chapterimg.prince.com.tw/upload/finance/201861385058156.pdf · company profile 6 7 ii. company...

1Prince Housing & Development Corp.

Letter to Shareholders 3

2.1 Date of Incorporation 72.2 Company History 7

Corporate Governance Report3.1 Organization 93.2 Directors’, Supervisors’ and Managers’ Information 123.3 Implementation of Corporate Governance 223.4 Auditing Notes 353.5 CPA Replacement Information 363.6 If the chairman, president, and financial or accounting manager of the company who had worked for the independent auditor or the related party in the most recent year, the name, title, and term with the independent auditor or the related party must be disclosed 363.7 Equity transferred and equity pledged (or changes thereto) by Directors, Supervisors, Department Heads and Shareholders of 10% Shareholding

or More during the preceding year or in the current year up to the date of printing of the annual report 373.8 The relationship of the top ten shareholders as defined in the Finance Standard Article 6 393.9 Investments of Directors, Supervisors, managers and directly or indirectly controlled business on the reinvested business and the total shareholdings ratio 41

Capital Overview4.1 Capital and Shares 434.2 Issuance of Corporate Bonds 484.3 Issuance of Preferred Shares 494.4 Global depository receipts 494.5 Employee Stock Options 494.6 Status of New Shares Issuance in Connection with Mergers and Acquisition 494.7 Information on Implementation of the Company’s Funds Utilization Plans 49

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SpokespersonName: Ming-Fan XieTitle: PresidentTel: 886-2-2758-9599E-mail:[email protected]

Deputy SpokespersonName: Chun-Liang LinTitle: Assistant Vice President of FinanceTel: 886-2-2758-9599E-mail: [email protected]: Da-Chang TaiTitle: Manager of AccountingTel: 886-6-282-1155E-mail: [email protected]

Stock Transfer AgentPresident Security Corp.Address: No.8, Dongxing Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.)Tel: 886-2-2746-3797Website: www.pscnet.com.tw

AuditorsPriceWaterhouseCooper (PwC)Auditors: Chien-Chih Wu, Yi-Chang LinAddress: 22F., No.95, Minzu 2nd Rd., Lingya Dist., Kaohsiung City 802, Taiwan (R.O.C.)Tel.: 886-7-237-3116Website: www.pwc.com/tw

Overseas Securities ExchangeNone

Corporate Websitehttp://www. prince.com.tw

Headquarters, Branches and PlantHead OfficeAddress: 21F., No.11, Songgao Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.)Tel: 886-2- 2758-9599

Taichung BranchAddress: 14F., No.416, Sec. 2, Chongde 2nd Rd., Beitun Dist., Taichung City 406, Taiwan (R.O.C.)Tel: 886-4- 2242-7376

Tainan BranchAddress: 8F., No.398, Sec. 1, Zhonghua E. Rd., East Dist., Tainan City 701, Taiwan (R.O.C.)Tel: 886-6-282-1155

Kaohsiung BranchAddress: 11F., No.74, Zhongzheng 2nd Rd., Lingya Dist., Kaohsiung City 802, Taiwan (R.O.C.)Tel: 886-7-222-9891

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Operational Highlights

5.1 Business Activities 515.2 Market and Sales Overview 535.3 Human Resources 605.4 Disbursement of environmental protection 615.5 Labor Relations 615.6 Important Contracts 62

Financial Information6.1 Five-Year Financial Summary– Consolidated Financial Statement 656.2 Five-Year Financial Analysis 696.3 Consolidated Financial Statements and Report of Independent Accountants for Years Ended December 31, 2017 and 2016 756.4 Non-Consolidated Financial Statements and Report of Independent Accountants for Years Ended December 31, 2017 and 2016 152

Review of Financial Conditions, Operating Results, and Risk Management7.1 Analysis of Financial Status 2167.2 Analysis of Operation Results 2177.3 Analysis of Cash Flow 2177.4 Major Capital Expenditure Items 2187.5 InvestmentPolicyinLastYear,MainCausesforProfitsorLosses, Improvement Plans and the Investment Plans for the Coming Year 2187.6 Analysis of Risk Management 2187.7 Other major matters 220

Special Disclosure8.I. Related Party 2228.2 Information of private offered securities 2328.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years 2328.4 Other Necessary Supplement 232

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Annual Report 2017

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4 5Prince Housing & Development Corp.

