
Beginning cash and cash equivalents	687,368	702,778
Closing cash and cash equivalents	$ 634,606	687,368

(See accompanying Notes to Consolidated Financial Statements.)

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Pacific Construction Co., Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025 and 2024
(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

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. The Company and its subsidiaries (hereinafter collectively referred to as the "Consolidated Company"), its primary businesses are contracting civil construction projects, land development and housing construction, housing and building development and rental, general department stores, real estate agency and agency sales, parking area, their export business, etc.

Approval Date and Procedures of The Consolidated Financial Statements

The accompanying consolidated financial statements were authorized for issuance by the Board of Directors and issued on March 10, 2026.

Application of New and Revised Accounting Standards and Interpretations:

(1) The impact of the International Financial Reporting Standards ("IFRS Accounting Standards") endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2025:

Amendments to IAS 21 "Lack of Exchangeability"

(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, 2025, would not have a significant impact on its consolidated financial statements:

IFRS 17 "Insurance Contracts" and amendments to IFRS 17 "Insurance Contracts"
Amendments to IFRS 9 and IFRS 7 "Amendment to Classification and Measurement of Financial Instruments"
Annual Improvements to IFRS Accounting Standards
Amendments to IFRS 9 and IFRS 7 "Contracts Referencing Nature-dependent Electricity"

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

The standards and interpretations released and amended by the International Accounting Standards Board (hereinafter referred to as "IASB") but not yet endorsed by FSC with potential impact to the Group are as follows:

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New or amended standards	Major amendments	Effective Date Issued by IASB
IFRS 18
"Presentation and Disclosure in Financial Statements"	The new standard introduces three categories of income and expense, two subtotals of income statement and one single note on management's performance measurement. These three guidelines amend and enhance how information is segmented in financial statements as well as provide users with a foundation for better and more consistent information and will impact all companies.

• Income statements with more structuration: Companies use different formats to express their operating results under current standards, making it difficult for investors to compare financial performance across companies. The new standard adopts a more structured income statement and introduces a new definition of the "operating income" subtotal. In addition, it stipulates that all income and expenses shall be classified into three new different categories based on the Company's main business activities.

• Management Performance Measurement (MPM): The new standard introduces the definition of management performance measurement. Also, it requires the company to provide useful information, i.e. how to calculate and reconcile the measures to the amounts recognized in accordance with IFRS accounting standards, to explain why each measure is included in a single note to the financial statements.

• More disaggregated information: The new standard includes guidance on how companies can enhance the grouping of information in their financial statements. It includes guidance on whether information should be included in the main financial statements or further broken down in the notes. | January 1, 2027
Note: The Financial Supervisory Commission issued a press release on September 25, 2025, announcing that Taiwan will adopt IFRS 18 for the 2028 fiscal year. If a company needs early adoption, it may choose to adopt early after obtaining approval from the Financial Supervisory Commission. |

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The Group is in the process of evaluating the impact on its financial position and performance by adopting the standards and interpretations mentioned above, and will disclose relevant impacts when the evaluation is completed.

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 19 "Subsidiaries without Public Accountability :Disclosures"
Amendments to IAS 21 "Converted to a highly inflated monetary expression"

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

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as "the Regulations") and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed and issued into effect by the Financial Supervisory Commission, R.O.C. (hereinafter referred to as "IFRS endorsed by the "FSC").

(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) Fair instruments measured at fair value through other comprehensive income are measured at fair value;
2) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation, limited as explained in note 4(18)

(ii) Functional and presentation currency

The functional currency of each Group entities is determined based on the primary economic environment in which the entities operate. The Group's consolidated financial statements are presented in New Taiwan Dollar, which is the Company's functional currency. All the financial information presented in New Taiwan Dollar has been rounded to the nearest thousands.

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

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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.

(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 (%)		Description
			December 31, 2025	December 31, 2024
The Company	Grand Pacific Holdings Limited	Investments, Trading	100.00%	100.00%	Subsidiaries in which the Company directly holds more than 50% of the ordinary shares
The Company	Pacific Construction Co., Ltd. (Note 1)	Construction Projects, or Acts as an Agency for Civil Engineering, Construction, Plumbing, Electrical and Air-Conditioning, and Decoration Projects	100.00%	100.00%	Subsidiaries in which the Company directly holds more than 50% of the ordinary shares
The Company	Taitou Xingye Co., Ltd.	General Business Real Estate Leasing	100.00%	100.00%	Subsidiaries in which the Company directly holds more than 50% of the ordinary shares
The Company	Pacific Realtor Co., Ltd.	Real Estate Agency	48.50%	48.50%	Subsidiaries in which the Company directly holds less than 50% of the ordinary shares but has control over
The Company	Pacific Department Stores Co., Ltd.	Department Store	48.45%	48.45%	Subsidiaries in which the Company directly holds less than 50% of the consolidated shareholding but has control over
Taitou Xingye Co., Ltd.	Chon Tse Asset Management Co., Ltd.	Management Consulting Services, General Hotel Industry	100.00%	100.00%	Subsidiaries in which the Company directly holds more than 50% of the ordinary shares
Grand Pacific Holdings Limited	Beijing Taikong Consulting Services Co., Ltd.	Management Consulting Services	100.00%	100.00%	Subsidiaries in which the Company directly holds more than 50% of the ordinary shares
Beijing Taikong Consulting Services Co., Ltd.	Hainan E-Tai Foods Co., Ltd	Food production,	100.00%	-	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.

(iii) List of subsidiaries which are not included in the consolidated financial statements: None.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(4) Foreign currencies

1. Currencies transaction

Transactions in foreign currencies are translated to the respective functional currencies of Group 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 Group'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 Group'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 Group 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 Group 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 Group are as follows:

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

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 Group 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.

1. 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 Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

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

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 Group 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 Group recognizes loss allowances for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, 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:

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 is 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 Group considers reasonable and supportable information

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’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 Group 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 Group in full.

The Group 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 Group 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 Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Group 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 asset is credit-impaired includes the following observable data:

significant financial difficulty of the borrower or issuer;
a breach of contract such as a default or being more than 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
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 Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual accounts, the Group’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 Group 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 Group expects no significant recovery from the amount written off. However, financial assets that are written off could

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

still be subject to enforcement activities in order to comply with the Group’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 Group 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 Group enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

Financial liabilities and equity instruments

1) Classification of debt or equity

Debt and or equity instruments issued by the Group 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).

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 Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group 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.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 Group 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 write-down 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 selling expenses incurred in selling the premises.

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.

(9) Investment property

Related parties refer to entities with significant influence over the financial and operating policies of the merged company, but which are not controlling or jointly controlling entities.

The merged company's interest in related parties is accounted for using the equity method. Under the equity method, investment is recognized at cost upon initial acquisition, and the investment cost includes transaction costs. The carrying amount of the investment in related parties includes goodwill identified at the time of the initial investment, less any accumulated impairment losses.

The consolidated financial statements include, from the date of gaining significant influence to the date of loss of significant influence, the amount of profit or loss and other comprehensive income recognized by the merged company in proportion to its equity interest in each of the invested related parties, after adjustments for consistency with the merged company's accounting policies.

Unrealized profits and losses arising from transactions between the merged company and related parties are recognized in the company's financial statements only to the extent of the non-related party investors' interest in the related parties.

When the merged company's proportionate share of losses to be recognized by the related parties equals or exceeds its equity interest in the related parties, it ceases to recognize such losses and recognizes only additional losses and related liabilities to the extent of any legal obligations, constructive

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

obligations, or payments already made on behalf of the investee company.

(10) 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 operating revenue on a straight-line basis over the lease term.

When investment property is reclassified as Property, plant and equipment due to a change in use, the carrying amount at the time of the change in use is reclassified.

(11) Property, plant and equipment

1) Recognition and measurement

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

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

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

2) Subsequent cost

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

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.

Land is not depreciated.

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

Buildings	5~55 years
Machinery and equipment	3~10 years
Other equipment	2~10 years

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Depreciation method, useful life and residual value at each reporting date are reviewed by the Group. Appropriate adjustments are made when necessary.

(12) Lease

At inception of a contract, the Group 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.

1) As a lessee

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

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

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 Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

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

fixed payments; including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
payments for purchase or termination options that are reasonably certain to be exercised.

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

there is a change in future lease payments arising from the change in an index or rate; or
there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or
there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
there is a change of its assessment on whether it will exercise a extension or termination option; or
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.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 Group 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 Group 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.

2) As a lessor

When the Group 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 Group 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 Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group 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 Group 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 Group applies IFRS15 to allocate the consideration in the contract.

The Group 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 Group recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of 'other income'.

(13) Service concession arrangements

1) Recognition and measurement

Where the Consolidated Company (operator) and a government agency (grantor) enter into a concession arrangement on privately managed public services that meets the following criteria, it will be treated in accordance with IFRIC 12 "Service Concession Arrangements":

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The grantor controls or regulates what services the operator must provide using the infrastructure, and to whom and at what price such services are provided;
The grantor controls any significant residual interest in the infrastructure at the end of the term of the service arrangement through ownership, beneficiary rights or other forms.

For construction or upgrade services provided by the Consolidated Company, the received or receivable consideration must be recognized as financial assets or intangible assets at fair value. The Consolidated Company has an unconditional contractual right to receive cash or another financial asset from the grantor or as instructed by the grantor for construction services, and recognizes such right as a financial asset. For the accounting policy of financial assets, refer to Note 4(7) "Financial instruments." The Consolidated Company acquires a right (license) to charge the users of public services, and recognize such right as an intangible asset. The right to charge the users of public services is not an unconditional right to receive cash, because the amount receivable is contingent on the extent to which the public uses the services. For the accounting policy of intangible assets (concessions), refer to Note 4(14) "Intangible assets."

If the payment received by the Consolidated Company for providing construction services is partly a financial asset and partly an intangible asset, the components of the respective consideration must be treated separately. The two components of the consideration received or receivable must be recognized at the fair value of the consideration received or receivable at the time of initial recognition.

2) Construction or upgrading service

For the treatment by the Consolidated Company of the revenue and cost related to construction or upgrading services in accordance with IFRS 15, refer to Note 4(17) "Recognition of revenue."

3) Operating service

For the treatment by the Consolidated Company of the revenue and cost related to operating services in accordance with IFRS 15, refer to Note 4(17) "Recognition of revenue."

(14) Intangible assets

1) Recognition and measurement

The Group's acquisition of other intangible assets with finite useful lives and non-determined 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.

