Aa63741263fba023aff4b56ece2

董事會辦公室副總經理

陳婉玲

會計處協理

張淑瓊

Vice General President, Board of Directors office

Chen, Wan-Ling

Assistant Vice President, Accounting Section of Finance Department

Jhang, Shu-Cyong

Content

005 I Letter to Shareholders 1. 2019 Business Report 2. 2020 Operation Plan 3. Future Development Strategies 4. Influence from External Competition, Regulations and Macro-operating Environment 5. Conclusion 013 II Company Proﬁle 1. Date of Establishment 2. Company History 019 III Corporate Governance Report 1. Organization 2. Directors, Supervisors and ManagementTeam 3. Implementation of Corporate Governance 4. Information of Fees to CPA 5. Information on AccountantChange 6. The Chairman, President and Financial or Accounting Manager of the Company who had Worked for the Independent Auditor or the Related Party in the PastYear 7. State of Changes to Shareholdings Held by Directors, Supervisors, Presidents and Major Shareholders 8. Information disclosing the spouse, kinship within second degree and relationship between any of the top ten shareholders 9. The Shareholding of the Company, Director, Supervisor, President and the Business that is Controlled by the Company Directly or Indirectly on the Invested Company 055 IV Capital Raised 1. Capital & Shares 2. Corporate bonds 3. Preferred stocks 4. Depositary Receipts 5. Employee Stock Options 6. New Shares to Employees with Restricted Rights 7. Status of New Shares Issuance in Connection with Mergers and Acquisitions 8. Financing Plans and Implementation

2 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT 067 V Business Activities 1. Business Scope 2. Market and Sales Overview 3. Employee Information 4. Expenditures on Environmental Protection (General Management Department) 5. Labor Relations 6. Important Contracts 083 VI Financial Information 1. Condensed balance sheet, income statement and auditors' opinions for the last five years 2. Financial Analysis of the Last Five Years 3. 2019 Audit Committee's Report 4. 2019 Financial Statements 5. 2019 Consolidated Financial Statements of The Parent Company and Subsidiaries Certified by CPA 6. Financial turnover difficulties in the company and its affiliated companies 241 VII Review of Financial Conditions and Performance, Operating Results, and Risk Management 1. Financial Condition 2. Financial Performance 3. Cash Flow 4. Effect of Major Capital Expenditures in 2019 on Financial Operations 5. 2019 Investment Policy, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year 6. Risk Management 7. Other Important Matters 249 VIII Special Disclosures 1. Summary of Affiliated Companies 2. Private Placement of Securities in Years 2019 to present 3. The Shares in the Company Held or Disposed by Subsidiaries in Years 2019 to present 4. Other Supplementary Matters 5. Matters that Have Significantly Affected Shareholders' Equity and Prices of Securities Pursuant to Subparagraph 2, Paragraph 3, Article 36 of Securities Exchange Law in Years 2019 to present

I. Letter to Shareholders

1. 2019 Business Report

2. 2020 Operation Plan

3. Future Development Strategies

4. Influence from External Competition, Regulations and Macro-operating Environment

5. Conclusion With the full support of all shareholders and directors and the effort of all employees in 2019, Taiwan Land Development Corporation Group’s (hereinafter referred to as “TLDC” or the “Group”) New Paradiso in Hualien attracted over 3 million visitors throughout the year. The Group also continued to grow its operations of Kinmen Wind Lion God Shopping Street, began construction of the Hualien LOHAS Creative Park and hot spring hotel and service apartment in Hsinchu, as well as continued to promote its development projects and industrial parks in Hualien and Taichung, thereby boosting sales and value of assets owned by the Group in various areas and maintaining a stable growth of its business. For 2019, the Group reported consolidated revenue of NT$390 million and after-tax earnings per share of NT$0.4, mainly derived from retail and recreational business. Based on the operating philosophy of a sharing economy, the Group continues to integrate green, intelligent, and cultural creation with local living environments to develop product characteristics. Meanwhile, digital entertainment, preventive medicine, leisure and sightseeing, and cultural creative industries have been introduced to drive investments, boost productivity and increase job opportunities, so as to promote local development and achieve asset revitalization. In response to international expansion, the Group has adopted new economic models, such as circular economic approach and sharing economy. A next-generation digital entertainment center positioned as a technology, art, trend, and culture amusement park is being built with diverse presentation methods, including AR, VR, video, music, competition, live broadcast, extreme activities, and remote control, with the main part being New Paradiso in Huilan Bay, Hualien. In the future, the Group will also integrate the utilization of large land to develop warehousing and energy, coupled with life technology (in combination of AI and physics) and biomedicine techniques, to launch LOHAS Creative Park and Biotech Park in Hualien. Moreover, it will partner with the local Tzu Chi Hospital to develop life science, which will support the biomedicine services to be provided in the LOHAS Creative Park. As for the Biotech Park, the Group mainly recruit bio-technology merchants specializing in antibiotics, hypha technology, Yakult, and extracts of Chinese herbal medicine. The Group will integrate digital technologies with bio-technology, apply digital computing, 3D photography, digital storage, and computer operation to conduct preventive healthcare, thereby establishing a preventive medical enterprise. The goal is to bring health to Huilien. In 2020, the Group has been gradually expanding its territory in the sightseeing business. It now has bases in such locations as Hualien and Kinmen, and currently operates the Kinmen Wind Lion God Shopping Street, the Starbucks housed in shipping containers, and New Paradiso. The Group’s development of industrial parks continues to mainly rely on sales at the Taichung Shengang Fengzhou Phase-II Industrial Park, the Precision Machinery Technology Park, and the Guanghua Lohas Creative Park. The Hualien Huilanwan Sunrise Village, residences for retirees featured with leisure and life preservation, is an international landmark and architectural art built up by a world-class architect and architectural artist. Positioned as a new arcadia, the community will be managed using a new concept of public facilities and sharing economy, thereby attracting best people to become neighbors. Furthermore, the village has green plants, sunshine and air, which totally meet the international standard of green architecture, including health, environmental protection, energy-saving, electricity preservation, and intelligence. Both rentals and sales are available to offer consumers more options. In terms of asset disposal and activation, the Group continues to process self-owned assets held in different areas. The Group's business units will delve deep into the development of the leisure real estate market and deployment for related peripheral developments to echo the core philosophy of sustainable management. It also promotes three major theme parks, including Yunmeng Hill in Hsinpu, Hsinchu; Zan Ecological Theme Park in Caotun, Nantou; and the Huilanwan in Hualien. In the following we present our 2019 business report, including implementation results of the business plans, budget implementation, financial highlights and profitability analysis, research and development status, and an outline of our 2020 business plan, including business policies for the Year, business objectives, and important production and marketing policies: 1. 2019 Business Report (1) Implementation of Business Plan A. Revenue from the Taichung City Precision Machinery Innovation Technology Park, the Hualien Guanghua Lohas Creative Park, the Kaohsiung Gangshan Benjhou Industrial Park, and the Shengang Fengzhou Phase-II Technology Industrial Park. Among which, the Shengang Fengzhou Phase-II Technology Industrial Park is one under cooperation and development between Taichung City Government and the Group. An environmental impact appraisal report was approved for announcement on Nov 22, 2018, an approved permit was acquired on June 12, 2019 after a development plan and detailed plan book was reviewed for several times, a contrast table was approved by the Environmental Protection Agency for recordation on Oct 24, 2019, and merchant recruitment and pre-sales are scheduled for 2020.

6 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT I LETTER TO SHAREHOLDERS

B. The Group disposed existing and scattered self-owned assets ranging from Taipei, Taichung, Tainan, Nantou, Hualien and Kaohsiung, and completed the disposal of assets at Chengde Rd. in Taipei to effectively expand its operating funds. After resources have been committed to cleaning up the environment of other self-owned assets, a new value has been created for the land and new elements have been infused, which directly drive local development while improving asset value. C. The Kinmen Wind Lion God Shopping Street is situated at a perfect spot and has an edge of duty-free. It hosts six major enterprises, which are logistics, cross-border e-commerce, bonded retailing, entertainment, special medical treatment, and start-up, and attracts renowned international groups to set up stores, such as Japan's largest general duty-free shop LAOX, Japan Medical, and four major sports brands, including the number-one sports brand in the world - Nike, as well as New Balance, PUMA, and Converse. Many foreign and domestic brands operate in the Street, and years of development have yielded fruits. Moreover, it has been engaging in the logistics and bonded warehousing for a long time, and spotted the business opportunities arising from cross-strait business trade development. In order to strengthen Kinmen's advantage of being the hub of cross-strait trade, and to expand warehousing and logistics services of trade around the border, it obtained the only regular bonded warehouse license in Kinmen in Oct. 2019, allowing itself to actively develop cross-strait cross-border e-commerce business, optimize the logistics function of the Park, and actively participate in cross-strait events in Kinmen and Xiamen, therefore keeping incessant business growth and stable profits. D. The land area available for development at the Hsinchu Hsinpu Yunmeng Hill amounts to nearly 30 hectares. Taoist culture is introduced as the main theme there, and a leisure health-promoting park is in the planning stage. A healthy, LOHAS, and sustainable hot spring ecological park will be built by incorporating housing and dining. Facilities under planning inside the park include Le Meridien Hsinchu Hotel & Resort, a service apartment, VILLA3, a hot spring clubhouse, Tianlesi, Sunshine Church, a camellia greenhouse, and a leisure ranch. Currently it has completed the construction of Yunshuiguan, Camellia Garden, and Orchid Garden, with other facilities to be completed gradually. E. The Nantou Caotun Zen Culture Eco-community has an area of 9.51 hectares. The community centers around the theme of Zen. Its green buildings under planning include a service apartment, vacation housing, and a Zen clubhouse. These buildings will look for inspiration from the artistic conception of mountains and forests in Kyoto, Japan; also, spiritual industries including a spiritual formation center and a health-promotion clubhouse will be introduced. F. The environmental impact appraisal and the submission of the water conservation plan for the DaKeng Development Project in Taichung have been completed, and the demolition of remnant incomplete buildings has been completed. G. The Group continued the operations of Huanlien New ParadisoNew Paradiso and the Starbucks housed in shipping containers, which have become a new landmark in Hualien. With an area covering 45 hectares, TLDC Hualien Huilanwan Theme Park is Taiwan’s first green smart theme park to form a micro-climate. The park is home to Huilanwan Sunrise Village, Cloud-shaped Buildings, Huilanwan clubhouse, New Paradiso, Rock Park, waterbird wetland conservation area, the Starbucks housed in shipping containers, and the TLDC happy ranch; among which, a building permit has been obtained for the LOHAS Creative Park, and the construction is underway. H. The Hualien Harbor Waterfront Recreation Area project under planning uses a sunrise and a rainbow to form a 7.6km-long recreational belt connecting Hualien Harbor to New Paradiso. A spectacular rainbow scenic area will be built alongside marathon roads and bicycle tracks, with water recreation such as water slides, surf boards and wind surfs, and colorful storage houses and adjacent areas. The Group also invests in Pescadores high-speed ferries, which launched a service from Suao to Hualien on Sep. 27, 2019. The Blue Magpie carries travelers and effectively links to the Hualien New Paradiso, thus expanding operating benefits of the development. (2) Budget Implementation In accordance with the Regulations Governing the Publication of Financial Forecasts of Public Companies, TDLC is not required to make a financial forecast in 2019; this part is thus omitted.

7 (3)Financial Status and Proﬁtability

Unit: NT$1,000; %

Item 2019 2018

Operating revenue 393,930 365,755

Gross operating proﬁt 207,218 167,246 Financial Status Operating net loss -721,958 -661,207

Net income after tax 297,880 401,916

ROA (%) 1.22 1.51

ROE (%) 1.54 2.17

Operating profit -9.48 -8.68 Profitability Issued capital ratio (%) Net profit before tax 3.74 5.55

Net proﬁt ratio (%) 75.61 109.88

EPS (NT$) - Retroactive adjustment 0.4 0.54

Sales revenue for the current period reached NT$393,930,000, consisting mainly of recognition of NT$65,794,000 in related revenue from agency business in industrial park development and other labor services, NT$92,622,000 in related revenue from food and beverage, and NT$209,500,000 in related revenue from retail/entertainment operations. After deducting operating costs of NT$186,712,000 and operating expenses of NT$929,176,000, and adding non-operating income of NT$1,006,764,000, TDLC reports an after- tax net income of NT$297,880,000 for the current period. (4) Research and Development Work In line with the trends for the future, the Group adopts the development strategies of "cultural creativity, technological innovation, international standards" and embraces the teaching of Laozi "The best of men is like water" and the teaching of Sun Tzu "Just as water retains no constant shape, there are no constant conditions in warfare" in the Art of War as corporate core values to respond swiftly and eﬀectively in the ever changing market and fulﬁll its corporate social responsibility. We uphold the principles of green, intelligent and cultural creation in building the three major business axes and establish the sharing economy business model, and utilize the 4D planning concept (Design; Digital; Different; Diverse) to offer a new way of life and new products. Our green business encompasses such items as ecological conservation, environmental protection, sustainable living, organic LOHAS, energy conservation & carbon reduction, future medical science, and leisure & well-being. Our intelligent business encompasses such items as advanced technologies and digitalization such as IoT, Big Data, IDC, smart cities, digital entertainment, preventive medicine, long-term healthcare, and smart homes. Our cultural creative business encompasses such items as arts and cultural exhibitions and performances, arts agency, cultural exchange, arts auctions, and the operation of arts villages. 2. 2020 Operation Plan (1) Business Policy A. Value-oriented Development Strategies: The Group adds value to the land and space through cultural creativity and technological innovation by integrating art as part of life and creating a sustainable, healthy LOHAS park. Building on the foundation of a sharing economy, the Group will develop three new major business operations: smart cities, digital entertainment, and preventive medicine, while continuing to follow through with the development of three major body & soul energy parks in Hualien, Hsinchu, and Nantou. B. Strengthening AI and digital operations and continuing sustainable development of IoT with future source of value in the cloud. TLDC’s next-step development will focus on transforming IoT into an industry, applying it in the learning aspect of lifestyle industries, implementing it in all dimensions of business innovation, and stepping up digital marketing through internet.

8 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT I LETTER TO SHAREHOLDERS

C. Consolidation of the development of Kinmen as a border trade center and its medical tourism industry: Kinmen's visa-on-arrival policy, increased duty-free shopping quota for visitors traveling to Mainland China through outlying islands, and the relaxation of Xiamen as a free trade zone have contributed to a steady growth in bilateral trade volume with China. The Park possesses the best bonded warehouse and outlying island duty-free shops in Kinmen. Through the cross-border e-commerce platform, the Group has built up a duty-free shop that receives customers at the front door and stores goods at the back of the store, thereby solidifying the development of Kinmen as a border trade center. The Group has also established the first youth start-up business space in Kinmen to provide an incubator for the youth starting businesses and cross- strait business development in Kinmen, which successfully realizes Kinmen’s cross-strait exemplary role as a base for the youth to start businesses. There has been a surge in cross-strait health check and relax trip and cosmetic surgery and relax trip in recent years. Thus, the Group will introduce medical clinics and health check centers to the park and include the function of offering medical accommodation, thus launching the medical tourism industry in Kinmen. D. Core values of a sustainable enterprise: Embracing green, intelligent, and cultural creativity as core beliefs, we infuse the land with new value, shape a unique brand image, create value for the sharing economy, flexibly utilize the 4D planning concept, communicate and integrate our corporate philosophy, and remain committed to constructing high-quality LOHAS living spaces. E. Implementing professional division of labor within the Group and talent recruitment: We pursue the overall rationalization of the Group and further enhancement of enterprise synergy through interaction and cooperation of all employees within the Group by diversifying our talent pool to meet human resources needs at different business locations and improving our asset management and Internet technology knowhow. (2) Operating (Sales) Goals A. We will continue to engage in the sales of the land across the Taichung City Precision Machinery Innovation Technology Park, the Guanghua Lohas Creative Park, and the Gangshan Benjhou Industrial Part, as well as the pre-sale of the land in the Shengang Fengzhou Phase-II Technology Industrial Park, in order to create revenue for the TLDC. B. Assets are disposed of and activated by blending “green, intelligent, and cultural creativity” into the lifestyle and environment of local areas in order to develop products and create benefit. In the current year, the Group will continue to dispose of self-owned assets in Taipei, Taichung, Tainan, Kaohsiung, and Hualien and seek opportunities to cooperate with foreign institutional investors, life insurance companies, and private equity funds in order to enrich its operating capital. C. Ongoing operations of shops in the Hualien New Paradiso, Rock Park, Kinmen Wind Lion God Shopping Street, and ARKI GALÉRIA, as well as Taigang Tea Factory, will bring in steady income. D. The construction of Le Meridien Hsinchu Hotel & Resort and service apartment in the Hsinchu Hsinpu Eco- community has broken ground. Construction permits for the hot spring clubhouse and VILLA3 have been issued. Subcontractor bidding and project launch & promotion are expected for this year. Meanwhile, the leisure ranch project located in the north of the park has also passed the establishment permit. The Group will endeavor to carry out reviews of the business plan, environmental appraisal, and water preservation, and conduct subsequent planning and construction matters in this year. E. The building permit for the Zen Clubhouse in the Nantou Caotun Eco-Complex project has been acquired. Subcontractor bidding is expected this year. Applications for the building permits of other blocks will be submitted progressively. The development of hot spring wells is ongoing. F. The environmental impact appraisal and the submission of the water conservation plan for the DaKeng Development Project in Taichung have been completed. The Group will continue to file various applications subsequently. G. New Paradiso and the Starbucks housed in shipping containers have become landmarks in Hualien. They attracted over 3 million visitors throughout 2019, thus pumping up the Group’s income. Second, the ongoing construction of the Hualien LOHAS Creative Park uses 3,675 3-cubic-meter (3.3 meter x 3.3 meter x 3.3 meter) building blocks, with an aim to have visitors stay in Hualien rather than treating it as a mere stopover. In the future, guests will also be able to enjoy the magnificent sea view of Huilanwan.

9 H. As for the Huilanwan Sunrise Village Housing Project in Hualien, the phase 1 pre-sale of the Huilan Village is currently under way, while the construction permit for phase 2 has already been acquired. The construction permit for the Aloft inn development project has been acquired, and a subcontractor bidding is scheduled for this year. I. The Group will continue to seek new development projects, including industrial park development and investment projects under the Act for Promotion of Private Participation in Infrastructure Projects. (3) Important Production and Marketing Policies A. Leveraging the strategy of land revitalization to diversify the utilization of land. B. Building three major parallel business lines evolving around the continued development of green, intelligent, and cultural creativity; promoting three major new business operations: smart cities, digital entertainment, and preventive medicine. C. Enhancing our corporate image and creating brand recognition; D. Creating added value for our products and enhancing our competitiveness by integrating cultural creativity, technological innovation, and international standards. E. Embracing the core value of "The best of men is like water," manifesting the central ideas and value consensus of "step beyond imagination, realize dreams." 3. Future Development Strategies Starting from the development goals of cultural creativity and technological innovation, the TLDC Group continues to integrate the 4D planning concept in its approaches for building new lifestyle models that are based on a sharing economy as its role evolves from being a builder of premium architectural spaces to being the provider and creator of a high quality lifestyle. As the value of land and building assets increase simultaneously, the Group will make the most of physical space to create virtual value and attract more members. Meanwhile, tailor-made products will be offered in order to turn virtual cloud into new valuable space through the systematic management and development of Big Data. The Group embraces the concept of green building via "construction traceability," and drives online to offline operation and sales through IoT to greatly enhance the value of digital marketing. TLDC takes upon itself an important mission for the future, which is to integrate leisure, living, creation and survival (work) while endeavoring to preserve rich cultural and humanistic elements in all of its works. The Group also takes it upon itself to improve the living environment of mankind as its corporate social responsibility. As it continues to adhere to the corporate culture of "Happiness, Sharing and Innovation," TLDC will be inviting people who share the same ideas and beliefs to join the cause of pursuing a more organic, minimalist, eco-friendly, and enjoyable lifestyle. We moreover believe that sustainable operations are the only approach to establishing new values and forging a viable future path for Taiwan. 4. Influence from External Competition, Regulations and Macro-operating Environment (1) External Competition A. Industrial park agency business: Because of the US-China trade war, funds withdrawn by Taiwanese companies flowing back to Taiwan lead to pressing demands for lands of industrial zones and industrial parks. However, as land acquisition has to be conducted based on market value and involves complex standard procedures for park arrangement and environmental feasibility studies, acquisition and overall development of large lands therefore involve difficult and arduous procedures. These circumstances have nevertheless turned the Group's industrial land assets into important assets. B. Development of the health industry: Along with drastic changes in the natural environment, and threats of air pollution, PM2.5 and new forms of virus (such as COVID-19 and SARS), people start to reflect on seeking an environment suitable for living and emphasizing health. As a result of this, the Group endeavors to develop the preventive healthcare industry, such as genetic testing, cell therapy, and somatic cell therapy.

10 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT I LETTER TO SHAREHOLDERS

C. Diversification: With the arrival of an aged society with a low birth rate, lifestyle transformation has become centered on leisure, well-being and family entertainment. Meanwhile, for the purpose of effectively bringing out the land value into full play and engaging in sustainable operations in response to the ever-changing technological era, diversification is key to allocating risk and creating new business opportunities. The Group has made aggressive deployment in four primary scopes of business—leisure real estate, smart cities, technology and entertainment shopping plazas, and e-commerce. This change was adopted in an effort to generate more profit, create new markets, and to put our core corporate beliefs of “green, intelligent, and cultural creativity” into practice. (2) Regulatory Environment

In order to cooperate with national policies, enhance the effectiveness of national property utilization, activate national assets, create a sustainable source of wealth, and perform the functions of supporting industries and revitalize economies, the Ministry of Finance creates superficies through invitation to tender, participates in urban renewal, activates national private real estate by diversified methods like joint modified use and lease through tendering in combination with the industry competent authorities, and releases national real estate to fully promote social housing and long-term care policy, which may serve as a source of lands if the Group invests in and develops national lands and diversifies its businesses to cover the development of the health industry in the future. To accommodate to the 9th amendment to the Urban Renewal Act in late 2019, Taipei City government issued three measures, including the Incentive Measures for Taipei City Urban Renewal Building Bulk, Taipei City Assessment Standards of Buildings in Rebuilt Districts/Sections within Self-Decided Renewal Units and Area Environmental Status, and Implementation Measures for Taipei City Urban Renewal Construction and Maintenance, in order to spur applications for Taipei urban renewal, promote the economic development of Taipei City, and boost Taipei City’s urban vitality. The Group will keep paying attention to and tracking business opportunities derived from the aforementioned law amendments afterwards. (3) Macro-operating Environment The Directorate-General of Budget, Accounting and Statistics, Executive Yuan forecast a 2.37% economic growth rate for 2019. With consideration of virus breakout in 2020, the Central Bank of the R.O.C. slashed its 2020 economic forecast to 1.92% as the pace of global economic expansion slows down and thus impacts Taiwan’s exports and domestic demand. As for Taiwan’s 2019 real estate market, there were 231,900 building sales or transfers in six municipalities, up 9.3% from 2018, indicating a gradual recovery in the trading of housing market after the consolidated housing and land tax was implemented. However,Land it has become more difficult to acquire lands due to their scarcity and no declines in raw material costs. Land in areas outside of metropolitan areas on the west coast will be relatively resistant to price reduction. This is especially advantageous for the Group, which holds a great deal of land assets with good fengshui, nice views, and premium environments in areas such as Hsinchu, Hualien, and Kinmen, and which has been promoting multiple hotels and leisure and health-promoting retiree residential development projects in said areas. 5. Conclusion The Group's future lies in innovation. The building of architectural spaces and landscapes is part of our character and values, as exemplified in our achievements in transforming outdated industrial zones into LOHAS creative parks. As cultural creation cannot rely on imagination alone, success largely relies on going beyond imagination. Trends for the future reside in sharing, combining the physical with the virtual, and creating cultural value through technology. The TLDC Group will continue to observe the "law of nature" in transforming the environment and creating carefree spaces for people; it is committed to forging an environment that is in total harmony with nature and making efforts to achieve the ultimate ideal realm of human beings and nature. Looking ahead to 2020, the Group will continue to draw from it outstanding experiences in development as well as its impressive resume and figures to create cultural and creative spaces. With its expertise, it will strive to provide leisure entertainment and new ways of life for retirees and health promotion that are more consistent with what people aspire after. It is the Group’s sincere hope that it will continue to earn the support and encouragement of its shareholders.

Chairman: President: Accounting Manager:

Chiu, Fu-Sheng Chiu, Fu-Sheng Chen, Wan-Ling

II. Company Profile

1. Date of Establishment

2. Company History 1. Date of Establishment: June 30, 1964 2. Company History

Establishment of the Company. Originally named "Taiwan Land Development Co." with authorized capital of 1964.06 NT$150 million specializing in land development business initially.

1972.07 Set up of Trust Department. Company was renamed as "Taiwan Development and Trust Co. (TDTC)" while stepping

1999.01 Completed privatization to become a listed company in accordance with government policies.

TTLDC dissolved its trust department in compliance with the Trust Enterprise Act and transferred its trust business 2005.08 to Jih Sun International Bank.

2005.12 Renamed as Taiwan Land Development Corporation

2006.03 Change of the listed category to construction and engineering stock.

2006.05 Establishment of the subsidiary, "Taiwan Innovation Co. (TIC),".

The chairman of TDLC has been appointed by the government since the Company was privatized in 1999. In the 2008.07 15th-term directors and supervisors meeting, the ﬁrst TLDC chairman from the private sector was elected, which marks a new era for the Company as it becomes a bona ﬁde private company.

Released a brand-new Corporation Identity System and announced the "Love and Green for Taiwan, claiming the 2008.11 mainstream of future life style through internationalization of future

Subsidiary "Taiwan Innovation Development Co. (TIDC)" passed the comprehensive review of the public tendering 2009.07 of the "Kinmen Commerce Recreation Center Build-Operate-Transfer (BOT) Project," which was organized by the Kinmen County government, and became the best applicant.

The Company collaborated with Professor Ken Sakamura, the father of Japanese computerized architecture TRON 2009.08 on "uhome " smart technology houses, and the "uhome" sensor network experience hall was established on level B2 of the Taiwan Land Development Financial Building.

Subsidiary "Taiwan Innovation Development Co. (TIDC)" established "Taiwan Commerce Development Corporation" 2009.10 to manage the development, property management, import trade business for Kinmen Commerce Recreation Center.

Afﬁliate "Taiwan Commerce Development Corporation" ofﬁcially signed the contract for the "Kinmen Commerce 2009.11 Recreation Center BOT" with the Kinmen County government.

The Company set up ARKI Galleria" on level B1 of the Taiwan Land Development Financial Building, providing the 2009.12 community of cultural creative artists and the general public with a space for exhibition, reading, talks and general art experience.

Subsidiary "Taiwan Innovation Development Co. (TIDC)" established "Taiwan Envirotech Development Corporation, 2009.12 "an information technology company specializing in green environmental architecture and construction.

Subsidiary "Taiwan Innovation Development Co. (TIDC)" established "Taiwan City Development Corporation," 2010.06 which is in charge of the integration of urban renewal business and providing management services for construction projects of "Taiwan Envirotech Corporation."

Subsidiary "Taiwan Innovation Development Co. (TIDC)" established "Hualien Culture Clubhouse Corporation," 2010.08 which is in charge of the development of boutique hotels in the style of Hakka fortiﬁed earth buildings at the Hualien Guanghua LOHAS Creative Park.

Subsidiary "Taiwan Innovation Development Co. (TIDC)" established "Hualien Ocean Forum Corporation," which 2010.09 is in charge of the development of the international forum and conference center at Hualien Guanghua LOHAS Creative Park. TLDC also established the ﬁrst afﬁliated company in mainland China, the "Taikai Xiamen Trading Corporation" in Xiamen.

Aﬃliates ”Taiwan Envirotech Corporation" and "Taiwan Envirotech Development Corporation" merged and renamed 2010.11 as "Taiwan Envirotech Development Corporation." The new entity specializes in managing IT and construction technology businesses.

Groundbreaking of the duty-free shopping center under Phase 1 of the "Kinmen Commerce Recreation Center 2011.01 BOT" project.

EEstablishment of the subsidiary "Hsinchu Hill Garden Corporation," responsible for developing the Hsinchu Hsinpu 2011.01 co-community.

Company participated in the bid for “Taichung Shengang Fengzhou Industrial Park Phase 2 Establishment, 2012.05 Planning, Development, Lease/Sales and Management Plan ＂ project organized by Taichung City Government and was selected the winner for the project.

14 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT II COMPANY PROFILE

Company established a subsidiary “Taiwan Midtown Development Corporation ＂ to engage in land development 2012.10 business in Taiwan area.

“ ＂ 2012.11 Subsidiary "Taiwan Innovation Development Co. (TIDC)" established Taiwan Talent Development Corporation to oﬀer manpower training, employment and entrepreneurship services.

2014.07 The Kinmen Wind Lion Plaza held its grand opening.

2014.08 Subsidiary “Taiwan LanYang Development Corporation ＂ was established to develop business in Yilan area.

2014.12 Hsinchu Hsinpu Eco-community project has completed the hot spring construction and opened for public use.

2014.12 TDLC's Wind Lion Plaza signed a strategic alliance agreement with Xiamen Bank, becoming the ﬁrst Taiwanese merchant in Kinmen area to enter strategic alliance with Xiamen Bank.

2015.01 TDLC hosted the fourth "Hsinpu Hot Spring Camellia Festival" at the Hsinpu Eco-community Park, and oﬀered visitors the chance to enjoy the hot springs for the ﬁrst time, which was well-received.

2015.03 Internationally acclaimed architect Japanese architect Kengo Kuma designed the Kinmen Wind Lion God Museum.

Hualien Huilan Bay Lohas Village is on exhibition at the National Building Museum in Washington D.C., the only 2015.03 architecture in Taiwan selected for exhibition.

TDLC Kinmen Wind Lion God Shopping Street wins the National Architecture Golden Quality Award in planning 2015.10 and design category and construction quality category. It is also the ﬁrst mall in Taiwan that is granted the "Gold Intelligent Building Mark" by the Ministry of the Interior.

Taiwan Land Development Corporation Group's Xinpu Smart Ecological Park has been pre-certified with an 2016.01 international LEED platinum rating.

Kinmen Wind Lion Plaza was recognized in the 2nd edition of China's City Complex "Golden Complex Award" as 2016.01 the winner of "Best Case Award"

TDLC and ROC Association of Ultrarunners co-organized 2016 Hualien Huilan Bay Wind Lion Cup Ultramarathon. 2016.04 Close to 1,000 runners joined the tournament, including well-known Japanese long-distance runner Hara Yoshkazu, also the holder of Asian ultramarathon record.

Hualien Sunrise Villa, developed by TDLC, is bestowed the rare honor of “Best Project Design” at the FIABCI- 2016.06 Taiwan Real Estate Excellence Awards.

TDLC relocates the Sun Moon Lake Peacock’s Park, a recreation garden with 48 years of history, to the Peacock 2016.11 Garden at Hsinpu Eco-community Park, creating a haven for the stately fowls.

TDLC invites He Guo-fang to assist with orchid cultivation and conservation at Hsinpu Eco-community Park, thus 2017.03 greatly enhancing the Park’s purpose and value in ecological development.

In order to practice corporate governance and embrace "green, intelligent, and cultural creativity" as core beliefs, 2017.06 TDLC selects three independent directors and sets up the Audit Committee.

TDLC set up a group of Vietnam-to increase Taiwan’s international competitiveness, TLDC builds “Production, 2017.09 Ecology, Life” as one wisdom city and assist Taiwan industries in production of outside of the Taiwan.

TDLC collaborates with Professor Ken Sakamura, the father of global IOT, in building an international wisdom city in 2017.12 Hualien through IOT advanced technique under experience of building Olympic wisdom city in Tokyo 2020.

TDLC holds the earning call and said that the next year’s targets are three areas: wisdom city, digital entertainment, 2017.12 medical protection etc., focusing on life style change, opening new hardware architecture and service software.

The first finished architecture – Yunshuiguan (“Wang Chan Lao Zhu Temple”) in TDLC’s Hsinchu Sinpu “Yunmeng 2018.01 Hill” is composed of 178 slices Yellow cedar. Alaska cedar (“Hinoki”) and 3,700 slices brasses imported from Japan and is the first use 3D complex Tai Chi Taoists architecture art in the world.

TDLC’s Sunrise Villa in Hui Lan Wan site takes Denmark BIG and England ARUP projections with green 2018.02 architecture wisdom residential structural design and completed earthquake-resistant structures, so there is no damage on February 6, 2018 earthquake.

TLDC Group oﬀered stone suppliers a 2-hectare complimentary temporary storage space in our Hualien Huilan Bay Theme Park for stone materials damaged in the February 6 Hualien Earthquake. TLDC will also utilize these stones 2018.03 in various developments in Huilan Bay. In the future, earthquake-damaged stones will also be used to pave the planned February 6 Hualien Earthquake Memorial Sidewalk at the port warehouses rented by TLDC in the Port of Hualien.

Founded the Changchun Club at the futuristic and fashionable Aloft Hotel in TLDC’s Hualien Huilan Bay Theme 2018.03 Park. The club organizes activities related to golf, diving, paragliding, light aircraft, motorbikes and sports cars and oﬀers a good resort for retirement life. We also invited the famous golfer Lu Chien-Soon back to his hometown in Hualien to promote golf and thereby promote Hualien’s tourism.

15 TLDC Group gave a black jade marble as a gift to Dr. Ken Sakamura from the Department of Information Networking for Innovation and Design (INIAD), Toyo University, Japan. Serving as the establishment of INIAD, the ceremony also unveiled a marble on which was carved two Chinese characters “Wu Wei” (letting things take their 2018.04 own course), alluding to the Taoist idea of integrating the real and the virtual, which is also the integration of IoT and AI. TLDC also planned to establish the TRON (Real-time Operating System Nucleus) in Taiwan to establish ubiquitous computing with its core technology.

TLDC oﬀers scholarships for seed employees and IoT talent to study in the Department of Information Networking 2018.04 for Innovation and Design (INIAD), Toyo University, Japan. Our joint cloud talent development program fully commenced, making Taiwan an IoT stronghold in the Asia Paciﬁc.

“Shipping Container Starbucks,” Asia’s first Starbucks coffeehouse, housed in shipping containers adjacent to TLDC’s New Paradiso, is the world’s ﬁrst organic and traceable building, bringing new life into containers in line 2018.09 with the philosophy of renewability in the circular economy. Through the image of the branching tree, this design will lead a new eco-friendly building trend.

In collaboration with the internationally renowned architectural master Kengo Kuma, TLDC Group built the TLDC Arki Galleria Building Block Concept Hall at the Houli Forest Expo Site of the Taichung World Flora Expo, thus 2018.10 creating the ﬁrst 4.0 agricultural ecosphere, in which camellia communicate and explain jokes to visitors with the help of IoT. Design-wise, it sought a natural approach so that the man-made building can conform to nature and be organic.

TLDC’s Vieshow Cinema New Paradiso, Asia’s first cinema to completely adopt laser projection, featuring Taiwan’s 2018.12 first IMAX® next-generation 4K laser projection system and 12 audio channel giant-screen movie theaters, officially opened on December 26.

The trial operation of TLDC’s New Paradiso commenced on December 26, marking the birth of the world’s ﬁrst 2018.12 “organic building,” which features the world’s highest indoor double-spiral slide, as well as virtual reality live video game competitions.

US artist Colette Miller painted “Angel Wings”, which was followed by the oﬃcial launch of the “Global Angel Wings ” “ 2019.01 Project. New Paradiso was the 60th international stop of the project, for which we specially designed the pattern I love HL” (Hualien) in the shape of a wing as a symbol of prayer for post-earthquake reconstruction in Hualien, thus echoing the image of New Paradiso as a place for “connecting with the Earth and communicating with the world.”

The mosaic mural on the outer wall of New Paradiso was certiﬁed by the Guinness World Records ™ as the largest 2019.01 ceramic tile mural.

2019.01 Hawaiian post-pop artist Aaron Kai completed a 66-meter wall painting of sea waves at New Paradiso in Hualien.

TLDC Group and Pescadores Ferry, an affiliated company of Wisdom Marine, jointly purchased Rikulau, the 2019.03 newest high-speed passenger liner, promoting safe and fast tourist cruise services on the blue highway along the Taiwanese coastline.

TLDC Tsumiki Pavilion in Taichung World Flora Exposition attracted nearly 600,000 visitors. In this exposition, TLDC also held a “New Daily Photography Contest of Human & Nature”. The competition covered on topics such as 2019.04 Tsumiki Pavilion, Camellia blooms, interaction between architecture and the human behavior, scenic night lighting, and more. The ﬁnal champion is Mr. Huang Xi Jie’s, for his artwork called “Shih Shih Ru Chi” – Life is like a game of chess.”

On May 21st 2019, TLDC Group’s subsidiary company “Taiwan Innovation Development Corporation (TIDC)” announced that it will sign a memorandum of understanding (MOU) with Ivy Life Sciences Co., Ltd. The two parties 2019.05 will jointly invest NT$ 500 million to fund medical institutions to establish phased cell laboratories in Kinmen. Ivy Life Sciences Co., Ltd. will provide cell products and supplies.

TLDC Group’s subsidiary company Taiwan Innovation Development Corporation (TIDC) cooperates with a world “ ” 2019.06 leading hotel brand - ibis. The two parties will create New Paradiso II Hotel with the combination of innovation, technology, art and architecture. The contemporary hotel will lead the next generation of tourism – “Health-Preserving Sojourn,” to transform a health restorative village into international 5-star rated hotel.

A 12,000 square meter painting was completed by world-renowned Zne painting artist, Chi-Sung Hung. This 2019.06 large painting is about 50 ﬂoors high, roughly about the length of 30 basketball courts, and was shown in Hualien Huilanwan for the ﬁrst time. Hung’s extraordinary creation achieved the Guinness World Records for the Largest Painting.

The "BLUE MAGPIE", a joint venture introduced by TLDC Group’s Wind Lion Travel and Pescadores Ferry had her 2019.06 maiden voyage from Hualien to Suao on June 21st, 2019, which opens the gate to East Taiwan.

World famous Master Baker, Wu Pao-Chun established “Huilan Store” in New Paradiso, Hualien. The store officially 2019.06 opened on June 21st, 2019, featuring an exclusive flavored bread made just for New Paradiso. By using Hualien local ingredients, the bread instantly holds a unique flavor and taste that meets the international and local standard style.

Hong Kong-style restaurant Sweet Dynasty started operating on August 7th, 2019 at New Paradiso. It achieves 2019.08 international and local ﬂavor standards as a Hong Kong and Taipei specialty dining. Most importantly, it strives to become the most high-end restaurant in Hualien.

A free outdoor movie “Missing Link” reunion event TLDC co-hosted with Ji-an Hualien Township Office and 2019.09 sponsored by Keng Sheng Daily News. The event attracted approximately 1,000 people, including underprivileged families from Ji'an Township and Hualien Orphan Welfare Foundation.

16 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT II COMPANY PROFILE

2019.09 The "BLUE MAGPIE" started operating on September 27th, 2019, sailing between Suao and Hualien.

The 12th Annual Festival Taiwan Harley “2019 BIKETOPIA” – Halley and Vespa reunion was held at New Paradiso’s 2019.10 multifunctional plaza in Hualien from October 25th to October 26th - a total of 1,500 attendees participated the event – a thousand motor cyclists and ﬁve hundred scooters.

The first Taiwanese “11.11 Chopsticks Festival” was held at New Paradiso, Hualien on November 10th, 2019. The double elevens embody two meanings: Ji’an township annual rice harvest on November and the digit eleven 2019.11 itself. To further describe the number itself meaning, a pair of chopsticks is like an imagery of “11” that creates an exclusive oriental food culture of Hualien.

TLDC Group achieved the Guinness World Records for “Longest Indoor Slide” at New Paradiso on December 7th, 2019.12 2019. The indoor slide measures 74.638 meters.

“ ” ’ “ ” 2019.12 Along with Japanese Puff CHOU Rings , South Korea s well-known international brand NoTag selects its first oversea flagship store opening in Asia at New Paradiso.

TLDC’s subsidiary Taiwan Innovation Development Corporation (TIDC) cooperates with Buddhist Hualien Tzu 2019.12 Chi Hospital to create a health industry. Both parties will focus on cell therapy and intangible treatment in future medicine and establish the world’s top biotechnology park in Huilanwan District, Hualien.