I


I


I. Business Report

I. 2017 Business Report

In 2017 the black swan effect persisted as witnessed by examples including Donald Trump’s US presidency,theUK’sBrexitprocedureandsoon.Eachofthemshockedtheglobalfinancialmarket.Fortunately, as the worst scenario has gone, market pessimism gradually faded out, and market confidencerecovered.

In the realty market, anxiety was gradually moderated as expedited by the dilution of the effect of combined property (land and building) taxes and emergence of deferred buying orders. Adhering to the “three goods and fair price” founding spirit and business philosophy inspired by former UK PM Churchill: “We shape our buildings, and afterwards our buildings shape us,” we continue to launch projects in northern, central and southern Taiwan and maintain housing quality control for residents. While air pollution has been deteriorating recently, we continuously develop and use new testing instruments for and in each construction projects, vowing to build smart and secure housing. In addition,asprofitsfromre-investmentsoverthepastdecadeorsograduallyemerged,equitycomesin steadily every year.

Projects completed in 2017 included: Prince Shin-Yi in and Price Fu III in Taipei and Prince Cloud inKaohsiung.In2017,theannualrevenuewasNT$5.734billionandthenetprofitoftheperiodwasNT$1.281billion; theconsolidatedrevenuewasNT$10.988billionandtheconsolidatednetprofitwas NT$1.264 billion.

2. Summary of the Current Business Plan

Looking into 2018, we should not overlook black swans at all times. While the trend of interest rate is the biggest black swan and the change in the low interest environment, the pressure from interest rise will gradually come to keep pace with the foreign countries. Along with the restless cross-strait relations and the “nine-in-one election” which is considered as the probe of the 2020 presidential elections, tough challenges are standing in the way of overall economic development.

In the realty market, as the three intervening factors: new canopy (rain shade) policy, nine-in-one election at the end of the year, and the interest trends of the Central Bank, the V-shape reversion of the reality market is far from expectation. However, the effect of the Taichung railway elevation project, the trial operations of the Taichung Metro Green Line, and the new Taichung Metro Orange Line (Port of Taichung to Taichung Airport) can help boost domestic demands and spur regional benefits toenergizeperipheralrealtymarkets.Furthermore,asmanycountiesandcitiesreducetheassessed present value and government assessed land value, this can effectively alleviate housing purchase burdens and stimulate purchase. Projects to be completed in 2018 include: Prince Hua-Wei in Taipei; Prince Yu Ding, W Epoch, Prince County and Prince Hsin Fu in Taichung; Prince Jum Fon Huei and Prince Win2 Future in Tainan; and Prince Cloud Zone C in Kaohsiung. In the re-investment, apart from continuously optimizing suite and house operations, we will integrate the marketing channels of Prince hotels to create topics in the business to bolster business performance.

3. Future Development Strategy

In view of the rise of “smart housing and healthy housing,” we will follow this trend and engage in active branding to make innovation and keep pace with the time, courageously challenge changes in the macro environment, enforce smart and healthy housing, and continue technology development innovation with the academe, in order to keep our 45-year-old brand glowing and shining. As 2018 istheyearofthedoginChinesezodiacandearthinthefiveelements,thisistheyearforlocaldogs,and we are sure that it will be favorable to the overall realty market.