3) Service concession arrangements

The Group shall recognize an intangible asset arising from service concession agreements when the Group a right to charge the public for the use of the infrastructure. The intangible assets resulted from construction or service upgraded in accordance with the service concession agreements are measured

~23~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

at the fair value on initial recognition. Subsequently, intangible assets are measured at cost, including borrowing costs that are eligible for capitalization, minus accumulated amortization and accumulated impairment losses.

4) 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 1~5 years
Service Concession Agreement 4 years

The useful life of intangibles arising from the service concession agreements begins on a day when the Group has a right to charge the public for the use of the infrastructure and ends on the expiry of the service concession agreements.

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 Group 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 Group 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

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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.

(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 Group recognizes revenue when the performance obligation is satisfied by transferring control over a customer's good or service. The Group's major revenue items are described as follows:

(1) Land development and property sale

The Group develops and sells residential real estate and often pre-sells real estate during or before construction. The Group 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 Group. However, after completion of delivery or transfer of legal title of the real estate to the customer, the Group has an enforceable right to payment for performance completed to date. Accordingly, the Group 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 Group 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 Group considers that these points provide customers with important rights that would not have incurred if the contract had not been obtained.

~25~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

and therefore the commitment to provide points to customers is a performance obligation. The Group appends the product's transaction price and those points on a relative stand-alone selling price basis. Based on historical 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 Group recognizes contract liabilities on the aforementioned basis at the sale of products and reclassified as revenue when these points are transferred or expired.

(3) Real estate agency and Real estate agency

The Group engages in Real estate agency and Real estate agency, 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.

(4) Lease income

Lease income generated from investment property is recognized over the lease term on a straight-line 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.

(5) Special revenue from department store counters

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

(6) Hotel service provision

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

(7) Parking service revenue

The Group provides operation and maintenance services for government parking lots and recognizes revenue from parking lot services based on the operating assets, either by the hour, by the number of times or by monthly passes.

(8) Financial components

The Group expects that (i) the financing components are not substantial to individual contract or (ii) the period between the transfer of the promised goods or services to the customer and payment

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

by the customer does not exceed one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

2. Cost of customer contracts

Incremental costs of obtaining a contract

The Group 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 Group 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 Group 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. Defined benefit plans

The Group'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 Group, 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 Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 Group 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 taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

The Group has determined that interest and penalties related to income taxes, including uncertain tax treatment, do not meet the definition of income taxes, therefore accounted for them under IAS37.

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 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 (i) no effect on net income or taxable gains (losses) and (ii) no equivalent taxable and deductible temporary differences.

2) Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group 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.

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.

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 income tax related uncertainties (if any)

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

1) the Group has the legally enforceable right to set off current tax assets against current tax liabilities; and

2) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

taxation authority on either:

(i) the same taxable entity; or
(ii) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(20) Earnings per share

Disclosures are made of basic and diluted earnings per share attributable to ordinary equity holders of the Group. The basic earnings per share is calculated based on the profit attributable to the ordinary shareholders of the Group 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 Group include stock dividends to employee stock compensation.

(21) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). The segment’s operating results are reviewed regularly by the Group’s chief operating decision maker to make decisions pertaining to the allocation of the resources to the segment and to assess its performance. In addition, discrete financial information is available from the interval reporting system.

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

In preparing these consolidated financial statements, management has made judgments and estimates about the future, including climate-related risks and opportunities, 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.

Estimates and underlying assumptions are reviewed on an ongoing basis and are consistent with the Group’s risk management and climate-related commitments where appropriate. Revisions to estimates are recognized prospectively in the period of the change and future periods.

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is as follows:

(1) Judgment on whether it has a significant influence on the invested company

The merged company holds more than 20% of the shares of Beijing Tai-Yun Building Co., Ltd. (hereinafter referred to as Beijing Tai-Yun), but because other controlling shareholders dominate the operation of the board of directors of Beijing Tai-Yun, the merged company cannot effectively exercise its board of directors and actually participate in major operations. Therefore, the merged company reassessed whether it still had significant influence in the fourth quarter of 2022 and considered the opinions of external lawyers. After the resolution of the board of directors of the merged company, the merged company no longer had a significant influence on Beijing Tai-Yun. This merged company ceased to adopt the equity

~29~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

method from the resolution date of the board of directors, and adjusted the corresponding subjects according to the accounting treatment of the loss of significant influence.

(2) 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 (9) and (14).

(3) Judgment on Lease

The Group 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 (9) and (14).

(4) Judgment on whether the Group has substantial control over its subsidiaries

The Group 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 Group 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 Group deems Pacific Realtor and Pacific Department Store Co., Ltd. as its subsidiaries.

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:

1) Allowance for losses on accounts receivable

The allowance for losses on the Group's accounts receivable is estimated based on the assumption of default risk and expected loss rate. The Group 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 Group'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 Group's accounting policies and disclosures include adopting fair value measurements for its financial and non-financial assets and liabilities. The Group has established an internal control system for fair value measurement. The internal control system includes establishing a valuation team responsible for reviewing

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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(24) – Financial Instruments.

6. Explanation of Significant Accounts

(1) Cash and cash equivalents

	December 31, 2025	December 31, 2024
Petty cash	$ 22,554	15,596
Demand deposit and Check deposit	486,539	574,412
Deposit account	125,513	97,360
Cash and cash equivalents in the Consolidated Cash Flows Statements	$ 634,606	687,368

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(24).

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

	December 31, 2025	December 31, 2024
Equity instruments measured at FVTOCI:
Current:
Unlisted (OTC) stocks - Foreign	$ 1,613,129	1,396,509
Non-Current:
Listed (OTC) stocks - Domestic	$ 34,720	34,472
Unlisted (OTC) stocks - Domestic, Foreign	2,145,472	2,114,402
	2,180,192	2,148,874
Total	$ 3,793,321	3,545,383

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 FVTOCI.
2) The Group through the aforementioned investments in equity instruments designated as measured

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

at FVTOCI, the Group’s recognized dividend income for 2025 and 2024 totaled NT$141,528 thousand and NT$245,723 thousand, respectively.

3) The Group did not dispose of any strategic investments in 2025, and no accumulated profits or losses during that period were transferred within its equity. The Group sold part of equity instruments measured at FVTPL in 2024, and the fair value at the time of disposal was NT$27,551 thousand, and the accumulated disposal benefit was NT$15,042 thousand. Therefore, the accumulated disposal benefit from head office NT$15,042 thousand has been transferred from other interests to retained earnings.

4) For market risk information, please refer to Note 6(24).

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

	December 31, 2025	December 31, 2024
Notes receivable - arising from operations	$ 106	103
Accounts receivable - measured at amortized cost	15,125	18,275
Less: Allowance for losses	(5,553)	(5,517)
	$ 9,678	12,861

The Group 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:

	December 31, 2025
	Gross Carrying Amount	Weighted-Average Loss	Loss Allowance Provision
Current	$ 6,474	11%	748
Less than 30~360 days past due	7,210	46%	3,301
More than 720 days past due	1,547	97%	1,504
	$ 15,231		5,553
	December 31, 2024
---	---	---	---
	Gross Carrying Amount	Weighted-Average Loss	Loss Allowance Provision
Current	$ 13,111	10%	1,307
Less than 30~360 days past due	3,818	72%	2,762
Past due 361~720 days	9	91%	8
More than 720 days past due	1,440	100%	1,440
	$ 18,378		5,517

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

	2025	2024
Balance at beginning of the year	$ 5,517	56,482
Reversal of impairment loss	264	(684)
Amounts written off	-	(50,330)
Gains and losses from foreign currency translation	(228)	49
Balance at end of the year	$ 5,553	5,517

The above financial assets were not pledged or guaranteed for the years ended December 31, 2024 and 2023. Other credit risk information, please refer to Note 6(24).

(4) Other receivables (Include long-term)

	December 31, 2025	December 31, 2024
Other receivables (Include long-term) - Other	$ 561,788	561,401
Less: Allowance for losses	(552,658)	(552,674)
	$ 9,130	8,727

The Group’s other accounts receivable allowance for losses debt changes as follows:

	2025	2024
Balance at beginning of the year	$ 552,674	2,820,339
Reversal of impairment loss (Note)	(1,182)	(887,669)
Amounts written off	-	(1,345,688)
Recover the written-off amount	1,166	-
Gains and losses from foreign currency translation	-	(34,308)
Balance at end of the year	$ 552,658	552,674

Note: In 2024, Other receivables reversal of impairment loss NT$887,681 thousands of Beijing Tai-Yun Building Co., Ltd. Please refer to Note 9(2).

Other credit risk information, please refer to Note 6(24).

(5) Inventory - construction

	December 31, 2025	December 31, 2024
Buildings and land held for sale	$ 1,125,414	1,135,722
Construction land	3,464,583	3,343,480
Construction in progress	2,281,643	2,018,796
Prepayment for land	-	23,450
Total	6,871,640	6,521,448
Less: Allowance to reduce inventory to market	(1,708,998)	(1,708,998)
Net	$ 5,162,642	4,812,450

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Inventory expected to be recovered in more than 12 months $ 4,208,228 4,399,253

1) December 31, 2025 and 2024, 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 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, 2025 and 2024, the capitalization of interest on construction in progress by the Group, please refer to Note 6(23).

5) In 2024, the Company sold part of its inventory, the factors that previously caused the net realizable value to be lower than the cost have disappeared, resulting in an increase in the net realizable value and a reduction in operating costs, please refer to Note6(21).

