PHD — Audit Report / Information 2019

Dec 12, 2019

PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2019 AND 2018

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For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

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Declaration of Consolidated Financial Statements of Affiliated Enterprises

For the year ended December 31, 2019, pursuant to “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises,” the entity that is required to be included in the consolidated financial statements of affiliates, is the same as the entity required to be included in the consolidated financial statements of parent and subsidiary companies under International Financial Reporting Standard No. 10. Also, if relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies, it shall not be required to prepare separate consolidated financial statements of affiliates.

Hereby declare,

PRINCE HOUSING & DEVELOPMENT CORP.

By LUO ZHI XIAN

Chairman

March 19, 2020

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REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and shareholders of Prince Housing & Development Corp.

Opinion

We have audited the accompanying consolidated balance sheets of Prince Housing & Development Corp. and its subsidiaries (the “Group”) as at December 31, 2019 and 2018, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other independent accountants (please refer to the “other matter” section of our report), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2019 and 2018, 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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the 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 and the report of other independent accountants are sufficient and appropriate to provide a basis for our opinion.

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Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

The most significant key audit matters in our audit of the consolidated financial statements of the current period are as follows:

Accuracy of building and land sales revenue recognition timing

Description

Please refer to Note 4(32) for accounting policies on sales revenue, and Note 6(26) for details. For the year ended December 31, 2019, building and land sales revenue amounted to NT$5,182,052 thousand, representing 42.48% of consolidated operating revenue.

The Group recognises building and land sales revenue and profit or loss upon the transfer of ownership and handing over the property. Since the Group has diverse customers, the information delivery and recording process between segments in the Group usually involve manual work, and thus may result in inappropriate timing of revenue recognition around the balance sheet date. Considering that the building and land sales revenue form most of the Group’s operating revenue, we identified the accuracy of building and land sales revenue recognition timing as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

• A. We obtained an understanding and assessed the reasonableness of internal controls on building and land sales revenue, and tested whether the process of building and land sales revenue recognition timing had been executed effectively, including verifying documents related to the date of ownership transfer and property handover and the accuracy of recognition timing; and

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• B. We performed cut-off test on building and land transactions around the end of the reporting period, including verifying land registration, house ownership certificate and customer signed receipts for handing over of property to confirm the building and land sales revenue recognition timing was adequate.

Recognition of construction revenue-the stage of completion estimate

Description

Please refer to Notes 4(32) and 5(2) for accounting policies on construction contracts and revenue recognition, and Note 6(26) for details. For the year ended December 31, 2019, construction revenue amounted to NT$3,212,214 thousand, representing 26% of consolidated operating revenue.

The Group provided property construction related services. During the duration of a contract, the recognition of revenue is based on the stage of completion of a contract. The stage of completion is determined by reference to the contract costs incurred to date and the proportion that contract costs incurred for work performed to date compared to the estimated total contract costs. Aforementioned estimated total contract costs were based on contract budget details compiled by owner’s design drawing, considering the changes in construction caused by additional or less work, and the price fluctuations in the recent market to estimate the contract work, overhead and relevant costs.

As the complexity of aforementioned total cost usually involves subjective judgement and contains a high degree of uncertainty, and the estimate of total cost affects the stage of completion and the recognition of construction revenue, thus we consider the reasonableness of the stage of completion which was applied on construction revenue recognition as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

• A. We obtained an understanding of the nature of business and industry of the Group and assessed the reasonableness of internal process of estimating total construction cost, including the procedure of estimating each construction cost and overhead, and the consistency of applying the estimation method;

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• B. We assessed and tested the internal controls which would affect the changes of estimated total cost, including verifying the evidence of additional or less work and constructions.

• C. We inspected the constructing site accompanied by the supervisor and other appropriate staff at the end of the reporting period to assess the reasonableness of the stage of completion method result.

• D. We obtained details of construction profit or loss and performed substantive procedures, including randomly checking the incurred cost of current period with the appropriate evidence, and additional or less work with the supporting documents, and recalculated the stage of completion.

Other matter – Scope of the Audit

We did not audit the financial statements of certain investments recognised under the equity method that are included in the financial statements. The aforementioned investments accounted for under equity method of NT$571,669 thousand and NT$542,161 thousand as at December 31, 2019 and 2018, constituted 1.04% and 1.07% of consolidated total assets; comprehensive income of aforementioned investments accounted for under equity method of NT$48,980 thousand and NT$2,623 thousand for the years ended December 31, 2019 and 2018, constituted 4.79% and 0.25% of consolidated total comprehensive income, respectively. Those financial statements were audited by other independent accountants whose report thereon have been furnished to us, and our opinion expressed herein is based solely on the reports of the other independent accountants.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Prince Housing & Development Corp., with an other matter paragraph, as at and for the years ended December 31, 2019 and 2018.

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Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including audit committee, are responsible for overseeing the Group’s financial reporting process.

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 ROC GAAS 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 ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

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• A. 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 for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

• D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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 the Group to cease to continue as a going concern.

E. 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.

F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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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 current period 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.

Tien, Chung-Yu

Wu, Chien-Chin

For and on behalf of PricewaterhouseCoopers, Taiwan

March 19, 2020

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) and 8 6(4) and 8 6(26) 6(5) 6(5) 6(5) and 7 6(6) and 8 6(7) 6(2) and 8 6(3) and 8 6(4) and 8 6(8) and 8 6(9) and 8 6(10) and 7 6(12) and 8 6(13) 6(31) 7 and 9	December31,2019 AMOUNT % $ 5,673,754 10 1,517,586 3 1,064,843 2 340,826 1 58,341 - 751,147 1 3,696 - 25,402 - 19,917,629 37 114,552 - 4,074 - 29,471,850 54 480,499 1 1,880,621 4 1,170,878 2 1,884,520 3 5,995,879 11 5,682,287 10 5,729,334 11 2,056,927 4 119,989 - 161,987 - 102,732 - 25,265,653 46 $ 54,737,503 100	December31,2018	December31,2018
		AMOUNT $ 5,673,754 1,517,586 1,064,843 340,826 58,341 751,147 3,696 25,402 19,917,629 114,552 4,074 29,471,850 480,499 1,880,621 1,170,878 1,884,520 5,995,879 5,682,287 5,729,334 2,056,927 119,989 161,987 102,732 25,265,653 $ 54,737,503	AMOUNT $ 3,968,253 1,524,269 970,839 616,853 72,170 1,715,273 27,793 99,502 21,958,127 318,246 44,254 31,315,579 78,906 1,792,162 1,121,692 1,847,468 6,226,443 - 5,777,841 2,118,323 141,697 255,028 80,464 19,440,024 $ 50,755,603	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Current financial assets at amortised cost 1140 Current contract assets 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 130X Inventories, net 1410 Prepayments 1479 Other current assets 11XX Current Assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1517 Non-current financial assets at fair value through other comprehensive income 1535 Non-current financial assets at amortised cost 1550 Investments accounted for under equity method 1600 Property, plant and equipment, net 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets, net 1840 Deferred income tax assets 1920 Refundable deposits 1990 Other non-current assets 15XX Non-current assets 1XXX Total assets				8 3 2 1 - 4 - - 43 1 -
				62
				- 4 2 4 12 - 11 4 - 1 -
				38
				100

(Continued)

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PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	December31,2019 December31,2018 Notes AMOUNT % AMOUNT % 6(14) and 8 $ 1,979,000 4 $ 990,000 2 6(15) and 8 99,925 - 401,734 1 6(26) 922,540 2 961,024 2 2,523 - 4,885 - 2,035,430 4 2,804,917 6 780,329 1 1,083,613 2 7 83,349 - 85,953 - 19,135 - 68,155 - 7 373,742 1 - - 6(16) 66,793 - 64,175 - 6(18) and 8 4,679,401 8 3,643,297 7 44,717 - 95,888 - 11,086,884 20 10,203,641 20 6(17) 4,500,000 8 4,500,000 9 6(18) and 8 7,476,523 14 9,799,357 19 6(19) 102,554 - 87,196 - 6(31) 298,127 1 307,672 1 7 5,905,455 11 - - 808,301 2 721,633 2 7 - - 551,632 1 6(20) 71,868 - 72,352 - 148,959 - 136,162 - 6(8) 194,020 - 198,077 - 19,505,807 36 16,374,081 32 30,592,691 56 26,577,722 52 6(21) 16,233,261 30 16,233,261 32 6(22) 2,260,513 4 2,260,513 5 6(23) 2,058,870 4 1,933,605 4 2,428,513 4 2,660,209 5 6(24) 876,490 2 788,031 1 6(21) ( 1,003) - ( 1,003) - 23,856,644 44 23,874,616 47 288,168 - 303,265 1 24,144,812 44 24,177,881 48 9 $ 54,737,503 100 $ 50,755,603 100	December31,2018	December31,2018
			%
Current liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2130 Current contract liabilities 2150 Notes payable 2170 Accounts payable 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2280 Current lease liabilities 2310 Receipts in advance 2320 Long-term liabilities, current portion 2399 Other current liabilities 21XX Current Liabilities Non-current liabilities 2530 Bonds payable 2540 Long-term borrowings 2550 Provisions for liabilities - non-current 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2610 Long-term notes and accounts payable 2620 Long-term notes and accounts payable to related parties 2640 Net defined benefit liability - non- current 2645 Guarantee deposits received 2670 Other non-current liabilities 25XX Non-current liabilities 2XXX Total Liabilities Equity attributable to owners of parent Share capital 3110 common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3500 Treasury stocks 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognised contract commitments 3X2X Total liabilities and equity			2 1 2 - 6 2 - - - - 7 -
			20
			9 19 - 1 - 2 1 - - -
			32
			52
			32 5 4 5 1 -
			47 1
			48
			100

The accompanying notes are an integral part of these consolidated financial statements.

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PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars, except for earnings per share)

Items

Years endedDecember31 2019 2018 Notes AMOUNT % AMOUNT % 6(26) and 7 $ 12,199,437 100 $ 11,855,207 100 6(6)(13)(30) ( 9,136,983 ) ( 75) ( 8,492,700) ( 72 ) 3,062,454 25 3,362,507 28 6(13)(30) and 7 ( 446,958 ) ( 3) ( 468,644) ( 4 ) ( 1,825,411 ) ( 15) ( 1,835,151) ( 15 ) 12(2) 11 - 121 - ( 2,272,358 ) ( 18) ( 2,303,674) ( 19 ) 790,096 7 1,058,833 9 6(27) 268,933 2 272,618 2 6(2)(28) 232,529 2 217,279 2 6(6)(29) and 7 ( 327,977 ) ( 3) ( 218,351) ( 2 ) 6(8) 98,487 1 39,029 1 271,972 2 310,575 3 1,062,068 9 1,369,408 12 6(31) ( 123,318 ) ( 1) ( 125,531) ( 1 ) $ 938,750 8 $ 1,243,877 11 6(20) ( $ 3,028 ) - $ 623 - 6(3)(24) 88,459 - ( 210,990) ( 2 ) ( 960 ) - ( 255) - 6(31) ( 48 ) - ( 136) - 84,423 - ( 210,758) ( 2 ) $ 84,423 - ($ 210,758) ( 2 ) $ 1,023,173 8 $ 1,033,119 9 $ 952,767 8 $ 1,252,655 11 ( 14,017 ) - ( 8,778) - $ 938,750 8 $ 1,243,877 11 $ 1,037,190 8 $ 1,041,897 9 ( 14,017 ) - ( 8,778) - $ 1,023,173 8 $ 1,033,119 9 6(32) $ 0.59 $ 0.77 $ 0.58 $ 0.76

4000 Sales revenue 5000 Operating costs 5900 Gross profit Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6450 Impairment loss (impairment gain and reversal of impairment loss) determined in accordance with IFRS 9 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit/(loss) of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the period Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 8311 Actuarial (loss) gain on defined benefit plan 8316 Total expenses, by nature 8320 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8300 Total other comprehensive income (loss)for the years 8500 Total comprehensive income for the years Profit (loss), attributable to: 8610 Owners of the parent 8620 Non-controlling interest Comprehensive income attributable to: 8710 Owners of the parent 8720 Non-controlling interest Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

The accompanying notes are an integral part of these consolidated financial statements.

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PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Year ended December 31, 2018 Balance at January 1, 2018 Effects of retrospeetive adjustments Balance at January 1, 2018 after adjustments Profit (loss) for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) for the year Appropriations and distribution of 2017 earnings: Legal reserve Cash dividends Disposal of financial assets at fair value through other comprehensive income Change in non-controlling interest Balance at December 31, 2018 Year ended December 31, 2019 Balance at January 1, 2019 Profit (loss) for the year Other comprehensive income for the year Total comprehensive income (loss) for the year Appropriations and distribution of 2018 earnings: Legal reserve Cash dividends Change in non-controlling interest Balance at December 31, 2019	Notes							Equity attr	Equity attr	ibutableto owners of	the parent						Non-controlling interest		Totalequity
			Share capital - commonstock		Capitalsurplus		Retained	earnings			Otherequityinterest		Treasury stocks		Total
							Legal reserve		Unappropriated retained earnings	Financial statements translation differences of foreignoperations v	Unrealised gains or losses from financial assets measured at fair alue through other comprehensive income	Unrealized gain or loss on available- for-sale financial assets
	6(24) 6(32) 6(3)(20)(24) 6(23) 6(3)(24) 6(32) 6(3)(20)(24) 6(23)		$ 16,233,261 - 16,233,261 - - - - - - - $ 16,233,261 $ 16,233,261 - - - - - - $ 16,233,261		$ 2,260,513 - 2,260,513 - - - - - - - $ 2,260,513 $ 2,260,513 - - - - - - $ 2,260,513		$ 1,805,495 - 1,805,495 - - - 128,110 - - - $ 1,933,605 $ 1,933,605 - - - 125,265 - - $ 2,058,870	$ 2,589,627 - 2,589,627 1,252,655 232 1,252,887 ( 128,110 ) ( 1,055,162 ) 967 - $ 2,660,209 $ 2,660,209 952,767 ( 4,036 ) 948,731 ( 125,265 ) ( 1,055,162 ) - $ 2,428,513		($ 48 ) $ - - 1,000,036 ( 48 ) 1,000,036 - - - ( 210,990 ) - ( 210,990 ) - - - - - ( 967 ) - - ($ 48 ) $ 788,079 ($ 48 ) $ 788,079 - - - 88,459 - 88,459 - - - - - - ($ 48 ) $ 876,538		$ 974,425 ( 974,425 ) - - - - - - - - $ - $ - - - - - - - $ -	($ 1,003 ) - ( 1,003 ) - - - - - - - ($ 1,003 ) ($ 1,003 ) - - - - - - ($ 1,003 )	$ 23,862,270 25,611 23,887,881 1,252,655 ( 210,758 ) 1,041,897 - ( 1,055,162 ) - - $ 23,874,616 $ 23,874,616 952,767 84,423 1,037,190 - ( 1,055,162 ) - $ 23,856,644		$ 314,382 - 314,382 ( 8,778 ) - ( 8,778 ) - - - ( 2,339 ) $ 303,265 $ 303,265 ( 14,017 ) - ( 14,017 ) - - ( 1,080 ) $ 288,168		$ 24,176,652 25,611 24,202,263 1,243,877 ( 210,758 ) 1,033,119 - ( 1,055,162 ) - ( 2,339 ) $ 24,177,881 $ 24,177,881 938,750 84,423 1,023,173 - ( 1,055,162 ) ( 1,080 ) $ 24,144,812

The accompanying notes are an integral part of these consolidated financial statements.

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PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Income and expenses having no effect on cash flows Net loss (gain) on financial assets at fair value through profit or loss Reversal of expected credit losses Share of profit of associates and joint ventures accounted for under equity method (Gain) loss on disposal of property, plant and equipment Gain on disposal of investment property Property, plan and equipment transferred to expenses Gain arising from lease modification Depreciation Amortization Interest expense Interest income Dividend income Gain on unrealized foreign exchange Changes in assets/liabilities relating to operating activities Changes in operating assets Financial assets at fair value through profit or loss - current Current contract assets Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Inventories Prepayments Other current assets Other non-current liabilities Changes in operating liabilities Current contract liabilities Notes payable Accounts payable Other payables Other payables - related parties Advance receipts Other current liabilities Provisions for liabilities - non-current Long-term notes and accounts payable - related parties Net defined benefit liability - non-current Other non-current liabilities, others Cash inflow generated from operations Interest received Cash dividend received Interest paid Income tax paid Net cash flows from operating activities

Notes Years ended December 31, 2019 2018 $ 1,062,068 $ 1,369,408 6(2)(28) ( 37,723 ) ( 74,516 ) 12(2) ( 11 ) ( 121 ) 6(8) ( 98,487 ) ( 39,029 ) ( 1,375 ) 2,965 ( 182 ) ( 602 ) 1,358 39 ( 12 ) - 6(9)(10)(12)(30) 729,711 342,937 6(13)(30) 61,957 62,304 6(29) 326,777 217,151 6(27) ( 14,656 ) ( 11,116 ) 6(3)(27) ( 101,775 ) ( 143,737 ) - ( 15,467 ) ( 357,187 ) ( 611,000 ) 276,027 ( 246,276 ) 13,829 25,318 964,137 ( 1,020,376 ) 24,097 ( 13,603 ) 74,100 57,181 2,040,345 106,162 199,712 ( 33,948 ) 40,180 186,391 ( 32,781 ) ( 5,979 ) ( 38,484 ) ( 242,015 ) ( 2,362 ) ( 12,282 ) ( 769,487 ) 499,570 ( 302,635 ) 85,577 17,491 21,302 2,618 ( 7,312 ) ( 51,171 ) 43,486 15,358 ( 12,343 ) - ( 20,095 ) ( 3,512 ) ( 20,293 ) 156 1,730 4,038,081 491,411 14,656 11,116 158,037 175,669 ( 323,444 ) ( 256,705 ) ( 160,223 ) ( 107,105 ) 3,727,107 314,386

(Continued)

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PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease in financial assets at amortised cost-current Proceeds from disposal of financial assets at fair value through other comprehensive income - non - current Proceeds from disposal of financial assets at fair value through other comprehensive income - non-current Increase in financial assets at amortised cost - non - current Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from disposal of investment property Increase in intangible assets Decrease in refundable deposits Net cash flows (used in) from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Decrease in short-term notes and bills payable Repayments of bonds Proceeds from issuance of bonds Repayment of long-term borrowings Proceeds from long-term borrowings Increase (decrease) in long-term notes and accounts payable Payments of lease liabilities Increase (decrease) in guarantee deposits received Cash dividends paid Changes in non-controlling interest Net cash flows used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Notes Years ended December 31, 2019 2018 ( $ 94,004 ) $ 383,459 6(3) - 1,786 - 10,057 ( 49,186 ) ( 310,635 ) 6(9) ( 53,030 ) ( 61,662 ) 5,260 50 1,855 4,345 6(13) ( 640 ) ( 1,154 ) 93,041 342,708 ( 96,704 ) 368,954 6(35) 989,000 130,000 6(35) ( 301,809 ) ( 653,824 ) 6(35) - ( 2,500,000 ) 6(35) - 2,500,000 6(35) ( 31,212,652 ) ( 15,778,978 ) 6(35) 29,925,922 16,437,157 6(35) 86,668 ( 22,713 ) 6(35) ( 368,586 ) - 6(35) 12,797 ( 36 ) 6(23) ( 1,055,162 ) ( 1,055,162 ) ( 1,080 ) ( 2,339 ) ( 1,924,902 ) ( 945,895 ) - 8,959 1,705,501 ( 253,596 ) 3,968,253 4,221,849 $ 5,673,754 $ 3,968,253

The accompanying notes are an integral part of these consolidated financial statements.