The most recognized New Year's Eve party in eastern Taiwan – "2020 Paradiso Super Party" was held at New 2019.12 Paradiso, Hualien.

The Groundbreaking Ceremony of Le Méridien Hot Spring Hotel in TLDC’s YunMeng Hill, Xinpu. YunMeng Hill 2020.01 is also a health-preserving village that blends in the surrounding geological environment, ﬂowers, birds and hot springs.

TLDC Group in cooperation with Taiwan Association of Logistics Management and Ezﬂy build the strongest logistics 2020.01 and commerce team in Wind Lion Plaza, Kinmen to create new business opportunities.

2020.01 TLDC Group’s Xinpu YunMeng Hill held “Hot Spring Festival” for the eighth consecutive year.

The first DXD VR pop-up shop was launched at New Paradiso with the all new VR flight shooting games. By 2020.01 creating a spherical cockpit that can be rotated in 720 degrees, it enables better customer experience in self-ﬂying planes.

TLDC Group held “Sunflowers Field Picnic” event at TLDC Happy Farm on Lantern Festival. The festival 2020.02 encourages hundreds of children in rural communities to enjoy delicious food and celebrate the Lantern Festival.

TLDC Group invited employees and their families to plant trees in Yunmeng Hill, Xinpu. With the call for action “plant 2020.03 a tree of life for a future greenery Earth.” Xinpu Yunmeng Hill reduces carbon emissions by 3,460 metric tons per year – equivalent to nine Daan Forest Park gas emission reduction.

III. Corporate Governance Report

1. Organization

2. Directors, Supervisors and ManagementTeam

3. Implementation of Corporate Governance

4. Information of Fees to CPA

5. Information on AccountantChange

6. The Chairman, President and Financial or Accounting Manager of the Company who had Worked for the Independent Auditor or the Related Party in the PastYear

7. State of Changes to Shareholdings Held by Directors, Supervisors, Presidents and Major Shareholders

8. Information disclosing the spouse, kinship within second degree and relationship between any of the top ten shareholders

9. The Shareholding of the Company, Director, Supervisor, President and the Business that is Controlled by the Company Directly or Indirectly on the Invested Company 1. Organization (1) Organizational Chart

Shareholders’ meeting

Remuneration Board of Directors (Chairman, Committee Vice Chairman, Directors) Board Oﬃce Audit Committee

Operation Planning Audit Oﬃce Meeting

President Consultants President’s Oﬃce

Vice President Vice President’s oﬃce

General Finance Operation Construction Planning Administration Public Aﬀairs Department Department Department Department Department Department (Accounting)

Administration Religion Finance Information Investment Investment Urban Section Project Cashier Technology (1) (2) Update

Stock Transfer, Board Meeting, Legal, Human Resource, Company Service, IT Service

20 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

(2) Major Corporate Functions

Department Functions

Audit Oﬃce ‧Responsible for audit operations and provide periodic reports to the Board of Directors.

‧The Investment Section is responsible for the Company's management policies (including management vision, goals, guidelines, operational planning and business reports, etc.); industrial trends, collection of information on the macro environment, product positioning, drafting development strategies of Company assets; investment worthiness of new businesses and feasibility assessment, editing and compiling investment or project briefing for subsidiary companies within the Group; feasibility study and investment development of Planning Department business real estate investment plans; financial planning, relationships building with financial institutions and capital raising and management. ‧Responsibleforregulatoryreviewduringdevelopmentphase;makingprovisionalfinancialcalculationsand invest mentanalysisduringdevelopmentphase;applyingforconstructionpermitfollowingdevelopment; capacity value creation; construction planning; landscape planning; space design; communication with and coordination of construction planning team.

‧ Responsibleforoperationsrangingfromadministeringindustryactivitiescommissionedbygovernment agenciesini ndustrialdistricts;establishingrevitalizationstrategiesforunusedlandinindustrialparksaswell asexecutingprojecto Operation Department perations;integrationofrelatedoperationsforcasescontractedunderthegovernment's Act for Promotion of Private Participation and fulﬁllment and management of project implementation; land development commissioned by government agencies or private enterprises, urban land consolidation, joint construction, BOT cases, new rural projects and urban renewal.

‧Responsibleforconstructionprojectbudgeting,constructionschedule,progressvaluationreviewandcost control duringtheconstructionphase;projectcontracting,procurementofmaterials,constructionqualityaudit andcontrol Construction Department oftheprogressofprojectconstruction;applicationforbuildingoccupationpermit;planningfor greenhouses, green landscaping, tree banks and construction materials for buildings involving green energy and reduced carbon footprint; communication with and supervision of contractors.

‧Accounting Section is responsible for establishing and controlling the Company's accounting system, budget Finance Department drafting, accounts processing, settlement, and the review and audit of various expenditures.

‧Utilization and management of human resources, talent cultivating and career planning; establishment of talent pool; Company Seal/Imprimatur, documentation, document management; compiling Group administrative regulations, systems and operating procedures; editing and producing annual reports; General Administration administrative management of re-invested companies; ﬁling, maintenance and management of Company's Department owned assets (excluding business operation or trial operation) as well as invisible asset; maintenance of IT software and hardware equipment and information security management; planning and developing management systems; disposal and maintenance/management of assets from loans receivable. ‧The Finance Division is in charge of cashier operations for the Company.

‧ ResponsibleforconductingpublicaﬀairsactivitiesassociatedwithLegislativeYuan,governmentagencies, the Public Aﬀairs Department media, landowners, juridical persons and domestic and foreign investors.

21 2. Directors, Supervisors and Management Team (1) Directors and Supervisors

April 30,2020

Shareholding Executives, Directors Shareholding when Current Shareholding Spouse & Minor by nominee or Supervisors who are Elected Shareholding arrangement spouses or within two Nationality/ Date Term Date degrees of kinship Title Place of Name Gender Elected (Years) First Experience (Education) Positions Held at Company or Other Companies Incorporation Elected Shares Shares (million (%) (million (%) Shares (%) Shares (%) Title Name Relation shares) shares)

Hung Sheng Investment Co., - 4.167 0.53 ------Ltd.

‧CEO and General Manager of the Company ‧Chairman, Taiwan Innovation Development Corporation ‧Chairman, Taiwan Envirotech Development Corporation ‧Chairman, Taiwan Commerce Development Corporation ‧Chairman, Hsinchu Hill Garden Corporation Republic of 06/28/ 07/01/ ‧ Chairman China 2017 3 years 2011 6.498 0.85 Chairman, Hualien Ocean Forum Corporation ‧Chairman, ERA Digital Media Co., Ltd. ‧Chairman, Hualien Culture Clubhouse Corporation Representative: Male 31.168 3.94 ‧Founder, ERA Group ‧Chairman, Taiwan City Development Corporation - - - Chiu, Fu-Sheng ‧Graduate, Fu Hsing Kang College ‧Chairman, Nanguo House Corporation ‧Chairman, Wind Lion Plaza Shopping Center Corporation ‧Chairman, Taiwan Mid-Town Development Corporation ‧Chairman, Taiwan Wind Lion Travel Service Corporation ‧Director, Taiwan Manpower Development Corporation ‧Director, Hung Sheng Investment Co., Ltd. ‧Director, Kinmen Forum Corporation Corporation

‧Vice CEO of the Company ‧Vice Chairman, Taiwan Innovation Development Corporation ‧Director, Taiwan Envirotech Development Corporation ‧Director, Taiwan Commerce Development Corporation ‧Chairman, ERA Communications Inc. ‧Director, Hsinchu Hill Garden Corporation ‧Chairman, Hualien Cable TV Co., Ltd. ‧Director, Nanguo House Corporation ‧ Chairman, Cashbox Party World Co., ‧Director, Wind Lion Plaza Shopping Center Corporation Vice Republic of 06/28/ 07/01 Ltd. ‧Director, Taiwan Manpower Development Corporation Chairman China Lian, Tai-Sheng Male 2017 3 years /2011 26.958 3.54 27.005 3.55 ‧Chairman, Tung Tai Cable TV Co., Ltd. ‧Chairman, ERA Communications Inc. - - - ‧ President, Satellite Television ‧Chairman, Hualien Cable TV Co., Ltd. Broadcasting Association R.O.C. ‧Chairman, Cashbox Party World Co., Ltd. ‧Graduate, ROCMA ‧Director, Zhong Du International Corporation ‧Chairman, ERA Global Culture Corporation ‧Supervisor, Tung Tai Cable TV Co., Ltd. ‧Director, Tongjia Development Co., Ltd. ‧Director, Jiaan Development Co., Ltd.

Hung Sheng Investment Co., - 4.167 0.53 ------Ltd.

Republic of 06/28/ 07/01 Director China 2017 3 years /2011 6.498 0.85 ‧ Senior Engineer, Pacific Engineers & ‧ Representative: Constructors, Ltd Director, Taiwan Envirotech Development Corporation Male 0.036 0.00 ‧Senior Engineer, Paciﬁc Engineers & Constructors, Ltd - - - Kow, Fu-Lin ‧M.S. in Civil Engineering, Ohio State ‧ University, U.S.A. Supervisor, ERA Cultural Creative Enterprise

Hung Sheng Investment Co., - 4.167 0.53 ------Ltd.

Republic of 06/28/ 06/28/ ‧Lawyer Director China 2017 3 years 2017 6.498 0.85 ． Director of the Institute of Science, Technology and Law,Institute for Representative: Female 0 0.00 Information Industry ．Deputy Chairman, Digital Transformation Association - - - Chan,Ting-Yi ．Chairman, NCC ．Deputy Chairman, Digital Transformation Association

22 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

2. Directors, Supervisors and Management Team (1) Directors and Supervisors

April 30,2020

Hung Sheng Investment Co., - 4.167 0.53 ------Ltd.

23 Shareholding Executives, Directors Shareholding when Current Shareholding Spouse & Minor by nominee or Supervisors who are Elected Shareholding arrangement spouses or within two Nationality/ Date Term Date degrees of kinship Title Place of Name Gender Elected (Years) First Experience (Education) Positions Held at Company or Other Companies Incorporation Elected Shares Shares (million (%) (million (%) Shares (%) Shares (%) Title Name Relation shares) shares)

‧Assistant VP, Finance Dept., Hualien Cable TV Co., Ltd. ‧Director, Holiday Entertainment Co., Ltd. ‧Director, Dahe Media Co.,Ltd ‧ Assistant VP, Finance Dept., Hualien ‧ Director Republic of Lin, Hung-Min Male 06/28/ 3 years 06/28/ 0 0.00 0 0.00 - - - - Cable TV Co., Ltd. Supervisor, Taiwan Innovation Development Corporation - - - China 2017 2017 ‧ ‧Supervisor, Taiwan Envirotech Development Corporation Banking & Finance, Tamkang University ‧Supervisor, Taiwan Commerce Development Corporation ‧Supervisor, Taiwan Mid-Town Development Corporation ‧Supervisor, Taiwan Manpower Development Corporation

‧ Manager, Nan Sanchong Branch of Taiwan Cooperative Bank Republic of 06/28/ 06/28/ ‧ Manager, Mincyuan Branch of Taiwan ‧ Director China Jhan, Cing-Wei Male 2017 3 years 2017 0 0.00 0 0.00 - - - - Cooperative Bank Independent Director, Shih Wei Navigation Co., Ltd. - - - ‧ Bachelor of TKU Department Business Administration

‧ Professor, NCUHRM Graduate Institute of Human Resource Management ‧ Professor, NCUHRM Department of ‧ Independent Director, Nan Ya Plastics Corporation Independent Republic of 06/28/ 06/28/ Economics ‧ Director China Jhu, Yun-Peng Male 2017 3 years 2017 0 0.00 0 0.00 ‧ Chair Professor, LIOU,JI-REN of Independent Director, China Petrochemical Development - - - Soochow University Corporation ‧ Doctor, University of Maryland Department of Economics

‧ Minister of the Interior ‧ Minister without Portfolio & Minister, Public Construction Commission,Executive Yuan Independent Republic of 06/28/ 06/28/ ‧ Deputy magistrate, New Taipei City Director China Lee, Hong-Yuan Male 2017 3 years 2017 0 0.00 0 0.00 Government ‧ Professor, NTU Department of Civil Engineering ‧ Doctor, University of Iowa Department of Civil & Environmental Engineering

24 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

25 Major shareholders of the institutional shareholders

April 30,2020

Name of Institutional Shareholders Major Shareholders

Hung Sheng Investment Co., Ltd. Chiu, Chih-Chiang (99.94%)

Major shareholders of the Company’s major institutional shareholders

April 30,2020

Name of Institutional Shareholders Major Shareholders

- -

B. Information on directors and supervisors (2)

Professional qualiﬁcations and independence analysis of directors and supervisors

Meet One of the Following Professional Qualification Requirements, Together with at Independence Criteria (Note) Least Five Years Work Experience An Instructor A Judge, or Higher Public Position in a Prosecutor, Criteria Department Attorney, of Certified Commerce, Public Number of Law, Accountant, Have Work Other Public Finance, or Other Experience in Companies Accounting, Professional the Areas of in Which the or Other or Technical Commerce, Individual is Academic Specialist Law, Finance, Concurrently Department Who has or Accounting, 1 2 3 4 5 6 7 8 9 10 11 12 Serving Related Passed a or Otherwise as an to the National Necessary for Independent Business Examination the Business Director Name Needs and been of the of the Awarded a Company Company Certificate in in a Public a Profession or Private Necessary Junior for the College, Business College or of the University Company Hung Sheng Investment Co., Ltd. ü        - Representative: Chiu, Fu-Sheng

Lian, Tai-Sheng ü          -

Hung Sheng Investment Co., Ltd. ü         - Representative: Kow, Fu-Lin Hung Sheng Investment Co., Ltd. ü         - Representative: Chan,Ting-Yi

Lin, Hung-Min ü           -

Jhan, Cing-Wei ü             1

Jhu, Yun-Peng ü             2

Lee, Hong-Yuan ü             -

Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of oﬃce.

26 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

1. Not an employee of the company or any of its aﬃliates. 2. Not a director or supervisor of the company or any of its aﬃliates. Notapply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent. 3. Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings. 4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.

5. Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act.Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent. 6. If a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: nota director, supervisor, or employee of that other company.Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent. 7. If the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: not a director (or governor), supervisor, or employee of that other company or institution. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent. 8. Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company.Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent, if the specified company or institution holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company. 9. Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations. 10. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.

11. Not been a person of any conditions deﬁned in Article 30 of the Company Law. 12. Not a governmental, juridical person or its representative as deﬁned in Article 27 of the Company Law.

27 (2) Management Team April 30,2019

Shareholding Spouse & Minor Shareholding by nominee Managers who are Spouses or Shareholding arrangement Within Two Degrees of Kinship Remark(s) Title Nationality Name Gender Elected Date Experience (Education) Other Position (Note) Shares (%) Shares (%) Shares (%) Title Name Relation

Republic of Chiu, Fu- Graduate, Fu Hsing Kang General Manager China Sheng Male 03/01/2020 31,167,721 3.94 0 0 0 0 College - - - Vice President , Republic of College of Law, National Taiwan Innovation Vice President China Rocky Lo Male 08/012019 2,927 0.00 0 0 0 0 Taiwan University Development - - - Corporation General Manager, Republic of Guo, Zong- Master of Law, Ming Taiwan Commerce Vice President China Xiong Male 05/01/2014 589,303 0.08 0 0 0 0 Chuan University Development - - - Corporation

Manager, Public Republic of Smart Chiang Male 01/01/2001 918,515 0.12 0 0 0 0 Dept. of Journalism, Shih - - - Aﬀairs Department China Hsin University Assistant Vice Vice President , President, Republic of Lin, Hsiang- Master of Media Taiwan Envirotech Planning China Pin Male 07/11/2019 13,896 0.00 0 0 0 0 Architecture Design , Ming Development - - - Department Chuan University Corporation Manager, Planning Manager, Finance Department Republic of Peng, Hua- Current student at Department , Taiwan Investment China Hui Female 11/01/2014 14,776 0.00 0 0 0 0 Department of Commerce Innovation Development - - - Section (1) National Open University Corporation Manager, Planning Master of Industrial Manager, Department Republic of Mao, Zhao- Engineering, Feng Chia Taiwan Innovation Investment China Kai Male 11/01/2014 134,187 0.02 0 0 0 0 University and National Development - - - Section (2) Taiwan University Corporation Assistant manager , Manager, Dept. of Natural Finance Operation Republic of Jerry Nien Male 06/29/2001 10,900 0.00 964 0 0 0 Resources, Chinese Department , Taiwan - - - Department China Culture University Innovation Development Corporation Master of Science Assistant Vice Program in Assistant manager , President, Republic of Chen, Wan- Accounting,Information Administration Section, Accounting China Ling Female 10/01/2008 15,292 0.00 0 0 0 0 and Law, Taiwan Innovation - - - Section of Finance National Chung Cheng Development Department University Corporation Manager, Administration Master of Business Section of General Republic of Ben Lin Male 11/01/2010 4,422 0.00 0 0 0 0 Administration, Fu Jen - - - Administration China Catholic University Department Manager, General Bachelor of Law & Political Administration Republic of Xu, Xing-Hua Female 05/01/2016 115,000 0.02 0 0 0 0 Science, Chinese - - - Department China CultureUniversity Acting manager, Dept. of Finance, Finance Republic of Liao,Tsui- Female 12/01/2019 45,630 0.01 0 0 0 0 Lunghwa University of - - - Department China Chuan Science and Technology

28 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

(2) Management Team April 30,2019

29 (3) Remuneration of Directors, Independent Directors, Supervisors, President, and Vice Presidents

Remuneration of Directors and Independent Directors Unit: NT$thousands

Remuneration Relevant Remuneration Received by Directors Who are Also Employees Ratio of Total Ratio of Total Remuneration Compensation (A+B+C+D) to Net (A+B+C+D+E+F+G) Base Compensation (A) Severance Pay (B) Directors Allowances (D) Income (%) Salary, Bonuses, Severance Pay (F) Employee Compensation (G) to Net Income (%) Remuneration Compensation(C) and Allowances (E) from ventures other than Title Name subsidiaries All Companies in the orfrom the parent companies Companies Companies Companies Companies Companies Companies The company consolidated financial Companies company The in the The in the The in the The in the The in the The in the The in the statements The in the (Note 1) company consolidated company consolidated company consolidated company consolidated company consolidated company consolidated company consolidated company consolidated financial financial financial financial financial financial financial financial statements statements statements statements statements statements statements statements Cash Stock Cash Stock

Representative: Chairman Chiu, Fu-Sheng

Vice Chairman Lian, Tai-Sheng

Director Lin, Hung-Min

15,876,100 15,876,100 - - 2,203,162 2,203,162 2,178,000 3,348,000 6.86% 7.25% ------6.86% 7.25% Representative: Director Chan,Ting-Yi

Representative: Director Kow, Fu-Lin

Director Jhan, Cing-Wei

Independent Director Jhu, Yun-Peng

Independent Director Lee, Hong-Yuan 3,600,000 3,600,000 - - 1,652,373 1,652,373 2,160,000 2,160,000 2.51% 2.51% ------2.51% 2.51%

Independent Director Christina Liu

1. Please describe the policy, system, standard, and structure of remuneration to independent directors, and the correlation between duties, risk, and time input with the amount of remuneration: 2. In addition to the above remuneration, director remuneration shall be disclosed as follows when received from companies included in the consolidated ﬁnancial statements in the most recent year to compensate directors for their services, such as being independent contractors.

Note 1: a. Specify the amount of remuneration received by directors from ventures other than subsidiaries orfrom the parent company in this ﬁeld (Please ﬁll in "None" if none). b. Where the Company's directors received relevant remuneration fromventures other than subsidiaries orfrom the parent company, the remuneration received by the Company's directors from ventures other than subsidiaries or from the parent company shall be included in the "I" column of the remuneration bracket table with the column name changed to "the parent company and all invested companies." c. The remuneration means pay, compensation (including compensation of employees, directors and supervisors) and business expenses received by the director serving as a director, supervisor or manager of ventures other than subsidiaries or of the parent company. Note 2: Separately list information for directors (non-independent directors) and independent directors.

30 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

(3) Remuneration of Directors, Independent Directors, Supervisors, President, and Vice Presidents

Remuneration of Directors and Independent Directors Unit: NT$thousands

Representative: Chairman Chiu, Fu-Sheng

Vice Chairman Lian, Tai-Sheng

Director Lin, Hung-Min

15,876,100 15,876,100 - - 2,203,162 2,203,162 2,178,000 3,348,000 6.86% 7.25% ------6.86% 7.25% Representative: Director Chan,Ting-Yi

Representative: Director Kow, Fu-Lin

Director Jhan, Cing-Wei

Independent Director Jhu, Yun-Peng

Independent Director Lee, Hong-Yuan 3,600,000 3,600,000 - - 1,652,373 1,652,373 2,160,000 2,160,000 2.51% 2.51% ------2.51% 2.51%

Independent Director Christina Liu

31 Names of Directors

Total of (A+B+C+D) Total of (A+B+C+D+E+F+G) Range of Remuneration Companies in Companies in The company the consolidated The company the consolidated ﬁnancial ﬁnancial statements statements Chan,Ting-Yi, Chan,Ting-Yi, Chan,Ting-Yi, Chan,Ting-Yi, Kow, Fu-Lin, Kow, Fu-Lin, Kow, Fu-Lin, Kow, Fu-Lin, Under NT$1,000,000 Jhan, Cing-Wei, Jhan, Cing-Wei, Jhan, Cing-Wei, Jhan, Cing-Wei, Lin, Hong-Ming Lin, Hong-Ming Lin, Hong-Ming Lin, Hong-Ming

NT$1,000,000 ～ NT$2,000,000

Jhu, Yun-Peng, Jhu, Yun-Peng, Jhu, Yun-Peng, Jhu, Yun-Peng, NT$2,000,000 ～ NT$3,500,000 Lee, Hong-Yuan, Lee, Hong-Yuan, Lee, Hong-Yuan, Lee, Hong-Yuan, Christina Liu Christina Liu Christina Liu Christina Liu

NT$3,500,000 ～ NT$5,000,000 Lian, Tai-Sheng Lian, Tai-Sheng Lian, Tai-Sheng Lian, Tai-Sheng

NT$5,000,000 ～ NT$10,000,000

NT$10,000,000 ～ NT$15,000,000

NT$15,000,000 ～ NT$30,000,000 Chiu, Fu- Sheng Chiu, Fu- Sheng Chiu, Fu- Sheng Chiu, Fu- Sheng

NT$30,000,000 ～ NT$50,000,000

NT$50,000,000 ～ NT$100,000,000

Over NT$100,000,000

Total 27,669,635 28,839,635 27,669,635 28,839,635

Remuneration of the President and Vice Presidents Unit: NT$

Ratio of total Bonuses and Employee compensation Salary(A) Severance Pay (B) Allowances (C) Compensation (D) (A+B+C+D) to net income (%) Remuneration from ventures Companies other than Title Name Companies Companies Companies in the con Companies subsidiaries or in the con in the con in the con The company solidated in the con from the parent The The The financial The company company solidated company solidated company solidated company solidated financial financial financial statements financial (Note) statements statements statements statements Cash Stock Cash Stock

General Chiu, Yu- Manager Yun 4,020,000 4,020,000 171,000 171,000 2,562,340 2,562,340 - - - - 2.29% 2.29% - Vice Guo, President Zong-Xiong

Note 1: General Manager, VP are provided with a car (monthly rental: NT$28,500) and a driver (monthly salary: NT$36,000). Note 2: The Company's actual severance pay and pension payout for 2019 was appropriated from the severance and pension fund.

32 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

Name of President and Vice Presidents Companies in the consolidated ﬁnancial statements (E) The company Companies in the consolidated ﬁnancial statements (E) Less than NT$ 1,000,000

NT$1,000,000 ~ NT$1,999,999

NT$2,000,000 ~ NT$3,499,999

NT$3,500,000 ~ NT$4,999,999 Chiu, Yu- Yun, Guo, Zong-Xiong Chiu, Yu- Yun, Guo, Zong-Xiong

NT$5,000,000 ~ NT$9,999,999

NT$10,000,000 ~ NT$14,999,999

NT$15,000,000 ~ NT$29,999,999

NT$30,000,000 ~ NT$49,999,999

NT$50,000,000 ~ NT$99,999,999

Greater than or equal to NT$100,000,000

Total 6,753,340 6,753,340

33 April 30,2020

Employee Compensation Employee Ratio of Total Title Name - in Stock Compensation Total Amount to Net (Fair Market - in Cash Income (%) Value)

Chief Executive Oﬃcer Chiu, Fu-Sheng Executive manager Mao, Zhao- Kai 0 1,500,000 1,500,000 0.37 Oﬃcers manager Ben Lin

(4) Comparison of Remuneration for Directors, Supervisors, President and Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, President and Vice Presidents The ratio of total remuneration paid by the Company and by all companies included in the consolidated ﬁnancial statements for the two most recent ﬁscal years to directors, supervisors, president and vice presidents of the Company, to the net income.

Ratio of total remuneration to net income (%)

The company Companies in the consolidated Year ﬁnancial statements Title 2019 2018 2019 2018

Director 6.86 8.27 7.25 8.63

Supervisor 2.51 0 2.51 0

President, vice president 2.29 1.46 229 1.46

A. Remunerationtodirectorsandsupervisorsincludestwoparts:Fixedtransportationexpensesassociatedwith attending board meetings as well as remuneration to directors and supervisors. Transportation expenses are determined based on industry standards. Profit distribution as remuneration for directors and supervisors is determined by the Company's Articles of Incorporation as follows: at the time of allocating surplus profits (if any), as much as 2% of the surplus may be allocated as remuneration to directors and supervisors, with the exact percentage of the current year subject to Board approval within the range specified above. After the operating performance for the year and the extent of participation and contribution of the directors and supervisors have been taken into consideration, the Remuneration Committee will make a recommendation to the Board, which in turn will submit the proposal to the Annual Shareholders' Meeting for approval before payments for the remuneration may be made, and no risks are expected in the future. B. Remuneration to President and VP includes salary, bonus and employee dividend, which are determined by the level of responsibilities of the position and performance. C. The percentage of remuneration to directors and supervisors for 2019 is the same as that of 2018. For 2018, remuneration to directors, supervisors, President and vice presidents is higher than that of 2017 in terms of the proportion to net profit mainly due to the proposed revision to the Articles of Incorporation of the Company approved by the board of directors (pending submission at the shareholders' meeting) in accordance with the amendment to the Company Act promulgated on May 20, 2015. One percent of profit shall each be allocated as remuneration to directors and supervisors as well as employee compensation according to the profit of the current year, after deduction of cumulative losses.

34 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

3. Implementation of Corporate Governance (1) Board of Directors A total of 15 (A) meetings of the Board of Directors were held in 2019. The attendance of director and supervisor were as follows:

Attendance in Attendance Title Name Ｂ By proxy rate (%) Remarks person( ) 【Ｂ / Ａ】 Hung Sheng Investment Co., Chairman Ltd. and Director Representative: Chiu, Fu- 15 0 100 Sheng Attended the following board meetings by proxy: Vice Chairman Lian, Tai-Sheng 0 15 0 From 01/24/2019 of 18th term 20th and Director board meeting to 12/30/2019 of 18th term 31th board meeting, total 15 Hung Sheng Investment Co., Director Ltd. 15 0 100 Representative: Kow, Fu-Lin 10/31/2019 Representative Replaced, A=13 Attended the following board Hung Sheng Investment Co., meetings by proxy: Director Ltd. 8 3 61.5 06/26/2019 of 18th term 25th board Representative: Huang, Guo- meeting and 07/25/2019 of 18th term Jyun 26th board meeting and 07/03/2019 of 18th term 2thinterim board meeting, total 13 Hung Sheng Investment Co., Appointed Director Ltd. 1 0 100 on10/31/2019Representative Representative: Chan,Ting-Yi Replaced, A=1 Attended the following board meetings by proxy: Director Lin, Hong-Ming 13 2 86.7 04/26/2019 of 18th term 23th board meeting, 12/30/2019 of 18th term 31th board meeting, total 2

Director Jhan, Cing-Wei 15 0 100

Attended the following board meetings by proxy: Independent Jhu, Yun-Peng 13 2 86.7 09/25/2019 of 18th term 28th board Director meeting, 07/12/2019 of 18th term 3th interim board meeting, total 2 Independent Director Lee, Hong-Yuan 15 0 100 Attended the following board meetings by proxy: 02/21/2019 of 18th term 21th board meeting,03/26/2019 of 18th term 22th Independent board meeting,04/26/2019 of 18th Director Christina Liu 8 6 53.3 term 23th board meeting,06/16/2019 of 18th term 25th board meeting, 12/30/2019 of 18th term 31th board meeting, 07/03/2019 of 18th term 2th interim board meeting, total 6

Other details that need to be recorded in the meeting minutes: 1. The functions and the implementation of the Board of Directors were in compliance with the Corporate Governance Best Practice Principles for TWSE/TPEx ListedCompanies. (1) Concerning the provisions of Article 14-3 of the Securities and ExchangeAct: In2019,13Board meetingswereconvened.TheprovisionsofArticle14-3of theSecuritiesand ExchangeActhave beenunanimously followed and passed by all independent directors. (2) Other board resolutions apart from the aforementioned matters with respect to objections or qualified opinions expressed by independent directors on record or in writing: None. 2. Recusal by directors from motions that involved conflicts ofinterest: In 2019, the Company convened 15 Board meetings, in which no conflicts of interest involved directors or independent directors. 3. The goals of improving the professional competencies of the Board of Directors (e.g., establishing the Audit Committee and improving the transparency of information) in the current year and recent years and assessment of implementation: The Company’s 2019 motions, which are subject to the Audit Committee’s approval or the Board of Directors’ resolution in accordance with the Company Act and Article 14-3 and 14-5 of the Securities and Exchange Act, have been submitted to the Board of Directors following the Audit Committee’s approval, and were passed and implemented (motions without the prior approval from the Audit Committee were directly submitted to the Board of Directors and implemented following the Board’s approval).

35 (2) Status of Audit Committee or Attendance of BoardMeeting A total of 6 (A) meetings of the Audit Committee were held in 2019. The attendance of an Audit Committee was as follows:

Attendance Title Name Attendance in By proxy rate (%) Notes person (B) [B/A]

Auditor Jhu, Yun-Peng 6 0 100 A=6

Auditor Lin, Hong-Ming 4 2 66.67 A=6

Auditor Christina Liu 6 0 100 A=6

Other details that need to be recorded in the meeting minutes:Auditor Christina Liuresigned on 02/14/2018 A. Where any of the following circumstances occurs with respect to the operations of the Audit Committee, the date, session, details of the motions, the resolutions from the Audit Committee, and the Company’s measures in accordance with the Audit Committee’s recommendations, shall bespecified. (a) Concerning the provisions of Article 14-5 of the Securities and Exchange Act: In 2019, a total of 6 Audit Committee meetings were convened. The provisions of Article 14-5 of the Securities and Exchange Act were unanimously passed. (b) Any issues apart from the aforementioned matters that are not agreed upon by the Audit Committee but passed by more than two-thirds of entire body of directors: None. B. The names of the independent directors, details of the motions, reason(s) for recusal, and participation in voting regarding the implementation of independent directors’ recusal from conflicts of interest:None. C. Communication between independent directors and chief internal auditors and accountants (with respect to the key matters, methods and results of the Company’s business and financialstatus): (a) Chief internal auditors communicated with the Audit Committee with respect to the amendments to the “Internal Control System” and “Implementation Rules of Internal Auditing,” the “Internal Control System Effectiveness Review,” and the “Declaration on Internal Control System”; in addition, during Board meetings, the Company’s annual audit plans, monthly audit office work reports, and the tracking and improvements of related internal control deficiencies shall be reported to the independentdirectors.

36 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

(b) Summary of communication between independent directors and chief internal auditors:

Treatment of Board meeting Date content Summary of independent independent directors' directors opinions 01/24/2019 of 18th term 20th board meeting December 2018 Audit Report. None Not applicable 02/21/2019 of 18th term 21th board meeting January 2019 Audit Report. None Not applicable

February 2019 Audit Report None Not applicable 03/26/2019 of 18th term 22th board meeting “ 2018 Statement of Declaration on Internal Control Agree Not applicable System”“Internal Control System Eﬀectiveness Review.” 04/26/2019 of 18th term 23th board meeting March 2019 Audit Report. None Not applicable 05/29/2019 of 18th term 24th board meeting April 2019 Audit Report. None Not applicable 06/26/2019 of 18th term 25th board meeting May 2019 Audit Report. None Not applicable

June 2019 Audit Report. None Not applicable 07/25/2019 of 18th term 26th board meeting Amendments to the “Internal Control System” and “Implementation Rules of Internal Auditing, Agree Not applicable 08/28/2019 of 18th term 27th board meeting July 2019 Audit Report None Not applicable 09/25/2019 of 18th term 28th board meeting August 2019 Audit Report. None Not applicable

September 2019 Audit Report None Not applicable

10/30/2019 of 18th term Amendments to the “Internal Control System” and 29th board meeting “Implementation Rules of Internal Auditing, Agree Not applicable

2020 Annual Audit Plan (audit workplan). Agree Not applicable

11/27/2019 of 18th term 30th board meeting October 2018 Audit Report None Not applicable 12/30/2019 of 18th term 31th board meeting November 2018 Audit Report. None Not applicable

(c) The accountants met during the audit committee meeting and exchanged views on the company's ﬁnancial reporting matters. (d) Summary of communication between independent directors and CPAs:

Date Main Points of Communication

1. Arranged CPA briefing and explanation to the Audit CommitteemembersExplained the Company’s 2018 individual financial reports and consolidated financial reports. 2019.03.26 2. CPAs discussed and communicated with Audit Committee members and meeting attendees with respect to the issues raised. 3. Independent directors’ recommendations: None

37 (3) Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

Deviations from Implementation Status 1 “the Corporate Governance Best-Practice Evaluation Item Principles for TWSE/ Yes No Abstract Illustration TPEx Listed Companies” and Reasons 1. Does the company establish and ü The company has formulated the company's "corporate None disclose the Corporate Governance governance code of practice" with reference to the "Code Best-Practice Principles based of Corporate Governance Practices for Listed and Over- on “Corporate Governance Best- the-counter Companies" on December 22, 105. Information Practice Principles for TWSE/TPEx observatory. In accordance with the spirit of the company's Listed Companies”? corporate governance operations and relevant regulations, the company's subsidiaries implement the internal control system and related supervision methods. 2. Shareholding structure & shareholders’ rights (1) Does the company establish ü (1) The Company has a spokesperson to take shareholders’ None an internal operating procedure advice address their concern at any time. Although there to deal with shareholders’ are no related operating guidelines in place, there are suggestions, doubts, disputes specialists to address shareholders’ advice and issues with and litigations, and implement related control available. based on the procedure? (2) Does the company possess the ü (2) The Company gains access to the list of major None list of its major shareholders as shareholders and ultimate controllers of major shareholders well as the ultimate owners of through the register of shareholders provided by the those shares? professional shareholder services agency. (3) Does the company establish ü (3) In order to maintain a sound financial relationship with None and execute the risk affiliated enterprises, the Company formulated its own management and firewall "Guidelines for conducting financial business with affiliated system within its conglomerate enterprises" in accordance with Article 17 of the Corporate structure? Governance Best-Practice Principles for TSEC/GTSM Listed Companies, the purpose of which is to achieve risk control and the establishment of firewalls. (4) Does the company establish ü (4) The Company already included “prevention against insider None internal rules against insiders trading” in its internal control system entitled as required by trading with undisclosed law and periodically communicates laws and regulations to information? related staff 3. Composition and Responsibilities of the Board of Directors (1) Does the Board develop and ü (1) Members of the Board of Directors include professionals in None implement a diversified policy different fields, communication, engineering, finance, and for the composition of its accounting, etc. Not only professional capabilities of the members? members but also their moral behavior and leadership are important considerations. (2) Does the company voluntarily ü (2) Besides the Remuneration Committee and the Audit None establish other functional Committee, the Company holds labor management committees in addition to the meetings and has other functional committees such as Remuneration Committee and Labor Safety and Health Group, Sexual Harassment the Audit Committee? Prevention Committee, and Employee Benefits Committee in place. (3) Does the company establish ü (3) The company has formulated the board of directors None a standard to measure the performance evaluation method at the 31st meeting performance of the Board and of the18th directors on 12/30/2019, and will evaluate implement it annually, and are the performance of the 2020 directors and functional performance evaluation results committees in the first quarter of 2021. submitted to the Board of Directors and referenced when determining the remuneration of individual directors and nominations for reelection? ü (4) The Company has appointed PwC Taiwan to inspect and None (4) Does the company regularly certify financial statements and the Board of Directors evaluate the independence of precisely follows the requirements in Article 32 of the CPAs? Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies when evaluating the independence of hired CPAs each year. The Company’s CPAs have not been remaining the same without change for seven consecutive years and are not found with discipline or punishment records in the past five years according to the data released by the Securities and Futures Bureau, Financial Supervisory Commission. In addition, they are formally and substantially impartial and express their opinions in a just way in accordance with the Communique 10 of the Code of Professional Ethics for CPAs.

38 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

Deviations from Implementation Status 1 “the Corporate Governance Best-Practice Evaluation Item Principles for TWSE/ Yes No Abstract Illustration TPEx Listed Companies” and Reasons 4. Does the company appoint a suitable ü The Company's General Administrative Department and None number of competent personnel responsible departments for related business operations and a supervisor responsible for administer Shareholders' Meetings and Board of Directors corporate governance matters meetings in accordance with the actual situation. Board (including but not limited to Directors and Supervisors (Audit Committee) implement providing information for directors business operation affairs and administer related corporate and supervisors to perform their governance operations such as company incorporation and functions, assisting directors and changes in incorporation registration. supervisors with compliance, handling work related to meetings of the board of directors and the shareholders' meetings, and producing minutes of board meetings and shareholders' meetings)? 5. Does the company establish a ü The Company maintains an effective communication and None communication channel and build coordination channel, through dedicated departments, with a designated section on its website various parties of interest, including banks, other debtors, for stakeholders (including but not proprietors, vendors, consumers and company employees, limited to shareholders, employees, and the Company provides sufficient information and respects, customers, and suppliers), as well maintains and protects the legitimate interests of these entities. as handle all the issues they care The Company also has a stakeholders’ only section on its for in terms of corporate social website. responsibilities? 6. Does the company appoint a ü The Company designates SinoPac Securities Inc. to deal None professional shareholder service withshareholder affairs. agency to deal with shareholder affairs? 7. Information Disclosure (1) Does the company have a ü (1) The Company has created a website in both Chinese None corporate website to disclose and English at: www.tldc.com.tw for the dissemination both financial standings of information such as financial business and corporate and the status of corporate governance. governance? (2) Does the company have other ü (2) Departments collect relevant information in accordance with None information disclosure channels their authorities and disclose it in the Market Observation (e.g. building an English Post System, corporate website and annual report; the website, appointing designated Company has also designated a spokesperson and an people to handle information acting spokesperson. There is also an Investor Relations collection and disclosure, section on the corporate website, providing information on creating a spokesman the Company's business operation status, briefings given system, webcasting investor at institutional investor presentations, shareholders Q&A, conferences)? and the status of corporate governance operations (3) Does the company announce ü (3) Due to the large number of subsidiaries held by the None and report annual financial company, in order to cooperate with the verification of statements within two months each subsidiary to prepare consolidated statements, it after the end of each fiscal is not yet possible to announce and declare the annual year, and announce and report financial report within two months of the end of the fiscal Q1, Q2, and Q3 financial year; Financial reports for theQ1, Q2, and Q3 and monthly statements, as well as monthly operations operation results, before the prescribed time limit?