(6) Subsidiaries with material non-controlling interests

Subsidiaries with material non-controlling interests to the Group 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, 2025	December 31, 2024
Pacific Department Stores Co., Ltd.	R.O.C.	51.55%	51.55%

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.:

	December 31, 2025	December 31, 2024
Current assets	$ 259,816	189,434
Non-current assets	3,712,659	3,759,585
Current liabilities	(195,182)	(163,914)
Non-current liabilities	(6,786)	(7,927)
Net assets	$ 3,770,507	3,777,178
Carrying amount of ending non-controlling interests	$ 1,838,177	1,819,470

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

	2025	2024
Operating revenue	$ 335,399	330,932
Net income	$ 154,412	215,713
Other comprehensive income	(13,483)	26,877
Total comprehensive income	$ 140,929	242,590
Attributable to non-controlling interests, net profit for the period	$ 79,595	111,194
Total comprehensive income attributable to non-controlling interests	$ 95,061	112,815
	2025	2024
Cash flows from operating activities	$ 68,838	49,437
Cash flows from investing activities	128,623	181,552
Cash flows from financing activities	(118,123)	(150,538)
Net increase in cash and cash equivalents	$ 79,338	80,451
Dividends paid to non-controlling interests	$ (76,083)	(52,307)

(7) Other financial assets-current

	December 31, 2025	December 31, 2024
Not compliant cash equivalents by Certificate of deposit	$ 1,083,769	1,129,659
Restricted deposits and fixed deposit certificates	77,138	-
Pre-sale gold trust	197,251	235,979
Gift Certificates trust	7,132	4,611
	$ 1,365,290	1,370,249

December 31, 2025 and 2024, certain assets had been pledged as collateral for various obligations, including guarantees for pre-sale proceeds held in trust, performance guarantees for gift vouchers, bank borrowings, and other financing arrangements, please refer to Note 8.

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

(8) Property, plant and equipment

In 2025 and 2024, details of changes in cost, depreciation, and impairment loss of property, plant, and equipment of the Group are as follows:

	Land	Buildings and Construction	Machinery Equipment	Other Equipment	Construction in Progress	Total
Cost or Deemed Cost:
Balance on January 1, 2025	$ 1,219,743	1,709,178	119,815	398,203	64,290	3,511,229
Addition	-	-	37,703	11,248	4,910	53,861
Transfer to Investment Property	-	-	-	-	(33,820)	(33,820)
Disposal and Scrap	-	-	-	(7,313)	-	(7,313)
Reclassification	-	-	-	70	(70)	-
Balance on December 31, 2025	$ 1,219,743	1,709,178	157,518	402,208	35,310	3,523,957
Balance on January 1, 2024	$ 1,219,743	1,694,560	119,333	396,029	42,644	3,472,309
Addition	-	-	663	20,053	25,466	46,182
Disposal and Scrap	-	-	(181)	(21,321)	-	(21,502)
Reclassified from investment property	-	14,618	-	-	-	14,618
Reclassified to other current assets	-	-	-	-	(378)	(378)
Reclassification	-	-	-	3,442	(3,442)	-
Balance on December 31, 2024	$ 1,219,743	1,709,178	119,815	398,203	64,290	3,511,229
Depreciation and Impairment Losses:
Balance on January 1, 2025	$ 4,722	1,040,846	108,762	296,506	-	1,450,836
Depreciation	-	33,700	5,423	30,307	-	69,430
Disposal and Scrap	-	-	-	(7,238)	-	(7,238)
Balance on December 31, 2025	$ 4,722	1,074,546	114,185	319,575	-	1,513,028
Balance on January 1, 2024	$ 4,722	992,950	104,647	282,296	-	1,384,615
Depreciation	-	40,173	4,256	33,478	-	77,907
Reclassified from investment property	-	7,723	-	-	-	7,723
Disposal and Scrap	-	-	(141)	(19,268)	-	(19,409)
Balance on December 31, 2024	$ 4,722	1,040,846	108,762	296,506	-	1,450,836
Carrying Amount:
December 31, 2025	$ 1,215,021	634,632	43,333	82,633	35,310	2,010,929
December 31, 2024	$ 1,215,021	668,332	11,053	101,697	64,290	2,060,393
January 1, 2024	$ 1,215,021	701,610	14,686	113,733	42,644	2,087,694

For the years ended December 31, 2025 and 2024, the Company convert real estate factory buildings and equipment into rental properties and decided to convert the inventory and investment real estate into a building for self-use, and has reclassified the cost of such property as a property, plant and equipment at the cost of the change of use, please refer to Note 6(10).
For the years ended December 31, 2025 and 2024, details of bank loans and financing guarantees pledged, please refer to Note 8.

~35~

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

(9) Right-of-use assets

Details of changes in right-of-use assets of the Group are as follows:

	Land Surface Rights	Buildings and Construction	Transportation Equipment	Total
Cost of Right-of-use Assets:
Balance on January 1, 2025	$ 106,758	68,247	3,033	178,038
Additions	-	6,028	914	6,942
Changes in Future Lease Payment	-	31	-	31
Decrease	-	(2,734)	-	(2,734)
Balance on December 31, 2025	$ 106,758	71,572	3,947	182,277
Balance on January 1, 2024	$ 98,698	56,214	2,951	157,863
Additions	-	12,033	3,304	15,337
Changes in Future Lease Payment	8,060	-	-	8,060
Early Termination	-	-	(3,222)	(3,222)
Balance on December 31, 2024	$ 106,758	68,247	3,033	178,038
Depreciation for Right-of-use Assets:
Balance on January 1, 2025	$ 25,922	21,210	202	47,334
Additions	4,899	16,903	668	22,470
Depreciation	-	(2,734)	-	(2,734)
Balance on December 31, 2025	$ 30,821	35,379	870	67,070
Balance on January 1, 2024	$ 21,260	8,158	2,712	32,130
Additions	4,662	13,052	579	18,293
Early Termination	-	-	(3,089)	(3,089)
Balance on December 31, 2024	$ 25,922	21,210	202	47,334
Carrying Amount:
December 31, 2025	$ 75,937	36,193	3,077	115,207
December 31, 2024	$ 80,836	47,037	2,831	130,704
January 1, 2024	$ 77,438	48,056	239	125,733

For the years ended December 31, 2025 and 2024, details of bank loans and financing guarantees pledged, please refer to Note 8.

~36~

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

(10) 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	Total
Cost or Deemed Cost:
Balance on January 1, 2025	$ 300,152	2,556,402	2,856,554
Additions	54,737	-	54,737
Transfer from PPE	-	33,820	33,820
Disposal	-	(42,345)	(42,345)
Balance on December 31, 2025	$ 354,889	2,547,877	2,902,766
Balance on January 1, 2024	$ 250,144	2,568,458	2,818,602
Additions	50,071	-	50,071
Subsequent expenditure is recognized as an increase in the carrying amount of the asset	-	2,821	2,821
Disposal	(63)	(259)	(322)
Reclassified to PPE	-	(14,618)	(14,618)
Balance on December 31, 2024	$ 300,152	2,556,402	2,856,554
Depreciation and Impairment Losses:
Balance on January 1, 2025	$ -	1,576,638	1,576,638
Depreciation	-	53,135	53,135
Disposal	-	(42,345)	(42,345)
Balance on December 31, 2025	$ -	1,587,428	1,587,428
Balance on January 1, 2024	$ -	1,540,708	1,540,708
Depreciation	-	43,838	43,838
Disposa	-	(185)	(185)
Reclassified to PPE	-	(7,723)	(7,723)
Balance on December 31, 2024	$ -	1,576,638	1,576,638
Carrying Amount:
December 31, 2025	$ 354,889	960,449	1,315,338
December 31, 2024	$ 300,152	979,764	1,279,916
January 1, 2024	$ 250,144	1,027,750	1,277,894

~37~

~38~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 fair value measurement for investment property has been categorized as a level 3 fair value based on the inputs to the valuation technique used.

The fair value measurement of investment property is based on the website of Department of Land Administration and estate agency’s website or the close deal in similar district, and obtain valuation report when necessary.

For the years ended December 31, 2025 and 2024, 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.
In 2025 and 2024, the Group decided to converted the PPE to rental and investment property to self-use, and reclassify the real estate as the building at the cost of change of use, please refer to Note 6(8).
For the years ended December 31, 2025 and 2024, details of bank loans and financing guarantees pledged, please refer to Note 8.

(11) Short-term loans

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

	December 31, 2025	December 31, 2024
Unsecured bank loans	$ -	57,463
Secured bank loans	1,549,280	1,261,777
Total	$ 1,549,280	1,319,240
Unused credit lines	$ 170,450	743,296
Range of interest rates	2.725–3.498%	2.725%–3.35%

In 2025 and 2024, the Group’s new addition NT$789,814 thousand and NT$454,319 thousand, repayment amount NT$559,774 thousand and NT$582,302 thousand.
For the Group’s pledged assets as Secured for bank loans, please refer to Note 8.

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

(12) Long-term loans

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

	December 31, 2025
	Currency	Range of Interest Rates	Maturity	Amount
Unsecured bank loans	NTD	2.22%	2028	$ 353
Secured bank loans	NTD	2.595%~3.501%	2026~2042	280,032
〃	RM	4.25%~4.99%	2026~2034	15,413
				295,798
Less: current portion				(62,480)
Total				$ 233,318
Unused credit lines				$ 9,447
	December 31, 2024
---	---	---	---	---
	Currency	Range of Interest Rates	Maturity	Amount
Unsecured bank loans	NTD	2.22%	2025~2028	$ 480
Secured bank loans	NTD	2.595%~3.501%	2025~2042	284,049
〃	RM	4.5%~4.82%	2025~2034	19,822
				304,351
Less: current portion				(61,388)
Total				$ 242,963
Unused credit lines				$ 9,320

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

(13) Corporate bonds payable / Due within one year or one operating cycle

The details of the Group bonds payable were as follows:

	December 31, 2025	December 31, 2024
Amount in the issuance of domestic ordinary corporate bonds	$ 445,500	480,000
Less: Due within one year or one operating cycle	(284,500)	(34,500)
Ending balance: Bonds payable	$ 161,000	445,500

In 2025, the Group replay the first secured ordinary corporate bonds in 2022 NT$34,500 thousand, and did not issue bonds. The company did not issue, repurchase or repay corporate bonds payable in 2024. The relevant details are as follows:

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

Item	The first secured ordinary corporate bonds in 2021
Total Issuance	NT$250,000 thousand
Date of Issue	June 4, 2021
Coupon Rate	0.63%
Issuance Period	June 4, 2021~June 4, 2026
Guarantee Agency	Taiwan Cooperative Bank
Trustee	Taipei Fubon Bank (former 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.
Item	The first secured ordinary corporate bonds in 2022
---	---
Total Issuance	NT$230,000 thousand
Date of Issue	April 1, 2022
Coupon Rate	0.85%
Issuance Period	April 1, 2022~April 1, 2027
Guarantee Agency	Taiwan Cooperative Bank
Trustee	Taipei Fubon Bank (former Jih Sun International Bank, Ltd.)
Repayment Method	The Group may repay the principal of the corporate bonds in 15% at the expiration of third years, 15% at the expiration of fourth years and 70% at the expiration of fifth years from the date of issuance.

