RUN LONG — Annual Report 2021

Aug 10, 2022

Stock Code: 1808

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潤隆建設股份有限公司 RUN LONG CONSTRUCTION CO., LTD.

2021

Annual Report

Printed on April 11, 2022

Inquiry Link: http://mops.twse.com.tw MOPS

http://www.runlong.com.tw Run Long Construction Co., Ltd.

• Names, positions, contact numbers and e-mail addresses of spokesperson and acting spokesperson: Spokesperson: Chiu, Ping-Tse, Presiden Contact No.:（02）8501-5696

Email: service@runlong.com.tw

Acting Spokesperson: Lu, Chia-Yin, Manager

Contact No.:（02）8501-5696 Email: service@runlong.com.tw

• Addresses and Telephone Numbers of Headquarters:

Address: 8F, No. 267, Lequn 2nd Rd., Zhongshan District, Taipei City

Tel.: （02）8501-5696

• Name, address, website and telephone number of stock transfer agent and registrar: Name: Capital Securities Co., Ltd.

Address: Basement Level 2, No. 97, Tunhua S. Rd., Daan District, Taipei City 10601 Website: agency. capital.com.tw

Tel.: （02）2702-3999

• Names of the CPAs who duly audited the annual financial report for the most recent fiscal year, and the name, address and telephone number of said person’s accounting firm: Names of CPAs: Yi-Lien Han and Ti-Nuan Chien

Name of Accounting Firm: KPMG Taiwan Address: 68F, No. 7, Xinyi Rd., Sec. 5, Taipei City Website: http://www.kpmg.com.tw Tel.: （02）8101-6666

• Name of any exchanges where securities are traded offshore, and the method by which to access information on said offshore securities: None

• Company website: http://www.runlong.com.tw

Table of Contents

I. Letter to the Shareholders.......................................................................................................................................... 1 1. Operating results of the previous year ....................................................... 2 2. Summary of the operating plans for the current year ............................................ 5 3. Future development strategies, impact posed by external competition, the regulatory environment and the overall business environment ........................................................... 6 II. Company Profile ...................................................................................................................................................... 9 1. Date of Establishment: ................................................................... 9 2. Company History ....................................................................... 9 III. Corporate Governance Report .............................................................................................................................. 14 1. Organization System ................................................................... 14 2. Information of directors, supervisors, president, vice presidents, associates, department and branch directors ............................................................................. 18 3. Remuneration of directors, supervisors, president, and vice presidents in latest year .................. 30 4. Implementation of Corporate Governance ................................................... 37 5. Certified CPA public fee information ..................................................... 105 6. CPA replacement information ........................................................... 106 7. Where the Company’s chairperson, president, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPAs or at an affiliated enterprise of such accounting firm, the name and position of the person and the period during which the position was held shall be disclosed. ........................................ 106 8. In the most recent fiscal year and up to the date of publication of the annual report, the directors, supervisors, managers and shareholders holding more than 10% of the equity transfer and equity pledge changes ....................................................................... 107 9. Shareholders who account for the top ten shareholders, and their relationships with each other ........ 109 10. The number of shares held by the Company, the Company’s directors, supervisors, managers and the companies directly or indirectly controlled by the Company in the same investment business, and combined to calculate the comprehensive shareholding ratio: .................................. 111 IV. Capital Overview ................................................................................................................................................ 112 I.Capital and Shares ..................................................................... 112 1. Source of share capital ................................................................. 112 2. Status of shareholders ................................................................. 116 3. Shareholding distribution status .......................................................... 116 4. Names of major shareholders ............................................................ 117 5. Market price, net worth, earnings, and dividends per share for the two most recent years ............. 118 6. Company dividend policy and implementation status ......................................... 120

1. Impact on the Company’s operating performance and earnings per share of the bonus shares proposed at this shareholder meeting: ............................................................. 121 8. Compensation of employees and directors ................................................. 122 9. Buyback of treasury stock of the company. ................................................. 123 10. Corporate bonds ..................................................................... 123 11. Preferred shares. ..................................................................... 131 12. Global depository receipts. ............................................................ 131 13 Employee share subscription warrants:. ................................................... 131 14. New restricted employee shares. ........................................................ 131 15. Issuance of new shares in connection with mergers and acquisitions. ............................ 131 16. Financial plans and implementation ..................................................... 132 V. Operational Highlights ......................................................................................................................................... 133 1. Business Activities .................................................................... 133 2. Market and Sales Overview ............................................................. 139 3. Employee information in the two most recent fiscal years and up to the date of publication of the annual report ........................................................................ 146 4. Environmental Protection Expenditure .................................................... 147 5. Labor Relations ...................................................................... 148 6. Information Communication Security Management .......................................... 150 7. Important Contracts ................................................................... 153 VI. Financial Profile ................................................................................................................................................. 155 I. Condensed balance sheet, comprehensive income statement and audit opinion of CPAs in the five most recent years ..................................................................... 155 2. Financial Analysis in the Past Five Years .................................................. 162 3. Audit Committee’s review report on the latest financial report .................................. 168 4. For the financial statements of the most recent year. .......................................... 169 5. Parent company-only financial statements audited by CPAs of the most recent year. ................ 169 6. If the Company and its affiliates have experienced financial difficulties in the most recent fiscal year and up to the date of publication of the annual report, the annual report shall explain how said difficulties affect the Company’s financial situation. ......................................... 169 VII. Review and Analysis of Financial Status and Business Results and Risk Issues ............................................. 170 1. Financial Status ...................................................................... 170 2. Financial Performance ................................................................. 171 3 . Cash flow ........................................................................... 173 4 . Impact of major capital expenditure on the financial status in the most recent year .................. 174 5 . Reinvestments in the most recent year ..................................................... 174 6 . Risks in the most recent fiscal year and up to the date of publication of the annual report ............. 174

2. Other important matters: None .......................................................... 178 VIII. Special Notes ................................................................................................................................................... 179 1. Information about the Company’s Affiliates ................................................ 179 2 . Holding or disposal of the Company’s shares by affiliates in the most recent year and up to the date of publication of the annual report .......................................................... 189 3. Holding or disposal of the Company’s shares by affiliates in the most recent year and up to the date of publication of the annual report:. ......................................................... 189 4. Other Necessary Supplementary Notes. .................................................... 189 5. Occurrence of any of the situations listed in Article 36, paragraph 2, subparagraph 2 of the Securities and Exchange Act which might materially affect shareholders’ equity or the price of the Company’s securities during the most recent fiscal year and up to the date of publication of the annual report: ..... 189 Attachment: 2021 financial statements certified by the CPAs. ................................................................................. 190

I. Letter to the Shareholders

Dear Shareholders,

Thank you all for being here with us. On behalf of Run Long, I would like to express my sincere gratitude for your support over the past year!

The COVID-19 pandemic has ravaged the world for more than two years. Looking back on 2021, Taiwan raised the pandemic alert level to level 3 for more than two months, and domestic demand-oriented industries bore the brunt. Taiwan stocks have also experienced a year of turbulence with an intraday drop by more than 1,400 points, breaking the record in history. It was a bloodbath for the major stocks. Although the housing market was once impacted by the level 3 alert, after the alert was lifted, the consumption in the housing market hit a new high again as driven by the outstanding domestic economic performance, low interest rates, and the monetary easing policy. In 2021, the number of buildings sold and transferred in six special municipalities broke the record, with 267,751 buildings, setting a new record in eight years.

In 2021, the housing market in Taiwan was extremely vibrant, and the rise in housing prices also raised the government’s concern that it would affect real home buyers with rigid demand. Various government agencies managed to curb property speculation, including the Financial Supervisory Commission's real estate project financial examination, the Central Bank's loan-to-value restriction measure, the Ministry of the Interior's prohibition of resale of pre-sale housing agreements, private legal persons’ home purchase permit system, whistleblowing bonus system, actual price registration 2.0, and the city and county governments’ active discussion on the housing tax rate for property not for self-occupation. The government has actively launched policies to improve the housing market by suppressing real estate speculation without undermining the market. Although it will still impact some housing market transactions in 2022, the rigid demand is strong. Also, with abundant upstream capital and factory expansion and building by technology companies in various places, it, based on the estimation, will also boost the confidence in home buying and continue to create a home buying boom.

Looking ahead to 2022, everyone expects the pandemic to become a norm like influenza and even hopes that 2022 will be the "last year of the pandemic". However, due to the rapid spread of Omicron in Taiwan at the beginning of 2022, it is still uncertain whether the level 3 alert will be launched again or whether the new variant will impact the world again. However, in 2022, Taiwan's real estate market is still supported by several factors. First, real estate has long been regarded as a protection against inflation. When Taiwanese people have enough funds, they often tend to invest in the real estate market. Second, the current general housing loan interest rate is about 1.33%. Even if the Central Bank raises the interest rate by 0.25% in 2022, the interest rate will only rise slowly from the historic low, with a limited impact on the real estate market. Third, semiconductor companies invest and build factories in succession in various places, which will be interlinked with the development of the housing market. These will be favorable factors for the real estate market in 2022.

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In 2022, the market will still be dominated by the rigid demand from first-time home buyers and people who wish to replace their homes. Run Long aims to promote the products, featuring “young people to start a family”, “large replaced with small”, “old replaced with new”, and launched "small property units", "small second property units", and "two-plus-one-room units" not only for self-occupation but for multiple purposes, such as investment and renting. In terms of product design, building materials, or public facilities planning, we create a healthy home space and strengthen the anti-pandemic function of overall buildings.

In recent years, Run Long has been actively launching cases in major cities in northern, central, and southern Taiwan. In 2021, we launched the Shihengbin-Ueno District and the “Shihengbin-Hoshino District” in Keelung and the “National Central City” in Taoyuan, which all witnessed excellent performance. In addition, the remaining unsold units of “Taichung Dibao” in Taichung and the finished projects of “Chungyen A+” in Xizhi, New Taipei City, and “Shicheng Run Long” in Taoyuan also demonstrated outstanding sales results.

In 2022, we will strive to eliminate our remaining houses while focusing on apartments for first-time home buyers and those who wish to replace their homes. At present, the projects we are planning and expecting to launch are mainly located in De'an CEF (Keelung), Chungho Yuanton (New Taipei City), Wanfang in Wenshan (Taipei), Shanjie in Guishan (Taoyuan), Zhongzheng in Xitun (Taichung), and Xinnan in Anping (Tainan).

Finally, I would like to thank all of our colleagues for their efforts. With the completion and handover of the “Bokelai Park” in Banqiao, “Jinai No. 2” in Tainan, and “Wenhua Run Long” in Kaohsiung in 2021, and projects due to be completed and handed over to the owners in 2022, including the “Shihengbin-Ueno District” and the “Shihengbin-Hoshino District” in keelung and the “National Central City” in Taoyuan, the Company's revenue grew remarkably throughout the year. In the future, we will continue to uphold our management principle of a pragmatic and steady business approach, to maintain stable revenue while at the same time pursuing regular profitability for our shareholders.

The operating results of 2021 and the business outlook of 2022 are reported as follows:

1. Operating results of the previous year

2. (I) Implementation result of the 2021 business plan:

   • (1) In 2021, the Company’s consolidated net operating revenue totaled NT$10,479,267 thousand, an increase of NT$2,823,031 thousand from NT$7,656,236 thousand in 2020, representing a growth rate of 36.87%.

   • (2) In 2021, the Company's consolidated net income before tax totaled NT$2,060,201 thousand, an increase of NT$1,850,171 thousand from NT$210,030 thousand in 2020.

   • (3) To sum up, the revenue and net income before tax for 2021 increased compared with 2020, mainly due to the increase in both the construction revenue and the sales of remaining unsold units of the Company's newly completed construction projects recognized for 2021 compared with 2020.

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(II) Budget implementation status:

In accordance with the “Regulations Governing the Publication of Financial Forecasts of Public Companies,” it is not necessary for the Company to prepare financial forecasting for 2021.

• (III) Analysis of financial income and expense and profitability:

nalysis of financial income and expense and profitability:	nalysis of financial income and expense and profitability:	nalysis of financial income and expense and profitability:	nalysis of financial income and expense and profitability:
(Expressed in Thousands of New Taiwan Dollar)
Year Item		2021	2020
Financial income and expenses	Net operating income	10,479,267	7,656,236
	Gross profit from operations	2,738,473	1,016,928
	Profit after tax	1,671,830	117,248
Solvency	Current ratio (%)	145.80	139.74
	Quick ratio (%)	32.88	33.17
Profitability	Return on assets (%)	5.33	1.4
	Return on equity (%)	28.46	2.21
	Operating profit to paid-in capital ratio(%)	53.29	10.93
	Pre-tax net profit to paid-in capital ratio(%)	52.52	5.67
	Net profit rate (%)	15.95	1.53
	Earnings per share(NT$)	4.26	0.32

Note: Consolidated information of the Company and its subsidiaries.

• (IV) Status of research and development:

• (1) Architectural planning and design:

  • The residential building is designed for first-time buyers and home exchangers. In terms of design space, the apartments are divided into 2 or 3 rooms using safe and healthy building materials. We value the needs of users in a bid to achieve both aesthetics and practicality.

  • We will work with famous architectural teams at home and abroad and learn from international teams’ experience to improve the four major know-hows of flow planning, space design, delicate construction techniques, and hotel butler service; then, launch building products that are more in alignment with customers’ needs and even beyond their expectations.

  • The ideas of “green building” and “smart living space” will be combined. Using the green building as the foundation, we will introduce the application of smart high-end technology that meets the needs of a rapidly changing market.

  • In the design and planning stages, the visual communication platform of the 3D modeling software "Building Information Modeling" (BIM) is used. By taking this approach, we can facilitate horizontal and vertical communication, coordination and

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integration among design, construction and user units to improve efficiency as well as quality.

• Due to the effects of the pandemic outbreak, “epidemic-proof building materials” are the trend for future projects. Public spaces and homes will be upgraded with epidemic-proof building materials.

• (2) Construction and management:

• The 3D modeling software “BIM” will be used to review the project interface, resolve conflicts to achieve accurate construction standards, and improve deficiencies of traditional construction management, reducing overall construction costs.

• As there is a shortage of manpower for traditional technology, we will do our utmost to research and develop methods or adjust the process to reduce the traditional wet construction mode so as to decrease environmental pollution (e.g. the possibility to grout wall tiles instead of reinforced concrete walls, dry flooring instead of floor tiles, etc.).

• We will adopt aluminum molds for structural systems, reduce the cost of material damage, increase the number of replacements, and effectively reduce the number of construction workers to accelerate the construction progress and reduce the cost.

• We will research and develop and test the pre-assembly approach for structural beams and columns and implement the complicated steel bar fastening procedure in the processing plant to avoid weather problems and check the quality first; as such, we can assemble them on-site, to reduce the floating time caused by overlapping of many tasks, to effectively control the progress.

• (3)Market research and development:

• The Group’s official “House Appreciate Platform” has been launched with the website divided into sections including "Market Pulse", "Proposal Hotspots", "Fashion Taste", "Architecture School", "Group Brand" and "Event Zone". We provide information on the Group's latest projects in Taiwan so that consumers can get hold of the latest information and services available.

• We will continue to operate in the mainstream residential building market, focusing on homeownership and home exchange needs to meet the market demand. We will also strive to improve our after-sales services and quality control processes to gain recognition from home buyers and increase our brand awareness.

• In response to the era of digital community, the Company has launched online issue-specific digital videos. By integrating our brand principles into the videos, we can capture the hearts and minds of home buyers while gaining recognition from target consumers.

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2. Summary of the operating plans for the current year

(I) Operating Policy

1. Continue to plan high-quality products with precise positioning and flexible sales strategies to meet customer needs.

2. Ensure the quality of each construction project with a system combining construction and building.

3. Respond to lack of labor, keep pace with the times, seek construction technology innovation.

4. Give full play to the functions of design material selection and construction management to achieve the objectives of product refinement, cost control and shortening of the construction period.

5. Perfect after-sales service to increase customers’ trust in the Company, enhance the Company’s future sales performance, and establish brand image and reputation.

6. Continue to seek various possibilities for land development, and actively expand reserves of high-quality locations and land resources.

(II) Forecasted sales volume and the basis

1. Projects expected to be completed and under construction this year:

The projects expected to be completed this year include “Shihengbin-Ueno District”, “Shihengbin-Hoshino District” in Keelung, and “National Central City” in Taoyuan. The projects under construction include “De An C” in Keelung, “Zonghe Yuantong” in New Taipei City, “Wenshan Wanfang” in Taipei, “Juke Run Long” in Hsinchu, and “Shicheng Aiyue” in Taichung and “Shuhoyuan” in KaoHsiung.

1. New projects expected in this year:

“De An C” in Keelung and “Xitun Zhongzheng” in Taichung ... etc.

1. Other remaining units for sale include “Kuobin Dayuan” in Xindian, New Taipei City; “Bokelai Park” in Banqiao, New Taipei City; “Kuobin Kuandi” in Neihu, Taipei City, “Taichung Dibao” and “NTC National Trading Center” in Taichung, and “Wenhua Run Long” in Kaohsiung; the goal is to eliminate all the remaining units.

(III) Important production and marketing policies

1. In terms of product planning, the main products are self-occupied units for first-time buyers and home replacement buyers. The planning and construction of individual projects will be strengthened based on the location of each individual project, in order to establish brand continuity and increase customers’ willingness to change or purchase homes.

2. Establish appropriate pricing, sales channels and advertisement strategies pertinent to the characteristics of products, supervise the meeting of the targets of each sales scheme and closely monitor market trends to allow flexible adjustment, in order to facilitate project development and maximize performance.

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   1. Product features tend to be diversified, increasing requirements for smart buildings, humanized residences, green buildings, environmental protection, barrier-free spaces, and medical care.

   2. A 100% invested subsidiary (Chin Chun Construction Co., Ltd.) may effectively supervise the quality of projects, control the construction progress, handle the construction costs, and continue to pursue novel high-tech, high-efficiency technologies, enrich professional knowledge, and strive for quality and service improvement.

   3. The product positioning and construction planning of projects that are yet to be developed must be responsive to the demand in the housing market and changes in the economic environment. The Company shall seek to meet its targets for improving its products, services, safety and active development.

   4. Save inventory management costs and actively dispose of remaining units.

4. Future development strategies, impact posed by external competition, the regulatory environment and the overall business environment

5. (I) Impact posed by external competition and the regulatory environment

In 2021, the amount of land purchased by builders and businessmen has hit a record high. Taichung, Taoyuan, and Kaohsiung are the most sought-after, and they are almost locked in rezoning or land along the MRT track. Because the relocation of large technology factories to the south has affected the flow of employment and residential population, The scarcity of essence land in Taipei is not easy to obtain and the cost is high, so many builders have adjusted their development strategies in a rolling manner and actively deployed to the south, which shows that builders have an optimistic view on the central and southern markets. As for Taoyuan Hsinchu, due to its geographical relationship with Shuangbei, in recent years, with the completion of high-speed rail, MRT and other rail transportation, a one-hour life circle has taken shape, making Taochu a first-class theater for corporate factories and headquarters. , to drive the development of local industries and attract a large number of employed people. In recent years, there have been waves of rezoning and development. The market has a large number of proposals and a variety of supplies, which can simultaneously meet the needs of first-time buyers, house replacements, and property buyers. Therefore, the company should follow the overall principles of high cost control, strong risk control and management capabilities, easy product planning, and good follow-up sales. In addition to traditional land sales, the company's development cases continue to be diversified and the development direction of cost control is carried out.

In today’s environment where the overall cost of real estate acquisition is increasing, cost control is becoming increasingly difficult. Therefore, projects should still be based on region, type and flexibility. Approaches such as sales, joint construction, government tenders, urban renewal and renovation of unsafe and old buildings can all be evaluated for development. The products with construction permits are the first priority because it helps to shorten the development time, so that their profit can be accurately controlled. The

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establishment cycles are short-term (sales), medium-term (joint construction) and long-term (urban renewal and unsafe and old building renovation). Various development projects in the city center, outskirts and outlying regions are combined to ensure project sources and maintain flexibility in capital deployment. For example, the Company’s previous transactions in GueiShan District (A7), Taoyuan City and Anping District, Tainan City; the government tender in Sanmin District, Kaohsiung City; the joint investment and construction project in Zhongshan District, Keelung City; the joint construction projects in the East District of Hsinchu City and Xitun District of Taichung City; and the urban renewal project in Zhonghe District, New Taipei City; these are all excellent development projects that cover different development types, different regions and different schedules. The Company is quite confident that they will become a good source of profit over the next few years.

(II) The impact of the overall business environment

In 2021, the COVID-19 epidemic had a huge impact on Taiwan. However, the domestic real estate market showed a high degree of resilience. It did not fear the local epidemic and the government’s real estate flipping policies. Instead, it benefited from low interest rates, abundant funds, investment preservation, and investment in semiconductor factories. The four pillars have made the housing market rise in price and volume, repeatedly setting unprecedented records in the history of Taiwan's real estate development.

Faced with the onslaught of inflation, the housing market is still supported by rigid demands such as property purchases. More and more new home buyers have shifted from a wait-and-see attitude to entering the market. Products with relatively small square footage and low total prices gradually It has become the main force in the market, coupled with the trend of high housing prices, consumers are increasingly paying attention to product planning and equipment, and products with lightweight luxury homes and first-time luxury homes will become mainstream in the future, which can attract 2 main groups of buyers: high-income families who want to buy small and medium-sized square meters as well as first-time buyers that are more particular about the quality of life.

In 2021, the industrial and commercial land and commercial real estate markets continued to expand, mainly due to the purchase of manufacturing for their own use, and the return of Taiwanese businessmen to stimulate industrial real estate. Benefiting from the strong demand from the rigid economy, the export performance of the technology industry and the manufacturing industry is outstanding. The expansion and upgrading needs of enterprises for office space may gradually appear as the old A-offices in urban areas are eliminated. The commercial real estate market is in short supply, especially as the government has made great efforts to build southern Taiwan into the next major technology town. Many domestic and foreign semiconductor manufacturers have successively announced to increase investment in Tainan and Kaohsiung. Industrial transformation and upgrading have also brought more opportunities for southern Taiwan to develop commercial real estate.

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(III) Future company development strategies

In recent years, in addition to continuing to sell existing homes across Taiwan, the company has continued to be optimistic and committed to finding places with greater rigid demand across Taiwan and launching suitable products. Currently, online cases such as "Shihengbin” in Zhongshan District, Keelung City, In addition to the “National Central City” in Zhongli District of Taoyuan City, the “Shicheng Aiyue” in Xitun District of Taichung City, and the “Shuhoyuan” in Sanmin District of Kaohsiung City, we are more actively looking for areas with strong demand for self-use to purchase land for development.

At present, the company is optimistic about emerging areas, such as Wenshan District in Taipei City, Zhonghe District in New Taipei City, Guishan District in Taoyuan City, and Anping District in Tainan City. The Company will successively obtain construction permits and prepare to launch pre-sales. The needs of first-time buyers and petty bourgeoisie are the main axes of planning.

In the future, the Company will continue to purchase high-quality land for diversified development. Other than residential land, commercial land will also be actively evaluated. The Company will target all of Taiwan to find potential areas for development, and launch high-quality products that meet market trends to increase the Company’s market share.

Chairperson: Managerial Officer: Head of Accounting:

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II. Company Profile

1. Date of Establishment: January 10, 1977

2. Company History

The Company was established in January 1977 pursuant to laws, and the shares were approved to be listed by the Taiwan Stock Exchange on August 3, 1994. The Company originally engaged in manufacturing, processing and trading of various ceramics, tiles, mosaics and artistic porcelain as its main business. Later, it successively developed the manufacturing and sales of industrial plastic products and communication engineering services. Since 2002, the Company has been actively transitioning into the environmental protection technology business, mainly engaging in the improvement and development of the treatment of incinerator bottom slag and its reuse. In 2004, the Company also ventured into real estate development and added the business of building residences by contracting to construction companies, and the lease and sale of commercial buildings. Major events in recent years are as follows:

Year	Important Event Description
2004	January: Since transitioning into the environmental protection technology business and the technologies and performance have become stabilized, to cope with the domestic real estate boom, the Company entered into the construction business and purchased lands in the Ankeng Section of Xindian City, Taipei County, for investing in the construction of real estate for sale, as the new area for the overall operating goal.
	April: The general shareholder meeting resolved to change Company name from Guobin Ceramics Industry Co., Ltd. to Guobin Dadi Environmental Protection Enterprise Co., Ltd., and the approval letter for the Company’s name change registration was obtained on April 20.
	April: The general shareholder meeting resolved to decrease the capital by NT$300 million to offset the accumulated losses; meanwhile, a capital increase of NT$300 million was conducted by private placement. It was approved by the Securities and Futures Commission on June 16. The paid-in capital became NT$600 million after the capital decrease and increase through private placement.
	August: The Company moved from the 7F, No. 170, Nanjing E. Road, Sec 4, Taipei City, to 10F, No. 67, Guangfu S. Road, Taipei City. On August 18, it obtained the approval letter for the location change registration.
2005	November:The Environmental Technology Business and the Environmental Protection Department of the Taipei County Government signed the “Commissioned Treatment Program for Recycling of Bottom Slag”.

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Year	Important Event Description
2006	June: the AGM resolved to transfer surplus to increase capital by NT$49.8 million; after the capital increase, the paid-in capital became NT$649.8 million.
2007	June: The general shareholder meeting resolved to transfer surplus to increase capital by NT$162.45 million; after the capital increase, the paid-in capital became NT$812.25 million.
2008	June: The Company moved from 10F, No. 67 Guangfu S. Road, Taipei City, to 6F, No. 207-1, Sec 3, Beixin Road, Xindian District, New Taipei City. On June 27, the Company obtained the approval letter for the location change registration.
	June: The general shareholder meeting resolved to transfer surplus and employees’ bonuses to increase capital by NT$163.75 million; after the capital increase, the paid-in capital became NT$976 million.
2009	June: The general shareholder meeting resolved to transfer surplus to increase capital by NT$156.16 million; after the capital increase, the paid-in capital became NT$1,132.16 million.
2010	June: The general shareholder meeting resolved to transfer surplus to increase capital by NT$226.432 million; after the capital increase, the paid-in capital became NT$1,358.592 million.
	June: 100% of the shares of the parent company Kuang Yang Investment Co., Ltd. were acquired by ChyiYuh Construction Co., Ltd.
	July: The Company moved from 6F, No. 207-1, Sec 3, Beixin Road, Xindian District, New Taipei City, to No. 220, Dechang St., Yingge District, New Taipei City. On July 15, the Company obtained the approval letter for the location change registration.
2011	January: The first batch of domestic secured convertible corporate bonds was issued for NT$600 million.
	June: The general shareholder meeting resolved to rename the Company from Guobin Dadi Environmental Protection Enterprise Co., Ltd. to Run Long Construction Co., Ltd. On June 20, the Company obtained the approval letter for the Company’s name change registration.
	October: The second batch of domestic secured convertible corporate bonds was issued for NT$1 billion.
2012	January: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$1,364,844,040.

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Year	Important Event Description
2012	April: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$1,422,325,180.
	July: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$1,437,237,120.
	October: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$1,446,006,430.
2013	January: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$1,446,342,980.
	April: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$1,446,991,390.
	September: The third batch of domestic secured convertible corporate bonds was issued for NT$1.5 billion.
	October: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$1,765,970,150.
2014	April: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$1,770,088,750.
	July: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$1,773,809,370.
	October: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$1,850,088,640.
	December: The Board of Directors resolved to increase capital in cash through issuing 30,000,000 common shares with a face value NT$10 per share for a total of NT$300,000,000.
2015	March: Through the issuance of common shares for capital increase in cash, the paid-up capital registration approved by the MOEA was increased to NT$2,150,088,640.

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Year	Important Event Description
2015	August: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$2,150,261,950.
	October: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$2,158,501,990.
2016	January: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$2,331,848,740.
	May: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$2,334,945,740.
	July: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$2,345,579,950.
	October: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$2,368,473,450.
2017	January: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$2,376,663,000.
	April: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$2,433,559,040.
	October: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$2,434,044,460.
2018	April: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$2,444,724,050.
	July: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$2,445,015,310.
	September: Acquired 100% stake of Jin Juun Construction Co., Ltd., a subsidiary of Highwealth Construction Corporation.

• 12 -

Year	Important Event Description
2018	October: Through the conversion of corporate bonds to common shares, the paid-in capital registration approved by the MOEA was increased to NT$3,083,305,310.
2019	February: Dissolved the Environmental Technology Business Division.
	September: Disposed the lands and buildings of the Environmental Technology plants at Dechang Section, Yingge District.
2020	October: The shareholder meeting resolved to transfer the surplus and capital reserve for capital increase of NT$616,661,060; the capital became NT$3,699,966,370 after the capital increase.
2021	October: The shareholder meeting resolved to transfer the surplus and capital reserve for capital increase of NT$222,000,000; the capital became NT$3,921,966,370 after the capital increase.

• 13 -

III. Corporate Governance Report

1. Organization System

2. (I) Organizational Structure

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(II) Major tasks of the functional committees under the Board of Directors

Functional committee	Major Tasks
Remuneration Committee	Prescribe and periodically review the performance review and remuneration policy, system, standards, and structure for directors and managerial officers. Evaluate and establish the remuneration of directors and managerial officers regularly.
Audit Committee	Establish or amend the internal control system pursuant to Article 14-1 of the Securities Exchange Act. Assessment of the effectiveness of the Company’s internal control system. Establish or amend handling procedures for financial or operational actions of material significance pursuant to Article 36-1 of the Securities and Exchange Act, such as acquisition or disposal of assets, derivatives trading, extension of monetary loans to others, and endorsements or guarantees for others. Review matters bearing on the personal interest of directors. Review transactions involving material assets or derivatives. Review material loaning of funds, endorsements, or provisions of guarantees. Review the offering, issuance, or private placement of any equity-type securities. Evaluate and approve the hiring, dismissal or remuneration of an attesting certified public accountant. Appoint or dismiss financial, accounting, or internal auditing officers. Review the financial statements of the year. Anyother material matter so determined bythe competent authority.

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(III) Work Description of Major Departments

(III) Work Description of	Major Departments
Departments	Functions
Chairman Office	The formulation of the Company’s long-term business development strategies. Supervising and verifying the effectiveness of the operation and execution of each business division. Planning and executing the operating strategies of each business division. Implementing resolutions of the Board of Directors
Company Governance Executives	As the top executive of corporate governance affairs, he is responsible for strengthening the corporate governance structure and promoting the planning and execution of corporate governance related businesses.
Audit	Assisting management to formulate the design and planning of the internal control system. Implementing the execution and evaluation of the internal control system. Auditing execution and report preparation, and auditing deficiencies and tracking the follow-up improvements. Assisting in the implementation of internal control self-evaluation in various departments. Submitting audit reports and explanations to the Board of Directors, the Audit Committee, and independent directors periodically.
President Office	Drafting of the Company’s mid- and short-term business objectives, guidelines, and implementation policies. Integrating Company-wide regulations and comprehensive planning. The vertical and horizontal integration of the Company’s various departments. Developing and planning of the Company’s organization. Responsible for supervising the operating performance of each business division. Planning and implementing of public relations activities and media liaison related affairs.
President Office Legal	Compiling the contents of the agreements, litigation documents and correspondence. Contract document reviewing, collection of laws and regulations, research on legal issues, collection of data, and filing.
Sales Dept.	Responsible for market evaluation, selection of sales agencies, marketing planning, pre-sale execution, signing contracts with customer and collecting payments, handover and title transfer operations, convening management committee meeting, and customer consultation and services.
Construction Dept.	Responsible for various project evaluations, construction monitoring, material acceptance, project outsourcing cost control, construction period control, quality control and after-sales warranty services.
Planning Dept.	Coordinating architectural designs of projects, product planning and permit applications, etc.
Development Dept.	Land development strategy recommendations and investment analysis and research, and environmental information collection. Comprehensive management of land purchases, joint venture land case signing, payment,transfer,taxpayment and other matters.

• 16 -

Departments	Departments	Functions
Finance Department	Finance	Funds deployment, financial analysis, receipts and payments, cashier and bank transaction processing.
	Accounting	General accounting matters; recording and review of related accounting documents; preparation, analysis and presentation of accounting statements and settlement accounts; taxation handling; annualbudgetpreparation.
	Stock affairs	Various stock affair operations. Responsible for the preparation of meetings of the Board of Directors and functional committees, agenda administration, and related resources or assistance required for performing duties. Responsible for the planning and preparation of the shareholder meetings and related agenda operations. Assisting in the planning and execution of information disclosure operations. Assistinginplanningmattersrelatedto corporate governance.
Administration Dept.		Planning the individual business of each department according to the work objectives and guidelines of the Company to reach the Company’s mission requirements. Coordination of various computerization schedules and effects, recommendation and signing of various operation plans. Planning, design, management and security maintenance of soft- and hardware equipment. Responsible for manpower needs, personnel recruitment, salary, assessment, welfare and education and training. Responsible for the management of general affairs and service supplies.

• 17 -

2. Information of directors, supervisors, president, vice presidents, associates, department and branch directors

(I) Information of Directors and Supervisors

April 11, 2022

Job Title	Nationality/Pla ce of Incorporation	Name	Gender Age	Date Effective	Term (Year)	Date First Elected	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Executives, Directors or Supervisors Who are Spouses or within the Second Degree of Kinship	Executives, Directors or Supervisors Who are Spouses or within the Second Degree of Kinship	Executives, Directors or Supervisors Who are Spouses or within the Second Degree of Kinship	Remarks (Note 1)
							Shares	Holding shares ratio	Shares	Holding shares ratio	Shares	Holding shares ratio	Stock Number	Holding shares ratio			Job Title	Name	Relationship
Institutional Director	Republic of China	Da-Li Investment Co.,Ltd		2021.08.16	Three years	2012.06.10	14,485,821	3.91	15,354,970	3.91	0	0	0	0	－	－	－	－	－
Representative of Institutional Director	Republic of China	Tsai, Chung-Ping	M 50-60	2021.08.16	Not applicable.	Not applicable.	Not applicable.	Not applicable.	9,551	0	159,000	0.04	0	0	College of Business, National Taichung University of Science and Technology	Run Long Construction Co., Ltd. Chairperson Da Li Investment Co., Ltd.Chairperson	None	None	None	Note 2
Institutional Director	Republic of China	Kaung Yang Investment Co., Ltd.		2021.08.16	Three years	1999.07.19	20,792,415	5.62	24,022,699	6.13	0	0	0	0	－	－	－	－	－
Representative of Institutional Director	Republic of China	Chiu, Ping-Tse	M 40-50	2021.08.16	Not applicable.	Not applicable.	Not applicable.	Not applicable.	0	0	0	0	0	0	Civil Engineering Institute, National Taiwan University Run Long Construction Co., Ltd. Chairman and President	Run Long Construction Co., Ltd. President Jin Jyun Construction Co., Ltd. Chairman	None	None	None
Representative of Institutional Director	Republic of China	Cheng, Chiao-Wen (Note 3)	F 30-40	2021.08.16	Not applicable.	Not applicable.	Not applicable.	Not applicable.	0	0	0	0	0	0	Pratt Institute Real Estate Development	Highwealth Construction Co., Ltd. Special Assistant	None	None	None
Representative of Institutional Director	Republic of China	Chen, Kuo-Yen	M 50-60	2021.08.16	Not applicable.	Not applicable.	Not applicable.	Not applicable.	0	0	429,300	0.11	0	0	National Taipei University of Technology Industrial Design Department ChyiYuh Construction Co., Ltd. Vice Chairman Consultant, Highwealth Construction	ChyiYuh Construction Co., Ltd. Consultant	None	None	None
Representative of Institutional Director	Republic of China	Hung, Ming-Yao (Note 4)	M 70-80	2018.06.11	Not applicable.	Not applicable.	Not applicable.	Not applicable.	-	-	-	-	-	-	Department of Soil and Water Conservation, Tamkang College of Arts and Science Associate Engineer, Public Works Bureau, Kaohsiung City Government	ChyiYuh Construction Co., Ltd. Technician	－	－	－

• 18 -

Job Title	Nationality/Pla ce of Incorporation	Name	Gender Age	Date Effective	Term (Year)	Date First Elected	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Executives, Directors or Supervisors Who are Spouses or within the Second Degree of Kinship	Executives, Directors or Supervisors Who are Spouses or within the Second Degree of Kinship	Executives, Directors or Supervisors Who are Spouses or within the Second Degree of Kinship	Remarks (Note 1)
							Shares	Holding shares ratio	Shares	Holding shares ratio	Shares	Holding shares ratio	Shares	Holding shares ratio			Job Title	Name	Relationship
Independent Director	Republic of China	Yen, Yun-Chi	M 60-70	2021.08.16	Three years	2015.06.11	0	0	0	0	0	0	0	0	China University of Technology Department of Public Health	Chairman Tungyue Advertising Co., Ltd.	None	None	None
Independent Director	Republic of China	Li, Wen-cheng	M 70-80	2021.08.16	Three years	2016.06.13	0	0	0	0	0	0	0	0	Central Police University Judge and Presiding Judge of Taiwan High Court	Highwealth Construction Independent Director Roo Hsing Co., Ltd. Independent Director	None	None	None
Independent Director	Republic of China	Chen, Yung-chang (Note 5)	M 60-70	2021.08.16	Three years	2021.08.16	0	0	0	0	0	0	0	0	National Taiwan University Department of Law Judge of Taiwan High Court	Attorney of All-Pro Law Firm Representative of corporate director of Flexium Interconnect Inc. Independent Director of LandMark Optoelectronics Corporation Independent Director of Center Ventures Independent Director of Collins Co. Ltd. Consultant of MasterLink Securities Corporation	None	None	None

Note 1: Where the chairperson and the president or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness and necessity thereof, and the measures adopted in response thereto (such as increasing the seats of independent directors, with the majority of directors not concurrently serving as employees or managerial officers).

Note 2: Chairperson Tsai, Chung-Ping ceased to serve as the President on Oct. 5, 2021, and Vice President Chiu, Ping-Tse was promoted as President. Note 3: Cheng, Chiao-wen, the Representative of Institutional Director, was elected at the shareholders' meeting on Aug. 16, 2021. Note 4: Hong, Ming-yao, the Representative of Institutional Director, was dismissed at the shareholders' meeting on Aug. 16, 2021. Note 5: Chen, Yung-chang, the independent director was elected at the shareholders' meeting on Aug. 16, 2021.

• 19 -

Table 1: Major shareholders of legal person shareholders

Table 1: Major shareholders of legal person shareholders	Table 1: Major shareholders of legal person shareholders	Table 1: Major shareholders of legal person shareholders
April 11,2022
Name of Legal Person Shareholder	Major shareholders of institutional shareholder
	Name of shareholder	Shareholding ratio
Da-Li Investment Co., Ltd	Tsai, Chung-Ping	47.93%
	Huang, Ching-Shui	29.76%
	Cheng, Jun-Fang	14.18%
Kaung Yang Investment Co., Ltd.	ChyiYuh Construction Co., Ltd.	100.00%

Table 2: The major shareholders of Table 1 the major shareholders of legal persons

April 11,2022	April 11,2022	April 11,2022
Legal Person Name	Legal Person’s Major shareholders
ChyiYuh Construction Co., Ltd.	Name of shareholder	Shareholding ratio
	Highwealth Construction	100.00%

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Information of Directors and Supervisors (II)

1. The Disclosure of Directors Professional Qualification and Independent Directors Independence

			April 11,2022
Qualification Name	Professional Qualifications and Experience	Independence Situation	Number of Other Public Companies in Which the Individual is Concurrently Serving as an IndependentDirector
Tsai, Chung-Ping (note 1)	■Representative of Institutional Director/Chairperson of Board of Directors/Chairperson ■Have more than 5 years of rich leadership experience in the construction industry and construction industry, and have a full range of administrative practice experience in various businesses of the company ■Primary current position Chairman of Run Long Construction Co., Ltd. Chairman of Da Li Investment Co., Ltd. ■None of the provisions of Article 30 of the CompanyAct.	Not applicable.	0
Chiu, Ping-Tse (note 1)	■Representative of Institutional Director/General Manager ■Have more than 5 years of rich leadership experience in the construction industry and construction industry, and have a full range of administrative practice experience in various businesses of the company ■Primary current position President of Run Long Construction Corporation. Chairman of Jin Jyun Construction Co., Ltd. ■None of the provisions of Article 30 of the CompanyAct.	Not applicable.	0
Cheng Chiao-Wen (Note 2)	■Representative of Institutional Director ■With more than 5 years of construction planning, sales industry-related business background, both professional and practical ■Primary current position Highwealth Construction Co., Ltd. Special Assistant ■None of the provisions of Article 30 of the CompanyAct.	Not applicable.	0
Chen, Kuo-Yen	■Representative of Institutional Director ■Have more than 5 years of rich experience in engineering construction industry leadership, and have business experience ■Primary current position ChyiYuh Construction Co., Ltd. Consultant ■None of the provisions of Article 30 of the CompanyAct.	Not applicable.	0

- 21 -

Qualification Name	Professional Qualifications and Experience	Independence Situation	Number of Other Public Companies in Which the Individual is Concurrently Serving as an IndependentDirector
Hung, Ming-Yao (Note3)	■Representative of Institutional Director Have more than 5 years of rich experience in engineering construction industry leadership ■Primary current position ChyiYuh Construction Co., Ltd. Technician ■None of the provisions of Article 30 of the CompanyAct.	Not applicable.	－
Yen, Yun-Chi	 Independent director / member of Remuneration Committee / member of Audit Committee  With more than 5 years of profound construction and sales industry-related business background, and rich practical experience in business and accounting  Primary current position Chairman Tungyue Advertising Co., Ltd.  None of the provisions of Article 30 of the Company Act.	1. The daughter of independent director Yan, Yun-qi has been employed by the company since January 1, 2022, but is not the manager of the company, so it is comply with the “Regulations Governing Appointment of Independent Directors Compliance Matters for Public Companies”. 2. The person, the spouse, the relatives within the second degree of relatives do not hold the number of shares in the company 3. Independent directors maintain their independence within the scope of their business execution, and must not have direct or indirect interests with the company, in the two years before the election and during the term of office, there is no circumstance specified in Article 3 of the "Regulations Governing Appointment of Independent Directors Compliance Matters for Public Companies" 4. The person has not provided business, legal, financial, accounting and other services to the Company or its affiliated companies for the last 2 years and received compensation	0

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Qualification Name	Professional Qualifications and Experience	Independence Situation	Number of Other Public Companies in Which the Individual is Concurrently Serving as an IndependentDirector
Li, Wen-Cheng	 Independent director / Remuneration Committee Convener / Audit Committee Convener  Retired judge (retired from Taiwan High Court in 2006), qualified as judge and lawyer for more than 5 years, and has rich experience in legal affairs  Past Experience President of Taiwan High Court President of Hualien Local Court President of Taitung Local Court President of Penghu Local Court His legal expertise covers administrative law, fair trade law, mass communication law, commercial litigation, criminal litigation, intellectual property litigation, etc. The company expects to rely on his expertise in legal talents and commercial litigation to assist the company in mastering the overall legal aspects during the operation layout, so as to reduce legal risks and improve operating efficiency.  None of the provisions of Article 30 of the Company Act.	1. Him, his spouse, and relatives within the second degree of kinship do not serve as directors, supervisors or employees of the company or its affiliated companies. Independent director Li, Wen-cheng concurrently serves as an independent director of the parent company, does not apply to this restriction. 2. The person, the spouse, the relatives within the second degree of relatives do not hold the number of shares in the company 3. Independent directors maintain their independence within the scope of their business execution, and must not have direct or indirect interests with the company, in the two years before the election and during the term of office, there is no circumstance specified in Article 3 of the "Regulations Governing Appointment of Independent Directors Compliance Matters for Public Companies" 4. The person has not provided business, legal, financial, accounting and other services to the Company or its affiliated companies for the last 2 years and received compensation	2

- 23 -

Name Qualification	Professional Qualifications and Experience	Independence Situation	Number of Other Public Companies in Which the Individual is Concurrently Serving as an IndependentDirector
Chen, Yung- chang (Note 4)	 Independent director / member of Audit Committee  Retired judge (retired from Taiwan High Court in 2007), qualified as judge and lawyer for more than 5 years, and has rich experience in legal affairs  Past Experience Judge of Taoyuan, Shilin and Taipei District Courts Chief Judge of Keelung District Court Judge and Presiding Judge of Taiwan High Court His legal expertise covers administrative law, fair trade law, mass communication law, commercial litigation, criminal litigation, intellectual property litigation, etc. The company expects to rely on his expertise in legal talents and commercial litigation to assist the company in mastering the overall legal aspects during the operation layout, so as to reduce legal risks and improve operating efficiency.  Primary current position Attorney of All-Pro Law Firm  None of the provisions of Article 30 of the Company Act.	1. The person, his spouse, and relatives within the second degree of kinship do not serve as directors, supervisors or employees of the company or its affiliated companies. 2. The person, the spouse, the relatives within the second degree of relatives do not hold the number of shares in the company 3. Independent directors maintain their independence within the scope of their business execution, and must not have direct or indirect interests with the company, in the two years before the election and during the term of office, there is no circumstance specified in Article 3 of the "Regulations Governing Appointment of Independent Directors Compliance Matters for Public Companies" 4. The person has not provided business, legal, financial, accounting and other services to the Company or its affiliated companies for the last 2 years and received compensation	3

Note 1: Chairperson Tsai, Chung-Ping ceased to serve as the President on Oct. 5, 2021, and Vice President Chiu, Ping-Tse was promoted as President.

Note 2: Cheng, Chiao-wen, the Representative of Institutional Director, was elected at the shareholders' meeting on Aug. 16, 2021.

Note 3: Hong, Ming-yao, the Representative of Institutional Director, was dismissed at the shareholders' meeting on Aug. 16, 2021.

Note 4: Chen, Yung-chang, the independent director was elected at the shareholders' meeting on Aug. 16, 2021.

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1. Diversity and Independence of the Board of Directors

2. (1) Diversity of the Board of Directors

The board of directors of the company guides the company's strategy, supervises the management and is responsible to the company and shareholders’ meeting. In various operations and arrangements of the corporate governance system, the board of directors exercises its functions and powers in accordance with laws, the company's Articles of Incorporation or the resolutions of the shareholders' meeting.

The structure of the board of directors of the company shall be based on the scale of the company's operation and development and the shareholding situation of its major shareholders, taking into account the needs of practical operations, and determining the appropriate number of directors with more than five members.

The composition of the Board of Director should consider the diversification, and that appropriate diversification policies should be formulated based on its own operation, operation type and development needs, including but not limited to the following 2 facets of standards:

 Basic conditions and values: Gender, age, nationality, culture, etc.

 Professional knowledge and skills: Professional background. (such as law, accounting, industry, finance, marketing, law or environmental protection), professional skills, and other experiences of industry.

The members of the board of directors shall generally possess the necessary knowledge, skills and qualities to perform their duties. In order to achieve the ideal goals of corporate governance, the overall ability of the board of directors should be as follows:

 Ability to make operational judgments.

• Ability to perform accounting and financial analysis.

• Ability to conduct management administration.

 Ability to conduct crisis management.

 Knowledge of the industry.

 Perspective of Global Market.

• Leadership.

• Capability of Decision Making.

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• (2) The company's current board member diversity policy and its implementation are as follows:

• The current Board of Directors consists of seven directors, including 3 independent directors, and each director has rich experience and expertise in different fields.

• The Company’s directors concurrently serving as employees account for 29% and independent directors account for 43%. One independent director has a tenure of less than 3 years, two independent directors have a tenure of 5 to 7 years. One directors is 70 years old or older, two directors are over 60 years old, 3 directors are between 40 to 60 years old, and one director is under 40 years old. The Company values the gender equality in the composition of the Board of Directors, there are 7 directors, including 1 female director, achieve 14%, and the goal is to add one more female director in the Board of Directors for the next term.

• The implementation of the diversification for the members of board of directors of this term (2021/08/16-2024/08/15) is as the following table:

Job Title	Name			Formation							Experience in	industry/ specialty	industry/ specialty
		Nationality	Gender	concurrently serve as the employee of the company	Age	Seniority of tenure as independent director	Financial Accounting	Law	Marketing	Operational Judgment	Business Management	Crisis Management	Knowledge of the Industry	Perspective of Global Market	Leadership	Capability of Decision
Chairperson and Representative of Legal Person Director	Tsai, Chung- Ping	Republic of China	Male		50 ｜ 60											
Representative of Legal Person Director	Chiu, Ping- Tse	Republic of China	Male		40 ｜ 50											
Representative of Legal Person Director	Cheng Chiao- Wen	Republic of China	Female		30 ｜ 40											
Representative of Legal Person Director	Chen, Kuo- Yen	Republic of China	Male		50 ｜ 60											
Independent Director	Yen, Yun- Chi	Republic of China	Male		60 ｜ 70	＞3										
Independent Director	Li, Wen- Cheng	Republic of China	Male		70 ｜ 80	＞3										
Independent Director	Chen, Yung- chang	Republic of China	Male		60 ｜ 70	＜3										

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• (3) The Independence of the Board of Directors

The board of directors of the company guides the company's strategy, supervises the management and is responsible to the company and shareholders. In various operations and arrangements of the corporate governance system, the board of directors exercises its functions and powers in accordance with laws, the company's articles of association or the resolutions of the shareholders' meeting. The board of directors of the company emphasizes the functions of independent operation and transparency. Directors and independent directors are independent individuals and exercise their powers independently. The three independent directors also abide by the relevant laws and regulations, cooperate with the powers of the audit committee, review the management and control of the company's existing or potential risks, etc., so as to supervise the effective implementation of the company's internal control, the selection (dismissal) of certified accountants, and independence and Fair preparation of financial statements. In addition, according to the company's "Director Election Regulations", the cumulative voting system and candidate nomination system are adopted for the selection and appointment of directors and independent directors, and shareholders are encouraged to participate. Personnel qualification review and confirmation of violations of the items listed in Article 30 of the Company Law are conducted and announced in accordance with the law to protect the rights and interests of shareholders, avoid monopoly or excessive nomination rights, and maintain independence.

The company has established a performance evaluation system for the board of directors, and implements an internal self-evaluation of the board of directors and self-evaluation of board members once a year. The measurements of the Board of Directors performance evaluation include five major aspects, namely (1) the degree of participation in the Company’s operations, (2) improvement in the quality of decision-making by the Board of Directors, (3) the composition and structure of the Board of Directors, (4) the election of the directors and their continuing professional education, and (5) internal control. The self-evaluation of board members include six major aspects, namely (1) grasp of the Company’s goals and missions, (2) recognition of director’s duties, (3) degree of participation in the Company’s operations, (4) management of internal relationships and communication, professionalism and (5) continuing professional education, and (6) internal control. The above-mentioned relevant self-assessment results are disclosed in the Company's annual report and official website after reporting to the Board of Directors.

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(2) Information of president, vice president, associates, department and branch directors

April 11, 2022

													April 11,	April 11,	April 11,	2022
Title	Nationality	Name	Gender	Date Effective	Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience(Education) (Note 1)	Position currently held at other companies	Managers who are Spouses or Within Two Degrees of Kinship			Remarks (Note 2)
					Shares	Holding shares ratio	Shares	Holding shares ratio	Shares	Holding shares ratio			Job Title	Name	Relationship
President	Republic of China	Tsai, Chung- Ping (Note 3)	M	2010.07.09	9,551	0	159,000	0.04	0	0	National Open College of Continuing Education Affiliated to National Taichung University of Science and Technology	Chairman of Da Li Investment Co., Ltd.	None	None	None
President	Republic of China	Chiu, Ping-Tse (Note 3)	M	2021.10.05	0	0	0	0	0	0	Civil Engineering Institute, National Taiwan University Run Long Construction Co., Ltd. Vice President	Chairman of Jin Jyun Construction Co., Ltd.	None	None	None
Company Governance Executives	Republic of China	Lin, Wen- Long (Note 4)	M	2021.06.24	0	0	0	0	0	0	National Taichung Commercial College Business Administration Dept. Taiwan Cooperative Bank Vice President	Highwealth Construction Co., Ltd. Company Governance Executives	None	None	None
Associate Vice President	Republic of China	Wu, Chin- Ching	M	2019.12.02	25,488	0.01	0	0	0	0	Shuan-Yuan Industrial Section Head Run Long Construction Co., Ltd. Administration Dept. Associate Vice President	None	None	None	None
Associate Vice President	Republic of China	Wang, Hsiao- Hua (Note 5)	M	2021.01.14	-	-	-	-	-	-	Department of Architecture and Urban Design, Chinese Culture University	－	－	－	－
Associate Vice President	Republic of China	Fang, Tze- Chiang (Note 6)	M	2021.08.10	0	0	0	0	0	0	Institute of Architecture and Urban Design, Department of Architecture, School of Design, National Taipei University of Technology Wu, Chang-Rung Architects Design Department Vice President	None	None	None	None

• 28 -

Title	Nationality	Name	Gender	Date Effective	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience(Education) (Note 1)	Position currently held at other companies	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship	Remarks (Note 2)
					Shares	Holding shares ratio	Shares	Holding shares ratio	Shares	Holding shares ratio			Job Title	Name	Relationship
Associate Vice President	Republic of China	Liu, Kuan- Ying (Note 7)	F	2022.04.01	35,080	0.01	0	0	0	0	Department of Lands, Chung Hsing University Highwealth Construction Co., Ltd., Sales Dept. Associate Manager Associate Vice President, Sales Dept., Bao-Yuan Construction Co., Ltd.	None	None	None	None
Manager	Republic of China	Lu, Chia-Yin	F	2011.10.27	40,674	0.01	0	0	0	0	Department of Accounting, National Taipei University of Business Run Long Construction Co., Ltd. Finance Manager	None	None	None	None
Manager	Republic of China	Lin, Ya-mei	F	2011.10.27	0	0	0	0	0	0	Accounting Department, Fu-Jen University Run Long Construction Co., Ltd. Accounting manager	None	None	None	None

Note 1: For the experience related to the current position, if such experience is any position at the accounting firm of the Company’s CPAs or at an affiliated enterprise of such accounting firm during the aforesaid period, such position and functions shall be specified.

• Note 2: Where the president or person of an equivalent post (the highest level manager) and the chairperson are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness and necessity thereof, and the measures adopted in response thereto (such as increasing the seats of independent directors, with the majority of directors not concurrently serving as employees or managerial officers). This is not applicable to the company, please refer to Note 3 description.

Note 3: Chairperson Tsai, Chung-Ping ceased to serve as the President on Oct. 5, 2021, and Vice President Chiu, Ping-Tse was promoted as President. Note 4: Mr. Lin, Wen-Long was appointed as the Company Governance Executive on Jun. 24, 2021.

• Note 5: Wang, Hsiao-Hua, the former president's office special assistant, was transferred to be the associate vice president of the planning department on Jan. 14, 2021; Wang, Hsiao-Hua, the planning department associate vice president, was transferred to the special assistant to the president's office on Aug. 10, 2021.

Note 6: On Aug. 10, 2021, Mr. Fang, Tze-Chiang was appointed as the Associate Vice President of the Planning dept. of the company. Note 7: On Apr. 1, 2022, Ms. Liu, Kuan-Ying was appointed as the Associate Vice President of the Sales dept. of the company.

• 29 -

3. Remuneration of directors, supervisors, president, and vice presidents in latest year

• (I) Remuneration of directors and independent directors (name and remuneration method are disclosed individually)

Dec. 31, 2021 Unit: NT$ thousand; Shares; %

Job Title	Job Title	Name	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Ratio of total compensation A+B+C+D and to net income (%)	Ratio of total compensation A+B+C+D and to net income (%)	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Ratio of Total Compensation (A+B+C+D+E+F+G) and to net Income (%)	Ratio of Total Compensation (A+B+C+D+E+F+G) and to net Income (%)	Compensation paid by an invested company other than the Company’s subsidiary or parent company
			Base Compensation (A)		Severance Pay (B)		Directors Remuneration (C)		Allowances (D)				Salary, Bonuses, and Allowances (E)		Severance Pay (F)		Employee Remuneration (G)
			The Company	Companies in the consolidated financial statements (Note 7)	The Company	Companies in the consolidated financial statements (Note 7)	The Company	Companies in the consolidated financial statements (Note 7)	The Company	Companies in the consolidated financial statements (Note 7)	The Company	Companies in the consolidated financial statements (Note 7)	The Company	Companies in the consolidated financial statements (Note 7)	The Company	Companies in the consolidated financial statements (Note 7)	The Company		Companies in the consolidated financial statements (Note 7)		The Company	Companies in the consolidated financial statements (Note 7)
																	Cash Bonus	Stock Amount	Cash Bonus	Stock Amount
General Director	Institutional Director	Da-Li Investment Co.,Ltd	0	0	0	0	5,300	5,300	0	0	5,300 0.32%	5,300 0.32%	0	0	0	0	0	0	0	0	5,300 0.32%	5,300 0.32%	None
	Representative of the Chairperson	Tsai, Chung-Ping	0	0	0	0	0	0	0	0	0	0	6,618	6,802	0	0	9,257	0	9,257	0	15,875 0.95%	16,059 0.96%	None
	Institutional Director	Kaung Yang Investment Co.,Ltd.	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	None
	Director Representative	Chiu, Ping-Tse	0	0	0	0	2,500	2,500	0	0	2,500 0.15%	2,500 0.15%	3,662	4,394	0	0	3,857	0	3,857	0	10,019 0.60%	10,751 0.64%	None
	Director Representative	Cheng, Chiao-Wen (Note 1)	0	0	0	0	600	600	0	0	600 0.04%	600 0.04%	0	0	0	0	0	0	0	0	600 0.04%	600 0.04%	None
	Director Representative	Chen, Kuo-Yen	0	0	0	0	1,000	1,000	0	0	1,000 0.06%	1,000 0.06%	0	0	0	0	0	0	0	0	1,000 0.06%	1,000 0.06%	None
	Director Representative	Hung, Ming-Yao (Note 2)	0	0	0	0	600	600	0	0	600 0.04%	600 0.04%	0	0	0	0	0	0	0	0	600 0.04%	600 0.04%	None
Independent Director	Independent Director	Yen, Yun-qi	1,020	1,020	0	0	0	0	0	0	1,020 0.06%	1,020 0.06%	0	0	0	0	0	0	0	0	1,020 0.06%	1,020 0.06%	None
	Independent Director	Li Wen-cheng	1,020	1,020	0	0	0	0	0	0	1,020 0.06%	1,020 0.06%	0	0	0	0	0	0	0	0	1,020 0.06%	1,020 0.06%	None
	Independent Director	Chen, Yung-chang (Note 3)	360	360	0	0	0	0	0	0	360 0.02%	360 0.02%	0	0	0	0	0	0	0	0	360 0.02%	360 0.02%	None

• 30 -

• Please describe the policy, system, standard and contruction of director’s payment, and describe the relevance of the amount of payment according to factors, such as responsibility, risk, and times:

In order to make independent directors have an impact on the Board of Directors and the operation of the Company and maintain independence, pursuant to Article 5 of the “Rules Governing the Scope of Powers of Independent Directors”, the Company has to pay the independent directors of the Company every month (or every quarter or every half year) regardless of the earnings of the Company. Moreover, the payment should be adjusted according to the level of participation and the value of the contribution (must be resolved by the Remuneration Committee and the Board of Directors).

The independent directors do not involve with the assignment of consideration and other incentives.

1. In addition to what is disclosed above, the payment of the directors provides all companies reported in the financial report with service (ex: serving as a non-employee consultant ... etc.) in a recent year: None

Note 1: Cheng, Chiao-wen, the Representative of Institutional Director, was elected at the shareholders' meeting on Aug. 16, 2021. Note 2: Hong, Ming-yao, the Representative of Institutional Director, was dismissed at the shareholders' meeting on Aug. 16, 2021. Note 3: Chen, Yung-chang, the independent director was elected at the shareholders' meeting on Aug. 16, 2021.

• 31 -

(II) Supervisors’ remuneration: Not applicable.

The Company has established the Audit Committee on June 11, 2018 to replace the functions of the supervisors.