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PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANIZATION

• (1) Prince Housing & Development Corp. (the “Company”) was established in September 1973, under the Company Act and other related regulations. The Company is primarily engaged in the construction, leasing and sale of public housing, commercial building, tourism/recreation place (children’s playground, water park, etc.) and parking lot/parking tower, and leasing and sale of real estate. The common shares of the Company have been listed on the Taiwan Stock Exchange since April 1991.

• (2) The main activities of the Company and its subsidiaries (collectively referred herein as the “Group”) are provided in Note 4(3) B.

• THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

• STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance the Board of Directors on March 19, 2020.

1. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows:

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative compensation’ IFRS 16, ‘Leases’ Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

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IFRS 16, ‘Leases’

• A. IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

• B. The Group has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as endorsed by the FSC. Accordingly, the Group increased ‘right-of-use asset’ by $6,073,115, increased ‘lease liability’ by $6,644,842, decreased other payables-related parties and long-term notes and accounts payable-related parties by $20,095 and $551,632, respectively, with respect to the lease contracts of lessees on January 1, 2019.

• C. The Group has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16.

• (a) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4.

• (b) The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.

• (c) The accounting for operating leases whose period will end before December 31, 2019 as shortterm leases and accordingly, rent expense of $5,801 was recognised for the year ended December 31, 2019.

• (d) The exclusion of initial direct costs for the measurement of ‘right-of-use asset’.

• D.The Group calculated the present value of lease liabilities by using weighted average incremental borrowing interest rate of 1,52%~2.21%.

• E. The Company recognised lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognised as of January 1, 2019 is as follows:

Operating lease commitments disclosed by applying IAS 17 as at December 31, 2018	$	10,733,376
Less: Non-cancellable operating lease agreements unreached the commencement date	(	3,184,379)
Total lease contracts amount recognised as lease liabilities by applying IFRS 16 on
January 1, 2019	$	7,548,997
Incremental borrowing interest rate at the date of initial application		1.52%~2.21%
Lease liabilities recognised as at January 1, 2019 by applying IFRS 16	$	6,644,842

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(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Company

New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows:

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’	January 1, 2020 January 1, 2020 January 1, 2020

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’ Amendments to IAS 1, ‘Classification of liabilities as current or non-current’	To be determined by International Accounting Standards Board January 1, 2021 January 1, 2022

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements

are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

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(2) Basis of preparation

• A. Except for the following items, these parent company only financial statements have been prepared under the historical cost convention:

• (a)Financial assets (including derivative instruments) at fair value through profit or loss.

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

• (c)Defined benefit liabilities recognised based on the net amount of pension fund assets less unrecognised actuarial gains and present value of defined benefit obligation.

• B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:

• (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

• (b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.

• (d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.

• (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All

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amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

B. Subsidiaries included in the consolidated financial statements:

			Ownership (%)	Ownership (%)
		Main business	December 31,	December 31,
Name of investor	Name of subsidiary	activities	2019	2018	Description
Prince Housing &	Prince Property Management	Real estate managers	100	100
Development Corp.	Consulting Co., Ltd.
	Cheng-Shi Investment	General investments	100	100
	Holdings Co., Ltd.
	Prince Housing Investment	Overseas investment	100	100
	Co., Ltd.
	The Splendor Hotel Taichung	Hotels and catering	50	50	Note 1
	Jin-Yi-Xing Plywood Co.,	Manufacture of	99.65	99.65
	Ltd.	plywood
	Prince Industrial Co., Ltd.	Development of	100	100
		public housing
		and building
	Prince Real Estate Co., Ltd.	Real estate trading	99.68	99.68	Note 3
		and leasing
	Times Square International	General investments	100	100	Note 2
	Holdings Co., Ltd.
Prince Property Management	Prince Apartment Management	Management of	100	100
Consulting Co., Ltd.	Maintain Co., Ltd.	apartment
	Prince Security Co., Ltd.	Security	100	100
Cheng-Shi Investment	Ta-Chen Construction &	Construction	100	100
Holdings Co., Ltd.	Engineering Corp.
	Prince Utility Co., Ltd.	Electricity and water	100	100
		pipe maintenance
	Cheng-Shi Construction	Construction	100	100
	Co., Ltd.
Times Square International	Times Square International	Hotels and catering	100	100	Note 2
Holdings Co., Ltd.	Hotel Corp.
	Times Square International	Hotels and catering	100	100	Note 2
	Stays Corp.

• Note 1: The Group does not directly or indirectly own above 50% of voting shares of The Splendor Hotel Taichung. However, as the Group has control over the finance and operations of the company, it is included in the consolidated financial statements.

• Note 2: Times Square International Stays Corp. was established in July 2018, and originally was a wholly-owned subsidiary of the Company. The Company converted its equity interests in Times Square International Stays Corp. and Times Square International Hotel into shares of Times Square International Investment Holdings Co., Ltd due to group reorganisation, and the date of conversion of stock into shares was December 24, 2018.

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• Note 3: On December 31, 2018, Dong-Feng Enterprises Co., Ltd. was merged into Prince Real Estate Co., Ltd. Under the merger, Dong-Feng Enterprises Co., Ltd. will be the dissolved company while Prince Real Estate Co., Ltd. will be the surviving company.

• C. Subsidiaries not included in the consolidated financial statements: None.

• D. Adjustments for subsidiaries with different balance sheet dates: None.

• E. Significant restrictions: None.

• F. Subsidiaries that have non-controlling interests that are material to the Group:

• The Group’s non-controlling interest is not material and thus, is not applicable.

(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan dollars, which is the Company’s functional and the Group’s presentation currency.

• A. Foreign currency transactions and balances

• (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.

• (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.

• (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

• (d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

• B. Translation of foreign operations

• (a) The operating results and financial position of all the Group entities, associates and jointly controlled entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

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     - i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

     - ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

     - iii. All resulting exchange differences are recognized in other comprehensive income.

  - (b) When the foreign operation partially disposed of or sold is an associate or joint arrangements, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Group still retains partial interest in the former foreign associate or joint arrangements after losing significant influence over the former foreign associate, or losing joint control of the former joint arrangements, such transactions should be accounted for as disposal of all interest in these foreign operations.

  - (c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group still retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

• (5) Classification of current and non-current items

• A. If assets and liabilities are related to the construction business, they are classified as current or non-current according to their operating cycle; if they are not related to the construction business, they are classified by annual basis.

• B. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

  • (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

  • (b) Assets held mainly for trading purposes;

  • (c) Assets that are expected to be realised within twelve months from the balance sheet date;

  • (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

• C. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

  • (a) Liabilities that are expected to be settled within the normal operating cycle;

  • (b) Liabilities arising mainly from trading activities;

  • (c) Liabilities that are to be settled within twelve months from the balance sheet date;

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• (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

• (6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits mature within three months and bonds with call back options meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

(7) Financial assets at fair value through profit or loss

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Company measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Company subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

• D. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(8) Financial assets at fair value through other comprehensive income

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:

• The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

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(9) Financial assets at amortised cost

• A. Financial assets at amortised cost are those that meet all of the following criteria:

• (a) The objective of the Group’s business model is achieved by collecting contractual cash flows.

• (b) The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognised in profit or loss when the asset is derecognised or impaired.

(10) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(11) Impairment of financial assets

• For financial assets at amortised cost, at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.

(12) Derecognition of financial assets

The Group derecognises a financial asset when one of the following conditions is met:

• A. The contractual rights to receive the cash flows from the financial asset expire.

• B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.

• C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.

－ (13) Leasing arrangements (lessor) operating leases

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

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(14) Inventories

• Except for gains or losses occurring from construction contracts that are recognised using the percentage of completion method, “land held for construction”, “construction in progress”, and “buildings and land held for sale” are stated at cost and evaluated at the lower of cost or net realisable value at the end of period. The individual item approach is used in the comparison of cost and net realisable value. The calculation of net realisable value is based on the estimated selling price in the normal course of business, net of estimated costs of completion and related adjusted selling expenses. The interest costs related to construction in progress are capitalised during the construction.

(15) Investments accounted for using equity method / subsidiaries, associates

• A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.

• B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

• C. When changes in an associate’s equity are not recognised in profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognises change in ownership interests in the associate in ‘capital surplus’ in proportion to its ownership.

• D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

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• F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss.

• G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, then the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

• H. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, then the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.

(16) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

• B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

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Buildings and structures	50 ~ 60 years
Machinery and equipment	3 ~10 years
Computer and communication equipment	3 ~ 5 years
Transportation equipment	5 years
Office equipment	3 ~ 20 years
Leasehold improvements	5 ~ 20 years
Other equipment	5 ~ 10 years

(17) Leasing arrangements (lessee)-right-of-use assets/ lease liabilities

Effective 2019

• A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of low-value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the following:

• (a) Fixed payments, less any lease incentives receivable; and

• (b) Variable lease payments that depend on an index or a rate.

The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

• C. At the commencement date, the right-of-use asset is stated at cost comprising the initial measurement of lease liability.

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

(18) Operating leases (lessee)

Effective 2018

Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.

(19) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 44 ~ 60 years.

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(20) Intangible assets

Computer software cost and service concession are stated at acquisition cost and amortised on a straight line basis. The useful life of major intangible assets is 3~5 years, while service concession is 44 years.

(21) Impairment of non-financial assets

• The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(22) Borrowings

• A. Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

• B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(23) Notes and accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(24) Bonds payable

• Ordinary corporate bonds issued by the Group are initially recognised at fair value less transaction costs. Any difference between the proceeds (net of transaction costs) and the redemption value is presented as an addition to or deduction from bonds payable, which is amortised to profit or loss over the period of bond circulation using the effective interest method as an adjustment to ‘finance costs’.

(25) Derecognition of financial liabilities

• A financial liability is derecognised when the obligation under the liability specified in the contract is discharged or cancelled or expires.

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(26) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

• (27) Provisions

• Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognized as interest expense. Provisions are not recognized for future operating losses.

(28) Employee benefits

• A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service.

• B. Pensions

• (a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

• (b) Defined benefit plans

  • i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet) of a currency and term consistent with the currency and term of the employment benefit obligations.

  • ii. Remeasurement arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

• C. Employees’ compensation and directors’ and supervisors’ remuneration

• Employees’ compensation and directors’ remuneration are recognised as expenses and liabilities,

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provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is distributed by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

(29) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

• D. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.

• E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

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• F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.

• G. Consolidated income tax return for tax filings of certain domestic subsidiaries in the Group accounted for in accordance with individual reporting situations. And subsidiaries have selected the consolidated income tax return for tax filings and pay additional tax on their undistributed retained earnings. If there is any tax effect due to the adoption of the consolidated tax system, the subsidiaries can proportionately allocate the effects on tax expense (benefit), deferred income tax and tax payable (tax refund receivable).

• (30) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

• (31) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

• (32) Revenue recognition

• A. Sales of services

The Group provides security and property management services. Revenue from a service contract in which the Group bills an agreed amount of service provided is recognised at the amount to which the Group has the right to invoice.

• B. Land development and resale

• (a) The Group develops and sells residential properties. Revenue is recognised when control over the property has been transferred to the customer. The properties have generally no alternative use for the Group due to contractual restrictions. However, an enforceable right to payment does not arise until legal title has passed to the customer. Therefore, revenue is recognised at a point in time when the legal title has passed to the customer.

• (b) The revenue is measured at an agreed upon amount under the contract. The consideration is due when legal title has been transferred. While deferred payment terms may be agreed in rare circumstances, the deferral never exceeds twelve months. The transaction price is therefore not adjusted because the contract does not include a significant financing component.

• C. Construction contract revenue

The Group sub-contracts public construction projects, sale and lease of public housings and business buildings. The construction contracts are identified to be one performance obligation satisfied over time. Contract revenue should be recognised by reference to the stage of completion of the contract activity, using the percentage-of-completion method of accounting, over the

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contract term. The stage of completion of a contract is measured by the proportion of contract costs incurred for work performed to date to the estimated total costs for the contract. If the outcome of a performance obligation cannot be estimated reliably in the beginning of the contract, but the incurred costs for satisfying performance obligation can be recovered, contract revenue should be recognised only to the extent of contract costs incurred that it is probable will be recoverable until the performance obligation can be estimated reliably. The customer pays at the time specified in the payment schedule. If the input construction cost exceed the payment, a contract asset is recognised. If the payments exceed the input construction cost, a contract liability is recognised.

• D. Hospitality service revenue

• The Group provides related services, such as accommodation and room service. Sales revenue will be recognised when services are provided or goods are sold. Consideration is collected when customers purchase services or goods.

• E. Service concession revenue

Information on service concession revenue is provided in Note 4(33).

• F. Rental revenue

The Group leases offices and dormitories. Rental revenue is recognised in profit or loss monthly on a straight-line basis over the lease term.

• G. Incremental costs of obtaining a contract

• The Group recognises an asset (shown as ‘other current assets’) the incremental costs (mainly comprised of sales commissions) of obtaining a contract with a customer if the Group expects to recover those costs. The recognised asset is amortised on a systematic basis that is consistent with the transfers to the customer of the goods or services to which the asset relates. The Group recognises an impairment loss to the extent that the carrying amount of the asset exceeds the remaining amount of consideration that the Group expects to receive less the costs that have not been recognised as expenses.

(33) Service concession arrangements

• A. The Group was contracted by National Taiwan University (grantor) to provide construction for the government’s infrastructure assets for public services and operate those assets for Changxing St. Campus for 44 years and 6 months, and for Shuiyuan Campus for 44 years and 4 months after construction is completed. When the term of operating period expires, the underlying infrastructure assets will be transferred to National Taiwan University without consideration. The Group allocates the fair value of the consideration received or receivable in respect of the service concession arrangement between construction services and operating services provided based on their relative fair values, and recognises such allocated amounts as revenues in accordance with IFRS 15, ‘Revenue from contracts with customers’.

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• B. Costs incurred on provision of construction services or upgrading services under a service concession arrangement are accounted for in accordance with IFRS 15, ‘Revenue from contracts with customers’.

• C. The consideration received or receivable from the grantor in respect of the service concession arrangement is recognised at its fair value. Such considerations are recognised as a financial asset or an intangible asset based on how the considerations from the grantor to the operator are made as specified in the arrangement. The Group recognises a financial asset to the extent that it has an unconditional contractual right to receive cash or another financial asset from or at the direction of the grantor for the construction services, and recognises an intangible asset to the extent that it receives a right (a licence) to charge users of the public service.

• (34) Operating segments

• Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker. The Chief Operating Decision-Maker is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The above information is addressed below:

(1) Critical judgements in applying the Group’s accounting policies

• Investment property

The Group uses a portion of the property for its own use and another portion to earn rentals or for capital appreciation. When these portions cannot be sold separately and cannot be leased out separately under a finance lease, the property is classified as investment property only if the own-use portion accounts for less insignificant portion of the property.

(2) Critical accounting estimates and assumptions

Revenue recognition

Construction contract revenue should be recognised by reference to the stage of completion in the contract period using the percentage of completion method. Construction costs are recognised in the incurred period. The stage of completion of a contract is measured by the proportion of contract costs incurred for work performed up to the balance sheet date to the estimated total contract costs.

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6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand and revolving funds Checking accounts and demand deposits Repurchase bonds	December 31,2019 $ 9,747 4,862,516 801,491 $5,673,754	December 31,2018
		$ 10,427 3,732,826 225,000
		$3,968,253

• A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. The repurchase bonds held by the Group has high liquidity, so they were classified as cash equivalents.

• C. Details of time deposits mature in excess of three months, trust fund of presale construction and borrowings compensation account pledged to others as collateral which were classified as financial assets at amortised cost, are provided in Note 6(4).

• D.Details of the interest income from the aforementioned pledged bank deposits which was recognised under interest income, are provided in Note 6(27).

(2) Financial assets at fair value through profit or loss

Items Current items: Financial assets mandatorily measured at fair value through profit or loss Listed (TSE and OTC) stocks Beneficiary certificates Valuation adjustments Items Non-current items: Financial assets mandatorily measured at fair value through profit or loss Listed (TSE and OTC) stocks Beneficiary certificates Valuation adjustments	December 31,2019 - $ 1,509,632 1,509,632 7,954 1,517,586 $ December 31,2019 264,520 $ 76,000 340,520 139,979 480,499 $	December 31,2018
		264,520 $ 1,151,620
		1,416,140 108,129
		1,524,269 $
		December 31,2018
		- $ 76,000
		76,000 2,906
		78,906 $

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• A. The Group recognised net gain of $37,723 and $74,516 on financial assets at fair value through profit or loss for the years ended December 31, 2019 and 2018, respectively.

• B. Details of the Group’s financial assets at fair value through profit or loss pledged to others as collateral are provided in Note 8.

(3) Financial assets at fair value through other comprehensive income

Items Non-current items: Designation of equity instrument Listed stocks Unlisted stocks Valuation adjustment	December 31,2019 115,144 $ 888,151 1,003,295 877,326 1,880,621 $	December 31,2018
		115,144 $ 888,151
		1,003,295 788,867
		1,792,162 $

• A. The Group has elected to classify stocks that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $1,880,621 and $1,792,162 as at December 31, 2019 and 2018, respectively.