39 Deviations from Implementation Status 1 “the Corporate Governance Best-Practice Evaluation Item Principles for TWSE/ Yes No Abstract Illustration TPEx Listed Companies” and Reasons 8. Is there any other important ü (1) Employee rights and interests: The Company recruits None information to facilitate a better talents via better remuneration and work environment, understanding of the company’s and arranges self-education and training opportunities for corporate governance practices employees. The Company also takes measures to ensure (e.g., including but not limited to the rights of employees guaranteed by the Labor Standards employee rights, employee wellness, Act. investor relations, supplier relations, (2) Employee wellness: The Company cares about employees' None rights of stakeholders, directors’ and physical and psychological well-being, and supports supervisors’ training records, the various activities associated with employee welfare, such implementation of risk management as travel subsidy and club subsidy. With the establishment policies and risk evaluation of an employee welfare committee, the labor-management measures, the implementation of meeting and the sexual harassment prevention committee, customer relations policies, and the Company maintains a good relationship with the purchasing insurance for directors employees. and supervisors)? (3) Investor relations: The Company has engaged an internal None material information designated unit and established a spokesperson system as the point of contact between the Company and shareholders. With respect to information transparency, the "Investor Services" section on the Company's website provides shareholders with the Company's operating status and other business information to provide shareholders and investors with the most up-to- date and effective advisory services. These channels serve as an important bridge for communication between the Company and investors. (4) Supplier relations: The Company's "Guidelines for None engaging technical services organizations to provide technical services" and "Guidelines for construction project tendering" are established to provide a set of criteria for commissioning technical services and construction project tendering, the purpose of which is to create maximum value for the Company and to maintain good relations with suppliers. (5) Stakeholder rights: The Company maintains an effective None communication channel with banks, other debtors, employees, consumers, suppliers, the community and parties of interest, and the Company respects, maintains and protects their legitimate interests. The Company also provides sufficient information to banks and other debtors so that they will be able to make judgment and determine the course of action regarding the Company’s operation and financial position. Meanwhile, the “Stakeholders ＂ section is set up on the Company’s website to providestakeholders (6) Directors and supervisors´ training records: None All directors of the Company possess appropriateprofessional background and practical management experience. In 2019, all directors participated in training courses organized by the Business Council for Sustainable Development of Taiwan for a total of 6 hours (7) The implementation of risk management policies and risk None evaluation measures: The Company is neither a securities firm, an investment trust or consulting enterprise, nor a futures commission merchant, so this is not applicable. (8) The implementation of customer relations policies: None A The Company has designated dedicated sections on the corporate website for various services provided and contact e-mail information, providing customers with prompt, convenient and comprehensive business information and access to grievance channel. In addition to handling cases, follow-ups and complaints about services rendered, the Company will also use the cases as materials for employee training purposes. B In compliance with the competent authority's requirements on "standard contract," the Company has clearly established the terms of the contract. Customers are informed of all fees with which they are charged and any use of customer information by outsourced operations when they enter into the agreement with the Company. (9) Status of purchase of liability insurance by the company for None directors and supervisors: The Company has purchased liability insurance for the directors and key personnel, and has reported this to the Board of Directors. (10) Major internal information management operating None procedures: Following public announcement of material information in compliance with the law, the Company shall inform all directors and managers of the matter immediately via short messages.

40 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

Deviations from Implementation Status 1 “the Corporate Governance Best-Practice Evaluation Item Principles for TWSE/ Yes No Abstract Illustration TPEx Listed Companies” and Reasons 9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures.

Note 1:

Multi- Professional core item background Operational Accounting Commerce Crisis Industry International Decision- Gender (Education judgment Management and and management experience market view Leadership making Director's ﬁnance economy capacity name category)

Chiu, Fu- Sheng Male Music ü ü ü ü ü ü ü Commissioned Lian, Tai-Sheng Male ü ü ü ü ü ü ü Oﬃcer Lin, Hong-Ming Male Financial ü ü ü ü ü ü ü ü

Chan, Ting-Yi Female Law ü ü ü ü ü ü ü Civil Kow, Fu-Lin Male engineering ü ü ü ü ü ü ü Business Jhan, Cing-Wei Male management ü ü ü ü ü ü ü

Jhu, Yun-Peng Male Economic ü ü ü ü ü ü ü Civil engineering Lee, Hong-Yuan Male and ü ü ü ü ü ü ü environmental engineering

(4) Composition, Responsibilities and Operations of the Remuneration Committee

A. Professional Qualiﬁcations and Independence Analysis of Remuneration Committee Members

Meets One of the Following Professional Qualification Requirements, Together with at Independence Criteria (Note) Least Five Years’ Work Experience Criteria A judge, public An instructor prosecutor, or higher attorney, position in a Certified department Public Has work Number of experience Other Public of commerce, Accountant, in the law, finance, or other Companies areas of in Which the accounting, professional commerce, Title or other or technical Individual is Remarks academic specialist who law, Concurrently department has passed finance, or 1 2 3 4 5 6 7 8 Serving as an related to a national accounting, Remuneration the business examination or otherwise Committee necessary Member needs of the and been for the Company awarded a business in a public certificate in Name or private a profession of the junior college, necessary for Company college or the business university of the Company

Others Chan, Ting-Yi ü ü ü ü ü ü ü ü ü Lee, Others Hong-Yuan ü ü ü ü ü ü ü ü ü Jhu, Others Yun-Peng ü ü ü ü ü ü ü ü ü

41 (a) Not an employee of the Company or any of its affiliates. (b) Not a director or supervisor of affiliated companies. Not applicable in cases where the person is an independent director of the parent company, or the Company directly or indirectly holds 50% or more of the total number of voting shares of the subsidiary. (c) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company, or ranking in the top 10 in holdings. (d) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three sub-paragraphs. (e) Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company, or who holds shares ranking in the top five holdings. (f) Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution which has a financial or business relationship with the Company. (g) Not a professional individual, who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof. (h) Not a person of any conditions defined in Article 30 of the Company Law. B. Attendance of Members at Remuneration Committee Meetings (a) There are 3 members in the Remuneration Committee. (b) Term of the current committee members: June 28, 2017 - June 27, 2020. Has met 20 times as of April 30, 2020; the titles and attendance records of the committee members are as follows:

Attendance in Attendance Rate Title Name Person(B) By Proxy (%)【Ｂ / Ａ】 Remarks

Convener Lee, Hong-Yuan 19 1 95% A=20 次

Committee 次 Member Christina Liu 16 3 84% A=19

Committee 次 Member Chan, Ting-Yi 1 0 100% A=1

Committee 次 Member Jhu, Yun-Peng 19 1 95% A=20

Other mentionable items: Christina Liu resigned on 02/14/2018.

42 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

(5) Corporate Social Responsibility

Implementation Status 1 Deviations from “the Corporate Social Responsibility Evaluation Item Best-Practice Yes No Abstract Explanation 2 Principles for TWSE/ TPEx Listed Companies” and Reasons 1. Does the company assess ESG risks ü The company has formulated the company's corporate social None associated with its operations based responsibility code of practice with reference to the "Listed OTC on the principle of materiality, and Corporate Social Responsibility Code of Practice" establish related risk management policies or strategies?3 2. Does the company establish ü In order to improve the management of corporate social None exclusively (or concurrently) responsibility, the Ministry of Public Affairs is the part-time unit dedicated first-line managers that promotes corporate social responsibility. It is responsible authorized by the board to be in for the proposal and implementation of corporate social charge of proposing the corporate responsibility policies, systems or related management policies social responsibility policies and and specific promotion plans, and regularly reports to the board reporting to the board? of directors. 3. Environmental issues (1) Does the company establish ü (1) (2)(3)For the Company’s internal planning, the Company None roper environmental will promote resource recovery, energy saving, reduce the management systems based use of disposable cups, encourage waste paper recycling; on the characteristics of their for the Company’s external planning, the Company will industries? propose green architecture, green community, energy (2) Does the company endeavor ü saving and carbon reduction, renewable energy creation, None to utilize all resources more etc..Also sets up a “uhome” wisdom green architecture efficiently and use renewable experience hall and combines foreign advanced energy- materials which have low saving and carbon reduction and intelligent perception of impact on the environment? green building design, and the Company will use it apply ((3) Does the company evaluate the ü in related development cases to develop smart technology None potential risks and opportunities and environmental protection buildings and implement in climate change with regard the environmental protection policies of global village to the present and future of its greenhouse gas reduction. business, and take appropriate action to counter climate change issues? ((4) (Does the company take ü (4) From 2008 to present, the Company has continually None inventory of its greenhouse gas cultivated about 22million trunks saplings to purify emissions, water consumption, environment. It is estimated that it will reduce 6,040 ton and total weight of waste in the metric tons of carbon. The office room’s temperature last two years, and implement will be controlled in 26 degrees to implement energy policies on energy efficiency conservation and greenhouse gas reduction policies and and carbon dioxide reduction, take responsibility for environmental protection and loving greenhouse gas reduction, the earth. water reduction, or waste management?

43 Implementation Status 1 Deviations from “the Corporate Social Responsibility Evaluation Item Best-Practice Yes No Abstract Explanation 2 Principles for TWSE/ TPEx Listed Companies” and Reasons 4. Social issues (1) Does the company ü (1) (2)(3) The Company has always treated employees in None formulate appropriate good faith and protected the legitimate rights and interests management policies and of employees in accordance with the requirements procedures according to ofthe Labor Standards Act. The Company also abides relevant regulations and the by relevant labor regulations by establishing a "Labor- International Bill of Human Management Committee," "Occupational Safety and Health Rights? Committee," "Sexual Harassment Prevention Committee" (2) Does the company have ü and "Employee Welfare Committee." The Company also None reasonable employee benefit organizes medical checkup and fire drills multiple times measures (including salaries, each year and maintains a healthy communication channel leave, and other benefits), and between management and employees. do business performance or results reflect on employee salaries? None (3) Does the companyprovide ü a healthy and safe working environment and organize training on health and safety for its employees on a regular basis? (4) Does the company provide ü (4) The Company has annual educational training plans and None its employees with career plans intensive development training courses to help boost development and training employees’ professional skills that meet the development sessions? demand taking into account the organizational strategies, work instructions, and personal performance and developments (5) Do the company's products ü (5) The Company has a responsible customer service unit None and services comply with to address related issues of customers and discuss relevant laws and international improvements and deficiencies accordingly in order to standards in relation to increase quality of products and customer satisfaction. customer health and safety, The Company’s products and services are in compliance customer privacy, and with applicable laws, regulations, and international marketing and labeling of guidelines. products and services, and are relevant consumer protection and grievance procedure policies implemented? (6) Does the company implement ü (6) The Company has established the Operating Guidelines None supplier management policies, for Authorizing Technical Labor Providers with Technical requiring suppliers to observe Services and the Engineering Tender Operating Guidelines relevant regulations on in place to govern authorization over technical services environmental protection, and engineering outsourcing as well as supplier evaluation occupational health and safety, The Company signs a contract with its main supplier. or labor and human rights? If The contract will include the CSR policies of both parties so, describe the results. and if the supplier involves a violation of the Policy and has a significant impact on the environment and society, theCompany may terminate or cancel the contract 5. Does the company reference ü The company's 2019 corporate social responsibility report is still None internationally accepted reporting under preparation, and the 2018 corporate social responsibility standards or guidelines, and prepare report is prepared in accordance with the 17 sustainable reports that disclose non-financial development goals (SDGs) of the United Nations information of the company, such as corporate social responsibility reports? Do the reports above obtain assurance from a third party verification unit? 6. Describe the difference, if any, between actual practice and the corporate social responsibility principles, if the company has implemented such principles based on the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies:

44 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

Implementation Status 1 Deviations from “the Corporate Social Responsibility Evaluation Item Best-Practice Yes No Abstract Explanation 2 Principles for TWSE/ TPEx Listed Companies” and Reasons 7. Other useful information for explaining the status of corporate social responsibility practices: 2019.1 Invite artists Colette Miller and Aaron Kai to Hualien New Paradise to paint, bring the artistic atmosphere to the local village, and integrate with the international, and use the free photo opportunities of the people and angel wings, sign the love convention, pass the enthusiastic public welfare, everyone can Universal appeal to become an earth angel . 2019.1 The outer wall tile mural of New Paradise Paradise, inspired by the origin of the Hualien South Island culture, was certified by the King's World Records. With the recognition of the international organization, it is committed to making Taiwan's art culture and architectural aesthetics leap to the international. 2019.2 Adhering to the concept of sharing good with the community, during the Chinese New Year period, Hualien vendors will be provided free of charge to set up stalls in the parking lot outside the new paradise park to help revitalize the local economy and prosperity. 2019.6 Held the 4th Hualien Sunrise Festival, inviting Hongqisong, known as the Earth Zen, to exhibit the paintings of the Big Buddha, and accepting the King's World Records certification, open to all people to visit for free, through religious power to achieve stability and comfort. 2019.9 In conjunction with the arrival of the Mid-Autumn Festival, the "Yueyuan people are more round" barbecue event was held in Hualien. Inviting disadvantaged families to come to the scene with nostalgic mosquito cinema, play movie animations that children love to watch, and provide free barbecue ingredients on the scene, so that vulnerable families can also feel the atmosphere of Mid-Autumn Reunion. 2019.11 Ji'an Township, where the Hualien Field is located, was famous for rice in the Japanese era. On November 11th, it jointly organized the Chopsticks Festival with the Ji'an Township Farmers' Association. This promotes local crops and traditional oriental rice culture, creating a new image of Hualien tourism. 2019.11 Cooperating with the Hualien County Government to hold the "2019 Pacific Hot Spring Carnival Carnival-Morioka Mountain Bike Tour Hualien" event, New Paradise Park created a float to participate in the parade to reach the traditional cultural exchange of Morioka Mountain Bike in Japan, and sent our mascot frog man puppetry and other people Close contact, interaction, and cooperation with the government to promote Hualien tourism special activities. 2019.12 Held the Hualien "Super Party" New Year's Eve Party, invited local drummers to participate in the performance, provided local talents outside the stage, and by attracting domestic and appearance light guests to participate in the scene, created new highlights for Hualien's local New Year and promoted Local economic development.

(6) Fulﬁllment of Ethical Corporate Management and Deviations from the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies"

Implementation Status 1 Deviations from “the Ethical Corporate Management Evaluation Item Best-Practice Yes No Abstract Illustration Principles for TWSE/ TPEx Listed Companies” and Reasons 1. Establishment of ethical corporate management policies and programs (1) Does the company declare its ü (1) (2)The Company's "Ethical Operation Procedures None ethical corporate management and Behavior Guidelines", "Work Rules", "Service policies and procedures in Undertaking", and "Internal Control Systems" all clearly its guidelines and external stipulate guidelines for recusal in case of conflict of documents, as well as the interest, unethical conduct prohibited, confidentiality commitment from its board to obligations, ethical business activities, and requirements implement the policies? for protecting and properly upholding Company reputation, (2) Does the company establish ü violation discipline and complaint system, and regulatory policies to prevent unethical compliance. Members of the Board of Directors and the conduct with clear statements Company's staff all duly enforce said regulations to ensure regarding relevant procedures, honest operation and honor the principle of good faith. guidelines of conduct, punishment for violation, rules of appeal, and the commitment to implement the policies? (3) Does the company establish ü (3) Operations of the Company are open, fair, transparent, None appropriate precautions and not violating its social responsibility. The Company’s against high-potential unethical employees do not accept unjustified giveaways in order conducts or listed activities to avoid undermining the Company’s rights. The Board of stated in Article 2, Paragraph Directors office is a designated unit to do notification filing 7 of the Ethical Corporate and supervision implementation and reports to the Board Management Best-Practice of Directors regularly. Principles for TWSE/TPEx Listed Companies?

45 Implementation Status 1 Deviations from “the Ethical Corporate Management Evaluation Item Best-Practice Yes No Abstract Illustration Principles for TWSE/ TPEx Listed Companies” and Reasons 2. Fulfill operations integrity policy (1) Does the company evaluate ü (1) All of the Company’s business activities are fair and None business partners’ ethical transparent. To avoid dealing or entering into contracts with records and include ethics- parties with prior record of unethical conduct, the Company related clauses in business may terminate or rescind a contract at any time once a contracts? counterparty is found to be involved in unethical business practice. (2) Does the company establish ü (2) To ensure sound ethical corporate management, the Board None an exclusively (or concurrently) Office is responsible for establishing and supervising the dedicated unit supervised by implementation of ethical corporate management policies the Board to be in charge of and their countermeasures, and for reporting to the Board corporate integrity? on a regular basis. (3) Does the company establish ü (3) The Company's "Ethical Corporate Management None policies to prevent conflicts of Guidelines" stipulate that: Suggestions and complaints interest and provide appropriate regarding personal rights or corporate management may communication channels, and be submitted in accordance with Company regulations. implement it? (4) Has the company established ü (4) The Company's accounting system was designed and None effective systems for both established in reference to the Regulations Governing the accounting and internal control Preparation of Financial Reports by Securities Issuers as to facilitate ethical corporate well as the Company’s overall operational activities, and management, and are they provides the basis for accounting treatment. The internal audited by either internal control systems were established in consideration of the auditors or CPAs on a regular overall operational activities of the Company and reviewed basis? whenever necessary in response to changes in the internal and external environments. The internal control systems are documented and observed following approval by the Board of Directors. Internal audits are carried out in accordance with the annual audit plan passed by the Board of Directors. (5) Does the company regularly ü (5) The Company has been practicing honest operations in None hold internal and external daily activities and communicates regulations governing educational trainings on honest operations from time to time each year. operational integrity? 3. Operation of the integrity channel (1) Does the company establish ü (1) The Company already specifies applicable self-discipline None both a reward/punishment terms and conditions in its employees’ letter of undertaking. system and an integrity hotline? Employees can file complaints or submit suggestions by Can the accused be reached phone or mail following the Company’s procedures and by an appropriate person for related departments will be assigned to help them. follow-up? (2) Does the company establish ü (2) For received reports and subsequent investigations, the None standard operating procedures Company will handle them confidentially and carefully. for confidential reporting on investigating accusation cases? (3) Does the company provide ü (3) The Company will absolutely keep the name of the None proper whistleblower complainant and details of the complaint confidential and protection? handle them properly. 4. Strengthening information disclosure (1) Does the company disclose its ü The Company discloses its honest operation status on its None ethical corporate management website. policies and the results of its implementation on the company’s website and MOPS? 5. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation. There have been no differences. 6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies). None.

(7) Corporate Governance Guidelines and Regulations: Please refer to the TWSE https://mops.twse. com.tw/mops/web/t100sb04_1 (8) Other Important Information Regarding Corporate Governance: Please refer to the website of the company https://www.tldc.com.tw

46 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

(9) Internal Control Systems A. Internal Control Statement

Taiwan Land Development Corporation Statement of Declaration on Internal Control System

Date: March 31, 2020 In 2019 the Company conducted an internal audit in accordance with its Internal Control Regulation and hereby declares as follows: I. The Company acknowledges and understands that the establishment, implementation and maintenance of the internal control system are the responsibility of the Board and managerial officers, and that the Company has already established such a system. The purpose is to provide reasonable assurance to the effectiveness and efficiency of business operations (including profitability, performance and security of assets), reliability of financial reporting and compliance with relevant regulatory requirements. II. There are inherent limitations to even the most well designed internal control system. As such, an effective internal control system can only reasonably ensure the achievement of the aforementioned goals. Moreover, the operating environment and situation may change, impacting the effectiveness of the internal control system. The internal control system of the Company features a self-monitoring mechanism. Once identified, any deficiency will be rectified immediately. III. The Company determines the effectiveness of the internal control system in design and implementation in accordance with the "Regulations Governing Establishment of Internal Control Systems by Public Companies" (hereinafter referred to as "the Regulations").The Regulations are instituted for judging the effectiveness of the design and implementation of the internal control system. There are five components of effective internal control as specified in the Regulations with which the procedure for effective internal control is measured, namely: (1) Control Environment, (2) Risk Evaluation, (3) Control Operation, (4) Information and Communication, and (5) Monitoring. Each of the elements in turn contains certain audit items. Refer to the Regulations for details. IV. The Company has adopted the aforementioned internal control system for an internal audit on the effectiveness of the design and enforcement of the internal control system. V. Based on the aforementioned audit findings, the Company holds that it has reasonably preserved the achievement of the aforementioned with the internal control system as of December 31, 2019 (including the monitoring over the subsidiaries), including the effectiveness and efficiency in operation, reliability in financial reporting and compliance with relevant regulatory requirements, and that the design and enforcement of internal control are effective. VI. This statement shall form an integral part of the annual report and prospectus of the company and will be publicly announced. If any fraudulent information, concealment or unlawful practices are discovered in the content of the aforementioned information, the Company shall be held liable under Article 20, Article 32, Article 171 and Article 174 of the Securities and Exchange Act. VII. This statement of declaration was approved by the Board on March 31, 2020 in the presence of 8 directors, who concurred unanimously.

Taiwan Land Development Corporation

Chairman: Signature

President: Signature

47 B. If the Company appoints accountants examine the internal control system, the Company shall disclose the audit report: None (10) As of the publishing date of the annual report, if the Company and its employees have of breaching internal control regulations, weakness, etc.: None (11) Major Resolutions of Shareholders’ Meeting and Board Meetings A. Important resolutions and their implementation at the Annual Shareholders' Meeting in 2019 (06/25/2019) The Company held one Annual Shareholders' Meeting in 2019 as of the publishing date of the The Company's Annual Shareholders' Meeting for 2019 was held on June 25 2019. Resolutions during the meeting and their implementations are as follows:

(a) Ratiﬁcation of the Company's operational ﬁnancial statements for 2018. The resolution and the statements have been submitted to the regulatory organization for memo and promulgation in accordance with laws and regulations.

(b) Ratiﬁcation of the Company's 2018 earnings distribution proposal: The resolution was approved B. Important resolutions adopted at the 23th meeting of the 18th Board (04/26/2019) (a) Details of the Company's 2018 earnings distribution proposal: Approved. (b) Details 2018 Distribution of Employee Remuneration and Directors' and Supervisors' Remunerations: Approved. (c) Meeting minutes from the 15th meeting of the 3rd Remuneration Committee: Approved. C. Important resolutions adopted at the 24th meeting of the 18th Board (05/29/2019) (a) Details of the 31th buyback of the Company's shares: Approved. (b) Transfer of the Company's treasury shares to employees as an incentive: Approved. D. Important resolutions adopted at the 25th meeting of the 18th Board (06/26/2019) (a) Meeting minutes from the 16th meeting of the 3rd Remuneration Committee: Approved. E. Important resolutions adopted at the 2th meeting of the 18th Interim Board (07/03/2019) (a) Case of sale of premises of Chengde Building in Taikai, Taipei City: Approved. (b) Transfer of the Company's treasury shares to employees as an incentive: Approved. F. Important resolutions adopted at the 4th meeting of the 18th Interim Board (07/30/2019) (a) Details of the 32th buyback of the Company's shares: Approved. G. Important resolutions adopted at the 26th meeting of the 18th Board (07/25/2019) (a) Meeting minutes from the 17th meeting of the 3rd Remuneration Committee: Approved. H. Important resolutions adopted at the 29th meeting of the 18th Board (10/30/2019) (a) Details of the 33th buyback of the Company's shares: Approved. (b) Transfer of the Company's treasury shares to employees as an incentive: Approved. (c) Meeting minutes from the 18th meeting of the 3rd Remuneration Committee: Approved. I. Important resolutions adopted at the 31th meeting of the 18th Board (12/30/2019) (a) Transfer of the Company's treasury shares to employees as an incentive: Approved. J. Important resolutions adopted at the 32th meeting of the 18th Board (01/15/2020) (a) Meeting minutes from the 19th meeting of the 3rd Remuneration Committee: Approved. K. Important resolutions adopted at the 34th meeting of the 18th Board (03/31/2020) (a) The Company’s individual financial reports, consolidated financial report, and consolidated business reports of aﬃliated companies for 2019: Approved.

48 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

(b) Submission of one copy of the 2019 Business Report: Approved. (c) Details of the 2020 Annual Shareholders' Meeting: Approved. (d) Election of the Company's 19th-term directors (including 3 independent directors). (e) Accountant Change for PwC Taiwan carries out internal rotation regularly: Approved. (f) Meeting minutes from the 20th meeting of the 3rd Remuneration Committee: Approved. L. Important resolutions adopted at the 35th meeting of the 18th Board (04/20/2020) (a) Election of the Company's 19th-term directors (including 3 independent directors). (12) Main content of recorded or written opinions from directors or supervisors on passed important resolutions by the Board of Directors in 2019 and during the current ﬁscal year up to the date of publication of the annual report: None (13) Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit, Corporate Governance and R&D

Reasons for Title Name Date of Appointment Date of Termination Resignation or Dismissal

GENERAL MANAGER CHIU, YU-YUN 2018/06/20 2019/08/01 Job transfer

GENERAL MANAGER ROCKY LO 2019/08/01 2020/03/01 Job transfer

SUPERVISOR OF FINANCE DEPARTMENT ROCKY LO 2019/01/25 2019/06/27 Job transfer SUPERVISOR OF FINANCE DEPARTMENT Su,Jung-Yu 2019/06/27 2019/12/01 Job transfer SUPERVISOR OF FINANCE DEPARTMENT LIAO,TSUI-CHUAN 2019/12/01 2020/05/13 Job transfer 4. Information Regarding the Company’s Audit Fee and Independence (1) Audit Fee

Accounting Firm Name of CPA Period Covered by CPA’s Audit Remarks

Ong Shih-Rong PricewaterhouseCoopers 108.01.01~108.12.31 Chang,Shu-Chiung

Unit: NT$ thousand

Fee Items Fee Range Audit Fee Non-audit Fee Total

1 Under NT$ 2,000,000 ü

2 NT$2,000,001 ~ NT$4,000,000

3 NT$4,000,001 ~ NT$6,000,000 ü ü

4 NT$6,000,001 ~ NT$8,000,000

5 NT$8,000,001 ~ NT$10,000,000

6 Over NT$100,000,000

(2) When non-audit fees paid to the certified public accountant, to the accounting firm of the certified public accountant, and/or to any affiliated enterprise of such accounting firm are equivalent to one quarter or more of the audit fees paid thereto, the amounts of both audit and non-audit fees as well as details of non-audit services shall be disclosed：

49 Information of Fees to CPA

Unit: NT$ thousand

Non-audit Fee

Accounting Name of CPA Audit Period Covered Remarks Firm Fee System by CPA’s Audit of Company Human Others Subtotal Design Registration Resource

Ong Shih-Rong 01/01/2019~ 12/31/2019 Other non- audit Pricewaterhouse fees: Bill Trust Coopers 5,550 50 5,600 Agreement Chang,Shu- 01/01/2019~ Procedure Chiung 12/31/2019

(3) If accounting firm was replaced and if the audit fees paid for the fiscal year in which such replacement took place are lower than those for the previous year, the reduction in the amount of audit fees, percentage of reduction and the reason(s) should be disclosed: None. (4) If the audit fees paid for the current year are lower than those for the previous fiscal year by 15 percent or more, the reduction in the amount of audit fees, reduction percentage, and reason(s) should be disclosed: None. 5. Information on Accountant Change: (1) Regarding previous CPA

Date of change April 15, 2020

To ensure the independence of their CPAs, PwC Taiwan carries out internal rotation regularly. Thus starting the first quarter 2020, accountants that audit (examine) Reasons for change and remark and certify the Company's financial reports are switched from Ong Shih-Rong and Chang,Shu-Chiung to Chen,Chin-Chang and Chang,Shu-Chiung.

Party Scenario CPA Client

Termination initiated by client Not applicable Not applicable Termination initiated by client or accountant declined to accept the appointment CPA declined to accept (continue) the appointment Not applicable Not applicable

Audit opinions other than unqualiﬁed opinions issued in the past two years and reasons None None None

Accounting principle or practice

Disclosure of financial report Y Audit scope or steps Opinions diﬀerent from those of issuer Others

None V

Description

Other disclosures(Matters that should be disclosed in accordance with Point 4, Item 1, Subparagraph None 5, Article 10 of the Regulations)

50 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

(2) Regarding succeeding CPA

Name of accounting ﬁrm Pricewaterhouse Coopers

Name of accountant Chen,Chin-Chang and Chang,Shu-Chiung.

Date of appointment April 15, 2020

Consultation given on accounting treatment or accounting principle adopted for any specific transactions and on possible opinion issued on None ﬁnancial report prior to appointment and results

Written opinions of succeeding CPA diﬀerent from those of previous CPA None

(3) Reply of previous CPA to matters provided in Items 1 & 2-3, Subparagraph 6, Article 10 of the Regulations. Not applicable. 6. The Chairman, President and Financial or Accounting Manager of the Company who had Worked for the Independent Auditor or the Related Party in the Past Year: None 7. Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders: Unit: Shares

2019 As of Apr. 30, 2020 Pledged Pledged Title Name Holding Holding Holding Holding Increase Increase Increase Increase (Decrease) (Decrease) (Decrease) (Decrease)

4,166,687 800,000 Director Hung Sheng Investment Co., 6,497,687 6,200,000 (2,331,000) (5,400,000)

49,944,721 44,020,000 31,167,721 24,920,000 Chairman Chiu, Fu-Sheng 2,330,000 4,075,000 (18,777,000) (19,100,000)

27,005,432 Vice Chairman Lian, Tai-Sheng 26,988,432 17,000

640,303 589,303 Vice President Guo, Zong-Xiong (49,000) (51,000)

14,927 2,927 Vice President Rocky Lo (15,000) (12,000)

20,896 13,896 Assistant Vice President Lin, Shang-Bin (11,000) (7,000)

71,147 15,292 Assistant Vice President Chen, Wan-Ling (175,000) (55,855)

1,001,515 918,515 Manager Smart Chiang (27,000) (83,000)

776 14,776 Manager Peng, Hua-Hui (33,000) 14,000

350,187 134,187 Manager Mao, Zhao-Kai (163,000) (216,000)

Manager Jerry Nien 73,900 10,900 (33,000) (63,000)

16,438 4,422 Manager Ben Lin (61,000) (12,016)

115,000 Manager Xu, Xing-Hua 28,000 115,000

45,630 Supervisor of Finance Department Liao, Tsui-Chuan 41,630 4,000

Note 1: Ms. Chiu, Yu-Yun was dismissed on August 1, 2019 Note 2: Ms. Liao, Tsui-Chuan appointed on December 1,dismissed on May 13,2020

51 (1) Shares Trading with Related Parties: None. (2) Shares Pledge with Related Parties: None. 8. Relationship among the Top Ten Shareholders As of 4/30/2020

Spouse’s/ Shareholding Name and Relationship Between ’ the Company’s Top Ten Current Shareholding minor s by Nominee Shareholders, or Spouses or Remarks Name Shareholding Arrangement Relatives Within Two Degrees

Shares % Shares % Shares % Name Relationship

Chairman, Taiwan Land Chiu, Fu-Sheng 31,167,721 4.10% - - - - Chiu, Fu- Development Sheng Corporation

Vice Chairman, Taiwan Lian, Tai- Land Lian, Tai-Sheng 27,005,432 3.55% - - - - Sheng Development Corporation

Kirin Shipping Co., Ltd. representative: Liou, Han-Yang 22,208,330 2.92% - - - - None None

Huiwen Investment Co., Ltd. representative: Lan, Mei-Jhou 15,747,016 2.07% - - - - None None

Lin, Gao-Huang 15,698,173 2.06% - - - - None None

Yushin Investment Co., Ltd. representative: Chiu,Chih-Chiang 12,451,774 1.64% - - - - None None

Investment account of Norges Bank managed by Citibank Taiwan 11,979,194 1.57% - - - - None None

Vanguard Emerging Markets Stock Index Fund, A Series of Vanguard International Equity Index 11,881,201 1.56% - - - - None None Funds

Vice Chairman, Taiwan Cashbox Partyworld Co., Ltd. Lian, Tai- Land representative:Lian, Tai-Sheng 11,704,492 1.54% - - - - Sheng Development Corporation

Pescadores Co., Ltd. representative: Chen,Huang-Min 10,000,822 1.31% - - - - None None

52 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT III CORPORATE GOVERNANCE REPORT

9. Ownership of Shares in Aﬃliated Enterprises 12/31/2018; Unit: shares/ %

Ownership by the Direct or Indirect Company Ownership by Directors/ Total Ownership Aﬃliated Enterprises Supervisors/Managers Shares % Shares % Shares %

Taiwan Innovation Development Corporation 1,132,468,428 100% 0 0 1,132,468,428 100%

Hsinchu Hill Garden Corporation 100,000 100% 0 0 100,000 100%

Taiwan Midtown Development Corporation 100,000 100% 0 0 100,000 100%

Taiwan Commerce Development Corporation 0 0 284,306,938 100% 284,306,938 100%

Taiwan Envirotech Development Corporation 0 0 10,000,000 100% 10,000,000 100%

Taiwan City Development Corporation 0 0 100,000 100% 100,000 100%

Hualien Culture Clubhouse Corporation 0 0 34,725,479 100% 34,725,479 100%

Hualien Ocean Forum Corporation 0 0 100,000 100% 100,000 100%

Nanguowoo Corporation 0 0 2,000,000 100% 2,000,000 100%

Wind Lion Plaza Shopping Center Corporation 0 0 92,000,000 100% 92,000,000 100%

Taiwan Manpower Development Corporation 0 0 50,000 100% 50,000 100%

Taiwan Wind Lion Travel Service Corporation 0 0 8,000,000 100% 8,000,000 100%

Kinmen Forum Corporation 0 0 50,000 100% 50,000 100%

Da-Din Engineering Consultation Co., Ltd. 0 0 637,500 51% 637,500 51%

Taigang Tea Manufactory Co., Ltd. 0 0 200,000 67% 200,000 67%

IV. Capital Raised

1. Capital & Shares

2. Corporate bonds

3. Preferred stocks

4. Depositary Receipts

5. Employee Stock Options

6. New Shares to Employees with Restricted Rights

7. Status of New Shares Issuance in Connection with Mergers and Acquisitions

8. Financing Plans and Implementation 1. Capital & Shares (1) Source of capital stock

A. Source of capital stock April 30, 2020 Authorized capital Paid-in Shares Notes

Month/ Issue Capital Year price increased Shares Amount Shares Amount Source of capital stock by assets Others other then cash 06/1964 10 15,000 150,000,000 15,000 150,000,000 Cash 07/1972 10 20,000 200,000,000 20,000 200,000,000 Cash 07/1979 10 50,000 500,000,000 50,000 500,000,000 Cash 07/1986 10 100,000 1,000,000,000 100,000 1,000,000,000 Cash 08/1990 10 270,000 2,700,000,000 270,000 2,700,000,000 Cash 01/1991 10 300,000 3,000,000,000 300,000 3,000,000,000 Earnings 11/1994 10 300,000,000 3,000,000,000 300,000,000 3,000,000,000 - 12/2004 10 350,000,000 3,500,000,000 300,000,000 3,000,000,000 - 05/2009 10 500,000,000 5,000,000,000 300,000,000 3,000,000,000 - 09/2009 10 500,000,000 5,000,000,000 314,419,033 3,144,190,330 Earnings 02/2010 11.8 500,000,000 5,000,000,000 394,419,033 3,944,190,330 Cash 08/2010 10 500,000,000 5,000,000,000 410,057,794 4,100,577,940 Earnings 07/2011 10 500,000,000 5,000,000,000 469,798,173 4,697,981,730 Earnings 10/2011 11.8 800,000,000 8,000,000,000 619,798,173 6,197,981,730 Cash 11/2012 10 800,000,000 8,000,000,000 655,300,218 6,553,002,180 Earnings 10/2014 10 800,000,000 8,000,000,000 679,110,295 6,791,102,950 Earnings and capital decrease through voidance of treasury stock 03/2015 10 800,000,000 8,000,000,000 662,010,295 6,620,102,950 Capital decrease through voidance of treasury stock 06/2015 10 990,000,000 9,900,000,000 662,010,295 6,620,102,950 - (Note 1) 10/2015 10 990,000,000 9,900,000,000 725,881,325 7,258,813,250 Earnings 04/2016 10 990,000,000 9,900,000,000 725,890,618 7,258,906,180 Convertible Bond 10/2016 10 990,000,000 9,900,000,000 760,784,871 7,607,848,710 Earnings and capital reserve 08/2017 10 990,000,000 9,900,000,000 760,884,077 7,608,840,770 Convertible Bond 11/2017 10 990,000,000 9,900,000,000 760,943,600 7,609,436,000 Convertible Bond

Note 1: Share capital revised in the shareholders meeting in 2015.

Unit: Shares

Authorized capital Shareholding type Issued shares Un-issued shares Total Total Notes

common shares 760,943,600 229,056,400 990,000,000 Listed stocks

B. Information for shelf registration: None.

(2) Shareholder structure: April 30, 2020

Shareholder Governmental Financial Other legal Domestic Foreign structure agencies institutions entities natural persons institutions & Total Quantity Natural persons

No. of shareholders 2 3 262 54,961 97 55,325

Shares 2 4,052,781 109,630,105 571,053,675 76,207,037 760,943,600

Percentage (%) 0% 0.53% 14.41% 75.05% 10.01% 100%

56 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT IV CAPITAL RAISED

(3) Shareholding Distribution Status April 30, 2020

No. of Class of shareholding shareholders Holding Percentage(%)

1 to 999 32,334 2,413,062 0.32%

1,000 to 5,000 12,545 27,858,245 3.66%

5,001 to 10,000 3,594 27,636,321 3.63%

10,001 to 15,000 1,721 21,374,635 2.81%

15,001 to 20,000 1,087 19,682,752 2.59%

20,001 to 30,000 1,158 29,141,573 3.83%

30,001 to 50,000 1,085 42,824,041 5.63%

50,001 to 100,000 863 61,646,383 8.10%

100,001 to 200,000 494 68,765,331 9.04%

200,001 to 400,000 261 71,710,334 9.42%

400,001 to 600,000 72 36,028,357 4.73%

600,001 to 800,000 26 17,255,372 2.27%

800,001 to 1,000,000 21 19,403,501 2.55%

1,000,001 or above 64 315,203,693 41.42%

Total 55,325 760,943,600 100.00%

(4) List of Major Shareholders April 30, 2020 Shareholding Shareholder's name Shares Percentage (%)

Chiu, Fu-Sheng 31,167,721 4.10%

Lian, Tai-Sheng 27,005,432 3.55%

Kirin Shipping Co., Ltd. 22,208,330 2.92%

Huiwen Investment Co., Ltd. 15,747,016 2.07%

Lin, Gao-Huang 15,698,173 2.06%

Yushin Investment Co., Ltd. 12,451,774 1.64%

Investment account of Norges Bank managed by Citibank Taiwan 11,979,194 1.57%

Vanguard Emerging Markets Stock Index Fund, A Series of Vanguard International Equity Index 11,881,201 Funds 1.56%

Cashbox Partyworld Co., Ltd. 11,704,492 1.54%

Pescadores Co., Ltd. 10,000,822 1.31%

57 (5) Share Prices for the Past Two Fiscal Years, together with the Company's Net Worth Per Share, Earnings Per Share, Dividends Per Share, and Related Information

Year Current ﬁscal year Item 2018 2019 up to 03/31/2020

Highest 10.55 10.25 9.04

Market price per share Lowest 7.81 8.08 4.68

Average 9.03 8.79 6.63

Before distribution 25.16 26.06 25.77 Net worth per share After distribution 25.16 (Note 4) -

Weighted average shares 739,800,945 746,632,603 760,694,765

EPS (after tax) Diluted earnings per share 0.54 0.40 (0.25)

Adjusted diluted earnings per share 0.54 (Note 4) (0.25)

Cash dividend - (Note 4) -

- (Note 4) - Dividend per share Stock dividend - (Note 4) -

Accumulated undistributed dividends - - -

Price-earnings ratio (Note 1) 16.72 21.98 (Note 5)

Return on investment Price-dividend ratio (Note 2) - (Note 4) -

Cash dividend yield rate(Note 3) - (Note 4) -

Note 1: Price-earnings (P/E) ratio = Average market price/Earnings per share Note 2: Price-dividend (P/D) ratio = Average market price/Cash dividends per share Note 3: Cash dividend yield rate = Cash dividend per share/Average market price Note 4: The resolution for earning distribution was passed at the 18th-term 36th Board of Directors meeting on May 13, 2020, and awaits approval in the 2020 annual shareholders meeting. Note 5: Since the denominator of the calculation formula is negative, it is not calculated.