(III) Remuneration of president and vice president

Dec. 31, 2021 Unit: NT$ thousand; Shares; %

Job Title	Name	Salary (A)	Salary (A)	Severance Pay (B)	Severance Pay (B)	Bonuses and Allowances ... etc.(C)	Bonuses and Allowances ... etc.(C)	Employee Remuneration (D) (Note 2)	Employee Remuneration (D) (Note 2)	Employee Remuneration (D) (Note 2)	Employee Remuneration (D) (Note 2)	Ratio of total compensation A+B+C+D and to net income (%)	Ratio of total compensation A+B+C+D and to net income (%)	Compensation paid by an invested company other than the Company’s subsidiary or parent company
		The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements	The Company		Companies in the consolidated financial statements		The Company	Companies in the consolidated financial statements
								Cash Bonus	Stock Amount	Cash Bonus	Stock Amount
Chairperson / President (Note 2)	Tsai, Chung-Ping	2,400	2,400	0	0	4,218	4,402	9,257	0	9,257	0	15,875 0.95%	16,059 0.96%	None
President (Note 2)	Chiu, Ping- Tse	1,200	1,800	0	0	2,462	2,594	3,857	0	3,857	0	7,519 0.45%	8,251 0.49%	None

Note 1: Regardless the title, any position equivalent to the president and vice president (e.g. director-general, chief executive, etc.) shall be disclosed.

Note 2: Chairperson Tsai, Chung-Ping ceased to serve as the President on Oct. 5, 2021, and Vice President Chiu, Bing-Zhe was promoted as President.

Note 3: The 2021 employees’ remuneration is filled in with the estimated amount.

.

• 32 -

(IV) Names and distribution status of managerial officers with employee remuneration distribution

Dec. 31, 2021 Unit: NT$ thousand; Shares; %

	Job Title	Name	Stock Amount	Cash Bonus	Total Amount	Ratio of total amount to net income(%)
MANAGERS	Chairperson	Tsai, Chung-Ping (Note1)	0	17,743	17,743	1.06
	President	Chiu, Ping-Tse (Note1)
	Company Governance Executives	Lin, Wen-Long (Note 2)
	Associate Vice President	Wu, Chin-Ching
	Associate Vice President	Wang, Hsiao-Hua (Note 3)
	Associate Vice President	Fang, Tze-Chiang (Note4)
	Associate Vice President	Liu, Kuan-Ying (Note 5)
	Manager	Lu, Chia-Yin
	Manager	Lin,Ya-mei

• Note 1: Chairperson Tsai, Chung-Ping ceased to serve as the President on Oct. 5, 2021, and Vice President Chiu, Ping-Tse was promoted as President.

• Note 2: Mr. Lin, Wen-Long was appointed as the Company Governance Executive on Jun. 24, 2021.

• Note 3: Wang, Hsiao-Hua, the former president's office special assistant, was transferred to be the associate vice president of the planning department on Jan. 14, 2021; Wang, Hsiao-Hua, the planning department associate vice president, was transferred to the special assistant to the president's office on Aug. 10, 2021.

• Note 4: On Aug. 10, 2021, Mr. Fang, Tze-Chiang was appointed as the Associate Vice President of the Planning dept. of the company.

• Note 5: On Apr. 1, 2022, Ms. Liu, Kuan-Ying was appointed as the Associate Vice President of the Sales dept. of the company.

• Note 6: The aforesaid amounts of 2020 employees’ remuneration are the estimated distributed amount.

• 33 -

• (V) Analysis of the ratio of total remuneration (paid to the directors, supervisors, president, and vice presidents of the Company by the Company and all the companies in the consolidated statements in the last two years) to net profit after tax, and explain the policy, standard, and combination of remuneration, the procedure for determining remuneration, and the relationship with operating performance and future risks:

• Total remuneration, as a percentage of net income after tax stated in the financial reports, as paid by the Company during the two most recent fiscal years to directors, supervisors, president and vice presidents:

Unit: NT$ thousand

					Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand
Item Job Title	The Company				All the companies in Consolidated statements
	2021		2020		2021		2020
	Total remunerations	As a percentage of net income after tax	Total remunerations	As a percentage of net income after tax	Total remunerations	As a percentage of net income after tax	Total remunerations	As a percentage of net income after tax
Director	12,400	0.74%	4,020	3.43%	12,400	0.74%	4,020	3.43%
President and Vice President (Note 1)	23,394	1.40%	6,448	5.50%	24,310	1.45%	7,171	6.12%
Net income after tax	1,671,830	－	117,248	－	1,671,830	－	117,248	－

• Note 1: Chairperson Tsai, Chung-Ping ceased to serve as the President on Oct. 5, 2021, and Vice President Chiu, Ping-Tse was promoted as President.

• Note 2: The total remuneration of directors, general managers and deputy general managers in 2021 increased compared with that in 2020, which was due to the increase in net profit after tax and the growth of operating performance in 2021.

• Policy, standards, and composition of remuneration payment:

• (1)The Company has established the Remuneration Committee, whose function is to evaluate, from an expert and objective standpoint, the Company’s policies and systems for the remuneration of directors and managers, and to make recommendations to the Board of Directors for the Board’s reference in decision making.

• (2)Pursuant to Article 22 of the Articles of Incorporation of the Company, the remuneration of directors for performing their duties shall be agreed upon by the Board of Directors based on the degree of individual directors’ participation in the operation and the value of their contributions. In addition, if the Company has made a profit in the current year, pursuant to the Article 29 of the Company’s Articles of Incorporation, no more than 3% of profit may be appropriated as director remuneration (on June 9, 2020, the shareholder meeting approved the amendment to Article 29 of the Company’s Articles of Incorporation, the appropriation is amended to no more than 1% as the remuneration to the directors). Independent directors receive a monthly fixed remuneration (paid

• 34 -

semi-annually) determined by the Board of Directors, and do not participate in the distribution of remuneration when the Company makes a profit.

• (3)The Company’s employee remuneration policy is determined based on personal work experience, job responsibilities, working ability and performance, the Company’s financial position and operating conditions, and is positively related to operating performance. In addition, if the Company has made a profit in the current year, pursuant to the Article 29 of the Company’s Articles of Incorporation, no less than 1% of the profit is appropriated for employee remuneration (on June 9, 2020, the shareholder meeting approved the amendment to Article 29 of the Company’s Articles of Incorporation, the appropriation is amended to no less than 0.1% as the remuneration to the employees).

• (4)The remuneration policy of the Company’s managerial officers, including salary and bonuses. For the salary, the Company’s internal salary balance is considered the market conditions are referred to, while being deliberated by the Remuneration Committee based on the managerial officers’ rank, educational and industrial background, professional ability and responsibilities, and then submitted to the Board of Directors for resolutions. Bonuses are determined based on the Company’s profit in the current year, taking into account the managerial officers’ positions, contribution, performance target achievement rate, and the Company’s operating performance for that year. Bonuses are reviewed by the Remuneration Committee and sent to the Board of Directors for resolution.

• (5)“Remuneration” as used in the Remuneration Committee Charter includes cash compensation, stock options, profit sharing and stock ownership, retirement benefits or severance pay, allowances or stipends of any kind, and other substantive incentive measures. Its scope shall be consistent with that of the remuneration for directors and managers as set out in the “Regulations Governing Information to be Published in Annual Reports of Public Companies”.

• Procedures for setting remuneration:

• (1)The performance evaluation of directors and managerial officers is based on the Company’s “Evaluation Procedures for the Board of Directors Performance” and the “Procedures of Performance Management” applicable to managerial officers and employees. Other than the Company’s overall operating performance, the industry’s future risks and development trends, the individual’s performance achievement rate and contribution to the Company are also considered when determining the reasonable remuneration given. Relevant performance appraisal and remuneration reasonableness is reviewed by the Remuneration Committee and the Board of Directors, and is subject to review from time to time based on the actual operating conditions and related laws and regulations, while considering the current reasonable trend of corporate

• 35 -

governance, in order to achieve a balance between the Company’s sustainable operation and risk control.

• (2)According to the performance self-assessment results of the Company’s 2021 Board of Directors, Board members, and members of functional committees, they were all found to be “significantly exceeding the standard” or “exceeding the standard”. Moreover, according to the Company’s 2021 annual managerial officers’ performance evaluation results, all managerial officers have achieved or exceeded the original target requirements, and the evaluation results based on the Company’s annual operating indicators have reached the highest standards. The remuneration of directors and managerial officers has fully considered their professional capabilities and the Company’s operations and financial position, and is linked to the Company’s overall operating performance, personal performance target management and appraisal results.

• Linkages to the operating performance and future risks:

• The Company’s overall operating conditions are the main consideration for the review of the relevant payment standards and systems, and the payment standards are approved based on the performance achievement rate and contribution level, to improve the overall organizational team effectiveness of the Board of Directors and the management department. In addition, by referring to the industry’s remuneration standards, the remunerations of the Company’s management is ensured to be competitive in the industry, to retain outstanding management talent.

The results of the Company’s operating results and the performance and remuneration of the management are inter-linked to each other, which positively promotes the overall performance of the Company and maximizes the interests of shareholders.

The important decisions of the Company’s management are based on a balanced consideration of various risk factors. The performance of related decisions is reflected in the Company’s profits, and then is related to the remunerations of the management.

• 36 -

4. Implementation of Corporate Governance

(I) Operation of the Board meeting:

In the most recent year (2021) the Board held 13 (A) meetings, and the attendance of directors (including Independent Directors) was as follows:

Job Title	Name	Actual no. of meetings attended (in non-voting capacity) (B)	No. of meetings with entrusted attendance	Ratio of actual no. of meetings attended (in non-voting capacity) (B/A)	Remarks
Chairperson	Da-Li Investment Co., Ltd Representative: Tsai Tsungpin	13	0	100.00%
Director	Kaung Yang Investment Co., Ltd. Representative: Chiu Pingtse	11	2	84.62%
Director	Kaung Yang Investment Co., Ltd. Representative: Cheng Chaiowen	6	0	100.00%	Inauguration on Aug. 16, 2021 (should attend 6 times)
Director	Kaung Yang Investment Co., Ltd. Representative: Chen Kuoyen	13	0	100.00%
Director	Kaung Yang Investment Co., Ltd. Representative: Hung Mingyao	7	0	100.00%	Aug. 16, 2021 dismissed (should attend 7 times)
Independent Director	Li Wencheng	13	0	100.00%
Independent Director	Yen Yunchi	12	1	92.31%
Independent Director	Chen Yungchang	6	0	100.00%	Inauguration on Aug. 16, 2021 (should attend 6 times)
Directors Average Actual Attendance Rate (%) for 2021 (Total actual attendances / total required attendances)				96.43%
Other items to be recorded: I.If any of the following circumstances occur in the operation of the Board meeting, please indicate the date of the Board meeting, the session number, the contents of the motion, the opinions of all independent directors and the Company’s handling of the opinions of the independent directors: (I)The matters listed in Article 14-3 of the Securities Exchange Act. Date Motion Contents Objection or reserved opinions of the independent directors Opinions of the independ ent directors The Company’s handling of the opinions of the independent directors Resolution 2021.01.14 (28th meeting of the last term) The Company proposed to transfer some constructed units to be sold as investment properties. None Approved Not applicable. All attending directors approved 2021.03.19 (29th meeting of the last term) Proposal for the Company’s 2020 earnings and capital surplus to issue new shares. None Approved Not applicable. All attending directors approved Proposal for the Company’s re-election of directors. None Approved Not applicable. All attending directors approved Proposal of the Company’s “Evaluation of Internal Control System Effectiveness” and “Internal Control System Statement”for 2020. None Approved Not applicable. All attending directors approved

• 37 -

Date Motion Contents Objection or reserved opinions of the independent directors Opinions of the independ ent directors The Company’s handling of the opinions of the independent directors Resolution 2021.04.23 (30th meeting of the last term) Proposals for the nomination of director (independent directors included) candidates for the Company’s general shareholders’ meeting of 2021. None Approved Not applicable. Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved Proposal to lift the non-competition restrictions for directors. None Approved Not applicable. Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved Proposal to delete and add Company’s “Internal Control System”forms. None Approved Not applicable. All attending directors ratified 2021.05.07 (31st meeting of the last term) Proposal to sell the housing and parking space of the Company’s construction projects to related parties. None Approved Not applicable. All attending directors approved Proposal to amend Company’s “Internal Control System”forms. None Approved Not applicable. All attending directors ratified Proposal to renew the Company’s “Directors’ LiabilitiesInsurance” None Approved Not applicable. All attending directors approved 2021.08.16 (First meeting ofthe term) Election of the chairman of the company. None Approved Not applicable. All attending directors approved 2021.09.07 2nd meeting of the term The Company intends to purchase land in Shanjie Section, Guishan District,TaoyuanCity. None Approved Not applicable. All attending directors approved Proposal to determine the ex-dividend and cash dividends distribution base dates for the 2020 surplus and capital reserve transferred to capital increasefor issuingnew shares (capital increase). None Approved Not applicable. All attending directors approved Proposal to amend Company’s “Internal Control System”forms None Approved Not applicable. All attending directors ratified 2021.10.21 (4th meeting of the term) Proposal of the Company plans to issue the 2021 1st Secured Ordinary Corporate Bonds. None Approved Not applicable. All attending directors approved 2021.11.09 (5th meeting of the term) The company intends to purchase land (including above-ground buildings) in the Hsinnan section of AnpingDistrict,TainanCity. None Approved Not applicable. All attending directors approved 2021.12.24 (6th meeting of the term) Proposal to amend Company’s “Internal Control System”forms. None Approved Not applicable. All attending directors approved Proposal to assess the independence of CPAs for 2021. None Approved Not applicable. All attending directors approved Proposal to distribute 2020 directors’ remuneration. None Approved Not applicable. Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved (II) Any other documented objections or qualified opinions raised by independent directors against Board resolutions in relation to matters other than those described above: None.	Date	Motion Contents	Objection or reserved opinions of the independent directors	Opinions of the independ ent directors	The Company’s handling of the opinions of the independent directors	Resolution
	2021.04.23 (30th meeting of the last term)	Proposals for the nomination of director (independent directors included) candidates for the Company’s general shareholders’ meeting of 2021.	None	Approved	Not applicable.	Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved
		Proposal to lift the non-competition restrictions for directors.	None	Approved	Not applicable.	Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved
		Proposal to delete and add Company’s “Internal Control System”forms.	None	Approved	Not applicable.	All attending directors ratified
	2021.05.07 (31st meeting of the last term)	Proposal to sell the housing and parking space of the Company’s construction projects to related parties.	None	Approved	Not applicable.	All attending directors approved
		Proposal to amend Company’s “Internal Control System”forms.	None	Approved	Not applicable.	All attending directors ratified
		Proposal to renew the Company’s “Directors’ LiabilitiesInsurance”	None	Approved	Not applicable.	All attending directors approved
	2021.08.16 (First meeting ofthe term)	Election of the chairman of the company.	None	Approved	Not applicable.	All attending directors approved
	2021.09.07 2nd meeting of the term	The Company intends to purchase land in Shanjie Section, Guishan District,TaoyuanCity.	None	Approved	Not applicable.	All attending directors approved
		Proposal to determine the ex-dividend and cash dividends distribution base dates for the 2020 surplus and capital reserve transferred to capital increasefor issuingnew shares (capital increase).	None	Approved	Not applicable.	All attending directors approved
		Proposal to amend Company’s “Internal Control System”forms	None	Approved	Not applicable.	All attending directors ratified
	2021.10.21 (4th meeting of the term)	Proposal of the Company plans to issue the 2021 1st Secured Ordinary Corporate Bonds.	None	Approved	Not applicable.	All attending directors approved
	2021.11.09 (5th meeting of the term)	The company intends to purchase land (including above-ground buildings) in the Hsinnan section of AnpingDistrict,TainanCity.	None	Approved	Not applicable.	All attending directors approved
	2021.12.24 (6th meeting of the term)	Proposal to amend Company’s “Internal Control System”forms.	None	Approved	Not applicable.	All attending directors approved
		Proposal to assess the independence of CPAs for 2021.	None	Approved	Not applicable.	All attending directors approved
		Proposal to distribute 2020 directors’ remuneration.	None	Approved	Not applicable.	Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved

• 38 -

II. For situations where a director avoids a motion related to their own interests, the director’s name, the contents of the motion, the reasons for the avoidance of interests and the voting results shall be disclosed:

Date	Motion Contents	Name of recused director	Reasons for the required recusal, and participation in the voting process	Resolution
2021.04.23 (30th meeting of the last term)	Proposals for the nomination of director (independent directors included) candidates for the Company’s general shareholders’ meeting of 2021.	Director Tsai, Chung-Ping Director Chiu, Ping-Tse Director Chen, Kuo-Yen Director Li, Wen-Chen Director Yen, Yun-Chi	The directors’ namination involves personal interests, and thus when reading and deliberating the remuneration of individual directors’ remuneration, Chairperson, Tsai Chung-Ping, Director Chiu, Ping-Tse, Director Chen, Kuo-Yen and independent Li, Wen-Cheng and Yen, Yun-Chi recused themselves, and the independent director Li, Wen-Cheng chaired the meeting as the acting chair to preside over the discussion and voting on the proposal.	Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved
	Proposal to lift the non-competition restrictions for directors.	Director Chiu, Ping-Tse Director Li, Wen-Chen Director Yen, Yun-Chi	As the content of the lifting of the non-compete restriction on directors of the company in this case involves personal interests, director Chiu, Ping-Tse, independent director Li ,Wen-Cheng and independent director Yen, Yun-Chi are the interested parties of the case. Directors to evade.	Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved
2021.10.05 (3rd meeting of the term)	Proposal to Dismissal and Appointment the President of the Company	Director Tsai, Chung-Ping Director Chiu, Ping-Tse	The proposal of Dismissal and Appointment the President of the Company involves personal interests, and Chairperson Tsai, Chung-Ping, Director Chiu, Ping-Tse concurrently serves as the President and the Vice President, who have conflict of interests to the proposal. Therefore, when reading and deliberating the proposal, Chairperson Tsai, Chung-Ping, Director Chiu, Ping-Tse recused themselves, and the independent director Li, Wen-Cheng chaired the meeting as the acting chair to preside over the discussion and voting on the proposal.	Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved

• 39 -

Date	Motion Contents	Name of recused director	Reasons for the required recusal, and participation in the voting process	Resolution
2010.12.24 (6th meeting of the term)	Proposal to distribute 2020 directors’ remuneration.	Director Tsai, Chung-Ping Directors Chiu, Ping-Tse Chen, Kuo-Yen	The directors’ remuneration involves personal interests, and thus when reading and deliberating the remuneration of individual directors’ remuneration, Chairperson, Tsai, Chung-ping, Director Chiu, Ping-Tse, and Director Chen, Kuo-Yen recused themselves, and the independent director Li, Wen-Cheng chaired the meeting as the acting chair to preside over the discussion and voting on the proposal.	Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved
	Proposal to distribute 2020 managerial officers’ remuneration.	Director Tsai, Chung-Ping Director Chiu, Ping-Tse	The proposal of managerial officers’ remuneration involves personal interests, and Chairperson Tsai, Chung-Ping, Director Chiu, Ping-Tse concurrently serves as the President and the Vice President, who have conflict of interests to the proposal. Therefore, when reading and deliberating the proposal, Chairperson Tsai, Chung-Ping, Director Chiu, Ping-Tse recused themselves, and the independent director Li, Wen-Cheng chaired the meeting as the acting chair to preside over the discussion and voting on the proposal.	Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved
	Proposal to disburse the 2021 annual performance bonus of the managerial officers.	Director Tsai, Chung-Ping Director Chiu, Ping-Tse	The proposal of annual performance bonus of the managerial officers involves personal interests, and Chairperson Tsai, Chung-Ping, Director Chiu, Ping-Tse concurrently serves as the President and the Vice President, who have conflict of interests to the proposal. Therefore, when reading and deliberating the proposal, Chairperson Tsai, Chung-Ping, Director Chiu, Ping-Tse recused themselves, and the independent director Li, Wen-Cheng chaired the meeting as the acting chair to preside over the discussion and voting on the proposal.	Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved

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III. Implementation status of assessment of the Board of Directors: (I) The cycle, period, scope, method and content of evaluation for the self assessment of the Board of Directors Period of Evaluation Duration of Evaluation Scope of Evaluation Methods of Evaluation Content of Evaluation Once per year January 1, 2021, to December 31, 2021 Performance evaluation of the overall Board of Directors, individual board members and functional committees (Audit Committee and Remuneration Committee) Internal assessment of the Board of Directors, board members, and functional committees The measurements of the Board of Directors performance evaluation include five major aspects, namely the degree of participation in the Company’s operations, improvement in the quality of decision-making by the Board of Directors, the composition and structure of the Board of Directors, the election of the directors and their continuing professional education, and internal control. The measurements of individual board members performance evaluation include six major aspects, namely grasp of the Company’s goals and missions, recognition of director’s duties, degree of participation in the Company’s operations, management of internal relationships and communication, professionalism and continuing professional education, and internal control. The measurements of functional committees performance evaluation include five major aspects, namely degree of participation in the Company’s operations, recognition of the duties of the functional committee, improvement in the quality of decision-making by the functional committee, composition of the functional committee and election and appointment of committee members, and internal control.	III. Implementation status of assessment of the Board of Directors: (I) The cycle, period, scope, method and content of evaluation for the self assessment of the Board of Directors Period of Evaluation Duration of Evaluation Scope of Evaluation Methods of Evaluation Content of Evaluation Once per year January 1, 2021, to December 31, 2021 Performance evaluation of the overall Board of Directors, individual board members and functional committees (Audit Committee and Remuneration Committee) Internal assessment of the Board of Directors, board members, and functional committees The measurements of the Board of Directors performance evaluation include five major aspects, namely the degree of participation in the Company’s operations, improvement in the quality of decision-making by the Board of Directors, the composition and structure of the Board of Directors, the election of the directors and their continuing professional education, and internal control. The measurements of individual board members performance evaluation include six major aspects, namely grasp of the Company’s goals and missions, recognition of director’s duties, degree of participation in the Company’s operations, management of internal relationships and communication, professionalism and continuing professional education, and internal control. The measurements of functional committees performance evaluation include five major aspects, namely degree of participation in the Company’s operations, recognition of the duties of the functional committee, improvement in the quality of decision-making by the functional committee, composition of the functional committee and election and appointment of committee members, and internal control.	III. Implementation status of assessment of the Board of Directors: (I) The cycle, period, scope, method and content of evaluation for the self assessment of the Board of Directors Period of Evaluation Duration of Evaluation Scope of Evaluation Methods of Evaluation Content of Evaluation Once per year January 1, 2021, to December 31, 2021 Performance evaluation of the overall Board of Directors, individual board members and functional committees (Audit Committee and Remuneration Committee) Internal assessment of the Board of Directors, board members, and functional committees The measurements of the Board of Directors performance evaluation include five major aspects, namely the degree of participation in the Company’s operations, improvement in the quality of decision-making by the Board of Directors, the composition and structure of the Board of Directors, the election of the directors and their continuing professional education, and internal control. The measurements of individual board members performance evaluation include six major aspects, namely grasp of the Company’s goals and missions, recognition of director’s duties, degree of participation in the Company’s operations, management of internal relationships and communication, professionalism and continuing professional education, and internal control. The measurements of functional committees performance evaluation include five major aspects, namely degree of participation in the Company’s operations, recognition of the duties of the functional committee, improvement in the quality of decision-making by the functional committee, composition of the functional committee and election and appointment of committee members, and internal control.	III. Implementation status of assessment of the Board of Directors: (I) The cycle, period, scope, method and content of evaluation for the self assessment of the Board of Directors Period of Evaluation Duration of Evaluation Scope of Evaluation Methods of Evaluation Content of Evaluation Once per year January 1, 2021, to December 31, 2021 Performance evaluation of the overall Board of Directors, individual board members and functional committees (Audit Committee and Remuneration Committee) Internal assessment of the Board of Directors, board members, and functional committees The measurements of the Board of Directors performance evaluation include five major aspects, namely the degree of participation in the Company’s operations, improvement in the quality of decision-making by the Board of Directors, the composition and structure of the Board of Directors, the election of the directors and their continuing professional education, and internal control. The measurements of individual board members performance evaluation include six major aspects, namely grasp of the Company’s goals and missions, recognition of director’s duties, degree of participation in the Company’s operations, management of internal relationships and communication, professionalism and continuing professional education, and internal control. The measurements of functional committees performance evaluation include five major aspects, namely degree of participation in the Company’s operations, recognition of the duties of the functional committee, improvement in the quality of decision-making by the functional committee, composition of the functional committee and election and appointment of committee members, and internal control.	III. Implementation status of assessment of the Board of Directors: (I) The cycle, period, scope, method and content of evaluation for the self assessment of the Board of Directors Period of Evaluation Duration of Evaluation Scope of Evaluation Methods of Evaluation Content of Evaluation Once per year January 1, 2021, to December 31, 2021 Performance evaluation of the overall Board of Directors, individual board members and functional committees (Audit Committee and Remuneration Committee) Internal assessment of the Board of Directors, board members, and functional committees The measurements of the Board of Directors performance evaluation include five major aspects, namely the degree of participation in the Company’s operations, improvement in the quality of decision-making by the Board of Directors, the composition and structure of the Board of Directors, the election of the directors and their continuing professional education, and internal control. The measurements of individual board members performance evaluation include six major aspects, namely grasp of the Company’s goals and missions, recognition of director’s duties, degree of participation in the Company’s operations, management of internal relationships and communication, professionalism and continuing professional education, and internal control. The measurements of functional committees performance evaluation include five major aspects, namely degree of participation in the Company’s operations, recognition of the duties of the functional committee, improvement in the quality of decision-making by the functional committee, composition of the functional committee and election and appointment of committee members, and internal control.	III. Implementation status of assessment of the Board of Directors: (I) The cycle, period, scope, method and content of evaluation for the self assessment of the Board of Directors Period of Evaluation Duration of Evaluation Scope of Evaluation Methods of Evaluation Content of Evaluation Once per year January 1, 2021, to December 31, 2021 Performance evaluation of the overall Board of Directors, individual board members and functional committees (Audit Committee and Remuneration Committee) Internal assessment of the Board of Directors, board members, and functional committees The measurements of the Board of Directors performance evaluation include five major aspects, namely the degree of participation in the Company’s operations, improvement in the quality of decision-making by the Board of Directors, the composition and structure of the Board of Directors, the election of the directors and their continuing professional education, and internal control. The measurements of individual board members performance evaluation include six major aspects, namely grasp of the Company’s goals and missions, recognition of director’s duties, degree of participation in the Company’s operations, management of internal relationships and communication, professionalism and continuing professional education, and internal control. The measurements of functional committees performance evaluation include five major aspects, namely degree of participation in the Company’s operations, recognition of the duties of the functional committee, improvement in the quality of decision-making by the functional committee, composition of the functional committee and election and appointment of committee members, and internal control.
	Period of Evaluation	Duration of Evaluation	Scope of Evaluation	Methods of Evaluation	Content of Evaluation
	Once per year	January 1, 2021, to December 31, 2021	Performance evaluation of the overall Board of Directors, individual board members and functional committees (Audit Committee and Remuneration Committee)	Internal assessment of the Board of Directors, board members, and functional committees	The measurements of the Board of Directors performance evaluation include five major aspects, namely the degree of participation in the Company’s operations, improvement in the quality of decision-making by the Board of Directors, the composition and structure of the Board of Directors, the election of the directors and their continuing professional education, and internal control. The measurements of individual board members performance evaluation include six major aspects, namely grasp of the Company’s goals and missions, recognition of director’s duties, degree of participation in the Company’s operations, management of internal relationships and communication, professionalism and continuing professional education, and internal control. The measurements of functional committees performance evaluation include five major aspects, namely degree of participation in the Company’s operations, recognition of the duties of the functional committee, improvement in the quality of decision-making by the functional committee, composition of the functional committee and election and appointment of committee members, and internal control.

• (II) The results of the 2021 performance evaluation were submitted to the Board of Directors on March 14, 2022. (III) Evaluation results: The performance evaluation results of the Company’s overall Board of Directors, individual board members, Audit Committee and Remuneration Committee were “significantly exceeding the standard” (90 points or more); it shows that the overall operation of the Company’s Board of Directors, Audit Committee and Remuneration Committee operate well as a whole, and in line with corporate governance.

• IV. Evaluation of the objectives and implementation of the strengthening of the functions of the Board of Directors in the current year and the most recent year:

• (I) For the improvement of the corporate governance system of the Company, the explanation is as follows: 1. In response to the Financial Supervisory Commission's "Corporate Governance 3.0" to promote listed companies to introduce risk management mechanisms, and to promote the company's sound operation and sustainable development, on Oct. 21, 2021, the Company's "Risk Management Procedures" was approved by the Audit Committee and the Board of Directors.

• The Company has insured directors and key staff with liability insurance. The current insured amount is US$3 million, to diversify the legal liability risks of directors and key managerial officers, and improve corporate governance capabilities.

• It is that the appointment of the corporate governance officer completed on Jun. 24, 2021. The position will serve as a communication bridge between the management and the Board of Directors and each functional committee, and it should be helpful in assisting the Company in establishing a corporate governance system.

• The board of directors added a female director during the re-election of directors at the general shareholders' meeting on Aug. 16, 2021.

• Provide information such as courses, sessions, seminars and other information for members of the Board of Directors as a reference for continuing education, in order to improve their knowledge and capabilities in corporate governance, business administration, and risk management.

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• (II) The operation of the Audit Committee

• The Company's Audit Committee was established on June 11, 2018 to replace the original supervisor system. The members of the committee are composed of all independent directors of the board of directors. There are three members, at least one of whom should have accounting or financial expertise. After the re-election of the company's shareholders' meeting on Aug. 16, 2021, the second session of the "Audit Committee" was formed by all the newly appointed independent directors, and the independent director Li, Wen-Cheng was elected by all the members as the convener. The Committee’s operation is pursuant to the “Audit Committee Charter”.

• The main responsibilities and the key tasks of the year were reviewing and supervising the Company’s financial reports, risk control, and finance-related proposals. The deliberations include: the Company’s financial reports, accounting and internal control systems, and major asset or derivative transactions, offering or issuing negotiable securities, appointment or dismissal and remuneration of CPAs, matters involving the interests of the directors, and the appointment and dismissal of financial, accounting or internal audit officers, among other things.

• (1) Review and Check of Financial Statements

  • Annual business report, financial statements and earning distribution proposals of the company shall be approved by the Audit Committee, and reviewed and discussed by the Board of Directors. After the approval of the Board of Directors, proposed to the shareholders’ meeting for ratification. In addition, the quarterly financial reports are also submitted to the Board of Directors after being reported to the Audit Committee.

• (2) Evaluate the Effectiveness of Internal Control System The self-evaluation results of the internal control system were conducted according to routine operations by each unit within the Company annually and checked by the Audit Committee. The Audit Committee checks the internal control system, including understanding operation results and the extent to which efficiency goals have been reached, reliability, timeliness, transparency of reports, and the effective enacting and implementation in accordance to laws and regulations, in order to reasonably ensure goals are achieved.

• (3) Appointment and Evaluation of CPAs

  • The Audit Committee shall conduct assessments of CPAs’ professionalism, independence, and reasonableness of remuneration at the end of each fiscal year. The results of the assessment of the CPAs’ service in 2021 have been deliberated and approved by the 4th meeting of the 2nd Term Audit Committee on December 24, 2021, and the 6th meeting of the Board of Directors on December 24, 2021. Yi-Lien Han, and Ti-Nuan Chien, accountants of KPMG, are in compliance with the assessment standards for independence and competence.

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• In the most recent year (2021) the Audit Committee held eight (A) meetings, the attendance of the independent directors is as follows:

Job Title	Name	Actual no. of meetings attended (B)	No. of meetings with entrusted attendance	Ratio of actual no. of meetings attended (B/A)	Remarks
Independe ntDirector	Li ,Wen-Cheng (Convener)	8	0	100.00%
Independe ntDirector	Yen, Yun-Chi	8	0	100.00%
Independe nt Director	Chen, Yung-Chang	4	0	100.00%	Inauguration on Aug. 16, 2021 (Four required attendances)
Audit Committee Member Average Actual Attendance Rate (%) for 2021(Total actual attendances / total required attendances)				100.00%
Other items to be recorded: I. If the operation of the Audit Committee has one of the following circumstances, the date and time of the Audit committee meeting, the term, the content of the proposal, dissenting opinions, reservations or major proposals of independent directors, the results of the resolution of the Audit Committee and the Company’s handling of the opinions of the Audit Committee shall be disclosed: (I) The matters listed in Article 14-5 of the Securities Exchange Act: Date of Board of Directors Meeting Motion Contents Audit Committee Date Resolution of the Audit Committee The Company’s handling of the opinions of the Audit Committee Resolution of the Board of Directors 2021.03.09 29th meeting of the last term Proposal for the Company’s 2020 business report and financial statements. 2021.03.09 25th meeting of the first term All attending members approved Not applicable. All attending directors approved Proposal for the Company’s 2020 earnings and capital surplus to issue new shares. All attending members approved Not applicable. All attending directors approved Proposal for the Company’s re-election of directors. All attending members approved Not applicable. All attending directors approved Proposal of the Company’s “Evaluation of Internal Control System Effectiveness” and “Internal Control System Statement” for 2020. All attending members approved Not applicable. All attending directors approved

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Date of Board of Directors Meeting	Motion Contents	Audit Committee Date	Resolution of the Audit Committee	The Company’s handling of the opinions of the Audit Committee	Resolution of the Board of Directors
2021.04.23 30th meeting of the last term	Proposals for the nomination of director (independent directors included) candidates for the Company’s general shareholders’ meeting of 2021.	2021.04.23 26th meeting of the first term	Except for members who did not participate in the discussion and avoid voting in accordance with the law, the remaining members agreed to pass the proposal	Not applicable.	Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved
	Proposal to lift the non-competition restrictions for directors.		Except for members who did not participate in the discussion and avoid voting in accordance with the law, the remaining members agreed to pass the proposal	Not applicable.	Except for directors recused from discussion and voting in accordance with the law, the remaining attending directors approved
	Proposal to delete and add Company’s “Internal Control System”forms.		All attending members approved	Not applicable.	All attending directors approved
2021.05.07 31st meeting of the last term	Proposal to sell the housing and parking space of the Company’s construction projects to related parties.	2021.05.07 27th meeting of the first term	All attending members approved	Not applicable.	All attending directors approved
	Proposal to amend Company’s “Internal Control System” forms.		All attending members approved	Not applicable.	All attending directors approved
	Proposal to renew the Company’s “Directors’ Liabilities Insurance”		All attending members approved	Not applicable.	All attending directors approved

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Date of Board of Directors Meeting	Motion Contents	Date of the Audit Committee meeting	Resolution of the Audit Committee	The Company’s handling of the opinions of the Audit Committee	Resolution of the Board of Directors
2021.09.07 2nd meeting of the term	The Company intends to purchase land in Shanjie Section, Guishan District, Taoyuan City.	2021.09.07 First meeting of the 2nd term	All attending members approved	Not applicable.	All attending directors approved
	Proposal to determine the ex-dividend and cash dividends distribution base dates for the 2020 surplus and capital reserve transferred to capital increase for issuing new shares (capital increase).		All attending members approved	Not applicable.	All attending directors approved
	Proposal to amend Company’s “Internal Control System” forms		All attending members approved	Not applicable.	All attending directors approved
2021.10.21 4th meeting of the term	Proposal of the Company plans to issue the 2021 1st Secured Ordinary Corporate Bonds.	2021.10.21 2nd meeting of the 2nd term	All attending members approved	Not applicable.	All attending directors approved
2021.11.09 5th meeting of the term	The company intends to purchase land (including above-ground buildings) in the Hsinnan section of Anping District, Tainan City.	202.11.09 3rd meeting of the 2nd term	All attending members approved	Not applicable.	All attending directors approved
2021.12.24 6th meeting of the term	Proposal to amend Company’s “Internal Control System” forms.	2021.12.24 4th meeting of the 2nd term	All attending members approved	Not applicable.	All attending directors approved
	Proposal to assess the independence of CPAs for 2021.		All attending members approved	Not applicable.	All attending directors approved

(II) In addition to the aforementioned matters, other matters that have not been approved by the Audit Committee and have been approved by more than two-thirds of all directors: None.

II. For situations where an independent director avoids a motion related to their own interests the contents of the motion, the reasons for the avoidance of interests and the voting results shall be disclosed: None. III. Communication between the independent directors and the internal audit supervisors and accountants (shall include the major issues, methods and results of communication regarding the Company’s financial and business conditions):

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(I) Communication between the independent directors and accountants:

1. The company's audit committee is composed of all independent directors. It holds regular meetings and communicates and discusses with certified accountants on the company's financial business-related proposals. The Audit Committee examines the various forms prepared by the Board of Directors and submitted to the shareholders' meeting (business report, financial statement, earnings distribution plan). And issue the audit committee review report in accordance with the regulations. 2. The Company’s CPAs regularly conduct audits or reviews of the annual and quarterly financial statements, with written results or meeting reported to the Audit Committee every quarter, as well as other communications required by relevant laws and regulations. 3. The Company’s independent directors have direct communication channels with internal audit officer and CPAs, and may communicate through email, phone call, interview, or meeting as necessary; and pursuant to the regulations of the competent authority, they regularly check the Company’s financial and business conditions, and communicate directly with the management unit. (II) Communication between the independent directors and internal audit supervisors: 1. Assess the effectiveness of the company's internal control system (issue a statement of internal control system), and submit it to the board of directors for resolution after being approved by the audit committee. 2. A summary of the company's "internal control system" rules and regulations will be submitted to the board of directors for resolution after being approved by the audit committee. 3. The formulation and revision of the Company's "Internal Audit System and Implementation Rules" shall be submitted to the Board of Directors for resolution after being approved by the Audit Committee. 4. The company has set up an audit unit directly under the board of directors, which is responsible for determining the organization, establishment and responsibility of internal audit, comprehensively managing audit business, and regularly and irregularly reporting the implementation of audit business to the audit committee and the board of directors. 5. After the internal audit report and the follow-up report are sent to the chairperson for review, the audit unit shall also report such to independent directors for review (in person or by email). The audit officer attends the Audit Committee and the Board of Directors to report on the internal audit operation, and fully communicates on the execution of the audit operation, the deficiencies found in audits and their improvement tracking, and the effectiveness. The Company’s independent directors may communicate and discuss with the audit officer depending on the content of the above-mentioned matters or as needed any time. 6. The auditing unit of the company listed the inspection opinions or the lack of inspection on the self-assessment of accountants and internal units, and the matters that should be strengthened in the internal control system statement. Report to the Audit Committee and the Board of Directors in writing. 7. Before the end of each fiscal year, the audit unit of the company will submit the audit plan for the next year to the board of directors for resolution after being approved by the audit committee. 8. In principle, the audit unit of the company holds a "Symposium on Review of Defects in Internal Control System" once a year. All independent directors have a discussion with the internal audit supervisor on the review of the lack of internal control system and make a record. The meeting minutes will be submitted to the board of directors.

2. 46 -

Date	Methods	Key points of communication	Communication status and results	The Company’s handling and execution of the opinions of the independent directors
2021.01 ~2021.12	The internal audit officer reported to the independent directors	Audit reports of December 2020 and January to November 2021	The internal audit officer sends the audit reports regarding the audit situation to the chairperson and independent directors every month, so that the chairperson and independent directors can keep track of the Company’s internal audit status in a timely manner
2021/03/19	Audit Committee 25th meeting of the first term	Internal audit report of Jan. 2021	All attending members agreed and took notice; submitted to the Board of Directors	No opinions from the independent directors
		Report on the implementation of the 2020 internal audit plans
		Self-assessment report on the design and implementation of various internal control systems from January to December 2020
		The Company’s “Evaluation of Internal Control System Effectiveness” and “Internal Control System Statement” for 2020	All attending members discussed and approved; submitted to the Board of Directors for approval	No opinions from the independent directors
2021/04/23	Audit Committee 26th meeting of the first term	Internal audit report of Feb. to Mar. 2021	All attending members agreed and took notice; submitted to the Board of Directors	No opinions from the independent directors
		Proposal to delete and add Company’s “Internal Control System” forms.	All attending members discussed and approved; submitted to the Board of Directors for approval	No opinions from the independent directors

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Date	Methods	Key points of communication	Communication status and results	The Company’s handling and execution of the opinions of the independent directors
2021/05/07	Audit Committee 27th meeting of the first term	Proposal to amend Company’s “Internal Control System” forms.	All attending members discussed and approved; submitted to the Board of Directors for approval	No opinions from the independent directors
2021/08/10	Audit Committee 28th meeting of the first term	Internal audit report of Apr. to Jun. 2021	All attending members agreed and took notice; submitted to the Board of Directors	No opinions from the independent directors
2021/09/07	Audit Committee First meeting of the 2nd term	Internal audit report of Jul. 2021	All attending members agreed and took notice; submitted to the Board of Directors	No opinions from the independent directors
		Proposal to amend Company’s “Internal Control System” forms.	All attending members discussed and approved; submitted to the Board of Directors for approval	No opinions from the independent directors
2021/10/21	Audit Committee 2nd meeting of the 2nd term	Internal audit report of Aug. 2021	All attending members agreed and took notice; submitted to the Board of Directors	No opinions from the independent directors
2021/11/09	Audit Committee 3rd meeting of the 2nd term	Internal audit report of Sep. 2021	All attending members agreed and took notice; submitted to the Board of Directors	No opinions from the independent directors
		Sep. 2021 deficiency tracking report

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Date	Methods	Key points of communication	Communication status and results	The Company’s handling and execution of the opinions of the independent directors
2021/12/24	Audit Committee 4th meeting of the 2nd term	Internal audit report of Oct. to Nov. 2021	All attending members agreed and took notice; submitted to the Board of Directors	No opinions from the independent directors
		Proposal for the Company’s 2022 audit plan.	All attending members discussed and approved; submitted to the Board of Directors for approval	No opinions from the independent directors
		Proposal to amend Company’s “Internal Control System” forms.
	Conference	2021 conference of the internal auditors and independent directors	No opinions from the independent directors
ommunication between independent directors and the CPAs is good. The main communication in 2021 are summarized below:
Date	Methods	Key points of communication	Communicat ion status and results	The Company’s handling and execution of the opinions of the independent directors
2021/03/19	In writing	The 2020 individual and consolidated financial statements	All attending members approved; submitted to the Board of Directors for approval	No opinions from the independent directors
2021/05/07	In writing	Q1 2021 consolidated financial statements
2021/08/10	In writing	Q2 2021 consolidated financial statements
2021/11/09	In writing	Q3 2021 consolidated financial statements
2021/12/24	In writing	Assessment of the independence of CPAs for 2021

(IV) The communication between independent directors and the CPAs is good. The main communication items in 2021 are summarized below:

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(III) Corporate governance status, variance from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons

Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”and Reasons
	YES	NO	Abstract Illustration
I. Does the Company follow the Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies, and has the Company established and disclosed its own Corporate Governance Best Practice Principles?			The Company has the “Corporate Governance Best Practice Principles” in place, and disclosed such in the “Corporate Governance Section” in the “Investors” section on the Company website and MOPS. Additionally, the 7th meeting of the Board of Directors approved to amend the “Corporate Governance Best Practice Principles” on March 14, 2022.	No variances.
2. The company's shareholding structure and shareholders' equity (1) Does the company stipulate internal operating procedures to deal with shareholders' suggestions, doubts, disputes and litigation matters, and implement them according to procedures? (2) Does the company have a list of the ultimate controllers of the major shareholders and major shareholders of the actual control company? (3) Does the company establish, implement and control the risk control and firewall mechanism between the enterprises? (4) Does the company stipulate internal regulations and prohibit insiders from using the undisclosed information on the market to buy and sell securities?	  		(1) The Company has a stock affairs unit, a spokesperson, and an e-mail box to handle shareholder suggestions or disputes pursuant to the Company’s internal operating procedures. The complaint filing, reporting, and suggestion functions are also provided on the Company’s website. If legal issues are involved, the legal department will take over. (2) As required, changes in the equity held by insiders are reported monthly, and during the period of book closures, the stock affairs agency provides the shareholder registry, to fully grasp the changes in the Company’s equity held by major shareholders. (3) The management of transactions with related parties, endorsement/guarantee, loaning of funds between the Company and the affiliates are all controlled by regulations. (4) The Company has established “Procedures for Handling Material Internal Information”, regulating that Company insiders and people who have obtained information shall not use undisclosed information of the market to buy or sell securities.	(1) No significant variances (2) No variances. (3) No variances. (4) No variances.

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Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
	YES	NO	Abstract Illustration
3.the composition and duties of the board of directors (1) Does the board of directors formulate diversity policies, specific management objectives and implement them?			(1) ■The diversification policy of the Company’s Board of Directors is mainly to stipulate that the composition of the Board of Director should consider the diversification, and that appropriate diversification policies should be formulated based on its own operation, operation type and development needs, including but not limited to the following standards: 1. Basic conditions and values: Gender, age, nationality, culture, etc. 2. Professional knowledge and skills: Professional background. (such as law, accounting, industry, finance, marketing, law or environmental protection), professional skills, and other experiences of industry. ■The overall Board of Directors shall possess the following abilities: 1. Ability to make operational judgments. 2. Ability to perform accounting and financial analysis. 3. Ability to conduct management administration. 4. Ability to conduct crisis management. 5. Knowledge of the industry. 6. An international market perspective. 7. Ability to lead. 8. Ability to make policy decisions. ■ The current Board of Directors consists of seven directors, including 3 independent directors, and each director has rich experience and expertise in different fields. ■The Company’s directors concurrently serving as employees account for 29% and independent directors account for 43%. One independent director has a tenure of less than 3 years, two independent directors have a tenure of 5 to 7 years. One director is 70 years old or older, 2 directors are over 60 years old, 3 directors are between 40to 60	(1) No variances.

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Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
	YES	NO	Abstract Illustration
(2) Does the Company voluntarily set up other functional committees in addition to the Remuneration Committee and the Audit Committee? (3) Does the company stipulate the performance appraisal methods of the board of directors and their assessment methods, and conduct performance evaluations every year and regularly, as well as report the appraisal results to the board of director, and serving as the reference for directors’ remuneration and nomination of re-election?			years old, and one director is under 40 years old. ■ The Company values the gender equality in the composition of the Board of Directors, there are 7 directors, including 1 female director, achieve 14%, and the goal is to add one more female director in the Board of Directors for the next term. ■The implementation of the diversification of the members of the Board of the Directors (Aug. 16, 2021, to Aug. 15, 2024) (Note 1). In addition, the “Board of Directors” page in the “Investors” section of the Company’s website discloses the Company’s Board of Directors diversification policy and implementation. (2) The functions related to corporate governance have been implemented by the Board of Directors, Audit Committee, and Remuneration Committee. The operations of the functional committees are smooth, and they have performed a sound supervisory function and strengthened the functions of the Board of Directors. (3) ■On August 12, 2020, the Board of Directors approved the amendments to the “Evaluation Procedures for the Board of Directors Performance”. At the end of each year, the stock affairs unit of the Finance Department assists in collecting information about Board activities and then implements the internal Board of Directors self-assessment. Questionnaires are provided for self-assessment to the Board of Directors, directors and all functional committees (including the Audit Committee and the Remuneration Committee), and after the statistical evaluation results are collected and reported to the Board of Directors as a basis for review and improvement. The overall Board performance evaluation results will be used as areferenceforselecting or	(2) The Company currently has no other functional committees, and will implement such pursuant to laws and regulations in the future. (3) No variances.

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Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
	YES	NO	Abstract Illustration
			nominating directors (including independent directors), and outcomes of the individual directors’ performance evaluation will be used as the reference basis for determining their individual compensation in the future. ■The measurements of the Board of Directors’ performance evaluation include the following five major aspects: 1. The level of involvement in the operation of the Company. 2. Improvement of the quality of the Board of Directors’ decision making. 3. The formation and composition of the Board of Directors. 4. Election and continuing education of the directors. 5. Internal control. ■The measurements of individual Board members’ performance evaluation include the following six major aspects: 1. Grasp of the goals and missions of the company. 2. Awareness of the duties of a director. 3. The level of involvement in the operation of the Company. 4. Operation and communication of internal relations. 5. The specialty and advanced studies of the directors. 6. Internal control. ■The measurements of functional committees’ performance evaluation include the following five major aspects: 1. The level of involvement in the operation of the Company. 2. The recognition of the duty of the functional committee. 3. The quality of the decision-making of the functional committee. 4. The formation of the functional committee and the election of its members. 5. Internal control. ■The Company completed the 2020 self-assessment of the overall Board of Directors,individual Board

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Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
	YES	NO	Abstract Illustration
(4) Does the company regularly assess the independence of the visa accountant?			members and functional committees’ performance at the end of Feb. 2022. The performance evaluation outcomes of the Company’s overall Board of Directors, individual board members, Audit Committees and Remuneration Committee are “significantly exceeding the standard” (90 points or more). ■The results of the aforesaid evaluation were submitted to the 7th meeting of the Board of Directors for reporting on March 14, 2022, and the main improvement suggestions and the direction for continuous strengthening in the future were provided. ■The Company has disclosed the “Evaluation Procedures for the Board of Directors Performance” on MOPS and the Company website; the results of such performance evaluation of the Board of Directors are also disclosed on the Company website. (4) According to Article 29 of the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies”, listed companies should choose certified public accountants with specialty, responsibility and independency. The Company should assess the independency of certified public accountants employed regularly (at least once a year). The results of the assessment of the CPAs’ service in 2021 have been deliberated and approved by the 4th meeting of the 2nd Term Audit Committee on December 24, 2021, and the 6th meeting of the Board of Directors on December 24, 2021. Yi-Lian Han and Ti-Nuan Chien the accountant of KPMG, are in compliance with the assessment standards for independence and competence (Note2).	(4) No variances.
IV. Whether the listed company has set up competent and suitable number of corporate governance personnel, as wellas corporate governance			■The company has passed the resolution to setup a Company Governance Executive on Jun. 24, 2021 Board of Directorsmeeting.	No variances.
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Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
	YES	NO	Abstract Illustration
officer, responsible for corporate governance related matters (including but not limited to providing information required by directors and supervisors to conduct business, assisting directors and supervisors to comply with laws and regulations, and handling matters related to meetings of the Board of Directors and shareholder meetings in accordance with the law, making board of directors and shareholders meeting minutes, etc.)?			(The group assigns the same person as the Company Governance Executive) ■The major responsibilities of the Company Governance Executive are as following: 1. Handle matters related to the meetings of the board of directors and the shareholders' meeting in accordance with the law. 2. Prepare the minutes of the board of directors and shareholders' meetings. 3. Assist the inauguration and continuing education of the directors. 4. Provide the information required by the directors to carry out their business. 5. Assist directors in complying with laws and regulations. ■In 2021, the company's Company Governance executive business execution focus are as following: 1. Assist directors to perform their duties, provide required information and arrange for further education for directors: (1) Compile the latest laws and regulations related to the company's business field and corporate governance, arrange for discussion in the board of directors, and promote it to board members from time to time. (2) Assist the directors to understand the laws and regulations that should be complied with when conducting business at the request of the directors. (3) Provide the company information required by the directors, and assist the directors to communicate and exchange with each business executive. (4) Assist the company to conduct at least 6 hours of refresher courses for board members. 2. Handle the procedures of the board of directors and the compliance matters of confirming resolutions: (1) A total of 13 board meetings were heldin 2021, but the Company
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Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
	YES	NO	Abstract Illustration
			Governance Executive held 8 board meetings after taking office on Jun. 24, 2021, and prepared board meeting notices and agendas in accordance with the law; Remind benefit avoidance in advance; and make minutes of proceedings within the statutory time limit. (2) Confirm that the convening, resolution procedures and minutes of the board of directors comply with relevant laws and regulations and corporate governance codes. 3. In 2021, the company's Company Governance executive has completed 12-hour further education.
5. Does the company establish communication channels with interested parties (including but not limited to shareholders, employees, customers and suppliers), set up stakeholder areas on the company's website, and respond appropriately to important corporate societies of concern to stakeholders, and responsibility issues?			The Company’s website has an “Investors” section. Out of respect for the interests of investors, the Company regularly identifies the types of investors and establishes contact windows and communication channels for each investor. Through appropriate communication, the Company understands their reasonable expectations and needs for appropriately responding to important corporate social responsibility issues investors are concerned about.	No variances.
6. Does the company appoint a professional stock agency to handle the affairs of the shareholders' meeting?			The Company has appointed the professional stock agency, the agency department of Capital Securities Corporation to handle the affairs of the shareholder meeting.	No variances.
7. Information disclosure (I) Has the company set up a website to disclose financial and corporate governance information? (II) Does the Company adopt other information disclosure methods (such as setting up an English website, appointing a dedicated person responsible for the collection and disclosure of company information, implementing a spokesperson system, postingthe corporate	 		(I) The Company has set up a corporate website to disclose finance, business and corporate governance related information in a timely manner pursuant to relevant laws and regulations. (II) The Company’s corporate website is mainly in Chinese. The relevant units are in charge of the collection of the Company’s information and the disclosure of material matters, and there are spokespersons and deputy spokespersons to implement the spokesperson system.The Company uploadsthe	(I) No variances. (II) No variances.

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Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
	YES	NO	Abstract Illustration
briefing process on the Company website, etc.)? (III) Does the Company publicly announce and file the annual financial reports within two months after the accounting year-end, and publicly announce and file the first, second and third quarter financial reports and monthly operating status reports before the stipulated deadlines?			relevant information on the website after corporate briefing conferences. (III) Although the Company does not announce and declare the financial report within two months after the end of the accounting year, it announces and declare the financial reports of the first, second, and the third quarter and the monthly operational situation early before the deadline.	(III) No significant variances
XIII. Does the Company have any other important information that can help understand the operation of corporate governance (including but not limited to employees’ rights, employee care, investor relations, supplier relationships, rights and interests of stakeholders, continuing education for directors and supervisors, implementation of risk management policies and risk measurement standards, implementation of customer policies, the Company’s purchase of liability insurance for directors and supervisors, etc.)?			The Company has other important information helpful to understand the operation of corporate governance:	No variances.