• B. In response to the modified investment strategy, the Group sold $1,786 of unlisted stocks at fair value and resulted in cumulative gains on disposal of $967 for the year ended December 31, 2018.

• C. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

		Years ended	December 31,	December 31,
		2019		2018
Equity instruments at fair value through other comprehensive income
Fair value change recognised in other comprehensive income	$	88,459	($	210,990)
Cumulative gains reclassified to retained earnings due to
derecognition	$	-	$	967
Dividend income recognised in profit or loss held at end of
period	$	101,775	$	143,737

• D. Details of the Group’s financial assets at fair value through other comprehensive income pledged to others as collateral are provided in Note 8.

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(4) Financial assets at amortised cost

Financial assets at amortised cost
Items	December 31,2019 $ 1,016,292 48,551 - 1,064,843 $ 918,512 $ 252,366 1,170,878 $	December 31,2018 582,400 $ 287,575 100,864 970,839 $ 890,216 $ 231,476 1,121,692 $
Current items: Time deposits maturing in excess of three months Trust account Pledged certificate of deposit Non-current items: Compensation account Pledged certificate of deposit

• A. As at December 31, 2019 and 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortised cost held by the Group was $2,235,721 and $2,092,531, respectively.

• B. Details of the Group’s financial assets at amortised cost pledged to others as collateral are provided in Note 8.

• C. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

(5) Notes and accounts receivable

Notes and accounts receivable
	December	31,2019	December	31,2018
Notes receivable	$	58,341	$	72,170
Accounts receivable	$	755,607	$	1,719,773
Less: Allowance for doubtful accounts	(	4,460)	(	4,500)
	$	751,147	$	1,715,273
Accounts receivable - related parties	$	3,696	$	27,793

• A. The ageing analysis of notes receivable and accounts receivable that were past due but not impaired is as follows:

is as follows:
Without past due Up to 30 days 31 to 60 days 61 to 90 days Over 91 days	Notes Accounts receivable receivable 58,341 $ 749,643 $ - 3,329 - 566 - 495 - 5,270 58,341 $ 759,303 $ December 31,2019	December 31,2018
	Notes receivable 58,341 $ - - - - 58,341 $	Notes receivable 72,170 $ - - - - 72,170 $	Accounts receivable
			1,737,372 $ 5,086 33 - 5,075
			1,747,566 $

The above ageing analysis was based on past due date.

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• B. As of December 31, 2019, December 31, 2018, and January 1, 2018, the balances of receivables (including notes receivable) from contracts with customers amounted to $769,233, $1,766,657 and $680,268, respectively.

• C. As at December 31, 2019 and 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes receivable were $58,341 and $72,170, respectively; the maximum exposure to credit risk in respect of the amount that best represents the Group’s accounts receivable were $754,843 and $1,743,066, respectively.

• D. Information relating to credit risk of notes receivable and accounts receivable is provided in Note 12(2).

• E. The Group does not hold any collateral pledged for notes and accounts receivable.

• (6) Inventories

Inventories
Land held for construction site Construction in progress Buildings and land held for sale Prepayment for land Prepayment for buildings and land Merchandise Land held for construction site Construction in progress Buildings and land held for sale Prepayment for land Prepayment for buildings and land Merchandise		December 31,2019
	Allowance for Cost valuation loss $ 7,660,212 ($ 64,249) 4,343,402 - 7,189,638 ( 12,258) 223,135 - 552,085 - 25,664 - $19,994,136 ($76,507) December 31,2018		Book value
			$ 7,595,963 4,343,402 7,177,380 223,135 552,085 25,664
			$19,917,629
	Allowance for Cost valuation loss $ 8,609,821 ($ 64,249) 4,181,706 - 8,099,706 ( 12,662) 282,111 - 841,421 - 20,273 - $22,035,038 ($76,911)		Book value
			$ 8,545,572 4,181,706 8,087,044 282,111 841,421 20,273
			$21,958,127

• A. The cost of inventories recognised as expense for the years ended December 31, 2019 and 2018 was $7,328,202 and $6,404,993, respectively, including the amounts of $404 and $26,667, respectively, that the Group wrote down from cost to net realisable value accounted for as cost of goods sold.

• B. Details of the Group’s inventories pledged to others as collateral are provided in Note 8.

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C. The interest capitalized as cost of inventory is as follows:

Interest paid before capitalization Interest capitalized Annual interest rate used for capitalization

Years ended December 31,	Years ended December 31,
2019 487,091 $ 160,314 $ 0.60%-2.50%	2018
	437,575 $
	220,424 $
	0.60%-2.58%

D. Details of significant inventories: (a)Buildings and land in progress

Taipei branch Ling Ko Dist. Li Shing Section No. 1209, etc. Bali Dist Chung Chang Section No.222 and 211-1, etc. W Prince (New Taipei City Shing Jheng Section No.883, etc.) Prince Hua Wei (Shilin Dist. Zhishan Section No. 602, etc.) Taichung branch Prince Xin World (Ping Hsin Section No. 694, etc.) Jin Shuei Dist. Wu Show Section No. 1037, No. 1038, No. 1040, etc. Tainan branch Prince Feng Yun (Hsin Ying Section No. 841-9) Jin Hua Section No. 1361 Shan Chia Section No. 939, etc. Others Kaohsiung branch Prince Cloud E (Ren Wu New Hougang West Section No .90, etc. ) Prince Cloud B (Ren Wu New Hougang West Section No .42, etc.) Ren Wu New Hougang West Section No. 88 experimental house Total buildings and land in progress Prince Castle (Building) (Nanzi subsection No. 158, etc.)	December 31,2019 1,975,394 $ 689,409 - - 2,664,803 $ December31,2019 1,627,356 $ 212,248 1,839,604 $ December31,2019 1,258,574 $ 688,265 155,943 3,738 2,106,520 $ December31,2019 1,572,455 $ 448,871 364,370 72,933 2,458,629 $ $ 9,069,556	December 31,2019
		1,852,235 $ 689,088 1,185,483 686,574
		4,413,380 $
		December31,2018
		1,260,063 $ 207,536
		1,467,599 $
		December31,2018
		1,093,329 $ 688,265 154,651 3,738
		1,939,983 $
		December31,2018
		1,509,936 $ 153,757 379,154 72,933
		2,115,780 $
		$ 9,936,742

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(b)Land held for construction site

(b)Land held for construction site
(c)Buildings and land held for sale Taipei branch Zhong Li Pu Ren Lot No. 720, etc. Others Taichung branch Wu Feng Lot No. 365~855 etc. Song Quan Lot No. 164 etc. Tu Ku Section No. 9-7, etc. Song Chang Lot No. 577 etc. Hou Long Zi Section No. 133-004 Xi Zhou Lot No. 112-54 etc. Others Tainan branch Shan Zhong Lot No. 1468, 1475 & 1476 etc. Xue Zhong Lot No. 679, etc. Yong Kang Ding An Lot No. 879, etc. Bei An Section No. 54-3, etc. Chin An Section No. 373~377 Bao An Lot No. 882, etc. Others Kaohsiung branch Ren Wu New Hougang West Section No. 53, etc. Ren Wu New Hougang West Section No. 30 & 52-74 Ren Wu Xiahai Section No. 642, 669 & 940, etc. Da Hua Lot No. 434 & 436 Total land held for construction site Taipei branch Taipei Shin Yi (Xin Zhuang Fuduxin) Prince Hua Wei W Prince Prince pine garden Prince Fu III Prince Da Din Prince Guo Boa Prince Fu II Others	December31,2019 140,156 $ 5,978 146,134 $ December31,2019 175,661 $ 137,697 55,167 19,912 19,513 2,766 11,713 422,429 $ December31,2019 234,699 $ 50,798 28,610 15,344 15,139 10,325 14,550 $ 369,465 December31,2019 905,077 $ 407,357 41,668 13,923 $1,368,025 $2,306,053 December31,2019 $ 1,203,294 936,352 908,965 512,426 89,346 12,025 5,738 - 546 $ 3,668,692	December31,2018
		140,156 $ 5,978
		146,134 $
		December31,2018
		175,661 $ 137,697 55,167 19,912 19,513 2,766 11,713
		422,429 $
		December31,2018
		234,699 $ 50,798 28,610 15,344 15,139 10,325 14,550
		$ 369,465
		December31,2018
		872,986 $ 407,357 - 13,923
		$1,294,266
		$2,232,294
		December31,2018
		$ 1,516,042 936,352 - - 830,889 12,235 5,738 25,395 546
		$ 3,327,197

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Prepayment for land Prepayment for buildings and land Taichung branch Prince Xian Heng W Epoch Chin Fon Gin Prince Jyun Prince Shin Fu Others Tainan branch Flower Bo Five Prince WIN2 Jun Chan LV Prince Jum Fon Huei Prince Golden Age Others Kaohsiung branch Prince Castle (Townhouse) Prince Cloud C apartment Prince Hua Yang Prince Cloud D Prince Dai Din Prince Cloud C townhouse Total buildings and land held for sale Tainan branch Ren Wu New Hougang West Section No. 20, etc. Taisugar Nanzi Section	December31,2019 1,223,688 $ 339,089 20,759 9,058 - 6,118 $1,598,712 December 31,2019 $ 578,935 80,640 19,725 15,208 5,302 2,292 $702,102 December31,2019 $ 1,204,509 28,347 27,883 22,206 7,170 -	December31,2018
		1,416,409 $ 992,044 40,718 20,542 343,573 6,118
		$2,819,404
		December 31,2018
		$ 719,686 229,619 19,725 170,269 5,302 2,292
		$1,146,893
		December31,2018
		$ - 637,544 54,641 91,355 8,473 7,669
	$1,290,115 $7,259,621 December31,2019 $223,135 December31,2019 $ 552,085	$799,682
		$ 8,093,176
		December31,2018
		$282,111
		December31,2018
		$ 841,421

(d)Prepayment for land

(e)Prepayment for buildings and land

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E. Disclosure of significant constructions:

• (a) As of December 31, 2019, significant constructions are set forth below:

Name of construction contract Tai She Zhi Shan Yuan - New construction Construction of T.S. Landmark Plaza ($1.2 billion) Tainan Metropolitan Expressway No.3, Zhonglu, Taoyuan City Construction of T.S. Landmark Plaza ($0.8 billion)	Contract amount 2,428,216 $ 1,792,455 1,681,905 1,151,305 1,050,252	Estimated construction cost 2,343,228 $ 1,745,827 1,606,206 1,093,740 1,019,832	Percentage of completion 70.20% 50.78% 36.73% 14.58% 50.65%	Accumulated constructionprofit/(loss)
				59,662 $ 23,678 27,804 8,393 15,408

(b) As of December 31, 2018, significant constructions are set forth below:

Name of construction contract Tai She Zhi Shan Yuan - New construction West Coast Expressway 130K FangLi to Dia An Construction Tainan Metropolitan Expressway Construction of T.S. Landmark Plaza ($1.2 billion) No.3, Zhonglu, Taoyuan City	Contract amount 2,417,143 $ 2,091,193 1,681,905 1,280,520 1,151,305	Estimated construction cost 2,272,083 $ 1,989,749 1,606,206 1,245,727 1,093,740	Percentage of completion 41.75% 99.71% 3.46% 9.33% 1.03%	Accumulated constructionprofit/(loss)
				60,563 $ 101,150 2,619 3,246 593

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(7) Other current assets

Other current assets
Items Deferred sales commission (Note) Others	December31,2019 40 $ 4,034 4,074 $	December31,2018
		41,096 $ 3,158
		44,254 $

Note: For the years ended December 31, 2019 and 2018, deferred sales commission (incremental costs of obtaining a contract) reclassified as selling expenses amounted to $41,056 and $182,202, respectively.

(8) Investments accounted for under equity method

respectively. nvestments accounted for under equity method
Name of associates Geng-Ding Co., Ltd. Uni-President Development Corp. PPG Investment Inc. (Note 1) Queen Holdings Ltd. Ming-Da Enterprise Co., Ltd. Amida Truslink Assets Management Co., Ltd. (Note 2)	Carrying Percentage of amount ownership $ 307,140 30.00% 1,146,288 30.00% 3,071 27.30% 400,869 27.30% 27,152 20.00% - 45.21% $1,884,520 December31,2019	December31,2018
	Carrying amount $ 307,140 1,146,288 3,071 400,869 27,152 - $1,884,520	Carrying amount $ 285,763 1,130,857 - 400,022 30,826 - $1,847,468	Percentage of ownership
			30.00% 30.00% 27.30% 27.30% 20.00% 45.21%

Note 1 ： As of December 31, 2018, carrying amount of investments in PPG Investment Inc. has been transferred to other non-current liabilities in the amount of $4,510 as it had declined to less than zero, respectively.

• Note 2: As of December 31, 2019 and 2018, the book value of the Company’s investment in Amida Truslink Assets Management Co., Ltd. was a credit balance thus, the investment was transferred to other non-current liabilities which amounted to $139,411 and $139,114, respectively.

Associates

• A. The basic information of the associate that is material to the Group is as follows:

Companyname Uni President Development Corp.	Principal place Nature of of business relationship Taiwan Strategic investments	Method of measurement
		Equity method

• B. The summarized financial information of the associate that is material to the Group is as follows: Balance sheet

alance sheet
		Uni President Development Corp.
	December 31,2019		December 31,2018
Current assets	$	221,434	$	206,849
Non-current assets		7,843,948		8,271,368
Current liabilities	(	3,318,190)	(	3,205,874)
Non-current liabilities	(	926,233)	(	1,502,821)
Total net assets	$	3,820,959	$	3,769,522
Share in associate’s net assets	$	1,146,288	$	1,130,857

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Statements of comprehensive income

Statements of comprehensive income
Revenue Profit for the period from continuing operations Total comprehensive income Dividends received from associates	Uni President Development Corp.
	Years ended December 31,
	2019 973,047 $ 156,197 $ 156,197 $ 31,428 $	2018
		959,140 $
		116,093 $
		116,093 $
		30,132 $

• C. The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarized below:

• As of December 31, 2019 and 2018, the carrying amount of the Group’s individually immaterial associates amounted to $598,821 and $572,987, respectively.

		Years ended	December31,	December31,
		2019		2018
Income for the period from continuing operations	$	184,440	$	20,440
Other comprehensive loss, net of tax	(	3,200)	(	783)
Total comprehensive income	$	181,240	$	19,657

• D. The Group’s investments had no quoted market price.

• E. The Group’s share of profit of associates and joint ventures accounted for using equity method for the years ended December 31, 2019 and 2018 was $98,487 and $39,029, respectively.

• F. The share of profit or loss and other comprehensive income of the individually immaterial associates were partially based on the financial statements which were audited by other independent accountants.

• G. Details of the Group’s investments accounted for under equity method pledged to others as collateral are provided in Note 8.

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(9) Property, plant and equipment

A. Details of book values are as follows:

operty, plant and equipment Details of book values are as follows:
Land Buildings Machinery and equipment Computer and communication equipment Transportation equipment Office equipment Leasehold improvements Other equipment Construction in progress and equipment under acceptance	December 31,2019 $ 2,855,368 2,809,386 4,256 2,185 3,442 239,120 20,342 49,706 12,074 $5,995,879	December 31,2018
		$ 2,865,610 2,998,461 5,299 3,741 3,626 262,073 21,669 53,999 11,965
		$6,226,443

B.Changes in property, plant and equipment for the period are as follows:

Cost Land Assets used by the Company Assets subject to operating leases Buildings and structures Assets used by the Company Assets subject to operating leases Machinery and equipment Computer and communication equipment Transportation equipment Office equipment Leasehold improvements Other equipment Construction in progress and equipment under acceptance		Year ended December 31,2019
	Opening net book amount 1,453,999 $ 1,411,611 2,683,084 1,869,859 15,886 60,113 13,695 839,153 73,533 94,204 11,965 $8,527,102	Additions Disposals Reclassifications - $ 1,248) ($ 8,994) ($ - - - 13,414 1,414) ( 46,319) ( - 1,050) ( - 745 - - - 57) ( 205 1,200 2,298) ( - 23,789 29,312) ( 18,285 - - - 2,756 2,266) ( 153 11,126 - 11,017) ( $53,030 ($37,645) 47,687) ($	Closing net book amount
			1,443,757 $ 1,411,611 2,648,765 1,868,809 16,631 60,261 12,597 851,915 73,533 94,847 12,074
			$8,494,800

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Year ended December 31, 2018

		Year ended December 31,2018	Year ended December 31,2018
Cost Land Assets used by the Company Assets subject to operating leases Buildings and structures Assets used by the Company Assets subject to operating leases Machinery and equipment Computer and communication equipment Transportation equipment Office equipment Leasehold improvements Other equipment Construction in progress and prepayments for equipment Accumulated depreciation Buildings and structures Assets used by the Company Assets subject to operating leases Machinery and equipment Computer and communication equipment Transportation equipment Office equipment Leasehold improvements Other equipment Accumulated depreciation Buildings and structures Assets used by the Company Assets subject to operating leases Machinery and equipment Computer and communication equipment Transportation equipment Office equipment Leasehold improvements Other equipment	Opening net book amount 1,453,999 $ 1,411,611 2,666,653 1,888,276 15,314 61,609 13,695 841,888 73,533 92,828 7,178 $8,526,584	Additions Disposals Reclassifications - $ - $ - $ - - - 12,793 - 3,637 2,768 26,034) ( 4,850 572 - - - 1,587) ( 91 - - - 21,832 33,871) ( 9,304 - - - 3,811 3,019) ( 584 19,886 - 15,099) ( $61,662 ($64,511) 3,367 $ Year ended December 31,2019		Closing net book amount
				1,453,999 $ 1,411,611 2,683,083 1,869,860 15,886 60,113 13,695 839,153 73,533 94,204 11,965
				$8,527,102
	Opening net book amount $ 1,039,987 514,495 10,587 56,372 10,069 577,080 51,864 40,205 $2,300,659	Additions Disposals Reclassifications $ 111,425 ($ 177) ($ 20,276) 63,784 ( 1,050) - 1,788 - - 1,761 ( 57) - 1,274 ( 2,188) - 64,275 ( 28,560) - 1,327 - - 5,306 370) ( - $250,940 32,402) ($ 20,276) ($ Year ended December 31,2018		Closing net book amount
				$ 1,130,959 577,229 12,375 58,076 9,155 612,795 53,191 45,141
				$2,498,921
	Opening net book amount $ 930,008 476,512 9,010 54,743 8,790 538,655 50,537 35,443 $2,103,698	Additions Disposals $ 109,979 $ - 64,017 ( 26,034) 1,577 - 3,216 ( 1,587) 1,279 - 71,958 ( 33,533) 1,327 - 5,104 342) ( $258,457 61,496) ($	Reclassifications $ - - - - - - - - - $	Closing net book amount
				$ 1,039,987 514,495 10,587 56,372 10,069 577,080 51,864 40,205
				$2,300,659

~45~

• C. Details of the Group’s property, plant and equipment pledged to others as collateral are provided in Note 8.