Chairman: Alex C. Lo President: Ming-fan Hsieh CAO: Da-chang Dai

II

Com

pany Profile

7Prince Housing & Development Corp.6

II. Company Profile

2.1 Date of Incorporation: September 20, 19732.1 Company History

Prince was founded on September 20 by Hsiu-Chi Wu, Yu-Li Hou, Zun-Xian Wu, Jyun-Jie Wu, Ching-Yuan Kao, Kao-Huei Cheng, Sheng-Ju Chuang, Xian-Fu Chuang, and Chang-Xing Wu in 1973. The changes in capital are as follows.

Year Milestones1973 Founded on September 20 with NT$37.5 million capital.

1975 Increased Capital to NT$97.5 million

1976 Increased capital to NT$120 million




1984 Increased capital to NT$327.6 million

1989 Increased capital to NT$1,300 million



1992 Increased capital to NT$3,948.75 million








2002 Decreased capital to NT$9,150.76 million












Company Profile

Annual Report 2017

Chapter II

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III. Corporate Governance Report

3.1 Organization 3.1.1 Organization Chart

Sales Service

Secretary

Engineering Affairs Service

Administrative Service

Sales-Tainan Sales Dept.

Land Dvpt. Dept.

Design Dept.

Engineering Dept.

Engineering Mgmt.-Branches

Interior Design

Architectural Design

Office of Design -Branches

Human Resource

Investment Management

Finance

Finance Taipei

Administrative -Branches

General Affairs

Finance Dept.

Accounting Dept.

Administrative Dept.

Cost

Accounting

Investment Planning

Dormitory of NCKU, Tainan

Office of IT

Dormitory of NTU, Taipei

Technique Development

Land Dvpt.- Branches

Office of Land Development

Sales-Taichung

Sales-Taipei

Sales Dept.

Sales Dept.

PresidentChairman /Vice

Chairman

Public AffairsLegal

Board of Directors

Cost Control

Board of Shareholders

Board ofSupervisors

Audit Office

Planning Group

Secretary Service

IT Dept.

Planning & Strategy Dept.

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3.1.2 Function of Each Department

Department Functions

Sales I(Taipei)Sales II

(Taichung)Sales III

(Tainan, Kaohsiung)

1. Operation: Prepare property sale or lease contracts, arrange contracting and sales matters.

2. Advertisement: Plan and design the advertising of houses.3. Market research: Survey the real estate markets, collect, arrange, and

analyze market data.4. Service: Provide after-sales services.

Land Development

1. Land purchase: Investigate and analyze land information and conditions, evaluateprofitandlossoflanddevelopment.

2. Land registration: Register buildings, transfer property rights, control process and schedule of land registration.

3. Land asset management: Create and maintain database of the company’s land assets, compute land value tax and house tax, etc.

Design

1. Architectural design: Survey and measure before engineering design, register and manage original engineering design and engineering literatures.

2. Interior design: Assist interior decoration, evaluate and conduct alteration of interior design.

Engineering

1. Engineering management: Supervise construction quality and progress, evaluate external construction projects, acquire and develop construction projects, undergo construction acceptance, investigate engineering materials, and collect materials of construction and planning acts.

2. Technique Development: Research and develop in construction technique and technique cooperation, survey new techniques.

Administration

1. Administration: Responsible for the company stock affairs.2. General Affairs: Responsible for all general affairs.3. Human Resource: Responsible for all matters related to human resource

management.

Finance

1. Investment management: Collect and analyze data of the subsidiaries, monitor operations of subsidiaries and ensure their operations are consistent with budget estimates.

2. Finance: Prepare cash budgets, plan for long-term funds, collect and distribute cash to support each branch and each subsidiary, pay salaries, and manage cash and instruments in hand.

3. Finance in Taipei: Manage cash and instruments, deal with housing and land loans, research in financial commodities, and meet the financial needs of subsidiaries.

Department Functions

Accounting

1. Accounting: Examine each kind of vouchers, keep bills and vouchers safely, keep track of account receivables, prepare lists of property, complete affairs pertaining to taxation, and analyze expenses of each department.