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==> picture [477 x 621] intentionally omitted <==

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

Implementation status (Note 1) Deviations from “the
Corporate Governance
Evaluation Item Best-Practice Principles for
YES NO Abstract Illustration
TWSE/TPEx Listed
Companies” and Reasons
(I) Employee interests: The Company has always been people-oriented, observing all relevant labor laws and
regulations, protecting the legitimate interests of employees, establishing a complete management system for
employee benefits, occupational safety and health, and training, while distributing performance bonuses,
year-end bonuses and employee remuneration based on operating results every year, to incorporate the
personal interests of employees into interests of the Company, creating a belief of co-prosperity and
coexistence.
(II) Employee welfare: The Company appreciates the safety and health of employees, provides health care and
assistance services. Employees are entitled to the group insurance and annual health checks; the welfare
committee and various clubs were established to organize various events to promote employee interactions.
1. Work-life balance: Subsidies for club activities and travelling subsidies.
2. Parenting support: Parental leave without pay, contracting to registered babysitting institutions and
breastfeeding rooms.
3. Livelihood support: Group insurance for employees and their families, wedding subsidies, maternity
subsidies, children’s education subsidies, new year gifts, birthday allowance, employee injury and
illness condolences and care, and subsidies for hospitalization and medical care.
4. Work assistance: Health checks and meal subsidies.
5. Other: Year-end parties, recognition for senior staff and preferential offers for employees at contracted
merchants.
Note: The aforesaid benefits include the Company and the Employee Welfare Committee.
(III) Investor relations:
1. The Company has a spokesperson and deputy spokesperson, responsible for the Company’s external
communications.
2. The Company announces finance, business, and material information on the Company website and
MOPS immediately, so that investors may fully understand the Company’s development direction and
strategic orientation, maximizing the interests of shareholders.
3. The Company’s general shareholder meetings provide shareholders with electronic ways to exercise
their voting rights. When the shareholder meeting is held, extemporary motions are avoided as much as
possible, in order to protect the interests of shareholders using electronic communication to vote.
(IV) Supplier relationships: The Company is committed to growing and fulfilling corporate social responsibilities
with suppliers, and innovating and improving quality together. The Company keeps good relations with
suppliers and ensures stable contract implementation.
1. The Company has set up the “Management Procedures for Suppliers”. New suppliers are reviewed in
advance, and only those who pass the review may be traded with; if there is no transaction within three
years, the qualification of qualified suppliers will be cancelled, and only after review and confirmation
may they become qualified suppliers again. The review includes the supplier’s capacity, scale, industry
reputation and financial credit, among other things.
----- End of picture text -----

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Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
	YES	NO	Abstract Illustration
2. Supplier appraisal/management: For qualified suppliers, the procurement unit shall fill in the “Supplier Appraisal Form” before the end of January and July each year for suppliers with transaction amounts of NT$200,000 (inclusive) or actual transaction performances of more than six times (inclusive). The forms will be evaluated by relevant units once. The appraisal includes delivery, quality, cooperation/service, and price of the supplier’s products. In addition, the supplier must satisfy relevant conditions such as labor, environmental and human rights. In case of violations, the Company may terminate or cancel the contract at any time, thereby urging all suppliers to fulfill their corporate social responsibilities. 3. The procurement unit has completed the Jan.-Jun.2021 and Jul.-Dec. 2021 “Supplier Appraisal Report” on Jul. 27, 2021, and Jan. 21, 2022, respectively, and the results of the appraisal are all A-level qualified vendors. (V) Rights of stakeholders: In order to fulfill the promises to stakeholders, and to respect and protect their legitimate interests, the Company has established various communication and complaint filing channels, and upholds the principle of good faith to handle and respond immediately. By establishing communication channels, the Company understands the issues that stakeholders are concerned about and immediately responds to their needs in a proactive manner, and takes such as a reference for the future direction of corporate social responsibility. In addition, the “Communication and Response” page of the “Investors” section on the Company website discloses the performance of communication with stakeholders. The communication with stakeholders in 2021 was reported at the 6th meeting of this term of the Board of Directors on December 24, 2021. (VI) Continuing education of the directors: Pursuant to the “Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies”, the Company provides continuing education courses to the directors from time to time. Continuing education in 2021 is as follows: Job Title Name Date of continuing education Held by Training Program Duration (hour) Independe nt Director Li, Wen- Cheng 2021/05/07~ 2021/05/07 Taiwan Corporate Governance Association Merge Review and Director Responsibilities 3 hours 2021/10/27~ 2021/10/27 Securities & Futures Institute 2021 Annual Insider Equity Transaction Legal Compliance Publicity and BriefingSession 3 hours

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	Evaluation Item	Evaluation Item	Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
				YES	NO	Abstract Illustration
Job Title Name Date of continuing education Held by Training Program Duration (hour) Independe nt Director Yen, Yun- Chi 2021/12/07~ 2021/12/07 Cathay Financial Holdings Co., Ltd. 2021 Cathay Sustainable Finance and Climate Change Summit Forum 6 hours Independe nt Director Chen, Yung- Chang 2021/08/30~ 2021/08/30 Taiwan Corporate Governance Association Directors' Fiduciary Duty and Business Judgment Guidelines 3 hours 2021/10/18~ 2021/10/18 Taipei Exchange OTC Center Insider Equity Promotion and Briefing Session of OTC Emerging Companies 3 hours (VII) Execution of risk management policies and risk measuring standards: I. Risk Management Policy In order to strengthen corporate governance, improve operations and sustainable development, and establish a comprehensive risk management culture as the basis for the company's risk management, the company has passed the "Risk Management Measures" by the Board of Directors on Oct. 21, 2021. As the highest guiding principle of the company's risk management. II. Risk Management Scope The risk management of the company at all levels includes "Strategic Deployment Risk", "Operational Management Risk", "Financial Operation Risk", "Hazardous Event Risk" and "Other Risks", etc., identification, measurement, monitoring and reporting of various risks, etc. The process should be adjusted in a timely manner in accordance with changes in the business environment, business and operational activities. III. Risk Management Organization 1. The board of directors The board of directors of the company is the highest guiding unit of the company's risk management. With the goal of complying with laws and regulations, promoting and implementing the company's overall operational risk management, it clearly understands the risks faced by sustainable operation and ensures the effectiveness of risk management.
	Job Title	Name		Date of continuing education			Held by	Training Program		Duration (hour)
	Independe nt Director	Yen, Yun- Chi		2021/12/07~ 2021/12/07			Cathay Financial Holdings Co., Ltd.	2021 Cathay Sustainable Finance and Climate Change Summit Forum		6 hours
	Independe nt Director	Chen, Yung- Chang		2021/08/30~ 2021/08/30			Taiwan Corporate Governance Association	Directors' Fiduciary Duty and Business Judgment Guidelines		3 hours
				2021/10/18~ 2021/10/18			Taipei Exchange OTC Center	Insider Equity Promotion and Briefing Session of OTC Emerging Companies		3 hours

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Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
	YES	NO	Abstract Illustration
2. Conduct management meeting The supervisory meeting or operation meeting chaired by the president or the relevant operation supervisor is responsible for reviewing and controlling the risk assessment and contingency command of various plans and projects initiated by the competent departments. 3. Responsible department Heads of departments and divisions are responsible for risk management, and are responsible for analyzing, monitoring and preventing relevant risks within their subordinate units to ensure the effective implementation of risk control mechanisms and procedures. 4. Audit unit Responsible for supervising all competent and responsible departments to follow the approval authority and related risk management methods and procedures to ensure the risk management awareness and implementation effectiveness of all employees. IV. Implementation status The Board of Directors of the Company passed and formulated the "Risk Management Measures" on Oct. 21, 2021, and on Dec. 24, 2021, reported the 2021 risk management operation to the sixth session of the Board of Directors. The relevant contents are briefly described as follows: 1. Strategic risk: According to the changes in the construction industry, set strategic goals, and cooperate with budget control to control the company's business direction. Set strategic goals and budgets once in year 2021. 2. Operational risk: hold a meeting of supervisors and related meetings on a regular or irregular basis every week to discuss the sales and other related details of each project one by one. In 2021, at least 40 supervisory meetings were held. 3. Financial risk: The company does not engage in high-risk investment, and has also formulated relevant measures such as "operational procedures for loaning funds to others" and "operational procedures for endorsement guarantees" to reduce financial risks. 4. Legal risk: In operating activities, in addition to complying with relevant laws and regulations, review and review the signed contracts in accordance with procedures, their legal validity, whether there are omissions, and inadequate regulations, so as to maintain the best interests of the company. 5. Information security risk: In 2021, the company did not find any major cyber attacks or incidents that had or may have a material adverse impact on the company's business and operations, nor was it involved in any legal cases or regulatory investigations related to this, On Dec. 24, 2021, the company's "information security risk management situation" was reported to the sixth session of the board of directors.
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Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
	YES	NO	Abstract Illustration
6. Hazard risk: The COVID-19 epidemic is spreading globally, and the response measures taken by the Group Management Department in conjunction with the Company's Management Department are as follows: (1) In line with the needs of epidemic prevention at all levels, formulate and implement health declarations and real-name registration for visitors and contractors during the epidemic. (2) Personnel entering and leaving control body temperature measurement and establishment of abnormal notification. (3) Implement response measures according to the level of epidemic prevention (4) Body temperature monitoring and abnormal body temperature notification. (5) The planners work in groups and partitions. (6) Meetings, events, and courses are suggested to be suspended, postponed or changed to video-based handling. (7) Fully pay employees to take out epidemic prevention insurance and vaccine insurance. (VIII) Implementation of customer policy: The Company has set up a dedicated customer service unit and staff to deal with issues related to customers, and maintains good relationship with customers for creating profit. (IX) The Company’s purchase of liability insurance for the directors: 1. The Company obtains directors’ liability insurance with respect to liabilities resulting from the exercise of their duties during their terms of directorship. 2. The coverage of the Company’s “Directors’ Liability Insurance” for 2020 and 2021 has been reviewed and approved in 21st meeting of this term of the Board of Directors on May 8, 2020, and the 31st meeting of this term of the Board of Directors on May 7, 2021. The insurance amount is US$3 million, and the insurance application has been completed. IX. Please state the improvements made to the items in the corporate governance evaluation results issued in the most recent year by the Corporate Governance Center of the Taiwan Stock Exchange Co., Ltd., and indicate the enhancement and improvement measures for the items not yet improved. 1. Already improved: Question No. 2.3: The company cooperated with the Taiwan Stock Exchange on Jan. 2, 2020, Tai Zheng Zhi Zi No. 10800242211 to amend the provisions of Article 4 of "Key Points of Matters to be Followed by the Board of Directors of Listed Companies and Exercise of Powers". On Oct. 5, 2021, the board of directors approved the resolution, and the former general manager of the company, Tsai, Chung-Ping, was elected as the chairman of the board of directors on August 16, 2021. Since October 5, 2021, he no longer serves as the general manager, and Chiu, Ping-Tse, the deputy general manager,waspromoted to thegeneral manager and also served as the

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Evaluation Item	Implementation status (Note 1)	Implementation status (Note 1)	Implementation status (Note 1)	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
	YES	NO	Abstract Illustration
spokesperson, which improved the situation that the chairman and the general manager were the same person before the re-election. Question 2/6: The company pays attention to gender equality in the composition of the board of directors. After the re-election of the shareholders' meeting on August 16, 2021, one of the seven board members is a female director. At this stage, the ratio of female directors is 14%. A further female director can be added as a goal. Question 2.21: In accordance with the provisions of Article 20 of "Key Points of Matters to be Followed by the Board of Directors of Listed Companies and Exercise of Powers", on June 24, 2021, the Board of Directors decided to appoint a corporate governance director. Question 2.22: In response to the Financial Supervisory Commission's "Corporate Governance 3.0" to promote listed companies to introduce risk management mechanisms, and to facilitate the company's sound operation and sustainable development, the company's board of directors came to the resolution of speculating the "Risk Management Procedure" on Oct.21, 2021. And shall be report to the Board of Directors at least once per year. Question 3.2: Since 2022, the company has simultaneously released major information in both Chinese and English. 2. Priority to enhance according to items that have not yet been improved: Question 2.15: The company should regularly (at least once) every year to invite certified accountants to attend the audit committee to communicate and discuss the review or audit results of quarterly and annual financial reports, important accounting standards or interpretation letters, and updates on securities laws and tax laws. Question 2.23: The company should conduct an external evaluation of the performance of the board of directors at least once every three years to improve the performance of the board of directors

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Note 1: The implementation of the diversification of members in the Board of the Directors (Aug 16, 2021, to Aug 15, 2024):

Job Title	Name			Formatio	n				Experience in	Experience in	Experience in	industry / specialty	industry / specialty
		Nationality	Gender	The employee of the company	Age	Seniority of tenure as independent director	Financial Accounting	Law	Marketing	Operational Judgment	Business Management	Crisis Management	Knowledge of the Industry	Perspective of Global Market	Leadership	Capability of Decision
Chairperson and Representative of Legal Person Director	Tsai, Chung- Ping	Republic of China	Male	√	50～60		√		√	√	√	√	√	√	√	√
Representative of Legal Person Director	Chiu, Ping-Tsee	Republic of China	Male	√	40～50		√		√	√	√	√	√	√	√	√
Representative of Legal Person Director	Cheng Chiao- Wen	Republic of China	Female		30～40		√		√	√	√	√	√	√	√	√
Representative of Legal Person Director	Chen, Kuo-Yen	Republic of China	Male		50～60				√	√	√	√	√	√	√	√
Independent Director	Yen, Yun-Chi	Republic of China	Male		60～70	＞3	√		√	√	√	√	√	√	√	√
Independent Director	Li, Wen- Cheng	Republic of China	Male		70～80	＞3		√		√	√	√	√	√	√	√
Independent Director	Chen, Yung- chang	Republic of China	Male		60～70	＜3		√		√	√	√	√	√	√	√

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Note 2: Assessment criteria for CPAs’ independence:

Item	Assessment Indicators	Assessment Outcomes	Assessment Outcomes
		YES	NO
1	Whether the CPAs have not provided the Company’s audit service for seven consecutive years	
2	Whether the CPAs have no direct or significant indirect relationship involving financial interest with the Company	
3	Whether the CPAs do not have financing or guarantee activities with the Company or the Company’s directors	
4	Whether the CPAs are not affected by the possibility of the Company’s business loss	
5	Whether the CPAs do not have any close business relationship with the Company	
6	Whether the CPAs do not have any potential employment relationship with the Company	
7	Whether the CPAs do not have any service fees related to the Company and the audit cases or possible fees	
8	Whether the CPAs and its audit service team members are not been currently serving or have within the last two years served as directors, managerial officers or positions that have a significant impact on the audit case in the Company.	
9	Whether the non-audit services provided by the CPAs to the Company do not directly affect important items of the audit case	
10	Whether the CPAs do not intermediate the shares or other securities issued by the Company	
11	Whether the CPAs have not acted as the Company’s defender or represented the Company’s defense against any legal proceedings with third parties or other disputes	
12	Whether the CPAs are not related to the Company’s directors, managers or persons who have significant influence on the audit case	
13	Whether the CPAs have not served as directors or managerial officers, or positions having a significant influence on the audit case in the Company within a year of resignation	
14	Whether the CPAs have not received valuable gifts from the Company or its directors or managerial officers	
15	Does the Company not require CPAs to accept improper options made by management in accounting policies or improper disclosures in financial statements?	
16	Whether the Company has not put pressure on CPAs to reduce professional service fees and thus prompt them to improperly reduce the audit tasks that should be performed	
Assessment Outcomes:
After the assessment, the certified public accountants the company appoints comply with the independency assessment items described above. We can make sure that the certified public accountants are correspond with the rules of independency, and the financial reports written by them can be trust.

After the assessment, the certified public accountants the company appoints comply with the independency assessment items described above. We can make sure that the certified public accountants are correspond with the rules of independency, and the financial reports written by them can be trust.

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(IV) Composition, duties, and operation of the Remuneration Committee

1. Remuneration Committee Member Information

				April 11,2022
Qualification Name Identity		Professional Qualifications and Experience	Independence Situation	No. of other listed companies working as remuneration committee member of
Independent Director	Li, Wen- Cheng (Convener)	■Independent director / Remuneration Committee Convener / Audit Committee Convener ■Retired judge (retired from Taiwan High Court in 2006), qualified as judge and lawyer for more than 5 years, and has rich experience in legal affairs ■Past Experience President of Taiwan High Court President of Hualien Local Court President of Taitung Local Court President of Penghu Local Court His legal expertise covers administrative law, fair trade law, mass communication law, commercial litigation, criminal litigation, intellectual property litigation, etc. The company expects to rely on his expertise in legal talents and commercial litigation to assist the company in mastering the overall legal aspects during the operation layout, so as to reduce legal risks and improve operating efficiency. ■None of the provisions of Article 30 of the Company Act.	1. Him, his spouse, and relatives within the second degree of kinship do not serve as directors, supervisors or employees of the company or its affiliated companies. Independent director Li, Wen-cheng concurrently serves as an independent director and Remuneration Committee member of the parent company, does not apply to this restriction. 2. The person, the spouse, the relatives within the second degree of relatives do not hold the number of shares in the company 3. The members of the Remuneration Committee maintain their independence within the scope of execution of their business, and shall not have direct or indirect interests in the company. They have no Circumstances stipulated in Article 6, Paragraph 1 of “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange” in the two years prior to their appointment and during their term of office. 4. The person has not provided business, legal, financial, accounting and other services to the Company or its affiliated companies for the last 2 years and received compensation.	2

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	Qualification Name Identity	Qualification Name Identity	Professional Qualifications and Experience	Independence Situation	No. of other listed companies working as remuneration committee memberof
	Independent Director	Yen, Yun- Chi	■Independent director / member of Remuneration Committee / member of Audit Committee ■With more than 5 years of profound construction and sales industry-related business background, and rich practical experience in business and accounting ■Primary current position Chairman Tungyue Advertising Co., Ltd. ■None of the provisions of Article 30 of the Company Act.	1. The daughter of Remuneration Committee member Yan, Yun-qi has been employed by the company since January 1, 2022, but is not the manager of the company, so it complies with the “Regulations Governing Appointment of Independent Directors Compliance Matters for Public Companies”. 2. The person, the spouse, the relatives within the second degree of relatives do not hold the number of shares in the company 3. The members of the Remuneration Committee maintain their independence within the scope of execution of their business, and shall not have direct or indirect interests in the company. They have no Circumstances stipulated in Article 6, Paragraph 1 of “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange” in the two years prior to their appointment and during their term of office. 4. The person has not provided business, legal, financial, accounting and other services to the Company or its affiliated companies for the last 2 years and received compensation.	0

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Qualification Identity Name	Qualification Identity Name	Professional Qualifications and Experience	Independence Situation	No. of other listed companies working as remuneration committee memberof
Others	Cai, Chi- Chan	■Member of the Remuneration Committee ■Qualified as a lawyer for more than 5 years, with rich experience in legal affairs ■Primary current position Attorney of Hong-Li Law Firm Sole mediator of Taichung City Government Labor Bureau ■None of the provisions of Article 30 of the Company Act.	1. Him, his spouse, and relatives within the second degree of kinship do not serve as directors, supervisors or employees of the company or its affiliated companies. The Remuneration Committee member Cai, Chi-Chan concurrently serve as the Remuneration Committee member of the parent company, does not apply to this restriction. 2. The person, the spouse, the relatives within the second degree of relatives do not hold the number of shares in the company 3. The members of the Remuneration Committee maintain their independence within the scope of execution of their business, and shall not have direct or indirect interests in the company. They have no Circumstances stipulated in Article 6, Paragraph 1 of “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange” in the two years prior to their appointment and during their term of office. 4. The person has not provided business, legal, financial, accounting and other services to the Company or its affiliated companies for the last 2 years and received compensation.	1

Note: The company was re-elected at the general shareholders’ meeting on Aug. 16, 2021, so it is necessary to re-appoint members of the 5th "Remuneration Committee", and the board of directors passed a resolution on Sep. 7, 2021 to appoint the 5th "Remuneration Committee". There are three members including Mr. Li, Wen-Cheng (independent director), Ms. Yen, Yun-Chi (independent director) and Mr. Cai, Chi-chan.

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2. Authority of the Remuneration Committee

• The remuneration committee of the Company convenes at least twice a year, and may hold meetings at any time as needed. The main responsibilities and annual work focus are to formulate and regularly review the policies, systems, standards and structures of directors and managers’ performance evaluation and remuneration, and regularly evaluate and determine the remuneration of directors and managers.

3. Remuneration Committee Operation Status

• (1) The Company’s Remuneration Committee is composed of three members.

• (2) The term of office of the fifth term of members: From Sep. 7, 2021 to Aug. 15, 2024, the Remuneration Committee held 6 meetings (A) in the most recent year (2021). The qualifications and attendance of the members are as follows:

Job Title	Name	Actual no. of meetings attended (B)	No. of meetings with entrusted attendance	Actual no. of meetings attended (B/A)	Remarks
Convener	Li, Wen-Cheng Independent Director	6	0	100.00%
Committee member	Yen, Yun-Chi Independent Director	5	1	83.33%
Committee member	Cai, Chi-chan	4	2	66.67%
Remuneration Committee Member Average Actual Attendance Rate (%) for 2021 (Total actual attendances / total required attendances)				83.33%
Other items to be recorded: I. Subjects and resolutions of the proposals of the Remuneration Committee during 2021 and 2022 as of March, and the Company’s handling of the opinions of the Remuneration Committee: Remunerati on Date of the Committee meeting Motion Contents Remunerati on Committee Resolution The Company’s treatment to the opinions of the Remunerati on Committee The board of directors Date The board of directors Resolution 2021.01.14 7th meeting of the 4th term Proposal for reappointment of Company staff All attending members approved Submitted to the Board of Directors for resolution January 14, 2021 (28th meeting of the last term) All attending directors approved 2021.03.09 8th meeting of the 4th term Proposal to distribute remuneration to the Company’s employees and directors for 2020. All attending members approved Submitted to the Board of Directors for resolution March 19, 2021 29th meeting of the last term All attending directors approved 2021.06.24 9th meeting of the 4th term Proposal to establish company governance executive by the Company. All attending members approved Submitted to the Board of Directors for resolution 2021.06.24 32nd meeting of the last term All attending directors approved

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Remunerati on Date of the Committee meeting	Motion Contents	Remunerati on Committee Resolution	The Company’s treatment to the opinions of the Remunerati on Committee	The board of directors Date	The board of directors Resolution
2021.08.10 10th meeting of the 4th term	Proposal for reappointment of Company staff	All attending members approved	Submitted to the Board of Directors for resolution	2021.08.10 (34th meeting of the last term)	All attending directors approved
	Proposal for appointments of the Company’s staff.	All attending members approved	Submitted to the Board of Directors for resolution		All attending directors approved
2021.10.05 First meeting of the 5th term	Proposal to elect the convener of the fifth term of the Remuneration Committee of the Company	Unanimously elected by all the present members, Li, Wen-Cheng as the convener of the committee and the chairman of the meeting		2021.10.05 3rd meeting of the term	All attending directors approved
	Proposal to Dismissal and Appointment the President of the Company	All attending members approved	Submitted to the Board of Directors for resolution		All attending directors approved
2021.12.24 2nd meeting of the 5th term	Proposal to distribute 2020 directors’ remuneration.	All attending members approved	Submitted to the Board of Directors for resolution	110.12.24 6th meeting of the term	All attending directors approved
	Proposal to distribute 2020 managerial officers’ remuneration.	All attending members approved	Submitted to the Board of Directors for resolution		All attending directors approved
	Proposal to disburse the 2021 annual performance bonus of the managerial officers	All attending members approved	Submitted to the Board of Directors for resolution		All attending directors approved
2021.03.14 3rd meeting of the 5th term	Proposal to distribute remuneration to the Company’s employees and directors for 2021.	All attending members approved	Submitted to the Board of Directors for resolution	2021.03.14 7th meeting of the term	All attending directors approved
2022.04.01 4th meeting of the 5th term	Proposal for appointments of the Company’s staff.	All attending members approved	Submitted to the Board of Directors for resolution	2022.04.01 8th meeting of the term	All attending directors approved

II. If the Board of Directors did not adopt or amend the suggestions of the Remuneration Committee, please indicate the date and session number of the Board meeting, the contents of the motion, the result of the resolution and the Company’s handling of the suggestions of the Remuneration Committee (if the remuneration passed by the Board is better than the suggestion of the Remuneration Committee, please state the difference and the reasons): No such situation.

III. If any member had objections or reservations about the resolutions of the Remuneration Committee and there is a record or a written statement, please indicate the date and session number of the Remuneration Committee meeting, the contents of the motion, all the opinions of the members and how the opinions were handled: No such situation.

Note: The company was re-elected at the general shareholders’ meeting on Aug. 16, 2021, so it is necessary to re-appoint members of the 5th "Remuneration Committee", and the board of directors passed a resolution on Sep. 7, 2021 to appoint the 5th "Remuneration Committee". There are three members including Mr. Li, Wen-Cheng (independent director), Ms. Yen, Yun-Chi (independent director) and Mr. Cai, Chi-chan.

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(V) Facilitate Sustainability Development implementation and Differences with the Sustainability Development Best Practice Principles for TWSE/TPEx Listed Companies and reasons

Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
I. Does the company establish a governance structure to promote sustainable development, and set up a dedicated (part-time) unit to promote sustainable development, and the board of directors authorizes the senior management to handle and supervise the situation to the board of directors?			■The company's "Corporate Social Responsibility Code of Practice" was implemented after the resolution of the board of directors on Mar. 21, 2017, and established a clear corporate social responsibility policy. And after the resolution of the board of directors on Mar. 14, 2022 to cope with the Act, changed the title into "Code of Practice for Sustainable Development”. ■In order to improve the management of sustainable development, the company establishes a governance structure to promote sustainable development, and assigns the management department as a part-time unit to promote sustainable development, responsible for the proposal and promotion of sustainable development policies, systems or related management guidelines and specific promotion plans. Implementation, and report to the board of directors regularly, and the implementation situation was reported at the 6th board of directors on Dec.	No variances.

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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
			24, 2021. ■Based on the report of the management department, the board of directors of the company reviews the implementation results, reviews the implementation results when necessary and requires improvement to ensure that the sustainable development strategy is fully implemented in the company's dailyoperations.
II. Does the company assess the risk of the environment, society, and issue of management of the company and set up a policy or strategy of risk management, according to principle of importance? (note 1)			■This disclosure covers the company's sustainable development performance at its main bases from January 2021 to December 2021. The risk assessment boundary is mainly based on the company. ■The Group upholds the concepts and material principles of “Ethical Principles” and “Sustainable Operations”. While pursuing the sustainable operations and profitability of the enterprise, it facilitates its Sustainable Development and values the interests of its stakeholders. The Company emphasizes the environmental, social and governance issues and incorporates them into the Company’s management policies and operating activities to achieve the goal of sustainable operations.	No variances.
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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
			■Based on the assessed risks, formulate relevant risk management policies or strategies such as Note 2.
3. Environmental Issue (1) Does the company set up an appropriate environmental management system, according to the feature of the industry? (2) Does the company dedicate in promoting efficiency of the usage of any energy, and use renewable materials that have a low impact on the environment? (3) Does the company assess the risks and chances that the climate change makes to the present and the future of the company,and	  		(1)Green buildings: The Company emphasizes energy saving for buildings in the usage stage. Many projects have obtained green building candidate certificates, integrating greening design, base water retention, energy-saving outer shells, and energy-saving illumination design into the daily life of users, to realize the concept of energy saving during the life cycle of buildings. (2) Use advanced technologies to introduce building information modeling into the construction culture. Through technical applications, various sorts of analysis information are effectively integrated, and the construction process is under control, and thus the Company effectively improves the construction efficiency and greatly reduces errors and the waste of energy and resources. (3) In response to the issues of global warming and climate change which are gettingmore serious every	(1) No variances. (2) No variances. (3) No variances.
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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
adapt measures against the issue?			day, the government is actively promoting energy saving and carbon reduction measures and the use of green energy sources to reduce emission of carbon dioxide. For the comfort and health of our citizens, and to reduce the impact on the environment of manufacturing building materials and promote the upgrade of the traditional construction material industry, the company shall actively take measures in response to the issue of climate change and put in effort into developing green building techniques to improve the level of green buildings, in hope of building up an energy saving and carbon emission reducing housing environment. Planning construction cases with energy saving and carbon emission reducing products, such as building materials, energy saving machinery, housing facilities and new energy systems applied in green buildings. To implement government policy, the Company goes to great lengths in environmental protection to put corporate social responsibilityinto

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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
(4) Does the company calculate the emission of green house gas, water consumption, and the amount of waste, and set up a managerial policy of reducing green house gas, reducing using water, or other waste.			practice. (4) The Company makes statistics on the information regarding the indirect greenhouse gas emissions generated by the power consumption, water consumption and construction site construction waste total weight in office areas, to serve as basis for developing management measures regarding energy saving, carbon reduction, greenhouse gas reduction, water reduction, etc. The company's statistics on the greenhouse gas emissions, water consumption, and total weight of construction waste in the office area in the past two years are as Note 3. The company continues to promote energy-saving solutions such as "Energy Saving and Carbon Reduction", and the goal of greenhouse gas emissions in the office area in 2022 is to keep below 80 metric tons.	(4) No variances.
4. Social Issues (1) Has the company formulated relevant management policies and procedures in accordance with relevant laws and			(1) The company follows the spirit of international human rights conventions, abides bydomestic labor	(1) No variances.
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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
regulations and international human rights conventions?			and related laws and regulations, supports and abides by the United Nations' Universal Declaration of Human Rights, the "Guiding Principles for Business and Human Rights", the "Global Covenant" and the International Labour Organization's "Basic Basics of Work" The principles enshrined in international human rights conventions such as the Declaration of Principles and Rights, such as freedom of association, the right to collective bargaining, care for vulnerable groups, prohibition of child labor, elimination of all forms of forced labor, elimination of employment and employment discrimination, etc., and affirmation of human resource utilization policies. There is no discrimination based on gender, race, socioeconomic class, age, marital and family status, etc. The company has also formulated various management regulations related to corporate governance, procurement
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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
(2) Does the company set up and practice the measures of employees’ welfare (including payment, vacation, and others), and adjust the payment according to the performance of the operation? (3) Whether the company offers both safe and healthy working environment for its employees,	 		and personnel, which clearly regulate the requirements related to human rights policies, and identify important human rights issues as the basis for promoting risk mitigation measures. (2) The Company has working rules and related personnel management regulations, which cover the basic salaries, working hours, leaves, pension payments, labor and health insurance benefits, and occupational accident compensation for the employees hired by the Company; all of these are compliant with the relevant provisions of the Labor Standards Act. The Employee Welfare Committee is established to handle various welfare matters through the welfare committee elected by the employees; the Company’s remuneration policy is to determine remunerations based on personal ability, contribution to the Company and performance, correlating positively to the operating performance. (3) The Company provides staff a safe and healthy workplace. There are air	(2) No variances. (3) No variances.

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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
and put into practice of safety and health education on a regular basis or not?			conditioning systems, equipment providing sufficient light, work places good for eyes and ears, evacuation routes and emergency exits, regular elevator maintenance, fire protection equipment, periodically and irregularly sanitizing and disinfection of the work place, water testing, and entry control. Employee health checks are conducted every year, and health consultation lectures are arranged. The health check items are added and adjusted according to employee needs every year, so that employees better understand and pay attention to their own health. In addition, the Company has the Employee Welfare Committee responsible for handling various welfare measures and subsidies for employees. The Company also handles labor insurance, national health insurance and group insurance pursuant to laws, to protect the interests of employees and fully support the balanced development of their

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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
			bodies, minds and souls. ■Implement as following: I. Access security 1. The company building is equipped with a strict access control monitoring system during the day and at night. 2. The company signs contracts with security companies at night and on holidays to maintain office security. II. Maintenance and inspection of various equipment 1. Carry out elevator equipment maintenance once a month. 2. According to the provisions of the Fire Protection Law, outsource fire inspections every year. 3. Conduct a water quality test once a year. 4. Do water dispenser maintenance every 3 months. III. Physiological Hygiene 1. Employee health checks are conducted every year, and health consultation lectures are arranged. The health check items are added and adjusted according to employee needs every year, so that employees better understand and pay attention to their own

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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
			health. 2. Hygienic working environment: no smoking is allowed in the office, and the office environment is cleaned and disinfected more than once a year. IV. Mental health 1. Sexual harassment prevention: investigate and punish according to the "Employee Complaint Management Measures" established by the company. 2. Quarterly magazines: The Group issues quarterly magazines to provide a channel for employees to write and publish and provide opinions to the company. V. Insurance and medical condolences 1. Insure labor insurance and health insurance in accordance with the law, and provide employee group insurance every year and allow family members to insure medical insurance and cancer insurance at preferential rates. 2. Insure employees against epidemic prevention and vaccine insurance to enhance comprehensive protection.
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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
(4) Whether an effective career development training project is available for employees or not? (5) Whether the health and security of the customers, privacy of the clients, and marketing and indication issues are following the rules, and related consumer or customers protection policies and grievance procedures are available by the company?	 		3. Employee Welfare Committee, responsible for handling various welfare measures and subsidies for employees. (4) The Company takes long-term talent cultivation as the top priority, and plans and arranges various internal and external training programs based on the needs of the organization and departments and the individual needs of employees, to improve and update employees’ knowledge and skills and establish abundant human capital. For the development of career competence of employees, the development of core professional competence and the balanced development of employees’ body, mind and soul shall be both taken into account. (5) The Company has formulated relevant policies to protect the interests of consumers, such as signing sales contracts conforming to the Ministry of the Interior’s standardized contract specifications, complying with marketing and promotion	(4) No variances. (5) No variances.

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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
(6) Whether the company set up a managerial policy of supplier, asking them to follow the rules, such as environmental rules, workplace safety and health, and labor right?			regulations, communicating with customers for their customized interior alterations, voluntary construction quality inspections and repairs, among other things, to ensure consumer rights. The Company maintains good communication channels with customers, and has dedicated departmental customer service personnel, who comply with confidentiality protocols and the Personal Information Protection Act for customer privacy. The Company’s website has an Investors section, disclosing policies to protect consumer rights and provide a complaint filing channel. (6) The Company has set up the “Management Procedures for Suppliers”. New suppliers are reviewed in advance, and only those who pass the review may be traded with; if there is no transaction within three years, the qualification of qualified suppliers will be cancelled, and only after review and confirmation maytheybecomequalified	(6) No variances.
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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
			suppliers again. The review includes the supplier’s capacity, scale, industry reputation and financial credit, among other things. For qualified suppliers, the procurement unit shall fill in the “Supplier Appraisal Form” before the end of January and July each year for suppliers with transaction amounts of NT$200,000 (inclusive) or actual transaction performances of more than six times (inclusive). The forms will be evaluated by relevant units once. The appraisal includes delivery, quality, cooperation/service, and price of the supplier’s products. In addition, the supplier must satisfy relevant conditions such as labor, environmental and human rights. In case of violations, the Company may terminate or cancel the contract at any time, thereby urging all suppliers to fulfill their corporate social responsibilities.
5. Does the company compile the Sustainability Report that disclose non-financial information according to international principle orguideline of report			The “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” are disclosed on the Companywebsite and	The company will compile a Sustainability Report in accordance with laws and regulations.
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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
editing? Are the report confirm and guarantee by third testing unit?			MOPS for reference. The system and measures adopted by the Company for social responsibility and the implementation of social responsibility performance are disclosed in the annual report. The company plans to compile and report the Sustainability Report from 2023.
VI. If the Company has its own Sustainable Development code in accordance with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies, please describe the difference between its operation and the prescribed code: The Company has the amended “Corporate Social Responsibility Best Practice Principles” based on “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” (the new title is “Sustainable Development Best Practice Principles”) for enhancing the corporate sustainability and fulfillment of corporate social responsibility, and integrated it into the management and operation of the Company. In order to improve the management of sustainable development, the company establishes a governance structure to promote sustainable development and assigns the administration dept. as a part-time unit to promote sustainable development, responsible for the proposal, promotion, implementation, and report of sustainable development policies, systems, or related management guidelines and specific promotion plans. And report the implementation situation to the board of directors at least onceperyear.
VII. Other important information to help understand the facilitation of corporate sustainable development: (I) The Company expects that its own operations will bring positive developments to neighborhood communities. In addition to focusing on its major business, the Company will continue to manage and maintain the adopted roads and parks in order to establish good community relations: 1. Adoption and maintenance of the sidewalk in front of Section 2, Chenggong Road, Neihu District, Taipei City. The adoption period is from February 17, 2015, to February 16, 2025, for ten years. 2. Adoption of the sidewalk in front of Land No. 139, Huimin Section, Xitun District, Taichung City, which is adjacent to Shicheng N. 2nd Road and Chaofu Road sidewalk (approximately 292m2). The adoption period is from December 7, 2017, to December 6, 2021, for four years. Adoption content includes sidewalk pavement renewal, new planting of sidewalk trees, and regular maintenance and management. 3. Adoption of parks, plazas, green spaces, beside Zhiyun Road in Hsinchu City (Land No. 1065, Guangwu Section). The adoption period is from Oct. 25, 2018, to Oct. 25, 2021 (Extended to October 25, 2027). The adoption includes responsibilities such as maintaining the adopted parks andgreen spaces bycollecting garbage and cleaninganimal excrement. When thepark, green

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Implementation Action Items	Implementation situation	Implementation situation	Implementation situation	Deviations from “The Sustainability Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	YES	NO	Abstract Illustration
space or plaza facility is damaged due to natural disasters or by people, the Hsinchu City Government shall be notified as soon as possible. (II) Participate in construction-related selection activities: 1. The construction project of "Bokelai Park" won the 23rd National Architecture Gold Award - Construction Quality Category. (III) The company sponsors various public welfare activities from time to time: 1. Donated NT$60,000 to New Taipei City Chen MingHsiung Selling Dreams Education Foundation. 2. Donated a fire police vehicle and a batch of disaster relief equipment to the Fire Department of Kaohsiung City Government, totaling NT$475,238. 3. The company donated NT$79,436 to the Kaohsiung City Physical Bank - Warm Christmas and Love Raising Event by colleagues in the north, central and southern districts of the company. (IV) Office energy saving measures: 1. Adjust and set the appropriate air-conditioning temperature according to the season to reduce the power load. 2. Replace the energy-saving lighting equipment in the office and turn off the lights during lunch break. (V) Water-conservation measures: Use the induction water-saving valve to effectively reduce unnecessary waste of water resources. (VI) Paper Category: 1. Promote the use of double-sided printing or printing multiple pages on one sheet of paper. 2. The briefcase/ briefcase is reused repeatedly. 3. Use electronic document processing to reduce printing or photocopying. 4. Make good use of the scan function to convert it into an electronic image archive. 5. Control color printing. (VII) Others: The recycling management and resource classification of wastes such as kitchen waste, iron-aluminum glass jars, waste paper and special bottles, etc., shall be carried out, and professionals shall be responsible for the treatment and classification of wastes.

Note 1: The principle of materiality refers to those related environmental, social and governance issues having significant impact on the Company’s investors and other stakeholders.

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Note 2: Based on the assessed risks, formulate relevant risk management policies or strategies such as the following:

following:
Item	Focus Content
Facilitate Company Governance	The board oversees CSR practices, including review and continuous improvement Set up full-time (part-time) units to promote corporate social responsibility Establish an effective corporate governance structure and related ethical standards Avoid unfair competition and fight bribery and corruption to create a level playingfield
develop a sustainable environment	Comply with environmental regulations Committed to improving the utilization efficiency of various energy (resources) Avoid contamination of water, air and land, and implement appropriate pollution control measures Continue to devote to the development of green construction technology to improve the green building level Focus on water resources management, waste treatment, resource recovery, environmental greening and other measures Be aware of the risks and opportunities that climate change may pose to operations
Maintain social welfare	The Company complies with relevant labor laws and respects internationally recognized labor human rights regulations/principles, and has established working rules and related personnel management regulations, which cover the prohibition of child labor, gender equality, the right of work and the prohibition of any illegal discrimination, and other provisions to protect human rights Provide a safe and healthy working environment for employees Create a good environment for employees' career development In accordance with government regulations and industry-related norms, ensure product and service quality, cooperate with suppliers and business partners, and work together to enhance corporate social responsibility Expecting its own operations to bring positive development to the surrounding communities, participating in community development and related activities of localgovernment agencies topromote communitydevelopment
Strengthen the disclosure of sustainable development information	Handle information disclosure in accordance with relevant laws and regulations, and disclose relevant and reliable information related to sustainable development to enhance information transparency

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Note 3: The company's statistics on the greenhouse gas emissions, water consumption and total weight of construction waste in the office area in the past two years are as follows:

Item (Year)	Greenhouse gas emissions (tons CO2e)	Water usage (m3)	Total weight of construction waste (tons) Keelung De’An A District
109	84	186	970.05
110	106	227	559.50

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(VI) Implementation of ethical corporate management and differences with Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Differences with Ethical Corporate Management Best Practice Principles for Listed Companies and reasons
	YES	NO	Abstract Illustration
1. Setting business integrity policies and programs (1) Does the company set the policy of trust management pass by the board of directors and express its commitment to the policies and practices of integrity management in its regulations and in the external documents, and do the board of directors and the management actively implement the business policies? (2) Has the company set up a program for the prevention of dishonesty as well as analizing and assessing the activity with high unethical risk, and include conducts specified in Article 7, paragraph 2 of the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”?	 		(1) In order to establish a corporate culture of ethical management and sound development, and provide a good business operation structure, the Company has formulated the “Ethical Corporate Management Best Practice Principles” to follow and implement it in internal management and external business activities. (2) The prevention programs adopted by the Company cover preventive measures against the following: 1. Offering and acceptance of bribes. 2. Providing illegal political donations. 3. Improper charitable donations or sponsorships. 4. Offering or acceptance of unreasonable presents or hospitality, or other improper benefits.	(1) No variances. (2) No variances.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Differences with Ethical Corporate Management Best Practice Principles for Listed Companies and reasons
	YES	NO	Abstract Illustration
(3) Has the company set up procedures, conduct guidelines and a disciplinary in the program for the prevention of dishonesty and appeals system in various programs and implemented them?			5. Misappropriation of trade secrets and infringement of trademark rights, patent rights, copyrights, and other intellectual property rights. 6. Engaging in unfair competitive practices. 7. Damage directly or indirectly caused to the rights or interests, health, or safety of consumers or other stakeholders in the course of research and development, procurement, manufacture, provision, or sale of products and services. (3) Based on the business philosophy and policies of the preceding paragraph, the Company clearly and in detail specifies guidelines in the Principles to prevent unethical conduct, punishment and appeal systems for violations, and implements them. The Company reviewed and amended the	(3) No variances.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Differences with Ethical Corporate Management Best Practice Principles for Listed Companies and reasons
	YES	NO	Abstract Illustration
			Company’s “Ethical Corporate Management Best Practice Principles” by referring the amendments to the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies” and the “Sample Template for XXX Co., Ltd. Procedures for Ethical Management and Guidelines for Conduct”.
2. Implementation of integrity management (1) Does the Company assess the integrity record of its business partners, and stipulate the terms of conduct on integrity in the contracts with business partners?			(1) The Company conducts commercial activities on the principle of fairness and transparency. When signing a contract with others, the legal personnel reviews the terms of the contract, and the contract includes the penalty terms; if the vendor fails to perform the contract truthfully, compensation will be made pursuant to the contract.	(1) No variances.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Differences with Ethical Corporate Management Best Practice Principles for Listed Companies and reasons
	YES	NO	Abstract Illustration
(2) Has the Company set up a dedicated corporate integrity promotion unit under the Board of Directors which regularly reports to the Board on its work (at least once a year)? (3) Has the company formulated policies to prevent conflicts of interest, provided appropriate channels for statements and implemented them?	 		(2) The Company designates the legal unit of the President’s Office as the unit in charge, responsible for handling the amendment, implementation, interpretation, consulting services, and reporting, registration and documentation of the Principles, as well as supervision and implementation. A report shall be made to the Board of Directors at least once a year. The implementation has been reported at the 6th meeting of the current term of the Board of Directors on Dec. 24, 2021. (3) The Company has stipulated the directors to recuse themselves from participating in discussions and voting when any proposal involves their interests and conflicts with the Company’s interests; the directors, managerial officers, employees, and appointees shall not use	(2) No variances. (3) No variances.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Differences with Ethical Corporate Management Best Practice Principles for Listed Companies and reasons
	YES	NO	Abstract Illustration
(4) Has the Company established an effective accounting system and internal control system for the implementation of integrity management, which is checked by the internal auditing unit on a regular basis or audited by external auditors? (5) Does the company hold regular internal and external training on business integrity?	 		their position in the Company and their influence to enable themselves or others to obtain improper interests. (4) ■The Company has established an effective accounting system and internal control system. The internal auditors schedule audit plans and perform audits based on the level of risk, and regularly report the audit status to the Board of Directors. ■Regularly commissioning CPAs to audit the financial statements and confirm the effectiveness of the internal control system. (5) The Group conducted education and promotion for the current directors, managerial officers and employees on Oct. 22, 2021. The course included the ethical management policy, the prohibition of insider trading and other related topics,so that theycould	(4) No variances. (5) No variances

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Differences with Ethical Corporate Management Best Practice Principles for Listed Companies and reasons
	YES	NO	Abstract Illustration
			fully understand the Company’s determination, policies and preventive programs of ethical management, and the consequences of violations of unethical conduct, as well as the prohibition of the directors, managerial officers, and employees from using information that is not available in the market for profit. The course lasted for 120 minutes and the Company had 12 participants in total. The course briefing file was sent to all directors, managerial officers and employees for reference.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Differences with Ethical Corporate Management Best Practice Principles for Listed Companies and reasons
	YES	NO	Abstract Illustration
3. The operation status of reporting system. (1) Has the company set up specific reporting and reward systems and a convenient reporting channel, and does the company assign appropriate personnel to investigate the person being reported? (2) Has the company set up standard investigation procedures and a related confidentiality mechanism for the matter being reported? (3) Does the company take measures to protect the reporter from improper treatment?	  		The Company has formulated the “Reporting Management Procedures”, clearly defined the reporting system, and provided legitimate reporting channels; the identity of the informant and the content of the report are kept fully confidential. The procedures are disclosed on the website.	(1) No variances. (2) No variances. (3) No variances.
4. Strengthening of Information Disclosure: Does the company disclose the contents of its Ethical Corporate Management Best Practice Principles and the effectiveness on its website and MOPS?			The Company discloses the implementation of the Ethical Corporate Management Best Practice Principles on the Company’s website, in the annual report and the prospectus.	No variances.
V. If the Company has its own Ethical Corporate Management Best Practice Principles in accordance with the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”, please describe the difference between them: The Company has established the “Corporate Governance Best Practice Principles”, and the operation is no different from the established principles.
VI. Other important information that helps to understand the Company’s ethical management operation (such as the Company’s review and revision of the Company’s integrity management code, etc.): The company adheres to the principle of good faith management and engages in all commercial activities. When signing a contract with others, its contents include compliance with the integrity management policy and the transaction relatives may terminate or cancel the terms of the contract at any time; Professional and diligent management to ensure fair, sustainable and competitive returns, to create the best interests of shareholders;toprovide workingconditions thatguarantee the health and safetyof

• 94 -

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Differences with Ethical Corporate Management Best Practice Principles for Listed Companies and reasons
	YES	NO	Abstract Illustration
each employee, to listen to employees and to face complaints from employees in good faith problems, encouragement and assist employees in developing relevant skills and knowledge, and avoid illegal activities, providing employees with sustainable employment opportunities. The Company values the interests of every stakeholder, to promote the sustainable development of the Company.

Note: Regardless of whether “Yes” or “No” is checked for the operation, it should be stated in the summary description column.

• (VII) If the Company has established corporate governance best practice principles and related regulations, it should disclose its inquiry method:

The Company has established the “Corporate Governance Best Practice Principles” by referring to the “Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies”.

Other than the “Corporate Governance Best Practice Principles”, the Company has also established the “Regulations Governing Procedure for Board of Directors Meetings”, the “Regulations for Election of Directors”, the“Principle of performance evaluation of the board of directors”, the “Audit Committee Charter”, the “Remuneration Committee Charter”, the “Code of Ethical Conduct”, the “Ethical Corporate Management Best Practice Principles” and the “Sustainable Development Best Practice Principles” as the regulations for the Company to advance corporate governance.

The aforementioned corporate governance related regulations of the Company are disclosed in the “Board of Directors”, “Functional Committees” and “Corporate Governance Related Information” pages in the “Investors” section on the Company’s website and in the “Formulation of relevant procedures and rules for corporate governance” under “Corporate Governance” on MOPS.

• (VIII) Other important information that is sufficient to enhance understanding of the Company’s operation of corporate governance:

• Material information of the Company is immediately announced on MOPS as required by the competent authority. The Company’s finance, business and corporate governance related information is also regularly or immediately updated in the “Investors” section on the Company’s website.

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(IX) Implementation of the internal control system

1. Internal Control Statement

RUN LONG CONSTRUCTION CO., LTD. Internal Control Statement

Date: Mar. 14, 2022

The Company’s internal control system of 2021, according to the result of self-assessment is thus stated as follows:

• I. The Company acknowledges that the implementation and maintenance of internal control system is the responsibility of the Board of Directors and management, and the Company has established such system. The internal control system is aimed to reasonably assure that goals such as the effectiveness and the efficiency of operations (including profitability, performance and protection of assets), the reliability of financial reporting and the compliance with applicable laws and regulations are achieved.

• II. An internal control system has its innate limitations. An effective internal control system can only ensure that the foregoing three goals are achieved. Moreover, due to the changes in the environment and conditions, the effectiveness of the internal control system will change accordingly. However, the internal control system of the Company has self-monitoring function and the Company will take corrective action once any defect is identified.

• III. According to the effective judgment items for the internal control system specified in the “Regulations Governing Establishment of Internal Control Systems by Public Companies” (hereinafter referred to as the “Regulations”), the Company judges whether or not the design and execution of internal control system is effective. The judgment items for internal control adopted by “Highlights” are, based on the process of management control, for classifying the internal control into five elements: 1.Control environment; 2.Risk assessments; 3.Control activities; 4.Information and communication; and 5.Monitoring. Each element also includes a certain number of items. For the foregoing items, refer to “Highlights”.

• IV. The Company has adopted the aforesaid judgment items for internal control to evaluate the effectiveness of the design and execution of the internal control system.

• V. Based on the above-mentioned result of the evaluation, the Company believes that the internal control system, including the design and execution of internal control relating to the effectiveness and efficiency of operations, the reliability of financial reporting and the compliance with applicable laws and regulations, has been effective as of December 31, 2021, and they can reasonably assure the aforesaid goals have been achieved.

• VI. This statement will be the main content of the annual report and prospectus and will be disclosed publicly. If the above contents have any falsehood and concealment, it will involve in the liability as mentioned in Article 20, 32, 171 and 174 of Securities and Exchange Law.

• VII. This statement has been approved by the meeting of the Board of Directors on March 14, 2022, and the 7 directors present all agreed with the contents of this statement.

RUN LONG CONSTRUCTION CO., LTD.

Chairperson: Tsai, Chumg-Ping Signature/Seal

President: Chiu, Ping-Tse Signature/Seal - 96 -

1. If the Securities and Futures Commission requires the company to commission an accountant to audit its internal control system, please disclose the accountant’s audit report: None.

2. (X) If there has been any legal penalty against the Company or its internal personnel, or any disciplinary penalty by the Company against its internal personnel for violation of the internal control system during the most recent fiscal year and up to the publication date of the annual report, where the result of such penalty could have a material effect on shareholder equity or securities prices, the annual report shall disclose the penalty, the main shortcomings, and conditions for improvement: None.

3. (XI) Important resolutions of the shareholder meeting and the Board meetings, in the latest year and as of the date of publication of the annual report

4. Key resolutions of shareholders meetings and implementation

The Company’s 2021 general shareholder meeting was held on Aug. 16, 2021, at No. 8 Zhifu Road, Zhongshan District, Taipei City (Dazhi Denwell Hotel, Prosperity and wealth Hall), and its important resolutions and implementation status are as follows:

• I. Ratification Items

• i. Proposal for the Company’s 2020 business report and financial statements.

• Voting results: 281,453,747 rights in favor, 61,014 rights opposed, and 2,933,053 abstentions/non-voting rights; the rights in favor took 98.94% of the total voting rights of the shareholders attended. The proposal was passed as it was proposed.

Implementation status: Proceeded as the resolution.

ii Proposal for the Company’s 2020 earnings distribution.

• Voting results: 281,446,917 rights in favor, 71,064 rights opposed, and 2,929,833 abstentions/non-voting rights; the rights in favor took 98.94% of the total voting rights of the shareholders attended. The proposal was passed as it was proposed.

• Implementation situation: The distribution of earnings per share is stock dividend for NT$0.2 and cash dividend for NT$0.2 per share; Oct. 2, 2021, was set as the ex-dividend base date, and Oct. 29, 2021, was the payment date of stock and cash dividends.

II. Discussion Items

• i Proposal for the Company’s 2020 earnings and capital surplus to issue new shares. Voting results: 281,463,187 rights in favor, 67,801 rights opposed, and 2,916,826 abstentions/non-voting rights; the rights in favor took 98.95% of the total voting rights of the shareholders attended. The proposal was passed as it was proposed.

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• Implementation situation: The distribution of earnings per share is stock dividend for NT$0.2 and share dividend for NT$0.4 per share; Oct. 2, 2021, was set as the ex-dividend base date, and Oct. 29, 2021, was the payment date of stock and cash dividends.

• ii Proposal to amend the Company’s “Rules of Procedure for Shareholder Meetings” Voting results: 281,453,697 rights in favor, 61,164 rights opposed, and 2,932,953 abstentions/non-voting rights; the rights in favor took 98.94% of the total voting rights of the shareholders attended. The proposal was passed as it was proposed.

• Implementation situation: The proposal was proceeded as the resolution, and the disclosure was made on MOPS and the Company website.

• iii Proposal for amendments to the Company's “Regulations for Election of Directors.” Voting results: 281,453,698 rights in favor, 61,164 rights opposed, and 2,932,952 abstentions/non-voting rights; the rights in favor took 98.94% of the total voting rights of the shareholders attended. The proposal was passed as it was proposed.

• Implementation situation: The proposal was proceeded as the resolution, and the disclosure was made on MOPS and the Company website.

III. Election Matters

1. Proposal for the Company’s re-election of directors. Voting Results:

Job Title	Shareholder’s Name	Elected Rights
Director	Da-Li Investment Co., Ltd. Representative: Tsai, Chung-Ping	284,900,505 Rights
Director	Kaung Yang Investment Co., Ltd. Representative: Chiu, Ping-Tse	280,872,305 Rights
Director	Kaung Yang Investment Co., Ltd. Representative: Cheng,Chiao-Wen	280,854,521 Rights
Director	Kaung Yang Investment Co., Ltd. Representative: Chen, Kuo-yen	280,768,872 Rights
Independent Director	Li, Wen-Cheng	280,815,884 Rights
Independent Director	Yen, Yun-Chi	280,747,249 Rights
Independent Director	Chen, Yung-Chang	280,600,195 Rights

• 98 -

Execution: The case was handled according to the election results. The elected list of directors (including independent directors) was announced on the Public Information Observatory on August 16, 2021, and was approved by the Ministry of Economic Affairs for registration on August 24, 2021.

IV. Other Proposals

1. Proposal to lift the non-competition restrictions for directors.

Voting results: 280,806,424 rights in favor, 678,227 rights opposed, and 2,963,187 abstentions/non-voting rights; the rights in favor took 98.71% of the total voting rights of the shareholders attended. The proposal was passed as it was proposed.

Implementation situation: The proposal was proceeded as the resolution, and the disclosure was made on MOPS and the Company website on Aug. 16, 2021.

1. Important resolutions of the Board of Director as of the year 2021 and the date of publication of the annual report are as follows:

Date of Meeting	Key resolution	Implementation situation
2021.01.14 (28th meeting of the term)	1. The Company proposed to transfer some constructed units to be sold as investment properties. 2. Proposal for reappointments of the Company’s staff. 3. Proposal to apply for a financing credit facility from financial institutions.	 Approved as proposed and implemented as the resolution.  The first discussion has been reported for completion on MOPS on Jan 14,2021.
2021.03.19 (29th meeting of the term)	1. Proposal to distribute remuneration to the Company’s employees and directors for 2020. 2. Proposal for the Company’s 2020 business report and financial statements. 3. Proposal for the Company’s 2020 earnings distribution. 4. Proposal for the Company’s 2020 surplus and capital reserve transferred to capital increase to issue new shares. 5. Proposal to amend the Company’s “Rules of Procedure for Shareholder Meetings”. 6. Proposal for the Company’s re-election of directors. 7. Proposal to lift the non-competition restrictions for directors. 8. Matters related to the convening of the Company’s general shareholder meeting of 2021. 9. Matters related to the acceptance of shareholders’proposals for	 Approved as proposed and implemented as the resolution.  The 1st to 4th, and 6th to 10th discussions have been reported for completion on MOPS on March 19, 2021.

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Date of Meeting	Key resolution	Implementation situation
	the Company’s general shareholder meeting of 2021 and the nomination of director (independent directors included) candidates 10. Proposal of the Company’s “Evaluation of Internal Control System Effectiveness” and “Internal Control System Statement” for 2020. 11. Proposal to apply for a financing credit facility from financial institutions. 12. Proposal to apply for a financing credit facility from financial institutions. 13. Proposal to apply for a financing credit facility from financial institutions.
2021.04.23 (30th meeting of the term)	1. Matters related to the acceptance of shareholders’ proposals for the Company’s general shareholder meeting of 2021 and the nomination of director (independent directors included) candidates. 2. Proposal to lift the non-competition restrictions for directors. 3. Proposal to delete and add Company’s “Internal Control System” forms.	 Approved as proposed and implemented as the resolution.  The first discussion has been reported for completion on MOPS on Apr. 23,2021.
2021.05.07 (31st meeting of the term)	1. The company Q1 2021 consolidate financial report proposal. 2. Proposal to sell the housing and parking space of the Company’s construction projects to related parties. 3. Proposal to amend Company’s “Internal Control System” forms. 4. Proposal to renew the Company’s “Directors’ Liabilities Insurance”. 5. Proposal to commission financial institutions to organize joint credit granting by the Company.	Approved as proposed and implemented as the resolution. The first and second discussions have been reported for completion on MOPS on May 7, 2021. The 4th discussion has been reported for completion on MOPS on Jul. 2, 2021.
2021.06.24 32nd meeting of the term	1. Proposal to establish company governance executive by the Company. 2. Proposal to lift the non-competition restrictions for managers. 3. Proposal to applyfor a financingcredit facilityfrom financial	Approved as proposed and implemented as the resolution.

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Date of Meeting	Key resolution	Implementation situation
	institutions.	The first discussion has been reported for completion on MOPS on Jun. 24,2021.
2021.07.22 (33rd meeting of the term)	1. To formulate a proposal for the postponement of the date and place of the 2021 Annual General Meeting of Shareholders of the Company. 2. To formulate the company's "Regulations on the appointment, dismissal, evaluation and remuneration of internal auditors". 3. Proposal to apply for a financing credit facility from financial institutions. 4. Proposal to apply for a financing credit facility from financial institutions. 5. Proposal to apply for a financing credit facility from financial institutions.	Approved as proposed and implemented as the resolution. The first discussion has been reported for completion on MOPS on Jul. 22, 2021. The 2nd discussion has been announced on the company website.
2021.08.10 (34th meeting of the term)	1. The company Q2 2021 consolidate financial report proposal. 2. Proposal for reappointments of the Company’s staff. 3. Proposal for appointments of the Company’s staff. 4. Proposal to apply for the ordinary corporate bond guarantee limits from financial institutions.	Approved as proposed and implemented as the resolution. The 1st to 3rd discussions have been reported for completion on MOPS on Aug. 10,2021.
2021.08.16 (1st meeting of the term)	1. Election of the chairman of the company.	Approved as proposed and implemented as the resolution. The first discussion has been reported for completion on MOPS on Aug. 16,2021.

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Date of Meeting	Key resolution	Implementation situation
2021.09.07 (2nd meeting of the term)	1. The Company intends to purchase land in Shanjie Section, Guishan District, Taoyuan City. 2. Proposal to determine the ex-dividend and cash dividends distribution base dates for the 2020 surplus and capital reserve transferred to capital increase for issuing new shares (capital increase). 3. Proposal to amend Company’s “Internal Control System” forms. 4. Proposal to appoint the members of the 5th "Remuneration Committee". 5. Proposal to apply for a financing credit facility from financial institutions. 6. Proposal to apply for a financing credit facility from financial institutions.	Approved as proposed and implemented as the resolution. The first, 2nd and the 4th discussions have been reported for completion on MOPS on Sep. 7, 2021.
2021.10.05 (3rd meeting of the term)	1. Proposal to Dismissal and Appointment the President of the Company 2. Proposal to apply for a financing credit facility from financial institutions.	Approved as proposed and implemented as the resolution. The first discussion has been reported for completion on MOPS on Oct. 5, 2021.
2021.10.21 (4th meeting of the term)	1. Proposal of the Company plans to issue the 2021 1stSecured Ordinary Corporate Bonds. 2. To formulate the "Risk Management Measures" of the Company. 3. Proposal to apply for a financing credit facility from financial institutions.	Approved as proposed and implemented as the resolution. The first discussion has been reported for completion on MOPS on Oct. 21, 2021. The 2nd discussion has been announced on the company website.
2021.11.09 (5th meeting of the term)	1. The company Q3 2021 consolidate financial report proposal. 2. The company intends to purchase land (including above-ground buildings) in the Hsinnan section of Anping District, Tainan City. 3. Proposal to apply for a financing credit facility from financial institutions.	Approved as proposed and implemented as the resolution. The first and

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Date of Meeting	Key resolution	Implementation situation
	4. Proposal to apply for the ordinary corporate bond guarantee limits from financial institutions.	second discussions have been reported for completion on MOPS on Nov 9, 2021.
2021.12.24 (6th meeting of the term)	1. Proposal for the Company’s 2022 audit plan. 2. Proposal to amend Company’s “Internal Control System” forms. 3. Proposal to assess the independence of CPAs for 2021. 4. Proposal to distribute 2020 directors’ remuneration. 5. Proposal to distribute 2020 managerial officers’ remuneration. 6. Proposal to disburse the 2021 annual performance bonus of the managerial officers. 7. Proposal to apply for a financing credit facility from financial institutions.	Approved as proposed and implemented as the resolution. The first discussion has been reported for completion on MOPS on Dec. 24,2021.
2021.03.14 (7th meeting of the term)	1. Proposal for the Company’s 2022 business plans and annual budgets. 2. Proposal to appoint and compensate the CPAs. 3. Proposal to distribute remuneration to the Company’s employees and directors for 2021. 4. Proposal for the Company's 2021 business report and financial statements. 5. Proposal for the Company's 2021 earnings distribution. 6. Proposal for the Company’s 2021 earnings and capital increase by way of issuance of new shares. 7. Proposal to amend the Company’s “Articles of Incorporation”. 8. Proposal to amend the Company’s “Handling Procedures of Acquiring or Disposing Assets.” 9. Proposal to amend the “Corporate Social Responsibility Best Practice Principles” and the “Company Governance Best Practice Principles”. 10. Matters related to the convening of the Company’s general shareholder meeting of 2022. 11. Matters related to the acceptance of shareholders’ proposals for the Company’s 2022 general shareholder meeting. 12. Proposal for the Company’s “Evaluation of Internal Control System Effectiveness” and “Internal Control System Statement” for 2021. 13. Proposal of the Company plans to issue the 2022 1stSecured Ordinary Corporate Bonds.	Approved as proposed and implemented as the resolution. The 3rd to 6th, and 9th to 13rd discussions have been reported for completion on MOPS on Mar. 19, 2021.

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Date of Meeting	Key resolution	Implementation situation
	14. Proposal to apply for a financing credit facility from financial institutions. 15. Proposal to apply for a financing credit facility from financial institutions. 16. Proposal to apply for a financing credit facility from financial institutions. 17. Proposal to apply for a financing credit facility from financial institutions.
2021.04.01 (8th meeting of the term)	1. Proposal for appointments of the Company’s staff.	Approved as proposed and implemented as the resolution. And the resolution has been reported for completion on MOPS on Apr. 1, 2022.

(XII) In the most recent year and up to the date of publication of the financial report, directors that had different opinions on important resolutions passed by the Board of Directors for which there are records or written statements, specify the major content: None.

(XIII) In the most recent year and up to the date of publication of the financial report, a summary of resignations of the Company’s chairperson, president, accounting, financial, internal audit and management officers and R&D executives:

Job Title	Name	On Board Date	Dismiss Date	Reason for resignation or dismissal
President	Tsai, Chung-Ping	2010.07.09	2021.10.05	Chairperson Tsai, Chung-Ping ceased to serve as the President on Oct. 5, 2021, and Vice President Chiu, Ping-Tse was promoted as President

• 104 -

• Certified CPA public fee information

• (I) The amount of public audit fees and non-audit public fees paid to the certified public accountants, their affiliated firms and affiliated enterprises, and the content of non-audit services:

Unit: NT$ thousand

services:						Unit: NT$ thousand
Accounting firm name	CPA name	CPAs’ Audit Report	Audit Fee	Non-audit Fee	Total	Remarks
KPMG Taiwan	Yi-Lien Han and Ti-Nuan Chien	2021/01/01~ 2021/12/31	2,700	132	2,832	Non-audit Fee Service Content is as follows: 1. Financial statement verification visa stamp certification fee. 2. Public expense for the review opinion on the transfer of surplus and capital reserve to capital increase. 3. Issue 2021 1st Secured Ordinary Corporate Bonds. 4. Full-time employee salary information checklist for supervisory positions to review public expenses.
	Chang, Zhi	2021/01/01~ 2021/12/31	-	60	600	Non-audit Fee Service Content is as follows: 1. The public fee for handling the registration of the re-election of directors. 2. Public fees for registration fee for surplus and capital surplus transferred to capital increase.