• －

• (10) Leasing arrangements lessee

• Effective 2019

• A. The Group leases various assets including offices, cafeterias, vehicles, private branch exchange telephone system and business area. Rental contracts are typically made for periods of 2 to 25 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes, and all or certain assets leased from associations and other related parties can be subleased to associations under the lessors’ agreement. Remaining lease assets cannot be lent, subleased, sold or granted in any different form to the third parties.

• B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Buildings and structures Machinery and equipment (private branch exchange) Transportation equipment (business vehicles)	December 31,2019 Book value 24,386 $ 5,655,745 924 1,232 5,682,287 $	Year ended December 31,2019
		Depreciation expense
		2,962 $ 389,376 853 590 393,781 $

• C. For the year ended December 31, 2019, the additions to right-of-use assets and lease liabilities was $5,849.

• D. Information on profit or loss in relation to lease contracts is as follows:

$5,849. Information on profit or loss in relation to lease contracts is as follows:
Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Expense on leases of low-value assets Expense on variable lease payments	Year ended December 31,2019
	100,073 $ 5,801 766 83,349

• E. For the year ended December 31 2019, the Group’s total cash outflow for leases amounted to $558,575.

~46~

• F. Variable lease payments

• (a) Some of the Group’s lease contracts contain variable lease payment terms that are linked to volume of business generated from a business area. For business areas, up to 0.63% of lease payments are on the basis of variable payment terms and are accrued based on the revenue. Variable payment terms are used for a variety of reasons, including additional revenue exceeding the base revenue, and rental income is calculated based on an agreed upon rate of revenue. Various lease payments that depend on revenue are recognised in profit or loss in the period in which the event or condition that triggers those payments occurs.

• (b) A 10% increase in the aggregate revenue of all business areas with such variable lease contracts would increase total lease payments by approximately 9.34%.

• G. Extension and termination options

• (a) Extension options are included in approximately 94.97% of the Group’s lease contracts pertaining to offices, business areas and cafeterias. These terms and conditions aim to maximise optional flexibility in terms of managing contracts.

• (b) In determining the lease term, the Group takes into consideration all facts and circumstances that create an economic incentive to exercise an extension option or not to exercise a termination option. The assessment of lease period is reviewed if a significant event occurs which affects the assessment.

• (c) Based on the assessment on exercising the extension option, an increase in the right-of-use assets and lease liabilities both amounting to $4,927 was recognised as at December 31, 2019.

• (11) Leasing arrangements – lessor

• A. The Group leases various assets including offices, dormitories, long-term rental suites and parking lot. Rental contracts are typically made for periods of 0.5 and 11 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. To secure lease assets, the lessee may be asked that leased assets may not be used as security for borrowing purposes or cannot be lent, subleased, sold or granted in any different form to the third parties by the lessors.

• B. Gain arising from operating lease agreements for the year ended December 31, 2019 are as follows:

follows:
		Year ended
	December31,2019
Rent income	$	455,981
Rent income arising from variable lease payments	$	64,980
C. The maturity analysis of the lease payments under the operating leases is as follows:
	December 31,2019
January 1, 2020 to December 31, 2020	$	398,632
January 1, 2021 to December 31, 2025		570,982
After January 1, 2026		148,330
	$	1,117,944

~47~

(12) Investment property

A. Details of book values are as follows:

estment property Details of book values are as follows:
Land Leased assets-land Leased assets-buildings	December 31,2019 265,550 $ 2,599,740 2,864,044 5,729,334 $	December 31,2018
		265,550 $ 2,590,774 2,921,517
		5,777,841 $

B. Changes in investment property for the period are as follows:

Year ended December 31, 2019

		Year ended December 31,2019
Cost Land Leased assets - land Leased assets - buildings Cost Land Leased assets - land Leased assets - buildings Accumulated depreciation Leased assets - buildings Accumulated depreciation Leased assets - buildings	Opening net book amount $ 265,550 2,590,774 3,917,001 $6,773,325	Additions Disposals Reclassifications $ - $ - $ - - ( 28) 8,994 - 2,176) ( 49,438 - $ 2,204) ($ 58,432 $ Year ended December 31,2018	Closing net book amount
			$ 265,550 2,599,740 3,964,263
			$6,829,553
	Opening net book amount $ 265,550 2,592,078 3,922,660 $6,780,288	Additions Disposals Reclassifications $ - $ - $ - - ( 113) ( 1,191) - 4,637) ( ( 1,022) - $ 4,750) ($ 2,213) ($ Year ended December 31,2019	Closing net book amount
			$ 265,550 2,590,774 3,917,001
			$6,773,325
	Opening net book amount $995,484	Additions Disposals Reclassifications $84,990 531) ($ 20,276 $ Year ended December 31,2018	Closing net book amount
			$1,100,219
	Opening net book amount $912,403	Additions Disposals Reclassifications $84,480 1,007) ($ 392) ($	Closing net book amount
			$995,484

• C. Rental income from the lease of the investment property and direct operating expenses arising from the investment property are shown below:

from the investment property are shown below:
Rental revenue from the lease of the investment property Direct operating expenses arising from the investment property that generated rental income in the period Direct operating expenses arising from the investment property that did not generate rental income in the period	Years ended December 31,
	2019 444,725 $ 163,673 $ - $	2018
		391,329 $
		160,861 $
		- $

~48~

• D. As of December 31, 2019 and 2018, the fair value of the investment property held by the Group was $12,697,342,and $12,756,468, respectively. The Group management estimated the fair value based on market evidence on transaction price of similar property and assessed value. Valuations were made using the income approach which is categorized within Level 3 in the fair value hierarchy.

• E. Information about the investment property that was pledged to others as collateral is provided in Note 8.

(13) Intangible assets

• A. Details of book values are as follows:

Service concession Software	December 31,2019 2,055,428 $ 1,499 2,056,927 $	December 31,2018
		2,116,681 $ 1,642
		2,118,323 $

• B. Changes in intangible assets for the period are as follows:

Cost Service concession Software Cost Service concession Software Accumulated Amortization Service concession Software Accumulated Amortization Service concession Software		Year ended December 31,	Year ended December 31,	2019
	Opening net book amount 2,868,372 $ 6,253 $2,874,625	Additions Disposals Reclassifications - $ - $ - $ 640 - 106) ( $640 - $ 106) ($ Year ended December 31,2018			Closing net book amount
					2,868,372 $ 6,787
					$2,875,159
	Opening net book amount 2,868,372 $ 5,099 $2,873,471	Additions Disposals - $ - $ 1,154 - $1,154 - $ Year ended December 31,		Reclassifications - $ - - $ 2019	Closing net book amount
					2,868,372 $ 6,253
					$2,874,625
	Opening net book amount 751,691 $ 4,611 $756,302	Additions Disposals Reclassifications 61,253 $ - $ - $ 704 - 27) ( $61,957 - $ 27) ($ Year ended December 31,2018			Closing net book amount
					812,944 $ 5,288
					$818,232
	Opening net book amount 690,438 $ 3,560 $693,998	Additions 61,253 $ 1,051 $62,304	Disposals - $ - - $	Reclassifications - $ - - $	Closing net book amount
					751,691 $ 4,611
					$756,302

~49~

C. Details of amortization on intangible assets are as follows:

Short-term borrowings For details of pledged assets, please refer to Note 8. Operating costs Administrative expenses Unsecured bank borrowings Secured bank borrowings Interest rate range	2019 2018 61,253 $ 61,253 $ 704 1,051 61,957 $ 62,304 $ Years ended December 31, December 31,2019 December 31,2018 1,849,000 $ 940,000 $ 130,000 50,000 1,979,000 $ 990,000 $ 1.48%~1.98% 1.53%~1.79%	Years ended December 31,	Years ended December 31,
			2018
			61,253 $ 1,051
			62,304 $

(14) Short-term borrowings

(15) Short-term notes and bills payable

	December 31,2019	December 31,2019	December 31,2018	December 31,2018
Commercial papers	$	100,000	$	401,900
Less: Unamortized discount	(	75)	(	166)
	$	99,925	$	401,734
Interest rate range		1.19%~1.59%		1.19%~1.43%

A. The above commercial papers were issued by banks and bills financial institutions.

B. For details of pledged assets, please refer to Note 8.

(16) Receipts in advance

Receipts in advance
Bonds payable Items Advance rent Other advance receipts 2017 1st secured ordinary bonds payable 2018 1st secured ordinary bonds payable	December 31,2019 65,862 $ 931 66,793 $ December 31,2019 2,000,000 2,500,000 4,500,000 $	December 31,2018
		62,731 $ 1,444
		64,175 $
		December 31,2018
		2,000,000 2,500,000
		4,500,000 $

(17) Bonds payable

~50~

• A.The Group issued secured ordinary bonds payable in June 2017. The significant terms of the bonds are as follows:

• (a)Total issue amount: $2,000,000

• (b)Issue price: At par value of $1,000 per bond

• (c)Coupon rate: 1.05%

• (d)Terms of interest repayment: The bonds interest is calculated on simple rate every year starting June 2017 based on the coupon rate.

• (e)Repayment term: The bonds are repaid upon the maturity of the bonds.

• (f)Period: 5 years, from June 19, 2017 to June 19, 2022.

• (g)The way of security: Secured by Bank of Taiwan.

• (h)Guarantee Bank: The bonds are guaranteed by Taipei Fubon Commercial Bank.

• B. The Group issued secured ordinary bonds payable in June 2018. The significant terms of the bonds are as follows:

• (a)Total issue amount: $2,500,000

• (b)Issue price: At par value of $1,000 per bond

• (c)Coupon rate: 0.84%

• (d)Terms of interest repayment: The bonds interest is calculated on simple rate every year starting June 2018 based on the coupon rate.

• (e)Repayment term: The bonds are repaid upon the maturity of the bonds.

• (f)Period: 5 years, from June 15, 2018 to June 15, 2023.

• (g)The way of security: Secured by Bank of Taiwan.

• (h)Guarantee Bank: The bonds are guaranteed by Taipei Fubon Commercial Bank.

~51~

- (18) Long term borrowings

Long-term borrowings
	December 31,2019		December 31,2018
Secured bank borrowings	$	10,356,383	$	9,958,821
Unsecured bank borrowings		728,400		2,314,400
		11,084,783		12,273,221
Less: Current portion	(	4,527,788)	(	3,643,297)
		6,556,995		8,629,924
Commerical papers		1,071,900		1,170,000
Less: Unamortized discount	(	759)	(	567)
		1,071,141		1,169,433
Less: Expiring within one year	(	151,613)		-
		919,528		1,169,433
	$	7,476,523	$	9,799,357
Range of maturity dates	2020.04.02~2027.11.02		2019.06.27~2027.11.02
Range of maturity rates		0.64%~2.41%		0.60%~2.41%

A. For details of restrictive covenants, please refer to Note 9.

• B. The Group and financial institutions entered into a contract for a syndicated borrowing. The Group shall redraw the revolving credit line to issue abovementioned commercial paper during the credit term. For the related information, please refer to Notes 9(9) to 9(12).

• C. For details of pledged assets, please refer to Note 8.

(19) Provisions - replacement cost

Provisions-replacement cost
		2019			2018
At January 1	$		87,196	$		99,539
Additions			49,427			41,181
Used	(		34,069)	(		53,524)
At December 31	$		102,554	$		87,196

(20) Pension

A.(a)The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Labor Standards Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 8% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

~52~

Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contributions to cover the deficit by next March.

(b) The amounts recognized in the balance sheet are determined as follows:

	December	31,2019	December	31,2018
Present value of defined benefit obligations	($	189,980)	($	190,446)
Fair value of plan assets		118,112		118,094
Net defined benefit liability	($	71,868)	($	72,352)

• (c) Changes in net defined benefit liability are as follows:

2019 Balance at January 1 Current service cost Interest (expense) income Remeasurements: Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31	Present value of defined benefit obligations 190,446) ($ 698) ( 1,723) ( 192,867) ( 3,254) ( 3,859) ( 7,113) ( - 10,000 189,980) ($	Fair value ofplan assets 118,094 $ - 1,074 119,168 - 4,085 4,085 4,859 10,000) ( 118,112 $	Net defined benefit liability 72,352) ($ 698) ( 649) ( 73,699) ( 3,254) ( 226 3,028) ( 4,859 - 71,868) ($

~53~

2018 Balance at January 1 Current service cost Interest (expense) income Remeasurements: Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31	Present value of defined benefit obligations 192,667) ($ 1,012) ( 1,969) ( 195,648) ( 1,972) ( 643) ( 2,615) ( - 7,817 190,446) ($	Fair value ofplan assets 99,893 $ - 1,030 100,923 - 3,238 3,238 21,750 7,817) ( 118,094 $	Net defined benefit liability
			92,774) ($ 1,012) ( 939) (
			94,725) (
			1,972) ( 2,595
			623
			21,750 - 72,352) ($

(d) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	Years ended December31,	Years ended December31,
	2019 0.70% 1.50%~2.00%	2018
		0.90%~1.00%
		1.50%~2.00%

Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Mortality Table.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

obligation is affected. The analysis was as follows:
Increase 0.25% Decrease 0.25% December 31, 2019 Effect on present value of defined benefit obligation 3,914) ($ 4,039 $ Increase 0.25% Decrease 0.25% December 31, 2018 Effect on present value of defined benefit obligation 4,206) ($ 4,346 $ Discount rate Discount rate	Future salaryincreases
	Increase 0.25% Decrease 0.25% 3,519 $ 3,435) ($ Future salaryincreases	Decrease 0.25%
	Increase 0.25% Decrease 0.25% 3,830 $ 3,732) ($	Decrease 0.25%

The sensitivity analysis above is based on other conditions that are unchanged but only one assumption is changed. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

~54~

• (e) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2020 amounts to $3,928.

• (f) As of December 31, 2019, the weighted average duration of that retirement plan is 8~11 years.

• B.(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (b) The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2019 and 2018 were $60,601 and $68,745, respectively.

• (21) Share capital

• A. Movements in the number of the Company’s ordinary shares outstanding are as follows:

• (Units: in thousand shares)

Shares at January 1 and December 31	2019 1,622,671	2018
		1,622,671

• B. As of December 31, 2019, the Company’s authorized capital was $20,000,000, and the paid-in capital was $16,233,261 with a par value of NT$10 per share, consisting of 1,623,326 thousand shares of ordinary stock.

• C. As of December 31, 2019 and 2018, the Company’s subsidiary, Prince Apartment Management Maintain Co., Ltd., held the Company’s stocks to maintain equity interest in the Company. The amount of shares held by the subsidiary was all 655 thousand shares, the average par value was all NT$1.53 per share, and the fair value was NT$11.25 and NT$10.20 per share, respectively.

(22) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

Capital surplus

legal reserve is insufficient.		Capital surplus	Capital surplus
2019 At January 1, 2019 (At December 31, 2019) 2018 At January 1, 2018 (At December 31, 2018)	Share premium 1,375,442 $	Treasury share transaction Others 877,839 $ 7,232 $ Capital surplus		Total
				2,260,513 $
	Share premium 1,375,442 $	Treasury share transaction 877,839 $	Others 7,232 $	Total
				2,260,513 $

~55~

(23) Retained earnings

• A. In accordance with the Company’s Articles of Incorporation, the Company will take into consideration its future business plans and capital expenditures in determining the amount of earnings to be retained and to be distributed. In accordance with the Company Law, 10% of the current year’s earnings, after payment of all taxes and after offsetting accumulated deficit, shall be set aside as legal reserve until the balance of legal reserve is equal to that of issued share capital. Afterwards, an amount shall be appropriated or reversed as special reserve in accordance with applicable legal or regulatory requirements, along with prior years’ accumulated unappropriated retained earnings, and then distribution should be in the following order: stock dividend and bonus to shareholders are no less than 20% of the accumulated distributable earnings, in current period and cash dividend is at least 30% of the total stock dividend and bonus; the appropriation of earnings is proposed by the Board of Directors and resolved by the shareholders.

• B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

• C.The Company recognised dividends distributed to owners both amounting to $1,055,162 ($0.65 (in dollars) per share) for the years ended December 31 2019 and 2018. On March 19, 2020, the Board of Directors proposed that total dividends for the distribution of earnings for 2019 was $811,663 at $0.5 (in dollars) per share.