2. Cost: Collect and organize each voucher or cost source, prepare different kinds of documents to maintain individual/ summary inventory and cost accounts.

InformationTechnology

1. Overall information technology and information security.2. Develop and maintain software programs.3. Responsible for IT vendor management and the contracts, acquirements,

and relationship with strategic IT vendors.

SecretaryOffice

1. Legal: Manage the company’s involvement in litigation, draft and review contracts and correspondence, participate in negotiation.

2. Public Relationship: Borden and deepen the company’s network of relationship across the foreign investors, the security investment companies, and company associations, serve as the company’s central contact for media and disseminate information regarding the company’s activities to the public.

3. Secretary: Conduct assignments from the chairman, the supervisors and the board of directors, arrange schedules, and manage artist paintings.

Planning & Strategy

1. Investment Planning: Identify effective investment strategies and conduct investment feasibility evaluation.

2. BOT projects: Operate dormitory BOT of National Taiwan University and National Cheng Kung University.

Cost Control1. Follow the company policy to purchase and deliver raw materials.2. Update costs of each project continuously from planning to settlement.

AuditOffice

1. Performauditingactivitiesidentifiedbytheboardofdirectors.2. Evaluate the internal control system and identify the effectiveness and

theefficiencyofeachoperationcycle.3. Report periodically the status of audit plan and provide related

recommendations as well as continuous improvement.4. Make certain that the company is in full compliance with the government

laws and regulations.

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5

Unit: Shares; 12.31.2017

Spouse & Minor Shareholding

Shareholding by Nominee

Arrangement Experience (Education) Other Position

Executives, Directors or Supervisors Who are Spouses or within Two Degrees of

Kinship

Shares % Shares % Title Name Relation

- - - - - - - - -

425,013 0.03% - - MBA, UCLA, USA (Note 2) Director Hsiu-Ling Kao Spouse

- - - - BA, Dept. of Accounting, National Chung Yuan Christian Univ. (Note 2) - - -

- - - - - - - - -

- - - - BS, Dept. of Agricultural Economics, National Taiwan Univ. (Note 2) - - -

- - - - - - - - -

- - - - Marymount College USA (Note 2) Chairman Chih-Hsien Lo Spouse

- - - - Junior High School Director of Tainan Spinning Co., Ltd. Director

Chien-Te Wu, Ping-Chih Wu, Shih-Hung

Chuang

Son, Son,

In-Law

- - - - - - - - -

239,010 0.01% - - MBA Managing Director of Kuen

Ching International Development Co. Ltd.

Director Chao-Mei Wu

Tseng, Ping-Chih Wu, Shih-Hung Chuang

Mother, Brother, In-Law

3,875,760 0.24% - - MS of Chemical Engineering and MS of Industrial Management, USC, USA

Director of Kuen Ching International Development Co.

Ltd. Director

Chao-Mei Wu Tseng, Ping-Chih Wu,

Shih-Hung Chuang

Mother, Brother, In-Law

- - - - - - - - -

44,329 0.00% - - BS, Dept. of Chemistry, Fu Jen Catholic Univ.

Chairman of San Shin Spinning Co., Ltd. - - -

- - - - - - - - -

- - - - MBA, Boston Univ., USA CEO of Times Square International Hotel Co., Ltd. Director

Chao-Mei Wu Tseng, Ping-Chih Wu,

Chien-Te Wu In-Law

- - - - BA, Dept. of Transportation &

Communication Management, National Cheng Kung Univ.

Chairman of Universal Cement Co., Ltd. Director Po-Ming Hou Brother

- - - - - - - - -

- - - - Chinese Culture Univ. Chairman of Tainan Spinning Co., Ltd. Director Po-Yi Hou Brother

- - - - - - - - -

5,624,933 0.35% - - Hsing Wu Univ. of Science and Tech.

Director and President of Shin Bo Fiber Co., Ltd.