(14) Lease Liabilities

The carrying amount in the Group’s lease liabilities:

	December 31, 2025	December 31, 2024
Current	$ 21,649	18,982
Non-Current	$ 105,095	119,024

For maturity analysis, please refer to Note 6(24) - Financial Instruments.

Amounts recognized in profit or loss are as follows:

	2025	2024
Interest expense on lease liabilities	$ 4,142	3,714
Gains on subleasing right-to-use assets	$ 40,853	35,850
Expenses of short-term leased	$ 3,034	3,953
Expenses to low-value leases assets (Low-value leases that do not include short-term leases)	$ 1,669	1,812

Lease amounts recognized in the cash flow statements are as follows:

	2025	2024
Total cash outflow from leases	$ 26,495	21,428

The Group 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 buildings and structures by store for a period of 2-5 years, and buildings for lease payments for certain contracts are calculated based on changes in local price indices, some leases include an option to extend the lease term for the same period as the original contract at the end of the lease term.

~40~

~41~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The Group was contracted by the New Taipei City Government Transportation Department to operate a parking lot for a period of 4 years. The lease includes an option to extend the lease for another year upon expiration of the lease period.

The period for some of the Group’s leased land, offices, employee dormitories, office equipment and transportation equipment are generally few days 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.

(15) 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(10) Investment Property.

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

	December 31, 2025	December 31, 2024
Under 1 year	$ 142,897	144,170
One to two years	93,424	17,947
Two to three years	65,952	67,119
Three to four years	53,532	61,511
Four to five years	46,877	51,482
More than five years	49,932	131,201
Total undiscounted lease payments	$ 452,614	473,430

For lease income generated from investment property for 2025 and 2024, please refer to Note 6(20); expenses generated from maintenance and leasing totaled NT$197,664 thousand and NT$168,162 thousand, respectively.

(16) Employee benefits

1. Defined benefit plans

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

	December 31, 2025	December 31, 2024
Present value of defined benefit obligations	$ 88,971	89,453
Fair value of plan assets	(117,964)	(114,082)
Net defined benefit assets, net	$ (28,993)	(24,629)
Net defined benefit assets	$ 30,488	27,042
Net defined benefit liability	$ 1,495	2,413

The Group makes defined benefit plan contributions to the pension fund account with Bank of Taiwan

~42~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 6 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.

The balance of the Group labor pension reserve account in the Bank of Taiwan amounted to NT$117,964 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.

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

The Group's movements in the present value of defined benefit obligations for 2025 and 2024 were as follows:

	2025	2024
Defined benefit obligations on January 1	$ (89,453)	(95,067)
Current service cost and interest	(1,668)	(1,462)
Net defined benefit liability (asset) remeasurement
- Actuarial gains and losses from experience adjustments	(2,268)	(974)
- Actuarial gains and losses from changes in financial assumptions	(1,609)	2,830
Benefit paid by the plan	6,027	5,220
Defined benefit obligations on December 31	$ (88,971)	(89,453)

~43~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 2025 and 2024 were as follows:

	2025	2024
Fair value of plan assets on January 1	$ 114,082	107,822
Interest revenue	1,791	1,236
Net defined benefit liability (asset) remeasurement
- Return on plan assets (excluding current interest)	8,064	10,137
Contributions paid by the employer	54	107
Benefits planned to be paid	(6,027)	(5,220)
Fair value of plan assets on December 31	$ 117,964	114,082

4) Expenses recognized in profit or loss

The Group's expenses recognized in profit or loss for 2025 and 2024 were as follows:

	2025	2024
Service costs for the period	$ 260	372
Net interest of net liabilities (asset) for defined benefit obligations	(383)	(146)
	$ (123)	226
Administrative expenses	$ (123)	226

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:

	December 31, 2025	December 31, 2024
Discount rate	1.30% ~ 1.35%	1.55% ~ 1.65%
Future salary increase rate	2.00%	2.00%

IN 2025 and 2024 the expected allocation payment to be made by the Group to the defined benefit plans for the one-year period after the reporting date is NT$412 thousands and NT$458 thousands.

The weighted-average lifetime of the defined benefit plan is 5~8 years.

6) Sensitivity analysis

For the years ended December 31, 2025 and 2024, the main actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

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

	Defined Benefit Obligation
	Increased by 0.25%	Decreased by 0.25%
December 31, 2025
Discount rate	(1,446)	1,484
Future salary increase rate	1,470	(1,440)
December 31, 2024
Discount rate	(1,588)	1,625
Future salary increase rate	1,626	(1,586)

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.

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 2025 and 2024, the Group contributed NT$9,257 thousand and NT$8,859 thousand, respectively, to the Bureau of Labor Insurance under the Defined Contribution Pension expense.

(17) Income Tax

Income tax expense

Details of the Group’s income tax expenses for 2025 and 2024 are as follows:

	2025	2024
Current income tax expense
Incurred during the period	$ 43,520	143,628
Additional surtax on earnings-unappropriated	29,796	1,440
Adjustment for prior periods	883	(2,423)
Land value increment tax	15,366	16,783
	89,565	159,428
Deferred income tax expense
Occurrence and reversal of temporal differences	(3,129)	(329)
	$ 86,436	159,099

~45~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

A reconciliation of the Group’s income tax expenses and net income before tax for 2025 and 2024 is as follows:

	2025	2024
Net income before tax	$ 178,067	1,019,736
Income tax calculated using the domestic tax rate where the Group operates	35,815	203,948
Effects on tax rate difference in foreign jurisdictions	2,296	(26,839)
Non-deductible expenses	12,741	36,910
Tax-free income	(38,804)	(218,190)
Investment gains and losses recognized under the equity method	5,448	168,670
Changes in unrecognized temporary differences	5,666	(74,611)
Early (high) underestimation	883	(2,423)
Additional surtax on earnings-unappropriated	29,796	1,440
Land value increment tax	15,366	16,783
Other	17,229	53,411
Total	$ 86,436	159,099

Deferred tax assets and liabilities

1) Unrecognized deferred tax liabilities

For the years ended December 31, 2025 and 2024, 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:

	December 31, 2025	December 31, 2024
Foreign investment gains or losses recognized under the equity method	$ 157,697	114,246

2) Unrecognized deferred tax assets

The Group unrecognized deferred tax assets are as follows:

	December 31, 2025	December 31, 2024
Deferred credit	$ 17,828	18,187
Bad debt disallowance	189,113	189,129
Unrealized impairment loss on assets	25,514	25,514
Unrealized inventory falling price loss	341,756	341,756
Unused tax losses carryforwards	169,854	175,913
Other	27,428	27,867
	$ 771,493	778,366

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

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, 2025, the expiration period for abovementioned unrecognized deferred tax assets of unused tax losses carryforwards were as follows:

Year of Assessment	Unrecognized Deferred Tax Assets	Expiration in Year
2017	$ 381	2027
2018	2,080	2028
2020	1,775	2030
2021	8,632	2031
2022	816	2032
2023	2,535	2033
2024	861,937	2034
	$ 878,156

3) Recognized deferred tax assets / liabilities

Changes in deferred tax assets (liabilities) for 2025 and 2024:

	Deferred Tax Assets	Deferred Tax Liabilities
January 1, 2025	$ 2,139	(752)
Debit (credit) on income statement	3,411	(282)
December 31, 2025	$ 5,550	(1,034)
January 1, 2024	$ 2,034	(976)
Debit (credit) on income statement	105	224
December 31, 2024	$ 2,139	(752)

Income tax verification

1) The Group’s income tax returns up to 2023 have been verified by the tax authorities.
2) The income tax returns of the Group’s subsidiaries to 2023 in Taiwan have been verified by the tax authorities is Pacific Department Store Co., Ltd, Chon Tse Asset Management Co., Ltd., Taitou Xingye Co., Ltd. and Pacific Realstore Co., Ltd.

(18) Capital and Other equity interests

As of December 31, 2025 and 2024, 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.

~46~

~47~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

1. Capital surplus

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

	December 31, 2025	December 31, 2024
Conversion premium for bonds payable	$ 350,720	350,720
Treasury shares transactions	57,183	47,006
Difference arising from subsidiary’s equity	211	211
Other	1,795	1,795
	$ 409,909	399,732

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.

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.

The company stipulating that the distribution of surplus or loss allowance shall be made after the end of each half year. If there is any surplus in the semi-annual final accounts, it shall be distributed in accordance with the above procedures.

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.

~48~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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. 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.

In accordance with FSC. Certificate. Issue. 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 10, 2025 and June 14, 2024 resolved to special reserve appropriated of NT$(12,944) thousand and NT$(13,931) thousand, respectively, for the motion of earnings distribution for 2024 and 2023.

3) Earnings distribution

The Company's 2025 and 2024 interim and annual profit distribution proposals and cash dividends per share have been resolved by the Board of Directors as follows:

	First half of 2025	Second half of 2024	First half of 2024	Second half of 2023
Board resolution date	August 11,2025	March 11, 2025	August 6,2024	March 12, 2024
Cash dividend	$ -	154,800	-	77,400
Cash dividend per share (NT)	$ -	0.40	-	0.20

The actual distribution of the company's earnings for the 2024 and 2023 fiscal years is the same as the amount recognized in the financial statements and no adjustment is required. The relevant information on the above distribution can be found on MOPS.