(6) Company's Dividend Policy and Implementation Dividend policy: According to the Company's Articles of Incorporation, at the time of allocating surplus profits (if any), the Company shall first set aside ten percent of such profits as a legal reserve after losses have been covered and all taxes and dues have been paid. The Company may appropriate another sum as a special reserve in accordance with business requirements and allocate one to eight percent of the earnings as employee bonus and one to two percent as remuneration for directors and supervisors; the remaining shall be determined via board resolutions. The board of directors shall be authorized to determine employee bonus and directors and supervisors' remuneration within the ranges specified above on an annual basis. Implementation Status: With regard to the Company's profit distribution plan for 2019, it was confirmed that the profit available for distribution was zero at the Board of Directors meeting on May 13, 2020. Therefore, no dividend distribution was planned. (7) Effect of free-gratis dividend proposed in the current shareholders’ meeting on Company’s business performance and earnings per share: None

58 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT IV CAPITAL RAISED

(8) Employee Bonus and Director Remuneration A. The percentages or ranges with respect to employee bonus and director compensation, as set forth in the Company’s Articles of Incorporation: In the event of proﬁt after closing of annual accounts (proﬁt refers to pre-tax earnings before deduction of compensation and remuneration distributed to employees as well as directors), between one to eight percent shall be allocated as compensation to employees and no more than two percent shall be allocated as remuneration to directors. However, in the event the Company has sustained accumulative losses, a proportion of profit shall be reserved in advance for compensation purposes. The preceding employee compensation may be paid in cash or stock shares, and shall be payable to employees of subsidiary companies who meet the requirements stipulated by the board of directors. The preceding remuneration to directors shall be paid in cash only. Proposals for employee compensation and remuneration to directors shall be approved by board meeting and shall be briefed in the shareholders' meeting. B. The basis for estimating employee compensation and director remuneration for the current period, the basis for calculating the number of shares distributed as stock dividends, the actual amount distributed and the variance with the estimates as well as accounting treatment:

(a) Per the regulations stipulated in the Articles of Incorporation of the Company, in the event of profit after annual account closing, one percent of profit shall be allocated respectively as employee compensation and remuneration to directors. (b) If there is a variance between the estimated and actual distributed amounts, the variance shall be regarded as the profit (loss) for the following year based on the changes in accounting estimates and will not affect the financial reports that have already been recognized. C. Information on employee compensation distribution proposals adopted by the Board of Directors: The 2019 earning distribution proposal has been approved at the 18th-term 36th Board meeting held on May 13, 2020; below is the status of employee bonus distribution adopted by the Board: (a) NT$2,719,868 in cash compensation will be distributed to employees and the same amount will be distributed to directors and supervisors as remuneration. There has been no discrepancy with the estimated annual recognized expenses. (b) Employee compensation shall on this occasion be paid in cash.

D. Use of earnings in 2018 ﬁscal year for distribution of employee bonus and director remuneration: The distribution proposal for employee bonus and director remuneration approved at the 18th- term 23th Board meeting held on April 26, 2019 and the actual distribution status are as follows: (a) The cash employee compensation and remuneration to directors and shareholders are NT$3,855,535 each. There has been no discrepancy with the estimated annual recognized expenses. (b) Employee compensation shall on this occasion be paid in cash.

59 (9) Buy-back of Treasury Stock:

Repurchases already completed

Treasury stocks: Batch Order 24th Batch 25th Batch 28th Batch 29th Batch

Transfer ownership of Transfer ownership of Transfer ownership of Transfer ownership of Purpose of buy-back shares to employees shares to employees shares to employees shares to employees

Timeframe of buy-back 2017/12/28~2018/02/12 2018/02/22~2018/04/20 2018/12/21~2019/01/23 2019/01/25~2019/03/22

Price range NT$9.00 to NT$11.00 NT$9.00 to NT$12.00 NT$8.00 to NT$10.00 NT$8.00 to NT$10.00

Class, quantity of shares Common shares Common shares Common shares Common shares repurchased 8,000,000 shares 6,850,000 shares 6,000,000 shares 6,000,000 shares

Value of shares repurchased (in NT$ thousands) NT$80,173,113 NT$66,721,464 NT$49,156,602 NT$50,470,845

Quantity of repurchased shares as a percentage of total shares to 100 % 68.50 % 100 % 100 % be repurchased (%)

Shares sold/transferred 8,000,000 shares 6,850,000 shares 6,000,000 shares 6,000,000 shares

Accumulated number of company shares held 0 shares 0 shares 0 shares 0 shares

Percentage of total company shares held (%) 0 % 0 % 0 % 0 %

Treasury stocks: Batch Order 30th Batch 31th Batch 32th Batch 33th Batch

Transfer ownership of Transfer ownership of Transfer ownership of Transfer ownership of Purpose of buy-back shares to employees shares to employees shares to employees shares to employees

Timeframe of buy-back 2019/03/27~2019/05/21 2019/06/20~2019/07/29 2019/08/01~2019/09/27 2019/11/11~2019/12/30

Price range NT$8.00 to NT$10.00 NT$9.00 to NT$11.00 NT$9.00 to NT$11.00 NT$8.00 to NT$10.00

Class, quantity of shares Common shares Common shares Common shares Common shares repurchased 6,012,000 shares 3,148,000 shares 4,182,000 shares 2,516,000 shares

Value of shares repurchased (in NT$ thousands) NT$51,596,625 NT$29,978,504 NT$36,447,694 NT$22,517,056

Quantity of repurchased shares as a percentage of total shares to 75.15 % 52.47 % 69.70 % 50.32 % be repurchased (%)

Shares sold/transferred 6,012,000 shares 3,148,000 shares 4,182,000 shares 2,516,000 shares

Accumulated number of company shares held 0 shares 0 shares 0 shares 0 shares

Percentage of total company shares held (%) 0 % 0 % 0 % 0 %

60 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT IV CAPITAL RAISED

2. Corporate bonds: (1) Proﬁle of corporate bonds

Second (term) secured Type First (term) secured corporate First (term) domestic secured corporate bond of 2015 convertible bond of 2016 bond of 2016

Issue date 6/9/2015 4/29/2016 11/15/2016

Denomination NT$ 1,000,000 NT$1,000,000 NT$1,000,000

Issue and transaction location Republic of China Republic of China Republic of China

Issue price Fully issued at face value Fully issued at face value Fully issued at face value

A: NT$1,000,000,000 Total value NT$ 800,000,000 B: NT$500,000,000 NT$ 800,000,000

A: 1.2% Interest rate 1.55% B: 1.4% 1.48%

Five-year term maturity date: Three-year term maturity Five-year term maturity date: Duration June 9, 2020 date: April 29, 2021 November 15, 2021

A: Taiwan Cooperative Bank Guarantor Taiwan Cooperative Bank B: Chang Hwa Commercial COTA Commercial Bank, Ltd. Bank

JihSun International JihSun International JihSun International Trustee Commercial Bank Co. Ltd Commercial Bank Co. Ltd Commercial Bank Co. Ltd

Sinopac Securities Company Taiwan Cooperative Securities Underwriter Limited Co., Ltd. HUA NAN Securities Co., Ltd.

Far East Law Office Attorney Far East Law Office Attorney Far East Law Office Attorney Certifying lawyer at law Charles Ya-Wen Chiu at law Charles Ya-Wen Chiu at law Charles Ya-Wen Chiu

PricewaterhouseCoopers PricewaterhouseCoopers PricewaterhouseCoopers (PwC) Taiwan Accountant Certifying CPA (PwC) Taiwan Accountant (PwC) Taiwan Accountant Ueng, Shyh-Rong, Wang, Ueng, Shyh-Rong Ueng, Shyh-Rong Hui-Hsien

Principal to be returned in a Principal to be returned in a Principal to be returned in a Payback method lump sum upon maturity lump sum upon maturity lump sum upon maturity

Principal yet to be paid back NT$ 800,000,000 NT$1,500,000,000 NT$800,000,000

Terms and conditions for redemption or early liquidation None None None

Restrictive terms and conditions None None None

Name of credit rating institution, rating date, outcome of corporate bond rating N/A N/A N/A

Value of common shares, depository receipts, or other securities that are converted (exchanged or subscribed) as None None None Additional of the date the annual report rights is printed

Issuance and conversion (swapping or subscription) None None None guidelines

Impacts of issuance and conversion, exchange or subscription, issue conditions on possible dilution and existing None None None shareholders’ equity

Name of swap object custodian institution None None None

61 Third (term) secured corporate bond of First (term) secured corporate bond of Type 2016 2018

Issue date 12/5/2016 8/3/2018

Denomination NT$ 1,000,000 NT$1,000,000

Issue and transaction location Republic of China Republic of China

Issue price Fully issued at face value Fully issued at face value

Total value NT$530,000,000 NT$200,000,000

Interest rate 1.5% 0.75%

Five-year term maturity date: December 5, Three-year term maturity date: August 3, Duration 2021 2021

Guarantor Taichung Commercial Bank Taiwan Cooperative Bank

Trustee JihSun International Commercial Bank Co. Ltd JihSun International Commercial Bank Co. Ltd

Underwriter Taichung Bank Securities Company Limited Taiwan Cooperative Bank

Far East Law Oﬃce Attorney at law Charles Far East Law Oﬃce Attorney at law Charles Certifying lawyer Ya-Wen Chiu Ya-Wen Chiu

PricewaterhouseCoopers (PwC) Taiwan Certifying CPA Accountant Wang, Hui-Hsien Accountant PricewaterhouseCoopers (PwC) Taiwan Ueng, Shyh-Rong Accountant Wang, Hui-Hsien

Principal to be returned in a lump sum upon Principal to be returned in a lump sum upon Payback method maturity maturity

Principal yet to be paid back NT$530,000,000 NT$200,000,000

Terms and conditions for redemption or early liquidation None None

Restrictive terms and conditions None None

Name of credit rating institution, rating date, outcome of corporate bond rating N/A N/A

Value of common shares, depository receipts, or other securities that are converted (exchanged or subscribed) as None None Additional of the date the annual report rights is printed

Issuance and conversion (swapping or subscription) None None guidelines

Impacts of issuance and conversion, exchange or subscription, issue conditions on possible dilution and existing None None shareholders’ equity

Name of swap object custodian institution None None

62 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT IV CAPITAL RAISED

(2) Information on conversion of corporate bonds: none (3) Information on exchange of corporate bonds: none (4) Information for shelf registration: none (5) Information on corporate bonds with stop options: none 3. Preferred stocks: None. 4. Depositary Receipts: None. 5. Employee Stock Options: None. 6. New Shares to Employees with Restricted Rights: None. 7. Status of New Shares Issuance in Connection with Mergers and Acquisitions: None. 8. Financing Plans and Implementation (1) 2009 cash capital increase proposal A. Details of the original proposal

(a) Competent authority approval date and ofﬁcial letter reference number: Approval letter FSC-Zheng-Fa- Zi No. 0980060739 issued by the Financial Supervisory Commission, Executive Yuan on November 20, 2009. (b) Total required capital of NT$1,079,140,000. (c) Issue of 80,000 thousand shares of common stock for cash capital increase at NT$11.8 per share in excess of par (NT$10). The total amount is NT$944,000 thousand. The remaining required capital is obtained via bank loans, from the Company’s own funds and other approaches. (d) Project items and estimated progress

Unit: NT$ thousand

Scheduled rate of progress of fund utilization Total Expected amount Item completion of 2009 2010 2011 2012 date capital required Prior to Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Land 2012 － development Q3 1,079,140 94,876 22,902 60,662 36,620 81,040 201,776 120,960 120,960 120,960 126,810 80,640 10,934

Total 1,079,140 94,876 22,902 60,662 36,620 81,040 201,776 120,960 120,960 120,960 126,810 80,640 － 10,934

(e) "Internet Information System" reporting date entered: November 24, 2009

B. Details of modiﬁed proposal (a) Total required capital of NT$2,679,771,000. (b) Issue of 80,000 thousand shares of common stock for cash capital increase at NT$11.8 per share in excess of par (NT$10). The total amount is NT$944,000 thousand. The remaining required capital is obtained via bank loans, from the Company's own funds and other approaches.

Scheduled rate of progress of fund utilization Expected Total Item completion amount 2012 2013 2014 2015 date of capital Before required 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Land development Q4 2015 2,679,771 594,304 72,898 66,840 63,491 149,673 134,637 121,316 121,316 121,316 146,809 146,809 146,809 146,809 161,686 161,686 161,686 161,686

Total 2,679,771 594,304 72,898 66,840 63,491 149,673 134,637 121,316 121,316 121,316 146,809 146,809 146,809 146,809 161,686 161,686 161,686 161,686

63 (d) "Internet Information System" reporting date entered: March 22, 2012 C. Implementation:

(a) Progress of fund implementation: Unit: NT$ thousand

Implementation Reason(s) that the project is ahead of or Project item Implementation Status 2018Q1 status as of Q1 behind schedule and improvement plan 2018

Planned 0 2,679,771 The actual progress of fund utilization for Amount of expenditure the project fell behind the planned schedule, mainly due to miscellaneous license and Actual 577 1,118,301 environmental impact assessment are Land longer than expected, lead to increasing Planned 0.0% 100.00% development costs and expenditure on development engineering with actual engineering progress Progress of deferred. However, in 2019 Q1, the progress implementation (%) management of project development Actual 0.02% 41.73% continued to be strengthened to achieve the expected beneﬁts.

(b) Capital in the amount of NT$944,000,000 proposed to be used for the development of Hsinchu Hsinpu Eco-community was raised on January 21, 2010. The planned expenditure at the end of Q1 2019 was NT$2,679,771,000, but the actual use of funds was NT$1,118,301,000. The actual progress of fund utilization for the project was behind schedule, mainly due to longer-than-anticipated process for review of miscellaneous permit application and assessment of environmental impact. As a result, the progress of development and payments of capital expenses were delayed. Nevertheless, as of Q1 2019, the Company has continually managed the progress of planned development in the hope of achieving the planned outcomes.

(c) Explanation of Beneﬁts: After the hotel area of the Hsinchu Hsinpu Eco-community has been completed, it is expected that income will be generated from rooms, dining, rental of conference hall and wedding venue as well as shops inside the hotel. Currently no such information is available for assessment of target attainment. (2) 2011 cash capital increase proposal A. Details of the proposal

(a) Competent authority approval date and oﬃcial letter reference number: Approval letter FSC-Zheng-Fa-Zi No. 1000035541 issued by the Financial Supervisory Commission, Executive Yuan on August 5, 2011. (b) Total required capital of NT$4,744,827,000. (c) Issue of 150,000 thousand shares of common stock for cash capital increase at NT$11.8 per share in excess of par (NT$10). The total amount is NT$1,770,000 thousand. The remaining required capital is obtained via bank loans, from the Company's own funds and other approaches.

(d) Project items and estimated progress Unit: NT$ thousand

Total 2011 2012 2013 2014 Expected amount Item completion of capital 2010 date required Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Land development Q4 2014 3,944,827 13,552 7,410 207 1,686,833 44,275 57,553 148,516 251,510 372,688 464,302 334,380 220,878 118,617 27,668 185,382 - 11,056

Investment in subsidiary Taiwan Innovation Q3 2012 800,000 - - - - 400,000 100,000 150,000 150,000 ------Development Corporation

Total 4,744,827 13,552 7,410 207 1,686,833 444,275 157,553 298,516 401,510 372,688 464,302 334,380 220,878 118,617 27,668 185,382 0 11,056

(e) "Internet Information System" reporting date entered: August 8, 2011

64 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT IV CAPITAL RAISED

B. Implementation:

(a) Progress of fund implementation: Unit: NT$ thousand

Project item Fund utilization: Reason(s) that project is ahead of or behind schedule

Planned 3,944,827 Cumulative amount The process for public land release took longer than expected. of expenditure As a result, we were behind schedule in land acquisition, Actual 2,956,101 which also aﬀected the subsequent work schedule. Now we are contracting out works according to schedule and carry Land development out acceptance check. The whole project is expected to be Planned 100% completed according to the original plan. The subsequent Cumulative progress works to be carried out are expected to catch up on the of implementation Actual 74.93% planned schedule.

Planned 800,000 Cumulative amount Investment of expenditure Actual 800,000 in subsidiary The amount of investment in subsidiary has been fully Taiwan Innovation disbursed. Development Planned 100% Corporation Cumulative progress of implementation Actual 100%

(b) With respect to capital raised in the 2011 cash capital increase with the issuance of new shares, the implementation progress and the amount of unused fund are considered reasonable without any major deviation as of Q1 2019. The Company has invested the whole raised fund in the project according to the original fund utilization plan without changes.

(c) Explanation of Beneﬁts: With regard to the sale of factory land (I) for the Taichung Precision Machinery Technology Park Phase II development project commissioned by Taichung City Government, it is completed now. In addition, the recognized labor income accumulated for the company as of December 31, 2018 reached NT$973,398,000; expected benefits are essentially realized. With regard to the subsidiary Taiwan Innovation Development Corporation, it concentrates on the integration, marketing and planning operations at the present time to link up with its earlier eﬀorts in land acquisition, project planning and development planning and to extend its business scope. Based on the actual operations of Taiwan.

V. Business Activities

1. Business Scope

2. Market and Sales Overview

3. Employee Information

4. Expenditures on Environmental Protection (General Management Department)

5. Labor Relations

6. Important Contracts 1. Business Scope (1) Business Scope A. Principal business activities and revenue distribution

2019 Business Scope Item Amount (NT$ Revenue Distribution thousand) (%)

Industrial park development and renewal Service revenue 39,601 10.05

Investment development business Revenue from product sales 113,730 28.87

Self-owned assets development business Rental/leasing revenue 68,267 17.33

Self-owned assets development business Revenue from product sales 172,332 43.75

Total 393,930 100

B. Current Products and Services (a) Industrial park development business: Agency business and joint venture of industrial park development, investment and development of residential and commercial land. (b) Self-owned assets development business: Provide strategies and sales management for real estate asset activation; assessment of new business associated with the development of Company-owned land; promotion of leisure agriculture and Taiwan’s special agricultural products; and leisure real estate development. (c) Investment and development business: Assessment and participation in BOT projects and other new development projects in various cities and counties, introduce digital entertainment, preventive medicine, tourism and leisure, culture creative industry and so on, O2O virtual and physical e-commerce business, foreign park development. (d) Urban renewal business: Agency of urban renewal projects conducted by the government or by private enterprises, coordination of the settlement of residents, and effective follow-up advancement of construction and development. C. Future Products and Services Currently Being Planned (a) Key Development Projects for Industrial Park Development Business ‧ Hualien Guanghua LOHAS Creative Park – Adding value to and invigorating land for production – After the practice of land expropriation compensation based on market value has become law, the supply of industrial land decreases, while their prices go up. We acquired the land in this project in the early days based on the government-declared land value and hence enjoy the advantage of lower land acquisition costs. The Park will aggressively appeal to businesses in cultural creativity and media industries as well as international healthcare and wellness/leisure industries in coordination with the direction of industrial development policies for the eastern part of Taiwan and the overall planning of the Park with the aim to drive the industrial upgrade in Hualien. ‧ Taichung Precision Machinery Technology Innovation Park Phase II - Shaping and developing a comprehensive knowledge-based multifunction park to keep pace with the trend of knowledge-based economy. ‧ Taichung Shengang Fengzhou Industrial Park Phase 2 – Embracing the spirits of humanity, innovation and sustainability to build an “intelligent eco park＂ that are infused with the elements of knowledge, technology and future. (b) Key Development of Businesses Associated with Company-owned Assets ‧ Hualien Guanghua LOHAS Creative Park–Start the town-building program in Huilan Bay Theme Park. The development projects include "Hualien Huilan Bay New Paradiso", "Hualien Huilan Bay Aloft Hotel", "Pacific Forum Center", "Sunrise Villa", and Hualiwu film and television park, leisure farm and ecological waterfront green area. They are expected to drive Hualien to become a tourism destination with high added values as well as a major city for creative LOHAS lifestyle.

68 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT V BUSINESS ACTIVITIES

‧ Hsinchu Hsinpu Eco-community– Located on beautiful sloped land in Hsinpu. According to environmental condition and the texture of Hakka village, propose designing the modern mountain city combined with aesthetics, ecology and intelligence. The plan of park has Le Meridien Hotel & Spa, service Apartment, top estates, greenhouse restaurant, leisure farm and other facilities and has leisure ecological farms, forest parks, tea gardens, accommodation and dining areas, etc.4 on hectares of land to provide a human-natural interface. ‧ Nantou Caotun Zen Culture Park – A thousand plum trees and cherry blossoms will be planted to create the beautiful scenery of a mountain forest. Based on the theme of “Zen ＂ , the Park will emphasize the philosophy of “less ＂ to open a path to a healthy body and mind for modern people. The Culture Park includes a clubhouse, hotel-style apartments, creative shops and learning space (c) Investment and Development Business ‧ In the first phase of the “Golden Gate Industrial and Commercial Park BOT Project ＂ , the development of Fengshiye Store Street has achieved steady growth, and will actively invest in the development of the second-phase hotel. (2) Industry Overview A. The Present and the Future The land development business continues to evolve with time. Confronted with increasing difficulty in land acquisition, how to create maximum land value becomes a critical issue in land development. In the face of global warming and ecological crisis, the question of how to achieve energy conservation, carbon reduction and sustainable environment has become highlight in land development; furthermore, according to estimates by the National Development Council, the elderly population will reach 3.44 million (accounting for 14.6%) by 2018, as Taiwan is set to become an aging society. By 2025, the elderly population will hit 4.85 million (accounting for 20.1%), as Taiwan is set to become an ultra-aging society. Taiwan's society is undergoing the transition of a rapidly aging population, adjustments in family structure and changes in lifestyles. Land development should aggressively provide more products going forward in order to meet the needs associated with long-term home care and small-area accommodation. On the other hand, Taiwan's industries are faced with the pressure to upgrade themselves. Therefore, in terms of the development of industrial parks, developers should oﬀerr innovative park design to meet the development needs of next- generation industries. At the same time, with the advent of cross-border e-commerce, live webcasting and 5G, the people's consumption pattern changes, how to use virtual technology or live platform to let consumers experience the scene in person, how to make consumers through online selection quickly to reach the hands of consumers and rapid transit planning, will be this generation of new consumer strategies and challenges. In addition, Taiwan has rich and diverse tourism resources and cultural heritage. The number of local and international tourists visiting Taiwan continues to rise. The SUHUA HIGHWAY was completed and opened to traﬃc in 2020. The transportation in the east is more convenient and diverse. The government statistics taiwan tourists about 11.13 million people in 2019, overall tourism revenue exceeded NT$ 880 billion , tourism foreign exchange revenue was approximately NT$ 395 billion, and domestic tourism revenue was approximately NT$ 485 billion. According of the Domestic and foreign demand on the fast growing tourism , providing more leisure, entertainment and accommodation products, and combining local characteristics with the planning of half-day and one-day tours will be a new blue ocean for land development..

69 B. Relationship with upstream, middle-stream, and downstream companies

Landowners Upstream Financial institutions

Steel, cement, electrical Land brokers and plumbing, and building Land integrators materials suppliers

Land developers Midstream Construction companies

Consulting ﬁrms Real estate management companies Construction companies

Sales department of construction companies

Warranty department of construction companies Downstream Marketing companies Brokers Property management companies

Consumers (Corporate or individual)

C. Product Trends and Competition (a) Product Trends Land development products include intermediary development services and end real estate products. Development services increasingly stress the capability to innovate and integrate: Innovation is stressed because it enhances the value of land and creates brand force. Integration is stressed because in the professional division of labor, tasks become more and more specialized, while the age of Internet also accelerates cross-industry integration. Besides, in terms of real estate products, Taiwan's total population was 23.60 million in 2019, 3.61 million of which were people 65 years or older (accounting for 15.28%); Owing to factors such as longer life expectancy and fewer children, the rate of population aging has been accelerating, as our population is expected to shrink in the future. In order to accommodate the government's policies and market needs, the Group has identified the following highlighted trends for future product rollout: developing leisure industries built around “Health and LOHAS＂; creating LOHAS environment and lifestyles; developing membership systems; promoting and cultivating various healthy lifestyles & artistic and cultural experience clubs; providing members with continued healthcare to enjoy LOHAS lifestyles. More ﬂexible development with compound functionality has become a trend, which will meet a wide variety of needs of modern people by providing commercial, residential, recreational and entertainment functions to create new lifestyles. In addition, sustainable architecture design and application of smart technology in space use are important trends in the development of real estate products that could lead to sustainable development and safer and more comfortable living.

70 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT V BUSINESS ACTIVITIES

(b) Competition Under the trends of global liberalization and warming of cross-strait relations, the land development market is expected to attract more Chinese and foreign investors and market competition is expected to heat up more. Be it the provision of intermediary development service or real estate products in the end market, development ideas, integration of professionals and innovative capability will be keys to excelling in competition and success. There is a pressing demand for industrial land in Taiwan. As land acquisition has to be based on market value and involves complex environmental feasibility study process, land acquisition and development become more difficult. Under the circumstances, industrial land assets currently owned by the Group are turned into valuable assets. As Taiwan attracts more foreign visitors and the life style of people in Taiwan changes, it becomes necessary for the Group to transform its business pattern and diversify its businesses to capitalize on the increase in land value, spread business risks and grasp more business opportunities. The Company builds three parallel core businesses of Embracing green, intelligent, and cultural creativity. Incorporating the elements of "Innovation, LOHAS, Sustainability and Intelligent" in all of its development projects. Hualien New Paradiso, which opened in 2018 was designed by Japan's Famous Architect , Kengo Kuma (who won the right to design the new National Arena for the 2020 Tokyo Olympics) and the first container of Starbucks in Asia, the largest ceramic tile mural and the longest indoor slide certified by The Guinness World Records, attracting more than 3.5 million visitors in 2019 . Kinmen Wind Lion Plaza was establishing and superficies rights in November 2009. The Park possesses the best bonded warehouse and outlying island duty-free shops in Kinmen. Through the cross-border e-commerce platform, the Group has built up a duty-free shop that receives customers at the front door and stores goods at the back of the store, thereby solidifying the development of Kinmen as a border trade center. In the future, "Live" will be the main core of the Group in Kinmen, Hsinpu, Hualien, Taichung and other areas of land development. The development of hotels, health residences, hotel-style apartments and other diversified residential products are combined with construction planning, membership marketing, operation management, tourism, and health care. To develop a full range of leisure and vacation industry, and become an industry leader in land development in Taiwan. (3) Technology and R&D Overview

A. R&D investment in 2018 and during the current ﬁscal year up to the date of publication of the annual report

Unit: NT$ thousand

Item 2019 As of 2020/03/31 Description

R&D expense 1,633 20

Operating revenue 393,930 89,584

R&D expense as a percentage of operating revenue 0.41% 0.02%

B. Successfully developed technologies and/or products in 2019 and during The Company is also keen on developing mobile applications and smart services with Internet of Things (IoT) experiences at its core, including: Researched and developed related solutions and smart services based on cloud service and the IoT, including: ‧Expanded the CDN platform connectivity application for streaming content

‧VMware private and public cloud Hybrid ‧Mobile live broadcasting system ‧Live event interactive interface ‧IoT environmental monitoring system ‧The combination of the IoT and marginal computing systems ‧The Integration of Smart Home and Health Information

71 ‧Smart building and energy monitoring system ‧The optimization of Hualien Smart City guide APP ‧Remote-shunt working system C. Future Directions for R&D Development (a) Increased the CDN platform added application function researcht;utilized cloud technology infrastructure to apply to the industrial development for new video entertainment media, healthcare and the IoT going forward (b) Researched and sought online video compression technology as well as partners and vendors for transmission service; conducted integrated applications and cooperation to improve live online video streaming quality and interactivity (c) Developed new energy systems and integrated IoT applications, as well as products with added value based on green buildings and related projects; negotiated partnership & cooperation; developed mid-and long-term business opportunities (d) Developed solutions for Smart Homes and Smart City (e) Development of e-commerce business operations (f) Integrated applications for Smart Shopping Mall and cashless transaction services (g) The virtual integration of Smart Shopping Mall O2O service D. Future R&D plans and expenses

R&D expenses The main factors of Current annual plan Current progress Estimated ﬁnish time R&D success and reinvestment mobile applications Phase I Innovative service Smart City Completed App and About NT$1,000,000 2020/12 models and mobile Smart city service imported Back-En application Hotel innovative Smart Hotel Collecting information About NT$ 4,000,000 2020/12 service models and Smart hotel service and planning application Phase I Completed App and Hualien Smart City guide imported Back-End Innovative service APP Phase II About NT$ 4,000,000 2021/03 models and mobile Increasing number of application membership planning and Innovative service Smart energy-saving homes evaluation testing About NT$ 3,000,000 2021/12 models and application planning and Innovative service Smart Industry evaluation testing About NT$ 3,000,000 2021/12 models and application (4) Short and Long Term Business Development Plans A. Short-term plans (a) Agency business of industrial park development: ‧Develop land activation strategies to enable diversification of land utilization so that unleased and unsold industrial park land can be minimized.Self-owned assets development business (b) Development business of Commpany-owned Assets : ‧ Propose the best development ideas in line with the conditions of each individual project, and build an integrated professional team and integrate resources to create the value of assets. ‧ Modularized operation helps leverage Company resources and improve market competitiveness. ‧ Bring in Cultural creativity, leisure and sightseeing and other industriesgreen to stimulate investment, boost productivity and create more job opportunities to drive the development and prosperity of local communities.

72 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT V BUSINESS ACTIVITIES

B. Long-term plans ‧Internally, actively build an integrated professional team, accumulate know-how, and construct a complete lineup for the land development business to establish a solid foundation of sustainable development. ‧Externally, create brand value and form extensive partnerships to expand the reach of Company business. 2. Market and Sales Overview (1) Market Analysis A. Sales (Supply) and areas of distribution for principal products and services and their market shares (a) Agency business of industrial park development and renewal: For newly developed industrial parks, the Taichung area is the primary target market, with aggressive marketing for Hualien Guanghua LOHAS Creative Park and Taichung Precision Machinery Technology Innovation Park. These are industrial park projects commissioned by the government and undertaken under the Company's agency business, and as a result no market share data has been calculated.

Unit:%

Projects for agency renewal business 2019 2018

Taichung Precision Machinery Technology Innovation Park Phase II 9.19 9.51

Hualien Guanghua LOHAS Creative Park 0.85 0.40

Taichung Industrial Park Phase 2 0.01 0.60

Taichung Precision Machinery Technology Innovation Park Phase I - 19.65

Taichung Sheng-Gang Fengzhou Technology Industrial Park Phase 2 - 1.18

Note: The numbers represent various revenues as percentages of operating income for the entire year.

(b) Development Business of Self-owned Assets: The Company's land resources are distributed throughout Taiwan. Currently the key development sites are company-owned land located at Hualien, Hsinpu, Hsinchu and Caotun, Nantou. Planning, designing and construction license application under way in 2019 included phase-one housing project of the Hualien Huilan Bay Sunrise Village, the Hualien Huilan Bay Tokaido Clubhouse, the Starwood Hotel at the Hsinchu Hsinpu Eco-community, hotel-style apartments, a hot spring villa, VILLA3, and the Zen Club at the Nantou Caotun Zen Ecological Park. Currently, no market shares have been calculated. B. Future Market Supply and Demand and Future Growth In the aspect of development service, the Company will concentrate on providing industrial park development services at the present stage. As cities and counties across Taiwan continue to develop new industrial parks, while expanding and renewing their existing ones, it provides the Company with significant business growth opportunity. The Company will continue to bolster its strength in innovative park development and vigorously vie for the business of developing new types of industrial parks. With regard to the real estate market, as the market has remained bullish for several years, the government is implementing a number of measures with an aim to stabilize housing prices. However, with the scarcity of available land, the increasing level of difficulty in obtaining it and rising material costs, real estate values are relatively stable and the room for lower housing prices is limited in the long run. In terms of the overall real estate market, the performance of housing markets in different regions started to shown obvious divergence, with northern region experiencing dropping prices and fewer transactions, and central and southern regions experiencing stable prices and stable turnover. The market activities are moving gradually towards the eastern area with the land prices in Hualien and Taitung rising every year. These market trends are particularly favorable to TLDC which holds a considerable amount of land assets and is embarking on several hotel and resort development projects in the areas. Through the sharing economy strategy, the Group will offer the opportunity for long-term holding of real estate for investment purpose that is poised to pay dividends.

In 2020, phase-one housing project of the Hualien Huilan Bay Sunrise Village and Hsinchu Hsinpu Hotel- style apartments will be actively launched and provide more than 2,000 households leisure and wellness residential products.

73 C. Competitive Niche (a) With solid performance records for industrial park development, the Company is presented with the opportunity to grab a greater share of the industrial park development service market. (b) The Company owns more than 160,000 ping of land across Taiwan that puts the Company in a highly competitive position. (c) The Company’s innovative development ideas facilitate the creation of brand image and competitive advantages in the market. (d) The Company stays close in touch with social trends and makes forward-looking investments that present great opportunity. (e) The Company has extensive deployment and a strong development team.

D. Advantages and Disadvantages of Company's Vision of Development and Response Measures Advantages (a) Advantages ‧The Company’s overall development deployment is consistent with social development trends and government policies. ‧As Taiwan and China continue to boost ties and the government implements visa upon arrival at Kinmen for Mainland tourists and the free trade zone policy, significant business opportunities are expected to be created for investment as well as tourism and leisure development projects in Kinmen. ‧ With the promulgation of the Statute for Industrial Innovation, new opportunities for the development of industrial parks present themselves. Rising demands for industrial land are advantageous to the business of industrial park development. (b) Disadvantages and Response Measures ‧The global economy is recovering slowly but the risk of a reversal still exists and Taiwan’s export- oriented economy is vulnerable to the impact of global economy. Thus any land development should be planned thoroughly and seek more collaboration partners to reduce risk.

‧Government policies, including flat tax rate for property and land, rising property tax and farmland used exclusively for agricultural purpose only, are expected to produce certain impact on the real estate market. The Company will formulate response strategies in view of government policies and market trends. ‧ Faced with increasingly scarce land resources and increasing difficulty to acquire land due to government’s adoption of land expropriation compensation by market value policy, the Company will resort to innovative development methods to add more value to the land. (2) Important Applications and Manufacturing Processes of Major Products: A. Important Applications of Major Products (a) Industrial park development business: Providing industrial parks with comprehensive upstream, midstream and downstream services and complying with government policies for the integration of various specialized and financial resources to create the best industrial environment. (b) Self-owned assets development business: Providing residential buildings, hotels, exhibition centers, business centers, leisure farms and other diversified products to meet the needs of future green lifestyle and cultural creativity. (c) Investment and development business: We provide comprehensive services and planning according to different development cases and by integrating internal and external resources. B. Project Implementation Process (a) Development of industrial parks: Industrial park establishment - Industrial park development - Industrial park sales and marketing - Industrial park management and maintenance - Industrial park renewal.

74 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT V BUSINESS ACTIVITIES

(b) Land development Investigation and assessment - Product positioning - Planning and design - Advertising and marketing - Promotion and sales - Construction - Completion and delivery - After-sales services (3) Supply Status of Main Materials A. Purchases for construction projects: All engineering and construction projects handled by the Company are conducted with the turnkey model - contractors are responsible for providing construction work and building materials. In order to gain effective control of construction quality and the progress of projects, apart from clearly stating the rules for construction tendering and contracting technical services organizations to carry out services on behalf of the Company in our internal control system and prudently selecting building contractors with good reputation, the Company also maintains healthy, long-term cooperative relationships with construction firms to make sure there will not be no shortage or monopoly in the supply of construction resources. B. Land for construction: The acquisition of land required for the Company's construction projects depends on the location of each case. In addition to purchasing land directly from landowners, we also participate actively in land made available by the government and court-auctioned property. Furthermore, since the Company is flexible in the mode of carrying out construction projects in which we invest, it is possible for us to acquire the necessary land by engaging in joint development and investment with other construction companies or with landowners. Therefore there is no shortage in the supply of land for construction. (4) Names of customers who contributed to more than 10% of total purchase (or sales) amount in one of the most recent two years and the corresponding purchase (or sales) amounts and percentages, as well as reasons for their changes (if applicable): A. Suppliers: List of suppliers with purchase amount exceeding 10% of total purchase

Unit: NT$ thousand

2017 2018 2019, as of the end of previous quarter

As a As a As a No. percentage Relationship percentage Relationship percentage Name Amount of net with Name Amount of net with Name Amount of net Relationship purchase Relationship purchase Relationship purchase with issuer (%) with issuer (%) with issuer (%) Costco Costco Xiangyu 1 Wholesale 15,739 15.57 None Wholesale 10,929 10.02 None Seafood 2,012 10.58 None Corporation Corporation Shop

Others 85,368 84.43 None Others 98,133 89.98 None Others 16,996 89.42 None

Net Net Net purchase 101,107 100 purchase 109,162 100 purchase 19,008 100

Note 1: The amount of purchase for construction projects includes contracting work, hypothesis engineering (such as soil preparation, fencing, security support and other non-foundation engineering) and site management fees.

Reasons for changes: Purchases conducted by the Company include commodity purchases, construction purchases and land for construction. Purchases conducted in 2019 were primarily planning and design fees paid to domestic and foreign architectural firms for the new development project in Hualien. There has been an increase in merchandise purchases resulting from the operational needs of the Kinmen Wind Lion Plaza. With respect to land for construction, the acquisition of land required for the Company's construction projects depends on the location of each project. The Company's counterparties in land transactions are not specific to certain individuals and can come from multiple sources, and the inventory of commodities is mainly due to the purchase of related products to accommodate the needs of the shopping plazas. Therefore no exceptional situations are present.

75 B. Merchandise customers: List of customers with sales amount exceeding 10% of total sales

Unit: NT$ thousand

2017 2018 2019, as of the end of previous quarter

As a As a As a No. percentage Relationship percentage Relationship percentage Relationship Name Amount of net Name Amount of net Name Amount of net purchase with issuer purchase with issuer purchase with issuer (%) (%) (%)

Hualien 1 Taichung City 79,825 21.83 None Others 393,930 100 None county 9,266 10.34 None

2 Others 285,930 78.17 None Others 80,318 89.66 None

Net sales 365,755 100 Net sales 393,930 100 Net sales 89,584 100

Reasons for changes: In addition to carrying out the development of industrial parks and renovation work on behalf of government agencies, the Company's main products comprise the sales of buildings commissioned through construction companies. The target buyers of these buildings are non-specific individuals and corporations. Due to the enormous amounts involved in real estate transactions, in general there is a low probability of repeat purchases by the same customers. Furthermore, service revenues for the development and renewal of industrial parks are mainly from government agencies and not from specific individuals or affiliated persons, so sales that are concentrated on government agencies should be considered a characteristic specific to this particular sector. (5) Production Volumes and Values Table for the Most Recent Two Years Unit: NT$ thousand

Year 2019 2018

Output quantity and value Quantity produced Value produced Quantity produced Value produced Primary project

Guanghua LOHAS Creative Park - 157,778 - 151,605

Taichung Sheng-Gang Fengzhou Technology 38,713 8,529 Industrial Park Phase 2

Kangshan Industrial Park - 36,247 - 113,320

Taichung Precision Machinery Technology - 37,602 - 36,086 Park Phase 1

Taichung Precision Machinery Technology 7,260 15,161 Park Phase 2

Others - - - -

Total - 277,600 - 324,701

Note: The various costs associated with and paid in advance by the Company's agency business for industrial park development commissioned by government agencies are based on the project owners' overall planning, and therefore the production quantity cannot be shown here.

76 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT V BUSINESS ACTIVITIES

(6) Sales Volumes and Values for the Most Recent Two Years Unit: NT$ thousand

Year 2019 2018

Quantity and value of sales Domestic sales Domestic sales Collection of Collection of Value Value Primary project advance payments advance payments (Note 1) (Note 2) (Note 1) (Note 2)

Taichung Precision Machinery Technology 38,713 3,372 8,529 1,455 Park Phase 2

Taichung Precision Machinery Technology 43 2,178 9,787 Park Phase I

Guanghua LOHAS Creative Park 36,184 34,794 33,185

Taichung Industrial Park Phase 2 - 4,313 13,295

Others 309 2 191 252

Total 39,022 39,601 8,720 42,992

Note 1: The Company is commissioned by the government to develop industrial parks; the numbers shown are the collections of advance payments for development costs. Note 2: The Company recognizes agency revenues in stages according to the progress of project construction and proportion of sales of industrial parks commissioned by the government. 3. Employee Information

From that year to Year 2018 2019 present March 31, 2019

Total number of employees 82 81 77

Average age 46 46 47

Average years of service 9 9 10

Ph.D. 1 1 1

Masters 20 19 13 Education Distribution Bachelor's 52 52 55

Senior high school 8 8 8

Below senior high school 1 1 0 4. Expenditures on Environmental Protection (General Management Department) (1) Total losses (including damage awards) and fines for environmental pollution in 2019 and during the current fiscal year up to the date of publication of the annual report: None. (2) An explanation of the measures (including corrective measures) and possible disbursements to be made in the future (including an estimate of losses, fines, and compensation resulting from any failure to adopt responsive measures): None. 5. Labor Relations (1) Current Important Labor-management Agreements and Their Implementation:

A. Employee benefits measures: (a) Leave system: For employees hired after privatization, three days per year for over half year and up to (and not including) one year of service; seven days per year for over one years and up to (and not including) two years of service; ten days per year for over two years and up to (and not including) three years of service; fourteen days per year for over three years and up to (and not including) five years of service; fifteen days per year for over five years and up to (and not including) ten years of service; For ten or more years of service, one extra day per year, up to a maximum of thirty days, is granted.