- - -

400,000 0.02% - - Finance Manager of Uni-President Enterprises Corp., Nan Ying Senior Commercial & Industrial Vocational

School

- - - -

- - - - B.L., Dept. of Law, National Taiwan Univ., Secretary General of Southern

Taiwan Science Park Bureau

Secretary General of Southern Taiwan Univ. of Science and

Tech. - - -


4

3.2 Directors’, Supervisors’ and Managers’ Information 3.2.1 Directors and Supervisors

Title Nationality/

Place of Incorporation

Name Gender Date Elected

Term (Years)

Date First Elected (Note 1)

Shareholding when Elected Current Shareholding

Shares % Shares % Chairman

(Institutional Shareholder) Tainan City Uni-President Enterprises Corp. - 6.21.2016 3 8.23.1973

(Note 1) 162,743,264 10.03% 162,743,264 10.03%

Chairman (Representitive) R.O.C. Chih-Hsien Lo M 6.21.2016 3 6.18.2013 - - - -

Director (Representitive) R.O.C. Tsung-Ping Wu M 6.21.2016 3 6.18.2013 - - - -

Director (Institutional Shareholder) Tainan City Joyful Inv. Co., Ltd. - 6.21.2016 3 4.03.1989 28,136,024 1.73% 28,136,024 1.73%

Director (Representitive) R.O.C. Li-Ling Cheng F 106.08.22 3 6.19.2001 - - - -

Director (Institutional Shareholder) Tainan City Kao Chyuan Inv.

Corp. - 6.21.2016 3 4.03.1989 (Note 1) 45,437,308 2.80% 52,457,308 3.23%

Director (Representitive) R.O.C. Hsiu-Ling Kao F 6.21.2016 3 6.18.2013 425,013 0.03% 425,013 0.03%

Director R.O.C. Chao-Mei Wu Tseng F 6.21.2016 3 4.26.1986 39,023,030 2.40% 39,023,030 2.40%

Director (Institutional Shareholder) Tainan City Taipo Inv. Co., Ltd. - 6.21.2016 3 4.03.1989 83,740,587 5.16% 88,386,587 5.44%

Director (Representitive) R.O.C. Chien-Te Wu M 6.21.2016 3 4.03.1989 9,656,943 0.59% 9,656,943 0.59%

Director (Representitive) R.O.C. Ping-Chih Wu M 6.21.2016 3 6.24.2010 12,888,695 0.79% 12,888,695 0.79%

Director (Institutional Shareholder) Tainan City Young Yuan Inv. Co.,

Ltd. - 6.21.2016 3 6.20.2012 14,969,463 0.92% 14,969,463 0.92%

Director (Representitive) R.O.C. Chung-Ho Wu M 6.21.2016 3 6.20.2012 5,209,847 0.32% 5,209,847 0.32%

Director (Institutional Shareholder) Taipei City Hung Yao Inv. Co.,

Ltd. - 6.21.2016 3 6.24.2010 2,346,491 0.14% 2,346,491 0.14%

Director (Representitive) R.O.C. Shih-Hung Chuang M 6.21.2016 3 8.29.2013 1,687,748 0.10% 1,687,748 0.10%

Director R.O.C. Po-Yi Hou M 6.21.2016 3 6.15.2004 13,701,215 0.84% 13,701,215 0.84%

Director (Institutional Shareholder) Tainan City Yu Peng Inv. Co.,

Ltd. - 6.21.2016 3 6.21.2016 669,975 0.04% 669,975 0.04%

Director (Representitive) R.O.C. Po-Ming Hou M 6.21.2016 3 6.15.2004 22,923,624 1.41% 22,923,624 1.41%

Director (Institutional Shareholder) Taipei City Cheng Long Inv. Co.,

Ltd. - 6.21.2016 3 4.26.1986 (Note 1) 25,882,643 1.59% 25,882,643 1.59%

Director (Representitive) R.O.C. Ying-Chih Chuang M 6.21.2016 3 4.26.1986 310,020 0.02% 310,020 0.02%

Independent Director R.O.C. Ho-Yi Hung M 6.21.2016 3 6.21.2016 - - - -

Independent Director R.O.C. Sheng-Tsai Hsu M 6.21.2016 3 6.21.2016 - - - -

Note 1: Uni-President Enterprises Corp. and Kao Chyuan Inv. Corp. stopped their director positions on Jun. 24, 2010 and reinstated on Jun. 18, 2013. Cheng Long Inv. Co., Ltd. stopped the director position on Jun. 18, 2013 and reinstated on Jun. 21, 2016.