The Board of Directors held on March 10, 2026 respectively, resolved the amount of cash dividends for the year of 2025. The amounts of dividends distributed to owners are as follows:

	2025
	Amount Per Share (in NT$)	Total Amount
Dividends distributed to ordinary shareholders:
Cash	$ 0.20	77,400

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

Treasury shares

Subsidiaries holding the Company’s treasury stock:

	December 31, 2025	December 31, 2024
Number of the Company shares the subsidiaries hold	25,444	25,444
Carrying Amount	$ 193,207	193,207
Stock market price	$ 237,647	286,245
Stock market price (Adjust shareholding ratio)	$ 115,143	138,689

Other equity interests

	Exchange Differences on Translation of Financial Statements of Foreign Operations	Unrealized gains (loss) from investments in financial assets measured at FVTOCI	Total
Balance on January 1, 2025	$ 289,171	277,077	566,248
Exchange differences on foreign operations	3,323	-	3,323
Unrealized gains (losses) from investments in financial assets measured at FVTOCI	-	232,911	232,911
Balance on December 31, 2025	$ 292,494	509,988	802,482
Balance on January 1, 2024	$ 214,398	236,942	451,340
Exchange differences on foreign operations	74,773	-	74,773
Unrealized gains (losses) from investments in financial assets measured at FVTOCI	-	55,177	55,177
Proceeds from disposal of equity instruments measured at FVTOCI	-	(15,042)	(15,042)
Balance on December 31, 2024	$ 289,171	277,077	566,248

Non-controlling interest

	2025	2024
Balance at beginning of the year	$ 1,912,816	1,846,147
Net profit from non-controlling interests	85,431	122,357
Remeasurement of defined benefit plans	473	1,924
Unrealized gains (loss) from investments in financial assets measured at FVTOCI	15,027	(296)
Subsidiary issues cash dividends to non-controlling interests	(91,533)	(57,329)
Dividends not claimed within the prescribed time limit	-	13
Balance at end of the year	$ 1,922,214	1,912,816

(19) Earnings per share

Basic earnings per share

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

For 2025 and 2024, the Group’s basic earnings per share and diluted earnings per share are calculated as follows:

Basic earnings per share

	2025	2024
Profit attributable to ordinary shareholders of the Company	$ 6,200	738,280
Weighted-average number of ordinary shares	361,556	361,556
	$ 0.02	2.04
Diluted loss per share	2025	2024
Profit attributable to ordinary shareholders of the Company (diluted)	$ 6,200	738,280
Weighted-average number of ordinary shares	361,556	361,556
Dilutive effects on potential ordinary shares Employee compensation	356	1,291
Weighted-average number of ordinary shares (After adjusting for the impact of dilutive potential common shares)	361,912	362,847
	$ 0.02	2.03

(20) Revenue from contracts with customers

1. Disaggregation of revenue

	2025
	Construction Segment	Leasing Segment	Department Store Segment	Property Management Others	Total
Primary geographical markets:
Taiwan	$ 365,971	62,354	335,399	101,000	864,724
Malaysia	-	-	-	273,006	273,006
	$ 365,971	62,354	335,399	374,006	1,137,730
Major products/Services lines:
Sales of real estate	$ 264,911	-	-	-	264,911
Lease revenue	-	62,354	25,185	288,104	375,643
Department store income	-	-	310,214	-	310,214
Service revenue	100,807	-	-	-	100,807
Other revenue	253	-	-	85,902	86,155
	$ 365,971	62,354	335,399	374,006	1,137,730
	2024
	Construction Segment	Leasing Segment	Department Store Segment	Property Management Others	Total
Primary geographical markets:
Taiwan	$ 727,427	55,610	330,932	88,440	1,202,409

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Malaysia	-	-	-	239,057	239,057
	$ 727,427	55,610	330,932	327,497	1,441,466
Major products/Services lines:
Sales of real estate	$ 624,860	-	-	-	624,860
Lease revenue	-	55,610	21,445	248,392	325,447
Department store income	-	-	309,487	-	309,487
Service revenue	100,252	-	-	-	100,252
Other revenue	348	-	-	81,072	81,420
	$ 725,460	55,610	330,932	329,464	1,441,466

2. Contract balances

	December 31, 2025	December 31, 2024	January 1, 2024
Notes receivable	$ 103	103	117
Accounts receivable	15,125	18,275	83,745
Less: Allowance for losses	(5,553)	(5,517)	(56,483)
Total	$ 9,678	12,861	27,379
Contract liabilities – Sales of real estate	$ 488,465	384,763	327,843
Contract liabilities – Voucher	11,066	11,556	11,569
Contract liabilities – Other	12,938	10,136	15,062
Total	$ 512,469	406,455	354,474

The amount of revenue recognized for the years ended December 31, 2025 and 2024 that was included in the contract liability balance at the beginning of the period were NT$49,186 thousands and NT$189,663 thousands respectively. Changes in contract liabilities are mainly due to the difference between the time when the Group transfers goods or services to customers to meet performance obligations (that is, when contract liabilities are recognized as revenue) and when customers pay. There were no other significant changes for the years ended December 31, 2025 and 2024.

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

For the years ended December 31, 2025 and 2024, the Group’s deferred revenues were NT$1,164 thousand and NT$1,162 thousand, respectively, (recorded as current contract liabilities). 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.

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

(21) Costs

Details of the Group costs for 2025 and 2024 are as follows:

	2025	2024
Department stores costs	$ 120,075	122,239
Lease costs	197,664	168,162

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Construction costs	168,269	530,984
Commission costs	54,558	70,587
Other operating costs	82,054	78,847
Inventory gain from price recovery	-	(13,549)
	$ 622,620	957,270

(22) Remuneration to Employees, Directors

On June 10, 2025, the Company's Shareholders' Meeting resolved to amend the Company's Articles of Association. According to the amended Articles of Association, if the Company has an annual profit, it shall allocate 1% to 2% as employee compensation (of which no less than 65% shall be allocated to lower-level employees), to be distributed by the Board of Directors in the form of shares or cash. The recipients may include employees of controlled or affiliated companies who meet certain conditions. The Company may also allocate no more than 2% of the aforementioned profit amount as director compensation by the Board of Directors. The distribution of employee and director compensation shall be reported to the Shareholders' Meeting. However, if the Company has accumulated losses, it shall reserve funds in advance to offset these losses before allocating employee and director compensation according to the aforementioned proportions.

The previous provision stipulated that if the company had a profit for the year, it should allocate 1% to 2% as employee compensation, to be distributed in stock or cash by resolution of the board of directors. The recipients could include employees of the controlling or subordinate companies who met certain conditions. The company could also allocate no more than 2% of the aforementioned profit amount as cash compensation to directors by resolution of the board of directors. The distribution of employee and director compensation should be reported to the shareholders' meeting. However, if the company had accumulated losses, it should reserve a certain amount to offset these losses before allocating employee and director compensation according to the aforementioned proportions.

For the years ended December 31, 2025 and 2024, the Company estimated its employee remuneration amounting to NT$1,177 thousand (Of this, 765 thousand was for the remuneration of grassroots employees) and NT$14,106 thousand, and directors' remuneration amounting to NT$1,177 thousand and NT$14,106 thousand. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees and directors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in the Company's Articles. These remunerations were expensed under operating costs or operating expenses. If there is a difference between the actual distribution amount in the next year and the estimated statement, it will be treated according to the change in accounting estimate, and the difference will be recognized as profit or loss in the next year. There is no difference between the company's 2025 and 2024 employees and director's 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)

(23) Non-operating income and expenses

Interest income

Details of the Group's interest income are as follows:

	2025	2024
Interest income Bank deposits	$ 9,316	12,558
Other (Note)	11,979	123,521
	$ 21,295	136,0794

The consolidated subsidiary's lawsuit against Beijing Taiyun Company's shareholders for advance payment was ruled to be calculated based on the LPR from March 13, 2021, totaling US$3,845 thousands. please refer to Note 9(2).

Other gains and losses

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

	2025	2024
Foreign currency exchange (loss) gains	$ 33,754	(55,342)
Dividend income	141,528	245,723
Gains (loss) of disposal of property, plant and equipment	(71)	(1,929)
Royalty revenue	9,524	9,524
Compensation income	-	(7,130)
Loss reversal benefit	-	(4,500)
Other gains and losses	9,654	5,889
	$ 194,389	192,235

Finance costs

Details of the Group's financial costs are as follows:

	2025	2024
Interest expense	$ 72,549	74,063
Lease liabilities interest	4,142	3,714
Less: Capitalization of interests	(4,593)	(2,652)
	$ 72,098	75,125
Capitalization rate	1.895%~3.003%	1.895%~3.063%

(24) Financial Instruments

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

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

the Group also assesses the financial situation of its customers regularly. The Group does not usually require customers to provide collaterals.

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 2025 and 2024 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.

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 1 Year	1-3 Years	3-5 Years	More Than 5 Years
December 31, 2025
Non-derivative finance liabilities
Floating rate instruments	$ 1,845,078	1,991,519	282,208	1,243,936	417,505	47,870
Fixed rate instruments	445,500	453,384	291,392	161,992	-	-
No interest-bearing liability	1,810,958	1,810,958	1,703,348	94,460	12,800	350
Lease liabilities	126,744	139,306	23,447	30,237	23,925	61,697
	$ 4,228,280	4,395,167	2,300,395	1,530,625	454,230	109,917
December 31, 2024
Non-derivative finance liabilities
Floating rate instruments	$ 1,623,591	1,767,187	352,386	759,665	580,474	74,662
Fixed rate instruments	480,000	499,183	45,850	453,333	-	-
No interest-bearing liability	1,838,184	1,838,184	1,738,669	85,615	13,900	-
Lease liabilities	138,006	148,511	18,134	27,608	34,902	67,867
	$ 4,079,781	4,253,065	2,155,039	1,326,221	629,276	142,529

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

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

Marketing risk

1) Currency risk

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

	December 31, 2025			December 31, 2024
	Foreign Currency	Exchange Rate	NTD	Foreign Currency	Exchange Rate	NTD
Financial Assets
Monetary Items
USD	$ 1,188	31.43	37,339	1,460	32.79	47,873
JPY	12,432	0.20	2,486	12,431	0.210	2,611
RMB	218,518	4.50	83,331	223,308	4.480	1,000,420
HKD	312	4.04	1,260	547	4.220	2,308
Non-Monetary Items
USD	5,730	31.43	180,094	5,730	32.79	187,887
Financial Liabilities
Monetary Items
RMB	1,177	4.50	5,297	158	4.480	707,524
HKD	168,807	4.04	681,980	168,757	4.220	712,490

2) Sensitivity analysis

The Group exchange rate risk is mainly due to foreign-currency-denominated 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, 2025 and 2024 with all other factors held constant, the net income would have increased or decreased by NT$16,857 thousand and NT$17,001 thousand, respectively. The same basis was used for the analysis for both periods.

3) As the Group deals with diverse foreign currencies, gains or losses on foreign exchange were summarized as a single amount. For the years ended December 31, 2025 and 2024, the foreign exchange profit and losses, including both realized and unrealized, amounted to NT$33,754 thousand and NT$(55,342) thousand, respectively.

Interest rate risk

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

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 Group’s management for the reasonably possible interval of interest rate change.