77 (b) Distribution of performance bonuses, annual bonuses and dividends (c) The Employee Welfare Committee is responsible for administering various employee welfare-related matters, including periodic domestic or overseas travel, self-improvement activities, distribution of birthday cash gifts, sickness/injury benefits, cash gifts for the three traditional holidays/festivals and subsidies for social clubs. B. Continuing education: The Company encourages employees to participate in continuing education and training outside of regular working hours and provides employees with an open and diverse learning environment. Employees will be able to improve themselves continuously through internal and external training, knowledge management and guidance from supervisors and peers. The Company has also planned a job training system to allow employees to bring together their personal life and career for a better future. C. Training: (a) Each year the Company allocates a budget for education and training and establishes training programs. Based on job functions and professional requirements, appropriate training courses are organized to improve employees' knowledge and enhance their overall quality in the hope that they will be able to develop professional know-how with enthusiasm and innovative ideas. Meanwhile, elites equipped with both professional expertise and practical management experience will be cultivated through the career- training program. The Company also conducts internal seminars at appropriate times, in addition to aggressively making arrangements for employees to take part in external training courses. (b) Integrated educational training courses (including online digital learning and courses conducted via video-conferencing) for 2019 totaled 789 hours, with 151 employees participating. (c) In order to encourage employees to pursue further studies after work, companies within the Group provided related subsidies amounting to around NT$407,000 to approximately 96 employees in 2019. (d) The Company strongly encourages employees to acquire job-related certificates and licenses. The Company's accounting department managers have obtained the license for accountant of higher examination. Managers in charge of construction have obtained the license for architect of higher examination. D. Retirement system: Pursuant to the provisions of the "Retirement, pension and severance guidelines for employees of state- owned financial and insurance enterprises operated by the Ministry of Finance," the Company allocates a fixed percentage of the monthly salary, depending on the salary scale of each employee, into company- and self-contributed funds and pension funds for the benefit of employees in their retirement. The Company was officially privatized on January 8, 1999, at which time the provisions of the Labor Standards Act became applicable. The date was also designated the basis date for the re-evaluation of employee pension liabilities and expenses in accordance with SFAS Bulletin 18, "Principles of Pension Accounting." Since the 1999 special fiscal year, when labor retirement regulations were adopted, each month the Company has been allocating 8% of monthly payroll as employee pension reserve, which is deposited in a Central Trust of China account. In addition, due to the fact that the Company's Trust Department was sold to JihSun Bank on August 6, 2005, following the approval from the Labor Bureau of Taipei City government, the Company settled the seniority in the old retirement system with employees in accordance with the pension calculation formulas stipulated in the Labor Standards Act in order to safeguard the interests of employees. Therefore, the retirement seniority of Company employees now follows the rules of the new retirement system, making it unnecessary for the Company to allocate funds into the Central Trust of China pension account. And according to the Labor Pension Act, 6% is allocated, depending on the insurance coverage scale, as pension funds and deposited with the Labor Insurance Bureau. E. In order to spell out the rights and obligations between the employer and employees clearly, as well as to maintain order in the workplace, the "Code of Practice" has been established and filed with the competent authority before being announced publicly. In addition, in order to impose certain requirements and ethical standards on employee conduct, a "Service Commitment Statement," applicable to all employees, has also been established.

78 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT V BUSINESS ACTIVITIES

F. Work environment safety: Employees of the Company shall comply with applicable occupational safety and health laws as well as with the Company regulations so that safety in the workplace and a healthy environment can be maintained. In addition, to prevent theft, fire or other man-made disasters from occurring, the following labor safety and health regulations have been implemented: (a) Regular medical check-ups will be conducted for employees on a regular basis (once every three years.) (b) Occupational safety and health-related training will be conducted for employees. (c) The Company's contractors are required to obtain comprehensive insurance coverage and to enhance the awareness of construction site safety and health management as well as to adopt appropriate measures. G. Other important agreements: None. (2) List any loss sustained as a result of labor disputes in 2019, and during the current ﬁscal year up to the date of publication of the annual report, disclose an estimate of losses incurred to date or likely to be incurred in the future, and indicate mitigation measures being or to be taken. If the loss cannot be reasonably estimated, make a statement to that eﬀect: None.

79 6. Important Contracts December 31, 2019

Commencement Contract type Parties date/expiration Main businesses Restrictive date clauses Hualien community Phase 2 –Housing concept development and BIG 2018.10 program design Hualien community Phase 2 ––Architecture, room and landscape WATG 2017.03 plan and detail design Kengo Kuma & Associates 2017.03 Hsinchu Xinpu-ClubHouse detail design Kengo Kuma & Kinmen natural village –Container house planning and design for Associates 2017.03 hostel Amendment Wu Cheng-rong Architects & 2016.09 Hualien community Phase 2 - Construction architectural design － Engineers and supervision

Hualien commercial zone 2 - Container house planning and design － BIG 2016.07 for hostel decoration works

BIG 2016.05 Hualien commercial zone 1 - planning and design for hostel －

Ove Arup & Partners Kinmen Commerce Leisure Park BOT project - Zone A Container － Hong Kong Ltd. 2016.04 house planning and design for Hotel

Ove Arup & Partners － Hong Kong Ltd. 2016.02 LEED Certiﬁed Consultant General Counseling Service

Kengo Kuma & Nantou Caotun service apartment project– architectural and － Associates 2015.12 interior planning and design Kengo Kuma & Associates 2015.10 Hualien Xianwu- Conceptual design of Cultural City

Kengo Kuma & Nantou Caotun service apartment project – architectural and － Associates 2015.02 landscape planning and design

Kinmen Commerce Leisure Park – Zone A and D development － MAD 2014.12 project – architectural design

Hsinchu Hsinpu project – Hsinpu Starwood Hotel’s interior design － P49 2014.11 onsulting service Kengo Kuma & Entrustment 2014.07 Hsinchu Hsinpu project – Detailed conceptual design of Villa3 － Contract Associates Ove Arup & Partners Consulting service for the directions and range of future － Hong Kong Ltd. 2014.06 development.

Hualien commercial zone 2 development project – container home － BIG 2014.02 and warehouse wholesale design

Kengo Kuma & Kinmen development project – construction planning and － Associates 2014.02 landscape design

Wealthy Engineering Technical service contract for the design and supervision of － Consultant 2013.01 Shengang Fengzhou Industrial Park Phase 2 project

Taipei Chengde Building project – commercial facilities planning － PINHOLE (Japan) 2012.09 and design Wu Cheng-rong Architects & 2012.07 Taipei Bade Road renewal project – construction planning, design, － Engineers and supervision service

R. J. Wu Architects Taichung Precision Machinery Technology Park Phase 2- － & Engineers 2012.05 construction design and supervision service

R. J. Wu Architects Hualien Shiang-Yi Mall project – construction design and － & Engineers 2012.04 supervision service

R. J. Wu Architects Hualien community project – construction design and supervision － & Engineers 2012.04 for phase 1 plants-supervision contract

R. J. Wu Architects Jin Hua Lian Hotel in Hualien No. 15 and 18 hotel design project - － & Engineers 2012.02 Construction architectural design and supervision

R. J. Wu Architects Impression Hualien - Hakka Tulou Cultural Center - Construction － & Engineers 2011.10 architectural design and supervision

R. J. Wu Architects Hsinchu Hsinpu Eco-community - Construction architectural design － & Engineers 2011.08 and supervision

Ove Arup & Partners Taipei City Bade Road, Sec. 2 urban renewal project – conceptual － Hong Kong Ltd. 2011.03 design consulting service

Ove Arup & Partners Kinmen Commerce Recreation Par BOT project architectural － Hong Kong Ltd. 2011.02 design planning contract

80 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT V BUSINESS ACTIVITIES

Commencement Contract type Parties date/expiration Main businesses Restrictive date clauses Urban renewal business planning service appointment contract for Urban Regeneration 2007.06 55 tracts of land including the short section numbered 64 located R&D Foundation at the Chenggong Section of Zhongzheng District, Taipei Wealthy Technical service contract for the application, establishment, Engineering 2012.06 planning and development, leasing and management of Shengang Consultant Phase 2 Fengzhou Industrial Park Taichung City Entrustment contract for the development of Taichung Precision Government 1998.10 Machinery Technology Innovation Park Entrustment Contract Kaohsiung County 1994.11 Entrustment contract for the development of the Kaohsiung government Kangshan Benjhou Industrial Park Taichung City Taichung Industrial Park standard factory building joint government 1990.11 development agreement Taichung City government 1989.08 Taichung Dali Industrial Park joint development agreement Hualien County government 1988.11 Hualien Guanghua Industrial Park joint development agreement

Commencement Contract type Parties date/expiration Main businesses Restrictive date clauses

Lee Ming Hualien County- New construction project of culture and innovation Construction Co., 2019.08 hotel Ltd.

SER-YEA Taichung Precision Machinery Technology Innovation Park- Construction CO., 2019.03 Second-phase project of tap water distribution system and sewage LTD. treatment plant

Chang Chia Mechanical Hualien commercial zone 1 new construction work Mechanical, and Electrical 2014.07 electrical and elevator works Engineering Co

Kinmen Commerce Recreation Park BOT project (new Jia Fu Interior constructionin Zone B) – Interior decoration and mechanical and Decoration Co. 2014.06 electrical works for 2F of North Building taken by Chii Li Coral, including B and C atrium space. Construction contract Lee Ming Construction Co., 2013.12 Hualien commercial zone 1 mall project Ltd.

Kinmen Commerce Recreation Park BOT project (new construction Jiapu Interior Design 2012.09 in Area B) – Partition and miscellaneous works (North and West Co., Buildings)

Sheng Yo Interior Kinmen Commerce Recreation Park BOT project (new construction Decoration Co. 2012.09 in Area B) – Partition and miscellaneous works (South Building)

Kinmen Commerce Recreation Park BOT project - new CHEN JE CORP. 2012.06 construction service agreement

TECO Electric & Machinery Co 2012.05 Kinmen Commerce Recreation Park B Area equipment project

Kone Elevators 2012.05 Kinmen Commerce Recreation Park B Area elevator equipment

81 Commencement Contract type Parties date/expiration Main businesses Restrictive date clauses Collections from the Line of credit: NT$26.94 billion Collateral 1. Facility A of the loan is NT$2.246 billion. As guarantee for are put into A syndicate of 11 a pledge created on the debt receivables from city (county) the sinking banks with Mega governments (advance development costs paid by the fund International Bank 2016.08~2021.08 Company on their behalf). designated as the lead bank 2. Facility B of the loan amounts to NT$4.48 billion. The loan is for secured by the senior mortgage on the company´s real estate repayment assets under development up to 120% of valuation amount. of principal and interest. Line of credit: NT$1.875 billion Taichung The purpose of the loan is for the construction and operating costs Commercial Bank 2019.08~2022.08 for the development of Guanghua Section of Jian Township, Hualien County. Line of credit: NT$700 million According to Kaohsiung Okayama Honsu Industrial Park claims Taiwan Business receivable Bank 2017.01~2022.01 (advance development costs paid by the Company on their behalf) sets pledge as guarantee. Based on the credit amount of 120% to Loan set the right weight limit. agreement Line of credit: NT$100 million According to the Taichung Sheng-Gang Fengzhou Technology ´ Taiwan Business 2017.12~2022.12 Industrial Park Phase 2 s receivables (advance development Bank costs paid by the Company on their behalf) to set pledge as guarantee. Based on the credit amount of 120% to set the right weight limit. Line of credit: NT$80 million The purpose of the loan is for the company's operating turnover. Land Bank of Taiwan 2017.07~2022.07 There are 5 pens in "Hsinchu Hsinpu Baozhen Section" and set the first place mortgage based on the credit amount of 120%. Line of credit: NT$10 billion The purpose of the loan is for purchasing lands and the company's Taichung 2018.05~2021.05 operating turnover. The 7 tracts of land at t Guanghua Section of Commercial Bank Jian Township,Hualien County are used as first-priority mortgage on a collateral for the loan with a maximum pledge amount of NT$12 billion Line of credit: NT$0.5 billion Taichung The purpose of the loan is for purchasing lands. The 4 tracts of Commercial Bank 2018.01~2023.01 land at the No. 48-51, Baozhen Section, Xinpu Town, Hsinchu County are used as first-priority mortgage on a collateral for the loan with a maximum pledge amount of NT$0.6 billion

82 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI.Financial Information

1. Condensed balance sheet, income statement and auditors' opinions for the last ﬁve years

2. Financial Analysis of the Last Five Years

3. 2019 Audit Committee's Report

4. 2019 Financial Statements

5. 2019 Consolidated Financial Statements of the Parent Company and Subsidiaries Certiﬁed by CPA

6. Financial turnover difficulties in the company and its aﬃliated companies 1. Condensed balance sheet, income statement and auditors' opinions for the last ﬁve years. (1) Condensed balance sheet (consolidated IFRS) Unit: NT$ thousand

Financial information for the last ﬁve years. Financial Year information Item from the current 2015 2016 2017 2018 2019 ﬁscal year up to 03/31/2020

Current Assets 9,604,072 10,494,059 10,718,373 9,386,592 8,912,743 8,897,572

Real Estate Properties, Factories and Equipment 1,390,278 2,547,056 2,925,601 3,038,198 1,656,856 1,649,322

Intangible Asset 35,266 31,363 83,194 68,070 59,317 59,926

Other Assets 19,514,962 20,128,697 21,461,735 23,129,206 27,008,822 27,135,412

Total Assets 30,544,578 33,201,175 35,188,903 35,622,066 37,637,738 37,742,232

Before distribution 9,365,675 8,760,091 10,266,183 9,060,696 8,851,350 9,291,015 Current Liabilities After distribution 9,223,249 8,760,091 10,266,183 9,060,696 Note 2

Non-current Liabilities 3,737,958 6,514,992 6,617,090 7,837,603 9,012,138 8,840,521

Before distribution 13,103,633 15,275,083 16,883,273 16,898,299 17,863,488 18,131,536 Total Liabilities After distribution 12,961,207 15,275,083 16,883,273 16,898,299 Note 2

Capital Stock 7,258,813 7,607,849 7,609,436 7,609,436 7,609,436 7,609,436

Capital Surplus 316,057 27,894 32,539 32,161 40,671 40,605

Before distribution 10,318,347 10,365,544 10,840,636 11,242,172 11,537,652 11,350,934 Retained Earnings After distribution 10,133,193 10,365,544 10,840,636 11,242,172 Note 2

Other Equity 5,734 2,375 1,881 - 600,902 600,902

Treasury Stock (471,595) (86,980) (189,935) (165,708) (22,517)

Non-controlling Interests 13,589 9,410 11,073 5,706 8,106 8,819

Before distribution 17,440,945 17,926,092 18,305,630 18,723,767 19,774,250 19,610,696 Total Equity After distribution 17,298,519 17,926,092 18,305,630 18,723,767 Note 2

Note 1: The financial information for the past five years has been examined and certified by the CPA. Note 2: The resolution for earning distribution was passed at the 18th term, 23th Board of Directors meeting on April 26, 2019, and awaits approval from the 2019 annual shareholders meeting.

84 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

(2) Condensed balance sheet (individual IFRS) Unit: NT$ thousand

Financial information for the last ﬁve years. Financial Year information from the current Item 2015 2016 2017 2018 2019 ﬁscal year up to 03/31/2020

Current Assets 8,187,862 8,881,234 8,635847 8,458,317 8,068,221

Real Estate Properties, Factories and Equipment 516,193 509,903 506,892 493,640 469,041

Intangible Asset - - - - -

Other Assets 18,001,520 20,465,767 21,805,794 23,253,818 23,924,670

Total Assets 26,705,575 29,856,904 30,948,533 32,205,775 32,461,932

Before distribution 7,453,968 7,754,222 8,579,688 7,536,632 7,338,433 Current Liabilities After distribution 7,311,542 7,754,222 8,579,688 7,536,632 Note 2

Non-current Liabilities 1,824,251 4,186,000 4,074,288 5,951,082 5,357,355

Before distribution 9,278,219 11,940,222 12,653,976 13,487,714 12,695,788 Total 6,Liabilities After distribution 9,135,793 11,940,222 12,653,976 13,487,714 Note 2

Capital Stock 7,258,813 7,607,849 7,609,436 7,609,436 7,609,436

Capital Surplus 316,057 27,894 32,539 32,161 40,671

Before distribution 10,318,347 10,365,544 10,840,636 11,242,172 11,537,652 Retained Earnings After distribution 10,133,193 10,365,544 10,840,636 11,242,172 Note 2

Other Equity 5,734 2,375 1,881 - 600,902

Treasury Stock (471,595) (86,980) (189,935) (165,708) (22,517)

Non-controlling Interests - - - - -

Before distribution 17,427,356 17,916,682 18,294,557 18,718,061 19,766,144 Total Equity After distribution 17,284,930 17,916,682 18,294,557 18,718,061 Note 2

Note 1: The financial information for the past five years has been examined and certified by the CPA. Note 2: The resolution for earning distribution was passed at the 18th term, 23th Board of Directors meeting on April 26, 2020, and awaits approval from the 2020 annual shareholders meeting.

85 (3) Condensed balance sheet (Financial Accounting Standards in Taiwan): None

(4) Condensed Consolidated Income Statement (Consolidated IFRS) Unit: NT$ thousand

Financial information for the last ﬁve years. Financial information Year from the Item current ﬁscal 2015 2016 2017 2018 2019 year up to 03/31/2020

Operating revenue 592,069 292,831 768,479 365,755 393,930 89,584

Operating proﬁt 461,653 147,696 641,144 167,246 207,218 53,466

Operating income (376,842) (578,011) (173,828) (661,207) (721,958) (139,039)

Non-operating revenue and expenses 2,575,988 980,708 730,477 1,083,857 1,006,764 (62,213)

Net proﬁt before tax 2,199,146 402,697 556,649 422,650 284,806 (201,252)

Continuing operations Net Income 2,039,605 247,810 469,874 401,916 297,880 (186,005)

Loss from discontinued operations ------

Net Income (loss) 2,039,605 247,810 469,874 401,916 297,880 (186,005)

Other consolidated income (net after tax) (1,004) (3,359) (494) (1,881) 600,902 -

Total consolidated income 2,038,601 244,451 469,380 400,035 898,782 (186,005)

Net income belongs to parent company 2,040,076 251,989 475,092 401,337 295,480 (186,718)

Net income belongs to non-controlling interests (471) (4,179) (5,218) 579 2,400 713

Total comprehensive income (loss) attributable to 2,039,072 248,630 474,598 399,456 896,382 (186,718) parent company

Total comprehensive income (loss) attributable to (471) (4,179) (5,218) 579 2,400 713 non-controlling interest

EPS 2.78 0.34 0.63 0.54 0.40 (0.25)

Note 1: The financial information for the past five years has been examined and certified by the CPA. Note 2: EPS after capitalization of earnings and adjusted number of outstanding shares from 2014 to 2018.

86 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

(5) Condensed Consolidated Income Statement ( individual IFRS) Unit: NT$ thousand

Financial information for the last ﬁve years. Financial information Year from the Item current ﬁscal 2015 2016 2017 2018 2019 year up to 03/31/2020

Operating revenue 411,718 79,579 573,373 83,766 98,350

Operating proﬁt 412,390 80,975 568,574 60,885 56,342

Operating income (72,693) (280,010) 162,439 (344,769) (307,081)

Non-operating revenue and expenses 2,211,849 574,433 387,571 722,611 573,628

Net proﬁt before tax 2,139,156 294,423 550,010 377,842 266,547

Continuing operations Net Income 2,040,076 251,989 475,092 401,337 295,480

Loss from discontinued operations - - - -

Net Income (loss) 2,040,076 251,989 475,092 401,337 295,480

Other consolidated income (net after tax) (1,004) (3,359) (494) (1,881) 600,902

Total consolidated income 2,039,072 248,630 474,598 399,456 896,382

Net income belongs to parent company

Net income belongs to non-controlling interests

Total comprehensive income (loss) attributable to parent company Total comprehensive income (loss) attributable to non-controlling interest

EPS 2.78 0.34 0.63 0.54 0.40

(6) Condensed income statement (Financial Accounting Standards in Taiwan): None (7) CPA's audit opinion

A. Names of certiﬁed accountants (a) The audit of the 2014 through 2016 ﬁnancial statement was consigned to accountants Ueng, Shyh-Rong and Wang, Hui-Hsien of PricewaterhouseCoopers.

(b) The audit of the 2017 through 2018 ﬁnancial statement was consigned to accountants Ueng, Shyh-Rong and Jhang, Shu-Cyong of PricewaterhouseCoopers. B. CPA's audit opinion:

(a) The CPA has issued an audit report containing an unqualified opinion with modified wording for the 2014 through 2015 financial statements of the Company. (b) The CPA has issued an audit report containing an unqualified opinion with modified wording for the 2016 through 2018 financial statements of the Company.

87 2. Financial Analysis of the Last Five Years. (1) Financial Analysis (IFRS consolidated)

Financial Analysis of the Last Five Years. Current Year ﬁscal Analysis Item year up to 2015 2016 2017 2018 2019 3/31/2020

Ratio of liabilities to assets 42.90 46.00 47.97 47.43 47.46 48.04 Financial Structure (%) Ratio of long-term capital to real estate 1,523.35 959.58 851.88 874.24 1,737.41 1725.02 properties, factories and equipment

Current Ratio 102.54 120.09 104.40 103.59 100.69 95.76

Solvency % Quick Ratio 86.7 105.01 90.96 88.45 85.55 81.26

Interest Protection Multiples 707.71 142.37 160.30 128.26 93.19 (107.19)

Receivables turnover (times) 42.52 29.03 16.40 10.60 10.69 8.19

Average collection period 8.56 12.57 22.25 34.43 34.14 44.56

Inventory turnover (times) 2.11 1.61 1.07 0.88 1.28 1.16

Operating ability Payables turnover (times) 7.28 4.49 2.05 1.28 1.72 1.62

Average days in sales 172.16 226.7 341.1 414.77 285.15 314.65

Turnover (times) of real estate 0.51 0.14 0.28 0.12 0.16 0.21 properties, factories and equipment

Total assets turnover (times) 0.02 0.01 0.02 0.01 0.01 0.01

ROA(%) 7.21 1.14 1.73 1.51 1.22 (1.49)

ROE(%) 12.29 1.4 2.59 2.17 1.54 (3.77)

Proﬁtability Pre-tax proﬁt to paid-in capital ratio(%) 30.29 5.29 7.31 5.55 3.74 (2.64)

Net proﬁt ratio(%) 344.48 84.62 61.14 109.88 75.61 (207.63)

EPS (NT$) 2.78 0.34 0.63 0.54 0.4 (0.25)

Cash ﬂow ratio (%) (18.06) (20.52) (11.57) (12.73) (12.02) (2.51)

Proﬁtability Cash ﬂow adequacy ratio (%) (Note 2) 85.82 31.96 (126.23) (185.96) (172.60)

Cash reinvestment ratio (%) (63.64) (35.07) (23.94) (22.32) (29.40) (7.29)

Operational Leverage 0.56 0.67 0.18 0.57 0.56 0.49 Leverage Financial Leverage 0.84 0.80 0.54 0.80 0.79 0.71

Financial ratios changed more than 20% in the last two years, described as follows: 1. Receivables turnover rate declines is due to the average number of receivables in the current period is higher than that in the previous period, resulting in an increase in the average number of days received in cash. 2. Payable turnover rate declines is due to the average number of receivables in the current period is higher than that in the previous period, resulting in an increase in the average number of payment days. 3. Real estate, factory and equipment turnover and total asset turnover decreased, due to the current operating income is reduced compared to the previous period. 4. The ratio of pre-tax net benefit to the amount of paid-in capital is decreasing, due to operating income in the current period is reduced. 5. The increase in net profit margin is due to the increase in other interests. 6. The decrease in the cash flow ratio is due to the development of long-term business in the current period resulting in a decrease in net cash flow from operating activities.

Note 1: The financial information for the past five years has been examined and certified by the CPA. Note 2: Not applicable as it is less than five years.

88 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

(2) Financial Analysis (IFRS individual)

Financial Analysis of the last ﬁve years. Current Year ﬁscal Analysis Item year up to 2015 2016 2017 2018 2019 3/31/2020

Ratio of liabilities to assets 34.74 39.99 40.89 41.88 39.11 Financial Structure (%) Ratio of long-term capital to real estate 3,729.58 4,334.68 4,412.94 4,997.40 5,356.35 properties, factories and equipment

Current Ratio 109.85 114.53 100.65 112.23 109.94

Solvency % Quick Ratio 102.41 107.07 93.90 97.62 94.19

Interest Protection Multiples 1,342.35 231.65 196.87 143.14 107.45

Receivables turnover (times) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2)

Average collection period (Note 2) (Note 2) (Note 2) (Note 2) (Note 2)

Inventory turnover (times) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2)

Operating ability Payables turnover (times) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2)

Average days in sales (Note 2) (Note 2) (Note 2) (Note 2) (Note 2)

Turnover (times) of real estate 0.80 0.16 1.13 0.17 0.20 properties, factories and equipment

Total assets turnover (times) 0.02 0.00 0.01 0.00 0.00

ROA(%) 8.55 1.69 1.81 1.58 1.21

ROE(%) 12.30 1.43 2.62 2.17 1.54

Proﬁtability Pre-tax proﬁt to paid-in capital ratio(%) 29.47 3.87 7.23 4.97 3.50

Net proﬁt ratio(%) 495.50 316.65 82.86 479.12 300.44

EPS (NT$) 2.78 0.34 0.63 0.54 0.40

Cash ﬂow ratio (%) (17.68) (10.05) (8.37) (14.54) (12.36)

Cash Flow Cash ﬂow adequacy ratio (%) (Note 3) 155.99 88.12 (61.32) (155.49)

Cash reinvestment ratio (%) (10.74) (6.33) (5.27) (7.43) (6.05)

Operational Leverage 0.81 0.97 1.08 0.91 0.69 Leverage Financial Leverage 0.31 0.51 2.27 0.74 0.72

Financial ratios changed more than 20% in the last two years 1. Interest coverage ratio decreased is due to current profit reduction 2. The ratio of pre-tax net benefit to the amount of paid-in capital is decreasing, due to operating income in the current period is reduced. 3. Real estate, factory and equipment turnover and total asset turnover decreased, due to the current operating income is reduced compared to the previous period. 4. The profitability rate decreased is due to the decrease in operating income during the period. 5. Cash flow ratio and cash reinvestment ratio decline is due to the increase of net cash outflow from the current business activities.

Note 1: The financial information for the past five years has been examined and certified by the CPA. Note 2: The ratio is not applicable to the Company due to industry characteristics. Note 3: Not applicable as it is less than five years.

89 (3) Financial Analysis-Financial Accounting Standards in Taiwan: None (4) Reasons for changes in ﬁnancial ratios in recent two years: A. The fact that long-term funds accounted for a declining percentage of real estate, factories and facilities is due to increased real estate, factories and facilities in this period.

B. The increase in ensured interest multiples is due to increased profits for the period. C. The decline in the turnover ratio of accounts receivable is due to an increase in the average amount of accounts receivable for this period over the previous period, which resulted in an uptick in the average number of days for collecting accounts receivable. D. The decline in the turnover ratio of goods in stock is due to continued commitment to development during this period, resulting in an increase in the average stock. E. The decline in the turnover ratio of accounts payable is due to the reduction of cost of goods sold. F. The increase in profitability ratio is due to increased operating revenue for this period. G. The increase in cash flow ratio is due to decreased net cash outflow from business activities in this period over the previous period. H. The decline in net cash flow adequacy ratio is due to decreased net cash flow from business activities as a result of developing long-term business operations. I. The increase in cash reinvestment ratio is due to decreased net cash outflow from business activities, as a result making increase of cash in investment ratio under the condition of increase fixed assets.

The formulae of the ﬁnancial analyses are as below A. Financial Structure (a) Ratio of liabilities to assets = Total liabilities/Total assets

(b) Ratio of long-term capital to real estate properties, factories and equipment=(Total equity+Non-current liabilities)/net amount of real estate properties, factories and equipment

B. Solvency (a) Current ratio=Current assets/Current liabilities

(b) Quick Ratio=(Current assets-Inventories-Prepaid expenses)/Current liabilities (c) Interest Protection Multiples= PBIT/Interest expenses for this period C. Operating ability (a) Receivables turnover (including accounts receivable and notes receivable generated from operation) = net sales/remaining sum of average receivables (including accounts payable and notes payable generated from operation) for every period (b) Average collection period = 365/receivables turnover (c) Inventory turnover = cost of sales/average inventory (d) Payables turnover (including accounts payable and notes payable generated from operation) = cost of sales/remaining sum of average payables (including accounts payable and notes payable generated from operation) for every period (e) Average days in sales = 365/Inventory turnover (f) Turnover of real estate properties, factories and equipment = net sales/average net amount of real estate properties, factories and equipment

(g) Total assets turnover = net sales/average total assets

90 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

D. Proﬁtability (a) ROA = [income after tax + interest expense x (1-tax rate)]/average total assets (b) ROE = income after tax/net average equity (c) Net proﬁt ratio = income after tax/net sales (d) EPS = (income belonging to parent company - stock dividend of preferred stocks)/weighted average number of issued shares E. Cash Flow

(a) Cash flow ratio = net cash flow of operating activities/current liabilities (b) Net cash flow adequacy ratio = net cash flow of operating activities in the last 5 years/(capital expenditure + addendum of inventory + cash dividend) in the last 5 years (c) Cash reinvestment ratio = (net cash flow of operating activities - cash dividend)/(gross amount of real estate properties, factories and equipment + long-term investment + other non-current assets + operating capital)

F. Leverage: (a) Operating leverage = (net operating income - current operating cost and expense)/operating profit Financial leverage = operating profit/(operating profit - interest expense)

91 3. 2019 Audit Committee's Report

Taiwan Land Development Corporation 2019 Annual Report Audit Committee’s Review Report

The Company’s 2019 individual financial statement(including balance sheet, income statement, statement of changes in shareholders’ equity and cash flow statement) and consolidated financial report, together with the 2019 business report and consolidated business report of affiliates submitted and surplus distribution from to Audit Committee for the verification by the Board of the Company have been certified and audited by accountants Weng, Shih-Jun and Chang, Shu-Chiun of PricewaterhouseCoopers. The Company’s 2019 individual financial statement(including balance sheet, income statement, statement of changes in shareholders’ equity and cash flow statement) and consolidated financial report have been reviewed and determined to be correct and accurate by the Audit Committee members of Taiwan Land Development Corporation. According to relevant requirements of the Securities and Exchange Act and the Company Law, we hereby submit this report.

To the Shareholders’ Meeting of 2020

Independent Director：

April 13, 2020

92 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

4. 2018 Financial Statements

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Taiwan Land Development Corporation

Opinion

We have audited the accompanying balance sheets of Taiwan Land Development Corporation (the “Company”) as at December 31, 2019 and 2018, and the related statements of comprehensive income, of changes in equity and of 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 at December 31, 2019 and 2018, 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 audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulﬁlled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is suﬃcient and appropriate to provide a basis for our opinion.

Emphasis of matter –Land Development Receivables

As described in Note 6(3), the Company has been consigned to develop industrial parks since the period it was government-operated. Under the consignment contract, the Company should pay all the development costs in advance, with the payments to be reimbursed when the land is sold. The land development receivables increased by $288,533 thousand, the collection of land development receivables amounted to $39,022 thousand for the year ended December 31, 2019, and the uncollected balance of land development receivables was $6,175,620 thousand as of December 31, 2019.

Key audit matters

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

93 Investment property

Description For a description of accounting policy on investment property, please refer to Note 4(16). For the accounting estimates and assumption uncertainty in relation to investment property, please refer to Note 5. For the details of investment property, please refer to Note 6(8). The Company’s investment properties consisted of hotels and shopping centres constructed in order to collect rents, as well as the land under development, and stated initially at its cost and measured subsequently using the fair value model. Also, the Company’s valuation of investment properties are taken to be the best use based on the purpose of the land’s legal usage, land usage intensity and changes in land use efficiency from land development and improvements. The Company’s investment properties were recognised based on the appraisal report from external appraisers. The aforementioned amount involved future years’ forecasting, assumptions were unobservable inputs and have high estimation uncertainty, and the estimated outcome has a significant effect in the valuation of investment properties. Since the aforementioned circumstances existed in the Company’s subsidiaries accounted for using equity method, we considered the investment properties as one of the key areas of focus for this year’s audit.

How our audit addressed the matter We performed the following audit procedures on the above key audit matter: 1. Assessed the appointed external appraisers in conformity with the rules of qualiﬁcation and independence. 2. Obtained the appraisal report of investment properties which was provided by the external appraisers, and confirmed that the appraisal method used met the rules of “Regulations Governing the Preparation of Financial Reports by Securities Issuers.” 3. Evaluated the estimation procedures of the Company’s future cash ﬂows made by the external appraiser for the investment properties which were evaluated by using income approach, and compared with future years’ cash flows that was listed in the valuation model with management’s operation plan. 4. For investment properties under land development analysis, checked prices of each similar property and compared with similar asset prices available using public information. 5. Checked the accuracy of valuation model calculation, and confirmed that the recognition amount was in agreement with the appraisal report.

Recognition of service revenue from industrial park

Description For a description of accounting policy on revenue recognition, please refer to Notes 4(7) (26). For details of revenue recognition, please refer to Note 6(21). The Company entered into industrial park development contracts with the government and operates in the development and leasing business of industrial parks according to the Statute for Industrial Innovation. According to the consignment contract, the government is in charge of land acquisition and cadastration and the Company shall raise funds for the costs, with the development costs to be reimbursed when the land is sold or leased. In addition, processing fee is calculated within the scopes of development and lease business after completing the agreements, and is recognised as development cost. Also, the Company recognises service revenue based on the percentage of land sold or leased.

94 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

Since the service revenue from the industrial park was recognised and calculated based on the percentage of the land sold or leased, and comprises a signiﬁcant percentage of operating revenue, we considered the service revenue from industrial park as one of the key areas of focus for this year’s audit.

How our audit addressed the matter We performed the following audit procedures on the above key audit matter: 1. Obtained an understanding and assessed the reasonableness of policies and procedures which were used to recognise service revenue. 2. Obtained an understanding and assessed the internal controls of related outsourcing procedures, the sale and leasing business and revenue recognition of industrial parks, and performed related tests. 3. Obtained details of development cost, and selected samples to verify the amount of related vouchers and compared with carrying amount. 4. Obtained and checked the development contract and industrial park sales rate table, and veriﬁed and recalculated the accuracy of sales rate and service revenue.

Assessment of going concern postulate

Description As of December 31, 2019, the current ratio of the Company and its subsidiaries was 100.69%. However, as described in the Emphasis of matter section of our report, the land development receivables have a longer recoverable time and are significant to current assets. The amount which is expected to be repaid or extended in one year is NT$4,453,000 thousand. The management of the Company has proposed operational policies in Note 12(1). Because the aforementioned actions significantly affected financial situation within 12 months from the balance sheet date, we considered the assessment of going concern postulate as one of the key areas of focus for this year’s audit.

How our audit addressed the matter We performed the following audit procedures on the above key audit matter: 1. Obtained the strategy of operating and financial situation and discussed the execution of strategy with management. 2. Obtained the Company’s projected cash flows within 12 months from the balance sheet date which were prepared by management and assessed its reasonableness, including: (a) Comparing the financial forecast information used by management with the actual result in a certain period after the balance sheet date. (b) Obtaining and reviewing the reasonableness of development plan provided by management. (c) Reviewing the facility added after the balance sheet date and the records of matured borrowing contracts which are renewed by financial institution. 3. Assessed the adequacy of financial statement notes disclosed by management.

95 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 the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, 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 charge with governance, including audit committee, are responsible for overseeing the Company’s ﬁnancial reporting process.

Auditor’s 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 auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ROC GAAS, 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. 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 auditor’s 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 auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. 5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

96 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the 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 auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Weng, Shih-Jung Chang, Shu-Chiung

For and on behalf of PricewaterhouseCoopers, Taiwan March 31, 2020

97 TAIWAN LAND DEVELOPMENT CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars)

December 31, 2019 December 31, 2018 Assets Notes AMOUNT % AMOUNT % Current assets 1100 Cash and cash equivalents 6(1) $ 90,545 - $ 727,207 2 1170 Accounts receivable, net 1,478 - 458 - 1180 Accounts receivable - related parties 7 - - 316 - 1200 Other receivables, net 6(3) and 8 6,243,917 19 5,994,403 19 1210 Other receivables - related parties 7 167,096 1 126,842 - 1220 Current income tax assets 77 - 67 - 130X Inventories, net 6(4) and 8 1,097,330 4 1,016,522 3 1410 Prepayments 7 59,052 - 84,301 - 1470 Other current assets 8 408,726 1 508,201 2 11XX Total current assets 8,068,221 25 8,458,317 26 Non-current assets Financial assets at fair value through profit or loss 1,526,700 5 1,517,100 5 1510 - non-current 6(2) and 7 1550 Investments accounted for under equity method 6(5) 12,529,304 39 12,036,409 37 1600 Property, plant and equipment, net 6(6) and 8 469,041 1 493,640 2 1755 Right-of-use assets 6(7) 73,454 - - - 1760 Investment property, net 6(8) and 8 8,532,036 26 8,418,443 26 1840 Deferred income tax assets 95,607 - 65,080 - 1900 Other non-current assets 6(9) and 8 1,167,569 4 1,216,786 4 15XX Total non-current assets 24,393,711 75 23,747,458 74 1XXX Total assets $ 32,461,932 100 $ 32,205,775 100 Liabilities and Equity Current liabilities 2100 Short-term borrowings 6(10) and 8 $ 1,664,000 5 $ 1,184,000 4 2110 Short-term notes and bills payable 6(11) and 8 228,911 1 232,952 1 2150 Notes payable 8,576 - 312 - 2170 Accounts payable 226 - 435 - 2180 Accounts payable - related parties 7 - - 58,029 - 2200 Other payables 6(12) 1,482,704 5 1,526,491 5 2220 Other payables - related parties 7 305,259 1 170,366 - 2280 Current lease liabilities 21,674 - - - 2300 Other current liabilities 6(13)(14)(15) 3,627,083 11 4,364,047 13 21XX Total current liabilities 7,338,433 23 7,536,632 23 Non-current liabilities 2530 Corporate bonds payable 6(14) and 8 3,027,187 9 3,824,938 12 2540 Long-term borrowings 6(15) and 8 1,893,939 6 1,630,643 5 2570 Deferred income tax liabilities 6(27) 374,855 1 399,451 1 2580 Non-current lease liabilities 52,850 - - - 2600 Other non-current liabilities 8,524 - 96,050 1 25XX Total non-current liabilities 5,357,355 16 5,951,082 19 2XXX Total liabilities 12,695,788 39 13,487,714 42 Equity Share capital 6(18) 3110 Share capital - common stock 7,609,436 24 7,609,436 24 Capital surplus 6(19) 3200 Capital surplus 40,671 - 32,161 - Retained earnings 6(20) 3310 Legal reserve 1,076,680 3 1,036,546 3 3320 Special reserve 10,165,492 31 9,804,090 30 3350 Unappropriated retained earnings 295,480 1 401,536 1 Other equity interest 6(5) 3400 Other equity interest 600,902 2 - - 3500 Treasury stocks 6(18) ( 22,517) - ( 165,708) -) 3XXX Total equity 19,766,144 61 18,718,061 58 Signiﬁcant contingent liabilities and unrecognised contract commitments 9 Signiﬁcant events after the balance sheet date 11 3X2X Total liabilities and equity $ 32,461,932 100 $ 32,205,775 100 The accompanying notes are an integral part of these parent company only financial statements.