• Note: If the Company changes its accountant or accounting firm this year, please indicate its check period separately and explain the reason for the replacement in the remarks column, and disclose the paid audit fees and non-audit fees in order. Non-audit Fee and shall explanation the service content.

• (II) When the Company changes its accounting firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year, the amounts of the audit fees before and after the change and the reasons shall be disclosed: None.

• (III) When the audit fees paid for the current fiscal year are lower than those for the previous fiscal year by 10 percent or more, the reduction in the amount of audit fees, reduction percentage, and reasons shall be disclosed: None.

• 105 -

• CPA replacement information

• (I) Regarding the former CPAs: None.

• (II) Regarding the successor CPAs: None.

• (III) The reply of the former CPAs regarding Article 10, Paragraph 10, Subparagraph 6 Items 1 and 2-3 of the Standards: Not applicable.

• Where the Company’s chairperson, president, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPAs or at an affiliated enterprise of such accounting firm, the name and position of the person and the period during which the position was held shall be disclosed: None.

• 106 -

• In the most recent fiscal year and up to the date of publication of the annual report, the directors, supervisors, managers and shareholders holding more than 10% of the equity transfer and equity pledge changes

• (I) Changes in shareholdings of directors, supervisors, managers and major shareholders

Unit: Share

				Unit: Share	Unit: Share
Job Title	Name	2021		Current year as of April 11
		Increase (decrease) in number of sharesheld	Increase (decrease) in number of pledgesheld	Increase (decrease) in number of sharesheld	Increase (decrease) in number of pledgesheld
Institutional Director	Da-Li Investment Co., Ltd	869,149	0	0	0
Chairperson	Tsai, Chung-Ping (Note 1)	2,410	0	0	0
Institutional Director	Kaung Yang Investment Co., Ltd.	3,230,284	0	0	0
Chairman and President	Chiu, Ping-Tse (Note 1)	0	0	0	0
Director	Cheng, Chiao-Wen (Note 2)	0	0	0	0
Director	Chen, Kuo-Yen	0	0	0	0
Director	Hung, Ming-Yao (Note 3)	－	－	－	－
Independent Director	Yen, Yun-Chi	0	0	0	0
Independent Director	Li, Wen-Cheng	0	0	0	0
Independent Director	Chen, Yung-Chang (Note 4)	0	0	0	0
Company Governance Executives	Lin, Wen-Long	0	0	0	0
Associate Vice President	Wu, Chin-Ching	1,442	0	0	0
Associate Vice President	Wang, Hsiao-Hua (Note 5)	－	－	－	－
Associate Vice President	Fang, Tze-Chiang (Note 6)	0	0	0	0
Associate Vice President	Liu, Kuan-Ying (Note 7)	－	－	－	－
Financial Officer	Lu, Chia-Yin	2,440	0	0	0
Accounting Officer	Lin, Ya-mei	0	0	0	0

Note 1: Chairperson Tsai, Chung-Ping ceased to serve as the President on Oct. 5, 2021, and Vice President Chiu, Ping-Tse was promoted as President.

Note 2: Cheng, Chiao-wen, the Representative of Institutional Director, was elected at the shareholders' meeting on Aug. 16, 2021.

• 107 -

• Note 3: Hong, Ming-yao, the Representative of Institutional Director, was dismissed at the shareholders' meeting on Aug. 16, 2021.

• Note 4: Chen, Yung-chang, the independent director was elected at the shareholders' meeting on Aug. 16, 2021.

• Note 5: Wang, Hsiao-Hua, the former President Office Special Assistant, was transferred to the Associate Vice President of the Planning Department on Jan. 14, 2021; Associate Vice President Wang, Hsiao-Hua of the Planning Department was transferred to the Special Assistant of the President Office on Aug. 10, 2021; President Office Special Assistant Wang, Hsiao-Hua was transferred to the President Office Special Assistant of the subsidiary Chin Chun Construction Co., Ltd on February 8, 2022.

• Note 6: On Aug. 10, 2021, Mr. Fang, Tze-Chiang was appointed as the Associate Vice President of the Planning dept. of the company.

• Note 7: On Apr. 1, 2022, Ms. Liu, Kuan-Ying was appointed as the Associate Vice President of the Sales dept. of the company.

(II) Information on equity transfers

Information of transfers of equity interests by a director, supervisor, managerial officer, or shareholder with a stake of more than 10 percent, where the counterparty of any such transfer of equity interests is a related party: None.

(III) Information on equity pledges

Information of pledges of equity interests by a director, supervisor, managerial officer, or shareholder with a stake of more than 10 percent, where the counterparty of any such pledge of equity interests is a related party: None.

• 108 -

9. Shareholders who account for the top ten shareholders, and their relationships with each other

April 11, 2022; Unit: Share: %

Name (Note 1)	Personal Holding Share	Personal Holding Share	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Holding shares in the name of others	Holding shares in the name of others	Names and relationships of the top ten shareholders who have a relationship with each other or are relatives of a spouse or a second degree kinship. (Note3)	Names and relationships of the top ten shareholders who have a relationship with each other or are relatives of a spouse or a second degree kinship. (Note3)	Remarks
	Stock Number	Holding shares ratio (Note 2)	Shares	Holding shares ratio (Note 2)	Shares	Holding shares ratio (Note 2)	Title (or Name)	Relationship
Chin-Shi-Pan Investment Co., Ltd Representative: Cheng Chun-Fang	38,625,861	9.85	Note 4	Note 4	Note 4	Note 4	Zheng Xiuhui	Relative within Second Degree Kinship
							Cheng Chiao- Wen	Relative within Second Degree Kinship
Runying Investment Co., Ltd. Representative：Zheng Xiuhui	25,117,350	6.40	Note 4	Note 4	Note 4	Note 4	Zheng Junfang	Relative within Second Degree Kinship
							Cheng Chiao- Wen	Relative within Second Degree Kinship
							Zheng Yousheng	Relative within Second Degree Kinship
							Cheng Chunmin	Relative within Second Degree Kinship
							Tsai, Chung- Ping	Relative within Second Degree Kinship
Xing Ri-sheng Investment Co., Ltd. Representative：Zheng Xiuhui	24,054,559	6.13	Note 4	Note 4	Note 4	Note 4	Zheng Junfang	Relative within Second Degree Kinship
							Cheng Chiao- Wen	Relative within Second Degree Kinship
							Zheng Yousheng	Relative within Second Degree Kinship
							Cheng Chunmin	Relative within Second Degree Kinship
							Tsai, Chung- Ping	Relative within Second Degree Kinship
Kaung Yang Investment Co., Ltd. Representative: Cheng Chaiowen	24,022,699	6.13	0	0.00	0	0.00	Zheng Xiuhui	Relative within Second Degree Kinship
							Zheng Junfang	Relative within Second Degree Kinship
Wan Shengfa Investment Co., Ltd Representative：Zheng Yousheng	22,698,296	5.79	Note 4	Note 4	Note 4	Note 4	Zheng Xiuhui	Relative within Second Degree Kinship
							Cheng Chunmin	Relative within Second Degree Kinship
							Tsai, Chung- Ping	Relative within Second Degree Kinship
Highwealth Construction Representative: Tsao, Yuan-Pao	22,422,816	5.72	Note 4	Note 4	Note 4	Note 4	None	None

• 109 -

Name (Note 1)	Personal Holding Share	Personal Holding Share	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Holding shares in the name of others	Holding shares in the name of others	Names and relationships of the top ten shareholders who have a relationship with each other or are relatives of a spouse or a second degree kinship. (Note3)	Names and relationships of the top ten shareholders who have a relationship with each other or are relatives of a spouse or a second degree kinship. (Note3)	Remarks
	Stock Number	Holding shares ratio (Note 2)	Shares	Holding shares ratio (Note 2)	Shares	Holding shares ratio (Note 2)	Title (or Name)	Relationship
Feng-Rao Investment Co., Ltd. Representative：Zheng Xiuhui	21,240,333	5.42	Note 4	Note 4	Note 4	Note 4	Zheng Junfang	Relative within Second Degree Kinship
							Cheng Chiao- Wen	Relative within Second Degree Kinship
							Zheng Yousheng	Relative within Second Degree Kinship
							Cheng Chunmin	Relative within Second Degree Kinship
							Tsai, Chung- Ping	Relative within Second Degree Kinship
ChyiYuh Construction Co., Ltd. Representative: Cheng Chunmin	19,686,744	5.02	Note 4	Note 4	Note 4	Note 4	Zheng Xiuhui	Relative within Second Degree Kinship
							Zheng Yousheng	Relative within Second Degree Kinship
							Tsai, Chung- Ping	Relative within Second Degree Kinship
Jing-Wei Investment Co., Ltd Representative：Huang Qingshui	18,550,098	4.73	Note 4	Note 4	Note 4	Note 4	None	None
Da-Li Investment Co., Ltd Representative: Tsai, Chung-Ping	15,354,970	3.92	0	0.00	0	0.00	Zheng Xiuhui	Relative within Second Degree Kinship
							Zheng Yousheng	Relative within Second Degree Kinship
							Cheng Chunmin	Relative within Second Degree Kinship

• Note 1: All the top ten shareholders shall be listed. Those that are legal person shareholders should list the name of the legal person shareholder and the name of the representative separately.

• Note 2: The calculation of the shareholding ratio refers to the calculation of the shareholding ratio in the name of oneself, the spouse, the minor child or the use of another person.

• Note 3: The shareholders listed in the previous disclosure, including legal persons and natural persons, shall disclose their relationship with each other in accordance with the issuer’s financial reporting standards.

• Note 4: The shareholder is not an insider declared by the company, so the relevant materials of his spouse, minor children or holding shares in the name of others cannot be obtained.

• 110 -

• The number of shares held by the Company, the Company’s directors, supervisors, managers and the companies directly or indirectly controlled by the Company in the same investment business, and combined to calculate the comprehensive shareholding ratio:

					Unit: Shares; %	Unit: Shares; %
Re-investment business (Note)	Investment by the Company		Directors, supervisors, managerial officers and investments directly or indirectly controlling the business		Comprehensive Investment
	Shares	Shareholding ratio	Shares	Shareholding ratio	Shares	Shareholding ratio
Jin Jyun Construction Co., Ltd.	50,000,000	100%	0	0%	50,000,000	100%

Note: The Company’s investments accounted for using the equity method.

• 111 -

IV. Capital Overview

I. Capital and Shares

1. Source of share capital

(1) The types of shares issued by the Company in the most recent fiscal year and up to the date of publication of the annual report

Unit: NT$; Shares

						Unit: NT$;Shares	Unit: NT$;Shares	Unit: NT$;Shares
Month /Year	Issuing price	Approved Share Capital		Paid-upShare Capital		Remark
		Stock Number	Amount	Stock Number	Amount	Sources of Share Capital	Non-cash Capital Increase	Others
2006/ 09	10	120,000,000	1,200,000,000	62,490,000	624,900,000	Surplus transferred to capital increase 24,900,000	None	Effective per Letter Jin-Guan-Zheng-Yi-Zi No. 0950129041 issued by the Financial Supervisory Commission, Executive Yuan, dated July 7, 2006 Effective per Letter Jin-Guan-Zheng-Yi-Zi No. 0950131709 issued by the Financial Supervisory Commission, Executive Yuan, dated August 14, 2006.
2006/ 09	10	120,000,000	1,200,000,000	64,980,000	649,800,000	Surplus transferred to capital increase (Private placement) 24,900,000	None
2007 /09	10	120,000,000	1,200,000,000	73,102,500	731,025,000	Surplus transferred to capital increase 81,225,000	None	Effective per Letter Jin-Guan-Zheng-Yi-Zi No. 0960044644 issued by the Financial Supervisory Commission, Executive Yuan, dated August 20, 2007.
2007/ 09	10	120,000,000	1,200,000,000	81,225,000	812,250,000	Surplus transferred to capital increase (Private placement) 81,225,000	None
2008/ 08	10	120,000,000	1,200,000,000	97,600,000	976,000,000	Surplus and employees’ bonus transferred to capital increase 163,750,000	None	Effective per Letter Jin-Guan-Zheng-Yi-Zi No. 0970034696 issued by the Financial Supervisory Commission, Executive Yuan, dated July 10, 2008.
2009/ 08	10	120,000,000	1,200,000,000	113,216,000	1,132,160,000	Surplus transferred to capital increase 156,160,000	None	Effective per Letter Jin-Guan-Zheng-Yi-Zi No. 0980034483 issued by the Financial Supervisory Commission, Executive Yuan, dated July 10, 2009.

• 112 -

Month /Year	Issuing price	Approved Share Capital	Approved Share Capital	Paid-upShare Capital	Paid-upShare Capital	Remark	Remark	Remark
		Stock Number	Amount	Stock Number	Amount	Sources of Share Capital	Non-cash Capital Increase	Others
2010/ 12	10	160,000,000	1,600,000,000	135,859,200	1,358,592,000	Surplus transferred to capital increase 226,432,000	None	Effective per Letter Jin-Guan-Zheng-Yi-Zi No. 0990056467 issued by the Financial Supervisory Commission, Executive Yuan, dated October 15, 2010.
2012/ 01	10	250,000,000	2,500,000,000	136,484,404	1,364,844,040	Conversion of corporate bonds 6,252,040	None	Tai-Zheng-Shang-Yi-Zi No. 10100013531 by the Taiwan Stock Exchange Corporation, dated January 18, 2012.
2012/ 04	10	250,000,000	2,500,000,000	142,232,518	1,422,325,180	Conversion of corporate bonds 57,481,140	None	Tai-Zheng-Shang-Yi-Zi No. 10100082201 by the Taiwan Stock Exchange Corporation, dated April 18, 2012.
2012/ 07	10	250,000,000	2,500,000,000	143,723,712	1,437,237,120	Conversion of corporate bonds 14,911,940	None	Tai-Zheng-Shang-Yi-Zi No. 10100169681 by the Taiwan Stock Exchange Corporation, dated July 26, 2012.
2012/ 10	10	250,000,000	2,500,000,000	144,600,643	1,446,006,430	Conversion of corporate bonds 8,769,310	None	Tai-Zheng-Shang-Yi-Zi No. 10100232901 by the Taiwan Stock Exchange Corporation, dated October 15, 2012.
2013/ 01	10	250,000,000	2,500,000,000	144,634,298	1,446,342,980	Conversion of corporate bonds 336,550	None	Tai-Zheng-Shang-Yi-Zi No. 10200010221 by the Taiwan Stock Exchange Corporation, dated January 17, 2013.
2013/ 04	10	250,000,000	2,500,000,000	144,699,139	1,446,991,390	Conversion of corporate bonds 648,410	None	Tai-Zheng-Shang-Yi-Zi No. 1020007491 by the Taiwan Stock Exchange Corporation, dated April 25, 2013.
2013/ 10	10	250,000,000	2,500,000,000	176,597,015	1,765,970,150	Conversion of corporate bonds 318,978,760	None	Tai-Zheng-Shang-Yi-Zi No. 1020021840 by the Taiwan Stock Exchange Corporation, dated October 22, 2013.
2014/ 04	10	250,000,000	2,500,000,000	177,008,875	1,770,088,750	Conversion of corporate bonds 4,118,600	None	Tai-Zheng-Shang-Yi-Zi No. 10300073421 by the Taiwan Stock Exchange Corporation, dated April 18, 2014.
2014/ 07	10	250,000,000	2,500,000,000	177,380,937	1,773,809,370	Conversion of corporate bonds 3,720,620	None	Tai-Zheng-Shang-Yi-Zi No. 1030014446 by the Taiwan Stock Exchange Corporation, dated July 17, 2014.
2014/ 10	10	250,000,000	2,500,000,000	185,008,864	1,850,088,640	Conversion of corporate bonds 76,279,270	None	Tai-Zheng-Shang-Yi-Zi No. 1030022108 by the Taiwan Stock Exchange Corporation, dated October 23,2014.

• 113 -

Month /Year	Issuing price	Approved Share Capital	Approved Share Capital	Paid-upShare Capital	Paid-upShare Capital		Remark	Remark
		Stock Number	Amount	Stock Number	Amount	Sources of Share Capital	Non-cash Capital Increase	Others
2015/ 01	10	250,000,000	2,500,000,000	215,008,864	2,150,088,640	Issuance of common stock for cash 300,000,000	None	Effective per Letter Jin-Guan-Zheng-Fa-Zi No. 1030052644 issued by the Financial Supervisory Commission, Executive Yuan, dated January 8, 2015
2015/ 08	10	250,000,000	2,500,000,000	215,026,195	2,150,261,950	Conversion of corporate bonds 173,310	None	Tai-Zheng-Shang-Yi-Zi No.1040016174 by the Taiwan Stock Exchange Corporation, dated August 11, 2015.
2015/ 10	10	250,000,000	2,500,000,000	215,850,199	2,158,501,990	Conversion of corporate bonds 8,240,040	None	Tai-Zheng-Shang-Yi-Zi No.1040021557 by the Taiwan Stock Exchange Corporation, dated October 21, 2015.
2016/ 01	10	250,000,000	2,500,000,000	233,184,874	2,331,848,740	Conversion of corporate bonds 173,346,750	None	Approved by the Taiwan Stock Exchange Corporation on January 20, 2016, for reference.
2016/ 05	10	250,000,000	2,500,000,000	233,494,574	2,334,945,740	Conversion of corporate bonds 3,097,000	None	Approved by the Taiwan Stock Exchange Corporation on May 10, 2016, for reference.
2016/ 07	10	250,000,000	2,500,000,000	234,557,995	2,345,579,950	Conversion of corporate bonds 10,634,210	None	Approved by the Taiwan Stock Exchange Corporation on August 2, 2016, for reference.
2016/ 10	10	250,000,000	2,500,000,000	236,847,345	2,368,473,450	Conversion of corporate bonds 22,893,500	None	Approved by the Taiwan Stock Exchange Corporation on October 24, 2016, for reference.
2017/ 01	10	250,000,000	2,500,000,000	237,666,300	2,376,663,000	Conversion of corporate bonds 8,189,550	None	Approved by the Taiwan Stock Exchange Corporation on January 25, 2017, for reference.
2017/ 04	10	250,000,000	2,500,000,000	243,355,904	2,433,559,040	Conversion of corporate bonds 56,896,040	None	Approved by the Taiwan Stock Exchange Corporation on April 19, 2017, for reference.
2017/ 10	10	250,000,000	2,500,000,000	243,404,446	2,434,044,460	Conversion of corporate bonds 485,420	None	Approved by the Taiwan Stock Exchange Corporation on October 19, 2017, for reference.
2018/ 04	10	250,000,000	2,500,000,000	244,472,405	2,444,724,050	Conversion of corporate bonds 10,679,590	None	Approved by the Taiwan Stock Exchange Corporation on April 13, 2018, for reference.
2018/ 07	10	250,000,000	2,500,000,000	244,501,531	2,445,015,310	Conversion of corporate bonds 291,260	None	Approved by the Taiwan Stock Exchange Corporation on July 27, 2018,for reference.

• 114 -

Month /Year	Issuing price	Approved Share Capital	Approved Share Capital	Paid-upShare Capital	Paid-upShare Capital	Remark	Remark	Remark
		Stock Number	Amount	Stock Number	Amount	Sources of Share Capital	Non-cash Capital Increase	Others
2018/ 09	10	360,000,000	3,600,000,000	308,330,531	3,083,305,310	Conversion of corporate bonds 638,290,000	None	Approved by Taiwan Stock Exchange Corporation on September 27, 2018, for reference.
2020/ 10	10	500,000,000	5,000,000,000	369,996,637	3,699,966,370	Surplus transferred to capital increase 308,330,530 capital surplus transferred to capital increase 308,330,530	None	Effective on the filing to the Financial Supervisory Commission on August 3, 2020 Approved by the Taiwan Stock Exchange Corporation on October 21, 2020, for reference.
2021/ 10	10	500,000,000	5,000,000,000	392,196,637	3,921,966,370	Surplus transferred to capital increase 74,000,000 capital surplus transferred to capital increase 148,000,000	None	Effective on the filing to the Financial Supervisory Commission on August 30, 2021 Approved by the Taiwan Stock Exchange Corporation on October 21, 2021, for reference.

• (2) Information on shelf registration: The Company has not applied to offer and issue securities by shelf registration.

• (3) Private placement of common shares in the most recent fiscal year and up to the date of publication of the annual report: None.

(II) Share type

annual report: None. re type	annual report: None. re type	annual report: None. re type	annual report: None. re type	annual report: None. re type
April 11,2022;Unit: Shares
Share Type	Approved Share Capital			Remark
	Outstanding Shares	Un-issued Shares	Total Amount
Ordinary share	500,000,000	107,803,363	392,196,637	Listed company stock

• 115 -

2. Status of shareholders

tus of shareholders	tus of shareholders	tus of shareholders	tus of shareholders
				April 11,2022;Unit: Shares
Type Volume	Government Agencies	Financial Institutions	Other Juridical Persons	Individual	Foreign Institutes and Foreigners	Total Amount
Shareholders	2	0	76	9,787	79	9,944
Shares	70	0	298,599,510	78,969,125	14,627,932	392,196,637
Shareholding ratio	0.00%	0.00%	76.13%	20.14%	3.73%	100.00%

3. Shareholding distribution status

• (I) Common shares dispersion

holding distribution status ommon shares dispersion	holding distribution status ommon shares dispersion	holding distribution status ommon shares dispersion	holding distribution status ommon shares dispersion
April 11,2022;Unit: Shares
Shareholding Tiers (Unit: Share)	Number of Shareholders	Shares	Shareholding ratio
1 to 999	4,186	896,573	0.23%
1,000 to 5,000	4,150	8,184,435	2.09%
5,001 to 10,000	755	5,130,427	1.31%
10,001 to 15,000	303	3,722,273	0.95%
15,001 to 20,000	124	2,146,161	0.55%
20,001 to 30,000	129	3,095,666	0.79%
30,001 to 40,000	60	2,099,927	0.54%
40,001 to 50,000	31	1,377,035	0.35%
50,001 to 100,000	80	5,699,404	1.45%
100,001 to 200,000	38	5,369,281	1.37%
200,001 to 400,000	27	7,537,142	1.92%
400,001 to 600,000	15	7,400,575	1.89%
600,001 to 800,000	9	6,045,866	1.54%
800,001 to1,000,000	4	3,671,630	0.93%
More than 1,000,001	33	329,820,242	84.09%
Total Amount	9,944	392,196,637	100.00%

(II) Preference share dispersion: The Company has not issued preferred shares.

• 116 -

4. Names of major shareholders

mes of major shareholders	mes of major shareholders	mes of major shareholders
April 11,2022;Unit: Shares
Share Name	Number of shares held	Shareholding ratio
Qingshiban Investment Co., Ltd.	38,625,861	9.85%
Jun Ying Investment Inc.	25,117,350	6.40%
Xing Ri-sheng Investment Co., Ltd.	24,054,559	6.13%
Kaung Yang Investment Co., Ltd.	24,022,699	6.13%
Wan Shengfa Investment Co., Ltd	22,698,296	5.79%
Highwealth Construction Corporation	22,422,816	5.72%
Feng-Rao Investment Co., Ltd.	21,240,333	5.42%
ChyiYuh Construction Co., Ltd.	19,686,744	5.02%
Jing-Wei Investment Co., Ltd.	18,550,098	4.73%
Da-Li Investment Co., Ltd	15,354,970	3.92%

• 117 -

5. Market price, net worth, earnings, and dividends per share for the two most recent years

Unit: NT$

					Unit: NT$
Item	Year		2020	2021	Current year as of Mar. 31, 2022 (Note 8)
Price per share (note 1)	Maximum		77.50	63.10	60.80
	Minimum		40.10	46.70	53.00
	Average		61.90	58.22	56.95
Net worth per share (Note 2)	Before assignment		13.71	17.02	－
	After assignment		13.51	15.02(Note 10)	－
EPS	Weighted average amount of shares (thousand shares)		369,997	392,197	392,197
	Earnings per share (Note 3)	Before Retrospectively Adjustment	0.32	4.26	－
		After Retrospectively Adjustment	0.30	3.71 (Note 10)	－
Dividend per share	Cash dividend		0.2	2.0 (Note 9)	－
	Issuance of bonus share	Earnings dividend	0.2	1.5 (Note10)	－
		Capital reserve dividend	0.4	－	－
	Accumulated unpaid dividend (note 4)		－	－	－
Analysis of ROI	P/E ratio (Note 5)		192.84	13.69	－
	Price to dividend ratio (Note 6)		308.55	29.16 (Note 9)	－
	Dividend yield (Note 7)		0.003	0.034 (Note 9)	－

• If shares are distributed in connection with a capital increase out of earnings or capital reserve, further disclose information on market prices and cash dividends retroactively adjusted based on the number of shares after distribution.

Note 1: Set forth the highest and lowest market price per share of common stock for each fiscal year and calculate each fiscal year’s average market price based upon each fiscal year’s actual transaction prices and volume.

Note 2: Please set forth the distribution based on the issued shares at the end of the year and resolved by the board of directors meeting or the general shareholders’ meeting in the next year.

Note 3: In case retrospective adjustment is required due to bonus shares, the earnings-per-share before and after adjustment shall be set forth.

• 118 -

• Note 4: In the conditions for issuing equity securities, if it is specified that the undistributed dividends of the year may be accumulated until they are distributed in a year with surplus earnings, the accumulated unpaid dividends shall be disclosed respectively.

• Note 5: Price-earnings ratios = Average closing price per share of the year / earnings per share.

• Note 6: Price to dividend ratios = Average closing price per share of the year / cash dividend per share.

• Note 7: Cash dividend yield = Cash dividend per share / average closing price per share of the year.

• Note 8: For the net worth per share and earnings per share, the latest information audited (reviewed) by the CPAs shall be filled in; other columns shall be filled in with the current year information up to the publication date of the annual report. The financial information of the Company for the first quarter of 2022 has not been reviewed by an accountant, so it will not be disclosed.

• Note 9: The distribution of dividends in cash from earnings for 2021 has been resolved by the Board of Directors on March 14, 2022.

• Note 10:The bonus shares from surplus for 2021 have been proposed by the Board of Directors on March 14, 2022, to be resolved by the 2022 general shareholder meeting.

• 119 -

• Company dividend policy and implementation status

• (I) Dividend policy set in the Articles of Incorporation

Where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, except when the legal reserve has reached the amount of the Company's paid-in capital. Depending on the Company's operation and legal requirements, special reserve may be set aside or reversed. The Company’s Board of Directors shall use any remaining profit together with any undistributed retained earnings as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders.

The Company’s dividend policy shall take into the Company's financial structure, operating situation and capital budget, as well as the interests of shareholders and balance of dividends. The distributable earnings may be retained or paid in shares or cash. The amount of dividend distribution shall be maintained at between 10% and 100% of the current year’s distributable earnings. The dividends paid in cash shall be less than 10% of the total dividends distributed in the year.

• (II) Proposed dividend distribution by the current shareholder meeting

• The distribution of dividends in cash from earnings for 2021 has been resolved by the Board of Directors on March 14, 2022. The cash dividend this year will be distributed of NT$2 per share.

• The bonus shares from surplus for 2021 have been proposed by the Board of Directors on March 14, 2022, to be resolved by the 2022 general shareholder meeting. The share dividend this year will be distributed of NT$1.5 per share. (i.e. 150 shares are allotted free of charge for every 1,000 shares)

for every 1,000 shares)
Item		Dividend per share (NT$/share)
Cash dividends	Bonus share from surplus	2
	Bonus share from capital reserve	－
Issuance of bonus share	Earnings dividend	1.5
	Capital reserve dividend	－

(III) Significant changes to dividend policy: None.

• 120 -

• Impact on the Company’s operating performance and earnings per share of the bonus shares proposed at this shareholder meeting:

s shareholder meeting:	s shareholder meeting:	s shareholder meeting:
Year Item			2022 (estimation)
Opening paid-in capital (thousand)			3,921,966
Dividend and stock dividend this year	Cash dividendsper share(NT$)		2(Note 1)
	bonus shares from surplus and capital reserve transferred to capital increase(shares)		0.15 (Note 2)
	Stock dividend from capital reserve transferred to capital increase(shares)		0
Changes to operating performances	Operating profit		Not applicable. (Note3)
	Increasing (decreasing) percentage of operating profit compared with the sameperiod lastyear
	Net income after tax
	Increasing (decreasing) percentage of net income after tax compared with the sameperiod lastyear
	Earningsper share
	Increasing (decreasing) percentage of earnings per share compared with the sameperiod lastyear
	Average annual return on investment (inverse of the average annualprice-earnings ratio)
Proforma earnings per share and price-earnings ratio	If all the retained earnings transferred to the capital increase were distributed bythe cash dividend	Proforma earnings per share(NT$)	Not applicable. (Note3)
		Proforma annual average rate on investment
	If capital reserve transferred to capital increase was not conducted	Proforma earnings per share(NT$)
		Proforma annual average rate on investment
	If capital reserve transferred to capital increase and all the retained earnings transferred to capital increase distributed by cash dividend were not conducted	Proforma earnings per share(NT$)
		Proforma annual average rate on investment

Note 1: The distribution of dividends in cash from earnings for 2021 has been resolved by the Board of Directors on March 14, 2022.

Note 2: The bonus shares from surplus for 2021 have been proposed by the Board of Directors on March 14, 2022, to be resolved by the 2022 general shareholder meeting.

Note 3: The Company did not officially announce the 2022 financial estimation. Hence, this item is not applicable.

• 121 -

• Compensation of employees and directors

• (I) Employees’ and directors’ compensation policies as stated in the Articles of Incorporation: Pursuant to Article 29 of the Articles of Incorporation, if the Company records a profit in a year, it shall set aside not less than one-thousandth of the profit as remuneration to employees and not more than one-hundredth of the profit as remuneration to directors. The remuneration shall be distributed after the resolution of the Board of Directors and reported to the shareholder meeting. However, if the Company still has accumulated losses, the compensation amount shall be reserved in advance.

The employee remuneration may be determined by shares or cash and its receiving parties must include its serving employees in accordance who meet certain criteria established by the board of directors.

• (II) The basis for the estimation of the amount of remuneration of employees and directors in the current period, and the accounting treatment if there is a difference between the estimated amount and the actual remuneration paid in shares or cash:

• Estimation basis for the period: 1.30% of the net profit before tax of the period as employees’ remuneration; 0.48% as the directors’ remuneration.

• The calculation basis for employees’ remuneration distributed in shares: No employees’ remuneration is paid in shares this period, and thus this is not applicable.

• Accounting treatment if there is a discrepancy between the estimate and the actual amount paid: The difference will be recognized as profit or loss from changes in accounting estimates in the next fiscal year.

• (III) Remuneration distribution as decided by the Board of Directors’ meeting

• Distribution of employees and directors’ remunerations:

• The Company’s 2021 remunerations for employees and directors were approved by the Board of Directors in the meeting on March 14, 2022, described as follows:

• (1) Employees’ remuneration in cash: NT$27,000,000 (approximately 1.30%)

• (2) Directors’ remuneration in cash: NT$10,000,000 (approximately 0.48%)

• Discrepant amount, reasons, and treatment, in the event of a discrepancy between the 2021 estimated amount and the actual remunerations paid in shares or cash to employees and directors: No discrepancy between the 2021 estimated amount and the actual remunerations paid.

• Employee remuneration paid in shares as a percentage of the total amount of the current net profit after tax and the total employee remuneration as reported in the consolidated or individual financial statements: there is no remuneration in shares proposed for the period, so it is not applicable.

• (IV) Actual distribution of employees and directors’ remuneration (including distributed cash, shares, and share prices) in the prior year, and the accounting disclosures, treatments and explanations if discrepancies exist

• 122 -

• Actual distribution of employees and directors’ remuneration in the previous year

Distribution	2020	2020	2020	2020
	Distributed amount resolved by the Board of Directors	Actual distributed amount	Recognized amount	Discrepant amount
Employee cash remuneration	NT$3,500 thousand	NT$3,500 thousand	NT$3,500 thousand	0
Directors’ remuneration	NT$1,500 thousand	NT$1,500 thousand	NT$1,500 thousand	0

     2. Reason for discrepancy between the actual distributed amount and recognized amount and treatment: No discrepancy from the expense amount recognized in 2020.

1. Buyback of treasury stock of the company: None.

2. Corporate bonds

3. I. Issuance Status of Corporate Bonds

   1. On December 9, 2016, approved with Letter Zheng-Gui-Zhai-Zi No. 10500352771 issued by the Taipei Exchange, the 2016 first batch of domestic secured ordinary convertible corporate bonds for NT$1.5 billion was issued.

   2. On August 16. 2017, approved with Letter Zheng-Gui-Zhai-Zi No. 10600222141 issued by the Taipei Exchange, the 2017 first batch of domestic secured ordinary convertible corporate bonds for NT$2 billion was issued.

   3. On March 27, 2019, approved with Letter Zheng-Gui-Zhai-Zi No. 10800017031 issued by the Taipei Exchange, the 2019 first batch of domestic secured ordinary convertible corporate bonds for NT$2 billion was issued.

   4. On March 27, 2019, approved with Letter Zheng-Gui-Zhai-Zi No. 10800017241 issued by the Taipei Exchange, the 2019 second batch of domestic secured ordinary convertible corporate bonds for NT$2 billion was issued.

   5. On December 17, 2019, approved with Letter Zheng-Gui-Zhai-Zi No. 10800138421 issued by the Taipei Exchange, the 2019 third batch of domestic secured ordinary convertible corporate bonds for NT$1.9 billion was issued.

   6. On November 3, 2021, approved with Letter Zheng-Gui-Zhai No. 11000120671 issued by the Taipei Exchange, the 2021 first batch of domestic secured ordinary convertible corporate bonds for NT$2 billion was issued.

   7. On Mar. 30, 2022, approved with Letter Zheng-Gui-Zhai No. 11100020801 issued by the Taipei Exchange, the 2022 first batch of domestic secured ordinary convertible corporate bonds for NT$2 billion was issued.

   8. Each of the above batches of corporate bonds was issued as follows:

4. 123 -

Dec. 19, 2021

		Dec. 19,2021
Type of Corporate Bonds		2016-1 Secured OrdinaryCorporate Bonds(Code: B85103)
Issuance(handling)date:		December 19,2016
Denomination		NT$1,000,000
Place of issuance and transaction(Note)		Not applicable.
Issuing price		At face value
Total		Face value of NT$1.5 billion in total
Interest rate		Coupon rate: fixed rate at 0.96%per annum
Period		5-yearperiod,maturitydate: December 19,2021
Guarantee Organization		Mega International Bank Co.,Ltd.
Trustee		Land Bank of Taiwan Co.,Ltd.
Underwritinginstitution		Not applicable.
Certified Lawyer		Zhong-Jie Wei
Certified Public Accountant		Chen,Chia-Hsiu
Reimbursement Method		Bullet repayment at maturity
Outstanding principal amount		NT$1,500,000,000
Redemption and Advanced Redemption Provisions		Not applicable.
Restrictions		None
Credit rating agency, assessment date and results		Not applicable.
Other rights attached	Amount of Converted (Exchanged or Subscribed) Ordinary shares, Overseas Depository Receipts or Other Negotiable Securities	Not applicable.
	Issuance and Conversion (Exchange or Subscription)Method	Please refer to the prospectus of the 2016-1 Secured Ordinary Corporate Bonds.
Potential impact of issuance, conversion, exchange, subscription, or issuing method and conditions on the dilution of equity and existingshareholders’ rights		Please refer to the prospectus of the 2016-1 Secured Ordinary Corporate Bonds.
Name of the Custodian Institution for Underlying Exchange		Not applicable.

Note: Filled in by overseas bond holders

• 124 -

April 11, 2022

		April 11,2022
Type of Corporate Bonds		2017-1 Secured OrdinaryCorporate Bonds(Code: B85104)
Issuance(handling)date:		August 23, 2017
Denomination		NT$1,000,000
Place of issuance and transaction (Note)		Not applicable.
Issuing price		At face value
Total		NT$2 billion in total
Interest rate		Coupon rate: fixed rate at 0.98% per annum
Period		5-year period, maturity date: August 23, 2022
Guarantee Organization		Land Bank of Taiwan Co., Ltd.
Trustee		JihSun International Bank Co., Ltd.
Underwriting institution		Not applicable.
Certified Lawyer		Zhong-Jie Wei
Certified Public Accountant		Jian Dinuan
Reimbursement Method		Bullet repayment at maturity
Outstanding principal amount		NT$2,000,000,000
Redemption and Advanced Redemption Provisions		Not applicable.
Restrictions		None
Credit rating agency, assessment date andresults		Not applicable.
Other rights attached	Amount of Converted (Exchanged or Subscribed) Ordinary shares, Overseas Depository Receipts or Other Negotiable Securities	Not applicable.
	Issuance and Conversion (Exchange or Subscription)Method	Please refer to the prospectus of the 2017-1 Secured Ordinary Corporate Bonds.
Potential impact of issuance, conversion, exchange, subscription, or issuing method and conditions on the dilution of equity and existing shareholders’ rights		Please refer to the prospectus of the 2017-1 Secured Ordinary Corporate Bonds.
Name of the Custodian Institution for Underlying Exchange		Not applicable.

Note: Filled in by overseas bond holders

• 125 -

April 11, 2022

		April 11,2022
Type of Corporate Bonds		2019-1 Secured OrdinaryCorporate Bonds(Code: B85105)
Issuance (handling) date:		April 2, 2019
Denomination		NT$1,000,000
Place of issuance and transaction (Note)		Not applicable.
Issuing price		At face value
Total		NT$2 billion in total
Interest rate		Coupon rate: fixed rate at 0.85% per annum
Period		5-year period, maturity date: April 2, 2024
Guarantee Organization		Bank of Taiwan Co., Ltd.
Trustee		Land Bank of Taiwan Co., Ltd.
Underwriting institution		Not applicable.
Certified Lawyer		Zhong-Jie Wei
Certified Public Accountant		Jian Dinuan
Reimbursement Method		Bullet repayment at maturity
Outstanding principal amount		NT$2,000,000,000
Redemption and Advanced Redemption Provisions		Not applicable.
Restrictions		None
Credit rating agency, assessment date andresults		Not applicable.
Other rights attached	Amount of Converted (Exchanged or Subscribed) Ordinary shares, Overseas Depository Receipts or Other Negotiable Securities	Not applicable.
	Issuance and Conversion (Exchange or Subscription)Method	Please refer to the prospectus of the 2019-1 Secured Ordinary Corporate Bonds
Potential impact of issuance, conversion, exchange, subscription, or issuing method and conditions on the dilution of equity and existing shareholders’ rights		Please refer to the prospectus of the 2019-1 Secured Ordinary Corporate Bonds
Name of the Custodian Institution for Underlying Exchange		Not applicable.

Note: Filled in by overseas bond holders

• 126 -

April 11, 2022

		April 11,2022
Type of Corporate Bonds		2019-2 Secured OrdinaryCorporate Bonds(Code: B85106)
Issuance (handling) date:		April 2, 2019
Denomination		NT$1,000,000
Place of issuance and transaction (Note)		Not applicable.
Issuing price		At face value
Total		NT$2 billion in total
Interest rate		Coupon rate: fixed rate at 0.85% per annum
Period		5-year period, maturity date: April 2, 2024
Guarantee Organization		Mega International Bank Co., Ltd.
Trustee		Land Bank of Taiwan Co., Ltd.
Underwriting institution		Not applicable.
Certified Lawyer		Zhong-Jie Wei
Certified Public Accountant		Jian Dinuan
Reimbursement Method		Bullet repayment at maturity
Outstanding principal amount		NT$2,000,000,000
Redemption and Advanced Redemption Provisions		Not applicable.
Restrictions		None
Credit rating agency, assessment date andresults		Not applicable.
Other rights attached	Amount of Converted (Exchanged or Subscribed) Ordinary shares, Overseas Depository Receipts or Other Negotiable Securities	Not applicable.
	Issuance and Conversion (Exchange or Subscription)Method	Please refer to the prospectus of the 2019-2Secured Ordinary Corporate Bonds.
Potential impact of issuance, conversion, exchange, subscription, or issuing method and conditions on the dilution of equity and existing shareholders’ rights		Please refer to the prospectus of the 2019-2Secured Ordinary Corporate Bonds.
Name of the Custodian Institution for Underlying Exchange		Not applicable.

Note: Filled in by overseas bond holders

• 127 -

April 11,2022	April 11,2022	April 11,2022
Type of Corporate Bonds		2019-3 Secured OrdinaryCorporate Bond(Code: B85107)
Issuance (handling) date:		December 24, 2019
Denomination		NT$1,000,000
Place of issuance and transaction (Note)		Not applicable.
Issuing price		At face value
Total		Face value of NT$1.9 billion in total
Interest rate		Coupon rate: fixed rate at 0.78% per annum
Period		5-year period, maturity date: December 24, 2024
Guarantee Organization		Taiwan Cooperative Bank Co., Ltd.
Trustee		Land Bank of Taiwan Co., Ltd.
Underwriting institution		Taiwan Cooperative Securities Co., Ltd. is the leading underwriter, and Land Bank of Taiwan Co., Ltd. is the co-underwriter
Certified Lawyer		Zhong-Jie Wei
Certified Public Accountant		Jian Dinuan
Reimbursement Method		Bullet repayment at maturity
Outstanding principal amount		NT$1,900,000,000
Redemption and Advanced Redemption Provisions		Not applicable.
Restrictions		None
Credit rating agency, assessment date andresults		Not applicable.
Other rights attached	Amount of Converted (Exchanged or Subscribed) Ordinary shares, Overseas Depository Receipts or Other Negotiable Securities	Not applicable.
	Issuance and Conversion (Exchange or Subscription)Method	Please refer to the prospectus of the 2019-3 Secured Ordinary Corporate Bonds.
Potential impact of issuance, conversion, exchange, subscription, or issuing method and conditions on the dilution of equity and existing shareholders’ rights		Please refer to the prospectus of the 2019-3 Secured Ordinary Corporate Bonds.
Name of the Custodian Institution for Underlying Exchange		Not applicable.

Note: Filled in by overseas bond holders

• 128 -

April 11, 2022

		April 11,2022
Type of Corporate Bonds		2021-1 Secured OrdinaryCorporate Bonds(Code: B85108)
Issuance (handling) date:		November 10, 2021
Denomination		NT$1,000,000
Place of issuance and transaction (Note)		Not applicable.
Issuing price		At face value
Total		NT$2 billion in total
Interest rate		Coupon rate: fixed rate at 0.57% per annum
Period		5-year period, maturity date: November 10, 2026
Guarantee Organization		Taiwan Business Bank Co., Ltd.
Trustee		Land Bank of Taiwan Co., Ltd.
Underwriting institution		BankTaiwan Securities Co.,Ltd.
Certified Lawyer		Zhong-Jie Wei
Certified Public Accountant		Han, Yi-Lian
Reimbursement Method		Bullet repayment at maturity
Outstanding principal amount		NT$2,000,000,000
Redemption and Advanced Redemption Provisions		Not applicable.
Restrictions		None
Credit rating agency, assessment date andresults		Not applicable.
Other rights attached	Amount of Converted (Exchanged or Subscribed) Ordinary shares, Overseas Depository Receipts or Other Negotiable Securities	Not applicable.
	Issuance and Conversion (Exchange or Subscription)Method	Please refer to the prospectus of the 2021 1stSecured Ordinary Corporate Bonds.
Potential impact of issuance, conversion, exchange, subscription, or issuing method and conditions on the dilution of equity and existing shareholders’ rights		Please refer to the prospectus of the 2021 1stSecured Ordinary Corporate Bonds.
Name of the Custodian Institution for Underlying Exchange		Not applicable.

Note: Filled in by overseas bond holders

• 129 -

April 11, 2022

		April 11,2022
Type of Corporate Bonds		2022-1 Secured OrdinaryCorporate Bonds(Code: B85109)
Issuance (handling) date:		Apr. 11, 2022
Denomination		NT$1,000,000
Place of issuance and transaction (Note)		Not applicable.
Issuing price		At face value
Total		NT$2 billion in total
Interest rate		Coupon rate: fixed rate at 0.85% per annum
Period		5-year period, maturity date: Apr. 11, 2027
Guarantee Organization		Mega International Bank Co., Ltd.
Trustee		Land Bank of Taiwan Co., Ltd.
Underwriting institution		Mega Securities Co.,Ltd.
Certified Lawyer		Zhong-Jie Wei
Certified Public Accountant		Han, Yi-Lian
Reimbursement Method		Bullet repayment at maturity
Outstanding principal amount		NT$2,000,000,000
Redemption and Advanced Redemption Provisions		Not applicable.
Restrictions		None
Credit rating agency, assessment date andresults		Not applicable.
Other rights attached	Amount of Converted (Exchanged or Subscribed) Ordinary shares, Overseas Depository Receipts or Other Negotiable Securities	Not applicable.
	Issuance and Conversion (Exchange or Subscription)Method	Please refer to the prospectus of the 2022 1stSecured Ordinary Corporate Bonds.
Potential impact of issuance, conversion, exchange, subscription, or issuing method and conditions on the dilution of equity and existing shareholders’ rights		Please refer to the prospectus of the 2022 1stSecured Ordinary Corporate Bonds.
Name of the Custodian Institution for Underlying Exchange		Not applicable.

Note: Filled in by overseas bond holders

• 130 -

(II) Information on Corporate Bonds Maturing Within 1 Year:

Type of Corporate Bonds	B85104 2017 1stSecured Ordinary Corporate Bonds
Release Date	Aug. 23, 2017
Period	Aug. 23, 2017 to Aug. 23, 2022
Outstanding principal amount	NT$2,000,000,000
Reimbursement Method	Bullet repayment at maturity five years after the day of issuance

• (III) Information on convertible corporate bonds: None.

• (IV) Information on exchanged corporate bonds: None.

• (V) Shelf registration of corporate bonds issuance: None.

• (VI) Information on corporate bonds with share options: None.

• (VII) Private placement of corporate bonds during the three most recent years and up to the publication date of the annual report: None.

• Preferred shares: None.

• Global depository receipts: None.

• 13 Employee share subscription warrants: None.

• New restricted employee shares: None.

• Issuance of new shares in connection with mergers and acquisitions: None.

• 131 -

16. Financial plans and implementation

• (I) Contents of the plans

For the period as of the quarter preceding the date of publication of the annual report, with respect to each uncompleted public issue or private placement of securities, and to such issues and placements that were completed in the most recent 3 years but have not yet fully yielded the planned benefits: None.

(II) Implementation of the plans

1. The Company issued the 2016 first batch of secured ordinary corporate bonds on December 19, 2016, with par value of NT$1.5 billion for the purpose of repaying bank loans, and has already completed the funding and execution. The funds have repaid the bank in full in Q4 2016, with visible effect.

2. The company's first guaranteed ordinary corporate bonds in 2016 were issued on Dec. 19, 2016 and matured after five years - matured on Dec. 19 2021. Based on the letter Zheng-Gui-Zhai No. 11004007202, dated November 2, 2021, issued by the Taipei Exchange, the trading will be terminated from the business day following the expiry date.

3. The Company issued the 2017 first batch of secured ordinary corporate bonds on August 23, 2017, with par value of NT$2 billion for the purpose of repaying bank loans, and has already completed the funding and execution. The funds have repaid the bank in full in Q3 2017, with visible effect.

4. The Company issued the 2019 first batch of secured ordinary corporate bonds on April 2, 2019, with par value of NT$2 billion for the purpose of repaying the 2014 first and second batch of secured ordinary company bonds, and has already completed the funding and execution. The funds have repaid the principal of the 2014 first and second batch of secured ordinary corporate bonds in the Q2 and Q3 2019, respectively.

5. The Company issued the 2019 second batch of secured ordinary corporate bonds on April 2, 2019, with par value of NT$2 billion for the purpose of repaying bank loans, and has already completed the funding and execution. The funds have repaid the bank in full in Q3 2019, with visible effect.

6. The Company issued the 2019 third batch of secured ordinary corporate bonds on December 24, 2019, with par value of NT$1.9 billion for the purpose of repaying bank loans, and has already completed the funding and execution. The funds have repaid the bank in full in Q4 2019, with visible effect.

7. The Company issued the 2021 first batch of secured ordinary corporate bonds on Nov. 10, 2021, with par value of NT$2 billion for the purpose of repaying bank loans, and has already completed the funding and execution. The funds have repaid the bank in full in Q4 2021, with visible effect.

8. 132 -

V. Operational Highlights

1. Business Activities

• (I) Business Activities

• Major lines of business

  • (1) Lease and sale of public housing and commercial buildings commissioned by construction companies.

  • (2) The subsidiary Chin Chun Construction mainly contracts construction projects.

• Major products and the business weight

ajor products and the business weight
2021	Business weight (%)
Construction revenue	92
Engineering revenue	8
Total	100

1. New products or services in planned development

2. (1) Construction business

The Company’s core values are planning capabilities, construction quality and after-sales service, and it actively promotes the brand. Its direction of project development is that of self-construction or joint construction, and it seeks to expand land development areas, accumulate land inventory, and advance into other types of real estate markets. In terms of product planning, the key appeals are the current rigid market needs for self-occupied and first time buyers, with safety, health and environmentally friendly housing demands. The Company is committed to construct sustainable and smart buildings. In terms of after-sales service, the Company continues to monitor the needs of customers and the market, actively handle customer complaints, and improve the trust of home buyers in the Company.

• (2) Construction/engineering business of the subsidiary Jin Jyun Construction

Chin Chun Construction is a comprehensive domestic construction company. Its main business is to contract construction and building projects. It is committed to providing high-quality construction services, upholding the high quality of construction projects, while continuously improving construction technologies and accumulating forward-looking construction management practices, and gradually expanding the business area in the construction industry.

• 133 -

(II) Industry Overview

1. Industry status and overview

• (1) Construction business

In 2021, the national housing market was hot, and the number of transferred buildings in Six major cities was 268,000, a new record high in the past 8 years; and the Ministry of the Interior announced that the number of transferred buildings nationwide in 2021 was 348,194, which also hit a new record high in 8 years, showing that in 2021, the housing market is indeed very hot.

Looking forward to the domestic housing market in 2021, under the support of good economic performance, loose capital and low-interest environment, and the post-epidemic effect of global inflation, the housing market transactions will be hot; There are still many interference factors such as the government's real estate speculation policy and the development of the epidemic. Recently, the central bank adjusted its selective credit control measures for the fourth time, and the government's housing market control policies have been comprehensively upgraded, which will help stabilize the housing market.

• (2) Construction/engineering business of the subsidiary Jin Jyun Construction

• High risk due to price fluctuations

Among the various costs of the construction industry, the rise in raw materials is the most obvious. Taiwan relies on foreign imports for many bulk materials, so prices are greatly affected by the international situation. In recent years, due to the rising awareness of environmental protection, major international steel exporters have reduced production, making supply scarce. In addition, after the epidemic has slowed down, the demand for steel in construction and manufacturing in various countries has increased, driving overall steel prices to rise.

• It is a regional and labor-intensive industry

Since most of the working processes of the construction project are completed by manpower, it is a labor-intensive industry. Workers in the construction industry are physical laborers under a subcontracting system; the turnover rate is high and difficult to control. In addition, it is often necessary to cooperate with local subcontractors and seek support of local workforce, machinery and materials. The regionality will affect the costs.

• Loss and lack of labor in the construction industry

Taiwan's construction industry depends on foreign countries, not only raw materials but also labor. With the recent active development of high-tech industry factories, public construction, and private housing projects, the problem of labor shortage has become very serious.

• 134 -

For lacking of labor in the construction business, and gaps in skilled workers have occurred in Taiwan’s construction industry. To cope with the current serious lack of labor, the Group is committed to researching and developing new technologies. Old construction means and working methods are greatly innovated, and in the future new construction methods will be used to improve construction technologies and construction quality as a whole.

1. Relationship among the industry’s up-, mid-, and downstream

2. (1) Construction Industry

The construction industry combines the two sides of the manufacturing industry (house production) and the service industry (house sales and services), and is closely related to the steel industry, cement industry, sand and gravel industry, glass industry, tile industry, hardware industry, wire and cable Industry, sanitary equipment manufacturing industry and furniture industry. In addition, it activates the advertising, realtors, decoration, utilities and other related industries, which will greatly help to boost the overall economic prosperity and benefits.

There are many upstream and downstream industries involved in the construction industry, and operation processes must rely on the cooperation and support of other industries such as manufacturing and mining. However, there may currently be joint ventures, shareholding, and investment for construction within domestic construction projects, construction companies and construction suppliers, which leads to a close cooperation among the upstream, midstream and downstream of the construction industry.

• (2) Construction/engineering business of the subsidiary Jin Jyun Construction

Its main source is the contracts commissioned by construction companies. The upstream industry includes the ready-mixed concrete industry, steel materials and products industry, cement industry, mechanical and electrical equipment industry, and ceramic tile industry; the downstream industry includes realtors, the furniture industry, home appliance industry, lighting industry and insurance industry, among other things. Therefore, the prosperity of the construction industry has a great impact on the industries of related raw materials, and also affects the development of other related industries.

1. Product development trends and competition

2. (1) Construction business

Looking forward to 2022, although there will be unfavorable factors such as "Government's real estate speculation", "Interest rate hikes", "Lack of jobs and materials" and the "Russian-Ukrainian war". Fortunately, the capital effect and the demand for investment preservation are still there, so private investment has momentum and it will drive the housing market towards stable development.

• 135 -

Real estate and land purchases are based on future trends. Understanding customer needs and finding suitable locations and products are the primary tasks of project promotion. Taiwan’s rapid demographic change, declining birthrate and aging population make the current family structure very different from the past. From the large family in the past to the small family now, low-cost small units have gradually become the new mainstream of the housing market. Furthermore, young people now are keen on high-tech lives, and technology and decoration technology are ever evolving. More and more furniture or home appliances are getting more compact or versatile. A spacious environment may still be enjoyed living in a small house. It is fair to say that small houses are the winning product for both aggressive and conservative buyers.

(2) Construction/engineering business of the subsidiary Jin Jyun Construction

The construction period of projects lasts for several years and single contract amounts are huge. During the construction period, it is easily affected by factors such as the economy, price fluctuations, and inflation. Therefore, the control of construction quality and progress have become one of the keys to profit.

At present, the shortage of work and materials is serious, prices are rising, building materials and wages are rising year by year. Faced with the problem of labor shortages, the Group is committed to research and development on how to transform engineering into technology to improve construction quality and efficiency. Technologies such as VR simulation construction systems, aerial photography machines, and infrared sensors are currently available in modern technology for engineering. The advantages of aluminum system formwork for manpower configuration and friendly environment, the reusable environmental protection concept of aluminum system formwork, the benchmark of standard operating procedures on assembly, the waste caused by aluminum formwork is far less than that of traditional wood formwork, and The dismantled state of the aluminum formwork grouting can also reduce a lot of manpower for subsequent mud decoration. In addition, the architectural design group has introduced the BIM digital system for construction, which can more accurately grasp the interface problems of different types of work in all aspects of construction. The standardization of system templates is one of the Group's strengths, and the Group has been actively developing new technologies to comprehensively improve construction technology and engineering quality.

(III) Overview of technology and research and development: The Company and its subsidiaries have invested considerable human resources and costs over the years, and have continuously introduced new services and systems to meet consumer demands for real estate transactions. However, the Company and its subsidiaries are mainly engage in real estate construction and transactions, so R&D investment is not applicable.

• 136 -

• (IV) Short-term and long-term operation plans

• Short-term operation plans

  • (1) Construction business

    • In 2021, we launched the Shihengbin-Ueno District and the Shihengbin-Hoshino District in Keelung and the National Central City in Taoyuan, which all witnessed excellent performance. In addition, the remaining unsold units of Taichung Dibao in Taichung and the finished projects of Chungyen A+ in Xizhi, New Taipei City, and Shicheng Run Long in Taoyuan also demonstrated outstanding sales results.

    • Promotions of major development projects are as follows:

      • a. Completed projects

Project Title	Location	Product	Sale rate	Units/parking lots to be sold
Chungyen A+	Xizhi District, NewTaipeiCity	Residence	100%	Zero units; zero parkinglots
Bokelai Park	Banqiao, New Taipei	Residence and commercial	97%	Four units; four parking lots
Kuobin Da Yuan	Xindian District, New TaipeiCity	Residence	71%	Seven units; 12 parking lots
State Guest Eaton	Wenshan District, Taipei City	Residence	100%	Zero units; zero parking lots
Kuobin Kuandi	Neihu District, Taipei City	Residence and commercial	96%	4 units; 7 parking lots
Shicheng Run Long	Taoyuan District, TaoyuanCity	Residence and commercial	100%	Zero units; zero parking lots
Kuobin Dayuan	Chubei City, Hsinchu County	Residence and commercial	100%	Zero units; zero parking lots
Taichung Dibao	Xitun District, Taichung City	Residence	71%	13 units; 35 parkinglots
NTC National Trading Center	Xitun District, Taichung City	Commercial	97%	Four units; 64 parking lots
Run Long (Jinai NO2)	Anping District, Tainan City	Residence and commercial	100%	Zero units; zero parking lots
Yuechen	Zuoying District, Kaohsiung City	Residence and commercial	100%	Zero units; zero parking lots
Wenhua Run Long	Lingya District, Kaohsiung City	Residence and commercial	98%	6 units; 5 parking lots

• 137 -

b. Pre-sale projects

Pre-sale projects
Project Title	Location	Product	Current progress ofsales
Shihengbin-Ueno District	Zhongshan, Keelung	Residence	81%
Shihengbin-Hoshino District	Zhongshan, Keelung	Residence and commercial	85%
National Central City	Chungli District, TaoyuanCity	Residence and commercial	73%
Juke Run Long	East District, Hsinchu City	Residence and commercial	99%
Shicheng Aiyue	Xitun District, Taichung City	Residence and commercial	99%
Taichung Chungcheng (VVS1)	Xitun District, Taichung City	Residence and commercial	46%
Shuhoyuan	Sanmin District, Kaohsiung City	Residence and commercial	99%

c. Future projects

Future projects
Project name (provisional)	Location	Product	Schedule of promotion
Keelung De An CEF	Zhongshan, Keelung	Residence and commercial	Under planning
Zhonghe Yuantong	Chungho, New Taipei	Residence	Under planning
Wanfang, Taipei City	Wenshan District, Taipei City	Residence	Under planning
Taoyuan Shanjie	Taoyuan Guishan District	Residence and commercial	Under planning
Tainan Xinnan	Anping District, Tainan City	Residence and commercial	Under planning

• 138 -

   - (2) Construction/engineering business of the subsidiary Jin Jyun Construction
  
      - The business direction of vertical integration (civil engineering/electromechanical and construction/electromechanical).
  
      - Cultivate relevant talents and improve the quality of professional human resources.
  
      - Deepen the application of BIM technology and smart technologies in construction
  
      - management.
  

  1. Long-term operation plans

     • (1) Construction business

       • Long-term business development should strengthen organizational efficiency, reduce unit costs, enhance market competitiveness, apply informatization, urban renewal plans and incentives, and flexibly use land development strategies to reduce land development costs and increase the Company’s profits.

       • Commit to product planning for meeting the diversified needs of buyers, while maintaining a good after-sales service system, so that customers may refer new customers to improve sales performance.

     • (2) Construction/engineering business of the subsidiary Jin Jyun Construction

       • Actively enhance brand (quality) recognition.

       • Improve the breadth and depth of products.

       • Actively research and develop other highly professional construction methods and

       • technologies.

       • Introduce digital technology and innovation.

• Market and Sales Overview

• (1) Market Analysis

  1. Geographic areas where the main products are sold

The Company’s business is the construction and sale of real estate. The subsidiary mainly contracts construction projects from the Group’s development projects. Real estate construction mainly selects areas with convenient transportation, complete living functions and with development potential.