(24) Other equity items

$811,663 at $0.5 (in dollars) per share. Other equity items
Unrealised gains Currency (losses)on valuation translation Total At January 1, 2019 788,079 $ 48) ($ 788,031 $ Revaluation - gross 88,459 - 88,459 At December 31, 2019 876,538 $ 48) ($ 876,490 $ Unrealised gains Currency (losses)on valuation translation Total At January 1, 2018 974,425 $ 48) ($ 974,377 $ Effect of retrospective application 25,611 - 25,611 Revaluation - gross 210,990) ( - 210,990) ( Revaluation transferred to retained earnings - gross 967) ( - 967) ( At December 31, 2017 788,079 $ 48) ($ 788,031 $		Total
		788,031 $ 88,459
		876,490 $

~56~

(25) Maturity analysis of assets and liabilities

The construction related assets and liabilities are classified as current and non-current based on the operating cycle. Related recognised amount expected to be recovered or repaid within or after 12 months from the balance sheet date is as follows:

December 31, 2019 Assets Notes receivable, net Accounts receivable, net (including related parties) Contract assets Inventories Liabilities Contract liabitities Notes payable Accounts payable Long-term notes and accounts payable December 31, 2018 Assets Notes receivable, net Accounts receivable, net (including related parties) Contract assets Inventories Liabilities Contract liabitities Notes payable Accounts payable Long-term notes and accounts payable	Within 12 months Over 12 months 35,854 $ 1,944 $ 499,243 126,934 88,986 251,840 10,612,229 9,279,736 11,236,312 $ 9,660,454 $ 502,439 $ 219,365 $ 1,940 - 992,360 924,060 - 11,456 1,496,739 $ 1,154,881 $ Within 12 months Over 12 months 48,899 $ 3,174 $ 1,306,149 278,524 210,227 406,626 8,899,739 13,038,115 10,465,014 $ 13,726,439 $ 740,465 $ 29,420 $ 4,528 - 1,419,404 1,263,726 - 11,456 2,164,397 $ 1,304,602 $	Total
		37,798 $ 626,177 340,826 19,891,965
		20,896,766 $
		721,804 $ 1,940 1,916,420 11,456
		2,651,620 $
		Total
		52,073 $ 1,584,673 616,853 21,937,854
		24,191,453 $
		769,885 $ 4,528 2,683,130 11,456
		3,468,999 $

~57~

(26) Operating revenue

Operating revenue
Revenue from contracts with customers Other - rental revenue	Years ended December 31,
	2019 11,679,161 $ 520,276 12,199,437 $	2018
		11,387,241 $ 467,966
		11,855,207 $

• A. The revenue from contracts with customers arises from the transfer of goods and services at a point in time or over time in the following business lines:

Year ended December 31, 2019 Revenue from external customer contracts Timing of revenue recognition At a point in time Over time Year ended December 31, 2018 Revenue from external customer contracts Timing of revenue recognition At a point in time Over time	Building and land sales 5,182,052 $ 5,182,052 $ - 5,182,052 $ Building and land sales 6,164,207 $ 6,164,207 $ - 6,164,207 $	Construction 3,212,214 $ - $ 3,212,214 3,212,214 $ Construction 1,772,016 $ - $ 1,772,016 1,772,016 $	Hotel management 2,656,614 $ - $ 2,656,614 2,656,614 $ Hotel management 2,602,233 $ - $ 2,602,233 2,602,233 $	BOT business 257,517 $ - $ 257,517 257,517 $ BOT business 297,098 $ - $ 297,098 297,098 $	Propertymanagement 370,764 $ - $ 370,764 370,764 $ Propertymanagement 551,687 $ - $ 551,687 551,687 $	Total
						11,679,161 $
						5,182,052 $ 6,497,109
						11,679,161 $
						Total
						11,387,241 $
						6,164,207 $ 5,223,034
						11,387,241 $

• B. Aggregate amount of the transaction price allocated to and the year expected to recognise revenue for the unsatisfied performance obligations in relation to the contracted significant construction contracts as of December 31, 2019 and 2018 are as follows:

December 31, 2019 December 31, 2018	Year expected to recognise revenue 2020~2021 2019~2021	Contracted amount
		4,171,740 $ 5,338,255

~58~

C. Contract assets and liabilities

The Group has recognised the following revenue-related contract assets and liabilities:

Contract assets: Contract assets - construction contracts Contract liabilites: Contract liabilities - buildings and land sales contracts Contract liabilities - construction contracts Contract liabilities - Hotel operation contracts Contract liabilities - BOT business	December31,2019 340,826 $ 496,296 $ 225,508 146,767 53,969 922,540 $	December31,2018 616,853 $ 601,715 $ 168,170 141,034 50,105 961,024 $	January1,2018
			370,577 $
			1,014,918 $ 10,202 132,090 45,829
			1,203,039 $

Revenue recognised that was included in the contract liability balance at the beginning of the period:

Revenue recognised that was included in the contract liability balance at the beginning of the period Building and land sales contracts Construction contracts Hotel operation contracts BOT business	Years ended December 31,	Years ended December 31,
	2019 348,046 $ 168,170 139,854 50,105 706,175 $	2018
		876,696 $ 10,202 130,815 45,829
		1,063,542 $

(27) Other income

Other income
Interest income Dividend income Indemnity income Income from confiscated guarantee due to a default Other income	Years ended December 31,
	2019 14,656 $ 101,775 20,301 38,551 93,650 268,933 $	2018
		11,116 $ 143,737 5,013 5,386 107,366
		272,618 $

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(28) Other gains and losses

Other gains and losses
Finance costs Net gain on financial assets at fair value through profit or loss Payables transferred to other income Net currency exchange gain Others Interest expense: Bank borrowings Lease liability Commercial paper Ordinary bonds Others Other finance expenses	2019 2018 37,723 $ 74,516 $ 193,224 134,083 507 15,982 1,075 7,302) ( 232,529 $ 217,279 $ Years ended December 31, 2019 2018 168,584 $ 151,671 $ 100,073 - 14,869 11,188 41,001 52,920 2,250 1,372 1,200 1,200 327,977 $ 218,351 $ Years ended December 31,
	2019 168,584 $ 100,073 14,869 41,001 2,250 1,200 327,977 $

(29) Finance costs

(30) Expenses by nature

Expenses by nature
Employee benefit expense Wages and salaries Labor and health insurance fees Pension costs Directors’ remuneration Other employee benefit expense Depreciation charges Amortization charges	Year	ended December 31,2019
	Operatingcosts 706,913 $ 71,733 32,300 - 13,109 824,055 $ 84,990 $ 61,253 $	Operatingexpenses 571,401 $ 60,873 29,648 42,140 33,453 737,515 $ 644,721 $ 704 $	Total
			1,278,314 $ 132,606 61,948 42,140 46,562
			1,561,570 $
			729,711 $
			61,957 $

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Year ended December 31, 2018

Employee benefit expense Wages and salaries Labor and health insurance fees Pension costs Directors’ remuneration Other employee benefit expense Depreciation charges Amortization charges	Operatingcosts 848,753 $ 75,056 37,773 - 9,314 970,896 $ 84,480 $ 61,253 $	Operatingexpenses 628,354 $ 65,401 32,923 52,343 34,641 813,662 $ 258,457 $ 1,051 $	Total
			1,477,107 $ 140,457 70,696 52,343 43,955
			1,784,558 $
			342,937 $
			62,304 $

• A. According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute compensation to the employees and pay remuneration to the directors that account for at least 2% and no higher than 3%, respectively, of distributable profit of the current period. If a company has accumulated deficit, earnings should be channeled to cover losses.

• Employees’ compensation can be distributed in the form of shares or in cash. Qualified employees, including the employees of subsidiaries of the company meeting certain specific requirements, are entitled to receive aforementioned stock or cash.

• Abovementioned distributable profit of the current period refers to the pre-tax profit before deduction of employees’ compensation and directors’ remuneration.

• B. For the years ended December 31, 2019 and 2018, employees’ compensation was accrued at $101,854 and $133,188, respectively; while directors’ remuneration was accrued at $34,651 and $45,311, respectively. The aforementioned amounts were recognised in salary expenses. The employees’ compensation and directors’ remuneration were accrued based on the percentage as prescribed in the Company’s Articles of Incorporation and distributable profit of current period for the year ended December 31 2019. The distributed amounts resolved by the Board of Directors were in agreement with the accrued amounts. The employees’ compensation will be distributed in the form of cash.

• Employees’ compensation and directors’ remuneration of 2018 as resolved at the meeting of Board of Directors were in agreement with those amounts recognised in the 2018 financial statements.

Information about employees’ compensation and directors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

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(31) Income tax

A. Income tax expense

(a) Components of income tax expense:

Current tax: Current tax on profits for the period Tax on undistributed surplus earnings Under (over) provision of prior year’s income tax Land value increment tax recognised in income tax for the period Total current tax Deferred tax: Origination and reversal of temporary differences Impact of change in tax rate Total deferred tax Income tax expense	2019 2018 71,437 $ 98,522 $ 3,690 9,066 2,942 3,143) ( 33,134 52,555 111,203 157,000 12,115 9,849) ( - 21,620) ( 12,115 31,469) ( 123,318 $ 125,531 $ Years ended December 31,

(b) The expense tax (charge)/credit relating to components of other comprehensive income is as follows:

follows:
Remeasurement of defined benefit plans Impact of change in tax rate Total deferred tax	Years ended December 31,
	2019 48 $ - 48 $	2018
		126 $ 10
		136 $

(c) Reconciliation between income tax expense and accounting profit:

		Years ended	December 31,	December 31,
		2019		2018
Tax calculated based on profit before tax and	$	212,414	$	273,882
statutory tax rate
Effect recognized from adjustments under tax	(	128,878)	(	206,829)
regulations
Tax on undistributed surplus earnings		3,690		9,066
Under (over) provision of prior year’s income tax		2,942	(	3,143)
Land value increment tax		33,134		52,555
Loss carryforward		16		-
Income tax expense	$	123,318	$	125,531

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B. Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows:

Deferred tax assets Temporary difference: Effects of lease liabilities Rent adjusted using the straight-line method Pensions Employee benefits Unused compensated absences Unrealised compensation losses Allowance for bad debts Net operating loss carryforward Deferred tax liabilities: Temporary difference: Provision for land revaluation increment tax Pensions Deferred tax assets Temporary difference: Rent adjusted using the straight-line method Pensions Employee benefits Unused compensated absences Unrealised compensation losses Allowance for bad debts Net operating loss carryforward Deferred tax liabilities: Temporary difference: Provision for land revaluation increment tax	January1 - $ 114,346 229 8 782 26,332 - - 141,697 $ 307,672 $ - 307,672 $ January1 100,106 $ 260 21 738 21,515 24 867 123,531 $ 320,839 $	Recognised in Recognised in other profit or loss comprehensive income 119,226 $ - $ 114,346) ( - 181) ( 48) ( 8) ( - 267) ( - 26,332) ( - 3 - 245 - 21,660) ($ 48) ($ 10,072) ($ - $ 527 - 9,545) ($ - $ Year ended December 31,2019 Year ended December 31,2018	Recognised in Recognised in other profit or loss comprehensive income 119,226 $ - $ 114,346) ( - 181) ( 48) ( 8) ( - 267) ( - 26,332) ( - 3 - 245 - 21,660) ($ 48) ($ 10,072) ($ - $ 527 - 9,545) ($ - $ Year ended December 31,2019 Year ended December 31,2018	December 31 119,226 $ - - - 515 - 3 245 119,989 $ 297,600 $ 527 298,127 $
		Recognised in profit or loss 14,240 $ 105 13) ( 44 4,817 24) ( 867) (	Recognised in other comprehensive income - $ 136) ( - - - - - 136) ($ - $	December 31 114,346 $ 229 8 782 26,332 - - 141,697 $ 307,672 $
		18,302 $ 13,167) ($

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• C. Expiration dates of loss carryforward and amounts of unrecognised deferred tax assets are as follows:

December 31, 2019

Year incurred In and before 2011 year ended December 31, 2012 year ended December 31, 2013 year ended December 31, 2014 year ended December 31, 2016 year ended December 31, 2017 year ended December 31, 2018 year ended December 31, 2019 year ended	Amount filed/ assessed Amount assessed Amount assessed Amount assessed Amount assessed Amount assessed Amount assessed Amount filed Amount filed	Unused amount 353,972 $ 11,475 31,006 31,519 11,668 29,524 20,383 38,118 527,665 $	Unrecognised deferred tax assets 70,794 $ 2,295 6,201 6,304 2,334 5,905 3,926 5,768 103,527 $	Usable Until
				2021 2022 2023 2024 2026 2027 2028 2029

December 31, 2018

Year incurred In and before 2011 year ended December 31, 2012 year ended December 31, 2013 year ended December 31, 2014 year ended December 31, 2016 year ended December 31, 2017 year ended December 31, 2018 year ended	Amount filed/ assessed Amount assessed Amount assessed Amount assessed Amount assessed Amount filed Amount filed Amount filed	Unused amount 500,091 $ 11,475 31,006 31,519 18,668 35,724 20,383 648,866 $	Unrecognised deferred tax assets 100,018 $ 2,295 6,201 6,304 3,733 7,145 4,077 129,773 $	Usable Until
				2021 2022 2023 2024 2026 2027 2028

• D. The Company’s income tax returns through 2017 have been assessed and approved by the Tax Authority.

• E. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China on February 7, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Company has assessed the impact of the change in income tax rate.

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(32) Earnings per share

Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Year ended December 31,2019
	Weighted average number of ordinary Earnings shares outstanding per share Amount after tax (shares in thousands) (in dollars) 952,767 $ 1,622,671 0.59 $ 952,767 $ 1,622,671 - 11,641 952,767 $ 1,634,312 0.58 $ Year ended December 31,2018	Earnings per share (in dollars)
		0.59 $
		0.58 $
	Weighted average number of ordinary shares outstanding Amount after tax (shares in thousands) 1,252,655 $ 1,622,671 1,252,655 $ 1,622,671 - 15,349 1,252,655 $ 1,638,020	Earnings per share (in dollars)
		0.77 $
		0.76 $

(33) Operating leases

Prior to 2019

The Company leases office, cafeterias and vehicles and business area under non-cancellable operating lease agreements. The lease terms are between 2011 and 2035, and all these lease agreements are renewable at the end of the lease period. Rental payment is calculated based on an agreed upon rate of revenue. The Company’s subsidiary recognised rental expense of $488,585 for the year ended December 31, 2018. The future aggregate minimum lease payments under noncancellable operating leases are as follows:

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Not later than one year Later than one year but not later than five years Later than five years	December 31,2018
	473,589 $ 2,162,999 8,096,788
	10,733,376 $

(34) Supplemental cash flow information

Investing and financing activities with no cash flow effects:

Supplemental cash flow information Investing and financing activities with no cash flow effects:
Prepayment for equipment (shown as ‘other non-current assets-others’) transferred to property, plant and equipment Investment properties transferred to real estate held for sale Inventories transferred to property, plant and equipment Intangible assets transferred to other non-current assets Property, plant and equipment transferred to investment properties	Years ended December 31,
	2019 10,592 $ - $ 153 $ 79 $ 38,156 $	2018
		3,395 $
		1,821 $
		11 $
		- $
		- $

(35) Changes in liabilities from financing activities

Short-term borrowings Short-term notes and bills payable Bonds payable Long-term borrowings Long-term notes and accounts payable Guarantee deposits received Lease liability Liabilities from financing activities - gross Short-term borrowings Short-term notes and bills payable Bonds payable Long-term borrowings Long-term notes and accounts payable Guarantee deposits received Liabilities from financing activities - gross	Changes in cash flow from financing January1,2019 activities 990,000 $ 989,000 $ 401,734 301,809) ( 4,500,000 - 13,442,654 1,286,730) ( 721,633 86,668 136,162 12,797 6,644,842 368,586) ( 26,837,025 $ 868,660) ($ Changes in cash flow from financing January1,2019 activities 860,000 $ 130,000 $ 1,055,558 653,824) ( 4,500,000 - 12,784,475 658,179 744,346 22,713) ( 136,198 (36) 20,080,577 $ 111,606 $	Changes in other non-cash items (Note) - $ - - - - 2,941 2,941 $ Changes in other non-cash items (Note) - $ - - - - - $	December 31,2019
			1,979,000 $ 99,925 4,500,000 12,155,924 808,301 148,959 6,279,197
			25,971,306 $
			December 31,2018
			990,000 $ 401,734 4,500,000 13,442,654 721,633 136,162
			20,192,183 $

Note: Changes in other non-cash items arose from the additions and disposals to lease liabilities.

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7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship with the Group

LATED PARTY TRANSACTIONS Names of related parties and relationship with the Group
Names of relatedparties Uni-President Development Corp. Ming-Da Enterprise Co., Ltd. President International Development Corp. Tone Sang Construction Corp. Tainan Spinning Co., Ltd. (Note) President Chain Store Corp. C-maan Health Limited Company Man Strong Manpower MGT Co., Ltd.	Relationshipwith the Group
	Associate Associate Other related party Other related party Other related party Other related party Other related party Other related party

Note: It is no longer a related party after the re-election of directors of the Company on June 21, 2019.

(2) Significant related party transactions and balances

• A. Sales of goods:

(a)

Construction subcontracting: －Other related parties	Years ended December 31,	Years ended December 31,
	2019 458,124 $	2018
		264,211 $

The contract prices of construction for related parties are based on expected construction cost plus reasonable management expenses and profit, and are determined based on mutual agreements. The construction payments are collected based on the contract terms. As of December 31, 2019 and 2018, the status of the construction of the related parties undertaken by the Group was as follows:

Tainan Spinning Co., Ltd.: Total amount of construction contracts that were signed but had not been settled yet Construction payments received Construction payments receivable	December 31,2019 December 31,2018 - $ 2,140,004 $ - 277,916) ( - $ 1,862,088 $

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December 31, 2019 December 31, 2018

Others related parties: Total amount of construction contracts that were signed but had not been settled yet $ 241,812 $ 239,850 Construction payments received ( 239,478) ( 215,425) Construction payments receivable $ 2,334 $ 24,425

had not been settled yet Construction payments received Construction payments receivable	241,812 $ 239,850 $ 239,478) ( 215,425) ( 2,334 $ 24,425 $	241,812 $ 239,850 $ 239,478) ( 215,425) ( 2,334 $ 24,425 $
(b) Rental income: －President Chain Store Corp. －Other related parties	Years ended December 31,
	2019 51,578 $ 16,449 68,027 $	2018
		49,837 $ 15,655
		65,492 $

Rent is determined by mutual agreements and is collected monthly.

• B. Accounts receivable

December 31, 2019 December 31, 2018 Accounts receivable - related parties: － Other related parties $ 3,696 $ 27,793

• C. Lease transactions - lessee

• (a)

  • i. The Group leases business area from the associate, Uni-President Development Corp. The lease terms are between 2011 and 2035, and all these lease agreements are renewable at the end of the lease period. Rental payment is calculated based on an agreed upon rate of revenue.

  • ii. The Group leases office from the other related parties, President International Development Corp. These leases have terms expiring between 2018 and 2023, and all these lease agreements are renewable at the end of the lease period.

  • iii. The Group leases office from the other related parties, Tainan Spinning Co., Ltd. These leases have terms expiring between 2015 and 2035, and all these lease agreements are not renewable at the end of the lease period.

• (b) Acquisition of right-of-use assets:

For the year ended December 31, 2019, there was no ‘right-of-use asset’ obtained from related parties. Due to the Group has elected to apply IFRS 16, ‘right-of-use asset’ was increased on January 1, 2019 as follows:

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Uni-President Development Corp. Tainan Spinning Co., Ltd. President International Development Corp,	5,757,210 $ 113,916 105,352 5,976,478 $

(c) Depreciation expense - right-of-use assets and rent expense

(d) Rents payable (e) Lease liabilities i. Outstanding balance: Uni-President Development Corp. President International Development Corp. Tainan Spinning Co., Ltd. Rent expense : Uni-President Development Corp. President International Development Corp. Tainan Spinning Co., Ltd. Depreciation expense - right-of-use assets: Corp. Corp. Other payables: Uni-President Development Long-term notes and accounts payable: Uni-President Development Lease liabilities - current: Uni-President Development Corp. President International Development Corp, Lease liabilities - non-current: Uni-President Development Corp. President International Development Corp,		2019 2018 335,371 - $ 24,312 4,505 - 364,188 - 83,349 453,743 $ - 23,585 $ - 6,915 83,349 484,243 $ Years ended December 31, December 31,2019 December 31,2018 83,349 $ 85,953 $ - $ 551,632 $ December 31,2019 318,530 $ 24,192 342,722 $ December 31,2018 5,697,083 $ 57,496 5,754,579 $
	$
	$
	$
		$

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ii. Interest expense:

nterest expense:
Interest expense: Uni-President Development Corp. President International Development Corp, Tainan Spinning Co., Ltd.	Year ended December31,2019
	94,026 $ 2,090 1,088
	97,204 $

D. Others:

Refundable deposits:

Uni-President Development Corp.