98 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

TAIWAN LAND DEVELOPMENT CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars, except earnings per share amount)

Years ended December 31 Items Notes 2019 2018 AMOUNT % AMOUNT %

4000 Sales revenue 6(21) and 7 $ 98,350 100 $ 83,766 100

5000 Operating costs 6(4)(25) and 7 ( 35,843) ( 37) ( 22,881) ( 28)

5900 Net operating margin 62,507 63 60,885 72

5910 Unrealised profit from sales ( 6,165) ( 6) - -

5950 Net operating margin 56,342 57 60,885 72

Operating expenses 6(3)(25) and 7

6100 Selling expenses ( 171,564) ( 174) ( 181,162) ( 216)

6200 General and administrative expenses ( 202,792) ( 206) ( 224,492) ( 268)

6450 Expected credit impairment gain 10,933 11 - -

6000 Total operating expenses ( 363,423) ( 369) ( 405,654) ( 484)

6900 Operating loss ( 307,081) ( 312) ( 344,769) ( 412)

Non-operating income and expenses

7010 Other income 6(22) and 7 59,464 60 52,957 63

7020 Other gains and losses 6(23) 620,156 631 550,630 658

7050 Finance costs 6(24) and 7 ( 118,061) ( 120) ( 120,769) ( 144)

Share of profit of associates and joint ventures 12,069 12 239,793 286 7070 accounted for using equity method, net 6(5)

7000 Total non-operating income and expenses 573,628 583 722,611 863

7900 Proﬁt before income tax 266,547 271 377,842 451

7950 Income tax benefit 6(27) 28,933 29 23,495 28

8200 Proﬁt for the year $ 295,480 300 $ 401,337 479

Other comprehensive income

Components of other comprehensive income that will not be reclassiﬁed to proﬁt or loss

8312 Gains on revaluation 6(5) 600,902 611 - -

Components of other comprehensive income that will be reclassiﬁed to proﬁt or loss

Other comprehensive loss, before tax, exchange 8361 - - ( 1,881) ( 2) diﬀerences on translation

8500 Total comprehensive income for the year $ 896,382 911 $ 399,456 477

Earnings per share 6(28)

9750 Basic earnings per share (in dollars) $ 0.40 $ 0.54

9850 Diluted earnings per share (in dollars) $ 0.40 $ 0.54

The accompanying notes are an integral part of these parent company only financial statements.

99 - - - - 420 9,175 401,337 295,480 Total equity Total $ 18,294,557 199 18,294,756 ( 1,881) 399,456 324,655) ( 348,084 $ 18,718,061 $ 18,718,061 600,902 896,382 221,354) ( 363,880 $ 19,766,144 ------stocks Treasury Treasury ($ 189,935) - 189,935) ( ($ 165,708) - - 324,655) ( 348,882 ($ 165,708) - - 221,354) ( 364,545 22,517) ($ ------surplus Revaluation $ - - - - - $ $ 600,902 600,902 - $ 600,902 ------Other Equity Interest Financial of foreign translation operations diﬀerences statements $ 1,881 $ - 1,881 $ ( 1,881) ( 1,881) - $ - - - $ - - - - 401,337 295,480 retained earnings $ 475,092 199 475,291 - 401,337 47,509) ( 427,583) ( - $ 401,536 $ 401,536 - 295,480 40,134) ( 361,402) ( - $ 295,480 Unappropriated ------427,583 361,402 Special reserve $ 9,376,507 - 9,376,507 - - - $ 9,804,090 $ 9,804,090 - - - $ 10,165,492 ------Retained Earnings 47,509 40,134 Legal reserve $ 989,037 - 989,037 - - - $ 1,036,546 $ 1,036,546 - - - $ 1,076,680 ------420 9,175 capital paid-in surplus, additional Total capital Total $ 32,539 $ - 32,539 - - ( 798) 32,161 $ 32,161 $ - - ( 665) 40,671 $ ------stock - common $ 7,609,436 - 7,609,436 - - - $ 7,609,436 $ 7,609,436 - - - $ 7,609,436 Share capital Notes 6(20) 6(18) 6(17)(19) 6(18)(19) 6(5) 6(20) 6(18) 6(17)(19) 6(18)(19) Profit for 2018 Profit for 2019 Other comprehensive loss Legal reserve appropriated Special reserve appropriated Other comprehensive income Legal reserve appropriated Special reserve appropriated Balance at January 1, 2018 Retrospective application and retrospective restatement Balance at January 1 after adjustments Balance at January 1, 2019 Total comprehensive income Total Appropriation and distribution of earnings Purchase of treasury shares Issuance of employee stock options shares sold to employees Treasury Balance at December 31, 2018 comprehensive income Total Appropriation and distribution of earnings Purchase of treasury shares Issuance of employee stock options shares sold to employees Treasury Balance at December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2019 Year TAIWAN LAND DEVELOPMENT CORPORATION TAIWAN OF CHANGES IN EQUITY STATEMENTS ONLY COMPANY PARENT AND 2018 YEARS ENDED DECEMBER 31, 2019 dollars) Taiwan (Expressed in thousands of New The accompanying notes are an integral part of these parent company only financial statements.

100 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

TAIWAN LAND DEVELOPMENT CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars)

Year ended December 31 Notes 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax $ 266,547 $ 377,842 Adjustments Adjustments to reconcile profit (loss) Unrealised sales revenue 6,166 - Unrealised other income 12,519 - Depreciation 6(6)(25) 9,954 9,145 Depreciation of right-of-use assets 6(7)(25) 26,749 -

Gain on lease modifications 6(23) ( 106) - Amortisation on other non-current assets 6(25) 14,973 15,136 Interest expense 6(24) 118,061 120,769 Interest income 6(22) ( 45,525) ( 46,177) Expect credit impairment gain 6(3) ( 10,933) -

Share of profit of investments accounted for using the equity method 6(5) ( 12,069) ( 239,793) Loss on disposal of investments accounted for using equity method 6(5)(23) - 340 Loss (gain) on disposal of property, plant and equipment 6(23) 4,538 ( 418)

Gains on financial assets at fair value through profit or loss 6(23) ( 9,600) ( 3,071) Loss on disposal of investment properties 6(8)(23) 9,832 11,660

Adjustments of fair value of investment properties 6(8)(23) ( 625,110) ( 559,473) Compensation cost of share-based payments 6(17) 7,247 202 Changes in operating assets and liabilities Changes in operating assets Accounts receivable, net ( 1,020) 106 Accounts receivable - related parties 316 ( 316) Other receivables, net ( 193,580) ( 277,341) Other receivables - related parties 4,745 ( 31) Inventories ( 80,808) ( 450,328) Prepayments 23,724 ( 13,113) Changes in operating liabilities Notes payable 8,264 ( 8,820) Accounts payable ( 209) ( 818) Accounts payable - related parties ( 58,029) ( 268) Other payables 129,398 79,974 Other payables - related parties 3,556 ( 30,956) Other current liabilities ( 197,966) 216,880

Cash outﬂow generated from operations ( 588,366) ( 798,869) Interest received 525 1,184 Interest paid 292,631 ( 281,723) Income tax paid ( 26,200) ( 16,181)

Net cash ﬂows used in operating activities ( 906,672) ( 1,095,589)

(Continued)

101 Year ended December 31 Notes 2019 2018

CASH FLOWS FROM INVESTING ACTIVITIES

Increase in other receivables - related parties ( 45,000) ( 45,297)

Decrease in other current assets 99,475 74,004

Proceeds from disposal of investments accounted for using equity method - 5,850

Acquisition of property, plant and equipment 6(6) ( 1,246) ( 9,956)

Proceeds from disposal of property, plant and equipment 12,877 14,481

Acquisition of investment properties 6(29) ( 73,080) ( 477,615)

Proceeds from disposal of investment properties 818,513 28,008

(Increase) decrease in other non-current assets ( 122,105) 2,477

Increase in refundable deposits - ( 35,252)

Decrease in refundable deposits 610 720

Capitalisation of interest paid ( 73,107) ( 69,401)

Net cash ﬂows from (used in) investing activities 616,937 ( 511,981)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from short-term borrowings 1,782,000 1,271,400

Repayment of short-term borrowings ( 1,302,000) ( 1,317,400)

(Decrease) increase in short-term notes and bills payable ( 4,041) 47,122

Increase in other payables - related parties 138,000 62,000

Proceeds from long-term borrowings 869,300 1,240,376

Repayment of long-term borrowings ( 1,945,003) ( 711,406)

Proceeds from issuance of bonds 6(14) - 200,000

Repayments of bonds - ( 198,300)

Decrease in guarantee deposits received ( 1,986) ( 2,183)

Repayment of lease principal ( 25,723) -

Stock repurchase 6(18) ( 221,354) ( 324,655)

Treasury shares sold to employees 6(18) 363,880 348,084

Net cash ﬂows (used in) from financing activities ( 346,927) 615,038

Net decrease in cash and cash equivalents ( 636,662) ( 992,532)

Cash and cash equivalents at beginning of year 727,207 1,719,739

Cash and cash equivalents at end of year $ 90,545 $ 727,207

The accompanying notes are an integral part of these parent company only financial statements.

102 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

TAIWAN LAND DEVELOPMENT CORPORATION NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated) 1. HISTORY AND ORGANIZATION Taiwan Land Development Corporation (the “Company”) was established on June 30, 1964 as a government- operated company and the principal business was land development. In July 1972, the Company was renamed as “Taiwan Trust and Development Corporation” and its principal business became financial services and land development. The Company became a listed company in January 1999 after privatization. To comply with the government’s “Second Financial Reformation Policy” and the rules of Trust Enterprise Act, the Company sold its trust department through a public bidding in August 2005. Consequently, the Company became a professional land development company from a financial institution with the approval of the Financial Supervisory Commission on September 13, 2005. The stockholders subsequently resolved to change the company name back to its original name “Taiwan Land Development Corporation” on December 14, 2005 with the principal business of land development and urban renewal development. The Company changed its type of industry in the Taiwan Stock Exchange to Building Material and Construction after March 2006. 2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE PARENT COMPANY ONLY FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION These parent company only financial statements were authorized for issuance by the Board of Directors on March 31, 2020. 3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS (1) Eﬀect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

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

Eﬀective date by New Standards, Interpretations and Amendments International Accounting Standards Board

Amendments to IFRS 9, ‘Prepayment features with negative compensation’ January 1, 2019

IFRS 16, ‘Leases’ January 1, 2019

Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ January 1, 2019

Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’ January 1, 2019

IFRIC 23, ‘Uncertainty over income tax treatments’ January 1, 2019

Annual improvements to IFRSs 2015-2017 cycle January 1, 2019

Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment. IFRS 16, ‘Leases’

A. IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases diﬀerently. IFRS 16 only requires enhanced disclosures to be provided by lessors. B. The Company has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” eﬀective in 2019 as endorsed by the FSC. Accordingly, the Company increased ‘right-of-use asset’ and ‘lease liability’ by $103,070 with respect to the lease contracts of lessees on January 1, 2019. C. The Company has used a single discount rate to a portfolio of leases with reasonably similar characteristics, which is permitted by the standard at the date of initial application of IFRS 16.

103 D. The Company calculated the present value of lease liabilities by using theweighted average incremental borrowing interest rate ranging from 2.94% to 3.13%. (2) Eﬀect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Company

New standards, interpretations and amendments endorsed by the FSC eﬀective from 2018 are as follows:

Eﬀective date by New Standards, Interpretations and Amendments International Accounting Standards Board

Amendments to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ January 1, 2020

Amendments to IFRS 3, ‘Definition of a business’ January 1, 2020

Amendments to IFRS 9, IAS 39 and IFRS7, ‘Interest rate benchmark reform’ January 1, 2020

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment. (3) IFRSs issued by IASB but not yet endorsed by the FSC New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

Eﬀective date by New Standards, Interpretations and Amendments International Accounting Standards Board

Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its To be determined by International Accounting associate or joint venture’ Standards Board

IFRS 17, ‘Insurance contracts’ January 1, 2021

Amendments to IAS 1, ‘Classification of liabilities as current or noncurrent’ January 1, 2022

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these parent company only financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. (1) Compliance statement The parent company onlyfinancial statements of the Company have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”. (2) Basis of preparation

A. Except for the following items, the parent company only financial statements have been prepared under the historical cost convention: (a) Financial assets (including derivative instruments) at fair value through profit or loss. (b) Investment property is subsequently measured at fair value. B. The preparation of financial statements in compliance with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the parent company onlyfinancial statements are disclosed in Note 5. (3) Classification of current and non-current items The Company classifies assets and liabilities relating to the construction department as current and non-current by its operating cycle (which is normally longer than one year). The following are the classification criteria for other departments:

104 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets: (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle; (b) Assets held mainly for trading purposes; (c) Assets that are expected to be realised within twelve months from the balance sheet date; (d) Cash, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay oﬀ liabilities more than twelve months after the balance sheet date. B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities: (a) Liabilities that are expected to be settled within the normal operating cycle; (b) Liabilities arising mainly from trading activities; (c) Liabilities that are to be settled within twelve months from the balance sheet date; (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not aﬀect its classification. (4) Cash equivalents Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (5) Financial assets at fair value through profit or loss A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost. B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting. C. At initial recognition, the Company measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss. (6) Accounts and notes receivable

A. Accounts and notes receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services. B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the eﬀect of discounting is immaterial. (7) Consigned land development business

A. The government organizations consign land development business to the Company, and the Company is also in charge of marketing the development in some cases. B. During the consignment period, the Company, as a consignee, pays on behalf of consignors for compensation fees of land collection, construction costs, supervision costs and inspection costs, etc. Consignors compute interest payable on cost paid by the Company. When conducting consigned land development business, including industrial parks, land restructuring and land repurchase, costs are recognised pursuant to the agreements in each consignment contract and contracts with contractors. When the proceeds from sale of land exceed the cost, in accordance with Article 47 ofAct for Industrial Innovation, developing organizations can make an agreement on receiving certain portion of profit with the commission organizations. In the case of industrial parks development, the Company recognises service income based on sales rate and progress of construction, when meeting all the following criteria: (a) Costs attributed to the contract can be reasonably confirmed. (b) Except for the collectible costs, other contract costs can be reasonably estimated.

105 (c) The collectibility of service income can be reasonably confirmed. C. Development costs are debited to the account “Land Development Receivables”, and receipts from buyers are credited to the account “Other current liabilities –deposit for sale of industrial park received in advance”, which are then oﬀset with land development receivables when buyers settle the last payment. (8) Impairment of financial assets For financial assets at amortised cost, at each reporting date, the Companyrecognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Companyrecognises the impairment provision for lifetime ECLs. (9) Derecognition of financial assets The Company derecognises a financial asset when the contractual rights to receive the cash ﬂows from the financial asset expire. (10) Operating leases (lessor)

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term. (11) Inventories

A. Except for land development agency, the Company’s inventories are land for construction, construction in progress and land and buildings for sale. B. Development costs are stated at cost, and qualified interest costs incurred during construction are capitalised. Inventories are transferred to construction costs on ratio-of-area method or ratio of selling price method consistently. Inventories are transferred to property for self-use when they are for self-use. When the purpose of use is changed and the inventories are then leased to others under operating leases, inventories are transferred to investment property. C. Buildings and land held for sale, construction in progress and land held for construction site are evaluated at the lower of cost or net realisable value, and the individual item approach is used in the comparison of cost and net realisable value. D. Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted- average method. The item by item approach is used in applying the lower of cost and net realisable value. (12) Investments accounted for using equity method/subsidiaries

A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to aﬀect those returns through its power over the entity. B. Unrealised profit (loss) that occurred from the transactions between the Company and subsidiarieshave been offset. The accounting policies of the subsidiaries have been adjusted to be consistentwith the Company’s accounting policies. C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognised in profitor loss, and its share of post-acquisition movements in other comprehensive income is recognisedin other comprehensive income. When the Company’s share of losses in a subsidiary equals orexceeds its interest in the subsidiary, the Company continues to recognise losses proportionate toits ownership. D. If changes in shareholdings in subsidiaries do not result in loss of control (transaction withnon-controlling interest), transactions shall be considered as equity transactions, which aretransactions between owners. Difference of adjustment of non-controlling interest and fair valueof consideration paid or received is recognised in equity.

106 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

E. When the Company loses control of a subsidiary, the Company remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any diﬀerence between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Company loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of. F. Pursuant to the “Rules Governing the Preparation of Financial Statements by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in theconsolidated financial statements. Owners’ equity in the parent company only financial statementsshall equal to equity attributable to owners of the parent in the consolidated financial statements. (13) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will ﬂow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total costmust be depreciated separately. D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives diﬀer from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings 55 years

Transportation equipment 5~15 years

Utility equipment 3~15 years

Leasehold assets 3 years

Other equipment 2~10 years

Leasehold improvements 5 years

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

Eﬀective 2019 A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company. For short-term leases or leases of low-value assets, lease payments are recognised as an expense on a straight-line basis over the lease term. B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using incremental borrowing interest rate. Lease payments are comprised of fixed payments, less any lease incentives receivable. The Company subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

107 C. At the commencement date, the right-of-use asset is stated at cost comprising the amount of the initial measurement of lease liability, The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset. (15) Leased assets/ operating leases (lessee) Prior to 2019

A. Based on the terms of a lease contract, a lease is classified as a finance lease if the Company assumes substantially all the risks and rewards incidental to ownership of the leased asset. (a) A finance lease is recognised as an asset and a liability at the lease’s commencement at the lower of the fair value of the leased asset or the present value of the minimum lease payments. (b) The minimum lease payments are apportioned between the finance charges and the reduction of the outstanding liability. The finance charges are allocated to each period over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. (c) Property, plant and equipment held under finance leases are depreciated over their estimated useful lives. If there is no reasonable certainty that the Company will obtain ownership at the end of the lease, the asset shall be depreciated over the shorter of the lease term and its useful life. B. Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term. (16) Investment property

A. Investment property is property held to earn rent or increase value or for both (including property under construction for the purpose). Investment property also includes land whose purpose of use has not been decided and is thus considered as capital appreciation. Investment property is transferred to property for self-use when it is for self-use. Investment property is transferred to inventory when it is held-for-sale. B. An investment property is stated initially at its cost and measured subsequently using the fair value model. A gain or loss arising from a change in the fair value of investment property is recognised in profit or loss. Pursuant to Jin-Guan-Zheng-Fa-Zi Letter No. 1030006415, the Company sets aside special reserve in an amount equivalent to additions in net fair value recorded during the period from profit or loss during the period and unappropriated retained earnings from prior periods if the investment property is measured subsequently at fair value. The above earnings appropriation is then reversed in an amount equivalent to the deductions and disposals if the accumulated net fair value of the investment property recorded is decreased or there is a disposal. (17) Impairment of non-financial assets The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised. (18) Borrowings

A. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any diﬀerence between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the eﬀective interest method. B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortized over the period of the facility to which it relates.

108 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

(19) Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities. B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the eﬀect of discounting is immaterial. (20) Financial liabilities and equity instruments

A. Ordinary corporate bonds Ordinary corporate bonds issued by the Company are initially recognised at fair value, net of transaction costs incurred. Ordinary corporate bonds are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is accounted for as the premium or discount on bonds payable and presented as an addition to or deduction from bonds payable, which is amortised in profit or loss as an adjustment to the‘finance costs’ over the period of bond circulation using the effective interest method. B. Convertible corporate bonds payable Convertible corporate bonds issued by the Company contain conversion options (that is, the bondholders have the right to convert the bonds into the Company’s common shares by exchanging a fixed amount of cash for a fixed number of common shares) and call options. The Company classifies the bonds payable and derivative features embedded in convertible corporate bonds on initial recognition as a financial asset or an equity instrument (‘capital surplus—stock warrants’) in accordance with the substance of the contractual arrangement and the definitions of a financial asset and an equity instrument. Convertible corporate bonds are accounted for as follows: (a) Call options embedded in convertible corporate bonds are recognised initially at net fair value as ‘financial assets at fair value through profit or loss’. They are subsequently remeasured and stated at fair value on each balance sheet date; the gain or loss is recognised as ‘gain or loss on valuation of financial assets at fair value through profit or loss’. (b) Bonds payable of convertible corporate bonds is initially recognised at fair value and subsequently stated at amortised cost. Any difference between the proceeds and the redemption value is accounted for as the premium or discount on bonds payable and presented as an addition to or deduction from bonds payable, which is amortised in profit or loss as an adjustment to the ‘finance costs’ over the period of bond circulation using the effective interest method. (c) Conversion options embedded in convertible corporate bonds issued by the Company, which meet the definition of an equity instrument, are initially recognised in ‘capital surplus—stock warrants’ at the residual amount of total issue price less amounts of ‘financial assets at fair value through profit or loss’ and ‘bonds payable—net’ as stated above. Conversion options are not subsequently remeasured. (21) Employee benefits A. Short-term employee benefits Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service. B. Pensions For defined contribution plan, the contributions are recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

109 C. Employees’ compensation, directors’ and supervisors’ remuneration Employees’ compensation, directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal obligation or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is distributed by shares, the Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution. (22) Employee share-based payment For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reﬂect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. And ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest. (23) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity. B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings. C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. D. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed. (24) Treasury shares

Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the diﬀerence between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax eﬀects, is included in equity attributable to the Company’s equity holders. (25) Dividends

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

110 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

(26) Revenue recognition

A. Sales of services The Company serves as an agent of land development on behalf of government organizations and is responsible to sell partial development projects. Sales of services are recognised at the percentage of completion of transactions. Please refer to Note 4(7) for related revenue recognised. B. Construction revenues (a) The Company develops and sells residential properties. Revenue is recognised when control overthe property has been transferred to the customer. The properties have generally no alternativeuse for the Company due to contractual restrictions. However, an enforceable right to paymentdoes not arise until legal title has passed to the customer. Therefore, revenue is recognised ata point in time when the legal title has passed to the customer. (b) The revenue is measured at an agreed upon amount under the contract. The considerationis due when legal title has been transferred. While deferred payment terms may be agreed inrare circumstances, the deferral never exceeds twelve months. The transaction price istherefore not adjusted because the contract does not include a significant financingcomponent. C. Catering income (a) The Company provides catering services. Revenue is recognised when the services are rendered. (b) Revenue is recognised when the service is provided as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. D. Rental revenue It is recognised as incomeon a straight-line basis during leasing period. 5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY The preparation of these parent company only financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below: Measurement of investment property As investment property is measured at fair value, the Company must determine the net fair value of investment property such as land and buildings on balance sheet date using experts’ judgements and estimates. The Company must adjust costs to fair value based on the valuation reports by experts. Such assessment of investment property is principally based on the demand for the products within the specified period in the future, trading trends of buildings and experts’ judgements and estimates, and may inﬂuence the measurement of fair value. Therefore, there might be material changes to the evaluation. As of December 31, 2019, the Company has recognised investment property of $8,532,036. 6. DETAILS OF SIGNIFICANTACCOUNTS (1) Cash and cash equivalents

December 31, 2019 December 31, 2018

Cash on hand and revolving funds $ 1,700 $ 1,550

Checking accounts and demand deposits 88,845 305,657

Cash equivalents-checking deposits in Bank of Taiwan - 420,000

$ 90,545 $ 727,207

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

111 B. The Company has appropriately reclassified the cash provided for collateral, and the information on pledged assets is provided in Note 8. (2) Financial assets at fair value through profit or loss

Items December 31, 2018

Non-current items:

Financial assets mandatorily measured at fair value through $ 1,526,700 $ 1,517,100 profit or loss - preference share A. The Company has no financial assets at fair value through profit or loss pledged to others. B. On May 5, 2016, the Company purchased 150,000,000 cumulative redeemable preference shares of Taiwan Innovation Development Corporation with a par value of NT$10. On May 5, 2021, these shares will be forcibly redeemed at the par value. Each year, the Company accrues 3% as dividend. C. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(3). (3) Other receivables

December 31, 2019 December 31, 2018

Land development receivables $ 6,180,860 $ 5,942,282

Other receivables 68,297 68,294

Less: Allowance for bad debts ( 5,240) ( 16,173)

$ 6,243,917 $ 5,994,403

A. The details on land development receivables were as follows: Accumulated service income at December 31, 2019 December Consignors 31, 2019

$ 4,247,720 $ 896,864 Hualien County Kuang Hua Lohas Creative Park Government 1,010,638 1,430,285 Kaohsiung City Kaohsiung Kangshan Benzhou Industrial Park Government Export Taichung Port Warehouse Park 17,241 176,632 Processing Zone, MOEA Taichung City 1st Precision Machinery Innovation 141,197 2,863,675 Taichung City Technology Park Government Taichung City 2nd Precision Machinery Innovation - 976,902 Taichung City Technology Park Government 634,795 17,678 Taichung City Taichung City, Feng Chou High-Tech Industrial Park Government 39,385 4,461 Taichung City Taichung City, Wen-Shan Industrial Park Government 89,884 7,388 Taichung City Taichung Aviation Industrial Park and Astronavigation Government ( 5,240) - Taichung City Less: Allowance for bad debts Government $ 6,175,620 $ 6,373,885

112 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

Accumulated service income at December 31, 2018 December Consignors 31, 2018 Hualien County Kuang Hua Lohas Creative Park $ 4,089,942 $ 860,680 Government Kaohsiung City Kaohsiung Kangshan Benzhou Industrial Park 973,036 1,430,283 Government Export Processing 17,241 176,632 Taichung Port Warehouse Park Zone, MOEA Taichung City Taichung City 1st Precision Machinery Innovation 133,937 2,863,632 Technology Park Government Taichung City Taichung City 2nd Precision Machinery Innovation - 973,398 Technology Park Government Taichung City Taichung City, Feng Chou High-Tech Industrial Park 598,548 17,678 Government Taichung City Taichung City, Wen-Shan Industrial Park 39,694 4,593 Government Taichung City Taichung Aviation Industrial Park and Astronavigation 89,884 7,388 Government ( 16,173) - Taichung City Less: Allowance for bad debts Government $ 5,926,109 $ 6,334,284

B.The movements on land development receivables for the year ended December 31, 2019 are as follows: Beginning Ending Items balances Additions Collections balances

Kuang Hua Lohas Creative Park $ 4,089,942 $ 157,778 $ - $ 4,247,720

Kaohsiung Kangshan Benzhou Industrial Park 973,036 37,602 - 1,010,638

Taichung Port Warehouse Park 1,068 10,933 - 12,001

Taichung City 1st Precision Machinery 133,937 7,260 - 141,197 Innovation Technology Park Taichung City 2nd Precision Machinery - 38,713 ( 38,713) - Innovation Technology Park Taichung City, Feng Chou High -Tech 598,548 36,247 - 634,795 Industrial Park Others 129,578 - ( 309) 129,269

$ 5,926,109 $ 288,533 ($ 39,022) $ 6,175,620

The movements on land development receivables for the year ended December 31, 2018 are as follows: Beginning Ending Items balances Additions Collections balances

Kuang Hua Lohas Creative Park $ 3,938,337 $ 151,605 $ - $ 4,089,942

Kaohsiung Kangshan Benzhou Industrial Park 936,950 36,086 - 973,036

Taichung Port Warehouse Park 1,259 - ( 191) 1,068

Taichung City 1st Precision Machinery 118,776 15,161 - 133,937 Innovation Technology Park Taichung City 2nd Precision Machinery - 8,529 ( 8,529) - Innovation Technology Park Taichung City, Feng Chou High-Tech Industrial 485,228 113,320 - 598,548 Park Others 129,578 - - 129,578

$ 5,610,128 $ 324,701 ($ 8,720) $ 5,926,109

C. For the years ended December 31, 2019 and 2018, interests paid on behalf of consignors recognised as deduction of interest expense were $166,786 and $158,175, respectively.

113 D. The Company had launched the construction and paid the related payment in advance based on the agreement. However, the owner, Taichung Port Warehouse Park, refused to pay the related amounts due. Therefore, the Company filed a lawsuit for the collection of the aforementioned receivables in 2016. The Kaohsiung District Court ruled that the owners shall pay $10,348 to the Company in December 2019. Additionally, the 5% interest will also be collected, which is calculated on the second day the indictment document was delivered, until the receivables are collected. However, both parties are not satisfied with the court decision and they have filed an appeal. Since the Company assessed that the likelihood of the payment to be recovered is remote, the Company recognised an impairment loss on land development receivables for the Taichung Port Warehouse Park amounting to $5,240. E. In January 2016, the Company paid the profit of Taichung Industry Park Technology Building development plan in line with the letter of Taichung City Government which was recognised as other accounts receivables by $66,332. F. The reasons for the Company to reserve allowance for uncollectible accounts are as follows: (a) The debtors of the land development receivables are government organizations, and the possibility of non-payment is remote. (b) According to the development contracts, proceeds from the sale and rental of the land are to be used first to repay the land development receivables. In addition, the Company can also claim for any related subsidies oﬀered by the government to repay the development costs. Therefore, there is no significant doubt or uncertainty on the collectability of the land development receivables. (c) The government is the subject of the development and also the owner of the land. Hence, the collectability of the development costs is not associated with the market values of the land. The inspected costs and prices are greater than costs already incurred and the land was sold on inspected prices and the proceeds were all collected. When settling the industrial park revenues and costs, in revenue-above- cost cases, the diﬀerence should be handed over to the industrial parks development and management fund based on the “Statute for Industrial Innovation” Article 47. Otherwise, the Company would be compensated by the fund according to the “Act for Industrial Innovation.” G. Please refer to Note 8 for the details of pledged land development receivables as of December 31, 2019 and 2018. (4) Inventories

A. The details of the Company’s inventories are as follows:

December 31, 2019 December 31, 2018

Land $ 405,764 $ 320,958

Buildings 181,995 185,460

Construction in progress 524,023 524,023

Merchandise inventory 24,135 33,007

Restaurant supplies 155 329

1,136,072 1,063,777

Less: Allowance for price decline ( 38,742) ( 47,255)

$ 1,097,330 $ 1,016,522

As of December 31, 2019 and 2018, the valuation allowance for land and buildings available for sale were $38,742 and $47,255, respectively.

114 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

B. Related (gain) loss on inventories:

2019 2018

Land cost $ 23,870 $ 5,552

Building cost 6,032 397

Food service costs 4,201 5,365

Cost of goods sold 10,175 -

Other operating costs 78 24

Loss on decline in market value ( 8,513) 11,543

Gain on reversal of decline in market value $ 35,843 $ 22,881

Due to the change in real estate market recovery, the Company recognised gain on reversal of land and buildings held for sale and valuation loss in the amount of $8,513 and $11,543 for the years ended December 31, 2019 and 2018, respectively, which were in accordance with appraisal reports issued by independent appraisers. C. No interest expense was capitalized for the years ended December 31, 2019 and 2018. D. Please refer to Note 8 for the details of pledged inventories as of December 31, 2019 and 2018. (5) Investments accounted for using equity method

2019 2018

At January 1 $ 12,036,409 $ 11,400,910

Eﬀect of IFRS 9 adoption - 403,559

Disposal of investments accounted for using equity method - ( 6,190)

Share of profit or loss of investments accounted for using the 12,069 239,793 equity method Treasury stock transferred to subsidiary’s employees 1,928 218

Revaluation increment of subsidiaries 600,902

Unrealised gain from downstream sales ( 122,004) -

Changes in other equity items - ( 1,881)

At December 31 $ 12,529,304 $ 12,036,409

Subsidiaries:

December 31, 2019 December 31, 2018

Taiwan Innovation Development Corporation $ 12,528,187 $ 12,035,291

Hsinchu Hill Garden Corporation 503 503

Taiwan Midtown Development Corporation 614 615

$ 12,529,304 $ 12,036,409

115 A. The summarized financial information of the subsidiary that is material to the Company is as follows: Balance sheet

Taiwan Innovation Development Corporation

December 31, 2019 December 31, 2018

Current assets $ 1,073,331 $ 1,094,915

Non-current assets 16,427,874 14,974,409

Current liabilities ( 1,350,723) ( 727,038)

Non-current liabilities ( 3,081,281) ( 2,916,171)

Total net assets $ 13,069,201 $ 12,426,115

Share in subsidiary's net assets $ 13,069,201 $ 12,426,115

Carrying amount of the subsidiary $ 12,528,187 $ 12,035,291

Statement of comprehensive income

Taiwan Innovation Development Corporation

December 31, 2019 December 31, 2018

Revenue $ 307,614 $ 576,434

Profit for the year from continuing operations 40,256 650,335

Other comprehensive loss, net of tax 600,902 ( 1,881)

Total comprehensive income $ 641,158 $ 648,454

Dividends received from subsidiary $ 585,302 $ 12,334

B. For the related information about subsidiaries, please refer to Note 4(3) of consolidated financial statements in 2019. C. In 2019, the Company’s subsidiary - Taiwan Innovation Development Corporation lease out property, plant and equipment and recognised the cost as investment property in line with the usage. Then the subsidiary recognised the difference between fair value and carrying amount as other comprehensive income by $600,902. D. The liquidation of the Company’s indirect subsidiary, Taiwan LanYang Development Corporation, was resolved by the shareholders at their meeting in April 2018. The indirect subsidiary was liquidated and deregistered as approved by the Taipei city government, resulting in gain on disposal of investment in the amount of $340 for the year ended December 31, 2018.

116 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

(6) Property, plant and equipment

Transportation Utility Other Leasehold Land Buildings equipment equipment equipment improvements Total At January 1, 2019 Cost $ 295,208 $ 196,936 $ 28,382 $ 10,093 $ 20,041 $ 28,716 $ 579,376

Accumulated - ( 32,644) ( 8,322) ( 6,942) ( 10,050) ( 27,778) ( 85,736) depreciation $ 295,208 $ 164,292 $ 20,060 $ 3,151 $ 9,991 $ 938 $ 493,640

2019

Opening net book $ 295,208 $ 164,292 $ 20,060 $ 3,151 $ 9,991 $ 938 $ 493,640 amount Additions - - - - 1,246 - 1,246

Transferred - - - - 1,524 - 1,524

Depreciation - ( 3,475) ( 2,059) ( 759) ( 2,723) ( 938) ( 9,954) charge Disposals ( 4,905) ( 2,148) ( 10,361) ( 1) - - ( 17,415)

Closing net book $ 290,303 $ 158,669 $ 7,640 $ 2,391 $ 10,038 $ - $ 469,041 amount

At December 31, 2019 Cost $ 290,303 $ 194,382 $ 13,967 $ 9,711 $ 22,809 $ 28,716 $ 559,888

Accumulated - ( 35,713) ( 6,327) ( 7,320) ( 12,771) ( 28,716) ( 90,847) depreciation $ 290,303 $ 158,669 $ 7,640 $ 2,391 $ 10,038 $ - $ 469,041

Transportation Utility Other Leasehold Land Buildings equipment equipment equipment improvements Total At January 1, 2018 Cost $ 308,895 $ 197,309 $ 27,485 $ 9,859 $ 11,389 $ 28,716 $ 583,653

Accumulated - ( 29,201) ( 5,867) ( 6,210) ( 7,988) ( 27,495) ( 76,761) depreciation $ 308,895 $ 168,108 $ 21,618 $ 3,649 $ 3,401 $ 1,221 $ 506,892

2018

Opening net book $ 308,895 $ 168,108 $ 21,618 $ 3,649 $ 3,401 $ 1,221 $ 506,892 amount Additions - - 897 293 8,766 - 9,956

Depreciation - ( 3,521) ( 2,455) ( 791) ( 2,095) ( 283) ( 9,145) charge Disposals ( 13,687) ( 295) - - ( 81) - ( 14,063)

Closing net book $ 295,208 $ 164,292 $ 20,060 $ 3,151 $ 9,991 $ 938 $ 493,640 amount

At December 31, 2018 Cost $ 295,208 $ 196,936 $ 28,382 $ 10,093 $ 20,041 $ 28,716 $ 579,376

Accumulated - ( 32,644) ( 8,322) ( 6,942) ( 10,050) ( 27,778) ( 85,736) depreciation $ 295,208 $ 164,292 $ 20,060 $ 3,151 $ 9,991 $ 938 $ 493,640

117 A. There is no capitalisation of interest on property, plant and equipment for the years ended December 31, 2019 and 2018. B. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8. (7) Leasing arrangements － lessee

Eﬀective 2019 A. The Company leases various assets including buildings and business vehicles. Rental contracts are typically made for periods of 2 to 5 years. Lease terms are negotiated on an individual basis and contain a wide range of diﬀerent terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes. B. Lease period of buildings and vehicles which belongs to short-term lease do not exceed 12 months. Short- term leases are not recognised as right-of-use assets. For details of rental expense due to the contract for the year ended December 31, 2019, please refer to Note 6(25). C. The carrying amount of right-of-use assets and the depreciation charge are as follows: Year ended December 31, December 31, 2019 2019

Carrying amount Depreciation charge

Buildings $ 70,988 $ 24,164

Transportation equipment (Business vehicles) 2,466 2,585

$ 73,454 $ 26,749

D. For the year ended December 31, 2019, the Company’s additions of right-of-use assets amounted to $1,498. E. Except for the depreciation charge, the information on profit and loss accounts relating to lease contracts is as follows:

Year ended December 31, 2019

Items aﬀecting profit or loss

Interest expense on lease liabilities $ 2,395

F. For the year ended December 31, 2019, the Company’s cash outﬂow due to lease amounted to $28,118. (8) Investment property

2019 2018

At January 1 $ 8,418,443 $ 6,887,708

Additions - from subsequent expenditures 143,309 610,930

Disposals ( 810,566) ( 39,668)

Transfers 155,740 400,000

Net gains from fair value adjustment 625,110 559,473

At December 31 $ 8,532,036 $ 8,418,443

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

2019 2018

Rental income from the lease of the investment property $ 11,103 $ 7,041

Direct operating expenses arising from the investment property that generated $ 2,794 $ 2,738 rental income during the year Direct operating expenses arising from the investment property that did not $ 3,386 $ 3,336 generate rental income during the year

118 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

B. Fair value basis of investment property The Company’s investment property is mainly located in Ji’an Township in Hualien County, Xinpu Township in Hsinchu County and Beitun Dist. in Taichung City. The investment properties are still under development and are mainly built as hotels and shopping centres for collecting rents. Rent is calculated at a fixed amount plus a certain percentage of the lessee’s sales. The related assumptions as of December 31, 2019 and 2018 are as follows: December 31, 2019

(a) The location and valuation method of the Company’s investment property are as follows:

Object Location Valuation method

Ji'an Commercial Zone 5 Ji’an Township, Hualien County Income approach

Hsinchu Xinpu Xinpu Township, Hsinchu County Land development analysis

Taichung Dakeng Beitun Dist., Taichung City Land development analysis

(b) Ji’an Commercial Zone 5 is analysed based on discounted cash flow of income approach, which is to use the object’s future discounted cash flow to analyse net profit and ending balance for each reporting period, and further estimate the price of the object using an appropriate discount rate. The object is expected to generate net cash inflow annually for the next 10 years after completion. The net cash inflow is discounted annually at an appropriate discount rate and equals the total of the present value. i. The future cash inflow of Ji’an Commercial Zone 5 is mainly hotel rental revenue and shopping centre rental revenue. Assessment of revenue is as follows:

Operating revenue Estimated rent Local or similar objects Shopping centre rental revenue (per dollar/per level ground/monthly) $1,200~$1,900 Slightly higher than the estimated rent Hotel rental revenue (per dollar/per level ground/ monthly) $820~$1,290 Approximate to the estimated rent Rent income from theatre (per dollar/per level ground/ monthly) $700~$1,200 Approximate to the estimated rent Rent income from cultural facility (per dollar/per place /monthly) $700~$1,200 Approximate to the estimated rent

ii. Future cash outflow a. Investing building cost b. Operating expenses Tax expenses, insurance expenses, management expenses, maintenance expenses, reset expenses and depreciation expenses and other necessary operating expenses. iii. Discount rates are based on the interest rate for a two-year small amount time deposit offered by the Directorate General of the Postal Remittances and Savings Bank plus 3 quarters (currently 1.845%). Risk premium is determined based on liquidity, risk, value increment and the difficulty of management. As of December 31, 2019, Ji'an Commercial Zone 5 adopted a discount rate of 4.106%. iv. As of December 31, 2019, the fair value of the investment property of Ji'an Commercial Zone 5 is based on the valuation report by Lin Chin-Sheng from Excellence International Real Estate Appraiser Firm, and the valuation date was September 30, 2019.

119 (c) Some investment property are land assets under development. Those land assets cannot be measured using the income approach and thus is measured using land development analysis, which takes into consideration legal usage, land use intensity and changes in land use efficiency arising from development and improvements, to estimate the total selling price after development or construction, and less direct costs, indirect costs, capital interest and profit rate to reach to the land development price breakdown before development or construction. The focus of the projects concerning primary investment property using land development analysis is to construct buildings with no more than 5 ﬂoors.