3.2 Directors’, Supervisors’ and Managers’ Information3.2.1 Directors and Supervisors

Note 1: Uni-President Enterprises Corp. and Kao Chyuan Inv. Corp. stopped their director positions on Jun. 24, 2010 and reinstated on Jun. 18, 2013. Cheng Long Inv. Co., Ltd. stopped the director position on Jun. 18, 2013 and reinstated on Jun. 21, 2016.

Note 2: Current position with PHD and other company.

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Note 2: Current position with PHD and other company. Name Current Position with PHD and Other Company

Chih-Hsien Lo

Chairman of:

Uni-President Enterprises Corp., President Chain Store Corp., Uni-President Natural Industrial Corp., Ton Yi Industrial Corp., TTET Union Corp., Prince Housing & Development Corp., Cheng Shi Investment Holding Co., Ltd., Times Square International Co., Ltd., Dong Feng Enterprises Co., Ltd., Prince Industrial Co., Ltd., Prince Real Estate Co., Ltd., Kai Yu Investment Co., Ltd., President Packaging Corp., President International Development Corp., Tong Yu Investment Corp., Un-President Real Estate Co., Ltd., ScinoPharm Taiwan, Ltd., Uni-President Cold Chain Corp., Presco Netmarketing Inc., Uni-President Dream Parks Corp., Uni-OAO Travel Service Corp., Kai Nan Investment Co., Ltd., President Century Corp., Changjiagang President Nisshin Food Co., Ltd., Uni-President (Vietnam) Co., Ltd.Uni-President (Thailand) Ltd., Uni-President (Philippines) Corp., Uni-President China Holdings Ltd. (Cayman), Tong Ren Corp., President Enterprises (China) Investment Co., Ltd.

Vice Chairman of: President Nisshin Corp.

Director of:

President Baseball Team Corp., Nanlien International Corp., Tone Sang Construction Corp., Retail Support International Corp., Presicarre Corp., President Fair Development Corp., President Starbucks Coffee Corp., Uni-President Organics Corp., PK Venture Capital Corp., Uni-President Glass Industrial Co., Ltd., Kuang Chuan Dairy Co., Ltd., Kuang Chuan Foods Co., Ltd., Uni-President Development Corp., Tait Marketing & Distribution Co., Ltd., Weilih Food Corp., Geng Ding Co., Ltd., Prince Property Management Consulting Co., Ltd., Kao Chyuan Inv. Corp., President Chain Store (BVI) Holdings Ltd., President Chain Store (Labuan) Holdings Ltd., Cayman President Holdings Ltd., Kai Yu(BVI) Investment Co., Ltd., President Packaging Holdings Ltd., Uni-President Southeast Asia Holdings Ltd., PT ABC President Indonesia, President Energy Development (Cayman Islands) Ltd., Uni-President Asia Holdings Ltd., Uni-President International (HK) Co., Ltd., Champ Green Capital Co., Ltd., Champ Green (Shanghai) Consulting Co. Ltd., Guiyang President Enterprises Co., Ltd., Shanghai President Enterprises Co., Taizhou President Enterprises Co., Ltd., Fuzhou President Enterprises Co., Ltd., Hefei President Enterprises Co., Ltd., Ningxia President Enterprises Co., Ltd., Xuzhou President Enterprise Co., Ltd., Hangzhou President Enterprise Co., Ltd., Jinan President Enterprise Co., Ltd., Guangzhou President Enterprises Co., Ltd., Hainan President Enterprise Co., Ltd., Nanchang President Enterprises Co., Ltd., Nanning President Enterprise Co., Ltd., Zhanjiang President Enterprise Co., Ltd., Changsha President Enterprises Co., Ltd., Zhengzhou President Enterprises Co., Ltd., Chongqing President Enterprise Co,. Ltd., Jangsu President Enterprises Co., Ltd., Hunan President Enterprises Co., Ltd., Uni-President Enterprises (TianJin) Co., Ltd., Shanxi President Enterprises Co., Ltd., Shenyang President Enterprises Co., Ltd., Changchun President Enterprise Co., Ltd., Shanxi President Enterprises Corp., Henan President Enterprises Co., Ltd., Baiyin President Enterprise Co., Ltd., Akesu President Enterprise Co., Ltd., Shijiezhuanng President Enterprise Co., Ltd., Harbin President Enterprises Co., Ltd., Inner Mongolia President Enterprises Co., Ltd., Xinjiang President Enterprises Food Co., Ltd., Wuhan President Enterprises Food Co., Ltd., Chengdu President Enterprises Food Co., Ltd., Kunming President Enterprises Corp., Kunshan President Enterprises Food Co., Ltd., Bama President Mineral Water Co., Ltd., Wuyuan President Enterprises Mineral Water Co., Ltd., Wuxue President Mineral Water Co., Ltd., Jilin President Mineral Water Co., Ltd., Uni-President Trading (Kunshan) Co., Ltd., Uni-President Trading (Hubei) Co., Ltd., President (Shanghai) Trading Co., Ltd., President (Kunshan) Food Science & Technology Co., Ltd., Beijing President Enterprises Drinks & Food Co., Ltd., Beijing President Drinks Co., Ltd., Uni-President Enterprises (Shanghai) Drink & Food Co., Ltd., Uni-President Enterprises (Hutubi) Tomato Products Technology Co., Ltd., Yantai North Andre Juice Co., Ltd., President Enterprises (Kunshan) Real Estate Development Co., Ltd., Uni-President Shanghai Pearly Century Co., Ltd., Uni-President Enterprises (Shanghai) Management Consulting Co., Ltd.

President of: Presco Netmarketing Inc.

Hsiu-Ling Kao

Chairman of: Kao Chyuan Inv. Corp., President Being Corp., Uni-President Department Store Corp., President Drugstore Business Corp., President Fair Development Corp., President Pharmaceutical Corp.

Director of: Uni-President Enterprises Corp., President Chain Store Corp., Ton Yi Industrial Corp., ScinoPharm Taiwan, Ltd., President International Development Corp., Prince Housing & Development Corp., Uni-President Development Corp., President Securities Corp., Times Square International Hotel Co., Ltd., President Starbucks Coffee Corp., President (Shanghai) Health Product Trading Company Ltd.

President of: Kao Chyuan Investment Corp.

Tsung-Ping Wu

Chairman of Uni-President Assets Management Co., Ltd. Director of: President International Trade & Investment Corp., President Chain Store Corp., Prince Housing &

Development Corp., Prince Real Estate Co. Ltd., Times Square International Hotel Co., Ltd., Ton Ren Pharmaceutical Corp., ScinoPharm Taiwan, Ltd., Kuang Chuan Dairy Co., Ltd., Kuang Chuan Foods Co., Ltd., Ton Yu Investment Inc., Uni-President International (HK) Co., Ltd., Uni-President (Vietnam) Co., Ltd.

Supervisor of: President Baseball Team Corp., President Entertainment Corp., Tone Sang Construction Corp., President Kikkoman Inc., Kai Yu Investment Co., Ltd., President International Development Corp., Un-President Real Estate Co., Ltd., Kai Nan Investment Co., Ltd., President Kikkoman Zhenji Foods Co., Ltd.