1. Market share, analysis of future supply and demand and market growth

2. 139 -

(1) Construction business

Top 15 in 2021 annual operating revenue of listed building materials construction:

Unit: NT$ thousand

Ranking	CompanyName	Revenue
1	2542 Highwealth	43,864,186
2	5522 FargloryLand Construction	33,138,325
3	3703 Hsinlu Construction	26,843,962
4	2520 Kindom Construction Corp.	25,131,745
5	2504 Goldsun Construction	21,801,699
6	2597 Ruentex Engineering& Construction Co.,Ltd.	21,251,038
7	2515 BES EngineeringInc.	17,196,685
8	2535 Dacin Construction	14,812,323
9	2548 Huaku Development Co.,Ltd.	13,547,257
10	2511 Prince Housing& Development corp.	12,513,691
11	2501 CathyReal Estate Development Co.,Ltd.	12,469,523
12	2546 Kedge Construction Co.,Ltd.	10,772,322
13	1808 Run LongConstruction Co.,Ltd.	10,479,267
14	6177 Da-Li Development Co.,Ltd.	10,078,567
15	2516 New Asia Construction & Development Corp.	8,042,793

Source: Market Observation Post System (MOPS).

The impact of the "Russian-Ukrainian war" on investors' confidence has been reflected in the stock and foreign exchange markets. In a period when large sums of money and investors are fluctuating, real estate does have the advantage of anti-inflation and preservation of value. The economic waves brought about by most of the past events will eventually bring the heatwave of funds back to the real estate market. Under the relatively chaotic economic conditions, real estate is the main investment target of the market. The impact of the "Russian-Ukrainian war" on the domestic real estate market is expected to be "Short-term Negative and Mid/Long-term Stable".

(2) Construction/engineering business of the subsidiary Jin Jyun Construction

At present, Chin Chun Construction mainly undertakes the construction projects of affiliates for development. Chin Chun Construction continues to improve and strengthen its project management system, including talent cultivation, and progess, quality, and contract management and maintenance, to improve the overall management efficiency of the Company to improve external competitiveness.

The Group uses innovative digital technologies to improve productivity, such as using the 3D “Building Information Modeling” (BIM), and unmanned robots to move materials (with automated warehousing and moving systems), to help construction

==> picture [47 x 11] intentionally omitted <==

companies solve labor shortages and improve efficiency.

Russia is the top 5 producer of raw materials such as diamonds, natural gas, oil, platinum, aluminum, gold, nickel and steel. Among them, the most direct impact on construction is steel, and the increase in oil prices will also affect the transportation of imported products. Therefore, it can be expected that the price of steel or imported building materials will fluctuate in the near future. However, it is expected that the impact of the "Russian-Ukrainian war" will gradually slow down under the pressure of powerful countries and the adjustment of various countries.

1. Competitive niches, long-term opportunities, threats, and countermeasures

2. (1) Construction projects

3. a. Competitive niches and long-term opportunities:

   • (a) Rigid demand such as self-occupation and house replacement remains strong.

   • (b) Taiwan's economy has performed well in recent years, the market capital is abundant, and the demand for investment preservation caused by rising prices is still there.

   • (c) Industrial expansion generates demand for commercial real estate, and the effect of large-scale investment in the semiconductor industry also drives the demand for surrounding factories, factory offices, and industrial real estate.

   • (d) In response to the impact of the COVID-19 epidemic in the past two years, mortgage interest rates have remained at historically low levels.

   • (e) The government continues to promote the policy of urban renewal and endangered elderly ordinances and encourages residents to participate in redevelopment.

b. Threats:

• (a) Lack of labor, lack of materials, excessive increase in construction costs and land costs, and because the housing sales policy cannot fully reflect the selling price, the return on investment is not as expected.

• (b) The government will make dynamic policy adjustments at any time in response to changes in the housing market and launch a housing policy, which is easy for investors to withdraw from the real estate market.

• (c) The central bank announced on March 17, 2022 to raise the interest rate by 0.25%, which will affect the mortgage interest rate, and the self-occupant spending with rigid demand for buying a house will be heavier.

• (d) Taipei & New Taipei City precious land is scarce and difficult to obtain, the cost is higher, the integration time is longer, and the development difficulty increases.

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• c. Countermeasures:

• (a) Continue to refine calculation methods for precise control of the return rate of projects, and reasonably and prudently estimate the sales price after the development is completed.

• (b) Continue to monitor development trends of commercial real estate, and invest in commercial or plant development when suitable.

• (c) Increase the number of cases of endangering the elderly and capital, or participate in government-run capital and investment cases, and increase the market share of Taipei & New Taipei City.

• (d) Rolling adjustment of development strategy, active southward layout.

• (2) Construction/engineering business of the subsidiary Jin Jyun Construction

• a. Competitive niches and long-term opportunities

• (a) As customers gradually come to care more about construction quality and technology, it is positive to comprehensive construction companies which specialize in construction engineering technologies with good corporate image and various achievements.

• (b) Cooperate with the Group to develop the 3D building information modeling (BIM) system and unmanned robot material transporting (with automated warehousing and moving systems), to enhance construction value and competitiveness with all-round services.

b. Threats

• (a) The number of Grade-A construction plants in Taiwan continued to increase, and the competition in the construction contracting market was fierce. In addition to the impact of rising raw materials and labor shortages, the profits of construction contractors were still unable to rebound significantly.

• (b) The increase in turnkey projects has provided relatively high competitive advantages for large-scale construction companies with scale and records.

• (c) Young people’s willingness to invest in the construction industry is low. Coupled with the impact of the epidemic, the problem of lack of work is becoming more and more serious.

c. Countermeasures

• (a) Through contracting diversified construction projects, accumulating various construction experience, establishing long-term operating core competitiveness, enhancing the technical capabilities of the more complex old and existing construction methods, and introducing new technical talents, it is possible to achieve technological optimization and the goal of expanding the technical field

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for reducing costs and improving competitiveness.

  - (b) Construction technology is refined, the standard steps and detailed drawings of each construction project are established, and the function and substitution of each material are understood deeply. In the supervision process, it is necessary to be practical and get to the bottom, to ensure that all products are in compliance with customers’ requirements and quality standards.

  - (c) Committed to the research and development of new technologies and automation of construction projects, such as the pre-casting construction method, to complete most of the construction needs in the factory, reducing the manpower requirement on the construction site.

• (II) Main products and manufacturing process

• Major products and their main uses

• (1) Development, construction, lease and sale of public residences and commercial buildings, while centering on the domestic market, to develop and construct community-type high-end residences, villas, buildings and other products.

• (2) Construction/engineering business of the subsidiary Jin Jyun Construction

Undertake residential, commercial and office building construction projects.

1. Production process of products

2. (1) Construction projects: The self-build process of residences is as follows

Land development → product planning → planning and design → marketing preparation → sales operation → construction → property title registration → handover → after-sales service

• (2) Construction/engineering business of the subsidiary Jin Jyun Construction: Contracting for engineering:

Business development → estimate → bidding (bargaining) → tender awarding with contract signing → construction budget → construction plan → material and manpower arrangement → construction management → completion → completion review

• (III) Supply of major source materials

• Construction business

• (1) Land

The Company has the land development department. Besides the development department actively looking for suitable lands, suitable lands may be introduced through land brokers. In addition, the Company also cooperates with landlords in the form of joint construction or participates in urban renewal development based actual needs. The supply of lands is stable.

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(2) Construction projects

The Company selects robust construction companies to cooperate, and controls the construction progress and ensures the quality of construction.

(3) Materials

To reduce cost and for the construction progress, for more flexible utilization and control over outsourcing operations, material procurement takes place through in-house price comparison, combination of construction and material procurement, or joint-outsourcing. Therefore the supply of materials is stable.

1. Construction/engineering business of the subsidiary, Jin Jyun Construction

For the main bulk materials for construction projects such as steel bars, steel sheets, concrete, sand, although there are price fluctuations from time to time, the subsidiary has long-term cooperation with vendors. Therefore, the supply situation is still stable. If the situation in Russia and Ukraine causes global steel prices to rise, the Executive Yuan said, "Sinosteel will reduce exports, give priority to supplying domestic needs, and help stabilize steel prices."

• (IV) Suppliers and clients accounting for 10 percent or more of the Company’s total procurement (sales) amount in either of the two most recent fiscal years, the amounts bought from (sold to) each, the percentage of total procurement (sales) accounted for by each

• Major supplier in the the two most recent fiscal years

Unit: NT$ thousand

	1. Major supplier in the the two	1. Major supplier in the the two	1. Major supplier in the the two	1. Major supplier in the the two	most recent fiscal years	most recent fiscal years	most recent fiscal years	most recent fiscal years	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand
	2020				2021				2022 up to the previous quarter (Note 1)
Item	Title	Amount	As a percentage of net purchases for the year (%)	Relation	Title	Amount	As a percentage of net purchases for the year (%)	Relation	Title	Amount	As a percentage to net purchases as of the previous quarter of the year (%)	Relation
1	ChyiYuh Construction Co.,Ltd.	2,622,584	21%	Parent company of the Company	Individual (Mr. Chen)	2,097,554	21%	None	－	－	－	－
2	Individual (Mr. Sheng)	2,159,028	18%	None	Japanese Company Hua Da Cheng Construction Engineering Co., Ltd. Taiwan Branch.	1,063,244	11%	None	－	－	－	－
	Others	7,432,355	61%	None	Others	6,768,302	68%	None	Others	－	－	－
	Net Purchase	12,213,967	100%		Net Purchase	9,929,100	100%		Net Purchase	－	－	－

Note 1: the 2022 Q1 financial statements have not been reviewed by the CPAs and thus will not be disclosed.

Note 2: Reason for changes: Some projects in construction have changed and the purchase of lands for construction led to changes in the purchase amount and percentage of the major suppliers.

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2. Major customers in the the two most recent fiscal years

Unit: NT$ thousand

									Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand
	2020				2021				2022 up to the previous quarter (Note 1)
Item	Name	Amount	Percentage (%)	Relation	Name	Amount	Percentage (%)	Relation	Name	Amount	As a percentage to net sales as of the previous quarter of the year (%)	Relation
1	Highwealth Construction	2,173,880	28%	Ultimate parent company of the Company	－	－	－	－	－	－	－	－
2	Shing-Yi-Fa Construction Co.,Ltd.	847,810	11%	None	－	－	－	－	－	－	－	－
	Others	4,634,546	61%	None	Others	10,479,267	100%		Others	－	－	－
	Net Sales	7,656,236	100%		Net Sales	10,479,267	100%		Net Sales	－	－	－

Note 1: the 2022 Q1 financial statements have not been reviewed by the CPAs and thus will not be disclosed.

Note 2: Reasons for change: Mainly, no single customer accounted for more than 10% of the company's annual net sales in 2021.

(V) Production volume and value in the two most recent years

Unit: NT$ thousand

				Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand
Year Volume Product	2020			2021
	Capacity	Volume	Value	Capacity	Volume	Value
Houses	－	651戶	3,608,125	－	926戶	5,145,191
Construction	－	－	3,531,021	－	－	773,500
Others	－	－	6,227	－	－	17,218
Total Amount	－	－	7,145,373	－	－	5,935,909

Note 1: The production volume and value of houses are the total units completed in the year and their total costs. Note 2: Others are leasing and spare parts sales costs.

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(VI) Sales volume and value in the two most recent years

Unit: NT$ thousand

(VI) Sales volume	and value in the two most recent years	and value in the two most recent years	and value in the two most recent years	and value in the two most recent years	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Year Volume Product	2020				2021
	Domestic sales		Export		Domestic sales		Export
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
Houses	355 units	3,930,087	−	−	1,243 units	9,638,471	−	−
Construction	−	3,711,639	−	−		825,576	−	−
Others	－	14,510	−	−		15,220	−	−
Total Amount	−	7,656,236	−	−		10,479,267	−	−

Note 1: The sales volume and value of houses are the total sold units and amount recognized as the construction revenue in the year.

Note 2: Others are leasing and spare parts sales revenue.

1. Employee information in the two most recent fiscal years and up to the date of publication of the

annual report

nual report	nual report
Year		2020	2021	Current year up to April 11, 2022
Number of employees	Employees	157	160	162
	Engineers	111	98	104
	Total Amount	268	258	266
Average age		38.81	39	39.31
Average years of service		4.94	5	5.03
Educational background distribution	PhD	0.00	0.00	0.00
	Master’s	5.60	6.20	6.40
	College Graduate	85.45	86.04	84.58
	Senior High School	8.58	6.98	8.27
	Below senior high school	0.37	0.78	0.75

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• Environmental Protection Expenditure

• (I) Any losses suffered by the Company in the most recent fiscal year and up to publication date of the annual report due to environmental pollution incidents (including any compensation paid and any violations of environmental protection laws or regulations found in environmental inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, and the content of the dispositions):

Our main business activities consist of the construction and sales of buildings. We outsource construction with or without materials procurement to contractors, who will be responsible for the processing and disposal of wastes. The Company assumes a supervisorial role, and therefore, did not recognize any losses from environmental pollution penalties during the last year and up to the publishing date.

• (II) An estimate of possible expenses that could be incurred currently and in the future and measures being or to be taken. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided:

• Responding measures expected to be taken: The Company stipulates in its contracts that construction partners shall take whole responsibility for any pollution during construction, and the Company is responsible for monitoring. The Company assumes a supervisorial role. We have the following measures in place to prevent pollution:

• Select the most appropriate construction methods based on the geology and the neighboring areas of the location to minimize noise and vibrations.

• Some works (such as continuous wall construction or concrete grouting) require continuous construction, which may cause construction during the night. In addition to maintaining good relations with neighbors, it is necessary to control the progress of the project and reduce construction during the night.

• Set up protection nets around the site to prevent dust and stones from flying or falling.

• Vehicles accessing the sites are required to clean their tires and body at the car-washing platform before leaving the sites; gates are designated as the security personnel’s responsibility area, to enhance the the supervision of vehicle cleaning when accessing the gates; strengthen water spraying to clean roads.

• Carry out the 5S (sort, set in order, shine, standardize, and sustain) cleanup campaign at the sites to keep the surrounding environment clean.

• Expected environmental expenditure for the next three years: None.

• Impact after the improvement: None.

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5. Labor Relations

• (I) Employee welfare measures, continuing education, training, retirement, and their implementation status; labor agreements and measures to safeguard employees’ interests

• Employee welfare measures

The Company has always emphasized employee benefits and established the Joint Employee Welfare Committee, to regularly hold birthday celebrations, medical and various other activities. All in-service employees may participate. The source of funds is allocated from the Company’s operating revenue, and the Employee Welfare Committee is responsible for management and utilization. The members of the Welfare Committee are elected by employees and are re-elected regularly to promote benefits. Employee welfare measures include labor and health insurance, group insurance, regular health checks, employee uniforms, birthday celebration and gifts, subsidies for weddings, funerals, and childbirth, emergency relief and other subsidies and holiday bonuses.

1. Continuing education training of employees

The Company’s employee training is based on internal management measures, and the management department formulates the training procedures, to conduct the pre-employment and on-the-job training for employees through internal training or by external organizations, so that employees may fully leverage their talents and continue to improve their knowledge and skills, to improve working efficiency.

Continuing education training received by employees of the Company and its subsidiaries in the most recent year (2021):

Training Program	Time of training	Training fee(NT$)	Target
Occupational safety and health business supervisor on-the-job education and training	6 hours	1,200	Sales Service Personnel
Continuing training course for accounting supervisors of issuers, securities firms and stock exchanges	12 hours	8,000	Accounting Officer
Practical operation of internal audit for compliance with laws and regulations	6 hours	3,500	Audit officer
IFRS Adoption Seminar (Selective Package) (Taipei Class)	12 hours	8,000	Accounting staff
Internal audit and internal control personal information law practical operation	6 hours	3,300	Auditors
Corporate intellectual property management and related internal audit workshop	6 hours	3,500	Audit officer
2021 Annual Insider Equity Transaction Legal Compliance Publicity and Briefing Session (online awareness)	3 hours	0	stock staff

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Training Program	Time of training	Training fee(NT$)	Target
How to interpret financial information and analyze financial fraud in audit	6 hours	3,300	Auditors
Seminar of Listed company’s bushiness.	3 hours	0	stock staff
2021 Seminar on Promoting the Adoption of IFRS in Taiwan	3 hours	0	Accounting staff
Pre-employment training	1 Hour	0	newcomers
Basic Construction Engineering Training	6 hours	0	All engineers of sites throughoutTaiwan
Advanced Engineering Professional Training	14 Hours	0	Construction site vice supervisor (and above) personnel throughoutTaiwan
Construction sites cross observation training	8 hours	35,923	Construction site vice supervisor (and above) personnel throughout northern and southern Taiwan
Construction sites cross observation training	16 hours	4,754	Construction site vice supervisor (and above) personnel throughout central Taiwan
Potential Special Training Camp	16 hours	118,734	Construction site vice supervisor (and above) personnel throughout Taiwan

3. Retirement system

The Company accommodates the enforcement of the Labor Pension Act (hereinafter referred to as the “new system”). For employees who choose to use the new system, their service years after adopting the new system, and the service years of employees who are employed after the implementation of the new system, the definite contribution system will be applied. The payment of the pension is made by the Company on a monthly basis at a minimum of 6% of the monthly salary and deposited in their individual labor pension account.

The Company’s pension expenses under the definite contribution of pension schemes in 2021 and 2020 were NT$8,780 thousand and NT$9,816 thousand, respectively.

4. Other important agreements

The Company has always been people-oriented, abiding by relevant labor laws and regulations, protecting the legitimate rights and interests of employees, establishing a complete management system for employee welfare, work safety and health, education and training, etc., and issuing performance bonuses, year-end bonuses and employee

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remuneration based on operating results each year, so the personal interests of employees and the interests of the company are combined to create a belief in co-prosperity and coexistence.

• (II) List any losses suffered by the Company in the two most recent fiscal years and up to the annual report publication date due to labor disputes (including any violations of the Labor Standards Act found in labor inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, the substance of the legal violations, and the content of the dispositions), and disclose an estimate of possible expenses that could be incurred currently and in the future and measures being or to be taken. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided: None.

• Information Communication Security Management

• (I) State the information security risk management structure, the information security policy, the specific management plan, and the resources invested in the security management of the information communication, etc.:

  1. Information security risk management framework:

According to the assessment of the company's responsible unit, although the information security risk is not a major operational risk item of the company, considering that the network environment is becoming more and more complex, the related risks may increase year by year. The Company's IT personnel are under the Administration dept and are responsible for the implementation of information security management units, carrying out specific management plans such as information security prevention and crisis handling, implementing corresponding security control measures, and continuing to improve internal abnormality detection and protection methods to reduce corporate information security risks. The Company reports the “Information Security Risk Management Situation” to the Board of Directors at least once a year.

1. Information Security Policy:

2. To ensure the correct, complete and available continuous operation of each information system

3. Prevent hackers, various viruses from invading and destroying

4. Prevention of improper and unlawful use with human intent

5. Prevent sensitive data from leaking

6. Avoid human error

7. Maintain physical environment security

8. Specific management plan:

The company considers that the information security insurance is still a new kind of insurance, and there is currently no information security insurance suitable for the company. Therefore, at this stage, the company's existing information security management procedures are used to implement information security risk management. The relevant

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specific implementation measures are as follows:

• (1) Network Security Management

• Configure an enterprise-level firewall to block illegal intrusions by hackers.

• Use Hi-Link VPN enterprise dedicated line with the North, Central and South branches, and use the data encryption method to avoid illegal capture during data transmission.

• Configure an online behavior management system to control network access, block access to harmful or policy-forbidden URLs and content, strengthen network security and prevent bandwidth from being improperly occupied.

• (2) System Access Control:

• The use of various application systems in the company must go through the information service request application process. After approval by the authority and responsibility supervisor, an account will be created in the IT section, and each system administrator can activate the permissions according to the functions applied for before it can be used.

• The password setting of the account must meet the specified strength, and must be mixed with alphanumeric characters to be accepted.

• When colleagues go through the resignation procedures, they need to contact the information personnel of the management department to delete the accounts and permissions of each system.

• (3) Implement information security training:

• Information security courses are added to the education and training of new recruits.

• On-the-job training for colleagues, special training sessions are held every quarter for colleagues who violate information security regulations.

• (4) Virus protection and management:

• Endpoint protection software is installed on the server and colleagues' computer equipment, and the virus pattern is automatically updated to ensure that the latest viruses can be blocked.

• The email server is equipped with an advertisement spam filtering mechanism to prevent viruses or spam from entering the user's PC.

• (5) Ensure system availability:

• Build a backup management system, and regularly keep one of the daily backup data in the computer room, and the other in a different place (the Taichung branch computer room) for mutual backup.

• Disaster recovery drills are carried out on a regular basis, and after the restoration reference point is selected, the backup file is restored to the system host.

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• (6) Security management of computer equipment:

  • The company's computer host, various application servers, etc. are all set up in a dedicated computer room. The computer room is locked at any time to strictly control the entry and exit of personnel, and records are kept for inspection.

  • There are independent air conditioners and uninterruptible power supply systems in the information room to keep the computer equipment running at a suitable temperature, and the operation of the computer application system will not be interrupted when the power is cut off.

  • To build a device management system, only mobile devices and USB devices certified by the company can be connected to the company's intranet and access data.

• Resources invested in information security management: "Information Security Measures Implementation Results" in 2021 are as follows:

• (1) Internal Audit Office

From Feb, 2021, the audit unit inspected system development and program revision control, and the control of information security management operations; no abnormal or deficient items were found.

• (2) For employees who violate information security regulations

• Colleagues in the company who modified the shared files in the data exchange area or arbitrarily for convenience deleted files by mistake.

• The information personnel immediately restore the file and set the file modification permission when they find it.

• In order to implement the information communication security incident notification and related contingency handling, the head of the management department reported the above incident in the supervisory meeting, and asked the heads of each department, Buda, and employees not to modify, change or reproduce the files of the shared documents without authorization.

• (3) Mail threat statistics

Currently, the Company has installed a spam control mechanism to filter and intercept malicious or advertisement mail.

• (4) Anti-virus interception

Anti-virus software is installed on the Company’s computers to prevent viruses from getting into computers and spreading.

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(5) Information security incidents in the year

Time	Information security incident	Treatment
2021/01	E-mail attachment file size limitation and blocking	The attachment is adjusted from 30MB to 10MB, and the letter with zip attachment is blocked
2021/03	Updated the Microsoft operating system	From March 1, 2021, to December 31, 2021, the version has been updated to Windows 10 Ver.20H2.
2021/07	Updated the version of the anti-virus software	Updated the version to 8.1.20377

(II) List the losses, possible impacts, and countermeasures of major information security incidents in the most recent year and up to the date of publication of the annual report. If it is impossible to estimate reasonably, the facts that cannot be reasonably estimated shall be stated:

As of the year 2021 and the date of publication of the annual report, the Company has not suffered any losses due to major information security incidents.

7. Important Contracts

Apr. 11, 2022

mportant Contracts				Apr. 11,2022
Type	Counterparty	Start and end date of contract	Content	Restrictive Provisions
Construction contract	DACIN Construction	Contract Date Dec. 19, 2012 ~ Warrantyexpires	Construction project contract (Kuobin Kuandi)	None
	Chyiyuh Construction	Contract Date Aug. 31, 2015 ~ Warrantyexpires	Construction project contract (Chungyen A+)	None
	Guoyuan Construction Co., Ltd.	Contract Data Jun. 1, 2018 ~ Warrantyexpires	Construction project contract (Bokelai Park)	None
	Chyiyuh Construction	Contract Date Jun. 7, 2018 ~ Warrantyexpires	Construction project contract (Yuechen)	None
	Chyiyuh Construction	Contract Date Jun. 12, 2018 ~ Warrantyexpires	Construction project contract (ShichengRun Long)	None
	Chyiyuh Construction	Contract Date Dec. 21, 2018 ~ Warranty expires	Construction project contract (Wenhua Run Long)	None
	Taisei Corporation	Contract Date Feb. 21, 2019 ~ Warrantyexpires	Construction project contract (De An A)	None
	Taisei Corporation	Contract Date Feb. 21, 2019 ~ Warrantyexpires	Construction project contract (De An B)	None
	Taisei Corporation	Contract Date Feb. 21, 2019 ~ Warrantyexpires	Construction project contract (De An C)	None

• 153 -

Type	Counterparty	Start and end date of contract	Content	Restrictive Provisions
Construction contract	Chyiyuh Construction	Contract Date Apr. 15, 2019 ~ Warrantyexpires	Construction project contract (De An A)	None
	Chyiyuh Construction	Contract Date Aug. 23, 2019 ~ Warrantyexpires	Construction project contract (Juke Run Long)	None
	Taisei Corporation	Contract Date Apr. 26, 2021 ~ Warrantyexpires	Construction project contract (Taipei Wanfang)	None
	Hua, Da-Cheng	Contract Date Jan. 20, 2015 ~ Warrantyexpires	Construction project contract (Ocean Metropolitan Core)	None
	Highwealth	Contract Date Sep. 25, 2017 ~ Warrantyexpires	Construction project contract (Jiancui 176)	None
	Highwealth	Contract Date Sep. 21, 2017 ~ Warrantyexpires	Construction project contract (Guangwu 1022)	None
	Highwealth	Contract Date Nov. 23, 2017 ~ Warrantyexpires	Construction project contract (Yongcui 38)	None
	Highwealth	Contract Date Nov. 13, 2017 ~ Warrantyexpires	Construction project contract (Yongcui 103)	None
	Highwealth Sunglory Institution	Contract Date Apr. 10, 2018 ~ Warrantyexpires	Construction project contract (Xindu section)	None
	Wells	Contract Date Jan. 22, 2020 ~ Warrantyexpires	Construction project contract (Huimin 3)	None
Joint construction contract	Chuangding Construction Co., Ltd.	Contract Date Dec. 3, 2015 ~ Joint construction and house handover completed	Yuanton Section, Chungho District, New Taipei City	None
	Mr. Chang and two other people Kao Yun Investment	Contract Date Nov. 28, 2017 ~ Joint construction and house handover completed	Guangwu, Hsinchu (Juke Run Long)	None
	Highwealth Construction	Contract Date Aug. 13, 2019 ~ Joint construction and house handover completed	Huian Section, Xitun District, Taichung City (ShichengAiyue)	None
Joint investment	Huan Ding Development Hai Ju Construction	Contract signing date: April 19, 2013 to the completion and conclusion of theproject	Dean Section, Chungshan District, Keelung City.	None

Note 1: Only includes construction contracts with value above NT$ 300 million (before taxes). Note 2: Only includes joint construction contracts with a deposit(check) of at least NT$ 30 million.

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VI. Financial Profile

• I. Condensed balance sheet, comprehensive income statement and audit opinion of CPAs in the five most recent years

• (I)Condensed Balance Sheet and Comprehensive Income Statement

  1. Condensed Balance Sheet - consolidated financial statements

Unit: NT$ thousand

Year Item	Year Item	Financial analysis in the five most recent years (Note 1)	Financial analysis in the five most recent years (Note 1)	Financial analysis in the five most recent years (Note 1)	Financial analysis in the five most recent years (Note 1)	Financial analysis in the five most recent years (Note 1)	Financial analysis as of March 31, 2022 (Note 3)
		2017(After re-compilatio n) (Note 2)	2018(Note 2)	2019	2020	2021
Current assets		23,622,120	19,416,911	24,473,681	32,877,608	35,529,894	－
Property, plant and equipment		2,004,388	1,970,122	1,601,532	243,860	237,243	－
Intangible assets		8,558	8,738	10,046	15,051	14,380	－
Other assets		782,739	1,008,909	3,034,120	3,661,471	3,543,494	－
Total assets		26,417,805	22,404,680	29,119,379	36,797,990	39,325,011	－
Current liabilities	Before distribution	14,615,068	10,110,691	12,901,157	23,527,423	24,367,806	－
	After distribution (Note 4)	15,480,068	12,577,335	13,517,818	23,601,423	25,152,199	－
Non-current liabilities		6,632,367	4,983,713	10,703,294	8,199,631	8,282,194	－
Non-current liabilities	Before distribution	21,247,435	15,094,404	23,604,451	31,727,054	32,650,000	－
	After distribution (Note 4)	22,112,435	17,561,048	24,221,112	31,801,054	33,434,393	－
Interests attributable to parent company owner		4,651,753	7,310,276	5,514,928	5,070,936	6,675,011	－
Share Capital		2,434,044	3,083,305	3,083,305	3,699,966	3,921,966	－
Capital surplus	Before distributio n	1,008,904	1,272,626	779,297	168,389	21,376	－
	After distributio n (Note 4)	666,904	779,297	162,636	20,389	21,376	－
Retained earnings	Before distribution	1,155,551	2,868,826	1,551,272	1,052,113	2,575,943	－
	After distribution (Note 4)	632,551	895,511	934,611	904,113	1,203,255	－
Other interests		53,254	85,519	101,054	150,468	155,726	－
Treasurystock		0	0	0	0	0	－
Previous equity under joint control		518,617	0	0	0	0	－
Non controlling interests		Not applicable.	Not applicable.	Not applicable.	Not applicable.	Not applicable.	－
Total equity	Before distribution	5,170,370	7,310,276	5,514,928	5,070,936	6,675,011	－
	After distribution (Note 4)	4,305,370	4,843,632	4,898,267	4,996,936	5,890,618	－

• 155 -

• Note 1: The information above was certified by accountants.

• Note 2: On September 7, 2018, the Board of Directors resolved to acquire the stake of Chin Chun Construction Co., Ltd. from the ultimate parent company, Highwealth Construction. The transaction was deemed a internal restructure in a group, and pursuant to Letter (101) Ji-Mi-Zhi No. 301 issued by Accounting Research and Development Foundation, it shall be deemed as merged from the beginning. Therefore, when the Company prepared the 2018 Consolidated Statements, the 2017 Consolidated Statements were re-prepared retrospectively.

• Note 3: the 2022 Q1 financial statements have not been reviewed by the CPAs and thus not to be disclosed.

• Note 4: The figures after distribution for 2021 were presented based on the proposal of the Board of Directors in the meeting on March 14, 2022; ratification by the 2022 general shareholder meeting is required.

• 156 -

2. Condensed Balance Sheet - parent company-only financial statements

Unit: NT$ thousand

		Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand
Year Item		Financial analysis in the five most recent years (Note 1)
		2017(After re-compilation) (Note 2)	2018 (Note 2)	2019	2020	2021
Current assets		22,823,490	18,190,039	22,843,851	31,299,034	33,467,156
Property, plant and equipment		2,003,853	1,969,727	1,599,259	240,696	234,619
Intangible assets		2,134	2,250	2,878	2,129	1,471
Other assets		1,301,356	1,551,479	3,629,017	4,218,903	4,036,756
Total assets		26,130,833	21,713,495	28,075,005	35,760,762	37,740,002
Current liabilities	Before distribution	14,328,096	9,419,506	11,856,783	22,490,195	22,782,797
	After distribution (Note3)	15,193,096	11,886,150	12,473,444	22,564,195	23,567,190
Non-current liabilities		6,632,367	4,983,713	10,703,294	8,199,631	8,282,194
Non-current liabilities	Before distribution	20,960,463	14,403,219	22,560,077	30,689,826	31,064,991
	After distribution (Note3)	21,825,463	16,869,863	23,176,738	30,763,826	30,280,598
Interests attributable to parent companyowner		Not applicable.	Not applicable.	Not applicable.	Not applicable.	Not applicable.
Share Capital		2,434,044	3,083,305	3,083,305	3,699,966	3,921,966
Capital surplus	Before distribution	1,008,904	1,272,626	779,297	168,389	21,376
	After distribution (Note3)	666,904	779,297	162,636	20,389	21,376
Retained earnings	Before distribution	1,155,551	2,868,826	1,551,272	1,052,113	2,575,943
	After distribution (Note3)	632,551	895,511	934,611	904,113	1,203,255
Other interests		53,254	85,519	101,054	150,468	155,726
Treasurystock		0	0	0	0	0
Previous equity under joint control		518,617	0	0	0	0
Non controllinginterests		Not applicable.	Not applicable.	Not applicable.	Not applicable.	Not applicable.
Total equity	Before distribution	5,170,370	7,310,276	5,514,928	5,070,936	6,675,011
	After distribution (Note3)	4,305,370	4,843,632	4,898,267	4,996,936	5,890,618

• 157 -

• Note 1: The information above was certified by accountants.

• Note 2: On September 7, 2018, the Board of Directors resolved to acquire the stake of Chin Chun Construction Co., Ltd. from the ultimate parent company, Highwealth Construction. The transaction was deemed a internal restructure in a group, and pursuant to Letter Ji-Mi-Zhi No. 301 issued by Accounting Research and Development Foundation, it shall be deemed as merged from the beginning. Therefore, when the Company prepared the 2018 Parent Company-Only Statements, the 2017 Parent Company-Only Statements were re-prepared retrospectively.

• Note 3: The figures after distribution for 2021 were presented based on the proposal of the Board of Directors in the meeting on March 14, 2022; ratification by the 2022 general shareholder meeting is required.

• 158 -

3. Condensed statement of comprehensive income - consolidated financial statements

Unit: NT$ thousand

	Financial analysis in the five most recent years (Note 1)
Year						Financial analysis as
	2017 (After					of March 31, 2022
		2018
Item	re-compilation)		2019	2020	2021	(Note 3)
		(Note 2)
	(Note 2)
Operatingrevenue	4,708,124	13,845,007	4,198,656	7,656,236	10,479,267	－
Grossprofit from operations	1,004,988	3,508,079	517,128	1,016,928	2,738,473	－
Operatingincome	589,216	2,641,655	(77,329)	404,454	2,090,047	－
Non-operating income and						－
	32,301	(115,760)	819,073	(194,424)	(29,846)
expenses
Income from continuing						－
	621,517	2,525,895	741,744	210,030	2,060,201
operations before income tax
Net income of continuing
	577,583	2,186,147	655,920	117,248	1,671,830	－
business units
Income of suspended business						－
	0	0	0	0	0
unit
Net income	577,583	2,186,147	655,920	117,248	1,671,830	－
Other comprehensive profits
	(37,045)	32,265	15,535	49,668	5,258	－
and losses(Net value after tax)
Total comprehensive income	540,538	2,218,412	671,455	166,916	1,677,088	－
Net income attributable to
	575,851	2,186,464	655,920	117,248	1,671,830	－
stockholders of theparent
Net profit attributable to the
previous equity’s net profit	1,732	(317)	0	0	0	－
underjoint control
Net income attributable to
	Not applicable.	Not applicable.	Not applicable.	Not applicable.	Not applicable.	－
non-controllinginterests
Total comprehensive income
attributable to stockholders of	538,806	2,218,729	671,455	166,916	1,677,088	－
theparent
Total comprehensive income
attributable to the previous
	1,732	(317)	0	0	0	－
equity’s net profit under joint
control
Total comprehensive income
attributable to non-controlling	Not applicable.	Not applicable.	Not applicable.	Not applicable.	Not applicable.	－
interests
Earningsper share(NT$)	2.38	8.11	1.77	0.30	4.26	－

Note 1: The information above was certified by accountants.

Note 2: On September 7, 2018, the Board of Directors resolved to acquire the stake of Chin Chun Construction Co., Ltd. from the ultimate parent company, Highwealth Construction. The transaction was deemed a internal restructure in a group, and pursuant to Letter (101) Ji-Mi-Zhi No. 301 issued by Accounting Research and Development Foundation, it shall be deemed as merged from the beginning. Therefore, when the Company prepared the 2018 Consolidated Statements, the 2017 Consolidated Statements were re-prepared retrospectively.

Note 3: the 2022 Q1 financial statements have not been reviewed by the CPAs and thus not to be disclosed.

• 159 -

4. Condensed statements of comprehensive income - parent company-only financial statements

Unit: NT$ thousand

	Financial analysis in the five most recent years (Note 1)
Year
	2017 (After
Item	re-compilation)	2018	2019	2020	2021
		N 2
	(Note 2)	(ote )
Operatingrevenue	4,378,108	12,576,070	1,684,425	3,944,597	9,653,691
Gross profit from
	993,857	3,443,422	384,494	835,974	2,641,258
operations
Operatingincome	585,126	2,610,382	(139,747)	308,835	2,073,849
Non-operating income and
	33,129	(94,846)	863,333	(134,164)	(33,749)
expenses
Income from continuing
operations before income	618,255	2,515,536	723,586	174,671	2,040,100
tax
Net income of continuing
	577,583	2,186,147	655,920	117,248	1,671,830
business units
Income of suspended
	0	0	0	0	0
business unit
Net income	577,583	2,186,147	655,920	117,248	1,671,830
Other comprehensive
profits and losses (Net value	(37,045)	32,265	15,535	49,668	5,258
after tax)
Total comprehensive
	540,538	2,218,412	671,455	166,916	1,677,088
income
Net income attributable to
	575,851	2,186,464	655,920	117,248	1,671,830
stockholders of theparent
Net profit attributable to the
previous equity’s net profit	1,732	(317)	0	0	0
underjoint control
Net income attributable to
	Not applicable.	Not applicable.	Not applicable.	Not applicable.	Not applicable.
non-controllinginterests
Total comprehensive
income attributable to	538,806	2,218,729	671,455	166,916	1,677,088
stockholders of theparent
Total comprehensive
income attributable to the
	1,732	(317)	0	0	0
previous equity’s net profit
underjoint control
Total comprehensive
income attributable to	Not applicable.	Not applicable.	Not applicable.	Not applicable.	Not applicable.
non-controllinginterests
Earningsper share(NT$)	2.38	8.11	1.77	0.30	4.26

Note 1: The information above was certified by accountants.

Note 2: On September 7, 2018, the Board of Directors resolved to acquire the stake of Chin Chun Construction Co., Ltd. from the ultimate parent company, Highwealth Construction. The transaction was deemed a internal restructure in a group, and pursuant to Letter Ji-Mi-Zhi No. 301 issued by Accounting Research and Development Foundation, it shall be deemed as merged from the beginning. Therefore, when the Company prepared the 2018 Parent Company-Only Statements, the 2017 Parent Company-Only Statements were re-prepared retrospectively.

• 160 -

(II) Auditing CPAs and audit opinions in the past five years

Year	Name of the firm	CPA name	Opinion
2021	KPMG Taiwan	Han Yi-Lien and Chien Ti-Nuan	Unqualified opinion
2020	KPMG Taiwan	Han Yi-Lien and Chien Ti-Nuan	Unqualified opinion
2019	KPMG Taiwan	Chien Ti-Nuan and TsengGou-yang	Unqualified opinion
2018 (Note)	KPMG Taiwan	Chien Ti-Nuan and Tseng Gou-yang	Paragraph with unqualified opinion and emphasis and paragraph with other matters
2017	KPMG Taiwan	Chien Ti-Nuan and Tseng Gou-yang	Unqualified opinion

Note: From 2018 to 2021, these are consolidated financial statements.

• 161 -

2. Financial Analysis in the Past Five Years

(I) Financial analysis - consolidated financial statements

		Financial analysis in the five most recent years (Note	Financial analysis in the five most recent years (Note	Financial analysis in the five most recent years (Note	Financial analysis in the five most recent years (Note	Financial analysis in the five most recent years (Note
		1)					Current year as of
Year
							Mar. 31, 2022
Item		2017 (After
			2018	2019	2020	2021	(Note 3)
		re-compilation
		) (Note 2)	(Note 2)
Financial	Debt to asset ratio	80.42	67.37	81.06	86.21	83.02	－
structure	L t itl t t
(%)	ong erm capa o propery, plant and equipmentratio	588.84	624.02	1,012.66	5,441.87	6,304.59	－
	Current ratio (%)	161.62	192.04	189.70	139.74	145.80	－
Solvency	Quick ratio (%)	40.09	61.5	42.46	33.17	32.88	－
	Interest coverage ratio (times)	3.11	9.76	3.19	1.48	5.59	－
	Receivable turnover rate (times)	5.35	14.51	6.80	11.91	19.91	－
	Average cash recovery day	68.22	25.15	53.67	30.64	18.33	－
	Inventory turnover rate (times)	0.25	0.68	0.22	0.30	0.29	－
Management	Payable turnover rate (times)	3.25	8.86	2.65	3.47	3.31	－
capacity
	Days sales outstanding	1,460	536.76	1,659.09	1,216.66	1,258.62	－
	Property, plant and equipment
		2.33	6.96	2.35	8.29	43.56	－
	turnover rate (times)
	Total asset turnover rate (times)	0.2	0.56	0.16	0.23	0.27	－
	Return on Assets (%)	3.57	9.89	3.59	1.40	5.33	－
	Return on Equity (%)	10.99	35.03	10.22	2.21	28.46	－
	Pre-tax net profit to paid-in capital
Profitability		25.53	81.92	24.05	5.67	52.52	－
	ratio (%)
	Net profit margin (%)	12.26	15.79	15.62	1.53	15.95	－
	Earnings per share(NT$)	2.38	8.11	1.77	0.30	4.26	－
	Cash flow ratio (%)	(Note 4)	69.4	(Note 4)	(Note 4)	(Note 4)	－
Cash
	Cash flow adequacy ratio (%)	(Note 4)	65.54	(Note 4)	(Note 4)	(Note 4)	－
Flow
	Cash reinvestment ratio (%)	(Note 4)	52.15	(Note 4)	(Note 4)	(Note 4)	－
	Operating leverage	1.86	1.10	(2.12)	1.67	1.15	－
Leverage
	Financial leverage	1.41	1.08	0.31	1.56	1.06	－

• 162 -

Please explain the reasons of the financial ratio changes in the past two years. (Analysis may be omitted if the changes did not reach 20%) 1. Interest coverage ratio increased by 278%: Because the 2021 net income before tax increased, the interest coverage ratio increased 2. Receivable turnover rate increased by 67%: Because the construction revenue increased in 2021, the receivable turnover rate increased. 3. Average cash recovery day decreased by 40%: Because the receivable turnover rate increased in 2021, the average cash recovery day decreased. 4. Property, plant and equipment turnover rate increased by 425%: due to the increase in operating income in 2021 and the decrease in average net property, plant and equipment due to the reclassification to non-current assets for sale in 2020, the property, plant and equipment turnover rate increased. 5. Return on assets increased by 281%: Because the 2021 net profit after tax increased, the return on assets increased. 6. Return on equity increased by 1,188%: Because the 2021 net profit after tax increased, the return on equity increased. 7. The ratio of net profit before tax to paid-in capital increased by 826%: due to the increase in net profit before tax in 2021, the ratio of net profit before tax to paid-in capital increased. 8. Net profit rate increased by 942%: Because the 2021 net profit after tax increased, the net profit rate increased. 9. Earnings per share (EPS) increased by 1,320%: Because the 2021 net profit after tax increased, the EPS increased. 10. Operating leverage decreased by 31%: due to the increase in construction revenue in 2021 and the decrease in the proportion of fixed costs, the operating leverage decreased. 11. Financial leverage decreased by 32%: Because the 2021 operating profit increased, the financial leverage decreased. Note 1: The information above was certified by accountants. Note 2: On September 7, 2018, the Board of Directors resolved to acquire the stake of Chin Chun Construction Co., Ltd. from the ultimate parent company, Highwealth Construction. The transaction was deemed a internal restructure in a group, and pursuant to Letter (101) Ji-Mi-Zhi No. 301 issued by Accounting Research and Development Foundation, it shall be deemed as merged from the beginning. Therefore, when the Company prepared the 2018 Consolidated Statements, the 2017 Consolidated Statements were re-prepared retrospectively. Note 3: the 2022 Q1 financial statements have not been reviewed by the CPAs and thus not to be disclosed. Note 4: The ratio in the cash flows is not calculated when the net cash flows from the operating activities are negative. Note 5: Formulae for financial analysis calculation are as follows:

• 1.Financial structure

• (1)Debt to asset ratio =total liabilities / total assets

• (2) Long term capital to property, plant and equipment ratio = (total equity + non-current liabilities) / net property, plant and equipment.

• 2.Solvency

• (1)Current ratio = current assets / current liabilities

• (2) Quick ratio = (current assets - inventory - prepaid expenses) / current liabilities

• (3)Interest coverage ratio = net profit before income tax and interest expense / interest expense in the current period

• 3.Operating capacity

• (1) Receivable (including accounts receivable and notes receivable due to business) turnover rate = net sales / average receivables for each period (including accounts receivable and notes receivable due to business)

• (2)Average cash recovery date = 365 / receivables turnover rate

• (3)Inventory turnover rate = sales cost / average inventory

• (4)Payable (including accounts payable and notes payable due to business) turnover rate = cost of sales / average balance payable on each period (including accounts payable and notes payable due to business)

• (5)Days sales outstanding = 365 / inventory turnover rate

• 163 -

(6)Property, plant and equipment turnover rate = net sales/net average property, plant and equipment value

• (7)Total asset turnover rate = net sales / average total assets

• 4.Profitability

• (1) Return on assets = [after tax profit and loss + interest expense × (1 - tax rate)] / average total assets

• (2) Return on equity = after tax profit and loss / average equity

• (3) Net profit rate = after tax profit and loss / net sales

• (4) Earnings per share = (profit or loss attributable to parent company owner - special dividend) / weighted average number of issued shares (Note 7)

• 5.Cash flow

• (1) Cash flow ratio = net cash flow from operating activities / current liabilities.

• (2) Cash flow adequacy ratio = net cash flow from operating activities in the last five years / (capital expenditure + inventory increase + cash dividend) in the last five years

• (3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividends) / (gross property, plant and equipment + long term investment + other non-current assets + working capital) (Note 8)

• 6.Leverage

• (1) Operating leverage = (net operating income - changing operating costs and expenses) / operating profit (Note 9)

• (2) Financial leverage = operating profit / (operating profit - interest expense)

• Note 6: The above calculation formula for earnings per share should pay careful attention to the following points:

• 1.Based on weighted average number of ordinary shares, but not the number of shares issued as of the end of the year.

• Every capital increase or treasury stock transaction should consider calculating the weighted average number of shares during the circulation period.

• The capital injection from the surplus or the capital reserve to increase its capital should retroactive adjustment calculate its earnings per share in the past year or the past six months in proportion of capital increase; no need to consider the period of capital increase.

• 4.If the preferred shares are non-convertible cumulative preferred stock, the dividends of the year, whether they’re issued or not, should be deducted from the net profit after tax, or be added to the net loss after tax. If the preferred shares are non-cumulative and have net profit after tax, the dividends should be deducted from the net profit after tax; no need for adjustment if they have loss.

• Note 7: When calculating the cash flow analysis careful attention should be paid to the following items:

• 1.Net cash flow from operating activities means the net income in the net cash flow table.

• 2.Capital expenditure means investment spending per year.

• Inventory would only be counted when the closing balance of prepaid rent is bigger than the beginning one. If the inventory in the end of the year has decreased, it should be shown as zero.

• Cash dividend includes common stock and preferred shares.

• Gross property, plant and equipment is the total amount of net of property, plant and equipment accumulated depreciation

• Note 8: Issuers should differentiate every fixed and variable operating cost and operating expense by their natures. If estimation or subjective judgement is involved, be aware of its rationality and consistency.

• Note 9: The Company’s shares without par value or a par value other than NT$10 are calculated based on interests ratio attributable to the owner of the parent company in the balance sheet, instead of pre-tax net profit to paid-in capital ratio.

• 164 -

(II) Financial analysis - parent company-only financial statements

		Financial analysis in the five most recent years (Note 1)	Financial analysis in the five most recent years (Note 1)	Financial analysis in the five most recent years (Note 1)	Financial analysis in the five most recent years (Note 1)	Financial analysis in the five most recent years (Note 1)
Year		2017 (After
Item		re-compilation)	2018	2019	2020	2021
		(Note 2)	(Note 2)
Financial	Debt to asset ratio	80.21	66.33	80.35	85.81	82.31
structure	Lon term caital to roert lant and
(%)	g p ppy, p equipmentratio	589	624.14	1,014.1	5,513.41	6,375.10
	Current ratio (%)	159.29	193.11	192.66	139.16	146.89
Solvency	Quick ratio (%)	35.62	53.14	32.87	29.01	28.47
	Interest coverage ratio (times)	3.1	9.76	3.14	1.40	5.55
	Receivable turnover rate (times)	5.14	15.36	10.75	24.22	33.82
	Average cash recovery day	71.01	23.76	33.95	15.07	10.79
	Inventory turnover rate (times)	0.22	0.6	0.08	0.14	0.27
Management	Payable turnover rate (times)	3.3	10.91	1.81	2.92	5.63
capacity
	Days sales outstanding	1,659.09	608.33	4,562.5	2,607.14	1,351.85
	Property, plant and equipment turnover
		2.17	6.32	0.94	4.28	40.62
	rate (times)
	Total asset turnover rate (times)	0.19	0.52	0.06	0.12	0.26
	Return on Assets (%)	3.65	10.09	3.72	1.44	5.52
	Return on Equity (%)	10.99	35.03	10.22	2.21	28.46
	Pre-tax net profit to paid-in capital ratio
Profitability		25.40	81.58	23.46	4.72	52.01
	(%)
	Net profit margin (%)	13.19	17.38	38.94	2.97	17.31
	Earnings per share(NT$)	2.38	8.11	1.77	0.30	4.26
	Cash flow ratio (%)	(Note3)	69.42	(Note3)	(Note3)	0.45
Cash
	Cash flow adequacy ratio (%)	(Note3)	61.85	(Note3)	(Note3)	28.45
Flow
	Cash reinvestment ratio (%)	(Note3)	48.07	(Note3)	(Note3)	0.25
	Operating leverage	1.31	1.09	(0.22)	1.60	1.11
Leverage
	Financial leverage	1.41	1.09	0.45	1.89	1.06

• 165 -

Please explain the reasons of the financial ratio changes in the past two years. (Analysis may be omitted if the changes did not reach 20%) 1. Interest coverage ratio increased by 296%: Because the 2021 net income before tax increased, the interest coverage ratio increased in double. 2. Receivable turnover rate increased by 40%: Because the construction revenue increased in 2021, the receivable turnover rate increased. 3. Average cash recovery day decreased by 28%: Because the receivable turnover rate increased in 2021, the average cash recovery day decreased. 4. Inventory turnover rate increased by 93%: Because the operational costs of goods increased in 2021, the inventory turnover rate increased. 5. Payable turnover rate increased by 93%: Because the operational costs of goods increased in 2021, the payable turnover rate increased. 6. Sales outstanding days decreased by 48%: Because the inventory turnover rate increased in 2021, the sales outstanding days decreased. 7. Property, plant and equipment turnover rate increased by 849%: due to the increase in operating income in 2021 and the decrease in average net property, plant and equipment due to the reclassification to non-current assets for sale in 2020, the property, plant and equipment turnover rate increased. 8. Total asset turnover rate increased by 117%: Because the 2021 operational revenue increased, the total asset turnover rate increased. 9. Return on assets increased by 283%: Because the 2021 net profit after tax increased, the return on assets increased. 10. Return on equity increased by 1,188%: Because the 2021 net profit after tax increased, the return on equity increased. 11. The ratio of net profit before tax to paid-in capital increased by 1,002%: due to the increase in net profit before tax in 2021, the ratio of net profit before tax to paid-in capital increased. 12. Net profit rate increased by 483%: Because the 2021 net profit after tax increased, the net profit rate increased. 13. Earnings per share (EPS) increased by 1,320%: Because the 2021 net profit after tax increased, the EPS increased. 14. Operating leverage decreased by 31%: due to the increase in construction revenue in 2021 and the decrease in the proportion of fixed costs, the operating leverage decreased. 15. Financial leverage decreased by 44%: Because the 2021 operating profit increased, the financial leverage decreased.

Note 1: The information above was certified by accountants.

• Note 2: On September 7, 2018, the Board of Directors resolved to acquire the stake of Chin Chun Construction Co., Ltd. from the ultimate parent company, Highwealth Construction. The transaction was deemed a internal restructure in a group, and pursuant to Letter Ji-Mi-Zhi No. 301 issued by Accounting Research and Development Foundation, it shall be deemed as merged from the beginning. Therefore, when the Company prepared the 2018 Parent Company-Only Statements, the 2017 Parent Company-Only Statements were re-prepared retrospectively.

• Note 3: The ratio in the cash flows is not calculated when the net cash flows from the operating activities are negative. Note 4: Formulae for financial analysis calculation are as follows:

• 1.Financial structure

• (1)Debt to asset ratio =total liabilities / total assets

• (2)Long term capital to property, plant and equipment ratio = (total equity + non-current liabilities) / net property, plant and equipment

• 2.Solvency

• (1)Current ratio = current assets / current liabilities

• (2) Quick ratio = (current assets - inventory - prepaid expenses) / current liabilities

• (3)Interest coverage ratio = net profit before income tax and interest expense / interest expense in the current period

• 3.Operating capacity

• (1) Receivable (including accounts receivable and notes receivable due to business) turnover rate = net sales / average receivables for each period (including accounts receivable and notes receivable due to business)

• 166 -

• (2)Average cash recovery date = 365 / receivables turnover rate

• (3)Inventory turnover rate = sales cost / average inventory

• (4)Payable (including accounts payable and notes payable due to business) turnover rate = cost of sales / average balance payable on each period (including accounts payable and notes payable due to business)

• (5)Days sales outstanding = 365 / inventory turnover rate

• (6)Property, plant and equipment turnover rate = net sales/net average property, plant and equipment value

• (7)Total asset turnover rate = net sales / average total assets

• 4.Profitability

• (1) Return on assets = [after tax profit and loss + interest expense × (1 - tax rate)] / average total assets

• (2) Return on equity = after tax profit and loss / average equity

• (3) Net profit rate = after tax profit and loss / net sales

• (4) Earnings per share = (profit or loss attributable to parent company owner - special dividend) / weighted average number of issued shares (Note 5)

• 5.Cash flow

• (1) Cash flow ratio = net cash flow from operating activities / current liabilities.

• (2) Cash flow adequacy ratio = net cash flow from operating activities in the last five years / (capital expenditure + inventory increase + cash dividend) in the last five years

• (3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividends) / (gross property, plant and equipment + long term investment + other non-current assets + working capital) (Note 6)

• 6.Leverage

• (1) Operating leverage = (net operating income - changing operating costs and expenses) / operating profit (Note 7)

• (2) Financial leverage = operating profit / (operating profit - interest expense)

• Note 5: Calculation formula for earnings per share above should pay careful attention to followed points:

• 1.Based on weighted average number of ordinary shares, but not the number of shares issued as of the end of the year.

• Every capital increase or treasury stock transaction should consider calculating the weighted average number of shares during the circulation period.

• The capital injection from the surplus or the capital reserve to increase its capital should retroactive adjustment calculate its earnings per share in the past year or the past six months in proportion of capital increase; no need to consider the period of capital increase.

• 4.If the preferred shares are non-convertible cumulative preferred stock, the dividends of the year, whether they’re issued or not, should be deducted from the net profit after tax, or be added to the net loss after tax. If the preferred shares are non-cumulative and have net profit after tax, the dividends should be deducted from the net profit after tax; no need for adjustment if they have loss.

• Note 6: Paying careful attention to the cash flow analysis as followed points:

• 1.Net cash flow from operating activities means the net income in the net cash flow table.

• 2.Capital expenditure means investment spending per year.

• Inventory would only be counted when the closing balance of prepaid rent is bigger than the beginning one. If the inventory in the end of the year has decreased, it should be shown as zero.

• Cash dividend includes common stock and preferred shares.

• Gross property, plant and equipment is the total amount of net of property, plant and equipment accumulated depreciation

• Note 7: Issuer should differentiate every fixed and variable operating cost and operating expense by their natures. If estimation or subjective judgement is involved, be aware of its rationality and consistency.

• Note 8: The Company’s shares without par value or a par value other than NT$10 are calculated based on interests ratio attributable to the owner of the parent company in the balance sheet, instead of pre-tax net profit to paid-in capital ratio.

• 167 -

3. Audit Committee’s review report on the latest financial report

RUN LONG CONSTRUCTION CO., LTD. Audit Committee’s Review Report

The Board of Directors has submitted the Company's 2021 business report, financial statements (including consolidated financial statements) and the proposal for earnings distribution; among these, the financial statements (including consolidated financial statements) have been audited by Han Yi-lien and Chien Ti-Nuan of KPMG and the audit report has been issued. The said business report, financial statements and the proposal for earnings distribution have been audited by the Audit Committee, with no discrepancy found. We have presented you the reports based on the provisions stipulated in Article 14-4 in the Securities and Exchange Act and Article 219 in the Company Act.

To:

2022 Annual General Meeting of Run Long construction Co., Ltd.

Audit Committee Convener: Li Wencheng

==> picture [54 x 58] intentionally omitted <==

March 14, 2022

• 168 -

• For the financial statements of the most recent year, CPAs’ Audit Report, balance sheet including two-year comparison, statement of comprehensive income, statement of changes in equity, cash flow statement, and notes and attached tables: Please refer to Pages 190 to 253.

• Parent company-only financial statements audited by CPAs of the most recent year. However, the detailed tables of the key accounting items are excluded: Please refer to Pages 254 to 314.

• If the Company and its affiliates have experienced financial difficulties in the most recent fiscal year and up to the date of publication of the annual report, the annual report shall explain how said difficulties affect the Company’s financial situation: None.

• 169 -

VII. Review and Analysis of Financial Status and Business Results and Risk Issues

1. Financial Status

Unit: NT$ thousand

			Unit: NT$ thousand	Unit: NT$ thousand
Year			Differences
	2020	2021
Item			Amount	%
Current assets	32,877,608	35,529,894	2,652,286	8.07
Property, plant and equipment	243,860	237,243	(6,617)	(2.71)
Intangible assets	15,051	14,380	(671)	(4.46)
Other assets	3,661,471	3,543,494	(117,977)	(3.22)
Total assets	36,797,990	39,325,011	2,527,021	6.87
Current liabilities	23,527,423	24,367,806	840,383	3.57
Non-current liabilities	8,199,631	8,282,194	82,563	1.01
Non-current liabilities	31,727,054	32,650,000	922,946	2.91
Interests attributable to parent				31.63
	5,070,936	6,675,011	1,604,075
companyowner
Share Capital	3,699,966	3,921,966	222,000	6.00
Capital surplus	168,389	21,376	(147,013)	(87.31)
Retained earnings	1,052,113	2,575,943	1,523,830	144.84
Other interests	150,468	155,726	5,258	3.49
Treasurystock	0	0	0	0
Previous equity under joint				0
	0	0	0
control
Non controllinginterests	0	0	0	0
Total equity	5,070,936	6,675,011	1,604,075	31.63
(I) Main reasons for significant changes in assets, liabilities and equity in the two most recent years and
their impacts:
1. Equity: Due to a increase in 2021 net profit after tax.
2. Capital reserves: Because the capital reserves were distributed as shareholders’ dividends in 2021.
3. Retained earnings: Due to a increase in 2021 net profit after tax
(II) Future responding plans shall be specified if the impacts are material: The aforesaid changes do not
impact the Company’s finance materially.