Hsinchu Xinpu Taichung Dakeng

Estimated total sales $ 12,355,926 $ 6,634,755

Profit margin 26% 17%

Capital interest comprehensive ratio 0.97% 2.59% Excellence International Real Estate Appraiser Firm Appraiser Firm JhuoYue Real Estate Appraiser Firm

Appraiser Lin Chin-Sheng Yang Xiang Ming

Valuation date (Note) December 30, 2019 December 23, 2018

December 31, 2018

(a) The location and valuation method of the Company’s investment property:

Object Location Valuation method

Ji'an Commercial Zone 5 Ji’an Township, Hualien County Income approach

Hsinchu Xinpu Xinpu Township, Hsinchu County Land development analysis

Taichung Dakeng Beitun Dist., Taichung City Land development analysis

Operating revenue Estimated rent Local or similar objects

Hotel rental revenue (per dollar/per room/daily) $ 5,000~$ 39,300 Slightly higher than the estimated rent Shopping centre rental revenue (per dollar/per level ground/monthly) $ 1,500 Approximate to the estimated rent

ii. Future cash outﬂow a. Operating costs Expendable expenses and direct expenses are operating costs. Hotel and shopping centre rental revenue is estimated to constitute 30% of the rental revenue and 1.5%~4% of operating items. The rental revenue is calculated at a steady state. b. Operating expenses Operating expenses are personnel expenses, administrative expenses, repairs and maintenance expenses, utility expenses, promotion expenses, cleaning expenses, aﬀorestation and taxes which are necessary for and directly related to operations. c. Substantial replacement allowance (including beginning cost of construction sales and interior design)

120 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

iii. Discount rates are based on the interest rate for a two-year small amount time deposit offered by the Directorate General of the Postal Remittances and Savings Bank plus 3 quarters (currently 1.845%). Risk premium is determined based on liquidity, risk, value increment and the difficulty of management. As of December 31, 2018, Ji'an Commercial Zone 5 adopted a discount rate of 4.614%. iv. As of December 31, 2018, the fair value of the investment property of Ji'an Commercial Zone 5 is based on the valuation report by Lin Chin-Sheng from Excellence International Real Estate Appraiser Firm, and the valuation date was December 30, 2018. (c) Some investment property are land assets under development. Those land assets cannot be measured using the income approach and thus is measured using land development analysis, which takes into consideration legal usage, land use intensity and changes in land use efficiency arising from development and improvements, to estimate the total selling price after development or construction, and less direct costs, indirect costs, capital interest and profit rate to reach to the land development price breakdown before development or construction. The focus of the projects concerning primary investment property using land development analysis is to construct buildings with no more than 5 floors.

Hsinchu Xinpu Taichung Dakeng

Estimated total sales $ 12,205,808 $ 6,105,531

Profit margin 28% 17%

Capital interest comprehensive ratio 0.96% 2.14% Excellence International Real Estate Appraiser Firm Appraiser Firm JhuoYue Real Estate Appraiser Firm

Appraiser Lin Chin-Sheng Yang Xiang Ming

Valuation date (Note) December 30, 2018 December 31, 2018

C. Amount of borrowing costs capitalized as part of investment property and the range of the interest rates for such capitalization are as follows:

2019 2018

Amount capitalised $ 73,107 $ 69,401

Interest rate 3.64%~3.79% 3.73%~3.86%

D. For the year ended December 31, 2019, the Board of Directors of the Company resolved to sell investment property to non-related party at a contract price totaling $532,869. All the proceeds was collected and the registration of transfer has been completed. E. For the year ended December 31, 2019, the Company reclssified right of superficies from long-term rent prepayment (shown as other non-current assets) to investment property in the amount of $145,569 in line with the expected usage. F. Since the change in land registration was completed in March 2018, there were transfers from other non- current assets into investment property in the amount of $400,000 during the year. The land located in 2nd subsection, Guanghua Section, Ji’an Township, Hualien County numbered 139, 140, 143, and 144, for a total contract price of $765,110 were purchased from the subsidiary, Taiwan Innovation Development Corporation, under the resolution of the Board of Directors on October 30, 2017. G. Please refer to Note 7 for the details of property transactions with related parties. H. Information about the investment property that was pledged to others as collateral is provided in Note 8.

121 (9) Other non-current assets

December 31, 2019 December 31, 2018

Receivables for planning and investigation $ 21,201 $ 21,201

Long-term receivables for selling land 417,176 417,176

Payment for land in Hsinchu County 433,712 433,712

Payment for land in Nantou County 31,278 31,278

Long-term prepaid expenses 30,600 54,772

Refundable deposits 40,443 41,053

Long-term prepaid rents - 145,569

Prepayment for land purchases 128,562 -

Others 64,597 72,025

$ 1,167,569 $ 1,216,786

A. The receivables for planning and investigation are fees prepaid by the Company on behalf of the Industrial Development Bureau, Ministry of Economic Affairs (MOEA) for the project “Preparation of pre-project expenses for Fenglin Industrial Park in Hualien County and Chihshang Industrial Park in Taitung County”. In accordance with the resolution of MOEA, as the Company finishes settling costs, MOEA will prepare a budget for reimbursement. B. The Company sold the research building of South Environmental Protection Technology Park in Kangshan Industrial Park to Kaohsiung City Government in 2004. According to the contract, Kaohsiung City Government should pay by installment for 30 years, and the Company recognised discounted receivable and interest expense accordingly. After renegotiation in 2008, the Kaohsiung City Government agreed that the Company take the uncollected receivables plus interest as uncollected land development receivables in accordance with the land development contract of Kangshan Industrial Park. In accordance with Jing- Gong-Zi Letter No.10135463200 issued by Kaohsiung City Government on December 6, 2012. Furthermore, the settlement of Kangshan Industrial Park development business was accepted by the Kaohsiung City Government in accordance with the development contract and the “Act for Industrial Innovation”. C. The Company acquired land nos. 045-1, 048~051, 105, 106, 236, 237~240, 259, 260, 262, 265, 267, 268, 279~284, 287, 436, 442, 444, 454~459 and 466 in Hsinpu Town, Hsinchu County for development. This acquisition was conducted using the Company Chairman’s name, as agricultural land is not allowed to be acquired by any corporate entity based on the Agricultural Development Act. The land is pledged to the Company and the Chairman also signed the letter of commitment to secure the Company’s ownership. D. The Company acquired land nos. 667 in Caotun Township, Nantou County for development. This acquisition was conducted using the Company Chairman’s name, as agricultural land is not allowed to be acquired by any corporate entity based on the Agricultural Development Act. The land is pledged to the Company and the Chairman also signed the letter of commitment to secure the Company’s ownership. E. The Company has signed contracts of superficies on nos. 744-47,744-48, and 744-49 in Xintou, Jinhu Township, Jimen County with Northern Region Branch, National Property Administration, MOF for a duration of 50 years in December 2012 and July 2013, respectively. The Company has paid royalty of $145,569 in full when the contract was signed. For the year ended December 31, 2019, the Company reclassified investment property in line with the expected usage. Please refer to Note 6(8) E. F. Refundable deposits of $31,910 were held in public lodgment oﬃce for the litigation purpose. Please refer to Note 9(1)A for details. (10) Short-term borrowings

December 31, 2019 December 31, 2018

Bank secured borrowings $ 1,664,000 $ 1,184,000

Interest rate range 2.92%~3.68% 2.92%~3.39%

Please refer to Note 8 for the details of pledged assets.

122 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

(11) Notes and bills payable

December 31, 2019 December 31, 2018

Commercial paper payable –Taiwan Cooperative Bills $ 200,000 $ 200,000

Commercial paper payable –International Bills 30,000 34,000

230,000 234,000

Less: Discount on commercial paper payable ( 1,089) ( 1,048)

$ 228,911 $ 232,952

Interest rate 2.738%~3.368% 2.738%~2.968%

Please refer to Note 8 for the details of pledged assets. (12) Other payables

December 31, 2019 December 31, 2018

Rent payable for land development $ 59,994 $ 59,980

Accrual for industrial zone construction 803,124 841,942

Remaining funds for industrial zone 523,260 523,260

Accrued expenses 62,750 86,380

Payables for industrial zone construction 25,131 10,233

Other payables - other 8,445 4,696

$ 1,482,704 $ 1,526,491

(13) Other current liabilities

December 31, 2018 December 31, 2017

Deposit for sale of industrial park received in advance $ 9,240 $ 9,240

Sale of real estate in advance - 207,365

Long-term liabilities-current portion 2,557,957 3,896,956

Bonds payable expiring within one year 800,000 -

Others 259,886 250,486

$ 3,627,083 $ 4,364,047

(14) Corporate bonds payable

December 31, 2019 December 31, 2018

Ordinary corporate bonds

1st issuance in 2015 $ 800,000 $ 800,000

1st issuance in 2016 1,500,000 1,500,000

2nd issuance in 2016 800,000 800,000

3rd issuance in 2016 530,000 530,000

1st issuance in 2018 200,000 200,000

3,830,000 3,830,000

Less: Discount on bonds payable ( 2,813) ( 5,062)

Less: Bonds payable expiring within one year ( 800,000) -

$ 3,027,187 $ 3,824,938

123 A. The Company issued $200,000, 0.75%, 1st domestic secured ordinary corporate bonds in 2018, as approved by the regulatory authority. The bonds mature 3 years from the issue date (August 3, 2018 ~ August 3, 2021) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on August 3, 2018. B. In 2016, the Company issued the first domestic secured ordinary corporate bonds for $1,500,000 in total, as approved by the competent authority. In this issuance, bond A was issued for $1,000,000 with 1.2% coupon rate and bond B was issued for $500,000 with 1.4% coupon rate covering 5 years. The circulation period is from April 29, 2016 to April 29, 2021. The bonds will be redeemed in cash at face value at the maturity date. On April 29, 2016, the bonds were listed on the Taipei Exchange. C. The Company issued $800,000, 1.48%, 2nd domestic secured ordinary corporate bonds in 2016, as approved by the regulatory authority. The bonds mature 5 years from the issue date (November 15, 2016 ~ November 15, 2021) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on November 15, 2016. D. The Company issued $530,000, 1.5%, 3rd domestic secured ordinary corporate bonds in 2016, as approved by the regulatory authority. The bonds mature 5 years from the issue date (December 5, 2016 ~ December 5, 2021) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on December 5, 2016. E. The Company issued $800,000, 1.55%, 1st domestic secured ordinary corporate bonds in 2015, as approved by the regulatory authority. The bonds mature 5 years from the issue date (June 9, 2015 ~ June 9, 2020) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on June 9, 2015. F. The issuance of domestic convertible bonds by the Company. (a) The terms of the 1st domestic secured convertible bonds issued by the Company are as follows

i. The Company issued $200,000, 0%, 1st domestic secured convertible corporate bonds, as approved by the regulatory authority. The bonds mature 3 years from the issue date (August 18, 2015 ~ August 18, 2018) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on August 18, 2015. ii. The bondholders have the right to ask for conversion of the bonds into common shares of Company during the period from the date after one month of the bonds issue to 10 days before the maturity date, except the stop transfer period as specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares. iii. The conversion price was set effective on August 10, 2015. The calculation is based on 110% of the basic price, which is one of the arithmetic mean of the closing prices at 1, 3 and 5 working days prior to the effective date. Ex-rights or ex-dividends price shall be calculated if the ex-rights or ex-dividends date is prior to the conversion date. Conversion prices shall be adjusted in accordance with the formula if the shares go ex-rights or ex-dividends prior to the issuance date. In accordance with the aforementioned approach, the conversion price was NT$12.05 per share at issuance. iv. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will be reset based on the pricing model in the terms of the bonds on each effective date regulated by the terms. If the reset conversion price is higher than the conversion price before the reset, the conversion price will not be adjusted. v. The Company may repurchase all the bonds outstanding in cash at the bonds’ face value at any time after the following events occur: (i) the closing price of Company common shares is above the then conversion price by 30% for 30 consecutive trading days during the period from the date after one month of the bonds issue to 40 days before the maturity date, or (ii) the outstanding balance of the bonds is less than 10% of total initial issue amount during the period from the date after one month of the bonds issue to 40 days before the maturity date. vi. Under the terms of the bonds, all bonds redeemed (including bonds repurchased from the Taipei Exchange), matured and converted are retired and not to be re-issued; all rights and obligations attached to the bonds are also extinguished.

124 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

(b) Regarding the issuance of convertible bonds, the equity conversion options amounting to $4,380 were separated from the liability component and were recognised in ‘capital surplus—stock warrants’ in accordance with IAS 32. The call options embedded in bonds payable were separated from their host contracts and were recognised in ‘financial assets or liabilities at fair value through profit or loss’ in net amount in accordance with IAS 39 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts. The eﬀective interest rate of the bonds payable after such separation was 2.67%. (c) Aforementioned convertible bonds were redeemed in August 2018. As of the date of redemption, the convertible bonds amounted to $1,700, which had been converted to common shares equivalent to 168 thousand shares. (15) Long-term borrowings

December 31, 2019 December 31, 2018

Bank unsecured borrowings $ 228,000 $ 264,000

Bank secured borrowings 4,223,896 5,263,599

Less: Current portion ( 2,557,957) ( 3,896,956)

$ 1,893,939 $ 1,630,643

Interest rate range 2.5%~3.46% 2.5%~3.46%

Maturity period 105.08.18~112.01.30 105.05.22~112.01.30

A. To develop business and improve the financial structure, the Company signed a long-term syndicated loan contract to obtain a credit line of $2,694,000 with Mega Bank and other 16 banks on August 10, 2016, including credit line A for $2,246,257 and credit line B for $447,743. Credit line A and credit line B were used for mid term working capital. Only credit line B is revolving. The credit line A and credit line B have been fully utilised as of December 31, 2019. According to the contract’s provisions, the Company must maintain certain financial ratios to be inspected at least once every half year. If not, the Company would be required to pay the penalties monthly until the date of improvement. The loan was successively repaid at the agreed upon debt service ratio starting from August 2017 and will be repaid in full at maturity. As of December 31, 2019, the borrowings amounted to $1,434,787. B. To support the development capital for the construction project in Baozhen, Xinpu, Hsinchu, the Company entered into a borrowing agreement with Land Bank of Taiwan in the amount of $80,000 on July 19, 2017 with the borrowing period of 5 years. The interest is payable monthly and principal is repayable at maturity. Under the agreement, the construction should be started within 1 year calculated starting from the borrowing date, if not, the original interest rate may be plus at least 0.125% starting from extended commencement date after obtaining the approval from Land Bank of Taiwan. As of December 31, 2019, the borrowings amounted to $80,000. C. To expand development business and improve financial structure, the Company entered into a loan agreement with the Taiwan Business Bank, Kang-Shan Branch in the amount of $700,000 on January 6, 2017 with the borrowing period of 5 years. The interest is payable monthly and principal is repayable in installments quarterly. The Company should repay the diﬀerence and interest payable in 5 days when the Company is notified by the Taiwan Business Bank, Kang-Shan Branch if the outstanding balance is lower than the value of Kaohsiung Kang-Shan Industrial Park plus special reserve account based on the agreement. As of December 31, 2019, the borrowings amounted to $393,750. (16) Pensions

A. Eﬀective July 1, 2005, the Company established a funded defined contribution pension plan (the “New Plan”) under the Labor Pension Act. Employees have the option to be covered under the New Plan. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are portable when the employment is terminated. B. The pension costs under the defined contribution pension plan for the years ended December 31, 2019 and 2018 were $4,139 and $4,256, respectively.

125 (17) Share-based payment

A. The Company’s share-based payment arrangements were as follows: For the year ended December 31, 2019: Quantity granted Vesting Type of arrangement Grant date (in thousand shares) conditions

Treasury stock transferred to employees 2019.01.24 6,000 Vested immediately

Treasury stock transferred to employees 2019.03.26 6,000 Vested immediately

Treasury stock transferred to employees 2019.05.29 6,012 Vested immediately

Treasury stock transferred to employees 2019.07.03 8,000 Vested immediately

Treasury stock transferred to employees 2019.07.03 6,850 Vested immediately

Treasury stock transferred to employees 2019.10.30 3,148 Vested immediately

Treasury stock transferred to employees 2019.10.30 4,182 Vested immediately

Treasury stock transferred to employees 2019.12.30 2,516 Vested immediately

For the year ended December 31, 2018: Quantity granted Vesting Type of arrangement Grant date (in thousand shares) conditions

Treasury stock transferred to employees 2018.01.24 11,446 Vested immediately

Treasury stock transferred to employees 2018.08.29 10,000 Vested immediately

Treasury stock transferred to employees 2018.09.26 8,000 Vested immediately

Abovementioned share-based payment arrangements are settled by equity. B. Details of the share-based payment arrangements are as follows:

2019 2018

No. of Weighted-average No. of Weighted-average options exercise price options exercise price (in thousands) (in dollars) (in thousands) (in dollars)

Options outstanding at January 1 - $ - 6,000 $ 10.03

Options granted 42,708 9.07 29,446 9.81

Options exercised ( 40,192) 9.08 ( 35,446) 9.85

Options outstanding at December 31 2,516 8.95 - -

C. The weighted-average stock price of stock options at exercise dates for the years ended December 31, 2019 and 2018 was NT$8.99 and NT$9.41 (in dollars) per share, respectively. D. Expenses incurred on share-based payment transactions are shown below:

2019 2018

Equity-settled $ 7,247 $ 202

(18) Share capital

A. As of December 31, 2019, the authorized common stock was $9,900,000 with par value of NT$10 (dollars) per share, and the outstanding common stock was $7,609,436 (760,944 thousand shares). Movements in the number of the Company’s ordinary shares outstanding are as follows:

Unit: In thousands of shares

2019 2018

At January 1 743,788 742,768

Treasury stock purchased by employees 40,192 35,446

Shares retired ( 25,552) ( 34,426)

At December 31 758,428 743,788

126 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

B. Treasury stocks (a) Reason for share reacquisition and movements in the number of the Company’s treasury stocks are as follows:

December 31, 2019 Name of company holding the shares Reason for reacquisition Number of shares Carrying amount (thousand shares)

The Company To be reissued to employees 2,516 $ 22,517

December 31, 2018 Name of company Reason for reacquisition holding the shares Number of shares Carrying amount (thousand shares)

The Company To be reissued to employees 17,156 $ 165,708

(b) Reacquisition of treasury shares is as follows:

Year ended December 31, 2019

28th 29th 30th 31th To be reissued to To be reissued to To be reissued to To be reissued to Term of reacquisition Reason for reacquisition employees employees employees employees Type and quantity of reacquired shares Common stock Common stock Common stock Common stock (shares in thousands) 3,694 6,000 6,012 3,148 Amount of reacquired shares $ 30,343 $ 50,471 $ 51,597 $ 29,978

Year ended December 31, 2019

32th 33th To be reissued to To be reissued to Term of reacquisition Reason for reacquisition employees employees Type and quantity of reacquired shares Common stock Common stock (shares in thousands) 4,182 2,516 Amount of reacquired shares $ 36,448 $ 22,517

Year ended December 31, 2018

24th 25th 26th 27th To be reissued to To be reissued to To be reissued to To be reissued to Term of reacquisition Reason for reacquisition employees employees employees employees Type and quantity of reacquired shares Common stock Common stock Common stock Common stock (shares in thousands) 7,270 6,850 8,000 10,000 Amount of reacquired shares $ 72,721 $ 66,721 $ 74,297 $ 92,103

Year ended December 31, 2018

28th To be reissued to Term of reacquisition Reason for reacquisition employees Type and quantity of reacquired shares Common stock (shares in thousands) 2,306 Amount of reacquired shares $ 18,813

(c) In 2019, the Board of Directors has resolved to transfer the shares to employees from the 24th, 25th, 28th, 29th,30th, 31st and 32nd time treasury share buyback total amounting to 40,192 thousand shares. The post-tax amount, net of securities transactions tax, was $363,880. (d) In 2018, the Board of Directors has resolved to transfer the shares to employees from the 19th, 21st, 22nd, 23rd, 26th and 27th time treasury share buyback total amounting to 35,446 thousand shares. The post-tax amount, net of securities transactions tax, was $348,084.

127 (e) Pursuant to the R.O.C. Securities and Exchange Law, the number of shares bought back as treasury stock should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realized capital reserve. (f) Pursuant to the R.O.C. Securities and Exchange Law, treasury stocks should not be pledged as collateral and is not entitled to dividends before it is reissued to the employees. (g) Pursuant to the R.O.C. Securities and Exchange Law, treasury stocks should be reissued to the employees within three years and shares not reissued within the three-year period are to be retired. (19) Capital surplus

2019

Share Treasury stock premium transactions Others Total

At January 1 $ 21 $ 22,216 $ 9,924 $ 32,161

Employee stock options issued - - 9,175 9,175

Treasury shares purchased by employees - 8,510 ( 9,175) ( 665)

At December 31 $ 21 $ 30,726 $ 9,924 $ 40,671

2018

Treasury Share stock Stock options Others Total premium transactions

At January 1 $ 21 $ 22,594 $ 4,343 $ 5,581 $ 32,539

Employee stock options issued - - - 420 420

Treasury shares purchased by employees - ( 378) - ( 420) ( 798) Recognition of expired Corporate bond with warrant At December 31 - - ( 4,343) 4,343 -

$ 21 $ 22,216 $ - $ 9,924 $ 32,161

Pursuant to the R.O.C. Company Law, capital reserve arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital reserve to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital reserve should not be used to cover accumulated deficit unless the legal reserve is insuﬃcient. (20) Retained earnings

128 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital. D. As of December 31, 2019, the Company appropriated special reserve amounting to $10,165,492 in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1030006415 due to its investment property is measured at fair value. E. The appropriations of 2018 and 2017 earnings had been resolved at the stockholders’ meeting on June 25, 2019 and June 22, 2018, respectively. Details are summarized below:

2018 2017

Dividends Dividends Amount per share Amount per share (in dollars) (in dollars)

Legal reserve $ 40,134 $ 47,509

Special reserve 361,402 427,583

$ 401,536 $ - $ 475,092 $ -

F. For the information relating to employees’ remuneration and directors’ and supervisors’ remuneration, please refer to Note 6(26). (21) Operating revenue

2019 2018

Service revenue $ 45,767 $ 42,992

Construction revenue 21,672 21,018

Rental revenue 11,103 7,041

Food service revenue 9,282 11,028

Sales revenue 10,175 -

Other operating revenues 351 1,687

$ 98,350 $ 83,766

The Company derives revenue from the transfer of goods and services over time and at a point in time. (22) Other income

2019 2018

Interest income from bank deposits $ 488 $ 1,137

Other interest income 45,037 45,040

Other non-operating income 13,939 6,780

$ 59,464 $ 52,957

A. For the information relating to other interest income, please refer to Notes 7 and 12 (12). B. For the years ended December 31, 2019 and 2018, the subsidiary, Taiwan Innovation Development Corporation, appropriated directors and supervisors’ remuneration at $438 and $6,514, respectively, which are recognised as miscellaneous income. On October 25, 2018, the Board of Directors resolved not to appropriate directors’ and supervisors’ remuneration for the year ended December 31, 2017. Therefore, the Company reversed the amount by recognising $79 as deduction of miscellaneous income.

129 (23) Other gains and losses

2019 2018

Gain on fair value adjustment of investment property $ 625,110 $ 559,473

(Loss) gain on disposal of property, plant and equipment ( 4,538) 418

Loss on disposal of investment property ( 9,832) ( 11,660)

Gain on financial assets at fair value through profit or loss 9,600 2,773

Currency exchange loss - ( 34)

Loss on disposals of investments - ( 340)

Gain on lease modifications 106 -

Miscellaneous disbursements ( 290) -

$ 620,156 $ 550,630

(24) Finance costs

2019 2018

Interest expense:

Bank loans $ 222,073 $ 224,742

Commercial paper 6,464 5,805

Bonds payable 119,948 117,244

Lease liabilities 2,395 -

Others 7,074 554

357,954 348,345

Less: Capitalisation of qualifying assets ( 73,107) ( 69,401)

Interest reimbursement for industrial zones ( 166,786) ( 158,175)

Finance cost $ 118,061 $ 120,769

(25) Expenses by nature

2019 2018

Employee benefit expense $ 170,876 $ 161,425

Depreciation - property, planet and equipment 9,954 9,145

Depreciation - right-of-use assets 26,749 -

Amortisation on other non-current assets 14,973 15,136

Rent expense 2,090 32,470

Advertisement expense 1,715 5,900

Entertainment expense 17,545 27,384

Donation expense 815 1,027

Taxes 10,657 12,738

Service expense 56,558 60,796

General and administrative expenses 10,420 11,351

Construction costs 21,389 17,492

Cost of goods sold 10,175 -

Other operating costs 4,279 5,389

Other expenses 41,071 68,282

$ 399,266 $ 428,535

130 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

(26) Employee benefit expense

2019 2018

Wages and salaries $ 129,835 $ 114,304

Labour and health insurance fees 7,610 7,890

Pension costs 4,139 4,256

Directors’ emoluments 26,444 32,306

Other personnel expenses 2,848 2,669

$ 170,876 $ 161,425

A. As of December 31, 2019 and 2018, the Company had approximately 85 and 92 employees, respectively, excluding 7 directors for both years. B. For the years ended December 31, 2019 and 2018, the Company’s average employee benefit expenses were $1,852 and $1,519 and average wages and salaries were $1,665 and $1,345, respectively. Change in average wages and salaries adjustments was 23.79%. C. According to the Articles of Incorporation of the Company, the distribution of earnings is based on the profit of the current year. Where there is distributable earnings after deducting those reserved to offset accumulated deficit, the Company shall distribute 1~8% of which as employees’ compensation and no more than 2% of which as directors’ and supervisors’ remuneration. The Company should reserve earnings to offset accumulated deficit if there is any. The aforementioned employees’ compensation can be paid in the form of stock or cash. The recipients can be employees of subsidiaries who are eligible based on the resolution of the Board of Directors. As for the directors’ and supervisors’ remuneration, it can only be paid by cash. D. For the years ended December 31, 2019 and 2018, employees’ compensation was accrued at $2,720 and $3,856, respectively; directors’ remuneration was accrued at $2,720 and $3,856, respectively. The aforementioned amounts were recognised in salary expenses. The employees’ compensation and directors’ and supervisors’ remuneration were both estimated and accrued based on 1% of distributable profit of current year for the year ended December 31, 2019. The accrued amount has not been resolved by the Board of Directors. The employees’ compensation will be distributed in the form of cash or shares. The employees’ compensation and directors’ and supervisors’ remuneration were both estimated and accrued based on 1% of distributable profit of current year for the year ended December 31, 2018. Where the accrued amounts for employees’ compensation and directors’ and supervisors’ remuneration are different from the actual distributed amounts as resolved by the stockholders at their stockholders’ meeting subsequently, the differences are accounted for as changes in estimates. Employees’ bonus and directors’ and supervisors’ remuneration for 2018 as resolved at the shareholders’ meeting were in agreement with those amounts recognised in the profit or loss of 2018. Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved by the Board of Directors and the shareholders at the shareholders’ meeting will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

131 (27) Income tax

A. Components of income tax expense

2019 2018

Current tax:

Current tax on profits for the year $ - $ -

Prior year income tax under (over) estimation - ( 7,326)

Others 26,190 2,827

Total current tax 26,190 ( 4,499)

Deferred tax:

Origination and reversal of temporary diﬀerences ( 55,123) ( 18,996)

Income tax expense ($ 28,933) ($ 23,495)

B. Reconciliation between income tax expense and accounting profit

2019 2018

Tax calculated based on profit before tax and statutory tax rate $ 53,309 $ 75,568

Tax exempt income by tax regulation ( 10,347) ( 31,732)

Prior year income tax under (over) estimation 10,917 ( 7,326)

Impact of change in the tax rate on temporary diﬀerences between current year ( 109,002) ( 80,472) and the year realised Eﬀect from changes in tax regulation - 17,640

Land value increment tax from sale of land 26,190 2,827

Income tax expense ($ 28,933) ($ 23,495)

C. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as follows:

December 31, 2019

Unrecognised deferred Year incurred Amount filed / assessed Unused amount tax assets Expiry year

2018 Amount filed $ 328,512 $ - 2028

2019 Amount assessed 207,217 - 2029

December 31, 2018

Unrecognised deferred Year incurred Amount filed / assessed Unused amount tax assets Expiry year

2018 Amount assessed $ 325,400 $ - 2028

D. The amounts of deductible temporary difference that are not recognised as deferred tax assets are as follows:

December 31, 2019 December 31, 2018

Deductible temporary diﬀerences

Allowance for sales return $ 13,434 $ 13,435

Temporary diﬀerence on service revenue 43,371 41,422

Allowance for price decline on inventories 7,748 9,451

Deferred credit - gain between related parties 24,401 17,108

Others 3,251 2,269

$ 92,205 $ 83,685

132 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

E. As of December 31, 2019 and 2018, the amount of deferred tax liabilities was $374,855 and $399,451, respectively. The land value increment tax originally applied to the Company’s Trust department in accordance with ‘Enterprise Merger and Acquisition Act’ was transferred to JihSun Bank. As of December 31, 2019 and 2018, the increment tax amounting to $15,868 will be paid when the land is transferred again. The accrued tax arising from depreciation of investment property provided in accordance with Income Tax Act amouted to $4,630 and $10,405, respectively. The tax related accrual arising from the fair value of the other investment property was $354,357 and $373,178, respectively. F. As of December 31, 2019, the Company’s income tax returns through 2017 have been assessed and approved by the Tax Authority. G. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company’s applicable income tax rate was raised from 17% to 20% eﬀective from January 1, 2018. The Company has assessed the impact of the change in income tax rate. (28) Earnings per share

The calculation of earnings per share is as follows:

2019

Weighted average number of ordinary Earnings per Amount after tax shares utstanding share (shares in (in dollars) thousands)

Basic earnings per share

Profit for the year $ 295,480 746,633 $ 0.40

Diluted earnings per share

Assumed conversion of all dilutive potential ordinary shares

Employees’ bonus - 421

Profit plus assumed conversion of all dilutive potential ordinary $ 295,480 747,054 shares $ 0.40

2018

Weighted average potential ordinary shares number of ordinary Earnings per Amount after tax shares utstanding share (shares in (in dollars) thousands)

Basic earnings per share

Profit for the year $ 401,337 739,801 $ 0.54

Diluted earnings per share

Assumed conversion of all dilutive potential ordinary shares

Employees’ bonus - 660

Profit plus assumed conversion of all dilutive potential ordinary $ 401,337 740,461 shares $ 0.54 (29) Supplemental cash ﬂow information Investing activities with partial cash payments:

2019 2018

Purchase of investment property $ 143,309 $ 610,930

Add: opening balance of other accounts payable 108,876 15,828

Add: opening balance of notes payable - 29,134

Less: ending balance of other accounts payable ( 105,998) ( 108,876)

Less: capitalized interest ( 73,107) ( 69,401)

Cash paid during the year $ 73,080 $ 477,615

133 7. RELATED PARTY TRANSACTIONS (1) Names of related parties and relationship

Names of related parties Relationship with the Company

Taiwan Innovation Development Corporation The Company’s subsidiary

Hsinchu Hill Garden Corporation The Company’s subsidiary

Taiwan Midtown Development Corporation The Company’s subsidiary

Taiwan Envirotech Development Corp. The Company’s subsidiary

Wind Lion Plaza Corporation The Company’s subsidiary

Taiwan Commerce Development Corp. The Company’s subsidiary

Tai-Gang Tea Factory Co. Ltd. The Company’s subsidiary

Hualien Ocean Forum Corp. The Company’s subsidiary

Da-Ding Consulting Co. Ltd. The Company’s subsidiary

Taiwan City Development Corporation The Company’s subsidiary

Taiwan Wind Lion Travel Service Corporation The Company’s subsidiary

Taiwan Lan Yang Development Corporation Liquidated subsidiary

Era of Creative Industries Co. Ltd. Other related party

Chiu Fu-Sheng The Company’s chairman

(2) Significant related party transactions A. Revenues

2019 2018

Rent revenues:

Taiwan Innovation $ 5,143 $ 3,429

Taiwan Win Lion Travel 1,650 -

Other related parties 46 218

$ 6,839 $ 3,647

It mainly resulted from rental revenue accrued from leasing oﬃce.

2019 2018

Sales of service:

Taiwan Innovation $ 6,166 $ -

Service revenue is recognised based on the percentage of actual services provided to the total services to be provided based on the service contract.

2019 2018

Sales revenues:

Taiwan Envirotech Development $ 10,175 $ -

Goods are sold based on the price lists in force and terms that would be available to third parties. B. Purchases

2019 2018

Restaurant supplies

Subsidiaries $ 89 $ 339

Goods are purchased from subsidiaries on normal commercial terms and conditions.

134 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

C. Operating expenses

2019 2018

Subsidiaries $ 23,361 $ 29,898

Other related parties - 686

$ 23,361 $ 30,584

(a) Expenses are generated from subsidiaries on professional services. (b) The total price of the service contract is decided by bilateral negotiation. The payment term is based on the schedule as specified in the contract. D. Accounts receivable

December 31, 2019 December 31, 2018

Wind Lion $ - $ 139

Taiwan Innovation - 177

$ - $ 316

The receivables from related parties arise mainly from the restaurant business. The receivables are unsecured in nature and bear no interest. There are no provisions held against receivables from related parties. E. Other receivables

December 31, 2019 December 31, 2018

Taiwan Innovation $ 382 $ 6,514

Taiwan LanYang - 297

Taiwan Wind Lion Travel 1,650 -

Subsidiaries 65 31

$ 2,097 $ 6,842

(a) As of December 31, 2019, the receivables mainly arose from oﬃce rent income from subsidiary, Taiwan Wind Lion Travel Service Corporatio, amounting to $1,650. (b) As of December 31, 2019, the receivables arise mainly from appropriation of directors’ and supervisors’ remuneration by the subsidiary, Taiwan Innovation Development Corporation, amounting to $6,514. F. Prepayments As of December 31, 2019, the prepayments for compensation to the key management amounted to $1,800. G. Accounts payable

December 31, 2019 December 31, 2018

Taiwan Innovation $ - $ 58,003

Subsidiaries - 26

$ - $ 58,029

It mainly resulted from the purchases of inventory from the subsidiary, Taiwan Innovation Development Corporation. H. Other payables

December 31, 2019 December 31, 2018

Taiwan Envirotech $ 99,800 $ 106,339

Subsidiaries 5,045 1,948

$ 104,845 $ 108,287

135 It mainly resulted from payables for the marketing and planning service provided by the subsidiary, Taiwan Innovation Development Corporation, as well as construction bill owed to Taiwan Envirotech Development Corporation. I. Property transactions (a) In 2009, 2011 and 2016, the Company sold land to subsidiary, Taiwan Innovation Development Corporation, for a total consideration of $787,040. The gain on sale of land amounting to $85,540 was recorded as deduction to “Investments accounted for using equity method” because Taiwan Innovation Development Corporation has not yet sold the land to a third party. (b) The Company entered into a contract with the subsidiary, Taiwan Innovation Development Corporation, in order to purchase the land located in 2nd subsection, Guanghua Section, Ji’an Township, Hualien County numbered 8 and 9 for a total contract price of $518,144 as resolved by the Board of Directors on January 24, 2018. As of December 31, 2019, the Company has fully paid the price for the transaction which was recorded as inventories. The transfer of ownership has been completed. (c) The Company purchased land from the subsidiary, Taiwan Innovation Development Corporation. The land is located in No. 7 and No. 9, Sec. 2, Zhishan Rd., Shilin Dist., Taipei City for a total contract price of $111,280 as resolved by the Board of Directors on October 24, 2018. The Company has fully paid the price for the transaction which was recorded as inventories. The transfer of ownership has been completed. (d) The Company entered into a contract with the subsidiary, Taiwan Envirotech Development Corp., in order to sell the buildings, parking lot and its share of land located in the 2nd Floor, No. 7, Fubei Street, North District, Tainan City under joint ownership for a total contract price of $63,987 as resolved by the Board of Directors on December 19, 2018. As of December 31, 2019, the Company has collected the proceeds from the disposal and the transfer of ownership has been completed. (e) The Company entered into a contract with the subsidiary, Taiwan Envirotech Development Corp., in order to sell the land use rights for a total contract price of $234,230 as resolved by the Board of Directors on December 21, 2018. The Company has collected the proceeds from the disposal and the transfer of ownership has been completed. (f) In December 2017, the Company entered into a contract with the subsidiary, Taiwan Innovation Development Corporation, in order to purchase the land located in 2nd subsection, Guanghua Section, Ji’an Township, Hualien County numbered 139, 140, 143, and 144, and the total contract price amounted to $765,110. As of December 31, 2019, the Company has fully paid the transaction which was recorded as investment property. The transfer of ownership has been completed. J. Loans from related parties: (a) Loans from related parties: i. Outstanding balance (Other payables):

December 31, 2019 December 31, 2018

Taiwan Innovation $ 20,000 $ -

Taiwan Envirotech 10,000 32,000

Taiwan Commerce 170,000 30,000

$ 200,000 $ 62,000

ii. Interest payable (Other payables)

December 31, 2019 December 31, 2018

Subsidiaries $ 414 $ 79

iii. Interest expense

2019 2018

Subsidiaries $ 7,072 $ 551

136 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

It mainly resulted from the borrowings from the subsidiary for short-term financing needs. a. For the year ended December 31, 2019, the annual rate of the Company loans from subsidiaries was 3.5%~ 4.1%. b. For the year ended December 31, 2018, the annual rate of the Company loans from subsidiaries was 3.5%. (b) Acquisition of preference share from related parties: Please refer to Note 6 (2). i. Outstanding balance:

Taiwan Innovation December 31, 2019 December 31, 2018

Financial assets at fair value through profit or loss $ 1,526,700 $ 1,517,100

ii. Dividends on preference share receivable (Other receivables)

December 31, 2019 December 31, 2018

Taiwan Innovation $ 165,000 $ 120,000

iii. Dividends on preference share (Other income)

2019 2018

Taiwan Innovation $ 45,000 $ 45,000

K. Endorsements and guarantees (a) Endorsements and guarantees provided by related parties:

December 31, 2019 December 31, 2018

Key management of the Company $ 6,345,896 $ 6,945,600

Taiwan Innovation 4,854,050 5,190,124

$ 11,199,946 $ 12,135,724

(b) Endorsements and guarantees provided to related parties:

December 31, 2019 December 31, 2018

Taiwan Innovation $ 2,242,000 $ 1,292,000

Taiwan Commerce 1,600,000 3,286,000

Subsidiaries - 50,000

$ 3,842,000 $ 4,628,000

L. Others (a) As of December 31, 2019 and 2018, the outstanding balances of aggregate commitments for outsourcing construction and services amounted to $231,708 and $242,397 for Taiwan Envirotech Development Corp. Land, and $41,575 and $42,302 for other subsidiaries, respectively. (b) Please refer to Note 6 (22). (3) Key management compensation

2019 2018

Salaries and other short-term employee benefits $ 33,394 $ 39,046

Termination benefits 216 228

$ 33,610 $ 39,274

137 8. PLEDGED ASSETS

December 31, Pledged asset Purpose 2019 2018

Other current assets

- Demand deposits $ 62,207 $ 162,145 Long-term borrowings compensation account

- Demand deposits 17,065 17,051 Land compensation fee account

- Demand deposits 159,114 159,114 Guarantee for development projects

168,272 168,225 Guarantee for development projects and long - Time deposits - term borrowings - Time deposits 160 160 Guarantee for projects

406,818 506,695

Other non-current assets

- Demand deposits 128,562 - Long-term borrowings compensation account

- Land in Hsinchu 404,088 404,088 Guarantee for short-term borrowings

- Long-term prepaid rents - 145,569 Guarantee for short-term borrowings

40,443 41,053 Guarantee for projects , leases and term - Refundable deposits borrowings 573,093 590,710

Other receivables Long-term borrowings

5,925,260 5,693,635 Guarantee for long-term borrowings and - Land development receivables short-term bills payable Guarantee for long-term borrowings,short- Inventories 988,275 813,863 term borrowings, short-term notes and bills payable and corporate bonds payable Investment property 8,474,191 7,951,329

Property, plant and equipment Guarantee for short-term borrowings

- Land and buildings 448,973 459,500

$ 16,816,610 $ 16,015,732

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS (1) Contingencies

A. The Company invested in the development of Kaohsiung Benzhou Industrial Park and entered into a contract, “Contract of Development in Kaohsiung Gungshan Industrial Park assigned by Kaohsiung County Government”, with Kaohsiung City Government. The contract provided that the Company should build the sewage treatment plant and transfer it to Kaohsiung County Government. However, Kaohsiung City Government, which had merged with county government, filed a lawsuit against the Company and claimed compensation amounting to $67,062 for negligence in management and maintenance of sewage treatment plant and remedy for facility damages in December 2015. Although, the Company has provided related evidences to prove that the facility was damaged because the companies in the industrial park disposed sewage without a permit, and poor management by Kaohsiung city government. Therefore, the Company is not liable for the damages. The case is now pending with the Kaohsiung District Court. Since the Court has not rendered the decision, the Company is unable to reasonably estimate the possible loss. Deposits amounting to $31,910 were held in public lodgment oﬃce for the litigation.