December 31,2019 68,391 $	December 31,2018
	67,396 $

• E. On June 20, 2006, the Company and China Metal Products Co., Ltd. (“A party”) jointly signed a creditor’s rights transfer contract with Amida Trustlink Assets Management Co., Ltd. (“B party”). Under the contract, the Company and A party should pay $2,100,000 each (totaling $4,200,000) to jointly acquire whole creditor’s rights of mortgages, security interests and other dependent claims (collectively referred herein as the creditor’s rights) on the Splendor Hotel Taichung Building, and each bears 50% rights and obligations of this acquisition; when all creditor’s rights of this object turn into property rights, the Company and A party should pay B party totaling $1,000,000 as the cost and reward of B party for it is entrusted with the task to help turn the creditor’s rights as stated above into property rights, but any excess cost over $1,000,000 if incurred on this task shall be borne by B party on its own; the Company should pay B party $300,000 before June 30, 2006, and the Company and A party should jointly issue a promissory note of $1,800,000 to B party on the signing date; payment should be done before July 15, 2006. The title to the creditor’s rights as stated above had been transferred to the Company and A party on August 2, 2006. Total acquisition price of the creditor’s rights amounted to $5,200,000, which the Company and A party bear 50% of the price each. The Company had paid its share.

• F. Certain subsidiaries’ short-term borrowings of the Group were guaranteed by the subsidiaries’ Chairman. However, the Group is negotiating with the banks for the cancellation of the joint guarantee.

(3) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Other long-term benefits Termination benefit Share-based payment	Years ended December 31,
	2019 59,918 $ - - - - 59,918 $	2018
		80,977 $ - - - -
		80,977 $

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8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Pledged asset Time deposits, demand deposits and checking deposits (shown as ‘financial assets at amortised cost’) Financial assets at fair value through profit or loss Land held for construction site Construction in progress Financial assets at fair value through other comprehensive income Investments accounted for under equity method Land Buildings and structures Investment property	December31,2019 1,219,429 $ 380,342 4,453,345 3,834,017 1,152,004 1,146,288 2,709,258 1,794,203 3,953,348 20,642,234 $	December31,2018	Purpose
		1,510,131 $ 356,906 4,578,217 3,960,061 1,096,674 1,321,365 2,718,252 1,878,868 3,947,261	Performance guarantee, construction performance guarantee, short-term and long-term borrowings, short-term commercial papers issue, member reward points’ gift coupons trust account and sinking funds Construction performance guarantees, short-term and long-term borrowings Short-term borrowings, notes and bills payable and long-term borrowings Short-term borrowings, notes and bills payable and long-term borrowings Short-term borrowings and long-term notes and bills payable Long-term borrowings, notes and bills payable Construction performance guarantees, short-term and notes and bills payable and long-term borrowings Short-term borrowings, notes and bills payable and long-term borrowings Construction performance guarantees, short-term and notes and bills payable and long-term borrowings
		21,367,735 $

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

(1) Summary of endorsements and guarantees is as follows:

A. Summary of endorsements and guarantees provided by the Company to subsidiaries is as follows:

Name of company The Splendor Hotel Taichung (Note)	December31,	Amount drawn 1,900,000 $ 2019	December31,	2018
	Total endorsement amount 2,150,000 $		Total endorsement amount 1,900,000 $	Amount drawn
				1,900,000 $

Note: The Company and China Metal Products Co., Ltd. provided endorsements and guarantees in equal proportions of 50% ownership each for the Splendor Hotel Taichung’s short-term borrowings, short-term notes and bills payable, long-term notes payable and syndication loan of long-term borrowings.

B. Summary of endorsements and guarantees provided by subsidiaries to the Company is as follows:

Name of company Prince Real Estate Co., Ltd.	December31,	Amount drawn 1,352,085 $ 2019	December31,	2018
	Total endorsement amount 1,352,085 $		Total endorsement amount 1,255,309 $	Amount drawn
				1,255,309 $

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C. Summary of endorsements and guarantees provided by subsidiaries to subsidiaries is as follows:

Subsidiaries being Name of subsidiaries endorsed/guaranteed	December31,	Amount drawn 20,000 $ - 20,000 $ 2019	December31,	2018
	Total endorsement amount 20,000 $ - 20,000 $		Total endorsement amount 20,000 $ 56,000 76,000 $	Amount drawn
Prince Apartment Management Maintain Co., Ltd. Prince Security Co., Ltd. Prince Property Management Consulting Co., Ltd. Prince Security Co., Ltd.				20,000 $ -
				20,000 $

• D. The accumulated operating losses of the subsidiary, the Splendor Hotel, had exceeded 50% of its paid-in capital and its current liabilities were greater than its current assets. The Company was committed to provide the endorsement and guarantees for all Splendor Hotel’s borrowings in its ownership proportion of 50%.

(2) Capital expenditures contracted for at the balance sheet date but not yet incurred are as follows:

Property, plant and equipment

December 31,2019 4,278 $	December 31,2018
	6,815 $

(3) Operating lease agreements:

Please refer to Note 6 (10) and (33) for details.

• (4) According to the sale contracts, the Company should provide warranty on the house structure and major facilities for one year from the handover day for the houses it sold. However, any damage to the houses caused by disasters, additions to the houses made by the buyers, or events that are not attributed to the Company is not included in the scope of warranty.

• (5) On March 17, 2005, the Company (“A party”) signed a contract with National Taiwan University (“B party”) relating to the construction and operation of dormitories on Chang-Hsing St. and Shui-Yuan Campus. The major terms of the contract are as follows:

• A. Under the contract, B party should be responsible for acquiring the ownership or land-use right for this project, and let A party use the land; A party must complete the construction within 3 years from the registration of the superficies, and may operate the dormitories for 44 years, collect dormitory rentals and use fees of other facilities from students, and should return the related assets to B party on the expiry of the contract.

• B. A party should give B party a performance guarantee of $60,000 for the construction on the signing date and $30,000 for operations before the start of operation. As of December 31, 2019, and 2018, A party had provided performance guarantee with a guarantee letter issued by the bank, all amounting to $30,000.

• C. A party should pay B party land rentals from the registration of the superficies, according to the terms of the contract, and pay B party operating royalties from the third year of the operation, based on the specified proportion of dormitory rentals and use fees of other facilities collected from students.

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• D. Terms of restrictions for A party:

  • (a) The ratio of A party’s own capital utilized in this project to total construction cost of this project should be at least 30%;

  • (b) During the operation period, the ratio of shareholders’ equity to total assets should be at least 25%; and current ratio (current assets/current liabilities) should be at least 100%;

  • (c) All rights acquired by A party under the contract, except for other conditions specified in the contract and approved by B party, should not be transferred, leased, registered as a liability/obligation or become an executed object of civil litigation.

• (6)On May 10, 2005, the Company (“A party”) signed a contract with National Cheng Kung University (“B party”) relating to the construction and operation of student dormitories and alumni hall. The major terms of the contract are as follows:

• A. Under the contract, B party should be responsible for acquiring the ownership or land-use right for this project, and let A party use the land by way of registration of the superficies; A party must obtain the user license within 3 years after the signing date, and may operate the dormitories and motorcycle parking lots for 35 years from the start of operation and collect dormitory rentals and use fees of other facilities from students for 50 years from the start of construction, and should return the related assets to B party on the expiry of the contract.

• B. A party should give B party performance guarantee of $50,000 for this project on the signing date, which will be returned in installment according to the contractual terms. As of December 31, 2019 and 2018, A party had provided performance guarantee with a guarantee letter issued by the bank, both amounting to $20,000.

• C. During the operation period, A party should pay B party dormitory operating royalties based on the specified proportion of annual operating revenue of the dormitories and auxiliary facilities operating royalties based on the specified proportion of annual operating revenue of the auxiliary facilities. A party should pay such operating royalties for prior year before the end of September every year. Further, according to the superficies contract signed by the two parties, A party should pay B party land rentals from the registration of superficies.

• D. All rights acquired by A party under the contract, except for other conditions specified in the contract and approved by B party, should not be transferred, leased, registered as a liability/obligation or become an executed object of civil litigation.

• (7)The Company signed a syndicated loan contract with 7 banks - Mega International Commercial Bank as the lead bank for a credit line of $2.16 billion. The syndicated loans include long-term (secured) loans and guarantee payments receivable (secured), which are used to fund the construction of dormitories in Changxing St. Campus and Shuiyuan Campus of National Taiwan University. During the loan period, the Company should maintain financial commitments such as current ratio, liability ratio and interest coverage; those financial ratios/restrictions shall be reviewed at least once every year, based on the Company’s audited annual non-consolidated financial statements. If the Company violates the above financial commitments, it shall improve its financial position by capital increase or other ways before the end of October of the following year from the year of violation; it would not be regarded as a default if the managing bank confirms that its financial position has improved

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completely. In case of violation, interest on the loans would be charged at the loan rate specified in the contract plus additional 0.25％ per annum from the notification date of the managing bank to the completion date of financial improvement or to the date the Company gains the relief from the consortium for its violation.

• (8)The Company signed a loan contract with Mega International Commercial Bank for a credit line of $785 million. The loans include long-term (secured) loans and guarantee payments receivable (secured), which are used to fund the construction of student dormitories and alumnus hall of National Cheng Kung University. During the loan period, the Company should maintain financial commitments such as current ratio, liability ratio and interest coverage; those financial ratios/restrictions shall be reviewed at least once every year. Current ratio and liability ratio shall be reviewed based on the Company’s audited annual non-consolidated financial statements, and interest coverage based on the Company’s revenue and expenditure table for the related project. If the Company violates the above financial commitments, it shall improve its financial position by capital increase or other ways before the end of October of the following year from the year of violation; it would not be regarded as a default if the bank confirms that its financial position has improved completely. In case of violation, interest on the loans would be charged at the loan rate specified in the contract plus additional 0.25 ％ per annum from the notification date of the bank to the completion date of financial improvement or to the date the Company obtains a waiver from the bank for its violation.

• (9)The Company signed a syndicated loan contract with 3 financial institutions - Mega International Commercial Bank as the lead bank for a credit line of $1.06 billion. The syndicated loans include medium-term (secured) loans and commercial paper guarantees, which are used for purchases of 4 tracts of PingHsin Sections No. 694, 706, 708 and 709 in Taiping Dist., Taichung City and construction payment of residential buildings. Furthermore, the Company shall repay in full for the balance of unpaid principal on maturity date.

• (10)The Company signed a syndicated loan contract with 3 financial institutions - Bank of Taiwan Co., Ltd. as the lead bank for a credit line of $3.045 billion. The syndicated loans include medium-term guarantee payments receivable (secured) and medium-term commercial paper guarantees (secured). Bank of Taiwan and Agricultural Bank of Taiwan provided medium-term guarantee payments receivable (secured) with a credit line of $2.545 billion which are used by the Company to apply for the guarantee of corporate bond issued by the bank. International Bills Finance Corp provides medium-term commercial paper guarantees (secured) with a credit line of $500 million which are used by the Company to repay the borrowing to the financial institutions and improve financial structure. These three financial institutions shall renew the contract with the Company for another 1 year based on their individual commitments and establish the facility documentation, which is similar to the commercial paper guarantees, letter of purchase contract and others. In addition, no matter whether the bondholders receive the payment or not, the banks’ guarantee responsibility will be released after the debtor returns the payables to the agency. This syndicated loan contract expired on November 21, 2018.

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• (11) The Company signed a syndicated loan contract with 4 financial institutions - Bank of Taiwan Co., Ltd. as the lead bank for a credit line of $3.221 billion. The syndicated loans include medium-term guarantee payments receivable (secured) and medium-term commercial paper guarantees. Bank of Taiwan and Agricultural Bank of Taiwan provided medium-term guarantee payments receivable (secured) with a credit line of $2.021 billion which are used by the Company to apply for the guarantee of corporate bond issued by the bank and pay off 2012 1[st] secured ordinary bonds payable. China Bills Finance Corp, Mega Bills Finance Corp and Taiwan Cooperative Finance Cop. provides medium-term commercial paper guarantees with a credit line of $1.2 billion which are used by the Company to apply for the guarantee of commercial paper guarantees and enrich operational working capital. These three financial institutions shall renew the contract with the Company for another 1 year based on their individual commitments and establish the facility documentation, which is similar to the commercial paper guarantees, letter of purchase contract and others. In addition, no matter whether the bondholders receive the payment or not, the banks’ guarantee responsibility will be released after the debtor returns the payables to the agency.

• (12) The Company signed a syndicated loan contract with 2 financial institutions - Bank of Taiwan Co., Ltd. as the lead bank for a credit line of $3.121 billion. The syndicated loans include medium-term guarantee payments receivable (secured) and medium-term commercial paper guarantees. Bank of Taiwan and Agricultural Bank of Taiwan provided medium-term guarantee payments receivable (secured) with a credit line of $2.521 billion which are used by the Company to apply for the guarantee of corporate bond issued by the bank and pay off 2013 1[st] secured ordinary bonds payable. International Bills Finance Corp provides medium-term commercial paper guarantees with a credit line of $600 million which are used by the Company to apply for the guarantee of commercial paper guarantees and enrich operational working capital. These three financial institutions shall renew the contract with the Company for another 1 year based on their individual commitments and establish the facility documentation, which is similar to the commercial paper guarantees, letter of purchase contract and others. In addition, no matter whether the bondholders receive the payment or not, the banks’ guarantee responsibility will be released after the debtor returns the payables to the agency.

• (13)On January 20, February 10 and December 27, 2014, the Company signed a contract with Taiwan Sugar Corporation (“TSC”) in relation to cooperative construction of houses. According to the contracts, TSC shall provide Taichung City Koan An Section No. 591-1 and Tainan City Hou Guan Section No.34 and Nanzi Dist., Kaohsiung City Nanzi 1st Section No. 158, etc; the Company shall provide funding for those projects and repurchase houses and land allocated to TSC amounting to $638,763, $830,889 and $1,255,300, and shall bear all improvement fees of houses, public facilities and land, selling expenses, and other expenses or contributed expenses required under the decrees. The Company shall not ask for any compensation for price fluctuations or other reasons. Further, under the contract, the Company shall give TSC performance guarantee amounting to $63,880, $83,080 and $125,540, respectively, on the signing date, which will be returned in instalments according to the contractual terms. The Company had provided such performance guarantee with guarantee letter of the bank as follows:

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Nanzi Dist., Kaohsiung City Nanzi 1st Section No. 158 etc	December 31,2019 55,210 $	December 31,2018
		125,540 $

• (14)The Company signed an agreement with Mr. Fang Tsai-Yuan and World Vision United Co., Ltd. on March 5, 2012 and July 17, 2012, respectively, for joint construction of houses. Under those agreements, Mr. Fang Tsai-Yuan and World Vision United Co., Ltd., the owners of land, shall provide the land located at Nos. 572 and 602, Sec. Zhi-Shan 1, Shilin District, Taipei City, respectively, and the Company is responsible for the construction; the houses built would be allocated to both sides based on the specified proportion. In addition, the Company shall give performance bond in the amount of $350,000 and $19,570 to Mr. Fang Tsai-Yuan and World Vision United Co., Ltd., respectively, which would be returned to the Group in installments. As of December 31, 2019 and 2018, balance of the performance bonds were as follows:

No. 602, Sec. Zhi-Shan 1, Shilin District, Taipei City No. 572, Sec. Zhi-Shan 1, Shilin District, Taipei City	December 31,2019 - $ - $	December 31,2018
		87,500 $
		4,893 $

• (15)As of December 31, 2019 and 2018, performance guarantee letters issued for construction undertaking, warranty and leases of subsidiary, Ta-Chen Construction & Engineering Corp., amounted to $530,080 and $399,589, respectively.

• (16)Certain construction contracts undertaken by subsidiary, Ta-Chen Construction & Engineering Corp., specify that default penalty shall be computed according to the contractual terms if the construction is not completed within the prescribed period.

• (17)On October 9, 2013, the subsidiary, the Splendor Hotel Taichung, signed a syndicated loan contract with 5 financial institutions, including Taiwan Cooperative Bank, etc., in the amount of $3.3 billion, with Prince Housing & Development Corp. and China Metal Products Co., Ltd. as guarantors. Under the contract, the subsidiary promised its tangible net equity shall not be negative and current ratio, liability ratio, tangible net equity and interest coverage of Prince Housing & Development Corp. and China Metal Products Co., Ltd. shall conform to certain criteria as specified in the contract. If the Splendor Hotel Taichung violates above financial commitments, the managing bank has the right to take the following actions, including but not limited, according to the contract or the resolution of majority of the consortium: 1) request the subsidiary to stop drawing down all or part of the loans; 2) cancel all or part of the credit line of the contract which has not been drawn down yet; 3) announce that all outstanding principal, interest and other accrued expenses payable to the consortium in relation to the loan contract should mature immediately; 4) inform the managing bank of the demand for subsidiary’s payment of the promissory note acquired under the loan contract; 5) inform the managing bank to exercise creditor’s right of mortgage; 6) exercise contract transfer right, or other rights given by the laws, the loan contract or other relevant documents; 7) take other actions as resolved by the majority of the consortium. The syndicated loan contract expired on October 15, 2018.