• 170 -

2. Financial Performance

• (I) Comparative analysis table of financial performance

Unit: NT$ thousand

			Unit: NT$thousand	Unit: NT$thousand
Year			Differences
Item	2020	2021	Amount	%
Operatingrevenue	7,656,236	10,479,267	2,823,031	36.87
Grossprofit from operations	1,016,928	2,738,473	1,721,545	169.29
Operatingincome	404,454	2,090,047	1,685,593	416.76
Non-operating income and				(84.65)
	(194,424)	(29,846)	164,578
expenses
Income from continuing				880.91
	210,030	2,060,201	1,850,171
operations before income tax
Continuing operations				1,325.89
	117,248	1,671,830	1,554,582
Net income
Income of suspended business				0
	0	0	0
unit
Net income	117,248	1,671,830	1,554,582	1,325.89
Other comprehensive profits and				(89.41)
losses	49,668	5,258	(44,410)
(Net losses after tax)
Total comprehensive income	166,916	1,677,088	1,510,172	904.75
Net profit attributable to				1,325.89
	117,248	1,671,830	1,554,582
parent companyowner
Net profit attributable to				0
Previous equity under joint	0	0	0
control
Net income attributable to				Not applicable.
non-controlling	Not applicable.	Not applicable.	Not applicable.
Equity
Total comprehensive income				904.75
attributable to owners of the	166,916	1,677,088	1,510,172
parent company
Total comprehensive income				0
attributable to
	0	0	0
Previous equity under joint
control
Total comprehensive income				Not applicable.
attributable to non-controlling	Not applicable.	Not applicable.	Not applicable.
interests
EPS(NT$)	0.30	4.26	3.96	1320.00
Main reasons for any material changes in operating revenues, operating income, or income before tax in the two most recent fiscal years: 1. Operating revenue: Mainly because the construction revenue increased significantly in 2021. 2. Operating gross profit: Please refer to (2) analysis of changes in operating gross profit. 3. Operating income (loss): Mainly because the construction revenue increased significantly in 2021 with higher margins. 4. Non-operating income and expenses: due to the recognition of impairment losses on non-current assets for sale in 2020. 5. Net profit before tax: due to the substantial increase in construction revenue in 2021 and its higher gross profit margin and decrease in non-operating losses. 6. Other comprehensive gains and losses for the current period: due to the decrease in the unrealized appraisal benefits of equity instrument investments measured at fair value through other comprehensivegains and losses recognized in 2021.

• Main reasons for any material changes in operating revenues, operating income, or income before tax in the two most recent fiscal

• years:

• Operating revenue: Mainly because the construction revenue increased significantly in 2021.

• Operating gross profit: Please refer to (2) analysis of changes in operating gross profit.

• Operating income (loss): Mainly because the construction revenue increased significantly in 2021 with higher margins.

• Non-operating income and expenses: due to the recognition of impairment losses on non-current assets for sale in 2020. 5. Net profit before tax: due to the substantial increase in construction revenue in 2021 and its higher gross profit margin and decrease in non-operating losses.

• Other comprehensive gains and losses for the current period: due to the decrease in the unrealized appraisal benefits of equity instrument investments measured at fair value through other comprehensive gains and losses recognized in 2021.

• 171 -

(II) Analysis of changes in operating gross profit

(Expressed in Thousands of New Taiwan Dollar)

		(Expressed in Thousands of New Taiwan Dollar)
	Before and
	after increase
Item	decrease	Reason for difference
	change
	amount
	1,815,565	The construction revenue increased, so the gross profit
Construction gross profit
		increased relatively.
	(83,739)	The contractual incomes from contracted projects
Engineering gross profit
		decreased, so the gross profit decreased relatively.
		This is due to the clearance of spare parts for the
	(10,281)
Others		environmental science business in 2021, which is due to
		negative gross profit.
Total Amount	1,721,545

• (III) Sales forecast and the basis, and possible impact on the Company’s future financial status and the contingency plan

1. Construction business

It has been more than two years since the outbreak of the COVID-19 epidemic. Taiwan has slowly found a way to coexist with the epidemic, and its economy has gradually recovered. However, the "Russian-Ukrainian War" has brought great uncertainty, and the "Russian-Ukrainian War" continues to rage. Similar geopolitical relations detonated public concerns about the situation in the Taiwan Strait, and the housing market confidence indicators plummeted. However, scholars have analyzed that the "Russian-Ukrainian War" will push up inflation, and real estate is the preferred target for anti-inflation. Rising global inflation will help the real estate market, but the impact of government policies on the real estate market is equally important.

In 2022, the market will still be dominated by the rigid demand from first-time home buyers and people who wish to replace their homes. Run Long aims to promote the products, featuring “young people to start a family”, “large replaced with small”, “old replaced with new”, and launched "small property units", "small second property units", and "two-plus-one-room units" not only for self-occupation but for multiple purposes, such as investment and renting. In terms of product design, building materials, or public facilities planning, we create a healthy home space and strengthen the anti-pandemic function of overall buildings.

In 2022, we will strive to eliminate our remaining houses while focusing on apartments for first-time home buyers and those who wish to replace their homes. At present, the projects we are planning and expecting to launch are mainly located in De'an

==> picture [47 x 11] intentionally omitted <==

CEF (Keelung), Chungho Yuanton (New Taipei City), Wanfang in Wenshan (Taipei), Shanjie in Guishan (Taoyuan), and Xinnan in Anping (Tainan).

2. Construction/engineering business of the subsidiary, Jhin Jyun Construction

Jhin Jyun Construction mainly contracts development projects from affiliates, and secures the construction quality, progress, and safety through standardized construction management, to establish the Group’s reputation of high quality.

The "Russian-Ukrainian War" has frightened the global stock market, embargoed Russian oil in Europe and the United States, and imposed sanctions on Russia by many countries, causing many bulk raw materials to rise in price. The market economy, which was already under the shadow of inflation, has become even worse. In addition to the huge impact on the market, Taiwan's construction industry is more cautious about the outlook for the next six months.

3 . Cash flow

(I) Cash flow analysis in the most recent year

Year			% of increase
	2020	2021
Item			(decrease)
		-
Cash flow ratio	-		-
Cash flow adequacy		-
	-		-
ratio
		-
Cash reinvestment ratio	-		-
Reasons for increase/decrease proportion analysis:
The net cash flow in 2020 and 2021 were negative, and thus were not calculated.

(II) Analysis of cash flow in the coming year

Unit: NT$ thousand

				Unit: NT$ thousand	Unit: NT$ thousand
			Anticipated	Remedies for cash
	Net cash flow from	Estimated
Beginning cash			cash surplus	deficits
	operating activities	yearly net
balance			(deficit)
	throughout the year	cash outflow		Investment	Financial
(A)			amount
	(B)	(C)
			A+B-C	plan	plans
2,178,382	262,832	1,285,461	1,155,753	－	－

1. Analysis of cash flow changes for the year:

Mainly increases in cash outflow from the construction payment input to construction projects and the repaying of financing loans of lands and construction upon project completion expected in the next year.

1. Remedies for illiquidity: There will be no shortage or deficit of cash in the next year.

2. 173 -

3. 4 . Impact of major capital expenditure on the financial status in the most recent year

4. (I) Utilization of major capital expenditures and source of funds: None.

5. (II) Expected effects: None.

6. 5 . Reinvestments in the most recent year

7. (I) Re-investment policy in the most recent year, the main reason for its profit or loss, the improvement plan and investment plan in the next year:

Unit: NT$ thousand

Investor	Investee	Investment gains/losses recognized in 2021	Re-investment policy	Main reason of profit or loss	Improvement plans
The Company	Jin Jyun Construction	12,457	The Company’s reinvestment policy currently focuses on the upstream and downstream construction related industries, seeking to increase reinvestment income	Re-investment business gross profit margin is stable	Focus on the steady operation of existing businesses and actively strive for new projects

• (II) Investment plan in the next year: Based on future operational needs, prudently evaluate relevant industries with stable profitability as investment targets.

• 6 . Risks in the most recent fiscal year and up to the date of publication of the annual report

• (I) The impact of interest and exchange rate changes and inflation on the Company’s profit and loss and future countermeasures

  1. The short-term and long-term borrowings of the Company and its subsidiaries are debts with floating interest rates. Therefore, changes in market interest rates will cause the effective interest rates of short-term and long-term borrowings to change accordingly, which will cause future cash flow fluctuations; When the interest rate increases or decreases by 0.5% with all other variables remaining unchanged, the interest expenses of the consolidated company in the year of 2021 and 2020 will increase by NT$72,137 thousand and NT$66,535 thousand, taking into account the net profit after interest capitalization, it will decrease or increase by NT$21,011 thousand and NT$22,493 thousand.

  2. The main operating income and expenditures and capital expenditures of the Company and its subsidiaries are mostly denominated in New Taiwan dollar, so exchange rate changes have no significant impact on the Company’s profit and loss.

  3. The Company and its subsidiaries continue to monitor changes in prices and raw material prices, maintain good interaction with customers and suppliers, and adopt appropriate

     • 174 -

procurement strategies to reduce inflation risks.

• (II) Policies of engagement in high-risk and highly leveraged investments, loans to others, endorsements and guarantees and derivative trading, main reasons for profit or loss and future countermeasures

The Company and its subsidiaries focus on their major businesses and have not conducted high-risk and highly leveraged investments in the most recent year.

The Company and its subsidiaries provides necessary endorsements and guarantees to subsidiaries/parent company when required by the business.

The Company and its subsidiaries do not conduct derivative trading.

The Company has the “Operational Procedures for Loaning of Funds to Others”, the “Operational Procedures for Endorsement and Guarantee”, and the “Handling Procedures of Acquiring or Disposing Assets” for compliance. The subsidiaries are supervised and required to establish related operational procedures and observe such procedures.

• (III) Future R&D projects and estimated R&D expenses: None.

• (IV) The impact of important domestic and overseas policy and regulation changes on the financial status of the Company and countermeasures

• The following newly released, amended and revised standards and interpretations have been recognized by the Financial Supervisory Commission, and start to be applicable from 2022:

  • Amendments to IAS 16 "Property, Plant and Equipment - The Price Before the Condition for Intended Use"

  • Amendments to IAS 37 "Onerous Contracts - Costs of Fulfilling Contracts"

  • Annual Improvements to IFRS 2018-2020 Cycle

  • Amendments to IFRS 3 "Reference to Conceptual Frameworks"

The consolidated company has assessed that the application of the aforesaid amendments will not create material changes in the consolidated financial statements.

1. On the afternoon of March 17, 2022, the central bank held the first quarterly meeting of the board of directors and supervisors, and decided to raise interest rates by 0.25%, and it will be implemented from March 18, 2022. This is the central bank's move to raise interest rates in violation of more than 10 years. In the past, in the low-interest environment, the financing cost of enterprises was low. Whether it was a temporary shortage of cash and a need for capital dispatch, or a large-scale borrowing to expand production capacity, the financial burden was not large. Today, higher interest rates mean higher borrowing costs for money, which could be a factor that erodes corporate profits. As a result, the rate hike environment is more favorable for large, financially sound companies. Large companies have high gross profit margins, dividend yields and stable cash flow, and are not easily affected by rising capital costs.

2. 175 -

3. (V) The impact of technological and industrial changes on the financial status of the Company and countermeasures:

4. Effect of damage to information systems upon the company's business affairs, as well as response measures being or to be taken:

The Company’s information system is under construction. In the hardware area servers with high stability have been set up and in the software area the information systems, software and default system parameters are regularly backed up and there is a complete data back-up mechanism to ensure service downtime is shortened.

With uninterrupted information services and information safety, the information unit under the management department regularly sends back-up data for storage in other places and there are regular drills for post-disaster recovery measures, to prevent the interruption of information services and shorten the recovery time from natural disasters or human accidents.

In order to get the information system smoothly back on track and reduce losses after the damage has occurred, in addition to regular drills for post-disaster recovery measures, the Company shall continue to plan, design, and improve the resource efficiency of software and hardware equipment, and to construct a network protection mechanism with a high-security level to reduce the risks of system damage.

In recent information security threat analysis, most of the threats come from external hacker attacks, followed by the negligence of internal employees and lack of information security awareness. The root cause of these information security incidents is that users open and click on phishing emails and execute them Caused by unknown malware. Therefore, information security protection requires the company's comprehensive consensus and full participation, only by gradually developing employees’ risk awareness and information security protection capabilities through working habits and company culture, can the information security defense capabilities truly be strengthened.

1. In 2021, the Company has not discovered any major internet attacks and events, negative influences that have harmed or may harm the Company’s business and operation, and not been involved in any law cases or monitoring investigation.

2. (VI) The impact of corporate image changes on the Company’s crisis management and countermeasures

The Company and its subsidiaries insist on the operating principles of steadiness, pragmatism, innovation and evolution, and have a good corporate image. So many outstanding talents are attracted to serve the Company and build the strength of the management team. The Company also regularly provides feedback on the operating results to investors. There is nothing jeopardizing the corporate image, nor are there risks of corporate crises.

• 176 -

• (VII) Expected benefits and possible risks of mergers and acquisitions and countermeasures

The Company and its subsidiaries have not had mergers and acquisitions during the most recent year and up to the date of publication of the annual report.

• (VIII) Expected benefits and possible risks of plant expansion, and countermeasures

The Company and its subsidiaries have not had plant expansions during the most recent year and up to the date of publication of the annual report.

• (IX) The impact of concentration of purchases or sales and countermeasures

• Construction business

Real estate sales business is for general customers, so there is no concentration of sales. The purchases are mainly the amounts of purchases from outsourcing to well-known level A construction companies, and the number of purchase transactions is small with significant payable amounts, so there will likely not be a concentration of purchases.

  2. Construction/engineering business of the subsidiary Jin Jyun Construction:

  - The major businesses are project contracting, and there is no concentration of purchases (material purchases and construction contractors) and sales (customers of contracted projects).

• (X) The impact of mass share transfers or changes of directors, supervisors or shareholders holding more than 10% of the Company’s shares, the risks and countermeasures

• During the most recent year and up to the date of publication of the annual report, there were no mass share transfers or changes of directors or shareholders holding more than 10% of the Company’s shares.

• (XI) The impact of changes of management on the Company, the risks and countermeasures During the most recent year and up to the date of publication of the annual report, there were no changes of management in the Company or its subsidiaries.

• (XII) Lawsuits and non-contentious cases

• Material litigation, non-litigation or administrative litigation with its judgment already made or pending in the most recent year and up to the date of the publication of the annual report, the result of which may have a significant impact on the shareholders’ equity or the price of the Company’s shares: None.

• Material litigation, non-litigation or administrative litigation with its judgment already made or pending in the most recent years and up to the date of the publication of the annual report related to the Company’s directors, supervisors, president, actual person in charge, shareholders holding more than 10% of the Company’s shares or affiliates, the result of which may have a significant impact on the shareholders’ equity or the price of the Company’s shares: None.

• 177 -

(XIII) Other important risks and countermeasures

1. Effect of the climate change upon the Company’s business affairs and the response measures being or to be taken:

The world has recently been ravaged by the COVID-19 variant virus, and the epidemic has made a comeback in various countries. According to the World Economic Forum's Global Risks Survey, infectious diseases are the biggest short-term threat, while climate change deteriorating into a climate risk crisis is the biggest long-term concern.

In response to the issues of global warming and climate change which are getting more serious every day, the government is actively promoting energy saving and carbon reduction measures and the use of green energy sources to reduce emission of carbon dioxide. For the comfort and health of our citizens, and to reduce the impact on the environment of manufacturing building materials and promote the upgrade of the traditional construction material industry, the company shall actively take measures in response to the issue of climate change and put in effort into developing green building techniques to improve the level of green buildings, in hope of building up an energy saving and carbon emission reducing housing environment. Planning construction cases with energy saving and carbon emission reducing products, such as building materials, energy saving machinery, housing facilities and new energy systems applied in green buildings. To implement government policy, the Company goes to great lengths in environmental protection to put corporate social responsibility into practice.

Environment, Social responsibility and corporate Governance (ESG) have become the most important issues in the world. When the world pays attention to the issue of environmental sustainability, the board of directors of the company will also evaluate the possible impact of climate change on the company and incorporate its response measures into the medium and long-term strategic plan.

Opportunities and risks brought by ESG and climate change to the company's operations will be properly planned by the company's management department, and the board of directors will provide more solid guidance and supervision. The management department will analyze the impact of climate risks, formulate response strategies, goals, and schedules, and implement them in order to comply with trends, regulations, and customer requirements, thereby enhancing the company's competitiveness.

1. Other important matters: None

2. 178 -

VIII. Special Notes

1. Information about the Company’s Affiliates

• (I) Organization Chart of Affiliates

==> picture [441 x 439] intentionally omitted <==

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

Highwealth Construction Corporation
100%
ChyiYuh Construction Co., Ltd.
5.72% 100%
5.02%
Kaung Yang Investment Co., Ltd.
6.13%
Run Long Construction Co., Ltd.
100%
Jin Jyun Construction Co., Ltd.
----- End of picture text -----

• 179 -

(II) Consolidated business reports of affiliated enterprises

1. Basic data of affiliates

		Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand
Company Name	Date of establishment	Address	Paid-in capital	Major business
Control Company Run Long Construction Co., Ltd.	1977.01.10	8F., No. 267, Lequn 2nd Rd, Zhongshan District, Taipei City	3,921,966	Development, sales and leasing of real estate
Subsidiary Jin Jyun Construction Co., Ltd.	2012.11.01	9F., No. 267, Lequn 2nd Rd, Zhongshan District, Taipei City	500,000	Construction, housing and building development, lease, sale business.

1. Information about common shareholders of entities presumed to have a controlling and subordinate relationship: None.

2. All affiliated companies’ operating business cover industries such as:

3. Construction industry

4. Part of the construction work of Run Long Construction Co., Ltd. is contracted to Jin Jyun Construction Co., Ltd.

5. 180 -

4. Information about the directors, supervisors and general managers of the affiliates:

Company Name	Title	Name or Representative	Number of shares held	Number of shares held
			Share Number	Shareholding ratio
Control Company Run Long Construction Co., Ltd.	Chairperson Director Director Director Independent Director Independent Director Independent Director	Da-Li Investment Co., Ltd Representative: Tsai Chungping Kaung Yang Investment Co., Ltd. Representative: Chiu Pingtse Kaung Yang Investment Co., Ltd. Representative: Chen Kuoyen Kaung Yang Investment Co., Ltd. Representative: Cheng Chaiowen Yen Yunchi Li Wencheng Chen Yungchang	15,354,970 24,022,699 24,022,699 24,022,699 0 0 0	3.92% 6.13% 6.13% 6.13% 0% 0% 0%
Subsidiary Jin Jyun Construction Co., Ltd.	Chairperson Director Director	Run Long Construction Co., Ltd. Representative: Chiu Pingtse Run Long Construction Co., Ltd. Representative: Lin Chihlung Run Long Construction Co., Ltd. Representative: Lu Xiren	50,000,000 50,000,000 50,000,000	100% 100% 100%

• 181 -

5.Overview of the operations of the affiliates:

Unit: NT$ thousand

Affiliate	Capital	Total assets	Non-current liabilities	Net worth	Operating revenue	Net operating income (loss)	Net income (after tax)	Earnings per share (after tax/NT$)
Controlling	3,921,966	37,740,002	31,064,991	6,675,011	9,653,691	2,073,849	1,671,830	4.26
company Run Long Constructio n Co., Ltd.
Affiliates Jin Jyun Constructio n Co., Ltd.	500,000	2,839,644	2,187,944	651,700	4,136,167	83,495	79,752	1.60

(III) Consolidated financial statements of affiliates:

The entities the Company is required to include in the consolidated financial statements of affiliates for 2021 (from January 1, 2021, to December 31, 2021) under the “Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Reports and Consolidated Financial Statements of Affiliated Enterprises” are the same as those included in the consolidated financial statements of the parent company prepared in conformity with the International Accounting Standards (IAS) No. 27 approved by the Financial Supervisory Commission. In addition, the information required to be disclosed in the combined financial statements of affiliates is included in the consolidated financial statements of the parent company. Consequently, the consolidated financial statements of affiliates are not prepared separately.

• 182 -

(IV) Relationship Report

Statement

The Company’s 2021 Relation Report (from January 1, 2021, to December 31, 2021) has been prepared pursuant to the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises”, and the disclosed information is materially consistent with the related information disclosed in the notes of financial statements of the abovementioned period.

Very truly yours,

The name of the company ：

RUN LONG CONSTRUCTION CO., LTD.

Person in Charge ： Tsai, Chung-Ping

==> picture [55 x 59] intentionally omitted <==

March 14, 2022

• 183 -

==> picture [437 x 75] intentionally omitted <==

CPAs’ Review Opinion on the Affiliation Report

To:RUN LONG CONSTRUCTION CO., LTD.,

The Affiliation Reportfor 2021 of Run Long Construction Co., Ltd. has been reviewed by the accountant in accordance with the provisions of Ministry of Finance Securities & Futures Commission Letter No. Taiwan-Finance-Securities-(6)-04448 issued on November 30, 1999. This review work, is based on whether the Affiliation Report for 2021 of Run Long Construction Co., Ltd. is prepared in accordance with the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises, and whether the disclosed information is not materially inconsistent with the information disclosed in the notes to the financial statements of the period audited by the accountant on March 14, 2022, with the review opinions issued.

According to the review result of the accountant, no violation has been found in the preparation of the above affiliation report to the provisions of the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises, and no material discrepancy has been found between the information disclosed in the foregoing affiliation report and the information disclosed in the notes to the financial statements of the same period.

KPMG Taiwan

Certified Public : Accountant

The original Ministry of : Financial Supervisory Commission Finance Securities & Order No. Financial-SupervisoryFutures Commission Securities-CorporateLetter No.Certified No. 1090332798 : No. (88) Taiwan-FinanceSecurities-(6)-18311

March 14, 2022 - 184 -

1. Overview of the relationship between the controlling company and subordinate companies

Name of the controlling company	Reason for controlling	Shareholding and share pledging of the controlling company	Shareholding and share pledging of the controlling company	Shareholding and share pledging of the controlling company	Director, supervisor, managerial officers appointed by controlling company	Director, supervisor, managerial officers appointed by controlling company
		Shares	Shareholding ratio	Shares pledged	Job Title	Name
Highwealth Construction	100% shares of ChyiYuh Construction Co., Ltd.	355,000,000	100%	-	Representative of Legal Person Director (Chairperson) ChyiYuh Construction Co., Ltd.	Cheng Chunmin
					Representative of Legal Person Director (Director) ChyiYuh Construction Co., Ltd.	Hsiung, Meng-Chi
					Representative of Legal Person Director (Director) ChyiYuh Construction Co., Ltd.	Fan Huajun
ChyiYuh Construction Co., Ltd.	100% shares of Kauang Yang Investment Co., Ltd.	29,900,000	100%	-	Representative of Legal Person Director (Chairperson) Kaung Yang Investment Co., Ltd.	Cheng Chiao-Wen
Kaung Yang Investment Co., Ltd.	Parent company of the Company	24,022,699	6.13%	-	Representative of Legal Person Director (Director) of the Company	Chiu, Ping-Tse
					Representative of Legal Person Director (Director) of the Company	Chen, Kuo-Yen
					Representative of Legal Person Director (Director) of the Company	Cheng Chiao-Wen

• 185 -

2. Purchase (sale) of goods

Unit: NT$ thousand

Status of transactions with he controlling company	Status of transactions with he controlling company	Status of transactions with he controlling company	Status of transactions with he controlling company	Terms of transactions with he controlling company	Terms of transactions with he controlling company	General transaction terms	General transaction terms	Reason of difference	Notes/accounts receivables (payables)	Notes/accounts receivables (payables)	Overdue accounts receivables	Overdue accounts receivables	Overdue accounts receivables	Remarks
Purchase (sale)	Amount	Percentage to the total purchase (sale)	Gross margin	Unit price (NT$)	Payment Terms	Unit price (NT$)	Payment Terms		Balance	Percentage to total notes/accounts receivables (payables)	Amount	Actions Taken	Allowance for non- performing loans
Purchase	394,943	3.98%	－	－	With common equivalent	Equivalent	With common equivalent	－	(155,253)	(6.23)%	－	－	－	－
Sales	(580,172)	(5.54)%	6.72%	－	With common equivalent	Equivalent	With common equivalent	－	96,679	16.63%	－	－	－	－

1. Property transaction: None.

2. Financing: None.

3. 186 -

5. Asset leasing:

Unit: NT$ thousand

Lease counterparty	Transaction Type (Leasing / Leased)	Underlying property	Underlying property	Lease term	Lease type	Basis of rent	Receipt (payment) method	Compared to general rent level	Total rent for the period	Receipt and payment status for the period	Other agreements
		Name	Location
Kaung Yang Investment Co., Ltd.	Leasing	Building	8F-6, No. 267, Lequn 2nd Rd, Zhongshan District, Taipei City	July 01, 2020, to June 30, 2021	Operating lease	Determined by referring the local market level	Monthly receipt	Equivalent	57	57	None
				July 1, 2021, to June 30, 2022
Highwealth Construction Corporation	Leased	Building	20F., No. 1507-2, Yucheng Rd., Gushan Dist., Kaohsiung City	August 1, 2020, to July 31, 2021	Operating lease	Determined by referring the local market level	Monthly payment	Equivalent	57	57	None
				Aug 1, 2021, to July 31, 2022
Highwealth Construction Corporation	Leased	Land	Land No. 310, Xindu Section, Sanmin District, Kaohsiung City	Jan. 1, 2021, to June 30, 2021	Operating lease	Determined by referring the local market level	Monthly payment	Equivalent	2,849	2,849	None
				July 1, 2021, to June 30, 2022
Highwealth Construction Corporation	Leased	Building	19F., No. 1507-1, Yucheng Rd., Gushan Dist., Kaohsiung City	Oct. 8, 2020, to Oct. 7, 2021	Operating lease	Determined by referring the local market level	Monthly payment	Equivalent	26	26	None
ChyiYuh Construction Co., Ltd.	Leased	Building	9F., No. 267, Lequn 2nd Rd, Zhongshan District, Taipei City	Jan. 1, 2021, to Dec. 31, 2021	Operating lease	Determined by referring the local market level	Monthly payment	Equivalent	1,739	1,739	None

• 187 -

• Other key transactions:

• (1) The merged company paid Qiyu Construction Co., Ltd. management consulting fees and sales activity fees totaling NT$11,534 thousand and contracted the project to Qiyu Construction Co., Ltd. to receive guarantee notes of NT$85,418 thousand.

• (2) The Company entered a joint-construction agreement with Highwealth Construction Co., Ltd, and paid a refundable deposit for NT$100,000 thousand and refundable deposit notes for NT$200,000 thousand

• (3) The merged company received NT$ 3,438 thousand in management service fees from Highwealth Construction Co., Ltd.

• Endorsement/guarantee: None.

• Other matters materially affecting finance and business: None.

• 188 -

• 2 . Where the Company has carried out a private placement of securities during the most recent fiscal year and up to the date of publication of the annual report, disclose the date on which the placement was approved by the Board of Directors or by a shareholders meeting, the amount thus approved, the basis for and reasonableness of the pricing, the manner in which the specified persons were selected, the reasons why the private placement method was necessary, the targets of the private placement, their qualifications, subscription amounts, subscription price, relationship with the Company, participation in the operations of the Company, actual subscription (or conversion) price, the difference between the actual subscription (or conversion) price and the reference price, the effect of the private placement on shareholders’ equity, and, for the period from receipt of payment in full to the completion of the related capital allocation plan, the status of use of the capital raised through the private placement of securities, the implementation progress of the plan, and the realization of the benefits of the plan: None.

• Holding or disposal of the Company’s shares by affiliates in the most recent year and up to the date of publication of the annual report: None.

• Other Necessary Supplementary Notes: none.

• Occurrence of any of the situations listed in Article 36, paragraph 3, subparagraph 2 of the Securities and Exchange Act which might materially affect shareholders’ equity or the price of the Company’s securities during the most recent fiscal year and up to the date of publication of the annual report: None.

• 189 -

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電 話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳 真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網 址 Web home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of Run Long Construction Co., Ltd.:

Opinion

We have audited the consolidated financial statements of Run Long Construction Co., Ltd. and its subsidiaries (“ the Group” ), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRS”), International Accounting Standards (“IASs”), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“ the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

1. Revenue recognition on sales of properties and land

Please refere to note 4(o), and 6(t) of the consolidated financial statements for the accounting policy on revenue recognition and the details of revenue.

• 190 -

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

Description of key audit matter

The real estate industry, in which the Group is into, has a higher tendency of revenue fluctuation, therefore the management has set up relevant internal control procedures. The Group’s sales revenue was $9,638,471 thousand in 2021, whether revenue is presented fairly has a significant impact on financial statement. Therefore, the recognition of sales revenue is one of the most important evaluation in performing our audit procedures.

Auditing procedures performed

Our principal audit procedures included the following: We test the effectiveness of the design and implementing the internal control system of sales revenue; Inspect of sales contracts, bank account transaction record and real estate ownership transfer document, etc.; Test the samples of sales transaction before and after the end of the year to ensure the correctness of sales revenue.

2. Construction contracts

Please refer to note 4(o), 5, and 6(t) of the consolidated financial statements for the accounting policies on revenue recognition, assumption used, and uncertainties considered in determining the total estimated costs, and revenue recognized from contracts.

Description of key audit matter

The Group is into industry of civil engineering and building construction contractors. The Group’s sales revenue from these contracts was $825,576 thousand in 2021, the revenue constituted 8% of the consolidated revenue. Revenues and costs of construction contracts are recognized and evaluated according to IFRS15. Managment judgment and estimation may be involved in determining total revenue, total estimated cost, and the extent of completion. Therefore, the recognition of revenue and cost of construction contracts is one of the most important evaluation in performing our audit procedures.

Auditing procedures performed

Our principal audit procedures included the following: We test the effectiveness of internal controls system of engineering revenue, receivable collection, contracting out and purchasing, payments and budgeting, which are relevant to financial report; compare and evaluate whether there is significant exception of change in total revenue, total estimated cost and the extent of completion; We obtain the revenue and cost the business estimated, review the completion and rationality in total contract price, budget, and accumulated involvement, to assess whether there is significant exception in contract revenue and cost that the business recognized.

3. Inventory valuation

Please refer to note 4(g), 5, and 6(d) of the consolidated financial statements for the accounting policies on measuring inventory, assumption used, and uncertainties considered in determining the net realizable value and the details of inventory.

Description of key audit matter

As of December 31, 2021, inventory of the Group valued $27,246,899 thousand, constituting 69% of the consolidated total assets, which was presented with lower of cost or net realizable value method. The judgment of net realizable value of inventory relies on management since the Group focuses on real estate industry, which is not only deeply affected by politics, macroeconomics, prosperity, and revolution of housing and land taxation, but also an industry involving a large portion of capital infusion and long-term payback. Thus, the valuation of inventory is one of the most important evaluation in performing our audit procedures.

• 191 -

Auditing procedures performed

Our principal audit procedures included the following: We understand the Group’s operating and accounting procedures for inventory valuation; Obtain the Group management’s data of inventory valuation; verify and inspect market value of the afore mentioned information. The net realizable value can be assessed in the following ways: through reviewing the recent selling price of the premises, by inquiring the selling price of premises nearby from the “Actual Selling Price of Real Estate” website, or by obtaining project investment analysis tables, inspecting and recalculating the net realizable value of inventory to ensure if it is adequate.

Other Matter

Run Long Construction Co., Ltd. has additionally prepared its parent-company-only financial statements as of and for the years ended December 31, 2021 and 2020, on which we have issued an unmodified opinion.

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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IASs, interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China, 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 are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive 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.

2. 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.

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

4. 192 -

5. 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 auditors’ 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 auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

6. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

7. Obtain sufficient and 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.

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 auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Yilien Han and Ti-Nuan Chien.

KPMG

Taipei, Taiwan (Republic of China) March 14, 2022

Notes to Readers

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

The auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditors’ report and consolidated financial statements, the Chinese version shall prevail. - 193 -

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1120 Current financial assets at fair value through other comprehensive income (notes 6(b) and 8) 1140 Current contract assets (note 6(t)) 1150 Notes receivable, net (note 6(c) and 8) 1170 Accounts receivable, net (note 6(c)) 1180 Accounts receivable due from related parties, net (notes 6(c) and 7) 1200 Other receivables 1210 Other receivables due from related parties (note 7) 1220 Current tax assets 1310 Inventories, manufacturing business, net (note 6(d)) 1320 Inventories (for construction business) (notes 6(d), 7 and 8) 1410 Prepayments 1461 Non-current assets held for sale (notes 6(e) and 8) 1476 Other current financial assets (notes 6(i), 7 and 8) 1479 Other current assets, others 1480 Current assets recognized as incremental costs to obtain contract with customers (note 6(i)) Non-current assets: 1600 Property, plant and equipment (notes 6(f) and 8) 1755 Right-of-use assets (note 6(g)) 1760 Investment property, net (notes 6(h) and 8) 1780 Intangible assets 1840 Deferred tax assets (note 6(q)) 1915 Prepayments for business facilities 1984 Other non-current financial assets, others (note 6(i) and 8) 1990 Other non-current assets, others Total assets	December 31, 2021 Amount % $ 2,178,382 6 607,956 2 34,959 - 363,485 1 121,145 - 96,679 - 27,340 - - - - - - - 27,246,899 69 269,153 1 - - 3,600,921 9 48,771 - 934,204 2 35,529,894 90 237,243 1 129,364 - 755,059 2 14,380 - 8,639 - - - 2,595,296 7 55,136 - 3,795,117 10 $ 39,325,011 100	December 31, 2020 Amount % 2,109,643 6 602,698 2 114,388 - 160,692 - 113,103 - 197,249 1 1,594 - 47,457 - 4,869 - 10,598 - 24,811,953 67 248,904 1 1,187,386 3 2,799,983 8 56,616 - 410,475 1 32,877,608 89 243,860 1 12,173 - 681,434 2 15,051 - 3,555 - 58,424 - 2,905,885 8 - - 3,920,382 11 36,797,990 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (note 6(j)) 2110 Short-term notes and bills payable (note 6(j)) 2130 Current contract liabilities (notes 6 (t) and 9) 2150 Notes payable 2170 Accounts payable 2180 Accounts payable to related parties (note 7) 2200 Other payables (note 7) 2230 Current tax liabilities (note 6(q)) 2250 Current provisions (notes 6(n) and (p)) 2280 Current lease liabilities (note 6(m)) 2321 Bonds payable, current portion or putable bonds (note 6(l)) 2322 Long-term borrowings, current portion (note 6(k)) 2399 Other current liabilities, others Non-Current liabilities: 2530 Bonds payable (note 6(l)) 2541 Long-term borrowings (note 6(k)) 2570 Deferred tax liabilities (note 6(q)) 2580 Non-current lease liabilities (note 6(m)) Total liabilities Equity (note 6(r)): 3110 Ordinary share 3200 Capital surplus 3300 Retained earnings 3400 Other equity interest Total equity Total liabilities and equity	December 31, 2021		December 31, 2020
			Amount %		Amount %
			$ 14,074,657 36 1,236,759 3 3,268,109 8 3,720 - 2,304,761 6 181,778 1 748,292 2 332,883 1 46,791 - 29,149 - 1,989,327 5 25,944 - 125,636 - 24,367,806 62 7,861,799 20 318,538 1 2,844 - 99,013 - 8,282,194 21 32,650,000 83 3,921,966 10 21,376 - 2,575,943 7 155,726 - 6,675,011 17 $ 39,325,011 100		11,936,172 32 2,758,113 8 3,365,105 9 71 - 1,616,669 5 562,306 2 342,077 1 98,983 - 21,262 - 8,827 - 1,481,281 4 1,018,091 3 318,466 1 23,527,423 65 7,851,491 21 344,482 1 2,844 - 814 - 8,199,631 22 31,727,054 87 3,699,966 10 168,389 - 1,052,113 3 150,468 - 5,070,936 13 36,797,990 100

• 194 -

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

Operating Revenues (notes 6(o), (t) and 7): 4511 Construction revenue 4521 Engineering service revenue 4800 Other operating revenue 5000 Operating costs (notes 6(u) and 7) Gross profit from operations Operating expenses: 6100 Selling expenses (notes 6(i)、(u) and 7) 6200 Administrative expenses (note 6(u)) Operating income Non-operating income and expenses (note 6(v) and 7): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs Profit from continuing operations before tax 7950 Less: Income tax expenses (note 6(q)) Profit 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8316 Unrealized gains from investments in equity instruments measured at fair value through other comprehensive income 8300 Other comprehensive income (net after tax) 8500 Total comprehensive income Earnings per share (note 6(s)) 9750 Basic earnings per share (NT dollars) 9850 Diluted earnings per share (NT dollars)	2021 Amount % $ 9,638,471 92 825,576 8 15,220 - 10,479,267 100 7,740,794 74 2,738,473 26 340,109 3 308,317 3 648,426 6 2,090,047 20 5,892 - 34,948 - 59,801 1 (130,487) (1) (29,846) - 2,060,201 20 388,371 4 1,671,830 16 5,258 - 5,258 - $ 1,677,088 16 $ 4.26 $ 4.26	2020 Amount % 3,930,087 51 3,711,639 49 14,510 - 7,656,236 100 6,639,308 87 1,016,928 13 347,003 5 265,471 3 612,474 8 404,454 5 11,278 - 31,774 - (91,353) (1) (146,123) (2) (194,424) (3) 210,030 2 92,782 1 117,248 1 49,668 1 49,668 1 166,916 2 0.30 0.30

See accompanying notes to consolidated financial statements.

• 195 -

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

Balance on January 1, 2020 Profit Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Cash dividends of ordinary share Stock dividends of ordinary share Cash dividends from capital surplus Stock dividends from capital surplus Due to donated assets received Disposal of investments in equity instruments designated at fair value through other comprehensive income Other changes in capital surpuls Balance on December 31, 2020 Profit Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Cash dividends of ordinary share Stock dividends of ordinary share Stock dividends from capital surplus Due to donated assets received Balance on December 31, 2021				Equity attributable	Equity attributable	to owners of parent	to owners of parent	to owners of parent		Total other equity interest Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Total other equity interest Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Total equity 5,514,928 117,248 49,668 166,916 - (308,330) - (308,331) - 73 - 5,680 5,070,936 1,671,830 5,258 1,677,088 - (74,000) - - 987 6,675,011
	Share capital		Capital surplus			Retained earnings
	Ordinary shares				Legal reserve		Unappropriated retained earnings		Total retained earnings
	$ 3,083,305 - - - - - 308,331 - 308,330 - - - 3,699,966 - - - - - 74,000 148,000 - $ 3,921,966		779,297 - -		823,949 - -		727,323 117,248 -		1,551,272 117,248 -		101,054 - 49,668 49,668 - - - - - - (254) - 150,468 - 5,258 5,258 - - - - - 155,726
			-		-		117,248		117,248
					65,576 - - - - - - -
					889,525 - -
					-
					11,750 - - - -
					901,275

• 196 -

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation Amortization Net loss on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Gain on disposal of property, plant and equipment Impairment loss on disposal of non-current assets held for sale Gain on lease modifications Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Decrease in financial assets at fair value through profit or loss Decrease (increase) in contract assets Increase in notes receivable Decrease (increase) in accounts receivable Decrease in accounts receivable due from related parties Increase in other receivables Derease (increase) in other receivables due from related parties Decrease in inventories Increase in inventories (construction) Increase in prepayments Decrease in other current assets Increase in other financial assets- current Increase in assets recognized as incremental costs to obtain contract with customers Increase in other financial assets—non-current Increase in contract liabilities Increase in notes payable Increase in accounts payable Increase (decrease) in accounts payable to related parties Increase in other payables Increase in provisions Increase (decrease) in other current liabilities Total adjustments Cash inflow (outflow) generated from operations Income taxes paid Net cash flows used in operating activities	2021 $ 2,060,201 42,202 3,005 - 130,487 (5,892) (26,352) - - (76) 143,374 - 79,429 (202,793) (8,042) 100,570 (25,920) 47,457 10,598 (2,188,514) (1,993) 66,283 (200,085) (523,729) (3,662) 205,668 3,649 688,092 (380,528) 404,171 25,529 (192,830) (1,953,276) 106,925 (154,686) (47,761)	2020 210,030 19,475 3,045 62 146,123 (11,278) (23,900) (1,944) 165,479 (142) 296,920 146,207 (58,341) (30,872) 163,821 210,181 (198) (45,420) 487 (5,659,393) (135,860) 50,735 (1,315,124) (193,415) (822) 1,288,602 71 330,937 210,490 45,515 12,697 226,290 (4,456,492) (4,246,462) (22,490) (4,268,952)

• 197 -

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (CONT’D)

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Proceeds from disposal of non-current assets classified as held for sale Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Increase in other non-current assets Increase in prepayments for business facilities Interest received Dividends received Net cash flows from investing activities Cash flows from (used in) financing activities: Increase in short-term borrowings Decrease in short-term borrowings Increase in short-term notes and bills payable Decrease in short-term notes and bills payable Proceeds from issuing bonds Repayments of bonds Repayments of long-term borrowings Payment of lease liabilities Other financial assets—current Other financial assets—non-current Cash dividends paid Interest paid Net cash flows from (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

See accompanying notes to consolidated financial statements.

• 198 -

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

(1) Company history

Run Long Construction Co., Ltd. (the “ Company” ) was incorporated in January 1977 as a company limited by shares under the Company Act of the Republic of China (R.O.C.). The Company's registered address is 8F., No. 267, Lequn 2nd Rd., Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.). On August 3, 1994, the Company’ s shares were listed on the Taiwan Stock Exchange (TWSE). The consolidated financial statements of the Company as of and for the year ended December 31, 2021 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”). The Group primarily engages in the business of construction, sales, leasing of residential and commercial buildings. Please refer to note 14 for the Group’s main business activities.

(2) Approval date and procedures of the consolidated financial statements:

The accompanying consolidated financial statements were authorized for issue by the Board of Directors on March 14, 2022.

(3) New standards, amendments and interpretations adopted:

• (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2021:

• ●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• ●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from April 1, 2021:

• ●Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its consolidated financial statements:

• －

• ●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”

• －

• ●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”

• ●Annual Improvements to IFRS Standards 2018–2020

• ●Amendments to IFRS 3 “Reference to the Conceptual Framework”

(Continued)

• 199 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (“IASB”), but have yet to be endorsed by the FSC:

Standards or Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

Content of amendment Effective date per IASB The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of balance sheet, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity. January 1, 2023

The Group is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and consolidated financial performance. The results thereof will be disclosed when the Group completes its evaluation.

The Group does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:

• ●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

• ●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

• ●Amendments to IAS 1 “Disclosure of Accounting Policies”

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

• ●Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(4) Summary of significant accounting policies:

The following significant accounting policies have been applied consistently to all periods presented in the consolidated financial statements except for that mentioned in note 3.

(a) Statement of compliance

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

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Basis of preparation

• (i) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for the following significant accounts.

• 1) Financial instruments measured at fair value through profit or loss are measured at fair value;

• 2) Fair value through other comprehensive income are measured at fair value;

• (ii) Functional and presentation currency

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

(c) Basis of consolidation

• (i) Principles for preparing consolidated financial statements

The consolidated financial statements comprise the Company and its subsidiaries. Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, 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.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Intragroup balances and transactions, and any unrealized income and expenses arising from Intragroup transactions are eliminated in preparing the consolidated financial statements The Group attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

The Group prepares consolidated financial statments using uniform accounting policies for like transactions and other events in similar circumstances.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received will be recognized directly in equity, and the Group will attribute it to the owners of the parent.

• (ii) List of subsidiaries in the consolidated financial statements:

Name of investor	Subsidiaries	Principal activity	Shareholding December 31, 2021 December 31, 2020 Description	Shareholding December 31, 2021 December 31, 2020 Description
			December 31, 2021
The Company	Jin Jyun Construction Co., Ltd.	Construction industry, residence and building lease construction	% 100.00	% 100.00

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

• (d) Classification of current and non-current assets and liabilities

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

• (i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) It is expected to be realized within twelve months after the reporting period; or

• (iv) The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

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

• (i) It is expected to be settled in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) It is due to be settled within twelve months after the reporting period; or

• (iv) The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

• (e) Cash and cash equivalents

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

(f) Financial instruments

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

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Financial assets

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

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) –equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

• 1) Financial assets measured at amortized cost

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

• ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

• 2) Fair value through other comprehensive income (FVOCI)

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

• ‧ it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

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

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Dividend income is recognized in profit or loss on the date on which the Group’s right to receive payment is established.

• 3) Fair value through profit or loss (FVTPL)

All financial assets not classified as measured at amortized cost or at FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

4) Business model assessment

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

5) Impairment of financial assets

The Group recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and accounts receivable, other receivable, guarantee deposit paid and other financial assets), debt investments measured at FVOCI and contract assets.

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

• ‧ debt securities that are determined to have low credit risk at the reporting date; and

• ‧ other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for accounts receivable and contract assets are always measured at an amount equal to lifetime ECL.

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

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

• ‧ significant financial difficulty of the borrower or issuer;

• ‧ a breach of contract such as a default or being more than 90 days past due;

• ‧ the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

• ‧ it is probable that the borrower will enter bankruptcy or other financial reorganization; or

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

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

The gross carrying amount of a financial asset is written off either partially or in full to the extent that there is no realistic prospect of recovery. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of writeoff based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

6) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

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

(Continued)

• 205 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

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

2) Equity instrument

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

3) Compound financial instruments

Compound financial instruments issued by the Group comprise convertible bonds denominated in NTD that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.

The liability component of compound financial instruments is initially recognized at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognized at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not remeasured.

Interest related to the financial liability is recognized in profit or loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognized.

4)

Financial liabilities

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

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

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

5) Derecognition of financial liabilities

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

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

6) Offsetting of financial assets and liabilities

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

(g) Inventory

(i) Manufacturer Industries

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(ii) Construction industry

Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes expenditure incurred in acquiring the inventories in bringing them to their existing location and condition, and capitalized borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The methods of determining the net realizable value are as follows:

1) Construction site

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses, or estimated by recent market value (development analytical method or comparison method).

(Continued)

• 207 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Construction in progress

Net realizable value is the estimated selling price (prevailina market condition) less the estimated costs and selling expenses needed to complete.

• 3) Real estate held for sale

Net realizable value is the estimated selling price (current market condition) in the ordinary course of business, less the estimated selling costs and expenses needed to sell the estate.

(h) Non-current assets held for sale

Non-current assets or disposal groups comprising assets and liabilities that are highly probable to be recovered primarily through sale rather than through continuing use, are reclassified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the Group’s accounting policies. Thereafter, generally, the assets or disposal groups are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to assets not within the scope of IAS 36 – Impairment of Assets. Such assets will continue to be measured in accordance with the Group’s accounting policies. Impairment losses on assets initially classified as held for sale and any subsequent gains or losses on remeasurement are recognized in profit or loss. Gains are not recognized in excess of the cumulative impairment loss that has been recognized.

Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortized or depreciated, and any equity-accounted investee is no longer equity accounted.

(i) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition, and subsequently at cost, less accumulated depreciation and accumulated impairment losses. Depreciation expense is calculated based on the depreciation method, useful life, and residual value which are the same as those adopted for property, plant and equipment.

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

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

• (j) Property, plant and equipment

(i) Recognition and measurement

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

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

(ii) Subsequent cost

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

(iii) Depreciation

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

Land is not depreciated.

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

he estimated useful lives of property, plant and equipm eriods are as follows:	ent for current and comparativ
1) Buildings	3～50 years
2) Equipment	3～5 years
3) Transportation and office equipment	3～5 years
4) Other equipment	3～15 years

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

(k) Lease

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

(i) As a leasee

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

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

(Continued)

• 209 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

• 1) Fixed payments; including in-substance fixed payments;

• 2) Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• 3) Amounts expected to be payable under a residual value guarantee; and

• 4) Payments for purchase or termination options that are reasonably certain to be exercised.

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

• 1) There is a change in future lease payments arising from the change in an index or rate; or

• 2) There is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or

• 3) There is a change of its assessment on whether it will exercise an option to purchase the underlying assets; or

• 4) There is a change of its assessment of lease period on whether it will exercise an extension or termination option; or

• 5) There is any lease modifications

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

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

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

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases of office equipment that have a lease term of 12 months or less and leases of low-value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(Continued)

• 210 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For sale-and-leaseback transactions, the Group applies the requirements for determining when a performance obligation is satisfied in IFRS15 to determine whether the transfer of an asset is accounted for as a sale of the asset. If the transfer of an asset satisfies the requirement of IFRS15 to be accounted for as a sale of the asset, the Group derecognizes the transferred asset, then measures the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained. Accordingly, the Group recognizes only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor. For leaseback transaction, the Group applies the lessee accounting policy. If the transfer of an asset does not satisfy the requirement of IFRS15 to be accounted for as a sale of the asset, the Group continues to recognize the transferred asset and recognizes the financial liability equal to the transfer proceeds.

(ii) As a leasor

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

When the Group is an intermediate lessor, it assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

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

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

(l) Intangible assets

(i) Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses.

Expenditure on research activities is recognized in profit or loss as incurred.

(Continued)

• 211 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable flow into the Group and intends to the Group, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

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

(iii) Amortization

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

1) Patent and trademark 10 years 2) Computer software 1～3 years

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

(m) Impairment of non-financial assets

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

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

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

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in current-period profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

(Continued)

• 212 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(n) Provisions

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

(i) Warranties

A provision for warranties is recognized by expected warranty expense in warranty period of construction. When warranty expense occurs, it would be written off the warranty provision which was recognized before, or warranty expense would be recognized as expense in the current period.

(o) Revenue

(i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group’s main types of revenue are explained below:

1) Land development and sale of real estate

The Group develops and sells residential properties and usually sales properties in advance during construction or before construction begins. Revenue is recognized when control over the properties has been transferred to the customer. An enforceable right to payment does not arise until legal title of a property has passed to the customer. Therefore, revenue is recognized at a point in time when the legal title has passed to the customer.

The revenue is measured at the transaction price agreed under the contract. For sale of readily available house, in most cases, the consideration is due when legal title of a property 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 for the effects of a significant financing component. For pre selling properties, the consideration is usually received by installment during the period from contract inception until the transfer of properties to the customer. If the contract includes a significant financing component, the transaction price will be adjusted for the effects of the time value of money during the period, using the specific borrowing rate of the construction project. Receipt of a prepayment from a customer is recognized as contract liability. Interest expense and contract liability are recognized when adjusting the effects of the time value of money. Accumulated amount of contract liability is recognized as revenue when control over the property has been transferred to the customer.

(Continued)

• 213 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Construction contracts

The Group enters into contracts to build residential properties, commercial buildings and public constructions. Because its customer controls the asset as it is constructed, the Group recognizes revenue over time on the basis of the construction costs incurred to date as a proportion of the total estimated costs of the contract. The consideration promised in the contract includes fixed and variable amounts. The customer pays the fixed amount based on a payment schedule. For some variable considerations (for example, a penalty payment calculated based on delay days) the Group recognizes revenue only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. If the Group has recognized revenue, but not issued a bill, then the entitlement to consideration is recognized as a contract asset. The contract asset is transferred to receivables when the entitlement to payment becomes unconditional.

If the Group cannot reasonably measure its progress towards complete satisfaction of the performance obligation of a construction contract, the Group shall recognize revenue only to the extent of the costs expected to be recovered.

A provision for onerous contracts is recognized when the Group expects the unavoidable costs of performing the obligations under a construction contract exceed the economic benefits expected to be received under the contract.

Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.

For residential properties, and commercial buildings, the Group offers a standard warranty to provide assurance that they comply with agreed upon specifications and has recognized warranty provisions for this obligation.

3) Financing components

The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

(ii) Contract costs

1) Incremental costs of obtaining a contract

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

(Continued)

• 214 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(p) Employee benefits

• (i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

• (ii) Short-term employee benefits

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

(q) Income Taxes

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

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

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

• (i) Temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;

• (ii) Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

• (iii) Taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date, and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

(Continued)

• 215 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

• (i) The Group has a legally enforceable right to set off current tax assets against current tax liabilities; and

• (ii) The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either

• 1) The same taxable entity; or

• 2) Different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(r) Earnings per share

Disclosures are made of basic and diluted earnings per share attributable to ordinary equity holders of the Company. The basic earnings per share is calculated based on the profit attributable to the ordinary shareholders of the Company divided by weighted average number of ordinary shares outstanding. The diluted earnings per share is calculated based on the profit attributable to ordinary shareholders of the Company, divided by weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as remuneration of employees and employee stock options.

(s) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Each operating segment consists of standalone financial information.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

In prepareing these consolidated financial statements, management has made judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

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

Information about judgments made in applying accounting policies that have significant effects on the amounts recognized in the consolidated financial statements is as follows: None.

(Continued)

• 216 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID-19 pandemic:

(a) Estimation of total revenue and cost of construction contracts

The Group recognizes revenue and cost on the basis of the extent of progress toward completion, which is estimated by the construction costs incurred to date as a proportion of the total estimated costs of the contract. The Group considers the extent of construction, estimated construction period, construction items, processes of construction, and estimated amount to contract out, to estimate total contract cost. Any change to above mentioned estimation basis may result in significant adjustments to total estimated construct cost.

• (b) Valuation of inventories

Inventories are measured at the lower of cost and net realizable value. The Group’s evaluate the selling price in the market is below the cost, and write off the cost of inventory to net realizable value. The estimation of net realizable value is based on current market conditions . Please refer note 6(d) for inventory valuation.

Valuation process

The Group’s accounting policies and disclosures included financial and non-financial assets and liaiblities measured at fair value. The Group’ s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value. The fair value measurement of investment property is based on the website of Department of Land Administration and estate agency’s website or the close deal in similar district.

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

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

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

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

The transfers policy between levels of the fair value hierarchy.

If there is any movement of financial instruments measured at fair value between level 1, level 2 and level 3, the Group recognizes the movement at the reporting date. For assumptions used in measuring fair value. Please refer notes as follows:

• (a) Note 6(n) Investment property.

• (b) Note 6(w) Financial instruments.

(Continued)

• 217 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and petty cash Demand Deposits (including foreign currency) Check Deposits Cash and cash equivalents	December 31, 2021 $ 569 2,177,469 344 $ 2,178,382	December 31, 2020
		684 2,108,614 345
		2,109,643

Please refer to note 6(w) for the disclosure of the Group’s financial assets and liabilities interest risk and sensitivity analysis.

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

Equity investments at fair value through other comprehensive income: Stocks listed on domestic market	December 31, 2021 $ 607,956	December 31, 2020 602,698

• (i) Equity investments at fair value through other comprehensive income

The Group designated the investments shown above as equity investment at fair value through other comprehensive income because these equity securities represent those investments that the Group intends to hold for long-term for strategic purposes and not hold for sale.

During the years ended December 31, 2021 and 2020, the dividends of $26,352 thousand and $23,900 thousand, respectively, related to equity investments at fair value through other comprehensive income, were recognized;

In 2020, the Group has sold its equity investments at fair value through other comprehensive income. The investments sold had a fair value of $10,777 thousand and the Group realized a gain of $254 thousand.

There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments as of December 31, 2021 and 2020.

• (ii) For credit risk and market risk, please refer to note 6(w).

• (iii) The financial assets at fair value through other comprehensive income of the Group had been pledged as collateral, please refer to note 8.

(Continued)

• 218 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (c) Note and account receivables, net (including related parties)

Note receivable Trade receivables–measured as amortized cost Total	December 31, 2021 $ 363,485 217,824 $ 581,309	December 31, 2020
		160,692 310,352
		471,044

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

Current Current	December 31, 2021	December 31, 2021
	Gross carrying amount Weighted- average loss rate $ 581,309 - December 31, 2020		Loss allowance Provision
			-
		Weighted- average loss rate -	Loss allowance Provision
			-

For the years ended December 31, 2021 and 2020, there are no expected credit losses recognized or reversed.

As of December 31, 2021 and 2020, note receivables had been pledged as collateral; please refer to note 8.

• (d) Inventories

Manufacturer industry: Spare parts Construction industry: Prepaid for land purchase Land held for construction sites Construction in progress Properties and land held for sale Subtotal Total	December 31, 2021 $ - 278,063 2,479,866 22,674,681 1,814,289 27,246,899 $ 27,246,899	December 31, 2020
		10,598
		310,679 762,128 20,035,513 3,703,633
		24,811,953
		24,822,551

(Continued)

• 219 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the year ended December 31, 2021, the Group changed the usage of partial asset, and reclassified properties and land held for sale to investment property according to definition of investment property. Please refer to Note 6(h).

For the years ended December 31, 2021 and 2020, there is no write-offs or reversals of inventories.

For the years ended December 31, 2021 and 2020, construction in progress of the Group is calculated using a capitalization rate 1.82% and 1.85%, respectively. For the amount of capitalized interest, please refer to note 6(v).

As of December 31, 2021 and 2020 the inventories of the Group had been pledged as collateral, please refer to note 8.

• (e) Non-current assets held for sale

The Group leased back its land and buildings in ChinTai section, Zhongshan district based on the resolution made during the board meeting on December 24, 2020. The selling price was $1,221,710 thousand (VAT included), and the disposal of land and buildings were on the progress. Consequently, the land and buildings were classified as non-current assets held for sale. Impairment loss resulting from measuring at the lower of carrying amount of the property plant and equipment and fair value to sell was $165,479 thousand. The loss was presented as other operating income and loss in statements of comprehensive income, please refer to note 6(v). As of December 31, 2021, the amount of the non-current asset held for sale was $1,187,386 thousand. The land and buildings have been sold and leased back in January 2021 and the relevant payment have been fully received.

As of December 31, 2020, the non-current assets held for sale of the Group had been pledged as collateral, please refer to note 8.

(f) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Group for the years ended December 31, 2021 and 2020, were as follows:

Cost: Balance on January 1, 2021 Additions Balance on December 31, 2021 Balance on January 1, 2020 Additions Disposals Reclassification to non-current assets held for sale Tarnsfer to (from) Balance on December 31, 2020	Land (Including improvement) $ 213,883 - $ 213,883 $ 1,335,587 - - (1,121,704) - $ 213,883	Buildings and construction 49,628 - 49,628 330,660 5,306 - (256,649) (29,689) 49,628	Machinery and equipment 1,699 - 1,699 - 1,699 - - - 1,699	Other equipment (Inclding transportation, office, leased improvements and other equipment) 47,955 1,755 49,710 44,040 3,140 (28,914) - 29,689 47,955	Total 313,165 1,755
					314,920
					1,710,287 10,145 (28,914) (1,378,353) -
					313,165

(Continued)

• 220 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Depreciation and Impairment: Balance on January 1, 2021 Depreciation Balance on December 31, 2021 Balance on January 1, 2020 Depreciation Disposals Reclassification to non-current assets held for sale Tarnsfer to (from) Balance on December 31, 2020 Carrying amounts: Balance on December 31, 2021 Balance on December 31, 2020	Land (Including improvement) $ 4,420 570 $ 4,990 $ 3,849 571 - - - $ 4,420 $ 208,893 $ 209,463	Buildings and construction 42,174 1,822 43,996 69,487 9,277 - (25,488) (11,102) 42,174 5,632 7,454	Machinery and equipment 177 425 602 - 177 - - - 177 1,097 1,522	Other equipment (Inclding transportation, office, leased improvements and other equipment) 22,534 5,555 28,089 35,419 2,581 (26,568) - 11,102 22,534 21,621 25,421	Total
					69,305 8,372
					77,677
					108,755 12,606 (26,568 (25,488 -
					69,305
					237,243
					243,860

(i) In order to manage activating strategies of assets and obtain the maximum effectiveness, the Group transferred the sold assets to the non-current assets held for sale in December, 2020. Please refer to note 6(e) for details. Please refer to note 6(v) for related gain or loss of disposal.

• (ii) As of December 31 2020, the property, plant and equipment of the Group had been pledged as collateral for long-term borrowings, please refer to note 8.