138 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

B. The Company signed a contract,「Construction of Sewage Treatment Plant for the development in Kaohsiung Benzhou Industrial Park」with Puchun Environmental Protection Engineering Corp. (hereafter “Puchun Corp.”) for the development of sewage treatment plant located in Kaohsiung Gangshan Benzhou Industrial Park. Later the trial run was pending due to the failure to collect adequate sewage. The plant was then transferred to Kaohsiung county government (now Kaohsiung city government) and confirmed as acceptance completed. After Kaohsiung city government assigned the construction of the plant to another contractor and altered the sewage treatment process, the trial run was aﬃrmed to be impracticable so that the acceptance of the construction was aﬃrmed not to have occurred. In January 2016, Puchun Corp. filed a lawsuit against the Company and claimed the Company owes the last construction payment of $21,042 and obliges to inform Hua Nan Commercial Bank to relieve its performance guarantee for the fourth phase. In May 2018, the Taiwan High Court ruled that the Company is liable for the compensation of $19,870 and interests starting from February 18, 2016 until the debt is settled. In June 2018, the Company appealed to the Supreme Court. Since the Court has not yet rendered the decision, the Company is unable to estimate the possible loss. C. The Company terminated the design service contract which was commissioned by Huang Chien-chung Architects Firm for urban renewal at the south-east wing of Taipei Main Station. Huang Chien-chung filed a lawsuit against the Company for design compensation, and the Court ordered the Company to pay $31,500 to Huang Chien-chung plus interest starting from July 28, 2011 until the debt is fully paid. On February 10, 2012, the Company filed a lawsuit with the Taiwan High Court. In 2019, the Taiwan High Court has ordered the Company to pay $10,311 ($7,908 represents interest from July 28, 2011 to the settlement date) out of $10,420, which the Company had paid to Huang Chien-chung as of September 30, 2019. However, the Company contested that the service compensation should be calculated according to the design service contract rather than $10,311 ordered in the second instance. The case is now on appeal with the Taiwan High Court. Since the High Court has not yet made a ruling on this case, the Company is unable to reasonably estimate the possible loss to the Company. D. The Company was consigned by the Taichung City Government to develop the industrial parks, Dali Industrial Park, Taichung Aviation Industrial Park and Astronavigation and Taichung City, Wen-Shan Industrial Park. The Company has completed the development as well as recognised the related industrial zone receivables and estimated accrued payables for industrial zone construction based on the agreement. However, the Taichung City Government claims that the Company shall settle all the remaining payments, and therefore filed a complaint against the Company in March 2017 due to the different opinions in recognition of certain development cost. The maximum amount of loss amounted to approximately $235,137 in accordance with the Taichung City Government’s claim if the Company losses the lawsuit. The Company has not accrued the loss because this case is currently under assessment, and the development cost was recognised based on related regulations. E. The Company engaged in development of Kaohsiung Benzhou Industrial Park and entered into a contract, “Contract of Development in Kaohsiung Gungshan Industrial Park assigned by Kaohsiung county government”, with Kaohsiung city government (formerly Kaohsiung county government). In March 2018, Kaohsiung city government filed a lawsuit against the Company claiming an outstanding payment of $621,500 and interests starting from December 17, 2016 until the debt is settled. However, the Company countered that the recognition of relevant development costs are established and the government owes reimbursement to the Company. The case is now pending with the Kaohsiung District Court. Since the Court has not rendered the decision, the Company is unable to estimate the possible loss. F. In 2002, the Company started a meeting called “The 4th review meeting on lease and land sales of Taichung Industrial Park” with former Taichung County Government. The meeting resolved to commission the Company to sell the second stage slope protection in Taichung Industrial Park. Until the merger and upgrade of Taichung City and Taichung County, Taichung City Government settled accounts in 2019 and filed a complaint against the Company demanding the Company to pay $429,412. The case is still in process in the Taipei District Court. As the ultimate outcome of the case is uncertain, the possible loss to the Company cannot be reasonably estimated. (2) Commitments As of December 31, 2019 and 2018, except for commitments mentioned in Notes 6(17) and 7(2)L(a), the Company’s aggregate commitments under the consignments for construction and services were $65,164 and $578,367, respectively.

139 10. SIGNIFICANT DISASTER LOSS None. 11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE The Company developed “The first stage of Taichung City Precision Machinery Innovation Technology Park” and entered into “Contract of Taichung City Machinery Technology Industrial Park” with former Taichung County Government. In 2020, Taichung City Government filed a complaint against the Company demanding the Company to pay $1,715,784. However, the Company considered the recognition of cost has its basis. The case is still in process by the Taichung District Court. As the ultimate outcome of the case is uncertain, the possible loss to the Company cannot be reasonably estimated. 12. OTHERS (1) Operational policies To relieve the pressure brought by the substantial payments on behalf of others incurred by the assigned projects of land development business, the Group consolidated its loans from several financial institutions into a 7-year long-term syndicated loan contract with a credit line of $16,500,000 in August 2005. With the repayments for the past years, the debt balance was considerably reduced. In order to lift unfavorable limitations for business growth, the Group once again signed a 5-year long-term syndicated loan contract with a credit line of $5,300,000 in August 2012. In August 2016, the borrowings was decreased to $2,694,000 following the reorganisation of syndicated loan aiming to repay former debt and replenish working capital. As of December 31, 2019, the syndicated loan amounted to $1,435,000. The Group is a comprehensive service provider in land development and an aggregator of value innovation. To meet the future tendency, the developing strategies of the Group are culture creation, technology innovation and international standards. Meanwhile, the Group uses the sayings of Lao Tzu ‘like water, benefiting all without contending with them’, and the sayings of Sun Tzu from the Art of War ‘therefore, just as water retains no constant shape, so in warfare there are no constant conditions’ to be the core spirit of the Group in order to fit the variable market and do the corporate social responsibility. The Group builds the three horizontal business lines, which are green, intelligent and cultural and creative industry, and the business mode of sharing economy. At the same time, the Group provides new life styles and products based on 4D concepts (ie. Design, Digital, Different and Diverse). In green business, the Group develops the business scale relating to eco- friendly, sustainable life, organic and LOHAS, energy saving and carbon reduction, NNS medical and leisure and health. In intelligent business, the Group develops the highly technological and digital business scale in relation to IoT, BIG DATA, IDC, smart city, digital entertainment, preventive health care, long-term care and smart home. In cultural and creative industry, the Group develops the business scale based on the concept of cultural exhibition, art management, cultural exchange, art auction, operating an artist village. The management principles are as follows: A. Value-oriented development strategies: The Company adds value to the land through cultural creativity and technological innovation by integrating art as part of life and creating a sustainable healthy LOHAS park. The Company developed three new business, including: smart city, digital entertainment and preventive health care, on the basis of sharing economy. The Company plans to carry out the development in Hualien, Hsinchu and Nantou aiming to build three main parks reviving energy in body, mind and spirits. B. Strengthening artificial intelligence and digital management and continually developing the IOT: Since the cloud is the source of value in the future, the Company will next focus on transforming IoT (Internet of Things) into an industry, realising it in learning and realistic creativity aspects in daily life industry and strengthening digital online marketing. C. Sale of industrial land: To create company profit, the Company continually sells the land located in Taichung City Precision Machinery Innovation Technology Park, Kuang Hua Lohas Creative Park, Ganshan Benjhou Industrial Park and pre-sell the second stage industrial land in Feng Chou High-Tech Industrial Park.

140 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

D. Disposal and activation of assets: To create benefit, the Company disposed and activated assets as well as developed products through combining green, intelligent, cultural and creative and local daily lifestyle. In the current year, the Company will continually dispose those self-owned assets located in Taipei, Taichung, Tainan, Kaohsiung, Hualien through real estate agency. Large-scale development projects will be continually constructed to attract foreign capital, life insurance, sovereign wealth fund and other cooperation opportunity in order to increase their working capital. E. Financing plan: For existing financing, the Company will communicate with banks to extend the contract or apply a new borrowing under the same conditions. The Company will apply for syndicated loan for the development of industrial park to obtain capital. For large-scale development projects, the Company will apply for land loans and construction loan to obtain capital. Whether to repay or renew for mid-term and long-term financing, it will depend on the development circle. F. Consolidation of the development of Kinmen as the border trade center and the development of medical tourism industry: The visa-on-arrival policy in Kinmen has enabled the number of visitors from Mainland China to hit a record high. Implementation of increased duty-free shopping quota for people coming from Mainland China through Kinmen and the relaxation of Xiamen as a free trade zone further contributed to a steady growth in bilateral trade volume. The park has the best bonded warehouse and oﬀshore duty-free store. The park develops stores with back warehouse business of duty-free stores through cross-border e-commerce platform and achieves the development of Kinmen border trade center. Additionally, the park established Kinmen first business space for youth entrepreneurship, provided birthplace for Kinmen youth entrepreneurship and business development for both sides of the Taiwan strait, and fulfilled the new model of youth entrepreneurship for both sides of the Taiwan strait in Kinmen. Because of the recent growth in “health check-tourism” and “aesthetic medicine-tourism” in both sides of the Taiwan strait, the park will import medical clinic and physical examination center, including medical accommodation, and start the new travel industry of medical tourism in Kinmen. G. Core values of sustainable enterprise: Employing “green, intelligent, and cultural creativity” as core beliefs, we infuse the land with new value, create a unique brand image, build a foundation for a sharing economy, apply concepts of 4D planning, communicating our corporate philosophy and committing to the construction of high-quality LOHAS spaces for living. H. Specialization within the Company and attraction of outstanding talent: Pursuit of overall rationalization of the Company and further enhancement of enterprise synergy through interaction and cooperation of all employees within the Company, combined with pioneering asset management and internet technology, and taking into account the demand for talent at every operating location. (2) Capital risk management

A. The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders 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 amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the balance sheet) less cash. Total capital is calculated as ‘equity’ as shown in the balance sheet plus net debt.

141 B. During 2019, the Company’s strategy, which was unchanged from 2018, was to maintain the gearing ratio under 50%. The gearing ratios at December 31, 2019 and 2018 were as follows:

December 31, 2019 December 31, 2018

Total borrowings $ 10,371,994 $ 10,769,489

Less: Cash ( 90,545) ( 727,207)

Net debt 10,281,449 10,042,282

Total equity 19,766,144 18,718,061

Total capital $ 30,047,593 $ 28,760,343

Gearing ratio 34.22% 34.92% (3) Financial instruments

A. Financial instruments by category

December 31, 2018 December 31, 2017

Financial assets

Financial assets at fair value through profit or loss

Financial assets mandatorily measured at fair value through profit or loss $ 1,526,700 $ 1,517,100

Financial assets at amortised cost/Loans and receivables

Cash and cash equivalents 90,545 727,207

Accounts receivable (including related parties) 1,478 774

Other receivables (including related parties) 6,411,013 6,121,245

Guarantee deposits paid 40,443 41,053

Other financial assets 535,380 506,695

$ 8,605,559 $ 8,914,074

December 31, 2018 December 31, 2017

Financial liabilities

Financial liabilities at amortised cost

Short-term borrowings $ 1,664,000 $ 1,184,000

Short-term notes and bills payable 228,911 232,952

Notes payable 8,576 312

Accounts payable (including related parties) 226 58,464

Other accounts payable (including related parties) 1,787,963 1,696,857

Corporate bonds payable (including current portion) 3,827,187 3,824,938

Long-term borrowings (including current portion) 4,451,896 5,527,599

Guarantee deposits received 8,524 10,510

$ 11,977,283 $ 12,535,632

B. Financial risk management policies The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse eﬀects on the Company’s financial position and financial performance.

142 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

C. Significant financial risks and degrees of financial risks (a) Market risk Price risk

i. The Company’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss. ii. The Company’s investments in equity securities comprise shares issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, post-tax profit for the years ended December 31, 2019 and 2018 would have increased/decreased by $15,267 and $15,171, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss.

Cash flow and fair value interest rate risk i. The Company’s main interest rate risk arises from total borrowings, which expose the Company to cash flow interest rate risk. During 2019 and 2018, the Company’s borrowings at variable rate were mainly denominated in New Taiwan dollars. ii. The Company’s borrowings are measured at amortised cost. The borrowings are periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates. iii. If the borrowing interest rate had increased/decreased by 0.125% with all other variables held constant, profit, net of tax for the years ended December 31, 2019 and 2018 would have decreased/ increased by $36 and $798, respectively. The main factor is that changes in interest expense result in floating-rate borrowings. (b) Credit risk

i. Credit risk refers to the risk of financial loss to the Company arising from default by the clients on the contract obligations. The main factor is that clients could not repay the contract cash flows of accounts receivable based on the agreed terms. ii. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored. iii. The Company adopts the assumption under IFRS 9, that is, the default occurs when the contract payments are past due over 90 days. iv. The Company classifies customers’ accounts receivable in accordance with customer types. The Company applies the modified approach using loss rate methodology to estimate expected credit loss under the provision matrix basis. (c) Liquidity risk Cash flow forecasting is performed in the operating entities of the Company and aggregated by Company treasury. Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Company’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, external regulatory or legal requirements.

143 Financial liabilities:

December 31, 2019 Less than 1 year Over 1 year Total

Short-term borrowings $ 1,682,873 $ - $ 1,682,873

Short-term notes and bills payable 232,706 - 232,706

Notes payable 8,576 - 8,576

Accounts payable (including related parties) 226 - 226

Other payables (including related parties) 1,264,703 523,260 1,787,963

Bonds payable (including current portion) 845,794 3,055,030 3,900,824

Long-term borrowings (including 2,685,441 1,981,272 4,666,713

current portion)

December 31, 2018 Less than 1 year Over 1 year Total

Short-term borrowings $ 1,194,867 $ - $ 1,194,867

Short-term notes and bills payable 236,508 - 236,508

Notes payable 312 - 312

Accounts payable (including related parties) 58,464 - 58,464

Other payables (including related parties) 1,173,597 523,260 1,696,857

Bonds payable (including current portion) 53,690 3,901,861 3,955,551

Long-term borrowings (including current portion) 4,048,725 1,843,409 5,892,134

(4) Fair value information

A. Details of the fair value of the Company’s financial assets and financial liabilities not measured at fair value are provided in Note 12(3). B. The diﬀerent levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s investment in bank debentures is included in Level 2. Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investment in derivatives is included in Level 3. C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2019 and 2018 is as follows:

December 31, 2019 Level 1 Level 2 Level 3 Total

Assets

Recurring fair value measurements

Financial assets at fair value through profit or $ - $ 1,526,700 $ - $ 1,526,700 loss Derivative financial instruments - - 8,532,036 8,532,036

Investment property (Note) $ - $ 1,526,700 $ 8,532,036 $ 10,058,736

144 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

December 31, 2018 Level 1 Level 2 Level 3 Total

Assets

Recurring fair value measurements

Financial assets at fair value through profit or $ - $ 1,517,100 $ - $ 1,517,100 loss Derivative financial instruments - - 8,418,443 8,418,443

Investment property (Note) $ - $ 1,517,100 $ 8,418,443 $ 9,935,543

Note: Investment property is measured at fair value.

D. The methods and assumptions the Company used to measure fair value are as follows: (a) The fair value of financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date (i.e. yield curves on the Taipei Exchange, average commercial paper interest rates quoted from Reuters). (b) Under “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, the Company appoints external valuers, by using the income approach to calculate the fair value of investment property. Related assumption and information of inputs are as follows: i. Cash flow: Cash flow shall be valuated on the basis of existing lease contracts, rent at local market rates, or current market rents for similar comparable properties in the same location and condition, and overvalued and undervalued comparable properties shall be excluded. If there is a period-end value, the discounted present period-end value may be added. ii. Analysis period: When there is no specified period for the income, the analysis period in principle shall not be longer than 10 years; when there is a specified period for the income, the income shall be estimated for the remainder of the specified period. iii. Discount rate: The discount rate shall be determined using the risk premium approach only, with the calculation based on a certain interest rate, plus the estimate for the individual characteristics of the investment property. The language "based on a certain interest rate" means the interest rate may not be lower than the floating interest rate on a 2-year time deposit of a small amount, as posted by the Chunghwa Post Co. Ltd., plus 0.75 percentage points. (c) Some of the Company’s investment property at fair value cannot be valued by income approach because the land is undeveloped. Under “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, the Company commissioned external appraiser using land development analysis approach to calculate the fair value of investment property. Related assumptions and information on inputs are as follows: i. Total sales revenue: Calculate the total sales amount after development or building in line with changes of land benefit due to the legal usage of land, use intensity, development and improvement. ii. Profit ratio: Estimation based on the average building profit ratio of the industry and considering operating risk, time of the period and market economic. iii. Capital Interest comprehensive ratio: Calculation based on interest rate for a one-year deposit, base rate and considering structure of self-owned capital and financing capital. E. For the years ended December 31, 2019 and 2018, there was no transfer between Level 1 and Level 2. F. For the movements of Level 3 for the years ended December 31, 2019 and 2018, please refer to Note 6(8).

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

Fair value at Significant Range Relationship December 31, Valuation unobservable (weighted of inputs to 2019 technique input average) fair value the higher the long-term revenue Long-term revenue growth rate, the Investment $ 2,986,809 Discounted cash growth rate, Note higher the fair property ﬂow value; the higher discount rate the discount rate, the lower the fair value the higher the profit rate, the Profit rate, lower the fair Investment Land development Capital interest value; the higher property 5,545,227 analysis comprehensive Note the capital interest ratio comprehensive ratio, the lower the fair value

Fair value at Significant Range Relationship December 31, Valuation unobservable (weighted of inputs to 2018 technique input average) fair value the higher the long-term revenue Long-term revenue growth rate, the Investment $ 3,403,619 Discounted cash growth rate, Note higher the fair property ﬂow value; the higher discount rate the discount rate, the lower the fair value the higher the profit rate, the Profit rate, lower the fair Investment Land development Capital interest value; the higher property 5,014,824 analysis comprehensive Note the capital interest ratio comprehensive ratio, the lower the fair value Note: Details of the discount rate range are provided in Note 6(8). 13. SUPPLEMENTARY DISCLOSURES (1) Significant transactions information A. Loans to others: Please refer to table 1. B. Provision of endorsements and guarantees to others: Please refer to table 2. C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3. D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None. E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None. F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: Please refer to table 4. G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 5. H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 6. I. Trading in derivative instruments undertaken during the reporting periods: Conversion rights of convertible bonds. None. J. Significant inter-company transactions during the reporting periods: Please refer to table 7.

146 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 8. (3) Information on investments in Mainland China

None. 14. SEGMENT INFORMATION Disclosure is not required.

147 TAIWAN LAND DEVELOPMENT CORPORATION Loans to others Year ended December 31, 2019 Table 1 Expressed in thousands of NTD(Except as otherwise indicated) Maximum Collateral outstanding Balance at Amount of Reason General Is a balance during December Actual Nature of transactions for short- Allowance Limit on loans Ceiling on No. amount Interest for granted to total loans （Note 2） Creditor Borrower ledger account related the year ended 31, drawn down rate loan with the term doubtful a single party granted Footnote （Note 3） party December 31, 2019 （）（Note 7） borrower financing Item Value （）（） 2019 （Note 5） Note 6 （Note 8）（Note 9） accounts Note 10 Note 10 （Note 4）

Taiwan Commerce Taiwan Envirotech Other receivables- 2 Yes $ 40,000 $ - $ - 2 $ - Working $ - None $ - $ 1,378,048 $ 1,378,048 Development Corp. Development Corp. related parties" 3.50% capital

Taiwan Commerce Other receivables- 2 The Company Yes 250,000 220,000 170,000 2 - Working - None - 1,378,048 1,378,048 Development Corp. related parties" 3.50% capital

Taiwan Envirotech Other receivables- 3 The Company Yes 92,000 60,000 10,000 2 - Working - None - 65,999 65,999 Development Corp. related parties" 3.70% capital

Taiwan Innovation Other receivables- 4 The Company Yes 100,000 100,000 20,000 2 - Working - None - 5,227,680 5,227,680 Development Corp. related parties" 4.10% capital

Taiwan Envirotech Other receivables- 5 Taiwan Wind Lion Yes 10,000 10,000 10,000 2 - Working - None - 27,140 27,140 Travel Service Corp. Development Corp. related parties" 3.70% capital

Note 1: Except for actural amount drawn down (Note 7), amount of transactions with the borrower (Note 9) and allowance for doubtful accounts, the balances and amounts mentioned in this table refer to the ceiling or amount of loans to others on the date of occurrence (dates of boards of directors' resolutions, date of signing the contract, date of payment or other date that can confirm the counterparty and monetary amount of the transaction, whichever date is earlier) pursuant to Article 7 of the Regulations. Note 2: The numbers filled in for the loans provided by the Company or subsidiaries are as follows: (1) The Company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’, and the same number refers to the same subsidiary. Note 3: Fill in the name of account in which the loans are recognised, such as receivables–related parties, current account with stockholders, prepayments, temporary payments, etc. Note 4: Accumulated maximum outstanding balance of loans to others as of the reporting month of the current year. Note 5: Fill in the effective ceiling/amount of loans to others as of the reporting month.（The amounts of funds to be loaned to others which have been approved by the board of directors of a public company in accordance with Article 14, Item 1 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies ＂ should be included in its published balance of loans to others at the end of the reporting period to reveal the risk of loaning the public company bears, even though they have not yet been appropriated. However, this balance should exclude the loans repaid when repayments are done subsequently to reﬂect the risk adjustment. In addition, if the board of directors of a public company has authorized the chairman to loan funds in instalments or in revolving within certain lines and within one year in accordance with Article 14, Item 2 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”, the published balance of loans to others at the end of the reporting period should also include these lines of loaning approved by the board of directors, and these lines of loaning should not be excluded from this balance even though the loans are repaid subsequently, for taking into consideration they could be loaned again thereafter.

148 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

TAIWAN LAND DEVELOPMENT CORPORATION Loans to others Year ended December 31, 2019 Table 1 Expressed in thousands of NTD(Except as otherwise indicated) Maximum Collateral outstanding Balance at Amount of Reason General Is a balance during December Actual Nature of transactions for short- Allowance Limit on loans Ceiling on No. amount Interest for granted to total loans （Note 2） Creditor Borrower ledger account related the year ended 31, drawn down rate loan with the term doubtful a single party granted Footnote （Note 3） party December 31, 2019 （）（Note 7） borrower financing Item Value （）（） 2019 （Note 5） Note 6 （Note 8）（Note 9） accounts Note 10 Note 10 （Note 4）

Taiwan Commerce Taiwan Envirotech Other receivables- 2 Yes $ 40,000 $ - $ - 2 $ - Working $ - None $ - $ 1,378,048 $ 1,378,048 Development Corp. Development Corp. related parties" 3.50% capital

Taiwan Commerce Other receivables- 2 The Company Yes 250,000 220,000 170,000 2 - Working - None - 1,378,048 1,378,048 Development Corp. related parties" 3.50% capital

Taiwan Envirotech Other receivables- 3 The Company Yes 92,000 60,000 10,000 2 - Working - None - 65,999 65,999 Development Corp. related parties" 3.70% capital

Taiwan Innovation Other receivables- 4 The Company Yes 100,000 100,000 20,000 2 - Working - None - 5,227,680 5,227,680 Development Corp. related parties" 4.10% capital

Taiwan Envirotech Other receivables- 5 Taiwan Wind Lion Yes 10,000 10,000 10,000 2 - Working - None - 27,140 27,140 Travel Service Corp. Development Corp. related parties" 3.70% capital

Note 6: Fill in the actual amount of loan to the debtors which does not exceed the ceiling. Note 7: The column of ‘Nature of loan’ shall fill in ‘Business transaction or ‘Short-term financing’. (1) Business relationship is ‘1’. (2) Short-term financing is ‘2’. Note 8: Fill in the amount of business transactions when nature of the loan is related to business transactions. Note 9: Fill in purpose of loan when nature of loan is for short-term financing, for example, repayment of loan, acquisition of equipment, working capital, etc. Note10: Fill in limit on loans granted to a single party and ceiling on total loans granted as prescribed in the creditor company’s “Procedures for Provision of Loans”, and state each individual party to which the loans have been provided and the calculation for ceiling on total loans granted in the footnote. (1) Ceiling on total loans granted to others is 50% of the Company's net assets; limit on loans granted to a single party is 20% of the Company's net assets. (2) Ceiling on total loans granted to others is 40% of the TIDC's net assets; limit on loans granted to a single party is 40% of TIDC's net assets. (3) Ceiling on total loans granted to others is 40% of the TCDC's net assets; limit on loans granted to a single party is 40% of TCDC's net assets. (4) Ceiling on total loans granted to others is 40% of the TEDC's net assets; limit on loans granted to a single party is 40% of TEDC's net assets. (5) Ceiling on total loans granted to others is 40% of the Taiwan Wind Lion Travel Service Corp.'s net assets; limit on loans granted to a single party is 40% of Taiwan Wind Lion Travel Service Corp.'s net assets.

149 TAIWAN LAND DEVELOPMENT CORPORATION Provision of endorsements and guarantees to others Year ended December 31, 2019 Table 2 Expressed in thousands of NTD(Except as otherwise indicated) Party being endorsed/guaranteed Ratio of Maximum Outstanding accumulated Provision of Provision of Provision of Limit on outstanding endorsement/ Amount of endorsement/ Ceiling on endorsements/ endorsements/ endorsements/ Relationship endorsements/ endorsement/ guarantee Actual amount endorsements/ guarantee amount total amount of guarantees by guarantees by guarantees to Number Endorser/ with the guarantees guarantee amount at drawn down guarantees to endorsements/ parent subsidiary to the party in Footnote (Note 2) guarantor Company name endorser/ provided for a amount as of December 31, （Note 7） secured with net asset value of guarantees company parent Mainland guarantor single party December 31, 2019 collateral the endorser/ provided to subsidiary company China （）（Note 4） 2019 （Note 8）（Note 4） Note 3 （）（Note 6） guarantor (Note 9) (Note 9）（Note 9） Note 5 company

The Company and Wind Lion Plaza $ 19,766,144 $ 50,000 $ - $ - $ - $ 39,532,288 0 Taiwan Innovation Corporation 3 0.00% Y N N Development Corp.

Wind Lion Plaza 19,766,144 150,000 - - - 39,532,288 0 The Company Corporation 3 0.00% Y N N

The Company and Taiwan Commerce 0 Taiwan Innovation 3 19,766,144 3,286,000 1,600,000 1,459,700 - 8.09% 39,532,288 Y N N Development Corp. Development Corp.

Taiwan Innovation 0 The Company 2 19,766,144 3,602,000 2,242,000 2,098,067 152,000 11.34% 39,532,288 Y N N Development Corp.

Taiwan Innovation Hualien Culture 1 Clubhouse 2 26,138,402 160,000 160,000 160,000 - 1.22% 26,138,402 Y N N Development Corp. Corporation

Taiwan Innovation 1 The Company 4 26,138,402 5,190,124 4,854,050 4,728,749 4,900,000 37.14% 26,138,402 N Y N Development Corp.

Taiwan Envirotech Taiwan Innovation 2 4 329,996 172,000 172,000 172,000 172,000 104.24% 329,996 N Y N Development Corp. Development Corp.

Note 1: Except for actual amount drawn down (Note 7), the balances and amounts mentioned in this table refer to the maximum amount or amount of endorsement/guarantees to others on the date of occurrence (the earlier of dates of boards of directors resolutions, date of signing the contract, date of payment or other date that can confirm the counter party and monetary amount of the transaction) pursuant to Article 7 of the Regulations. Note 2: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows: (1) The Company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’and the same number refers to the same subsidiary. Note 3: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following seven categories: (1) Having business relationship. (2) The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed subsidiary. (3) The endorsed/guaranteed company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company. (4) The endorser/guarantor parent company owns directly and indirectly more than 90% voting shares of the endorsed/ guaranteed company. (5) Mutual guarantee of the trade made by the endorsed/guaranteed company or joint contractor as required under the construction contract. (6) Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership. (7) Joint guarantee of the performance guarantee for pre-sold home sales contract as required under the Consumer Protection Act.

150 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

TAIWAN LAND DEVELOPMENT CORPORATION Provision of endorsements and guarantees to others Year ended December 31, 2019 Table 2 Expressed in thousands of NTD(Except as otherwise indicated) Party being endorsed/guaranteed Ratio of Maximum Outstanding accumulated Provision of Provision of Provision of Limit on outstanding endorsement/ Amount of endorsement/ Ceiling on endorsements/ endorsements/ endorsements/ Relationship endorsements/ endorsement/ guarantee Actual amount endorsements/ guarantee amount total amount of guarantees by guarantees by guarantees to Number Endorser/ with the guarantees guarantee amount at drawn down guarantees to endorsements/ parent subsidiary to the party in Footnote (Note 2) guarantor Company name endorser/ provided for a amount as of December 31, （Note 7） secured with net asset value of guarantees company parent Mainland guarantor single party December 31, 2019 collateral the endorser/ provided to subsidiary company China （）（Note 4） 2019 （Note 8）（Note 4） Note 3 （）（Note 6） guarantor (Note 9) (Note 9）（Note 9） Note 5 company

The Company and Wind Lion Plaza $ 19,766,144 $ 50,000 $ - $ - $ - $ 39,532,288 0 Taiwan Innovation Corporation 3 0.00% Y N N Development Corp.

Wind Lion Plaza 19,766,144 150,000 - - - 39,532,288 0 The Company Corporation 3 0.00% Y N N

The Company and Taiwan Commerce 0 Taiwan Innovation 3 19,766,144 3,286,000 1,600,000 1,459,700 - 8.09% 39,532,288 Y N N Development Corp. Development Corp.

Taiwan Innovation 0 The Company 2 19,766,144 3,602,000 2,242,000 2,098,067 152,000 11.34% 39,532,288 Y N N Development Corp.

Taiwan Innovation Hualien Culture 1 Clubhouse 2 26,138,402 160,000 160,000 160,000 - 1.22% 26,138,402 Y N N Development Corp. Corporation

Taiwan Innovation 1 The Company 4 26,138,402 5,190,124 4,854,050 4,728,749 4,900,000 37.14% 26,138,402 N Y N Development Corp.

Taiwan Envirotech Taiwan Innovation 2 4 329,996 172,000 172,000 172,000 172,000 104.24% 329,996 N Y N Development Corp. Development Corp.

Note 4: Fill in limit on endorsements/guarantees provided for a single party and ceiling on total amount of endorsements/guarantees provided as prescribed in the endorser/guarantor company's ""Procedures for Provision of Endorsements and Guarantees"", and state each individual party to which the endorsements/guarantees have been provided and the calculation provided in the footnote. (1) Ceiling on total endorsements/guarantees is 200% of the Company's net asset; limit on endorsements/guarantees to a single party is 100% of the Company's net assets. (2) Ceiling on total endorsements/guarantees is 200% of TIDC’s net assets; limit on endorsements/guarantees to a single party is 200% of TIDC’s net assets. Note 5: The maximum outstanding endorsement/guarantee amount as of the reporting month of the current year. Note 6: Fill in the amount approved by the Board of Directors or the chairman if the chairman has been authorised by the Board of Directors based on subparagraph 8, Article 12 of the Regulations Governing Loaning of Funds and Making of Endorsements/ Guarantees by Public Companies. Note 7: Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company. Note 8: Fill in the amount of endorsements/guarantees secured with collateral. Note 9: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by the Company to subsidiary and provision by subsidiary to the Company, and provision to the party in Mainland China.

151 TAIWAN LAND DEVELOPMENT CORPORATION Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) Year ended December 31, 2019 Table 3 Expressed in thousands of NTD(Except as otherwise indicated) As of December 31, 2019 Marketable securities Relationship with the General Footnote Securities held by （Note 1） securities issuer （Note 2） ledger account Book value （Note 4） Number of shares （Note 3） Ownership (%) Fair value

Taiwan Envirotech Development Stock, The First Credit Financial asset at fair value None 20 $ 2 - $ 2 Corp. Cooperative Of Hualien through profit or loss

Stock, The First Credit Financial asset at fair value Hualien Culture Clubhouse None 20 2 - 2 Corporation Cooperative Of Hualien through profit or loss

Preference share, Taiwan Financial asset at fair value The Company Innovation Development The Company's subsidiary 150,000,000 1,526,700 100 1,526,700 Corporation through profit or loss

Schroder Asian Emerging Bond Financial asset at fair value Taiwan Wind Lion Travel Service None - 4,529 - 4,529 Corp. Fund through profit or loss

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities. Note 2: Leave the column blank if the issuer of marketable securities is non-related party. Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; fill in the acquisition cost or amortised cost deducted by accumulated impairment for the marketable securities not measured at fair value. Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

TAIWAN LAND DEVELOPMENT CORPORATION Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more Year ended December 31, 2019 Table 4 Expressed in thousands of NTD(Except as otherwise indicated)

Transaction Status of Basis or reference Real estate Real estate date or date Date of Book value Disposal amount collection of "Gain (loss) Counterparty Relationship with the Reason for disposal used in setting the Other commitments disposed by of the event acquisition proceeds on disposal" seller price

13 slope parking lots in B1, B2 and B3 of No. Chinese Evangelical The appraised value The Company 232 and 246, Sec. 3, 2019/7/3 Year 1994 $ 523,000 $ 530,000 $ 530,000 ($ 571) Covanant Church None To fulfill working capital by appraiser was - Chengde Rd., Datong $529,290. Dist., Taipei City.

Note 1: If terms of related-party transactions are diﬀerent from third-party transactions, explain the diﬀerences and reasons in the ‘Unit price’ and ‘Credit term’ columns. Note 2: In case related-party transaction terms involve advance receipts (prepayments) transactions, explain in the footnote the reasons, contractual provisions, related amounts, and differences in types of transactions compared to third-party transactions. Note 3: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

152 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

TAIWAN LAND DEVELOPMENT CORPORATION Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) Year ended December 31, 2019 Table 3 Expressed in thousands of NTD(Except as otherwise indicated) As of December 31, 2019 Marketable securities Relationship with the General Footnote Securities held by （Note 1） securities issuer （Note 2） ledger account Book value （Note 4） Number of shares （Note 3） Ownership (%) Fair value

Taiwan Envirotech Development Stock, The First Credit Financial asset at fair value None 20 $ 2 - $ 2 Corp. Cooperative Of Hualien through profit or loss

Stock, The First Credit Financial asset at fair value Hualien Culture Clubhouse None 20 2 - 2 Corporation Cooperative Of Hualien through profit or loss

Preference share, Taiwan Financial asset at fair value The Company Innovation Development The Company's subsidiary 150,000,000 1,526,700 100 1,526,700 Corporation through profit or loss

Schroder Asian Emerging Bond Financial asset at fair value Taiwan Wind Lion Travel Service None - 4,529 - 4,529 Corp. Fund through profit or loss

153 TAIWAN LAND DEVELOPMENT CORPORATION Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more Year ended December 31, 2019 Table 5 Expressed in thousands of NTD(Except as otherwise indicated)

Diﬀerences in transaction terms Notes/accounts receivable Transaction compared to third party transactions (payable) Purchaser/ Relationship （Note 1） Footnote Counterparty with the （） seller counterparty Percentage of total Note 2 Purchases Amount Percentage of total Credit term Unit price Credit term Balance notes/accounts receivable (sales) purchases (sales) (payable)

Taiwan Commerce Wind Lion Plaza Same Parent $ 129,231 Based on the $ 5,989 Development Corporation Company (sales) 67.99% contract Negotiated price No significant change 63.30% - Corp.

Taiwan Innovation Same Parent Based on the Wind Lion Plaza (sales) 105,710 Negotiated price 36,000 - Corporation Development Corp. Company 46.50% contract No significant change 51.27%

Taiwan Envirotech Taiwan Innovation Same Parent Based on the (sales) 413,827 Negotiated price 36,889 - Development Development Corp. Company 93.39% contract No significant change 20.81% Corp.

Taiwan " The Innovation Company's 111,154 Based on the - Development The Company subsidiary (sales) 36.13% contract Negotiated price No significant change - - Corp. "

TAIWAN LAND DEVELOPMENT CORPORATION Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more Year ended December 31, 2019 Table 6 Expressed in thousands of NTD(Except as otherwise indicated)

Overdue receivables Relationship Balance as at Turnover rate Amount collected Allowance for Creditor Counterparty with the December 31, 2019 (times) subsequent to the doubtful accounts counterparty （Note 1） Amount Action taken balance sheet date

The Company Taiwan Innovation Development Corp. The Company $ 165,382 Note 3 $- - $ - $ -

Taiwan Commerce The Company The Company 170,401 Note 4 - - 170,401 - Development Corp.

Note 1: Fill in separately the balances of accounts receivable–related parties, notes receivable–related parties, other receivables– related parties…. Note 2: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation. Note 3: Other receivables arising from preference dividends and directors' and supervisors' remuneration. Note 4: Other receivables arising from loan to others and interest.

154 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

TAIWAN LAND DEVELOPMENT CORPORATION Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more Year ended December 31, 2019 Table 5 Expressed in thousands of NTD(Except as otherwise indicated)

Taiwan Commerce Wind Lion Plaza Same Parent $ 129,231 Based on the $ 5,989 Development Corporation Company (sales) 67.99% contract Negotiated price No significant change 63.30% - Corp.

Taiwan Innovation Same Parent Based on the Wind Lion Plaza (sales) 105,710 Negotiated price 36,000 - Corporation Development Corp. Company 46.50% contract No significant change 51.27%

Taiwan Envirotech Taiwan Innovation Same Parent Based on the (sales) 413,827 Negotiated price 36,889 - Development Development Corp. Company 93.39% contract No significant change 20.81% Corp.

Taiwan " The Innovation Company's 111,154 Based on the - Development The Company subsidiary (sales) 36.13% contract Negotiated price No significant change - - Corp. "

The Company Taiwan Innovation Development Corp. The Company $ 165,382 Note 3 $- - $ - $ -

Taiwan Commerce The Company The Company 170,401 Note 4 - - 170,401 - Development Corp.

155 TAIWAN LAND DEVELOPMENT CORPORATION Signiﬁcant inter-company transactions during the reporting period Year ended December 31, 2019 Table 8 Expressed in thousands of NTD(Except as otherwise indicated)

Transaction Number Company name Counterparty Relationship Percentage of consolidated (Note 1) (Note 2) General ledger account Amount Transaction terms total operating revenues or total assets (Note 3)

3 Taiwan Envirotech Development Corp. Taiwan Innovation Development Corp. 2 Engineering service revenue $413,827 Note 6 105.05%

4 Wind Lion Plaza Corporation Taiwan Envirotech Development Corp. 3 Sales of Services 30,632 Note 6 7.78%

4 Wind Lion Plaza Corporation Taiwan Innovation Development Corp. 2 Sales of Services 105,710 Note 6 26.83%

0 The Company Taiwan Innovation Development Corp. 1 Interest revenue from preference shares 45,000 Note 5 11.42%

2 Taiwan Commerce Development Corp. Wind Lion Plaza Corporation 3 Rental revenue 129,231 Note 5 32.81%

2 Taiwan Commerce Development Corp. Taiwan Innovation Development Corp. 2 Rental revenue 39,077 Note 5 9.92%

1 Taiwan Innovation Development Corp. The Company 2 Construction revenue 111,154 Note 5 28.22%

1 Taiwan Innovation Development Corp. The Company 2 Sales of Services 16,000 Note 5 4.06%

0 The Company Taiwan Commerce Development Corp. 1 Endorsements and guarantees 1,459,700 None 3.88%

0 The Company Taiwan Innovation Development Corp. 1 Endorsements and guarantees 2,098,067 None 5.57%

1 Taiwan Innovation Development Corp. The Company 2 Endorsements and guarantees 4,728,749 None 12.56%

1 Taiwan Innovation Development Corp. Taiwan Commerce Development Corp. 1 Endorsements and guarantees 1,459,700 None 3.88%

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.): (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary.

156 Intergenerational×Happiness×Health Maintenance Village TLDC 2019 ANNUAL REPORT VI FINANCIAL INFORMATION

TAIWAN LAND DEVELOPMENT CORPORATION Signiﬁcant inter-company transactions during the reporting period Year ended December 31, 2019 Table 8 Expressed in thousands of NTD(Except as otherwise indicated)