~55~

~56~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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, 2025 and 2024 would have increased or decreased by NT$7,380 thousand and NT$6,494 thousand, mainly due to The Group 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:

	2025		2024
Prices of Securities at the Reporting Date	Other Comprehensive Income (Loss) (Net of Tax)	Net Income (Loss) (Net of Tax)	Other Comprehensive Income (Loss) (Net of Tax)	Net Income (Loss) (Net of Tax)
Increase 1%	$ 37,933	-	35,454	-
Decrease 1%	$ (37,933)	-	(35,454)	-

6. Fair value information

1) The Group'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:

	December 31, 2025
	Fair Value
	Carrying Amount	Level 1	Level 2	Level 3	Total
Financial assets at FVTOCI	$3,793,321	34,720	-	3,758,601	3,793,321
	December 31, 2024
	Fair Value
	Carrying Amount	Level 1	Level 2	Level 3	Total
Financial assets at FVTOCI	$3,545,383	34,472	-	3,510,911	3,545,383

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

The Group’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

~57~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 Group 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 Group 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: It uses the net asset value method to estimate the fair value, and its fair value has adjusted the impact of liquidity discount and minority equity discount.

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

| | Measured at FVTOCI
Equity instruments
without public quotes |
| --- | --- |
| January 1, 2025 | $ 3,510,911 |
| Recognized in other comprehensive income | 247,690 |
| December 31, 2025 | $ 3,758,601 |
| January 1, 2024 | $ 3,449,744 |
| Recognized in other comprehensive income | 61,167 |
| December 31, 2024 | $ 3,510,911 |

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The above stated total gains or losses are reported in "Unrealized valuation gains (losses) on financial assets at FVTOCI." Among these, assets still being held in 2025 and 2024 by:

	2025	2024
Total profit (losses) recognized
Recognized in other comprehensive income(reported in “Unrealized gain (loss) on valuation of financial assets measured at FVTOCI”)	$ 247,690	61,167

~59~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

The fair value measurements of the Group are classified as Level 3. It mainly includes financial assets measured at FVTOCI - equity securities investment.

Most of the Group’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.

The quantified information for significant unobservable inputs was as follows:

Item	Valuation Technique	Significant Unobservable Inputs
Financial Assets at FVTOCI—Equity Investment Without an Active Market	Discounted Cash Flow Method	• Long-term revenue growth rate (As of December 31, 2025 and 2024, were 2.7% and 2.3%. respectively)
• Weighted average cost of funds rate (As of December 31, 2025 and 2024, were 9.604% and 9.623%, respectively)
• Lack-of-Marketability discount rate (both at 7% As of December 31, 2025 and 2024)	• 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.
Financial Assets at FVTOCI—Equity Investment Without an Active Market	Net Assets Value Method	• Net Assets value
• Price to book ratio (As of December 31,2025 and 2024, were 0.95~1.18 and 0.87~1.72 respectively)
• Lack-of-Marketability discount rate (both at 7%~40% As of December 31, 2025 and 2024)	• The higher the Net Assets value, the higher the Fair value
• The higher the equity-to-net-worth ratio, the higher the fair value
• The higher the lack of marketability discounts and control discount, the lower 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 Group’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:

	Inputs	Changes Up or Down	Changes of fair value in other comprehensive income
			Favorable Change	Unfavorable Change
December 31, 2025
Financial assets at FVTOCI
Equity investment without an active market	Liquidity discount	1%	80,203	(80,203)
December 31, 2024
Financial assets at FVTOCI
Equity investment without an active market	Liquidity discount	1%	35,109	(35,109)

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.

(25) Financial risk management

Overview

The Group 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 Group. 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 Group’s risk management structure. The board of directors has given full authority to the management to develop and control the Group’s risk management policy. The management regularly reports its operations to the board of directors.

The Group’s risk management policy's establishment is to identify and analyze the risks faced by the Group 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 guidelines and operating procedures, the Group has developed a disciplined and constructive control environment so that all employees understand their roles and obligations.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The Group’s audit committee monitors how management monitors compliance with the Group’s risk management policy and procedures while also reviewing the appropriateness of related risk management structure for the Group's risks. Internal auditors assist the Group'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 Group'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 Group's internal control system has established a credit policy. According to the policy, the Group must analyze each new customer's credit rating individually before granting the standard payment and delivery terms and conditions. The Group’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 Group 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 Group 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 Group’s construction projects are carried out based on the operating measures of company construction projects. Construction counter-parties the Group constructs out to have a sound reputation with their construction capacities meeting the regulations; therefore, the Group 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 Group 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 Group’s Finance Department. There are no major performance concerns as the counter-parties and the performing parties of the Group are banks and financial institutions, corporative organizations and government agencies with investment grade or above, so there are no major credit risks.

3) Guarantee

The Group’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, 2025 and 2024, the Group provided no endorsements/guarantees.

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

4. Liquidity risk

The Group'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 Group'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 Group's reputation.

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

The Group'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 Group's unused borrowings for the years ended December 31, 2025 and 2024, please refer to Note 6(11) and (12).

5. Market risk

Market risk affects the Group'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 Group 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 Group 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(24).

2) Interest rate risk

The Group'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 Group's interest rate risk mainly comes from its floating-rate loans. The Group 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.

For the sensitivity analysis of interest rate risk, please refer to Note 6(24).

3) Other market price risk

The Group holds equity securities investments that generate equity price risk. The equity investment is not held for trading but is a strategic investment. The Group 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(24).

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(26) Capital management

The Group’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 Group 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 Group 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 2025 and 2024 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, 2025 and 2024 are as follows:

	December 31, 2025	December 31, 2024
Total liabilities	$ 4,921,052	4,629,511
Less: Cash and cash equivalents	(634,606)	(687,368)
Net liabilities	4,286,446	3,942,143
Total equity	9,721,207	9,610,284
Capital after adjustment	$ 14,007,653	13,552,427
Debt-to-equity ratio	30.60%	29.09%

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Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 consolidated financial statements.

Name of the Related-Party	Relationship with the Group
Living Spring International Development Co., Ltd.	Representative Director of the company's
Pacific 88 Co., Ltd.	Associates of the Group
Shin Lien Development Co., Ltd.	Associates of the Group
Beijing Tai-Yun Building Co., Ltd.	Other Related-Party
Rakuya International Info. Co. Ltd.	Other Related-Party
Pacific Venture Investment Limited.	Other Related-Party
(Shanghai) Pacific Realtor Service Limited.	Other Related-Party
Pacific SOGO Department Store Co., Ltd.	Other Related-Party
Shabayan Co., Ltd	Other Related-Party
Ms. Guo	Spouse of the Group's directors
Ms Hsiao	Spouse of the Group's directors
Pacific Urban Management Consulting Co., Ltd.	Substantial Related-Party of the Group
Rongmei Biomedical Co., Ltd.	Substantial Related-Party of the Group

(2) Significant transactions with related parties

1. Operating revenue

The Group's significant sales to related parties and their outstanding balances are as follows:

| Name of the Related-Party | Operating Revenue
(Rental Revenue, Department store Revenue and Other operating Revenue) | |
| --- | --- | --- |
| | 2025 | 2024 |
| Other Related-Party | $ 1,483 | 1,445 |

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. Purchase

The purchases price from related parties are summarized as follows:

	2025	2024
Living Spring International Development Co., Ltd.	$ 460	-
Other related parties	179	-
	$ 639	-

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

Amounts receivable from related parties

The Group’s details of amounts receivable from related parties are as follows:

Accounts receivable
Name of the Related-Party	December 31, 2025	December 31, 2024
Pacific SOGO Department Store Co., Ltd.	$ 1	7
Other receivables
---	---	---
Name of the Related-Party	December 31, 2025	December 31, 2024
(Shanghai) Pacific Realtor Service Limited.	$ -	2,000
Other Related-Party—Payment on behalf	150	150
Less: Allowance for losses	-	(2,000)
	$ 150	150

Amounts payable to related parties

Name of the Related-Party	Other payables
	December 31, 2025	December 31, 2024
Pacific Venture Investment Limited.	$ 680,979	711,656
Living Spring International Development Co., Ltd.	-	4,335
	$ 680,979	715,991

Property transactions

In March 2025, the Group signed a contract with another related party, Ms. Hsiao, to purchase land and buildings in the Fei-Tsui Section of Wanli District, New Taipei City, for the purpose of group consolidation and development (Accounts by Investment Property). The contract price was NT$54,655 thousand, and the relevant payments have been completed. The price for the property acquired from the related party was determined with reference to the property appraiser's valuation report and through negotiation between the two parties. The price does not exceed the transaction cost calculated by adding necessary interest to the related party's price. The price and payment terms are not comparable to other related party transactions.

The Group with CTBC Real Estate Co., Ltd. and Eastern Realty Co., Ltd. signed a cooperation agreement in July 2025 to jointly establish Shin Lien Development Co., Ltd. (hereinafter referred to as "Shin Lien Development"). Shin Lien Development was officially approved for establishment on November 27, 2025. According to the cooperation agreement, the company's investment is NT$3,000 thousand, representing a 33.33% stake and holding one board member. Therefore, the merging company will have significant influence with Shin Lien Development as of December 31, 2025.

~65~

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

Other
1) The Group signed a one-year special director appointment contract with other related-parties in 2025 and 2024, respectively. The total price of the one-year contract is NT$960 thousand, and the operating expenses in 2025 and 2024 are both NT$960 thousand.
2) The service fee and advertising fee paid by the merged company for entrusting other related-parties to publish advertisements in 2025 and 2024 are NT$179 thousand and NT$190 thousand, respectively.

(3) Key management personnel transactions

Remuneration to key management personnel includes:

	2025	2024
Short-term employee benefits	$ 38,956	55,207
Post-employment benefits	216	108
	$ 39,172	55,315

Pledged Assets

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

Asset Name	Pledge Subject	December 31, 2025	December 31, 2024
Buildings and land held for sale	Long-term, Short-term loans	$ 653,406	646,975
Construction land	Long-term, Short-term loans and construction performance guarantee	931,687	824,046
Construction in progress	Long-term, Short-term loans	602,461	527,570
Other financial assets - current and non-current	Short-term loans, Pre-sale price trust, Bonds payable and voucher escrow	325,367	361,063
Non-current financial assets at FVTOCI	Short-term loans	54,123	53,341
Property, plant and equipment	Long-term, Short-term loans	1,885,416	1,881,382
Right-to-use assets	Long-term loans	75,937	80,836
Investment property, net	Long-term, Short-term loans	1,029,359	1,082,967
Total		$ 5,557,756	5,458,180

Material Contingent Liabilities and Unrecognized Contractual Commitments

(1) Material unrecognized contractual commitments:

On December 31, 2025 and 2024, the total price of the purchase and sale contract signed by the Group 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:

	December 31, 2025	December 31, 2024
Total contract price	$ 2,171,253	1,749,368
Amounts received	$ 488,465	384,763

~67~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2024 and 2023, the amounts of land purchase contracts entered into by the Group and the amounts paid in accordance with the contracts are as follows:

	December 31, 2025	December 31, 2024
Total purchase contract price	$ 3,651,026	3,663,146
Price paid	$ 663,484	686,934
Allowance for losses	$ 663,484	663,484

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.