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• (18) On October 3, 2018, the subsidiary, the Splendor Hotel Taichung, signed two syndicated loan contracts with 7 financial institutions, including Taiwan Cooperative Bank and Bank SinoPac, etc., each amounting to $1.65 billion and totaling $3.3 billion, with Prince Housing & Development Corp. and China Metal Products Co., Ltd. as guarantors, respectively. Under the contract, the subsidiary promised its tangible equity (equity less intangible assets) shall not be negative and current ratio, liability ratio, tangible net equity and interest coverage of Prince Housing & Development Corp. and China Metal Products Co., Ltd. shall conform to certain criteria as specified in the contract. If the Splendor Hotel Taichung violates above financial commitments, the managing bank has the right to take the following actions, including but not limited, according to the contract or the resolution of majority of the consortium: 1) request the subsidiary to stop drawing down all or part of the loans; 2) cancel all or part of the credit line of the contract which has not been drawn down yet; 3) announce that all outstanding principal, interest and other accrued expenses payable to the consortium in relation to the loan contract should mature immediately; 4) inform the managing bank of the demand for subsidiary’s payment of the promissory note acquired under the loan contract; 5) inform the managing bank to exercise creditor’s right of mortgage; 6) exercise contract transfer right, or other rights given by the laws, the loan contract or other relevant documents; 7) take other actions as resolved by the majority of the consortium.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT SUBSEQUENT EVENTS

None.

12. OTHERS

(1) Capital management

The Group’s capital management is to ensure it has sufficient financial resource and operating plans to meet operational capital for future needs, capital expenditure, obligation repayment and dividend distribution. The Group adjusts borrowing amount in accordance with construction progress and capital needed for operations.

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(2) Financial instruments

A. Financial instruments by category

nancial instruments Financial instruments by category
Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument Financial assets at amortised cost (Note) Cash and cash equivalents Financial assets at amortiesed cost Notes receivable Accounts receivable (including related parties) Other receivables Refundable deposits Financial liabilities Financial liabilities at amortised cost Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other payables (including related parties) Corporate bonds payable Long-term borrowings (including current portion) Long-term notes and accounts payable (including current portion) Guarantee deposits received Lease liabilities	December 31,2019 1,998,085 $ 1,880,621 5,673,754 2,235,721 58,341 754,843 25,402 161,987 12,788,754 $ December 31,2019 1,979,000 $ 99,925 2,523 2,035,430 863,678 4,500,000 12,155,924 808,301 148,959 22,593,740 $ 6,279,197 $	December 31,2018
		1,603,175 $ 1,792,162 3,968,253 2,092,531 72,170 1,743,066 99,502 255,028
		11,625,887 $
		December 31,2018
		990,000 $ 401,734 4,885 2,804,917 1,169,566 4,500,000 13,442,654 1,273,265 136,162
		24,723,183 $
		- $

Note: The Group reclassified cash and cash equivalent pledged to others as collateral from initially classification of “other financial assets” to “financial assets at amortised cost” in accordance with the category of financial instruments. This reclassification has no effect on either assets, liabilities or earnings per share on December 31, 2019 and 2018.

B. Financial risk management policies

• (a)The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk.

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• (b) Risk management is carried out by a central treasury department (Group's finance & accounting division) under policies approved by the Board of Directors. Group's finance & accounting division evaluates and hedges financial risks in close cooperation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

The Group operates internationally and the currencies primarily used are New Taiwan dollars and United States dollars. Foreign exchange risk arises from recognised assets and liabilities and net investments in foreign operations. Management has set up a policy to require the Group entities to manage their foreign exchange risk against their functional currency. The entities are required to manage their entire foreign exchange risk exposure with the Group finance & accounting division. Foreign exchange risk does not have significant impact to the Group.

Price risk

• i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

• ii. Shares and open-end funds issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 10% with all other variables held constant, post-tax profit for the years ended December 31, 2019 and 2018 would have increased/decreased by $185,015 and $149,214, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $100,330 and $100,330, respectively, as a result of equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

The Group’s interest rate risk mainly arose from short-term and long-term borrowings (excluding commercial papers) issued at variable rates and exposed the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group’s borrowings at floating rate were calculated by New Taiwan dollars, if interest rates on borrowings

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had been 0.1% basis point higher/lower with all other variables held constant, profit before tax for the years ended December 31, 2019 and 2018 would have been $13,064 and $13,263 lower/higher, respectively.

• (b) Credit risk

Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted so it expects that the probability of counterparty default is remote under the Group’s assessment. Credit risk arises from outstanding receivables (including contract assets).

Accounts receivable and contract assets

• i. The Group will perform credit check in accordance with credit policies when entered into construction contracts, the credit risk of receivables (mainly contract assets or accounts receivable) are low as the result of credit check was low.

• ii.The Group’s accounts receivable and contract assets came from general enterprise or government institution. To protect the quality of accounts receivable and contract assets, the Group has created process of credit risk management. The Group considered customers’ financial status, historical trading record and future economic condition in accordance with types of customer, and took into account factors that may influence customers’ ability to pay to assess the credit quality of customers. The Group estimated credit loss by loss rate.

• iii.The Group adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 90 days.

• iv. The Group adjusted the provision matrix with the historical loss of accounts receivable and forecastability, which considered the economic condition in the next one year. The provision matrix in accordance with above estimation are as follows:

December 31, 2019 Expected loss rate Total book value Loss allowance December 31, 2018 Expected loss rate Total book value Loss allowance	Without past due 0.01% 749,643 $ - 0.01% 1,737,372 $ -	Up to 30 days past due 10% 3,329 $ - 10% 5,086 $ -	Over31-60days 25% 566 $ - 25% 33 $ -	Over61-90days 50% 495 $ - 50% - $ -	Over91 days 100% 5,270 $ 4,460 100% 5,075 $ 4,500	Total
						759,303 $ 4,460 1,747,566 $ 4,500

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• v. Movements in relation to the group applying the simplified approach to provide loss allowance for accounts receivable are as follows:

			2019			2018
		Accounts receivable			Accounts receivable
At January 1	$		4,500	$		4,621
Provision for impairment loss			29			-
Reversal of impairment loss	(		40)	(		121)
Derecognised	(		29)			-
At December 31	$		4,460	$		4,500

• vi. The estimation of expected credit loss on financial assets at amortised cost, excluding accounts receivable, is as follows:

For financial assets at amortised cost, at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.

(c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group’s finance & accounting division. Group’s finance & accounting division monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times.

• ii. The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

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Non-derivative financial liabilities : Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other payables (including related parties) Lease liability Guarantee deposits received Bonds payable (including current portion) Long-term borrowings (including current portion) Long-term notes and accounts payable (including related parties) Non-derivative financial liabilities : Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other payables (including related parties) Guarantee deposits received Bonds payable (including current portion) Long-term borrowings (including current portion) Long-term notes and accounts payable (including related parties)		December 31,2019
	Within 1year 1,999,507 $ 100,000 2,474 1,111,366 860,152 467,703 76,553 42,000 4,731,737 -	Between 1 to 3years - $ - 29 922,898 3,369 929,605 20,115 2,084,000 3,892,315 796,845 December 31,2018	Over 3years
			- $ - 20 1,166 157 5,696,773 52,291 2,521,000 4,296,617 11,456
	Within 1year 995,964 $ 401,900 4,837 1,541,191 1,160,945 99,335 42,000 3,743,439 -	Between 1 to 3years - $ - 41 1,262,237 7,695 4,428 84,000 6,168,482 1,261,809	Over 3years
			- $ - 7 1,489 926 32,399 4,542,000 4,248,341 11,456

iii. The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(3) Fair value information

• A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group ’ s investment in listed stocks and beneficiary certificates is included in Level 1.

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• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity without active market is included in Level 3.

• B. Fair value information of investment property at cost is provided in Note 6(12).

• C. Financial instruments not measured at fair value

The carrying amounts of the Group’s cash and cash equivalents, financial instruments at amortised cost (including financial assets at amortised cost, receivable, accounts receivable (including related parties), other receivables, refundable deposits, short-term borrowings, short-term notes payable, notes payable, accounts payable, other payables (including related parties), lease liability, corporate bonds payables, long-term borrowings, long-term notes and accounts payable (including related parties), and guarantee deposits received) are approximate to their fair values.

• D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2019 and 2018 are as follows:

• (a)The related information of natures of the assets and liabilities is as follows:

December 31, 2019 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities Financial assets at fair value through other comprehensive income Equity securities December 31, 2018 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities Financial assets at fair value through other comprehensive income Equity securities	Level 1 1,998,085 $ 886,663 2,884,748 $ Level 1 1,603,175 $ 804,727 2,407,902 $	Level 2 - $ - - $ Level 2 - $ - - $	Level 3 - $ 993,958 993,958 $ Level 3 - $ 987,435 987,435 $	Total
				1,998,085 $ 1,880,621
				3,878,706 $
				Total
				1,603,175 $ 1,792,162
				3,395,337 $

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• (b).The methods and assumptions the Group used to measure fair value are as follows:

• i. The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Listed shares Open-end fund Market quoted price Closing price Net asset value

• ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the balance sheet date.

• E. For the years ended December 31, 2019 and 2018, there was no transfer between Level 1 and Level 2.

• F. The following chart is the movement of Level 3 for the years ended December 31, 2019 and 2018:

At January 1 Adjustment due to transfer of standard (Loss) gain recognised in other comprehensive income (Note) Sold in the period Effect of exchange rate changes At December 31	2019 2018 Non-derivative equity Non-derivative equity instruments instruments 987,435 $ 105,285 $ - 880,641 6,523 3,312 - 1,803) ( - - 993,958 $ 987,435 $

• Note: Shown as unrealised gain or loss on financial assets at fair value through other comprehensive income.

• G. For the years ended December 31, 2019 and 2018, there was no transfer into or out from Level 3.

• H. Finance and Accounting segment is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently assessing valuation results and making any other necessary adjustments to the fair value.

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• I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

measurement:
Non-derivative equity Unlisted shares Non-derivative equity Unlisted shares	Fair value at December31,2019	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fairvalue
	993,958 $ Fair value at December31,2018	Discounted cash flow Valuation technique	Weighted average cost of capital Discount for 30% lack of marketability Significant unobservable input	0.64%~ 2.41% 30% Range (weighted average)	The higher the weighted average cost of capital, the lower the fair value The higher the net asset value, the higher the fair value Relationship of inputs to fairvalue
	987,435 $	Discounted cash flow	Weighted average cost of capital Discount for 30% lack of marketability	0.60%~ 2.41% 30%	The higher the weighted average cost of capital, the lower the fair value The higher the net asset value, the higher the fair value

• J. The Group has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss or of other comprehensive income from financial assets and liabilities categorized within Level 3 if the inputs used to valuation models have changed:

December 31, 2019

				December	31,2019	31,2019
Financial assets Equity instruments Financial assets Equity instruments	Input 888,151 Input 888,151	Change ±1% Change ±1%	Recognised in	Unfavourable change - $ profit or loss December	Recognised in other comprehensive income
			Favourable change - $		Favourable Unfavourable change change 8,882 $ 8,882) ($ 31,2018	Unfavourable change
			Recognised in	Unfavourable change - $ profit or loss	Recognised in other comprehensive income
			Favourable change - $		Favourable Unfavourable change change 8,882 $ 8,882) ($	Unfavourable change

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13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: Please refer to table 1.

• B. Provision of endorsements and guarantees to others: Please refer to table 2.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital:None.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to table 4.

• F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.

• H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 6.

• I. Trading in derivative instruments undertaken during the reporting periods: None.

• J. Significant inter-company transactions during the reporting periods: Please refer to table 7.

• (2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 8.

(3) Information on investments in Mainland China

None.

14. SEGMENT INFORMATION

(1) General information

Management has determined the reportable operating segments based on the reports reviewed by the Chief Operating Decision-Maker that are used to make strategic decisions. The Group’s corporate composition, basis for segmentation, and basis for measurement of segment’s information had no significant changes for the year. The Chief Operating Decision-Maker considers the business from a product perspective.

(2) Measurement of segment information

The Chief Operating Decision-Maker assesses the performance of the operating segments based on the profit (loss) before taxes. This measurement basis excludes the effects of non-recurring revenues/expenditures from the operating segments. Accounting policies of operating segments are the same as the summary of significant accounting policies in Note 4 to the consolidated financial statements.

(3) Information about segment profit or loss and assets

The segment information provided to the Chief Operating Decision-Maker for the reportable segments is as follows:

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Year ended December 31, 2019

											Write-off and	Write-off and
Item		Construction				Hotel			Others		Adjustment				Total
External operating revenue-net		$	8,394,210		$	3,195,625		$	609,602		$	-		$	12,199,437
Internal operating revenue-net			376,377			-			66,487	(		442,864)			-
Total segment revenue			8,770,587			3,195,625			676,089						12,199,437
Costs and expenses	(		8,693,654)	(		2,728,151)	(		460,318)			472,782	(		11,409,341)
Segment income			76,933			467,474			215,771						790,096
Other income			268,412			8,145			14,944	(		22,568)			268,933
Other gains and losses			229,821			587			2,121			-			232,529
Finance costs	(		187,800)	(		155,575)	(		287)			15,685	(		327,977)
Share of profit of associates and joint ventures
accounted for under equity method			627,904			-			27,901	(		557,318)			98,487
Profit from continuing operations before tax			1,015,270			320,631			260,450						1,062,068
Income tax expense	(		88,475)	(		31,301)	(		3,542)			-	(		123,318)
Net income for the period		$	926,795		$	289,330		$	256,908					$	938,750
Segment assets		$	45,825,063		$	13,141,995		$	904,487	(		5,134,042)		$	54,737,503

						Year ended	Year ended	December	31,	2018
									Write-off and
Item		Construction				Hotel		Others	Adjustment				Total
External operating revenue-net		$	7,936,223		$	3,131,086	$	787,898	$	-		$	11,855,207
Internal operating revenue-net			1,088,578			-		75,647	(	1,164,225)			-
Total segment revenue			9,024,801			3,131,086		863,545					11,855,207
Costs and expenses	(		8,589,858)	(		2,718,144)	(	641,246)		1,152,874	(		10,796,374)
Segment income			434,943			412,942		222,299					1,058,833
Other income			256,165			13,469		28,005	(	25,021)			272,618
Other gains and losses			218,582	(		784)	(	519)		-			217,279
Finance costs	(		179,128)	(		59,287)	(	160)		20,224	(		218,351)
Share of profit of associates and joint ventures
accounted for under equity method			665,802			-		14,637	(	641,410)			39,029
Profit from continuing operations before tax			1,396,364			366,340		264,262					1,369,408
Income tax expense	(		99,452)	(		20,732)	(	5,347)		-	(		125,531)
Net income for the period		$	1,296,912		$	345,608	$	258,915				$	1,243,877
Segment assets		$	47,484,417		$	7,773,620	$	900,539	(	5,402,973)		$	50,755,603

The adoption of IFRS 16, ‘Leases’, had the following impact on the segment information in 2019.

Increase in depreciation expense Increase in right-of-use assets Increase in lease liabilities	Construction 35,997 $ 189,104 $ 191,372 $	Hotel 356,475 $ 5,490,949 $ 6,085,572 $	Write-off and Others Adjustment 2,691 $ 1,382) ($ 4,279 $ 2,045) ($ 4,320 $ 2,067) ($	Total
				393,781 $
				5,682,287 $
				6,279,197 $

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(4) Reconciliation for segment income (loss) and assets

The revenue from external parties, segment income and segment assets reported to the Chief Operating Decision-Maker are measured in a manner consistent with the revenue, profit before taxes, and total assets in the financial statements. Information on adjusted consolidated total profit (loss), reportable segment profit after taxes and total assets, and reconciliation for reportable segment assets for this year is provided in Note 14(3).

(5) Information on products and services

The Chief Operating Decision-Maker considers the business from a product type perspective. Information about products is provided in Notes 6(26) and 14(3).

(6) Geographical information

The Group operates mainly in Taiwan and it has no external customer revenue from other regions.

~88~

Prince Housing & Development Corp. Loans to others Year ended December 31, 2019

No. (Note 1) Table 1	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year ended December 31,2019	Balance at December 31, 2019	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short-term financing	Allowance for accounts	Collateral	Limit on loans granted to Ceiling on total a singleparty loansgranted Expressed in thousan (Except as otherwise	Limit on loans granted to Ceiling on total a singleparty loansgranted Expressed in thousan (Except as otherwise	Footnote ds of NTD indicated)
													Item Value
1 2 3 4	Ta-Chen Construction& Engineering Corp. Time Square International Co., Ltd. Cheng-Shi Construction Co., Ltd. Prince Utility Co., Ltd.	Cheng-Shi Investment Holdings Co., Ltd. Times Square International Investment Holdings Co., Ltd. Cheng-Shi Investment Holdings Co., Ltd. Cheng-Shi Investment Holdings Co., Ltd.	Other receivables - related parties Other receivables - related parties Other receivables - related parties Other receivables - related parties	Y Y Y Y	200,000 $ 1,000 90,000 20,000	200,000 $ 1,000 90,000 -	100,000 $ - 90,000 -	2.7 2.7 2.7 2.7	Short-term financing Short-term financing Short-term financing Short-term financing	$ - - - -	Additional operating capital Additional operating capital Additional operating capital Additional operating capital	$ - - - -	None - None - None - None -	$ 453,949 (Note 3) 189,193 104,158 22,671	453,949 $ 189,193 104,158 22,671	Note 2 Note 4 Note 5 Note 6

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

• (1) The Company is ‘0’.

• (2) The subsidiaries are numbered in order starting from ‘1’.

• Note 2: Limit on loans granted to a single party and ceiling on total loans granted as prescribed in Ta-chen Construction & Engineering Corp. "Procedures for Provision of Loans" are as follows:

• A. Ceiling on total loans to others: 40% of the Company's net worth.

• B. Limit on loans to a single party:

• (a) Nature of the loan is related to business transactions: Limit to a single party is NT$1.0 billion or the amount of business transactions between the creditor and borrower in the current year.

• (b) Nature of loan is for short-term financing: Limit on loans to a single party is NT$500 million.

• Note 3: Limit on loans granted to a single party as prescribed in Ta-Chen Construction & Engineering Corp. 's "Procedures for Provision of Loans" are not allowed more than NT$500 million. However, limit on loans granted to a single party shall not excess the ceiling on total loans, therefore, Ta-Chen Construction & Engineering Corp. 's limit on loans granted to a single party is based on its ceiling on total loans.

• Note 4: Limit on loans granted to a single party and ceiling on total loans granted as prescribed in Time Square International Co., Ltd. "Procedures for Provision of Loans" are as follows:

• A. Ceiling on total loans to others: 30% of the Company's net worth.

• B. Limit on loans to a single party:

• (a) Nature of the loan is related to business transactions: The amount of business transactions between the creditor and borrower in the current year.

• (b) Nature of loan is for short-term financing: Limit on loans to a single party is 30% of the Company's net worth.