• (g) Right-of-use assets

The Group leases assets including land and buildings. Information about leases for which the Group as a lessee was presented below:

Cost: Balance on January 1, 2021 Additions Lease modification Balance on December 31, 2021 Balance on January 1, 2020 Additions Lease modification Balance on December 31, 2020	Land $ 12,447 72 (8,967) $ 3,552 $ 8,547 8,581 (4,681) $ 12,447	Buildings - 152,503 - 152,503 - - - -	Total 12,447 152,575 (8,967) 156,055 8,547 8,581 (4,681) 12,447

(Continued)

• 221 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Depreciation and impairment losses: Balance on January 1, 2021 Depreciation Lease modification Balance on December 31, 2021 Balance on January 1, 2020 Depreciation Lease modification Balance on December 31, 2020 Carrying amounts: Balance on December 31, 2021 Balance on December 31, 2020	Land $ 274 946 (793) $ 427 $ 1,845 642 (2,213) $ 274 $ 3,125 $ 12,173	Buildings - 26,264 - 26,264 - - - - 126,239 -	Total 274 27,210 (793) 26,691 1,845 642 (2,213) 274 129,364 12,173

(h) Investment Property

The information of investment properties of the Group were as follows:

Cost: Balance on January 1, 2021 Transfer from inventory Balance on December 31, 2021 Balance on January 1, 2020 Balance on December 31, 2020 Depreciation and Impairment: Balance on January 1, 2021 Depreciation Balance on December 31, 2021 Balance on January 1, 2020 Depreciation Balance on December 31, 2020	Land and improvement $ 375,656 48,035 $ 423,691 $ 375,656 $ 375,656 $ - - $ - $ - - $ -	Buildings and construction 317,575 32,210 349,785 317,575 317,575 11,797 6,620 18,417 5,570 6,227 11,797	Total
			693,231 80,245
			773,476
			693,231
			693,231
			11,797 6,620
			18,417
			5,570 6,227
			11,797

(Continued)

• 222 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Carrying amounts: Balance on December 31, 2021 Balance on December 31, 2020 Fair value: Balance on December 31, 2021 Balance on December 31, 2020	Land and improvement $ 423,691 $ 375,656	Buildings and construction Total 331,368 755,059 305,778 681,434 $ 940,387 $ 837,250	Total
			755,059
			681,434

The investment property includes several commercial buildings for that are owned by the Group for renting to the third party. Please refer to note 6(o) for more information.

The fair value measurement of investment property is based on the website of Department of Land Administation and estate agencys website or the close deal in similar district. The fair value measurement of investment property has been categorized as a level 3 fair value based on the imputs to the valuation techique used.

As of December 31, 2021 and 2020, the Group’s investment property had been pledged as collateral, please refer to note 8.

• (i) Other financial assets and incremental costs of obtaining a contract

Other current and non-current financial assets Current incremental costs of obtaining a contract Total	December 31, 2021 $ 6,196,217 934,204 $ 7,130,421	December 31, 2020
		5,705,868 410,475
		6,116,343

(i) Other financial assets

Other financial assets include certificate of deposit as collateral, trust account for presale of properties, reserve account for borrowing, endorsement and performance guarantee, reserve account for bonds and construction deposit.

(ii) Incremental costs of obtaining a contract

The Group expects that incremental commission fees paid to intermediaries, and the bonus for the internal sales department are recoverable. The Group has therefore capitalized them as contract costs. Capitalized commission fees are amortized when the related revenues are recognized. For the years ended December 31, 2021 and 2020, the Group recognized $193,621 thousand and $120,387 thousand of selling expense.

(Continued)

• 223 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(j) Short-term borrowings, notes and bills payable

The details of short-term borrowings, notes and bills payable of the Group were as follows:

Secured bank loans Unsecured bank loans Short-term notes and bills payable Total Secured bank loans Unsecured bank loans Short-term notes and bills payable Total		December 31, 2021	December 31, 2021	December 31, 2021
	Currency	Range of interest rate
	TWD TWD TWD
	Currency	Range of interest rate	Maturity Amount 2021~2025 $ 10,605,172 2021 1,331,000 2021 2,758,113 $ 14,694,285	Amount
	TWD TWD TWD	1.72%~2.14% 1.23% 0.41%~1.82%

(i) The issue of bank loan and repayment

For the years ended December 31, 2021 and 2020, the incremental amounts were $22,484,683 thousand and $18,838,610 thousand, respectively; the repayment amounts were $21,868,200 thousand and $13,152,910 thousand, respectively.

• (ii) Collateral for bank Loans

The Group had pledged as collateral for bank loans, please refer to note 8.

• (k) Long-term borrowings/Long-term borrowings, current portion

The details of long-term borrowings of the Group were as follows:

Secured bank loans Less: current portion Total Secured bank loans Less: current portion Total		December 31, 2021 Range of interest rate Maturity Amount 1.54% 2034 $ 344,482 (25,944) $ 318,538 December 31, 2020 Range of interest rate Maturity Amount 1.44% 2034~2035 $ 1,362,573 (1,018,091) $ 344,482
	Currency	Range of interest rate
	TWD
	Currency	Range of interest rate
	TWD	1.44%

(Continued)

• 224 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (i) The issue of bank loan and repayment

For the years ended December 31, 2021 and 2020, the incremental amounts both were $0 thousand; the repayment amounts were $1,018,091 thousand and $58,762 thousand, respectively.

• (ii) Collateral for bank Loans

The Group had pledged as collateral for bank loans, please refer to note 8.

• (l) Bonds payable/ Bounds payable current portion or putable bonds

The details of the Group’s bonds payable were as follows:

The details of the Group’s bonds payable were as follows:
Secured ordinary corporate bond－current Secured ordinary corporate bond－non-current Total	December 31, 2021 $ 1,989,327 7,861,799 $ 9,851,126	December 31, 2020
		1,481,281 7,851,491
		9,332,772

• (i) The Group issued a secured ordinary corporate bond for 5 years at the amount of $2,000,000 thousand with an interest rate of 0.57%, in November 2021. The Group did not issue, redeem or repay the above corporate bond for the year ended December 31, 2020.

• (ii) The Group issued a secured ordinary corporate bond amounting to $5,900,000 thousand, ～

• $1,500,000 thousand, and $2,000,000 thousand with an interest rate of 0.78% 0.85%, 0.96%, and 0.98% in 2019, December 2016, and August 2017, respectively. The secured ordinary corporate bonds were issued for 5 years.

(iii) For the details of collateral of secured ordinary carporate bond, please refer to note 8.

(m) Lease liabilities

The carrying amount of lease liabilities were as follows：

Current Non-current	December 31, 2021 $ 29,149 $ 99,013	December 31, 2020
		8,827
		814

For the maturity analysis, please refer to note 6(w).

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases	For the years ended December 31	For the years ended December 31
	2021 $ 2,282 $ 19,389	2020
		33
		27,688

(Continued)

• 225 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The amounts recognized in the statement of cash flows for the Group were as follows：

Total cash outflow for leases	For the years ended December 31	For the years ended December 31
	2021 $ 47,763	2020 28,165

(i) Real estate lease

In January 2021 the Group sold and leased back its office buildings and leased land for the construction of its reception center and parking lot. The leases run for a period of 2-20 years. The Group also leases out its office equipment and outdoor advertising. These leases are shortterm and of low-value items. The Group has elected not to recognize its right-of-use assets and lease liabilities for these leases.

(n) Provisions

Balance on January 1, 2021 Provisions made during the year Balance on December 31, 2021 Balance on January 1, 2020 Provisions used at current period Balance on December 31, 2020	Warranty
	$ 17,778 25,419 $ 43,197 $ 4,290 13,488 $ 17,778

For the years ended December 31, 2021 and 2020, the Group’ s warranty provision is related to construction contract. The warranty measured by the historical record, the Group expects most of the liabilities will realize within 1-3 years after construction completion.

(o) Operating lease

The Group leases out its investment property. The Group has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Please refer to note 6(h) sets out information about the operating leases of investment property.

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date are as follows:

Less than one year One to two years Two to three years Three to four years Four to five years Total undiscounted lease payments	December 31, 2021 $ 16,271 16,031 9,358 6,261 514 $ 48,435	December 31, 2020
		15,431 15,585 15,345 8,672 5,576
		60,609

(Continued)

• 226 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020, the Group’ s rental income from investment properties were $14,991 thousand and $14,510 thousand, respectively.

(p) Employee benefits

(i) Defined benefit plans

The Group’s employee benefit liabilities were as follows:

Short-term paid leave liability	December 31, 2021 $ 3,594	December 31, 2020
		3,484

• (ii) Defined contribution plans

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

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $8,780 thousand and $9,816 thousand for the years ended December 31, 2021 and 2020, respectively.

(q) Income tax

• (i) The components of income tax expenses for the years ended December 31, 2021 and 2020 were as follows:

Current tax expense Current period Land value increment tax Adjustment for prior periods Deferred tax expense Origination and reversal of temporary differences Income tax expense	For the years ended December 31	For the years ended December 31
	2021 $ 352,214 40,167 1,074 393,455 (5,084) $ 388,371	2020
		107,156 2,480 (14,157)
		95,479
		(2,697)
		92,782

(Continued)

• 227 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The reconciliation of income tax expense and profit before tax for the years ended December 31, 2021 and 2020 are as follows:

	For	the years ended	December 31
		2021	2020
Profit before tax	$	2,060,201	210,030
Income tax expense at domestic statutory tax rate		412,040	42,006
Book –tax difference between deferred interest expense		(14,629)	(6,982)
Land tax exempt income		31,987	2,890
Book –tax difference between deferred sales commission		(18,712)	25,187
Adjustment for prior periods		1,074	(14,157)
Financial assets measured at fair value through profit and		-	12
loss
Book-Tax difference between deferred impairment loss		(33,096)	33,096
Land value increment tax		40,167	2,480
Dividend income		(5,270)	(4,780)
Others		(25,190)	13,030
	$	388,371	92,782

(ii) Recognized deferred tax asset and liability

Changes in the amount of deferred tax assets and liabilities for the years ended December 31, 2021 and 2020 were as follows:

Deferred tax asset: Balance on January 1, 2021 Credit income statement Balance on December 31, 2021 Balance on January 1, 2020 Debit income statement Balance on December 31, 2020 Deferred tax liabilities: Balance on January 1, 2021 Balance on December 31, 2021 Balance on January 1, 2020 Balance on December 31, 2020	Warranty	Warranty
	$ 3,555 5,084 $ 8,639 $ 858 2,697 $ 3,555 Provision for land value increment tax
		Provision for land value increment tax
	$ 2,844 $ 2,844 $ 2,844 $ 2,844

(Continued)

• 228 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Assessment of tax

The Company’ s income tax had been examined by the tax authorities till the year 2019.

(r) Capital and other equity

As of December 31, 2021 and 2020, the total value of authorized ordinary shares were $5,000,000 thousand, with par value of $10 per share. The paid-in capital were $392,197 thousand and $369,997 thousand, respectively.

(i) Ordinary shares

A resolution was passed during the general meeting of shareholders held on August 16, 2021 for the issuance of 20 and 40 new shares, at per one thousand share, using retained earnings and capital surplus, respectively, with an amount totaling $222,000 thousand. The Company has received thu approval from the Financial Supervisory Commission for the above capital increase on August 30, 2021, and August 3, 2020, respectively. Also, a resolution was passed during the board meeting, to set October 1, 2020, and October 2, 2021, respectively, as the date of allocated capital. The relevant statutory registration procedures have since been completed.

(ii) Capital surplus

The components of the capital surplus were as follows:

Premium on issuance of capital stock Donation from shareholders Others	December 31, 2021 $ 12,021 3,585 5,770 $ 21,376	December 31, 2020
		160,021 2,598 5,770
		168,389

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

On August 16, 2021, a resolution was approved during the general meetings of the shareholders for the distribution of cash dividends amounting to $148,000 thousand. Furthermore, the distribution of cash dividends amounting to $308,331 thousand resulted in a capital increase of $308,330 thousand by using the capital surplus based on the resolution approved during the general meetings of the shareholders held on June 9, 2020.

(Continued)

• 229 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Retained earnings

In accordance with the Company’s Articles of Incorporation, which were appproved during the general meeting of shareholders held on June 9, 2020, stipulates that Company's net earnings should first be used to offset the prior years’ deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, and then any remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

Before the distribution of dividends, the Company shall first take into consideration its operating environment, industry developments, and the long-term interests of stockholders, as well as its programs to maintain operating efficiency and meet its capital expenditure budget and financial goals in determining the stock or cash dividends to be paid. When distributing dividends, the Company determines the stock or cash dividends to be paid. The limit of dividend distribution is maintained between 10% and 100% of current-year earnings distribution. The cash dividends shall not be below 10% of total dividends.

As the Company distributes all or part of dividends, or legal reserve, or cpaital with cash, the Company should hold a Board meeting to pass the resolution by more than half of the directors present at the Board meeting, which meeting requires a quorum of two thirds of all the directors present. The resolution should be submitted to the Shareholder’s meeting.

1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

2) Special reserve

In accordance with the FSC, a portion of current-period earnings and undistributed priorperiod earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders’ equity. Similarly, a portion of unappropriated earnings prior-period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions.

(Continued)

• 230 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Earnings distribution

Earnings distribution for the years ended December 31, 2020 and 2019 was decided by the resolution adopted, at the general meeting of shareholders held on August 16, 2021 and June 9, 2020, respectively. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders: Cash Shares Total	For the years ended December 31	For the years ended December 31	For the years ended December 31	For the years ended December 31	For the years ended December 31
	2020			2019 Amount per share (dollars) Amount 1.00 308,330 1.00 308,331 616,661
	Amount per share (dollars)		Amount		Amount
	$ 0.20 0.20	74,000 74,000 $ 148,000	74,000 74,000		308,330 308,331
					616,661

The amount of cash dividends on the appropriations of earnings for the years ended December 31, 2021, and the amount of shares dividends of appropriations of earnings for the years ended December 31, 2021, had been approved and proposed, respectively during the board meeting on March 14, 2022, as follows:

Dividends distributed to ordinary shareholders: Cash Shares Total Other equity items (net after tax) Balance on January 1, 2021 Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Balance on December 31, 2021 Balance on January 1, 2020 Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Disposal of investments in equity intruments diesignated at fair value thragh other compiehensive income Balance on December 31, 2020	For the year ended December 31	For the year ended December 31	For the year ended December 31
		2021
		Amount per share Total Amount 2.00 784,393 1.50 588,295 $ 1,372,688 Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income $ 150,468 5,258 $ 155,726 $ 101,054 49,668 (254) $ 150,468	Total Amount
	$		784,393 588,295

(iv) Other equity items (net after tax)

(Continued)

• 231 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(s) Earnings per share

The calculations of basic and diluted earnings per share were as follows:

(i) Basic earnings per share

1) Profit attributable to ordinaryshareholders of the Company 2) Weighted-average number of ordinary shares (ii) Diluted earnings per share 1) Profit attributable to ordinary shareholders of the Company (diluted) 2) Weighted-average number of ordinary shares (basic) Effect of restricted employee shares unvested Weighted-average number of ordinary shares (diluted)	For the years ended December 31	For the years ended December 31
	2021 2020 $ 1,671,830 117,248 392,197 392,197 For the years ended December 31	2020
		117,248
		392,197
		2020
		117,248
		392,197 124
		392,321

• (t) Revenue from contracts with customers

(i) Disaggregation of revenue

Primary geographical markets: Taiwan Major products/services lines: Sales revenue (sales of real estate) Construction contractor Other revenue Timing of revenue recognition: Products and services transferred over time Revenue transferred at a point in time Total	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2021
	Sales of real estate department $ 9,653,691 $ 9,638,471 - 15,220 $ 9,653,691 $ 14,991 9,638,700 $ 9,653,691	Construction contractor department 825,576 - 825,576 - 825,576 825,576 - 825,576	Total
			10,479,267
			9,638,471 825,576 15,220
			10,479,267
			840,567 9,638,700
			10,479,267

(Continued)

• 232 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the year ended December 31, 2020 Sales of real estate department Construction contractor department Total Primary geographical markets: Taiwan $ 3,944,597 3,711,639 7,656,236 Major products/services lines: Sales revenue (sales of real estate) $ 3,930,087 - 3,930,087 Construction contractor - 3,711,639 3,711,639 Other revenue 14,510 - 14,510 $ 3,944,597 3,711,639 7,656,236 Timing of revenue recognition: Products and services transferred over time 14,510 3,711,639 3,726,149 Revenue transferred at a point in time 3,930,087 - 3,930,087 Total $ 3,944,597 3,711,639 7,656,236 (ii) Contract balances December 31, 2021 December 31, 2020 January 1, 2020 Contract assets－Construction $ 34,959 114,388 56,047 Less: Allowance for impairment - - - Total $ 34,959 114,388 56,047 Contract liabilities－Construction $ - 50,395 180,095 Contract liabilities－Sales of real estate 3,267,845 3,308,906 1,593,488 Contract liabilities－Advance receipt 264 5,804 256 Total $ 3,268,109 3,365,105 1,773,839	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020
			Total
			7,656,236
			3,930,087 3,711,639 14,510
			7,656,236
			3,726,149 3,930,087
			7,656,236
			January 1, 2020
			56,047 -
			56,047
			180,095 1,593,488 256
			1,773,839

For details on accounts receivable and allowance for impairment, please refer to note 6(c).

The amount of revenue recognized for the years ended December 31, 2021 and 2020 that was － included in the contract liability Sales of real estate balance at the beginning of the period were $1,372,307 thousand and $143,594 thousand, respectively.

The major change in the balance of contract assets and liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received. There were no other significant changes for the years ended December 31, 2021 and 2020.

(Continued)

• 233 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(u) Employee and directors' remuneration

In accordance with the articles of incorporation the Company should contribute no less than 0.1% of the profit as employee remuneration and less than 1% as directors' remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The recipients of shares and cash may include the employees of the Company’s affiliated companies who meet certain conditions.

For the years ended December 31, 2021 and 2020, the Company estimated its employee remuneration amounting to $27,000 thousand and $3,500 thousand, respectively, and directors’ remuneration amounting to $10,000 thousand and $1,500 thousand, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors of each period, multiplied by the percentage of remuneration to employees, directors as specified in the Company's articles. If there is difference between the estimated amount and actual distribution of next year, the Company recognizes it in profit and loss of the next year, as a change in accounting estimates. If a resolution is made by the meeting of Board of Directors to distribute employee remuneration by shares, the number of shares to be distributed will be calculated based on the closing price of the Company’s ordinary shares, one day before the date of the meeting of Board of Directors. These remunerations were expensed under operating expenses for the years end 2021 and 2020. Related information would be available at the Market Observation Post System website. The amounts, as stated in the consolidated financial statements, are identical to those of the actual distributions for the years ended 2021 and 2020.

(v) Non-operating income and expenses

(i) Interest income

The details of interest income for the years ended December 31, 2021 and 2020 were as follows:

Interest income from construction refundable deposit Interest income from bank deposit and bills Others	For the years ended December 31	For the years ended December 31
	2021 $ 2,199 2,760 933 $ 5,892	2020 2,344 2,275 6,659 11,278

(ii) Other income

The details of other income for the years ended December 31, 2021 and 2020 were as follows:

Dividend income Rent income	For the years ended December 31	For the years ended December 31
	2021 $ 26,352 8,596 $ 34,948	2020
		23,900 7,874
		31,774

(Continued)

• 234 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Other gains and losses

The details of other gains and losses for the years ended December 31, 2021 and 2020 were as follows:

Foreign exchange losses Losses on financial assets at fair value through profit or loss Gain on disposal of property, plant and equipment Impairment loss on non-current assets Other income Other expenses	For the years ended December 31 2021 2020 $ (87) (924) - (62) - 1,944 - (165,479) 59,966 73,195 (78) (27) $ 59,801 (91,353)
	2021 $ (87) - - - 59,966 (78) $ 59,801

(iv) Finance costs

The details of finance cost for the years ended December 31, 2021 and 2020 were as follows:

Interest expense Bank loans and collateral Guarantee fees Interest on corporate bond Other financial expenses Less: capitalized interest	For the years ended December 31 2021 2020 $ 345,375 344,168 16,421 6,303 83,931 81,732 2,282 33 (317,522) (286,113) $ 130,487 146,123
	2021 $ 345,375 16,421 83,931 2,282 (317,522) $ 130,487

(w) Financial instruments

(i) Credit risk

1) Credit risk exposure

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

2) Concentration of credit risk

The most of accounts receivable of the Group are from sales of real estate department and construction contractor department. Receivables generated from construction contractor department are mostly from companies in the Group or listed companies, which are considered to have good credit. Thus, the Group evaluates there is no significant credit risk.

(Continued)

• 235 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Receivables generated from sales of real estate department are mostly from individuals, and the payments are usually completed with transferring, check, or loans form the bank, which are considered to have low credit risk and no past-due condition. Thus, the Group evaluates there is no need to recognize loss allowance provision.

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

December 31, 2021 Non derivative financial liabilities: Secured bank loans Unsecured bank loans Short-term notes and bills payable Ordinary corporate bonds (including current portion) Notes payable, accounts payable and other payables Lease liabilities December 31, 2020 Non derivative financial liabilities: Secured bank loans Unsecured bank loans Short-term notes and bills payable Ordinary corporate bonds (including current portion) Notes payable, accounts payable and other payables Lease liabilities	Carrying amount $ 13,897,139 522,000 1,236,759 9,851,126 3,238,551 128,162 $ 28,873,737 $ 11,967,745 1,331,000 2,758,113 9,332,772 2,521,123 9,641 $ 27,920,394	Contractual cash flows 14,626,158 524,321 1,237,900 10,123,060 3,238,551 133,892 29,883,882 12,673,345 1,346,420 2,760,000 9,648,880 2,521,123 10,030 28,959,798	Within 1 year 1,619,390 524,321 1,237,900 2,079,820 3,238,551 29,162 8,729,144 1,815,644 1,346,420 2,760,000 1,582,820 2,521,123 4,629 10,030,636	1-3 years 5,977,050 - - 6,020,440 - 58,325 12,055,815 3,523,716 - - 2,117,240 - 4,319 5,645,275	3-5 years 6,807,073 - - 2,022,800 - 45,607 8,875,480 7,080,273 - - 5,948,820 - 139 13,029,232	Over 5 years
						222,645 - - - - 798
						223,443
						253,712 - - - - 943
						254,655

The Group does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

• (iii) Market risk

1) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Group’s financial assets and liabilities.

(Continued)

• 236 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.5% when reporting to management internally, which also represents the Group management's assessment of the reasonably possible interest rate change.

If the interest rate had increased / decreased by 0.5% basis points, the Group’s interest expenses would have increased / decreased by $72,137 thousand and $66,535 thousand, respectively, for the years ended December 31, 2021 and 2020, with all other variable factors remaining constant. Taking into account that capitalized interest of profit may decrease or increase by $21,011 thousand and $22,493 thousand, respectively. This is mainly due to the Group’s borrowing at variable rates.

• 2) Other market price risk

For the years ended December 31, 2021 and 2020, the sensitivity analyses for the changes in the securities price at the reporting date were performed using the same basis for the profit and loss as illustrated below:

Price of securities at reporting date Increasing 10％ Decreasing 10％	For the years ended December 31	For the years ended December 31	For the years ended December 31	For the years ended December 31
	2021		2020 Other comprehensive income after tax Net income 60,270 - (60,270) -
	Other comprehensive income after tax $ 60,796 $ (60,796)	Net income		Net income
		-		-
		-		-

• (iv) Information of fair value

• 1) Valuation techniques for financial instruments measured at fair value

The fair value of financial assets and liabilities at fair value through profit or loss, and financial assets at fair value through other comprehensive income is measured on a recurring basis. The carrying amount and fair value of the Group’s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required :

Financial assets at fair value through other comprehensive income Stocks listed on domestic markets		December 31, 2021	December 31, 2021	December 31, 2021
	Book Value $ 607,956		Fair Value
		Level 1 607,956	Level 2 -	Level 3 -	Total 607,956

(Continued)

• 237 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other receivables Other financial assets- current Other financial assets- non-current Subtotal Total Financial liabilities measured at amortized cost Short-term loans Short-term notes and bills payable Notes payable, accounts payable and other payables Lease liabilities Corporate bonds payable (including current portion) Long-term loans (including current portion) Total Financial assets at fair value through other comprehensive income Stocks listed on domestic markets Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other receivables Other financial assets- current Other financial assets- non-current Subtotal Total		December 31, 2021	December 31, 2021	December 31, 2021
	Book Value $ 2,178,382 581,309 27,340 3,600,921 2,595,296 8,983,248 $ 9,591,204 $ 14,074,657 1,236,759 3,238,551 128,162 9,851,126 344,482 $ 28,873,737		Fair Value
		Level 1 Level 2 Level 3 - - - - - - - - - - - - - - - - - - 607,956 - - - - - - - - - - - - - - - - - - - - - - - December 31, 2020			Total - - - - -
					-
					607,956
					- - - - - -
					-
			Fair Value
		Level 1 602,698 - - - - - - 602,698	Level 2 - - - - - - - -	Level 3 - - - - - - - -	Total 602,698
					- - - - -
					-
					602,698

(Continued)

• 238 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial liabilities measured at amortized cost Short-term loans Short-term notes and bills payables Notes payable, accounts payable and other payables Lease liabilities Corporate bonds payable (including current portion) Long-term loans (including current portion) Total		December 31, 2020	December 31, 2020	December 31, 2020
	Book Value $ 11,936,172 2,758,113 2,521,123 9,641 9,332,772 1,362,573 $ 27,920,394		Fair Value
		Level 1 - - - - - - -	Level 2 - - - - - - -	Level 3 - - - - - - -	Total - - - - - -
					-

• 2) Valuation techniques for financial instruments measured at fair value

• a) Non-derivative financial instruments

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm's-length basis. Whether transactions are taking place ‘regularly’ is a matter of judgment and depends on the facts and circumstances of the market for the instrument.

Quoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

Fair values and extents of financial instruments quoted in active markets are listed as follows:

• i) Fair value of listed stocks and corporate bonds are determined by market prices, for they are issued with standard terms and conditions, and are quoted in active markets.

• b) Derivative financial instruments

Measurement of the fair value of derivative instruments is based on the valuation techniques generally accepted by market participants such as the discounted cash flow or option pricing models. Fair value of forward currency is usually determined by the forward currency exchange rate. Structured Interest Rate Derivatives financial instruments are base on appropriate option pricing models (such as the Black – Scholes model) or other evaluation methods.

(Continued)

• 239 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The discounted cash flow method is used to estimate the fair value. The main assumptions are considering the probability of occurrence base on the surplus before the tax, interest, depreciation and amortization to estimate the price to be paid, and are estimated as the present value after discounting, whose discount rate is adjusted base on the risk.

• 3) Transfers between levels

Stock held by the Group quoted in an active market is sorted to Level 1. There is no difference regarding valuation techniques for the years ended December 31, 2021 and 2020. There is no transfer between levels measured at fair value for the years ended December 31, 2021 and 2020.

• (x) Financial risk management

• (i) Overview

The Group have exposures to the following risks from its financial instruments:

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

The following likewise discusses the Group’s exposure information, objectives, policies and processes for measuring and managing the above mentioned risks.

(ii) Structure of risk management

The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

(iii) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investments in debt securities.

1) Trade and other receivable

The Group’ s credit risk is affected by its clients. Accounts receivable generated by selling real estate has a lower credit risk since the payment is completed by the masses with transferring, check, or loans from the bank. Receivables generated from construction contractor department are mostly from companies in the Group or listed companies, which are considered to have low credit risk.

(Continued)

• 240 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group discloses the estimation of accounts receivables’ and other receivables’ loss with allowance for bad debt impairment loss account. Allowance for bad debt impairment loss account is composed with specific losses and batch of unrecognized losses components. Unrecognized losses components are determined by historically statistical data from similar financial assets.

2) Investments

The exposure to credit risk for the bank deposits, fixed income investments, and other financial instruments is measured and monitored by the Group’s finance department. The Group only deals with banks, other external parties, corporate organizations, government agencies and financial institutions with good credit rating. The Group does not expect any counterparty above fails to meet its obligations hence there is no significant credit risk arising from these counterparties.

3) Guarantees

The Group’s policy is to provide financial guarantees only to wholly owned subsidiaries. On December 31, 2021 and 2020, no other guarantees were outstanding.

(iv) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’ s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

(y) Capital management

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

In order to maintain or adjust the capital structure, the Group may adjust the dividend payment to the shareholders, or issue new shares.

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

(Continued)

• 241 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

As of 2021, the Group’s capital management strategy is consistent with the prior year as of 2020. The gearing ratio is maintained so as to ensure financing at reasonable cost. The Group’s debt-toequity ratio as of December 31, 2021 and 2020, were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total Equity Total capital and equity Debt-to-equity ratio	December 31, 2021 $ 32,650,000 (2,178,382) 30,471,618 6,675,011 $ 37,146,629 % 82	December 31, 2020 31,727,054 (2,109,643) 29,617,411 5,070,936 34,688,347 % 85

• (z) Investing and financing activities not affecting current cash flow

The Group’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2021 and 2020, were as follows:

(i) By the lease to get the right-of-use asset, please refer to notes 6(g).

(7) Related-party transactions:

• (a) Parent company and ultimate controlling company

On December 31, 2021 and 2020, Guang Yang Investment Co., Ltd. (Guang Yang) is the parent company of the Group and owns 6.13% and 5.62% of all shares outstanding of the Company, respetively. Chyi Yuh Construction Co., Ltd. is the parent company of Guang Yang. Highwealth Construction Corp. is the ultimate controlling party of the Group and has issued the Consolidated Financial Statements available for Public Use.

• (b) Names and relationship with related party

The followings are entities that have had transactions with related party during the periods covered in the consolidated financial statements.

Name of related party		Relationship with the Group
Guang Yang Investment Co., Ltd.	Parent company of the Group
Chyi Yuh Construction Co., Ltd.	Parent company of Guang Yang Investment Co., Ltd.
Highwealth Construction Corp.	Ultimate controlling company of the Group
(Highwealth)
Well Rich International Co., Ltd.	Same ultimate controlling company with the Group
Bo Yuan Construction Co., Ltd. (Bo		〃
Yuan)
Ju Feng Hotel Management		〃
Consultant Co., Ltd. (Ju Feng)
Highwealth Real Estate Co., Ltd.		〃

(Continued)

• 242 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of related party	Relationship with the Group
Da Li Investment Co., Ltd.	Same president with the Company
Goyu Construction Co., Ltd	The entity is a joint venture under the parent company of
	the Group
○○, Chen	Key management personnel of the ultimate controlling
	company of the Group
○○, Ye	Relatives by blood within the second degree of relationship
	of key management personnel of the Company
○○, Wu	Relatives by blood within the second degree of relationship
	of key management personnel of the Company

• (c) Significant transactions with related parties

• (i) Operating revenues

  • 1) Constrution revenue

The amounts of significant sales and amount unsettled by the Group to related parties were as follows:

○○, Wu ○○, Ye	Construction revenue For the years ended December 31 2021 2020 $ - 7,329 - - $ - 7,329	Contract liabilities-sales of real estate	Contract liabilities-sales of real estate
		December 31, 2021 - 1,528 1,528	December 31, 2020
	2021 $ - - $ -
			- -
			-

The total amount of the contract of sales to the related parties are $17,088 thousand, and $7,479 thousand (VAT included), respectively. There were no significant differences of the price and conditions for related parties and ordinary contract mentioned above.

• 2) Engineering service

The engineering service recognized by the Group to related parties were as follows:

Parent company－Highwealth Parent company－Highwealth	Engineering service recognized	Engineering service recognized	Engineering service recognized
	For the years ended December 31
	2021 2020 $ 580,172 2,173,880 Amount charged		2020
			2,173,880
		For the years ended December 31
			2020
			2,055,676

(Continued)

• 243 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group determines the price of construction contract to related parties on the basis of construction budget added reasonable fees and margin, after approvals from managements. There were no significant differences from the margin rates and payment terms given to other customers.

(ii) Purchase

• 1) The amounts of purchases from contract construction by the Group from related parties were as follows:

Parent company: Chyi Yuh Other related parties	Purchase (charged)	Purchase (charged)
	For the years ended December 31
	2021 $ 390,276 27,057 $ 417,333	2020
		2,622,584 50,281
		2,672,865

There were no significant differences of the price and conditions for related parties and ordinary contract mentioned above.

• 2) The Group commissioned related parties to administer construction properties. Administration fees were as follows:

Parent company： Highwealth Othr related parties	Expense paid	Expense paid
	For the years ended December 31
	2021 $ 4,667 2,398 $ 7,065	2020
		3,333 -
		3,333

• (iii) Receivables from related parties

The receivables from related parties were as follows:

Accounted items	Categories Parent company－Highwealth Parent company－Highwealth Other related parties	December 31, 2021 $ 96,679 - - $ 96,679	December 31, 2020 197,249 47,323 134
Accounts receivable Other receivables 〃
			244,706

(Continued)

• 244 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Payables to related parties

The payables to related parties were as follows:

Accounted items	Categories Parent company－Highwealth Parent company－Chyi Yuh Other related parties Parent company Other related parties	December 31, 2021 $ - 155,253 26,525 1,246 4,596 $ 187,620	December 31, 2020
Accounts payable 〃 〃 Other payables 〃			952 531,969 29,385 1,718 17,680
			581,704

(v) Leases

The leases between the Group and related parties were as follows:

1) Rent income

Parent company Other related parties： Bo Yuan Other related parties		Guarantee	deposits December 31, 2020 - 1,140 - 1,140	Rent income	Rent income
				For the years ended December 31
				2021 57 6,749 47 6,853	2020 57 6,964 41
					7,062

2) Rent expense

Parent company Other related parties	Refundable deposits December 31, 2021 December 31, 2020 $ 215 215 140 140 $ 355 355	Rent expense	Rent expense
	December 31, 2021 $ 215 140 $ 355	For the years ended December 31
		2021 4,671 940 5,611	2020 5,896 2,119
			8,015

As of December 31, 2021 and 2020, The Group prepaid to parent company were $0 thousand and $33 thousand for the leases mentioned above, respectively.

(Continued)

• 245 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(vi) Others

• 1) As of December 31, 2021 and 2020, the Group’ s contracts with related parties for construction cooperation were as follows:

Property December 31, 2021 Shr Jeng Ai Yue (Huei An section) December 31, 2020 Yue Cheng (Guo Mau Project) Shr Jeng Ai Yue (Huei An section)	Land owner /Investor	Type	Portion	Construction deposits
	Parent company －Highwealth Parent company －Highwealth Parent company －Highwealth	Redistribution under cooperative construction Redistribution under cooperative construction Redistribution under cooperative construction	57% 40% 57%	Refundable deposits $100,000 Refundable notes $200,000 Refundable deposit $ 50,000 Refundable deposit $100,000 Refundable notes $200,000

The consumption of Yue Chen (Guo Mau Project) and the exchange of buildings for land with the parent Company had been completed by 2020. By the end of December 31, 2020, for the asset pledged from joint construction contract, please refer to note 8.

• 2) As of December 31, 2021 and 2020, the Group received guarantee notes from Chyi Yuh were $85,418 thousand and $34,178 thousand for the construction contracts, respectively.

• 3) The Group commissioned related parties to sell real estate and administer the construction sites. Related consulting fees and commission and sales expense were as follows:

Parent company Other related parties: Ju Feng Other related parties	Expense paid	Expense paid
	For the years ended December 31
	2021 $ 11,534 23,094 2,332 $ 36,960	2020
		11,429 28,960 24,784
		65,173

(Continued)

• 246 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 4) The management serives provide to related parties were as follows:

Parent company	Other income	Other income
	For the years ended December 31
	2021 $ 3,438	2020
		-

(d) Key management personnel compensation

Key management personnel compensation comprised:

Short-term employee benefits ledged assets: The carrying values of pledged assets were as follows: Pledged assets Object Financial assets at FVOCI Bank loans Notes receivable Bank loans and short-term notes and bills payable Other financial assets- current and non-current Trust account, performance gurantee, bank loans, short-term notes and bills payable and bonds Inventories (construction) Bank loans, short-term notes and bills payable, long-term borrowings and bonds Property, plant and equipment Long-term borrowings Investment property Long-term borrowings, bank loans, short-term notes and bills payable and bonds Non-current assets held for sale Long-term borrowings, current portion	Short-term employee benefits ledged assets: The carrying values of pledged assets were as follows: Pledged assets Object Financial assets at FVOCI Bank loans Notes receivable Bank loans and short-term notes and bills payable Other financial assets- current and non-current Trust account, performance gurantee, bank loans, short-term notes and bills payable and bonds Inventories (construction) Bank loans, short-term notes and bills payable, long-term borrowings and bonds Property, plant and equipment Long-term borrowings Investment property Long-term borrowings, bank loans, short-term notes and bills payable and bonds Non-current assets held for sale Long-term borrowings, current portion	For the years ended December 31 2021 2020 $ 47,640 16,496 December 31, 2021 December 31, 2020 $ 607,956 602,698 231,552 60,849 5,722,732 5,193,040 23,119,945 18,524,172 - 18,587 755,059 672,655 - 1,187,386 $ 30,437,244 26,259,387
		2021 $ 47,640 December 31, 2021 $ 607,956 231,552 5,722,732 23,119,945 - 755,059 - $ 30,437,244
Financial assets at FVOCI Notes receivable Other financial assets- current and non-current Inventories (construction) Property, plant and equipment Investment property Non-current assets held for sale	Bank loans Bank loans and short-term notes and bills payable Trust account, performance gurantee, bank loans, short-term notes and bills payable and bonds Bank loans, short-term notes and bills payable, long-term borrowings and bonds Long-term borrowings Long-term borrowings, bank loans, short-term notes and bills payable and bonds Long-term borrowings, current portion

(8) Pledged assets:

The carrying values of pledged assets were as follows:

As of December 31, 2021 and 2020, the book value of pledged assets providing undrawn guaranteed loan are $65,752 thousand and $1,173,710 thousand, respectively. As of December 31, 2021 and 2020 the Group provided notes receivable of presale cases $1,536,234 thousand, and $1,157,804 thousand, as collateral for the bank loans, respectively.

(Continued)

• 247 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(9) Commitments and contingencies:

• (a) Unrecognized contractual commitments

• (i) Amount of signed contract and received amount from contracts for construction released, for properties sold in advance and sold after completion, and for property, plant and equipment were as follows:

Amounts of signed contracts Received amount from contracts Outstanding checks received from presale cases	December 31, 2021 $ 32,748,085 $ 3,267,845 $ 2,159,217	December 31, 2020
		28,211,418
		3,308,906
		2,115,653

• (ii) As of December 31, 2021 and 2020, the refundable deposits paid, through cooperation with the land owners, amounted to $425,000 thousand and $475,000 thousand, respectively; the refundable notes submitted amounts both were $220,000 thousand.

• (iii) As of December 31, 2021 and 2020, the contract price of administer services the Group provided to joint investors both were $14,286 thousand, the amounts received both were $11,429 thousand.

• (iv) Unrecognized commitments generated by signing contracts for purchasing inventories were as follows:

Acquisition of inventory (construction)	December 31, 2021 $ 2,768,959	December 31, 2020
		4,014,262

• (v) Construction contract price signed by subsidiaries was as follows:

Amount of signed contracts Received amount from contracts	December 31, 2021 $ 252,079 $ 123,574	December 31, 2020
		5,022,489
		4,389,516

• (vi) As of December 31, 2020, the Group expect to pay the rent for total $160,276 thousand because of the unrecognized lease-back transaction. The lease term was expected to be from January, 2021 to July, 2026.

(Continued)

• 248 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(10) Losses due to major disasters:None

(11) Subsequent events:None

(12) Other:

A summary of current-period employee benefits, depreciation, and amortization, by function, is as follows:

follows:
	For theyears ended December 31
By funtion By item	2021			2020
	Operating Cost	Operating Expense	Total	Operating Cost	Operating Expense	Total
Employee benefits
Salary	55,683	168,861	224,544	96,932	117,680	214,612
Labor and health insurance	5,591	13,871	19,462	8,912	11,693	20,605
Pension	2,847	5,933	8,780	4,710	5,106	9,816
Others	2,396	14,333	16,729	3,953	15,038	18,991
Depreciation	7,052	35,150	42,202	6,804	12,671	19,475
Amortization	-	3,005	3,005	-	3,045	3,045

(Continued)

• 249 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group:

• (i) Loans to other parties: None

• (ii) Guarantees and endorsements for other parties:

Guarantees	Guarantees	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:
		(Amount in Thousands of New Taiwan Dollars, Unless specified Otherwise)
No.	Name of guarantor	Counter-party of guarantee and endorsement		Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
1	Jin Jyun Constructio n Co., Ltd.	The company	3	1,335,002	600,000	600,000	450,000	600,000	% 8.99	3,337,506	N	Y	N

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

Note 1:The numbering is as follows:
----- End of picture text -----

  - 1) “0” represents the company

  - 2) Investees are sequentially numbered from 1 by company

• Note 2:The relationship between the guarantee and the guarantor are as follows:

  • 1) Transactions between the companies.

  • 2) The Company directly or indirectly holds more than 50% voting right.

  • 3) When other companies directly or indirectly hold more than 50% voting rights of the Company.

  • 4) The Company directly or indirectly holds more than 90% voting right.

  • 5) A company that is mutually protected under contractual requirements based on the needs of the contractor.

  • 6) A company that is endorsed by all the contributing shareholders in accordance with their shareholding ratio due to joint investment relationship.

  • 7) Under the Consumer Protection Act, performance guarantees for pre-sale contracts for companies in the same industry.

• Note 3:The Company endorsed the operation method for the total amount of guarantees and the limit for endorsement of a single enterprise:

  • 1) The aggregate amount of endorsements and guarantees endorsed by the company and its subsidiaries shall not exceed 50% of the net value of the Company.

  • 2) The aggregate amount of endorsements and guarantees endorsed by the company and its subsidiaries for a single enterprise shall not exceed 20% of the net value of the Company.

• (iii) Securities held as of December 31, 2021 (excluding investment in subsidiaries, associates and joint ventures):

(Amount in Thousands of New Taiwan Dollars, Unless specified Otherwise)

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Highest Percentage of ownership (%)	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company	Stock- Highwealth Construction Corp.	Ultimate controlling company of the Company	Financial assets at fair value through other comprehensive income- current	13,145,000	607,956	% 0.94	607,956	% 1.02

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: None

(Continued)

• 250 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Name of property	Transaction date	Transaction amount	Status of payment	Counter- party	Relationship with the Company	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	References for determining price	Purpose of acquisition and current condition	Others
							Owner	Relationshi p with the Company	Date of transfer	Amount
The Company	Taoyuan city Gui Shan district Shan Jie section	September 7, 2021	1,614,096	1,614,096	Chen ○○, and other 6 people	Not related parties	-	-	-	-	Appraisal	Construction
The Company	Tainan city Anping section	November 9, 2021	1,223,873	371,621	Chang ○○, and other 14 people	Not related parties	-	-	-	-	Appraisal	Construction

• (vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None

• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company	Chyi Yuh Construciton Co., Ltd.	Parent company of the Company	Contracting project	376,780	4.21%		-		(153,274)	(12.76)%	Note 2
The Company	Jin Jyun Construction Co., Ltd.	Subsidiary of the Company	Contracting project	2,987,553	33.38%		-		(557,514)	(46.40)%	Note 2, 3
Jin Jyun Construction Co., Ltd.	Highwealth Construction Corp.	Ultimate parent company	Contracted project	(580,172	) (14.03)%		-		96,679	12.66%	Note 1
Jin Jyun Construction Co., Ltd.	The Company	Parent company	Contracted project	(3,310,591	) (80.04)%		-		557,514	72.98%	Note 1, 3

Note 1: The contracted company recognizes its construction revenue through percentage of completion method, and the amount of sales included.

Note 2: The contracting company records its import price through estimates of amount of purchase through number of trials. Note 3: Reconciliated in the preparation of consolidated report.

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
Jin Jyun Construction Co., Ltd.	The Company	Parent company	557,514	7.86	-	-	548,297	-

• (ix) Trading in derivative instruments: None.

• (x) Business relationships and significant intercompany transactions:

(In Thousands of New Taiwan Dollars)

				(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of company	Name of counter-party	Nature of relationship	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0	The Company	Jin Jyun Construction Co., Ltd.	1	Accounts payable	557,514	Same with peer terms	1.42%
			1	Operating cost	3,310,591	Same with peer terms	31.59%
1	Jin Jyun Construction Co., Ltd.	The Company	2	Accounts receivable	557,514	Same with peer terms	1.42%
			2	Operating revenue	3,310,591	Same with peer terms	31.59%

(Continued)

• 251 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Note 1:The numbering is as follows:

• 1) “0” represents the parent company

• 2) Subsidiaries are sequentially numbered from 1 by company

Note 2:Relation between related parties are as follows:

• 1) Parent company and its subsidiaries

• 2) Subsidiaries and its parent company

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2021 (excluding information on investees in Mainland China):

(Amount in Thousands of New Taiwan Dollars, Unless specified Otherwise)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2021	Balance as of December 31, 2021	Balance as of December 31, 2021	Highest Percentage of wnership	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Percentage of wnership	Carrying value
Run Long Construction Co., Ltd.	Stock- Jin Jyun Construction Co., Ltd.	Taiwan	Construction, housing and building development rental services etc.	518,300	518,300	50,000,000	% 100.00	502,279	% 100.00	79,752	12,457

Note: Reconciliated in the preparation of consolidated report.

• (c) Information on investment in mainland China: None.

• (d) Major shareholders:

Shareholding Shareholder’s Name	Shares	Percentage
Ching Shr Ban Investment Co., Ltd.	38,625,861	% 9.84
Ruen Ying Investment Co., Ltd.	25,117,350	% 6.40
Guang Yang Investment Co., Ltd.	24,022,699	% 6.13
Wan Sheng Fa Investment Co., Ltd.	22,698,296	% 5.78
Highwealth Construction Corp.	22,422,816	% 5.71
Shing R Sheng Investment Co., Ltd.	21,840,559	% 5.56
Feng Rau Investment Co., Ltd.	21,240,333	% 5.41
Chyi Yuh Construction Co., Ltd.	19,686,744	% 5.01

(Continued)

• 252 -

RUN LONG CONSTRUCTION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Segment information:

The Group used to engage in the business of construction, sales of residential and commercial buildings. Information about reportable segments and reconciliations of the Group for the years ended December 31, 2021 and 2020 were detailed below:

For the year ended December 31, 2021 Revenue: Revenue from external customers Intersegment Interest revenue Total revenue Interest expenses Depreciation and amortization Reportable segment profit or loss Capital expenditure Reportable segment assets Reportable segment liabilities For the year ended December 31, 2020 Revenue: Revenue from external customers Intersegment Interest revenue Total revenue Interest expenses Depreciation and amortization Reportable segment profit or loss Capital expenditure Reportable segment assets Reportable segment liabilities	Developing segment $ 9,653,691 - 5,528 $ 9,659,219 $ 130,075 $ 42,411 $ 2,040,100 $ 66,137 $ 37,740,002 $ 31,064,991 $ 3,944,597 - 10,849 $ 3,955,446 $ 145,783 $ 20,223 $ 174,671 $ 9,253 $ 35,760,762 $ 30,689,826	Constructing segment 825,576 3,310,591 364 4,136,531 412 2,796 99,854 2,243 2,839,644 2,187,944 3,711,639 1,442,394 429 5,154,462 340 2,297 179,150 61,685 2,076,461 1,374,514	Reconciliation and elimination - (3,310,591) - (3,310,591) - - (79,753) - (1,254,635) (602,935) - (1,442,394) - (1,442,394) - - (143,791) - (1,039,233) (337,286)	Total 10,479,267 - 5,892
				10,485,159
				130,487
				45,207
				2,060,201
				68,380
				39,325,011
				32,650,000
				7,656,236 - 11,278
				7,667,514
				146,123
				22,520
				210,030
				70,938
				36,797,990
				31,727,054

• 253 -

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電 話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳 真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網 址 Web home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of Run Long Construction Co., Ltd.:

Opinion

We have audited the financial statements of Run Long Construction Co., Ltd.(“the Company”), which comprise the balance sheets as of December 31, 2021 and 2020, the statements of comprehensive income, changes in equity and cash flows for the years then ended and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

1. Revenue recognition on sales of properties and land

Please refer to note 4(n), and 6(t) of the financial statements for the accounting policy on revenue recognition and the details of revenue.

• 254 -

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

Description of key audit matter

The real estate industry, in which the Company is into, has a higher tendency of revenue fluctuation, therefore the management has set up relevant internal control procedures. The Company's sales revenue was $9,638,471 thousand in 2021, whether revenue is presented fairly has a significant impact on financial statement. Therefore, the recognition of sales revenue is one of the most important evaluation in performing our audit procedures.

Auditing procedures performed

Our principal audit procedures included the following: We test the effectiveness of the design and implementing the internal control system of sales revenue; Inspect of sales contracts, bank account transaction record and real estate ownership transfer document, etc.; Test the samples of sales transaction before and after the end of the year to ensure the correctness of sales revenue.

2. The share of profit of subsidiaries accounted for using equity method

Please refer to note 4(h), and 6(f) of the financial statements for the accounting policies on investments in subsidiaries and the details of investments in subsidiaries accounted for using equity method.

Description of key audit matter

The Jin Jyun Construction Co., Ltd., a subsidiary of Run Long Construction Co., Ltd.’s, is into industry of civil engineering and building construction contractors. Revenue and cost of construction contracts are recognized and evaluated according to IFRS15. Managment judgment and estimation may be involved in determining total revenue, total estimated cost, and the extent of completion. Those including contract addition and reduction, the alternation of design, the inflation or deflation in cost, or other sub-cost , and the degree of completion based on contract activities on the end date of financial report, etc. High degree of uncertainty of accounting estimates are involved in all activities. Therefore, income recognition of the subsidiaries is one of the most critical assessments of financial reporting audit matters we perform.

Auditing procedures performed

Our principal audit procedures included the following: We test the effectiveness of internal controls system of engineering revenue, receivable collection, contracting out and purchasing, payments and budgeting of Jin Jyun Construction Co., Ltd., those mentioned above are relevant to financial report; compare and evaluate whether there is significant exception of change in total revenue, total estimated cost and the extent of completion; We obtain the revenue and cost the business estimated, review the completion and rationality in total contract price, budget, and accumulated involvement, to assess whether there is significant exception in contract revenue and cost that the business recognized.

1. Inventory valuation

Please refer to note 4(f), 5, and 6(d) of the financial statements for the accounting policies on measuring inventory, assumption used, and uncertainties considered in determining the net realizable value and the details of inventory.

Description of key audit matter

As of December 31, 2021, inventory of the Company valued $26,749,946 thousand, constituting 71% of the total assets, which was presented with lower of cost or net realizable value method. The judgment of net realizable value of inventory relies on management since the Company focuses on real estate industry, which is not only deeply affected by politics, macroeconomics, prosperity, and revolution of housing and land taxation, but also an industry involving a large portion of capital infusion and long-term payback. Thus, the valuation of inventory is one of the most important evaluation in performing our audit procedures.

• 255 -

Auditing procedures performed

Our principal audit procedures included the following: We understand the Company’ s operating and accounting procedures for inventory valuation; Obtain the Company management’ s data of inventory valuation; verify and inspect market value of the afore mentioned information. The net realizable value can be assessed in the following ways: through reviewing the recent selling price of the premises, by inquiring the selling price of premises nearby from the “Actual Selling Price of Real Estate” website, or by obtaining project investment analysis tables, inspecting and recalculating the net realizable value of inventory to ensure if it is adequate.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Regulations Governing the Preparation of Financial Reports by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’ 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 Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

1. Identify and assess the risks of material misstatement of the 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.

2. 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 Company’s internal control.

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

4. 256 -

5. 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 Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the 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 auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

6. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

7. Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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 financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Yilien Han and Ti-Nuan Chien.

KPMG

Taipei, Taiwan (Republic of China) March 14, 2022

Notes to Readers

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

The auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditors’ report and parent company only financial statements, the Chinese version shall prevail.

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(English Translation of Parent Company Only Financial Statements and Report Originally Issued in Chinese) RUN LONG CONSTRUCTION CO., LTD.

Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1120 Current financial assets at fair value through other comprehensive income (notes 6(b) and 8) 1150 Notes receivable, net (note 6(c) and 8) 1170 Accounts receivable, net (note 6(c)) 1200 Other receivables 1210 Other receivables due from related parties (note 7) 1220 Current tax assets 1310 Inventories, manufacturing business (note 6(d)) 1320 Inventories (for construction business) (note 6(d), 7 and 8) 1410 Prepayments (note 7) 1460 Non-current assets held for sale (note 6(e) and 8) 1476 Other current financial assets (notes 6(j), 7 and 8) 1479 Other current assets, others 1480 Current assets recognized as incremental costs to obtain contract with customers (notes 6(j)) Non-current assets: 1550 Investments accounted for using equity method (notes 6(f)) 1600 Property, plant and equipment (note 6(g) and 8) 1755 Right-of-use assets (note 6(h)) 1760 Investment property, net (note 6(i) and 8) 1780 Intangible assets 1984 Other non-current financial assets, others (note 6(j), 7 and 8) 1990 Other non-current assets, others Total assets	December 31, 2021 Amount % $ 1,438,780 4 607,956 2 363,485 1 11,456 - 27,325 - - - - - - - 26,749,946 71 229,795 1 - - 3,100,544 8 3,665 - 934,204 2 33,467,156 89 502,279 1 234,619 1 129,364 - 755,059 2 1,471 - 2,594,918 7 55,136 - 4,272,846 11 $ 37,740,002 100	December 31, 2020 Amount % 1,286,398 4 602,698 2 160,692 - 35,096 - 1,584 - 47,457 - 4,869 - 10,598 - 24,570,742 69 192,136 - 1,187,386 3 2,786,119 8 2,784 - 410,475 1 31,299,034 87 619,822 2 240,696 1 12,173 - 681,434 2 2,129 - 2,905,474 8 - - 4,461,728 13 35,760,762 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (note 6(k)) 2110 Short-term notes and bills payable (note 6(k)) 2130 Current contract liabilities (notes 6 (t), 7 and 9) 2150 Notes payable 2170 Accounts payable 2180 Total accounts payable to related parties (note 7) 2200 Other payables (note 7) 2230 Current tax liabilities 2251 Current provisions for employee benefits (note 6(p)) 2280 Current lease liabilities (notes 6(n) 2321 Bonds payable, current portion or putable bonds (note 6(m)) 2322 Long-term borrowings, current portion (note (l)) 2399 Other current liabilities, others Non-Current liabilities: 2530 Bonds payable (note 6(m)) 2541 Long-term borrowings (note 6(l)) 2570 Deferred tax liabilities (note 6(q)) 2580 Non-current lease liabilities (note 6(n)) Total liabilities Equity (note 6(r)): 3100 Ordinary shares 3200 Capital surplus 3300 Retained earnings 3400 Other equity interest Total equity Total liabilities and equity	December 31, 2021		December 31, 2020
			Amount %		Amount %
			$ 13,874,657 37 1,236,759 3 3,268,109 9 3,674 - 463,615 1 734,353 2 715,285 2 327,087 1 2,527 - 29,149 - 1,989,327 5 25,944 - 112,311 - 22,782,797 60 7,861,799 21 318,538 1 2,844 - 99,013 - 8,282,194 22 31,064,991 82 3,921,966 11 21,376 - 2,575,943 7 155,726 - 6,675,011 18 $ 37,740,002 100		11,936,172 34 2,758,113 8 3,314,710 9 - - 440,218 1 846,934 2 309,284 1 68,785 - 2,321 - 8,827 - 1,481,281 4 1,018,091 3 305,459 1 22,490,195 63 7,851,491 22 344,482 1 2,844 - 814 - 8,199,631 23 30,689,826 86 3,699,966 11 168,389 - 1,052,113 3 150,468 - 5,070,936 14 35,760,762 100

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See accompanying notes to parent company only financial statements.

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) RUN LONG CONSTRUCTION CO., LTD.

Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Share)

Operating Revenues (note 6(o), (t)): 4511 Construction revenue 4800 Other operating revenue 5000 Operating costs (note 7) Gross profit from operations Operating expenses: 6100 Selling expenses (note 6(j) and 7) 6200 Administrative expenses (note 6(u) and 7) Operating income Non-operating income and expenses: (note 6(v) and 7) 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of associates and joint ventures accounted for using equity method Profit from continuing operations before tax 7950 Less: Income tax expenses (note 6(q)) Profit 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8316 Unrealized gains from investments in equity instruments measured at fair value through other comprehensive income 8300 Other comprehensive income (net after tax) 8500 Total comprehensive income Earnings per share (note 6(s)) 9750 Basic earnings per share (NT dollars) Diluted earnings per share (NT dollars)	2021 Amount % $ 9,638,471 100 15,220 - 9,653,691 100 7,012,433 73 2,641,258 27 340,109 4 227,300 2 567,409 6 2,073,849 21 5,528 - 34,790 - 43,551 1 (130,075) (1) 12,457 - (33,749) - 2,040,100 21 368,270 4 1,671,830 17 5,258 - 5,258 - $ 1,677,088 17 $ 4.26 $ 4.26	2020 Amount % 3,930,087 100 14,510 - 3,944,597 100 3,108,623 79 835,974 21 347,003 9 180,136 4 527,139 13 308,835 8 10,849 - 31,615 1 (104,232) (3) (145,783) (4) 73,387 2 (134,164) (4) 174,671 4 57,423 1 117,248 3 49,668 1 49,668 1 166,916 4 0.30 0.30

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) RUN LONG CONSTRUCTION CO., LTD.

Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Balance on January 1, 2020 Profit Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Cash dividends of ordinary share Stock dividends of ordinary share Cash dividends from capital surplus Stock dividends from capital surplus Due to donated assets received Disposal of investments in equity instruments designated at fair value through other comprehensive income Other changes in capital surplus Balance on December 31, 2020 Profit Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Cash dividends of ordinary share Stock dividends of ordinary share Stock dividends from capital surplus Due to donated assets received Balance on December 31, 2021	Share capital		Capital surplus			Retained earnings	Retained earnings	Retained earnings		Total other equity interest Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Total other equity interest Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Total equity 5,514,928 117,248 49,668 166,916 - (308,330) - (308,331) - 73 - 5,680 5,070,936 1,671,830 5,258 1,677,088 - (74,000) - - 987 6,675,011
	Ordinary shares				Legal reserve		Unappropriated retained earnings		Total retained earnings
	$ 3,083,305 - - - - - 308,331 - 308,330 - - - 3,699,966 - - - - - 74,000 148,000 - $ 3,921,966		779,297 - -		823,949 - -		727,323 117,248 -		1,551,272 117,248 -		101,054 - 49,668 49,668 - - - - - - (254) - 150,468 - 5,258 5,258 - - - - - 155,726
			-		-		117,248		117,248
					65,576 - - - - - - -
					889,525 - -
					-
					11,750 - - - -
					901,275

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) RUN LONG CONSTRUCTION CO., LTD.

Statements of Cash Flows

For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Net loss on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of subsidiaries,associates and joint ventures accounted for using equity method Gain on disposal of property, plant and equipment Impairment loss on disposal of non-current assets held for sale Gain on lease modifications Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Decrease in financial assets at fair value through profit or loss Increase in notes receivable Decrease (increase) in accounts receivable Increase in other receivables Decrease (increase) in other receivables due from related parties Decrease in inventories Increase in inventories (construction) Increase in prepayments Decrease (increase) in other current assets Decrease (increase) in other financial assets－current Iincrease in assets recognized as incremental costs to obtain contract with customers Increase in other financial assets—non-current Total changes in operating assets Changes in operating liabilities: Increase in contract liabilities Increase in notes payable Increase in accounts payable Increase (decrease) in accounts payable to related parties Increase in other payables Increase (decrease) in provisions Increase (decrease) in other current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow (outflow) generated from operations Income taxes paid Net cash flows from (used in) operating activities	2021 $ 2,040,100 40,750 1,661 - 130,075 (5,528) (26,352) (12,457) - - (76) 128,073 - (202,793) 23,640 (25,920) 47,457 10,598 (1,932,772) (19,403) (867) 286,426 (523,729) (3,695) (2,341,058) 256,063 3,674 23,397 (112,581) 404,001 206 (193,148) 381,612 (1,959,446) (1,831,373) 208,727 (105,099) 103,628	2020 174,671 18,361 1,862 62 145,783 (10,849) (23,900) (73,387) (1,944) 165,479 (142) 221,325 146,207 (30,872) (35,096) (656) (45,420) 487 (5,451,634) (94,920) 59,673 (1,311,143) (193,415) (411) (6,957,200) 1,418,302 - 91,038 360,498 41,298 (122) 228,921 2,139,935 (4,817,265) (4,595,940) (4,421,269) (2,620) (4,423,889)

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) RUN LONG CONSTRUCTION CO., LTD.