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

	December 31, 2025	December 31, 2024
Borrowings and issuance of commercial promissory notes	$ 1,450,750	1,453,250
Performance bond	381,370	381,370
Contracting project	69,000	69,000
Other	806,750	806,750
Total	$ 2,707,870	2,710,370

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

	December 31, 2025	December 31, 2024
Joint construction deposit	$ 970	970

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 Group 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, 2025 and 2024, the trust amounts of printed gift certificates totaled NT$7,132 thousand and NT$4,611 thousand, respectively (recorded as other financial assets - current).
The Group on December 31, 2025 and 2024 for set up a special counter and deposit guarantee notes at the decoration construction guarantee NT$7,408 thousand and NT$8,228 thousand, and all the guaranteed ticket for rent NT$6,912 thousand.
The Group signed a trademark authorization contract with Dadi Xingye Co., Ltd. The period of trademark use was from September 2017 to the end of September 2027, a total of ten years, and an annual premium was NT$10,000 thousand (tax included). The premium income recognized in both 2025 and 2024 was NTS 9,524 thousand (recorded as other income).

(2) The following are the explanations of the principal, interest calculation method and other matters payable by Beijing Taiyun Building Co., Ltd. (referred to as Beijing Taiyun Company) to its Hong Kong subsidiary Grand Pacific Holdings Co., Ltd. (referred to as Pacific Holdings Company) to clarify equity-related disputes:

Regarding the principal balance of US$29,962 thousands and interest payable by Beijing Tai-yun

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Company to Pacific Holdings Company, Pacific Holdings Company entrusted a lawyer to file a lawsuit against Beijing Tai-yun Company's shareholders for advance payment in March 2021. The case was determined in the second instance judgment on August 7, 2024, and Pacific Holding Company was found in favor of the case. In addition to repaying the principal in full, Beijing Tai-yun Company must also pay interest totaling US$3,845 thousands based on the LPR from March 13, 2021. The funds were remitted by Beijing Tai-yun Company to the trust account of Beijing Taikong Consulting Services Co., Ltd. designated by Pacific Holding Company on August 16 and September 30, 2024, respectively, and the interest compensation operation between the two parties was completed on October 15, 2024.

Pacific Holdings Company filed a lawsuit against Beijing Tai-yun Company for invalidity of the board of directors' resolution on May 7, 2021. On September 30, 2024, the company received a second-instance judgment that Pacific Holdings Company won the case. Pacific Holdings Company will issue a document requesting Beijing Tai-yun Company to restore the relevant resolutions of the board of directors to their original state.
On August 18, 2018, the board of directors of Beijing Tai-yun Company resolved to continue leasing the Taiyun Building to Beijing Grand Pacific Department Store. However, according to the regulations of Beijing Tai-yun Company, the operational policies, business plans, and development plans must be approved by two-thirds of the directors present at the board meeting before implementation. Legal opinions suggest that the Taiyun Building is a major asset of Beijing Tai-yun Company, and the rental income from this building is a primary source of revenue for the company. Therefore, matters related to the leasing or renewal of the lease for this building should fall under the company's annual operational policies, business plans, and development plans. Without a legal resolution passed by the board of directors of Beijing Tai-yun Company and the signing of a new lease contract, there is no agreed periodic leasing relationship with Beijing Grand Pacific Department Store. However, the existence of the leasing relationship remains disputed. If Beijing Grand Pacific Department Store makes any payments to Beijing Tai-yun Company during this period, such payments may be classified as unjust enrichment returns or damages.
In 2025, the merged company filed two lawsuits against Beijing Taiyun and related parties: one concerning the confirmation of the shareholder status of 2.5% of Beijing Taiyun's shares, and the other concerning improper rent reduction by Beijing Jun Tai Department Store. The lawsuit concerning the confirmation of the shareholder status of the 2.5% shares resulted in a first-instance loss for the merged company because it had not signed a nominee shareholding agreement with Shanghai Taichong Decoration Engineering Co., Ltd. However, the merged company appealed to the Beijing Fourth Intermediate People's Court on January 28, 2026. The lawsuit concerning improper rent reduction by Beijing Jun Tai Department Store is pending a court hearing notice.
The directors appointed to Pacific Holdings Company by the merged company before June 2015 seem to have failed to fulfill their relevant duties of loyalty and care, leading to disputes arising from borrowing and related equity transactions between the Hong Kong subsidiary and the shareholders of Beijing Tai-yun Company, which is an invested company. Additionally, there are allegations of obtaining disproportionate director remuneration from other related enterprises. Therefore, on October 13, 2018, the board of directors of the merged company resolved to file criminal charges for breach of trust against the aforementioned directors and related personnel. The case was dismissed by the Taipei District Prosecutor's Office on December 24, 2023. The merged company has entrusted a lawyer to file a request for reconsideration on January 22, 2024, which has currently been referred back to the Taipei

~68~

~69~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

District Prosecutor's Office for further investigation. However, this criminal case does not involve monetary damages, and there has been no resulting active financial loss.

10. Losses Due to Major Disasters: None.

11. Significant Subsequent Events: None.

12. Other

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

| Function
Nature | 2025 | | | 2024 | | |
| --- | --- | --- | --- | --- | --- | --- |
| | Operating Cost | Operating Expense | Total | Operating Cost | Operating Expense | Total |
| Employee benefit expense | | | | | | |
| Salary expense | 84,724 | 162,775 | 247,499 | 76,154 | 194,082 | 270,236 |
| Labor and health expense | 6,348 | 15,448 | 21,796 | 5,749 | 14,456 | 20,205 |
| Pension expense | 2,973 | 6,161 | 9,134 | 2,816 | 6,269 | 9,085 |
| Other Employee benefit expense | 6,289 | 12,467 | 18,756 | 5,703 | 14,078 | 19,781 |
| Depreciation expense | 110,800 | 34,235 | 145,035 | 94,900 | 45,138 | 140,038 |
| Amortization expense | 3,429 | 2,452 | 5,881 | 1,123 | 3,852 | 4,975 |

13. Note to 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 Group for the years ended 2025:

1. Loaning of fund to other parties:

(In Thousands of New Taiwan Dollars)

No.	Companies That Lend Funds Lead Funds	Lending Object	Accounting Title	Whether or not a Related-Party	Highest Amount for the Period	Ending Balance	Actual Borrowing Amount	Interest Rate Range	Nature for Financing	Business Transaction Amount	Reasons for Short-Term Financing	Allowance for Lower Amount	Collateral		Financing Limit for Each Borrower	Aggregate Financing Limit
													Name	Value
2	Grand Pacific Holdings Limited	Beijing Taikong Consulting Services Co., Ltd..	Other receivables	Yes	20,000	20,000	4,500	-%	2	-	Operational turnaround	-	None	-	1,899,963	1,899,963

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.

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(3) The total amount of funds lent by Grand Pacific Holding company to others, excluding to its wholly-owned parent company and wholly-owned subsidiaries, shall not exceed 40% of Grand Pacific Holding company's net worth. Individual loans by Grand Pacific Holding company shall not exceed 10% of Grand Pacific Holding company's net worth, up to NT$3,000 thousand. The total amount of funds lent by Grand Pacific Holding company's wholly-owned parent company and its directly or indirectly wholly-owned subsidiaries shall not exceed Grand Pacific Holding company's net worth. The limit on individual loans by Grand Pacific Holding company to its wholly-owned parent company and its directly or indirectly wholly-owned subsidiaries shall be limited to the net worth of the lending company (Grand Pacific Holding company).

For companies or firms with short-term financing needs, the individual loan amount shall not exceed 10% of Grand Pacific Holding company's net worth, up to NT$30 million

Note 2: The Company’s net worth mentioned above is based on the most recent review report audited by CPAs.

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.

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)

Held By	Types and Names of Securities	Relationship with the Securities Issuer	Account Titles in Book	End of the Period				Current Highest Shareholding Ratio	Remark
				Shares (Thousand Shares)	Carrying Amount	Shareholding Ratio	Fair Value (Note 1)
Pacific Construction Co., Ltd.	Xin-Ye-Yong Development Co., Ltd.	Investment businesses valuated by fair values	Non-current financial assets at FVTOCI	2	-	18.17 %	-	18.17%
o	Pacific Resources Corporation.	o	o	33	2,265	4.39 %	2,265	4.39%
o	Pacific SOGO Department Store Co., Ltd.	o	o	9,519	217,516	1.15 %	217,516	1.15%	Pledge of 2,369,000 shares
Pacific Department Stores Co., Ltd.	stock - Pacific Construction Co., Ltd.	The Company’s parent	o	24,836	208,853	6.42 %	208,853	6.42%	Note 2
o	stock - Taiwan High Speed Rail Corporation.	Investment businesses valuated by fair values	o	1,240	34,720	0.02 %	34,720	0.02%
o	stock - Pacific SOGO Department Store Co., Ltd.	o	o	85,031	1,942,966	10.27 %	1,942,966	10.27%
o	stock - SOGO Department Stores Co., Ltd.	o	o	2,542	-	12.08 %	-	12.08%
o	stock - Pacific Life Development Co., Ltd.	o	o	505	-	3.30 %	-	3.30%
o	VCOOL Inc.	o	o	27	-	0.27 %	-	0.27%
Pacific Realtor Co., Ltd.	stock - Pacific Construction Co., Ltd.	The Company’s parent	o	608	5,677	0.15 %	5,677	0.15%	Note 2
o	stock - Hong Kong Xian-Hui Company.	Investment businesses valuated by fair values	o	5,700	-	10.00 %	-	10.00%
o	stock - Mi-Jia-Le Construction Co., Ltd.	o	o	2,000	-	8.58 %	-	8.58%
o	stock - Rakuya International Info. Co. Ltd.	o	o	806	15,864	6.82 %	15,864	6.82%
Grand Pacific Holding Limited	Beijing Tai-Yun Building Co., Ltd.	o	Current financial assets at FVTOCI	-	1,613,129	47.50 %	1,613,129	47.50%
Taiou Xingye Co., Ltd.	stock - GOOD TV Broadcasting Corp.	o	Non-current financial assets at FVTOCI	1,500	16,594	17.65 %	16,594	17.65%
o	stock - Mi-Jia-Le Construction Co., Ltd.	o	o	1,213	-	5.21 %	-	5.21%

Note 1: 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: When preparing the consolidated financial report, it has been written off.