• Note 5: Limit on loans granted to a single party and ceiling on total loans granted as prescribed in Cheng-Shi Construction Co., Ltd. “Procedures for Provision of Loans” are as follows:

• A. Ceiling on total loans to others: 40% of the Company’s net worth.

• B. Limit on loans to a single party:

• (a)Nature of the loan is related to business transactions: The amount of business transactions between the creditor and borrower in the current year.

• (b)Nature of loan is for short-term financing: Limit on loans to a single party is 40% of the Company’s net worth.

• Note 6: Limit on loans granted to a single party and ceiling on total loans granted as prescribed in Prince Utility Co., Ltd. “Procedures for Provision of Loans” are as follows:

• A. Ceiling on total loans to others: 40% of the Company’s net worth.

• B. Limit on loans to a single party:

• (a)Nature of the loan is related to business transactions: The amount of business transactions between the creditor and borrower in the current year.

• (b)Nature of loan is for short-term financing: Limit on loans to a single party is 40% of the Company’s net worth.

Table 1,Page 1

Prince Housing & Development Corp.

Table 2

Expressed in thousands of NTD

(Except as otherwise indicated)

Provision of endorsements and guarantees to others

Year ended December 31, 2019

Party being endorsed/guaranteed

Number (Note 1)	Endorser/ guarantor	Companyname	Relationship with the endorser/ guarantor (Note 2)	Limit on endorsements/ guarantees provided for a singleparty	Maximum outstanding endorsement/ guarantee amount as of December 31, 2019	Outstanding endorsement/ guarantee amount at December 31, 2019	Actual amount drawn down	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided	Provision of endorsements/ guarantees by parent company to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
0 1 2 3	Prince Housing & Development Corp. Prince Real Estate Co., Ltd. Prince Apartment Management Maintain Co., Ltd. Prince Property Management Consulting Co., Ltd.	The Splendor Hotel Taichung Prince Housing & Development Corp. Prince Security Co., Ltd. Prince Security Co., Ltd.	6 3 4 4	4,771,329 $ 2,500,000 20,000 56,000	2,150,000 $ 2,055,309 20,000 56,000	$ 2,150,000 1,352,085 20,000 -	1,900,000 $ 1,352,085 20,000 -	$ - - - -	9% 130% 27% 0%	11,928,322 $ 5,000,000 50,000 120,000	Y N N N	N Y N N	N N N N	Note 3 Note 4 Note 5 Note 6

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:

• (1) The Company is ‘0’.

• (2) The subsidiaries are numbered in order starting from ‘1’. The same company will have the same number.

Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following seven categories:

• (1)Having business relationship.

• (2)The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/guaranteed subsidiary.

• (3) The endorsed/guaranteed company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company.

• (4)The endorser/guarantor parent company owns directly and indirectly more than 90% voting shares of the endorsed/guaranteed company.

• (5)Mutual guarantee of the trade made by the endorsed/guaranteed company or joint contractor as required under the construction contract.

• (6)Due to joint venture, all shareholders provide endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.

• (7) Joint guarantee of the performance guarantee for pre-sold home sales contract as required under the Consumer Protection Act.

• Note 3:In accordance with the Company’s related regulations, the limit on endorsements and guarantees for any single entity is 20% of the Company’s net worth based on the latest financial statements and the limit on accumulated amount of transactions of endorsements and guarantees is 50% of the Company’s net worth based on the latest financial statements.

Note 4: In accordance with Prince Real Estate Co., Ltd.'s related regulations, the limit of endorsements and guarantees for any single entity is $2,500,000; the total accumulated amount is $5,000,000.

Note 5: In accordance with Prince Apartment Management Maintain Co., Ltd.'s related regulations, the limit of endorsements and guarantees for any single entity is $20,000; the total accumulated amount is $50,000.

Note 6: In accordance with Prince Property Management Consulting Co., Ltd.'s related regulation, the limit of endorsements and guarantees for any single entity is $56,000; the total accumulated amount is $120,000.

Table 2,Page 1

Prince Housing & Development Corp.

Holding of marketable securities at the end of the year (not including subsidiaries, associates and joint ventures)

December 31, 2019

		December 31, 2019
Securities held by Marketable securities Name of investee companies Table 3	Relationship with the securitiesissuer	General ledgeraccount		As of Decemb	er 31, 2019	Fairvalue Footnote Expressed in thousands of NTD (Except as otherwise indicated)
			Numberofshares	Bookvalue	Ownership (%)
Prince Housing & Development Corp. Stock Nantex Industry Co., Ltd. Stock ScinoPharm Taiwan, Ltd. Stock Simplo Technology Co., Ltd. Stock Universal Venture Capital Investment Corp. Stock Grand Bills Finance Corp. Stock Chipwell Tech. Corp. Stock Nanmat Technology Co., Ltd. Stock Southern Science Joint Development . Stock Formosoft International Co., Ltd. Stock President Energy Development Corp. Stock President International Development Corp. Fund Mega Diamond Money Market Fund Fund UPAMC James Bond Money Market Fund Fund Yuanta Wan Tai Money Market Fund Jih Sun Money Market Fund Fund Yuanta De-Li Money Market Fund Fund Prudential Financial Money Market Fund Ta-Chen Construction & Engineering Corp. Stock Nantex Industry Co., Ltd. Stock Chipwell Tech. Corp. Stock Nanmat Technology Co., Ltd. Prince Apartment Management Maintain Co., Ltd. Stock Prince Housing & Development Corp. Stock Tainan Spinning Co., Ltd. Fund UPAMC James Bond Money Market Fund Prince Security Co., Ltd. Stock Nanmat Technology Co., Ltd. Prince Property Management Consulting Co., Ltd. Fund CTBC Hwa-win Money Market Fund Cheng-shi Construction Co., Ltd. Fund UPAMC James Bond Money Market Fund Time Square International Co., Ltd. Fund FSITC Money Market Fund Eastspring Investments Well Pool Money Market Fund Fund Taishin 1699 Money Market Fund Allianz Global Investor Taiwan Money Market Fun Prince Real Estate Co., Ltd. Stock Nantex Industry Co., Ltd. Stock Sung Gang Asset Management Co., Ltd. Fund Jih Sun Money Market Fund Prince Utility Co., Ltd Fund UPAMC James Bond Money Market Fund	None None None None None None None None None None None None None None None None None None None None Parent company None None None None None None None d None None None None None	Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss -current Financial assets at fair value through profit or loss -current Financial assets at fair value through profit or loss -current Financial assets at fair value through profit or loss -current Financial assets at fair value through profit or loss -current Financial assets at fair value through profit or loss - non - current Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss - current Non-current financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss -current	7,564,988 23,605,921 76,349 1,400,000 48,672 344,488 1,648,563 10,000 7,117 300,000 87,745,770 6,301,406 6,006,728 13,316,728 13,497,677 12,269,203 12,593,359 13,327,483 349,990 1,848,857 655,424 122,201 896,298 246,513 2,172,949 10,217,642 168,686 2,205,234 2,214,905 2,384,757 194,282 47,968 13,571,283 2,997,207	227,706 $ 627,918 23,134 11,306 877 1,209 59,678 2,063 - 8,946 832,707 79,342 100,782 202,449 200,813 200,846 200,004 401,157 1,228 66,929 7,374 1,283 15,000 8,924 24,000 171,434 60,042 30,021 30,000 30,000 5,848 775 201,907 50,288	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 10.00 Note 1 6.00 6.63 - - - - - - Note 1 Note 1 5.40 Note 1 Note 1 - Note 1 - - - - - - Note 1 6.90 - -	30.10 $ Listed company, Note 2 26.60 Listed company, Note 3 303.00 OTC company 8.14 18.02 3.51 36.20 206.29 - 29.82 9.49 Note 4 12.59 Note 5 16.78 15.20 14.88 16.37 15.80 30.10 Note 6 3.51 36.20 11.25 Listed company 10.50 Listed company 16.78 36.20 11.06 16.78 179.10 13.66 13.58 12.58 30.10 Listed company 16.15 OTC company 14.88 16.78

Note 1: Percentage of Company’s ownership is less than 5%.

Note 2: 4,088 thousand shares of outstanding common stock were used as collateral for loan.

Note 3: 17,276 thousand shares of outstanding common stock were used as collateral for loan.

Note 4: 60,000 thousand shares of outstanding common stock were used as collateral for loan.

• Note 5: 6,301 thousand units of outstanding common stock were used as collateral for loan.

• Note 6: 10,000 thousand shares of outstanding common stock were used as collateral for loan.

Table 3,Page 1

Prince Housing & Development Corp.

Table 4

Acquisition of real estate reaching $300 million or 20% of paid-in capital or more

Year ended December 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

If the counterparty is a related party, information as to the last Reason for transaction of the real estate is disclosed below: acquisition of real estate Original owner Relationship and Relationship who sold the real between the original Date of the Basis or reference status of the Transaction Status of with the estate to the owner and the original used in setting the real Other Real estate acquired by Real estate acquired Date of the event amount payment Counterparty counterparty counterparty acquirer transaction Amount price estate commitments Prince Housing & Development Corp. Ren Wu Dist. Xia 2013/06/14 Note 2 $ 1,169,785 Redevelopment Third party - - - $ - Note 2 For operating None Hai Lot No. 978, (Note 1) zone of Xia Hai use etc. Term, Renwu District, Kaohsiung City Prince Housing & Development Corp. Nanzi subsection 2014/11/07 $ 1,255,309 1,255,309 Taiwan Sugar Third party - - - - Market value For operating None No. 158,etc. (Note 3) Corporation use

Note 1: The transfer of title took place on settlement date. The Company paid $0 for the current period. As of December 31, 2019, the Company has already paid $1,169,785.

Note 2: In order to purchase 67.13% of areas from the north side of the offset-expenditure land in the redevelopment zone, the transaction amount was the expected price including compensation for demolition to all land owners of north side of the offset-expenditure land, compensation for demolition to owners of parkland to be (67.13%), construction expenses in all regions (67.13%) and interests arising from re-planning committee's borrowing from the Company to pay aforementioned expenses. Note 3: November 7, 2014 was the signing date of the contract. The Company paid $414,063 for the current period. As of December 31, 2019, the Company has already paid $1,255,309.

Table 4,Page 1

Prince Housing & Development Corp.

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more Year ended December 31, 2019

Table 5

Purchaser/seller Table 5	Counterparty	Relationship with the counterparty		Tra	nsaction		Differences in transaction terms compared to third party transactions		(Except as otherwise Notes/accounts receivable(payable) Expressed in thousan		indicated) Footnote ds of NTD
			Purchases (sales)	Amount	Percentage of total purchases(sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Prince Housing & Development Corp. Prince Housing & Development Corp.	Cheng-Shi Construction Co., Ltd. Prince Utility Co., Ltd.	Subsidiary Subsidiary	Purchases Purchases	267,889 $ 108,487	15% 5%	Payments were paid in accordance with the contract terms Payments were paid in accordance with the contract terms	It is reasonable compared to the normal tradings It is reasonable compared to the normal tradings	It is reasonable compared to the normal tradings It is reasonable compared to the normal tradings	21,930) ($ ( 4,326)	(1%) 0%

Table 5,Page 1

Table 6

Prince Housing & Development Corp.

Receivables from related parties reaching $100 million or 20% of paid-in capital or more

December 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at December31,2019	Turnover rate	Overdue	Overdue	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
Prince Housing & Development Corp. Ta-Chen Construction & Engineering Corp.	The Splender Hotel Taichung Cheng-Shi Investment Holdings Co., Ltd.	Subsidiary Affiliate	Other assets - obligation receivable 575,000 $ Other receivables - loans to others 100,000 $	- -	- $ - $	- -	- $ - $	- $ - $

Table 6,Page 1

Table 7

Expressed in thousands of NTD

Prince Housing & Development Corp.

Significant inter-company transactions during the reporting periods Year ended December 31, 2019

(Except as otherwise indicated)

Transaction

Number	Companyname	Counterparty	Relationship	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets
0 0 0 0 0 0 1 2	Prince Housing & Development Corp. Prince Housing & Development Corp. Prince Housing & Development Corp. Prince Housing & Development Corp. Prince Housing & Development Corp. Prince Housing & Development Corp. Prince Real Estate Co., Ltd. Ta-Chen Constmctron& Engineering Corp.	Cheng-Shi Construction Co., Ltd. Cheng-Shi Construction Co., Ltd. Prince Utility Co., Ltd. Prince Utility Co., Ltd. The Splender Hotel Taichung The Splender Hotel Taichung Prince Housing & Development Corp. Cheng-Shi Investment Holdings Co., Ltd.	The Company to the consolidated subsidiaries The Company to the consolidated subsidiaries The Company to the consolidated subsidiaries The Company to the consolidated subsidiaries The Company to the consolidated subsidiaries The Company to the consolidated subsidiaries The consolidated subsidiaries to the Company The consolidated subsidiaries to the consolidated subsidiaries	Purchases 267,889 $ Construction in progress 942,800 Purchases 108,487 Construction in progress 307,600 Endorsement and guarante 2,150,000 Other assets - obligation receivables 575,000 Endorsement and guarante 1,352,085 Loans to others 100,000		Based on mutual agreements - Based on mutual agreements - In accordance with endorsement and guarantee procedures Creditor's rights purchase contract In accordance with endorsement and guarantee procedures Based on Procedures for provision of loans	2.20% 1.72% 0.89% 0.56% 3.93% 1.05% 2.47% 0.18%

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1) Parent company is ‘0’.

• (2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

(1) Parent company to subsidiary.

• (2) Subsidiary to parent company.

• (3) Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: The table only discloses transaction amounts of NT$100 million or more.

Table 7,Page 1

Prince Housing & Development Corp.

Information on investees Year ended December 31, 2019

Table 8

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial invest	ment amount	Shares held	as at December 31,2019	as at December 31,2019	Net profit (loss) of the investee for the year ended December 31, 2019	Investment income (loss) recognised by the Company for the year ended December 31,2019	Footnote
				Balance as at December 31,2019	Balance as at December 31,2018	Number of shares	Ownership (%)	Book value
Prince Housing & Development Corp. Cheng-Shi Investment Holdings Co., Ltd	Cheng-Shi Investment Holdings Co., Ltd. Prince Property Management Consulting Co., Ltd. Geng-Ding Co., Ltd. Prince Housing Investment Co., Ltd. Uni-President Development Corp. The Splender Hotel Taichung Jin Yi Xing Plywood Co., Ltd. Ming-Da Enterprise Co., Ltd. Prince Industrial Co., Ltd. Prince Real Estate Co., Ltd. Times Square International Investment Holdings Co., Ltd. Ta-Chen Construction & Engineering Corp. Prince Utility Co., Ltd. Cheng-Shi Construction Co., Ltd.	Taiwan Taiwan Taiwan British Virgin Islands Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan	General investment Management and consulting Hotels and catering Overseas investment Leasing of buildings Hotels and catering Manufacture of plywoods Real estate trading Development of public housing and building Real estate trading and leasing General investment Construction Electricity water pipe Construction	1,146,925 $ 181,000 120,000 140,413 1,080,000 975,000 165,410 37,378 10,000 470,784 607,270 856,566 56,025 208,027	1,146,925 $ 181,000 120,000 140,413 1,080,000 975,000 165,410 37,378 10,000 470,784 607,270 856,566 56,025 208,027	97,504,758 17,146,580 18,000,000 428 108,000,000 97,500,000 3,938,168 200,000 1,000,000 12,292,315 68,400,000 90,497,528 3,070,000 20,100,000	100% 100% 30% 100% 30% 50% 99.65% 20% 100% 99.68% 100% 100% 100% 100%	1,133,975 $ 262,006 307,140 525,031 1,146,288 284,831 297,509) ( 27,152 9,355 912,198 992,375 1,134,872 56,677 260,395	214,844 $ 20,306 74,456 32,316 156,197 29,025) ( 148) ( 8,443 60) ( 155,265 126,769 169,098 5,313 43,917	229,871 $ 20,401 22,337 32,316 46,859 14,513) ( 18,321 1,688 60) ( 144,213 126,769 - - -	Notes 1 and 2 Notes 1 and 2 Note 2 Note 4 Note 2 Notes 1 and 2 Note 2 Notes 1, 2 Notes 2 Notes 2 and 3 Notes 2 and 3 Notes 2 and 3

Table 8,Page 1

Investor	Investee	Location	Main business activities	Initial invest	ment amount	Shares held	as at December 31,2019	as at December 31,2019	Net profit (loss) of the investee for the year ended December 31, 2019	Investment income (loss) recognised by the Company for the year ended December 31,2019	Footnote
				Balance as at December 31,2019	Balance as at December 31,2018	Number of shares	Ownership (%)	Book value
Prince Housing Investment Co., Ltd. Prince Property Management Consulting Co., Ltd. Princre Real Estate Co., Ltd. Time Square International Investment Holdings Co., Ltd	PPG Investment Inc. Queen Holdings Ltd. Prince Apartment Management Maintain Co., Ltd. Prince Security Co., Ltd. Amida Trustlink Assets Management Co., Ltd. Time Square International Co., Ltd. Times Square International Stays Corp. (Note 5)	U.S.A British Virgin Islands Taiwan Taiwan Taiwan Taiwan Taiwan	Overseas investment Overseas investment Management of apartments Security Development of public housing and building Hotels and catering Hotels and catering	56,945 $ 122,034 67,853 159,611 305,480 376,270 231,000	56,945 $ 122,034 67,853 159,611 305,480 376,270 231,000	273 2,730 3,000,000 13,172,636 21,644,062 46,300,000 22,100,000	27.30% 27.30% 100% 100% 45.21% 100% 100%	3,071 $ 400,869 61,480 172,664 139,411) ( 630,643 312,864	27,943 $ 74,258 4,933 15,622 659) ( 134,109 6,909) (	- $ - - - - - -	Note 3 Note 3 Notes 2 and 3 Notes 2 and 3 Note 3 Note 2 and 3 Note 2 and 3

Note 1: The difference between the income (loss) of the investee and the investment income (loss) of the investee recognised by the Company is the investment income (loss) of the investee recognised by the Company in proportion to the share ownership and unrealised gain (loss) from elimination of inter-Company transactions.

Note 2: Subsidiary.

Note 3: The amount has been included in the profit (loss) of the Company’s investee accounted using equity method and has been recognised as gain (loss) on investment.

Note 4: Provided 108,000 thousand shares as collateral.

Note 5: Times Square International Investment Holdings Co., Ltd. invested $100 thousand in Times Square International Stays Corp. for the year and the registration was completed on January 16, 2020.

Table 8,Page 2