Statements of Cash Flows (CONT’D)

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Proceeds from disposal of non-current assets held for sale Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Increase in other non-current assets Interest received Dividends received Net cash flows from investing activities Cash flows from (used in) financing activities: Increase in short-term borrowings Decrease in short-term borrowings Increase in short-term notes and bills payable Decrease in short-term notes and bills payable Proceeds from issuing bonds Repayments of bonds Repayments of long-term borrowings Other financial assets－current Other financial assets－non－current Payment of lease liabilities Cash dividends paid Interest paid Net cash flows from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) RUN LONG CONSTRUCTION CO., LTD.

Notes to the Financial Statements

For the years ended December 31, 2021 and 2020

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

(1) Company history

Run Long Construction Co., Ltd. (the “ Company” ) was incorporated in January 1977 as a company limited by shares under the Company Act of the Republic of China (R.O.C.). The Company's registered address is 8F., No. 267, Lequn 2nd Rd., Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.). On August 3, 1994, the Company’s shares were listed on the Taiwan Stock Exchange (TWSE). The Company primarily engages in the business of construction, sales, leasing of residential and commercial buildings.

(2) Approval date and procedures of the financial statements:

The parent company only financial statements were authorized for issue by the Board of Directors on March 14, 2022.

(3) New standards, amendments and interpretations adopted:

• (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. ("FSC") which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2021:

• ●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• ●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from April 1, 2021:

• ●Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its financial statements:

• －

• ●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”

• －

• ●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”

• ●Annual Improvements to IFRS Standards 2018–2020

• ●Amendments to IFRS 3 “Reference to the Conceptual Framework”

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

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

The following new and amended standards, which may be relevant to the Company, have been issued by the International Accounting Standards Board ("IASB"), but have yet to be endorsed by the FSC:

Standards or Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

Content of amendment Effective date per IASB The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of balance sheet, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity. January 1, 2023

The Company is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its financial position and financial performance. The results thereof will be disclosed when the Company completes its evaluation.

The Company does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its financial statements:

• ●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

• ●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

• ●Amendments to IAS 1 “Disclosure of Accounting Policies”

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

• ●Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(4) Summary of significant accounting policies:

The following significant accounting policies have been applied consistently to all periods presented in the parent company only financial statements except for that mentioned in note 3.

• (a) Statement of compliance

These partner company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations”).

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(b) Basis of preparation

• (i) Basis of measurement

The accompanying parent company only financial statements have been prepared on the historical cost basis except for the following significant accounts.

• 1) Financial instruments measured at fair value through profit or loss are measured at fair value;

• 2) Financial instruments measured at fair value through other comprehensive income are measured at fair value;

• (ii) Functional and presentation currency

The functional currency of each Company entities is determined based on the primary economic environment in which the entities operate. The parent company only financial statements are presented in New Taiwan Dollars (NTD), which is the Company’s functional currency. All the financial information presented in New Taiwan Dollar has been rounded to the nearest thousands.

• (c) Classification of current and non-current assets and liabilities

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

• (i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) It is expected to be realized within twelve months after the reporting period; or

• (iv) The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as noncurrent.

• (i) It is expected to be settled in its normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) It is due to be settled within twelve months after the reporting period; or

• (iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(d) Cash and cash equivalents

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

(e) Financial instruments

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

(i) Financial assets

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

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

1) Financial assets measured at amortized cost

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

• ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• 2) Fair value through other comprehensive income (FVOCI)

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

• ‧ it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

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

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

Dividend income is recognized in profit or loss on the date on which the Company’s right to receive payment is established.

• 3) Fair value through profit or loss (FVTPL)

All financial assets not classified as measured at amortized cost or at FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

• 4) Business model assessment

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• 5) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses ("ECL") on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and account receivables, other receivable, guarantee deposit paid and other financial assets), debt investments measured at FVOCI and contract assets.

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

• ‧ debt securities that are determined to have low credit risk at the reporting date; and

• ‧ other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for account receivables and contract assets are always measured at an amount equal to lifetime ECL.

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

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

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

• ‧ significant financial difficulty of the borrower or issuer;

• ‧ a breach of contract such as a default or being more than 90 days past due;

• ‧ the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

• ‧ it is probable that the borrower will enter bankruptcy or other financial reorganization; or

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

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

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

The gross carrying amount of a financial asset is written off either partially or in full to the extent that there is no realistic prospect of recovery. For corporate customers, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

6) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

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

• (ii) Financial liabilities and equity instruments

1) Classification of debt or equity

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

2) Equity instrument

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

3) Compound financial instruments

Compound financial instruments issued by the Company comprise convertible bonds denominated in NTD that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

The liability component of compound financial instruments is initially recognized at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognized at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not remeasured.

Interest related to the financial liability is recognized in profit or loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognized.

4) Financial liabilities

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

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

5) Derecognition of financial liabilities

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

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

• 6)

Offsetting of financial assets and liabilities

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

(Continued)

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RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(f) Inventories

(i) Manufacturer Industries

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(ii) Construction industry

Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes expenditure incurred in bringing them to their existing location and condition, and capitalized borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The methods of determining the net realizable value is estimated are as follows:

• 1) Construction site

Net realizable value is by referring to the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses, or estimated by recent market value (development analytical method or comparison method).

• 2) Construction in progress

Net realizable value is the estimated selling price (prevailing market condition) less the estimated costs and selling expenses needed to complete.

• 3) Real estate held for sale

Net realizable value is the estimated selling price (prevailing market condition) in the ordinary course of business, less the estimated selling costs and expenses needed to sell the estate.

(g) Non-current assets held for sale

Non-current assets or disposal groups comprising assets and liabilities that are highly probable to be recovered primarily through sale rather than through continuing use, are reclassified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the Company’s accounting policies. Thereafter, generally, the assets or disposal groups are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to assets not within the scope of IAS 36 – Impairment of Assets. Such assets will continue to be measured in accordance with the Company’s accounting policies. Impairment losses on assets initially classified as held for sale and any subsequent gains or losses on remeasurement are recognized in profit or loss. Gains are not recognized in excess of the cumulative impairment loss that has been recognized.

(Continued)

• 271 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortized or depreciated, and any equity-accounted investee is no longer equity accounted.

(h) Investing subsidiaries

In preparing the parent company only financial statements of the Company, investee company that controlled by the Company is accounted for under the equity method. Under equity method, profit for the year and other comprehensive income for the year reported in an entity’s parent company only financial statement of comprehensive income, shall equal to profit for the year and other comprehensive income’ attributable to owners of the parent reported in that entity’s consolidated statement of comprehensive income. Total equity reported in an entity’ s parent company only financial statement shall equal to equity attributable to owners of parent reported in that entity’s consolidated financial statements.

The Company’ s changes in equity interests in subsidiaries that did not lead to loss of control, deemed as equity transactions between owners.

(i) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition, and subsequently at cost, less accumulated depreciation and accumulated impairment losses. Depreciation expense is calculated based on the depreciation method, useful life, and residual value which are the same as those adopted for property, plant and equipment.

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

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

(j) Property, plant and equipment

(i) Recognition and measurement

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

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

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

(ii) Subsequent cost

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

(Continued)

• 272 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(iii) Depreciation

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

Land is not depreciated.

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

he estimated useful lives of property, plant and equipm eriods are as follows:	ent for current and comparativ
1) Buildings	3～50 years
2) Equipment	3～5 years
3) Transportation and office equipment	3～5 years
4) Other equipment	3～15 years

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

(k) Lease

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

(i) As a leasee

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

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

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

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

• 1) Fixed payments; including in-substance fixed payments;

• 2) Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• 3) Amounts expected to be payable under a residual value guarantee; and

(Continued)

• 273 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• 4) Payments for purchase or termination options that are reasonably certain to be exercised.

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

• 1) There is a change in future lease payments arising from the change in an index or rate; or

• 2) There is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or

• 3) There is a change of its assessment on whether it will exercise an option to purchase the underlying asset; or

• 4) There is a change of its assessment of lease period on whether it will exercise an extension or termination option; or

• 5) There is any lease modifications

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

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

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

The Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases of office equipment that have a lease term of 12 months or less and leases of lowvalue assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

• (ii) As a leasor

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

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

(Continued)

• 274 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

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

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

(l) Intangible assets

(i) Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses.

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable flow into the Company and the Company intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

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

• (iii) Amortization

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

==> picture [280 x 30] intentionally omitted <==

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

(Continued)

• 275 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(m) Impairment of non-financial assets

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

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

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

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in current-period profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(n) Revenue

• (i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’ s main types of revenue are explained below:

• 1) Land development and sale of real estate

The Company develops and sells residential properties and usually sales properties in advance during construction or before construction begins. Revenue is recognized when control over the properties has been transferred to the customer. An enforceable right to payment does not arise until legal title of a property has passed to the customer. Therefore, revenue is recognized at a point in time when the legal title has passed to the customer.

(Continued)

• 276 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

The revenue is measured at the transaction price agreed under the contract. For sale of readily available house, in most cases, the consideration is due when legal title of a property 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 for the effects of a significant financing component. For pre selling properties, the consideration is usually received by installment during the period from contract inception until the transfer of properties to the customer. If the contract includes a significant financing component, the transaction price will be adjusted for the effects of the time value of money during the period, using the specific borrowing rate of the construction project. Receipt of a prepayment from a customer is recognized as contract liability. Interest expense and contract liability are recognized when adjusting the effects of the time value of money. Accumulated amount of contract liability is recognized as revenue when control over the property has been transferred to the customer.

2) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(ii) Contract costs

• 1) Incremental costs of obtaining a contract

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

(o) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Short-term employee benefits

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

(Continued)

• 277 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(p) Income Taxes

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

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

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

• (i) Temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;

• (ii) Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

• (iii) Taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date, and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

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

• (i) The Company has a legally enforceable right to set off current tax assets against current tax liabilities; and

• (ii) The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either

• 1) The same taxable entity; or

• 2) Different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(Continued)

• 278 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(q) Earnings per share

The Company disclose the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to the ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potential dilutive ordinary shares, such as remuneration of employees and employee stock options.

(r) Operating segments

The Company has disclosed operating segments information in the consolidated financial statements. Therefore, the Company does not disclose operating segment information in the parent company only finanical statements.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

In preparing these financial statements, management has made judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

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

Information about judgements made in applying accounting policies that have significant effects on the amounts recognized in the parent only company financial statements is as follows: None.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID-19 pandemic:

(a) Valuation of inventories

Inventories are measured at the lower of cost and net realizable value, the Company’s evaluate the selling price in the market is below the cost, and write off the cost of inventory to net realizable value. The estimation of net realizable value is based on current market conditions . Please refer note 6(d) for inventory valuation.

Valuation process

The Company accounting policies and disclosures included financial and non-financial assets and liabilities measured at fair value. The Company’ s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value. The fair value measurement of investment property is based on the website of Department of Land Administration and estate agency’s website or the close deal in similar district.

(Continued)

• 279 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

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

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

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

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

The transfers policy between levels of the fair value hierarchy

If there is any movement of financial instruments measured at fair value between level 1, level 2 and level 3, the Company recognizes the movement at the reporting date. For assumptions used in measuring fair value. Please refer notes as follows:

• (a) Note 6(i) Investment property.

• (b) Note 6(w) Financial instruments.

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash on hand and petty cash Demand Deposits (including foreign currency) Check Deposits Cash and cash equivalents	December 31, 2021 $ 339 1,438,107 334 $ 1,438,780	December 31, 2020
		344 1,285,719 335
		1,286,398

Please refer to note 6(w) for the disclosure of the Company’s financial assets and liabilities interest risk and sensitivity analysis.

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

Equity investments at fair value through other comprehensive income: Stocks listed on domestic market	December 31, 2021 $ 607,956	December 31, 2020 602,698

(i) Equity investments at fair value through other comprehensive income

The Company designated the investments shown above as equity investment at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term for strategic purposes and not hold for sale.

(Continued)

• 280 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

During the years ended December 31, 2021 and 2020, the dividends of $26,352 thousand and $23,900 thousand, respectively, related to equity investments at fair value through other comprehensive income, were recognized;

In 2020, the Company has sold its equity investments at fair value through other comprehensive income. The investments sold had a fair value of $10,777 thousand and the Company realized a gain of $254 thousand.

There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments as of December 31, 2021.

• (ii) For credit risk and market risk, please refer to note 6(w).

• (iii) The financial assets at fair value through other comprehensive income of the Company had been pledged as collateral, please refer to note 8.

• (c) Note and account receivables, net

Note receivable Trade receivables–measured as amortized cost Total	December 31, 2021 $ 363,485 11,456 $ 374,941	December 31, 2020
		160,692 35,096
		195,788

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

Current Current	December 31, 2021	December 31, 2021
	Gross carrying amount Weighted- average loss rate $ 374,941 - December 31, 2020		Loss allowance Provision
			-
		Weighted- average loss rate -	Loss allowance Provision
			-

For the years ended December 31, 2021 and 2020, there are no expected credit losses recognized or reversed.

As of December 31, 2021 and 2020, note receivables had been pledged as collateral; please refer to note 8.

(Continued)

• 281 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(d) Inventories

Manufacturer industry: Spare parts Construction industry: Prepaid for land purchase Land held for construction sites Construction in progress Properties and land held for sale Subtotal Total	December 31, 2021 $ - 278,063 2,479,866 22,176,559 1,815,458 26,749,946 $ 26,749,946	December 31, 2020
		10,598
		310,679 762,128 19,794,302 3,703,633
		24,570,742
		24,581,340

For the year ended December 31, 2021, the Company changed the usage of partial asset, and reclassified properties and land held for sale to investment property according to definition of investment property. Please refer to Note 6(i).

For the years ended December 31, 2021 and 2020, there is no write-offs or reversals of inventories.

For the years ended December 31, 2021 and 2020, construction in progress of the Company is calculated using a capitalization rate 1.82% and 1.85%, respectively. For the amount of capitalized interest, please refer to note 6(v).

As of December 31, 2021 and 2020 the inventories of the Company had been pledged as collateral, please refer to note 8.

(e) Non-current assets held for sale

The Company leased back its land and buildings in ChinTai section, Zhongshan district based on the resolution made during the Board meeting on December 24, 2020. The selling price was $1,221,710 thousand (VAT included), and the disposal of land and buildings was on the progress. Consequently, the land and buildings were classified as non-current assets held for sale. Impairment loss resulting from measuring at the lower of carrying amount of the property plant and equipment and fair value to sell was $165,479 thousand. The loss was presented as other operating income and loss in statements of comprehensive income, please refer to note 6(v). As of December 31, 2020, the amount of the non-current asset held for sale was $1,187,386 thousand. The land and buildings have been sold and leased back in January 2021 and the relevant payment have been fully received.

As of December 31, 2020, the non-current assets held for sale of the Company had been pledged as collateral, please refer to note 8.

(Continued)

• 282 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(f) Investments accounted for using equity method

The investments accounted for using equity method of the Company for the year ended December 31, 2021 and 2020, were as follows:

Subsidiaries	December 31, 2021 $ 502,279	December 31, 2020
		619,822

• (i) Subsidiaries

Please refer to consolidated financial statement of 2021.

• (g) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company for the years ended December 31, 2021 and 2020, were as follows:

Cost: Balance on January 1, 2021 Additions Balance on December 31, 2021 Balance on January 1, 2020 Additions Disposals Reclassification to non-current assets held for sale Transfer to (from) Balance on December 31, 2020 Depreciation and Impairment: Balance on January 1, 2021 Depreciation Balance on December 31, 2021 Balance on January 1, 2020 Depreciation Disposals Reclassification to non-current assets held for sale Transfer to (from) Balance on December 31, 2020 Carrying amounts: Balance on December 31, 2021 Balance on December 31, 2020	Land (Including improvement) $ 213,883 - $ 213,883 $ 1,335,587 - - (1,121,704) - $ 213,883 $ 4,420 570 $ 4,990 $ 3,849 571 - - - $ 4,420 $ 208,893 $ 209,463	Buildings and construction 49,628 - 49,628 330,660 5,306 - (256,649) (29,689) 49,628 42,174 1,822 43,996 69,487 9,277 - (25,488) (11,102) 42,174 5,632 7,454	Machinery and equipment 1,699 - 1,699 - 1,699 - - - 1,699 177 425 602 - 177 - - - 177 1,097 1,522	Other equipment (including transportation, office, leasehold improvements, and other equipment) 42,262 843 43,105 40,352 1,135 (28,914) - 29,689 42,262 20,005 4,103 24,108 34,004 1,467 (26,568) - 11,102 20,005 18,997 22,257	Total 307,472 843 308,315 1,706,599 8,140 (28,914) (1,378,353) - 307,472 66,776 6,920 73,696 107,340 11,492 (26,568) (25,488) - 66,776 234,619 240,696

(Continued)

• 283 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• (i) In order to manage activating strategies of assets and obtain the maximum effectiveness, the Company transferred the sold assets to the non-current assets held for sale in December, 2020. Please refer to note 6(e) for details. Please refer to note 6(v) for the related gain or loss of disposal.

• (ii) As of December 31, 2020, the property, plant and equipment of the Company had been pledged as collateral for long-term borrowings, please refer to note 8.

• (h) Right of use assets

The Company leases assets including land and buildings. Information about leases for which the Company as a lessee was presented below:

Cost: Balance on January 1, 2021 Additions Lease modification Balance on December 31, 2021 Balance on January 1, 2020 Additions Lease modification Balance on December 31, 2020 Depreciation and impairment losses: Balance on January 1, 2021 Depreciation Lease modification Balance on December 31, 2021 Balance on January 1, 2020 Depreciation Lease modification Balance on December 31, 2020 Carrying amounts: Balance on December 31, 2021 Balance on December 31, 2020	Land		Buildings - 152,503 - 152,503 - - - - - 26,264 - 26,264 - - - - 126,239 -	Total 12,447 152,575 (8,967) 156,055 8,547 8,581 (4,681) 12,447 274 27,210 (793) 26,691 1,845 642 (2,213) 274 129,364 12,173

(Continued)

• 284 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(i) Investment Property

The information of investment properties of the Company were as follows:

Cost: Balance on January 1, 2021 Transfer from inventory Balance on December 31, 2021 Balance on January 1, 2020 Balance on December 31, 2020 Depreciation and Impairment: Balance on January 1, 2021 Depreciation Balance on December 31, 2021 Balance on January 1, 2020 Depreciation Balance on December 31, 2020 Carrying amounts: Balance on December 31, 2021 Balance on December 31, 2020 Fair value: Balance on December 31, 2021 Balance on December 31, 2020	Land and improvement $ 375,656 48,035 $ 423,691 $ 375,656 $ 375,656 $ - - $ - $ - - $ - $ 423,691 $ 375,656	Buildings and construction Total 317,575 693,231 32,210 80,245 349,785 773,476 317,575 693,231 317,575 693,231 11,797 11,797 6,620 6,620 18,417 18,417 5,570 5,570 6,227 6,227 11,797 11,797 331,368 755,059 305,778 681,434 $ 940,387 $ 837,250	Total
			693,231 80,245
			773,476
			693,231
			693,231
			11,797 6,620
			18,417
			5,570 6,227
			11,797
			755,059
			681,434

The investment property includes several commercial buildings for that are owned by the Company for renting to the third party. Please refer to note 6(o) for more information.

The fair value measurement of investment property is based on the website of Department of Land Administation and estate agencys website or the close deal in similar district. The fair value measurement of investment property has been categorized as a level 3 fair value based on the imputs to the valuation techique used.

As of December 31, 2021 and 2020, the Company’ s investment property had been pledged as collateral, please refer to note 8.

(Continued)

• 285 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(j) Other financial assets and incremental costs of obtaining a contract

Other current and non-current financial assets Current incremental costs of obtaining a contract Total	December 31, 2021 $ 5,695,462 934,204 $ 6,629,666	December 31, 2020
		5,691,593 410,475
		6,102,068

(i) Other financial assets

Other financial assets include certificate of deposit as collateral, trust account for presale of properties, reserve account for borrowing, performance guarantee, reserve account for bonds and construction deposit.

• (ii) Incremental costs of obtaining a contract

The Company expects that incremental commission fees paid to intermediaries, and the bonus for the internal sales department are recoverable. The Company has therefore capitalized them as contract costs. Capitalized commission fees are amortized when the related revenues are recognized. For the years ended December 31, 2021 and 2020, the Company recognized $193,621 thousand and $120,387 thousand of selling expenses.

(k) Short-term borrowings, notes and bills payable

The details of short-term borrowings, notes and bills payable of the Company were as follows:

Secured bank loans Unsecured bank loans Short-term notes and bills payable Total Secured bank loans Unsecured bank loans Short-term notes and bills payable Total		December 31, 2021	December 31, 2021	December 31, 2021
	Currency	Range of interest rate
	TWD TWD TWD
	Currency	Range of interest rate	Maturity Amount 2021~2025 $ 10,605,172 2021 1,331,000 2021 2,758,113 $ 14,694,285	Amount
	TWD TWD TWD	1.72%~2.14% 1.23% 0.41%~1.82%

(Continued)

• 286 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• (i) The issue of bank loan and repayment

For the years ended December 31, 2021 and 2020, the incremental amounts were $22,034,683 thousand and $18,588,610 thousand, respectively; the repayment amounts were $21,618,200 thousand and $12,902,910 thousand, respectively.

• (ii) Collateral for bank Loans

The Company had pledged as collateral for bank loans, please refer to note 8.

• (l) Long-term borrowings/Long-term borrowings, current portion

The details of long-term borrowings of the Company were as follows:

Secured bank loans Less: current portion Total Secured bank loans Less: current portion Total		December 31, 2021 Range of interest rate Maturity Amount 1.54% 2034 $ 344,482 (25,944) $ 318,538 December 31, 2020 Range of interest rate Maturity Amount 1.44% 2034~2035 $ 1,362,573 (1,018,091) $ 344,482
	Currency	Range of interest rate
	TWD
	Currency	Range of interest rate
	TWD	1.44%

• (i) The issue of bank loan and repayment

For the years ended December 31, 2021 and 2020, the incremental amounts were $0 thousand; the repayment amounts were $1,018,091 thousand and $58,762 thousand, respectively.

• (ii) Collateral for bank Loans

The Company had pledged as collateral for bank loans, please refer to note 8.

• (m) Bonds payable/Bonds payable, current pertion or putable bonds

The details of the Company’s bonds payable were as follows:

Secured ordinary corporate bond－current Secured ordinary corporate bond－non-current Total	December 31, 2021 $ 1,989,327 7,861,799 $ 9,851,126	December 31, 2020
		1,481,281 7,851,491
		9,332,772

(Continued)

• 287 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• (i) The Company issued a secured ordinary corporate bond for 5 years at the amount of $2,000,000 thousand, with an interest rate of 0.57%, in November 2021. The Company did not issue, redeem or repay the above corporate bond as of December 31, 2020.

• (ii) The Company issued a secured ordinary corporate bond amounting to $5,900,000 thousand, ～

• $1,500,000 thousand, and $2,000,000 thousand with an interest rate of 0.78% 0.85%, 0.96% and 0.98% in 2019, December 2016, and August 2017, respectively. The secured ordinary corporate bonds were issued for 5 years.

(iii) For the details of collateral of secured ordinary corporate bond, please refer to note 8.

• (n) Lease liabilities

The carrying amount of lease liabilities were as follows：

Current Non-current	December 31, 2021 $ 29,149 $ 99,013	December 31, 2020
		8,827
		814

For the maturity analysis, please refer to note 6(w).

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases	For the years ended December 31	For the years ended December 31
	2021 $ 2,282 $ 16,600	2020
		33
		25,637

The amounts recognized in the statement of cash flows for the Company were as follows:

Total cash outflow for leases	For the years ended December 31	For the years ended December 31
	2021 $ 44,974	2020
		26,114

• (i) Real estate lease

In January 2021, the Company sold and leased back its office buildings and leased land for the construction of its reception center and parking lot. The leases run for a period of 2-20 years. The Company also leases out its office equipment and outdoor advertising. These leases are short-term and leases of low-value items. The Company has elected not to recognize its rightof-use assets and lease liabilities for these leases.

(Continued)

• 288 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(o) Operating lease

The Company leases out its investment property. The Company has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Please refer to note 6(i) sets out information about the operating leases of investment property.

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date are as follows:

Less than one year One to two years Two to three years Three to four years Four to five years Total undiscounted lease payments	December 31, 2021 $ 16,271 16,031 9,358 6,261 514 $ 48,435	December 31, 2020
		15,431 15,585 15,345 8,672 5,576
		60,609

For the years ended December 31, 2021 and 2020, the Company’s rental income from investment properties were $14,991 thousand and $14,510 thousand, respectively.

(p) Employee benefits

(i) Defined benefit plans

The Company’s employee benefit liabilities were as follows:

Short-term paid leave liability (ii) Defined contribution plans	December 31, 2021 $ 2,527	December 31, 2020
		2,321

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

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $3,212 thousand and $2,987 thousand for the years ended December 31, 2021 and 2020, respectively.

(Continued)

• 289 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(q) Income tax

(i) Income tax expenses

The components of income tax expenses for the years ended December 31, 2021 and 2020 were as follows:

The components of income tax expenses for the years were as follows:	ended December 31, 2021 and 2020
Current tax expense Current period Land value increment tax Adjustment for prior periods Income tax expense	For the years ended December 31 2021 2020 $ 327,269 68,925 40,167 2,480 834 (13,982) $ 368,270 57,423
	2021 $ 327,269 40,167 834 $ 368,270

The reconciliation of income tax expense and profit before tax for the years ended December 31, 2021 and 2020 were follows:

31, 2021 and 2020 were follows:
	For	the years ended	December 31
		2021	2020
Profit before tax	$	2,040,100	174,671
Income tax expense at domestic statutory tax rate		408,020	34,934
Book –tax difference between deferred interest expense		(14,629)	(6,982)
Land tax exempt income		31,987	2,890
Adjustment for prior periods		834	(13,982)
Book –tax difference between deferred sales commission		(18,712)	25,187
Financial assets measured at fair value through profit and		-	12
loss
Book –tax difference betweent deferred impairment loss		(33,096)	33,096
Land value increment tax		40,167	2,480
Dividend income		(5,270)	(4,780)
Others		(41,031)	(15,432)
	$	368,270	57,423

(Continued)

• 290 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(ii) Recognized deferred tax asset and liability

Changes in the amount of deferred tax liabilities for the years ended December 31, 2021 and 2020 were as follows:

Deferred tax liabilities: Balance on January 1, 2021 Balance on December 31, 2021 Balance on January 1, 2020 Balance on December 31, 2020	Provision for land value increment tax
	$ 2,844 $ 2,844 $ 2,844 $ 2,844

• (iii) Assessment of tax

The Company’s income tax had been examined by the tax authorities till the year 2019.

(r) Capital and other equity

As of December 31, 2021 and 2020, the total value of authorized ordinary shares were $5,000,000 thousand, with par value of $10 per share. The paid-in capital were 392,197 thousand and 369,997 thousand, respectively.

(i) Ordinary shares

A resolution was passed during the general meeting of shareholders held on August 16, 2021 for the issuance of 20 and 40 new shares, at per one thousand share, using retained earnings and capital surplus, respectively, with an amount totaling $222,000 thousand. The Company has received the approval from the Financial Supervisory Commission for the above capital increase on August 30, 2021, and August 3, 2020, respectively. Also, a resolution was passed during the board meeting, to set October 1, 2020, and October 2, 2021, respectively, as the dates of allocated capital. The relevant statutory registration procedures have since been completed.

(ii) Capital surplus

The components of the capital surplus were as follows:

Premium on issuance of capital stock Donation from shareholders Others	December 31, 2021 $ 12,021 3,585 5,770 $ 21,376	December 31, 2020
		160,021 2,598 5,770
		168,389

(Continued)

• 291 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

On August 16, 2021, a resolution was approved during the general meetings of the shareholders for the distribution of cash dividends amounting to $148,000 thousand. Furthermore, the distribution of cash dividends amounting to $308,331 thousand resulted in a capital increase of $308,330 thousand by using the capital surplus based on the resolution approved during the general meetings of the shareholders held on June 9, 2020.

(iii) Retained earnings

In accordance with the Company’s Articles of Incorporation, which were approved during the general meeting of shareholders held on June 9,2020, stipulates that Company's net earnings should first be used to offset the prior years’ deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, and then any remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

Before the distribution of dividends, the Company shall first take into consideration its operating environment, industry developments, and the long-term interests of stockholders, as well as its programs to maintain operating efficiency and meet its capital expenditure budget and financial goals in determining the stock or cash dividends to be paid. When distributing dividends, the Company determines the stock or cash dividends to be paid. The limit of dividend distribution is maintained between 10% and 100% of current-year earnings distribution. The cash dividends shall not be below 10% of total dividends.

As the Company distributes all or part of dividends, or legal reserve, or cpaital with cash, the Company should hold a Board meeting to pass the resolution by more than half of the directors present at the Board meeting, which meeting requires a quorum of two thirds of all the directors present. The resolution should be submitted to the Shareholder’s meeting.

1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

(Continued)

• 292 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

2) Special reserve

In accordance with the FSC, a portion of current-period earnings and undistributed priorperiod earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders’ equity. Similarly, a portion of unappropriated earnings prior-period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions.

3) Earnings distribution

Earnings distribution for the years ended December 31, 2020 and 2019 was decided by the resolution adopted, at the general meeting of shareholders held on August 16, 2021 and June 9, 2020, respectively. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders: Cash Shares Total	For the years ended December 31	For the years ended December 31	For the years ended December 31	For the years ended December 31	For the years ended December 31
	2020			2019 Amount per share (dollars) Amount 1.00 308,330 1.00 308,331 616,661
	Amount per share (dollars)		Amount		Amount
	$ 0.20 0.20	74,000 74,000 $ 148,000	74,000 74,000		308,330 308,331
					616,661

The amount of cash dividends on the appropriations of earnings for the years ended December 31, 2021, and the amount of shares dividends of appropriations of earnings for the years ended December 31, 2021, had been approved and proposed, respectively during the board meeting on March 14, 2022, as follows:

during the board meeting on March 14, 2022, as follows:
Dividends distributed to ordinary shareholders: Cash Shares Total	For the years ended December 31
	2021
	Amount per share Total Amount $ 2.00 784,393 1.50 588,295 $ 1,372,688	Total Amount
		784,393 588,295

(Continued)

• 293 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(iv) Other equity items (net after tax)

Balance on January 1, 2021 Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Balance on December 31, 2021 Balance on January 1, 2020 Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance on December 31, 2020

Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income $ 150,468 5,258 $ 155,726 $ 101,054 49,668 (254) $ 150,468

(s) Earnings per share

The calculations of basic and diluted earnings per share were as follows:

• (i) Basic earnings per share

1) Profit attributable to ordinary shareholders of the Company 2) Weighted-average number of ordinary shares	For the years ended December 31	For the years ended December 31
	2021 $ 1,671,830 392,197	2020
		117,248
		392,197

(ii) Diluted earnings per share

1) Profit attributable to ordinary shareholders of the Company (diluted) 2) Weighted-average number of ordinary shares (basic) Effect of restricted employee shares unvested Weighted-average number of ordinary shares (diluted)	For the years ended December 31	For the years ended December 31
	2021 $ 1,671,830 392,197 499 392,696	2020
		117,248
		392,197 124
		392,321

(Continued)

• 294 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• (t) Revenue from contracts with customers

• (i) Disaggregation of revenue

Primary geographical markets: Taiwan Major products/services lines: Sales revenue (sales of real estate) Other revenue Timing of revenue recognition: Products and services transferred over time Revenue transferred at a point in time	For the years ended December 31	For the years ended December 31
	2021 $ 9,653,691 $ 9,638,471 15,220 $ 9,653,691 $ 14,991 9,638,700 $ 9,653,691	2020
		3,944,597
		3,930,087 14,510
		3,944,597
		14,510 3,930,087
		3,944,597

(ii) Contract balances

Contract liabilities－Sales of real estate Contract liabilities－Advance receipt Total	December 31, 2021 $ 3,267,845 264 $ 3,268,109	December 31, 2020 3,308,906 5,804 3,314,710	January 1, 2020 1,593,488 256 1,593,744

For details on accounts receivable and allowance for impairment, please refer to note 6(c).

The amount of revenue recognized for the years ended December 31, 2021 and 2020 that was － included in the contract liability Sales of real estate balance at the beginning of the period were $1,372,307 thousand and $143,594 thousand, respectively.

The major change in the balance of contract assets and liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received. There were no other significant changes for the years ended December 31, 2021 and 2020.

(Continued)

• 295 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(u) Employee and directors' remuneration

In accordance with the articles of incorporation the Company should contribute no less than 0.1% of the profit as employee remuneration and less than 1% as directors' remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The recipients of shares and cash may include the employees of the Company’s affiliated companies who meet certain conditions.

For the years ended December 31, 2021 and 2020, the Company estimated its employee remuneration amounting to $27,000 thousand and $3,500 thousand, respectively, and directors' remuneration amounting to $10,000 thousand and $1,500 thousand, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors of each period, multiplied by the percentage of remuneration to employees, directors as specified in the Company's Articles. If there is difference between the estimated amount and actual distribution of next year, the Company recognizes it in profit and loss of the next year, as a change in accounting estimates. If a resolution is made by the meeting of Board of Directors to distribute employee remuneration by shares, the number of shares to be distributed will be calculated based on the closing price of the Company’s ordinary shares, one day before the date of the meeting of Board of Directors. These remunerations were expensed under operating expenses for the years ended 2021 and 2020.

Related information would be available at the Market Observation Post System website. The amounts, as stated in the consolidated financial statements, are identical to those of the actual distributions for the years ended 2021 and 2020.

(v) Non-operating income and expenses

(i) Interest income

The details of interest income for the years ended December 31, 2021 and 2020 were as follows:

follows:
Interest income from construction refundable deposit Interest income from bank deposit and bills Others	For the years ended December 31
	2021 $ 2,197 2,398 933 $ 5,528	2020 2,341 1,849 6,659 10,849

(ii) Other income

The details of other income for the years ended December 31, 2021 and 2020 were as follows:

Dividend income Rent income	For the years ended December 31	For the years ended December 31
	2021 $ 26,352 8,438 $ 34,790	2020
		23,900 7,715
		31,615

(Continued)

• 296 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(iii) Other gains and losses

The details of other gains and losses for the years ended December 31, 2021 and 2020 were as follows:

Foreign exchange gains (losses) Losses on financial assets at fair value through profit or loss Gain on disposal of property, plant and equipment Impairment loss on non-current assets Other Income Other expenses	For the years ended December 31 2021 2020 $ (87) (924) - (62) - 1,944 - (165,479) 43,716 60,316 (78) (27) $ 43,551 (104,232)
	2021 $ (87) - - - 43,716 (78) $ 43,551

(iv) Finance costs

The details of finance costs for the years ended December 31, 2021 and 2020 were as follows:

Interest expense Bank loans and collateral Guarantee fees Interest on corporate bond Other financial expenses Less: capitalized interest	For the years ended December 31 2021 2020 $ 344,963 343,828 16,421 6,303 83,931 81,732 2,282 33 (317,522) (286,113) $ 130,075 145,783
	2021 $ 344,963 16,421 83,931 2,282 (317,522) $ 130,075

(w) Financial instruments

(i) Credit risk

1) Credit risk exposure

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

2) Concentration of credit risk

The most of account receivables of the Company are from sales of real estate department. Receivables generated from sales of real estate department are mostly from individuals, and the payments are usually completed with transferring, check, or loans form the bank, which are considered to have low credit risk nd no past-due condition. Thus, the Company evaluates there is no need to recognize loss allowance provision.

(Continued)

• 297 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

December 31, 2021 Non derivative financial liabilities: Secured bank loans Unsecured bank loans Short-term notes and bills payable Ordinary corporate bonds (including current portion) Notes payable, accounts payable and other payables Lease liabilities December 31, 2020 Non derivative financial liabilities: Secured bank loans Unsecured bank loans Short-term notes and bills payable Ordinary corporate bonds (including current portion) Notes payable, accounts payable and other payables Lease liabilities	Carrying amount $ 13,697,139 522,000 1,236,759 9,851,126 1,916,927 128,162 $ 27,352,113 $ 11,967,745 1,331,000 2,758,113 9,332,772 1,596,436 9,641 $ 26,995,707	Contractual cash flows 14,425,891 524,321 1,237,900 10,123,060 1,916,927 133,892 28,361,991 12,673,345 1,346,420 2,760,000 9,648,880 1,596,436 10,030 28,035,111	Within 1 year 1,419,123 524,321 1,237,900 2,079,820 1,916,927 29,162 7,207,253 1,815,644 1,346,420 2,760,000 1,582,820 1,596,436 4,629 9,105,949	1-3 years 5,977,050 - - 6,020,440 - 58,325 12,055,815 3,523,716 - - 2,117,240 - 4,319 5,645,275	3-5 years 6,807,073 - - 2,022,800 - 45,607 8,875,480 7,080,273 - - 5,948,820 - 139 13,029,232	Over 5 years
						222,645 - - - - 798
						223,443
						253,712 - - - - 943
						254,655

The Company does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

• (iii) Market risk

1) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Company’s financial assets and liabilities.

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.5% when reporting to management internally, which also represents the Company management's assessment of the reasonably possible interest rate change.

(Continued)

• 298 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

If the interest rate had increased / decreased by 0.5% basis points, the Company’s interest expenses would have increased / decreased by $71,137 thousand and $66,535 thousand, respectively, for the years ended December 31, 2021 and 2020, with all other variable factors remaining constant. Taking into account that capitalized interest of profit may decrease or increase by $20,673 thousand and $22,458 thousand, respectively. This is mainly due to the Company’s borrowing at variable rates.

• 2) Other market price risk

For the years ended December 31, 2021 and 2020, the sensitivity analyses for the changes in the securities price at the reporting date were performed using the same basis for the profit and loss as illustrated below:

Price of securities at reporting date Increasing 10％ Decreasing 10％	For the years ended December 31	For the years ended December 31	For the years ended December 31	For the years ended December 31
	2021		2020 Other comprehensive income after tax Net income 60,270 - (60,270) -
	Other comprehensive income after tax $ 60,796 $ (60,796)	Net income		Net income
		-		-
		-		-

(iv) Information of fair value

• 1) Valuation techniques for financial instruments measured at fair value

The fair value of financial assets and liabilities at fair value through profit or loss, and financial assets at fair value through other comprehensive income is measured on a recurring basis. The carrying amount and fair value of the Company’s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

Financial assets at fair value through other comprehensive income Stocks listed on domestic markets Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other receivables Other financial assets－current Other financial assets－non- current Subtotal Total		December 31, 2021	December 31, 2021	December 31, 2021
	Book Value $ 607,956 $ 1,438,780 374,941 27,325 3,100,544 2,594,918 7,536,508 $ 8,144,464		Fair Value
		Level 1 607,956 - - - - - - 607,956	Level 2 - - - - - - - -	Level 3 - - - - - - - -	Total 607,956
					- - - - -
					-
					607,956

(Continued)

• 299 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

Financial liabilities measured at amortized cost Short-term loans Short-term notes and bills payable Notes payable, accounts payable and other payables Lease liabilities Corporate bonds payable (including current portion) Long-term loans (including current portion) Total Financial assets at fair value through other comprehensive income Stocks listed on domestic markets Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other receivables Other financial assets－current Other financial assets－non- current Subtotal Total Financial liabilities measured at amortized cost Short-term loans Short-term notes and bills payable Notes payable, accounts payable and other payables Lease liabilities Corporate bonds payable (including current portion) Long-term loans (including current portion) Total		December 31, 2021	December 31, 2021	December 31, 2021
	Book Value $ 13,874,657 1,236,759 1,916,927 128,162 9,851,126 344,482 $ 27,352,113		Fair Value
		Level 1 Level 2 Level 3 - - - - - - - - - - - - - - - - - - - - - December 31, 2020			Total
					- - - - - -
					-
			Fair Value
		Level 1 602,698 - - - - - - 602,698 - - - - - - -	Level 2 - - - - - - - - - - - - - - -	Level 3 - - - - - - - - - - - - - - -	Total
					602,698
					- - - - -
					-
					602,698
					- - - - - -
					-

(Continued)

• 300 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• 2) Valuation techniques for financial instruments measured at fair value

• a) Non-derivative financial instruments

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’ s-length basis. Whether transactions are taking place ‘regularly’ is a matter of judgment and depends on the facts and circumstances of the market for the instrument.

Quoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

Fair values and extents of financial instruments quoted in active markets are listed as follows:

• i) Fair value of listed stocks and corporate bonds are determined by market prices, for they are issued with standard terms and conditions, and are quoted in active markets.

b) Derivative financial instruments

Measurement of the fair value of derivative instruments is based on the valuation techniques generally accepted by market participants such as the discounted cash flow or option pricing models. Fair value of forward currency is usually determined by the forward currency exchange rate. Structured Interest Rate Derivatives financial instruments are base on appropriate option pricing models (such as the － Black Scholes model) or other evaluation methods.

The discounted cash flow method is used to estimate the fair value. The main assumptions are considering the probability of occurrence base on the surplus before the tax, interest, depreciation and amortization to estimate the price to be paid, and are estimated as the present value after discounting, whose discount rate is adjusted base on the risk.

3) Transfers between levels

Stock held by the Company quoted in an active market is sorted to Level 1. There is no difference regarding valuation techniques for the years ended December 31, 2021 and 2020. There is no transfer between levels measured at fair value for the years ended December 31, 2021 and 2020.

(Continued)

• 301 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• (x) Financial risk management

• (i) Overview

The Company have exposures to the following risks from its financial instruments:

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

The following likewise discusses the Company’ s exposure information, objectives, policies and processes for measuring and managing the above mentioned risks.

• (ii) Structure of risk management

The Company’ s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

(iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investments in debt securities.

• 1) Account and other receivables

The Company’s credit risk is affected by its clients. Accounts receivable generated by selling real estate has a lower credit risk since the payment is completed by the masses with transferring, check, or loans form the bank.

The Company discloses the estimation of accounts receivables’ and other receivables’ loss with allowance for bad debt impairment loss account. Allowance for bad debt impairment loss account is composed with specific losses and batch of unrecognized losses components. Unrecognized losses components are determined by historically statistical data from similar financial assets.

2) Investments

The exposure to credit risk for the bank deposits, fixed income investments, and other financial instruments is measured and monitored by the Company’s finance department. The Company only deals with banks, other external parties, corporate organizations, government agencies and financial institutions with good credit rating. The Company does not expect any counterparty above fails to meet its obligations hence there is no significant credit risk arising from these counterparties.

(Continued)

• 302 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

3) Guarantees

The Company’ s policy is to provide financial guarantees only to wholly owned subsidiaries. On December 31, 2021 and 2020, no other guarantees were outstanding.

(iv) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’ s reputation.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Company’ s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

(y) Capital management

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

In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to the shareholders, or issue new shares.

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

As of 2021, the Company’s capital management strategy is consistent with the prior year as of 2020. The gearing ratio is maintained so as to ensure financing at reasonable cost. The Company’s debt-toequity ratio as of December 31, 2021 and 2020, were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total Equity Total capital and equity Debt-to-equity ratio	December 31, 2021 $ 31,064,991 (1,438,780) 29,626,211 6,675,011 $ 36,301,222 % 82	December 31, 2020 30,689,826 (1,286,398) 29,403,428 5,070,936 34,474,364 % 85

(Continued)

• 303 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• (z) Investing and financing activities not affecting current cash flow

The Company’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2021 and 2020, were as follows:

• (i) By the lease to get the right-of-use asset, please refer to notes 6(h).

(7) Related-party transactions:

• (a) Parent company and ultimate controlling company

On December 31, 2021 and 2020, Guang Yang Investment Co., Ltd. (Guang Yang) is the parent company of the Company and owns 6.13% and 5.62% of all shares outstanding of the Company, respctively. Chyi Yuh Construction Co., Ltd. is the parent company of Guang Yang. Highwealth Construction Corp. is the ultimate controlling party of the Company and has issued the Consolidated Financial Statements available for Public Use.

• (b) Names and relationship with related party

The followings are entities that have had transactions with related party during the periods covered in the financial statements.

Name of related party Relationship with the Company Guang Yang Investment Co., Ltd. Parent company of the Company Chyi Yuh Construction Co., Ltd. Parent company of Guang Yang Investment Co., Ltd. Highwealth Construction Corp. Ultimate controlling company of the Company (Highwealth) Well Rich International Co., Ltd. Same ultimate controlling company with the Company Bo Yuan Construction Co., Ltd. 〃 (Bo Yuan) Highwealth Real Estate Co., Ltd. 〃 Ju Feng Hotel Management 〃 Consultant Co., Ltd. (Ju Feng) Jin Jyun Construction Co., Ltd Subsidiary Company Da Li Investment Co., Ltd. Same president with the Company ○○, Chen Key management personnel of the ultimate controlling company of the Company ○○, Ye Relatives by blood within the second degree of relationship of key management personnel of the Company ○○, Wu Relatives by blood within the second degree of relationship of key management personnel of the Company

(Continued)

• 304 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• (c) Significant transactions with related parties

• (i) Operating revenues

The amounts of significant sales by the Company to related parties were as follows:

○○, Wu ○○, Ye	Revenue	Revenue		Contract liabilities-sales of real estate	Contract liabilities-sales of real estate
	For the years ended December 31 2021 2020 $ - 7,329 - - $ - 7,329			December 31, 2021 - 1,528 1,528	December 31, 2020
		2020
		7,329 -			- - -
		7,329

The total amount of the contract of sales to the related parties are $17,088 thousand, and $7,479 thousand (VAT included) respectively.

There were no significant differences of the price and conditions for related parties and ordinary contract mentioned above.

(ii) Purchase

• 1) The amounts of purchases from contract construction by the Company from related parties were as follows:

Parent company: Chyi Yuh Subsidiary company: Jin Jyun Other related parties	Purchase (charged)	Purchase (charged)
	For the years ended December 31 2021 2020 $ 376,780 2,619,754 2,987,553 1,117,126 19,914 42,524 $ 3,384,247 3,779,404
	2021 $ 376,780 2,987,553 19,914 $ 3,384,247
		3,779,404

There were no significant differences of the price and conditions for related parties and ordinary contract mentioned above.

(Continued)

• 305 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• 2) The Company commissioned related parties to administer construction properties. Administration fees were as follows:

Administration fees were as follows:
Parent company： Highwealth Other related parties	Expense paid
	For the years ended December 31
	2021 $ 4,667 2,398 $ 7,065	2020 3,333 - 3,333

(iii) Receivables from related parties

The receivables from related parties were as follows:

Accounted items	Categories Parent company－Highwealth Other related parties	December 31, 2021 $ - - $ -	December 31, 2020
Other receivables 〃			47,323 134
			47,457

(iv) Payables to related parties

The payables to related parties were as follows:

Accounted items	Categories Parent company－Chyi Yuh Parent company－Highwealth Subsidiary company－Jin Jyun Other related parties Parent company Other related parties	December 31, 2021 $ 153,274 - 557,514 23,565 - 4,596 $ 738,949	December 31, 2020
Accounts payable 〃 〃 〃 Other payables 〃			531,969 952 284,628 29,385 390 17,680
			865,004

(v) Guarantees

Subsidiary company Jin Jyun Co., Ltd provided guarantees to the Company. As of December 31, 2021, the guarantee balance was $600,000 thousand, $450,000 thousand have been used.

(Continued)

• 306 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(vi) Leases

The leases between the Company and related parties were as follows:

• 1) Rent income

Parent company Other related parties: Bo Yuan Other related parties	Guarantee deposit December 31, 2021 December 31, 2020 $ - - 1,378 1,140 - - $ 1,378 1,140	Rent income	Rent income
	December 31, 2021 $ - 1,378 - $ 1,378	For the years ended December 31
		2021 57 6,749 47 6,853	2020
			57 6,964 41
			7,062

• 2) Rent expense

Parent company Other related parties	Refundable deposits December 31, 2021 December 31, 2020 $ - - 140 140 $ 140 140	Rent expense	Rent expense
	December 31, 2021 $ - 140 $ 140	For the years ended December 31
		2021 2,906 940 3,846	2020
			4,629 2,119
			6,748

As of December 31, 2021 and 2020, The Company prepaid to parent Company were $0 and $33 thousand for the leases mentioned above, respectively.

(vii) Others

• 1) As of December 31, 2021 and 2020, the Company’s contracts with related parties for construction cooperation were as follows:

Land owner

	Land owner
Property December 31, 2021 Shr Jeng Ai Yue (Huei An Section)	/Investor Parent company －Highwealth	Type Redistribution under cooperative construction	Portion 57%	Refundable deposit
				Refundable deposit $100,000 Refundable notes $200,000

(Continued)

• 307 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

Property December 31, 2020 Yue Cheng (Guo Mau Project) Shr Jeng Ai Yue (Huei An Section)	Land owner /Investor Parent company －Highwealth Parent company －Highwealth	Type Redistribution under cooperative construction Redistribution under cooperative construction	Portion 40% 57%	Refundable deposit
				Refundable deposit $ 50,000 Refundable deposit $100,000 Refundable notes $200,000

The consumption of Yue Chen (Guo Mau Project) and the exchange of buildings for land with the Parent Company had been completed by 2020. By the end of December 31, 2020, for the asset pledged from joint construction contract, please refer to note 8.

• 2) The Company received guarantee notes were as follows:

Parent company－Chyi Yuh Subsidiary company－Jin Jyun	December 31, 2021 $ 85,418 17,779 $ 103,197	December 31, 2020 34,178 8,098 42,276

• 3) The Company commissioned related parties to sell real estate. Related consulting fees and commission and sales expense were as follows:

Parent company Other related parties: Ju Feng Other related parties	Expense paid
	For the years ended December 31 2021 2020 $ 105 - 23,094 28,960 2,183 21,784 $ 25,382 50,744
	2021 $ 105 23,094 2,183 $ 25,382

• (d) Key management personnel compensation

Key management personnel transaction

Key management personnel compensation comprised:

Short-term employee benefits	For the years ended December 31	For the years ended December 31
	2021 $ 46,724	2020
		15,772

(Continued)

• 308 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Pledged assets	Object Bank loans Bank loans, short-term notes and bills payable Trust account, performance bonds, bank loans, short-term notes and bills payable and bonds Bank loans, short-term notes and bills payable, long-term borrowings and bonds Long-term borrowings Long-term borrowings, bank loans, short-term notes and bills payable and bonds Long-term borrowings, current portion	December 31, 2021 $ 607,956 231,552 5,232,732 22,790,245 - 755,059 - $ 29,617,544	December 31, 2020
Financial assets at FVOCI Notes receivable Other financial assets－current and non-current Inventories (construction) Property, plant and equipment Investment property Non-current assets held for sale			602,698 60,849 5,193,040 18,394,764 18,587 672,655 1,187,386
			26,129,979

As of December 31, 2021 and 2020, the book value of pledged assets providing undrawn guaranteed loan are $65,752 thousand and $1,173,710 thousand, respectively.As of December 31, 2021 and 2020, the Company provided notes receivable of presale cases $1,536,234 thousand and $1,157,804 thousand, as collateral for the bank loans, respectively.

(9) Commitments and contingencies:

• (a) Unrecognized contractual commitments

• (i) Amount of signed contract and received amount from contracts for construction released, for properties sold in advance and sold after completion, and for property, plant and equipment were as follows:

Amounts of signed contracts Received amount from contracts Outstanding checks received from presale cases	December 31, 2021 $ 32,748,085 $ 3,267,845 $ 2,159,217	December 31, 2020
		28,211,418
		3,308,906
		2,115,653

• (ii) As of December 31, 2021 and 2020, the refundable deposits paid, through cooperation with the land owners, amounted to $425,000 thousand and $475,000 thousand, respectively; the refundable notes submitted amounts both were $220,000 thousand.

(Continued)

• 309 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• (iii) As of December 31, 2021 and 2020, the contract price of administer services the Company provided to joint investors both were $14,286 thousand, the amounts received both were $11,429 thousand.

• (iv) Unrecognized commitments generated by signing contracts for purchasing inventories were as follows:

follows:
Acquisition of inventory (construction)	December 31, 2021 $ 2,768,959	December 31, 2020
		4,014,262

• (v) As of December 31, 2020, the Company expect to pay the rent for total $160,276 thousand because of the unrecognized lease-back transaction. The lease term was expected to be from January, 2021 to July, 2026.

(10) Losses due to major disasters:None

(11) Subsequent events:None

(12) Other:

A summary of current-period employee benefits, depreciation, and amortization, by function, is as follows:

		For theyears ended December 31	For theyears ended December 31	For theyears ended December 31	For theyears ended December 31	For theyears ended December 31
By function By item		2021		2020
	Operating Cost	Operating Expense	Total	Operating Cost	Operating Expense	Total
Employee benefits
Salary	2,266	112,526	114,792	2,780	67,045	69,825
Labor and health insurance	233	7,990	8,223	307	7,125	7,432
Pension	117	3,095	3,212	164	2,823	2,987
Remuneration of directors	-	12,280	12,280	-	3,900	3,900
Others	289	8,771	9,060	480	9,574	10,054
Depreciation	6,626	34,124	40,750	6,227	12,134	18,361
Amortization	-	1,661	1,661	-	1,862	1,862

For the year ended December 31, 2021 and 2020, the information on the number of employees

amd employee benefit expense of the Company is as follows:

For the years ended December 31

Number of employees Number of directors who were not employees The average employee benefit The average employee salary Percentage of average employee salary expense Remuneration to supervisors

(Continued)

• 310 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

The item of the Company’s salary and remuneration about directors, independent director, managers, and employees are as follows:

• (a) Independent directors

• (i) Regardless of the Company’ s profit or loss, independent directors' salary and remuneration need to be paid in monthly basis (or quarterly, half yearly) and be adjusted according to the value of his/her participation in the contribution to Company's operation.

• (ii) The independent directors cannot participate in the distribution of director's compensation and other bonus distribution.

• (b) Other directors

• (i) The Company pays other directors’ remuneration, according to the value of his/her participation in the contribution to Company’s operation and refer to peer remuneration levels.

• (ii) Other directors' remuneration is allocated at a rate specified in the Company’ s articles of incorporation.

• (iii) According to the needs of the actual execution of the business, the Company has to pay for the traffic allowance.

• (c) Managerial officer

• (i) The monthly fixed salary is determined by salary level of each rank.

• (ii) According to the result of the operation performance assessment, the Company distributes the performance bonus.

• (iii) Year-end bonuses will be issued based on the results of employee performance appraisal.

• (iv) Employees' remuneration is allocated at a rate specified in the Company’ s articles of incorporation.

• (v) Traffic allowance and supervisor allowance are paid in accordance to duties and standards.

• (d) Other employees:

The salary of the Company’s employees is handled in accordance with the regulations of the "post ranks table" and "post salary benchmark table". The employee salary is divided into recurring and non-recurring salaries.

• (i) Recurring salaries include basic salaries, duties allowance, construction site allowance, professional allowance, meal allowance and other allowance.

• (ii) Non-recurring salaries include overtime pay, Dragon Boat festival bonus, Mid-Autumn Festival bonus and year-end bonus.

(Continued)

• 311 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company:

• (i) Loans to other parties: None

• (ii) Guarantees and endorsements for other parties:

Guarantees	Guarantees	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:	and endorsements for other parties:
		(Amount in Thousands of New Taiwan Dollars, Unless specified Otherwise)
No.	Name of guarantor	Counter-party of guarantee and endorsement		Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
1	Jin Jyun Constructio n Co., Ltd.	The company	3	1,335,002	600,000	600,000	450,000	600,000	% 8.99	3,337,506	N	Y	N

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Note 1: The numbering is as follows:
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  - 1) “0” represents the company

  - 2) Investees are sequentially numbered from 1 by company

• Note 2:The relationship between the guarantee and the guarantor are as follows:

  • 1) Transactions between the companies.

  • 2) The Company directly or indirectly holds more than 50% voting right.

  • 3) When other companies directly or indirectly hold more than 50% voting rights of the Company.

  • 4) The Company directly or indirectly holds more than 90% voting right.

  • 5) A company that is mutually protected under contractual requirements based on the needs of the contractor.

  • 6) A company that is endorsed by all the contributing shareholders in accordance with their shareholding ratio due to joint investment relationship.

  • 7) Under the Consumer Protection Act, performance guarantees for pre-sale contracts for companies in the same industry.

• Note 3:The Company endorsed the operation method for the total amount of guarantees and the limit for endorsement of a single enterprise:

  • 1) The aggregate amount of endorsements and guarantees endorsed by the company and its subsidiaries shall not exceed 50% of the net value of the Company.

  • 2) The aggregate amount of endorsements and guarantees endorsed by the company and its subsidiaries for a single enterprise shall not exceed 20% of the net value of the Company.

• (iii) Securities held as of December 31, 2021 (excluding investment in subsidiaries, associates and joint ventures):

   - (Amount in Thousands of New Taiwan Dollars, Unless specified Otherwise)
  

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
The Company	Stock- Highwealth Construction Corp.	Ultimate parent controlling of the Company	Financial assets at fair value through other comprehensive income-current	13,145,000	607,956	% 0.94	607,956

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: None

(Continued)

• 312 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

• (v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Name of property	Transaction date	Transaction amount	Status of payment	Counter- party	Relationship with the Company	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	References for determining price	Purpose of acquisition and current condition	Others
							Owner	Relationshi p with the Company	Date of transfer	Amount
The Company	Taoyuan city Gui Shan district Shan Jie section	September 7, 2021	1,614,096	1,614,096	Chen ○○, and other 6 people	Not related parties	-	-	-	-	Appraisal	Construction
The Company	Tainan city Amping section	November 9, 2021	1,223,873	371,621	Chang ○○, and other 14 people	Not related parties	-	-	-	-	Appraisal	Construction

• (vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None

• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company	Chyi Yuh Construciton Co., Ltd.	Parent company of the Company	Contracting project	376,780	4.21%		-		(153,274)	(12.76)%	Note 2
The Company	Jin Jyun Construction Co., Ltd.	Subsidiary of the Company	Contracting project	2,987,553	33.38%		-		(557,514)	(46.40)%	Note 2
Jin Jyun Construction Co., Ltd.	Highwealth Construction Corp.	Ultimate parent company	Contracted project	(580,172)	(14.03)%		-		96,679	12.66%	Note 1
Jin Jyun Construction Co., Ltd.	The Company	Parent company	Contracted project	(3,310,591)	(80.04)%		-		557,514	72.98%	Note 1

Note 1: The contracted company recognizes its construction revenue through percentage of completion method, and the amount of sales included.

Note 2: The contracting company records its import price through estimates of amount of purchase through number of trials.

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
Jin Jyun Construction Co., Ltd.	The Company	Parent company	557,514	7.86	-	-	548,297	-

(ix) Trading in derivative instruments: None.

• (b) Information on investees:

The following is the information on investees for the years ended December 31, 2021 (excluding information on investees in Mainland China):

(Amount in Thousands of New Taiwan Dollars, Unless specified Otherwise)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2021	Balance as of December 31, 2021	Balance as of December 31, 2021	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares	Percentage of wnership	Carrying value
Run Long Construction Co., Ltd.	Stock- Jin Jyun Construction Co., Ltd. T	aiwan	Construction, housing and building development rental services etc.	518,300	518,300	50,000,000	% 100.00	502,279	79,752	12,457

• (c) Information on investment in mainland China: None.

(Continued)

• 313 -

RUN LONG CONSTRUCTION CO., LTD. Notes to the Financial Statements

(d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Ching Shr Ban Investment Co., Ltd.	38,625,861	% 9.84
Ruen Ying Investment Co., Ltd.	25,117,350	% 6.40
Guang Yang Investment Co., Ltd.	24,022,699	% 6.13
Wan Sheng Fa Investment Co., Ltd.	22,698,296	% 5.78
Highwealth Construction Corp.	22,422,816	% 5.71
Shing R Sheng Investment Co., Ltd.	21,840,559	% 5.56
Feng Rau Investment Co., Ltd.	21,240,333	% 5.41
Chyi Yuh Construction Co., Ltd.	19,686,744	% 5.01

(14) Segment information:

Please refer to the consolidated financial statements.

• 314 -

RUN LONG CONSTRUCTION CO., LTD. 潤隆建設股份有限公司

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Chairperson: Tsai, Chung-Ping