~71~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

(In Thousands of New Taiwan Dollars)

Companies with Accounts Receivable	Counterparty Name	Relationship	Balance of Receivables from Related-Parties	Turnover Rate	Amounts Due from Related Parties		Receivables Amount Collected from Related-Parties Subsequently	Provision Allowance for Loss
					Amount	Processing Method
Grand Pacific Holdings Limited	Beijing Taikong Consulting Services Co., Ltd.	This company is a subsidiary of our company	983,878	- %	-		-	-

Business relationships and significant transactions between parent and subsidiaries:

No	Name of company	Name of company-party	Nature of relationship	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0	Grand Pacific Holdings Limited	Beijing Taikong Consulting Services Co., Ltd.	1	Other receivables	983,878	-	6.72%
1	Beijing Taikong Consulting Services Co., Ltd.	Grand Pacific Holdings Limited	2	Other payables	979,378	-	6.69%
1	Beijing Taikong Consulting Services Co., Ltd.	Grand Pacific Holdings Limited	2	Other payables	4,500	Business turnover	0.03%

Note 1: The numbering is as follows:
1. "0" represents the parent company
2. Subsidiaries are sequentially numbered from 1 by company

Note 2: Relation between related parties are as follows:
1. Parent company and its subsidiaries
2. Subsidiaries and its parent company
3. Subsidiaries and its subsidiaries

Note 3: Reconciliated in the preparation of consolidated report.

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 2025 is as follows:

(In Thousands of New Taiwan Dollars)

Name of Investor	Name of Investor	Location	Principal Business	Sum of Initial Investment		Held at the End of Period			Current Highest Shareholding Ratio	Net Income (Loss) of Investee	Share of Profits (Loss) of Investee	Remark
				End of the Period	End of the Previous Year	Shares	Ratio	Carrying Amounts
Pacific Construction Co., Ltd.	Pacific Realtor Co., Ltd.	Taiwan	Introduction of housing leases and sales, etc.	46,506	46,506	7,275	48.50%	63,999	48.50%	29,363	5,253
#	Pacific Department Stores Co., Ltd.	#	Building lease and sales, supermarket operation, department store import and export, etc.	909,562	909,562	89,396	48.45%	1,636,573	48.45%	154,412	64,883	Note 1
#	Grand Pacific Holdings Limited	HK	Investments, Trading	206,876	206,876	365,858	100.00%	1,899,963	100.00%	27,875	27,875
#	Pacific Construction Co., Ltd.	#	Construction projects, or acts as an agency for civil engineering, construction, plumbing, electrical and air-conditioning, and decoration projects, etc.	34,016	34,016	8,163	100.00%	-	100.00%	-	-
#	Taitou Xingye Co., Ltd.	Taiwan	Investment	236,000	256,000	23,600	100.00%	214,137	100.00%	(6,327)	(6,327)
Taitou Xingye Co., Ltd.	Chon Tse Asset Management Co., Ltd.	#	Management Consulting Services + General Hotel Industry	180,000	180,000	18,000	100.00%	175,488	100.00%	(3,161)	(3,161)
Pacific Department Stores Co., Ltd.	Pacific 88 Co., Ltd.	#	Wholesale, Retail and trading of restaurant business, Daily essential and department stores	8,459	8,459	846	48.98%	-	48.98%	-	-	Investees accounted for using equity method
Pacific Realtor Co., Ltd.	Xinlian Development Co., Ltd.	#	Operation of the real estate brokerage transaction system	3,000	-	300	33.33%	2,996	33.33%	(11)	(4)	#

Note 1: Among these, 33,016 thousand shares were pledged as collateral for bank loans.
Note 2: Except for investees invested using the equity method, the above investees have been written off in the preparation of the consolidated financial statements.

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

C. Information on Investments in Mainland China:

Information on investments in Mainland China:

Unit: NT$ / USD /CNY thousand

Name of the Investment in China	Principal Item	Paid-In Shares Capital	Investment Method	Opening Cumulative Balance of Investment Capital Invested from Taiwan	Investment Capital Transferred or Recovered During the Current Period		Closing Cumulative Balance of Investment Capital Invested from Taiwan	Net Income (Loss) of Investee	The Company's Directly or Indirectly Invested Shareholding	Mid-term highest Shareholding ratio	Share of Profits (Losses) of Investee	Carrying Value of Investments at the End of the Period	Investment Income Remitted as of the End of the Year
					Outward Remittance	Recovered
Beijing Tai-Yun Building Co., Ltd.	Wholesale and retail commercial facilities within the planning area of development, construction, sales and leases	377,160 (USD12,000) (Note 2)	Note 1	179,151 (USD5,700) (Note 2)	-	-	179,151 (USD5,700) (Note 2)	-	47.50%	47.50%	- (Note 4)	- (Note 4)	-
Beijing Taikong Consulting Services Co., Ltd.	Business management consulting	471 (USD15) (Note 2)	Note 1	471 (USD15) (Note 2)	-	-	471 (USD15) (Note 2)	585	100.00%	100.00%	585 (Note 3)	765 (Note 5)	-
Hainan E-Tai Foods Co., Ltd.	Food production, sales, online sales, food import and export	4,500 (CNY1,000) (Note 2)	Note 1	-	4,500 (CNY1,000)	-	4,500 (CNY1,000)	(8)	100.00%	100.00%	(8) (Note 3)	4,452 (Note 5)

Note 1: Invested in China through a company in a third region. The investment company is Grand Pacific Holdings Ltd.
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.
Note 4: The Q4 of 2022 is transferred to financial assets at FVTOCI.
Note 5: When preparing the consolidated financial report, it has been written off.

Limit for investing in China

Unit: NT$ thousand / USD thousand

Cumulative Investment Outflow from Taiwan as of December 31, 2024	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment Authorized by Investment Commission, MOEA
USD 6,966	USD 6,966	5,832,724

Note 6: Limit calculation: Net equity for the Group in the period × 60% = NTD9,721,207 thousand × 60% = NTD5,832,724 thousand.
Note 7: Shanghai Pacific Construction Co., Ltd. was liquidated on June 21, 2009. The liquidation balance was remitted to 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.
Segment Information

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

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The Group 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 Group 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 non-cash 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 Group’s operating segment:

	2025
	Construction Segment	Leasing Segment	Department Store Segment	Property Management Others	Adjustments and Elimination	Total
Revenue:
Revenues from external customers	$ 365,971	62,354	335,399	374,006	-	1,137,730
Inter-segment income	21,500	11,487	-	9,327	(42,314)	-
Interest revenue	7,873	-	959	12,463	-	21,295
Total revenue	$ 395,344	73,841	336,358	395,796	(42,314)	1,159,025
Interest expense	$ 71,585	-	227	391	(105)	72,098
Depreciation and Amortization	13,331	41,156	39,268	60,429	(3,268)	150,916
Reportable segment profit/losses before tax	$ (11,216)	(119,773)	161,113	176,152	(28,209)	178,067
Assets:
Reportable segment Assets	$ 6,926,254	43,720	3,972,475	4,084,794	(384,984)	14,642,259
Reportable segment Liabilities	$ 3,792,098	78,463	201,968	884,915	(36,392)	4,621,052

~74~

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

	2024
	Construction Segment	Leasing Segment	Department Store Segment	Property Management Others	Adjustments and Elimination	Total
Revenue:
Revenues from external customers	$ 725,460	55,610	330,932	329,464	-	1,441,466
Inter-segment income	35,289	11,402	-	11,298	(57,989)	-
Interest revenue	8,022	-	555	127,502	-	136,079
Total revenue	$ 768,771	67,012	331,487	468,264	(57,989)	1,577,545
Interest expense	$ 67,986	-	949	6,276	(86)	75,125
Depreciation and Amortization	18,023	39,378	39,478	51,401	(3,267)	145,013
Reportable segment profit/losses before tax	$ (158,139)	15,823	215,887	968,838	(22,673)	1,019,736
Assets:
Reportable segment Assets	$ 6,776,158	43,720	3,949,019	3,877,028	(406,130)	14,239,795
Reportable segment Liabilities	$ 3,497,500	78,463	171,841	911,609	(29,902)	4,629,511

(2) Regional information

The Group’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	2025	2024
Revenues from external customers:
Taiwan	$ 940,311	1,202,409
Sabah	197,419	239,057
	$ 1,137,730	1,441,466
Non-current assets:
Taiwan	$ 2,389,687	2,401,391
Sabah	1,066,208	1,087,655
Total	$ 3,455,895	3,489,046

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 Group has a large customer base, there is no significant concentration of transactions with major customers.

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PCC — Audit Report / Information 2025

52132_rns_2026-05-18_7029bcbc-6b61-44d1-ba20-8333489607c6.pdf

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated financial statements and Independent Auditors' Report

Table of Contents

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2025 and 2024

(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, 2025 and 2024

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flow

For the years ended December 31, 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars)

Pacific Construction Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flow (Continued)

For the years ended December 31, 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars)

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

4. Summary of Significant Accounting Policies

(1) Statement of compliance

(2) Basis of preparation

(i) Basis of measurement

(ii) Functional and presentation currency

(3) Basis of consolidation

(i) Principles of preparation of the consolidated financial statements

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(4) Foreign currencies

1. Currencies transaction

2. Foreign operations

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

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(6) Cash and cash equivalents

(7) Financial instruments

1. Financial assets

1) Financial assets measured at amortized cost

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(10) Investment property

(11) Property, plant and equipment

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(12) Lease

1) As a lessee

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

2) As a lessor

(13) Service concession arrangements

1) Recognition and measurement

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

4) Amortization

(15) Impairment of non-financial assets

(16) Provision for Liabilities - Excise Duty

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(17) Revenue Recognition

1) Revenue from customer contracts

(1) Land development and property sale

(2) Customer loyalty program

Pacific Construction Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

PCC Audit Report / Information 2025