Li-Ling Cheng

Chairman of Joyful Investment Co., Ltd., Li Lin Investment Co., Ltd., Cheng Kao Huei Social Welfare Foundation Director of: Tainan Spinning Retail & Distribution Co., Ltd., Nan Fan Housing Development Co., Ltd., Nantex Industry

Co., Ltd., Uni-President Enterprises Corp., Prince Industrial Co., Ltd., Prince Real Estate Co., Ltd., Prince Property Management Consulting Co., Ltd., Times Square International Co., Ltd., Uni-President Assets Management Co., Ltd., Nanmat Technology Co., Ltd., Jun Dao International Corp., Eten Technology Inc., Konten Networks Inc., Tainan Spinning Cultural Foundation

Supervisor of: Hsin Lin Investment Co., Ltd.

7

Major Shareholders of the Institutional Shareholders 12.31.2017

Name of Institutional Shareholders Major Shareholders of the Institutional Shareholders

Joyful Investment Co., Ltd. Chao-Yuan Cheng (50%), Miao-Yu Cheng Hung (24.5%), Li-Ling Cheng (6%), Hung-Yi Cheng (5%), Bi-Huei Cheng (3.5%), Kuo-Bi Cheng (3.5%), Huei-Yi Cheng (3.5%), Bi-Ying Cheng (3%), Kao-Huei Cheng (0.5%), Yu-Cheng Chen (0.5%)

Uni-President Enterprises Corp.

Kao Chyuan Inv. Co., Ltd. (4.91%), BNP Paribas Wealth Management Singapore Branch (3.04%), Po-Ming Hou (2.60%), Saudi Arabian Monetary Agency (2.36%), Po-Yu Hou (2.27%), Government of Singapore (1.86%), Hsiu-Ling Kao (1.64%), T. Rowe Price Emerging Markets Stock (1.55%), Cathay Life Insurance Co., Ltd. (1.55%), Vanguard Emerging Markets Stock Index Fund (1.46%)

Kao Chyuan Investment Co., Ltd. Hsiu-Ling Kao (62.2%), Chih-Hsien Lo (20.71%), Han-Di Kao (5.7%), Zi-Yi Kao (5.26%), Shi-Ai Lo (5.16%), Ching-Yuan Kao (0.97%)

Taipo Investment Co., Ltd. Chao-Mei Wu Tseng (8.48%), Ping-Chih Wu (20.84%), Ping-Yuan Wu (20.84%), Chien-Te Wu (18.95%), Wei-Te Wu (18.95%), Su-Mei Huang (8.88%), Cheng Ta Investment Co., Ltd. (1.41%), Ching-Mei Wu (0.31%), Ru-Yu Chiang Wu (0.31%), Jyuan Chiang Wu (0.31%)

Young Yuan Investment Co., Ltd. Chung-Ho Wu (27.05%), Chung-Chien Wu (24.5%), Wu Jyun Jie Charitable Foundation (24.65%), Bao-Huei Wu (8.5%), Man-Huei Wu (8.5%), Mei-Siang Chen (3.4%), Ai-Gui Huang (3.4%)

Hung Yao Investment Co., Ltd. Shih-Hung Chuang (34%), Hsin-Yi Wu (33%), Yen-Yao Chuang (33%)

Yu Peng Investment Co., Ltd. Po-Ming Hou (76.27%), Yi-Zhen Chang (23.73%)

Cheng Long Investment Co., Ltd. Ying-Chih Chuang (1%), Ying-Nan Chuang (5%), Mei-Yu Chuang Chen (5%), Ching-Chih Chuang Lin (11.5%), Yun-Da Chuang (20%), Hsiu-Wen Wang (12.5%), Chih-Chin Chuang (12.5%), Ting-Ya Chuang (12.5%), Yu-Hsuan Chuang (10%), Ming Hsuan Chuang (10%)

Major Shareholders that are Institutional Shareholders 12.31.2017

Name of Institutional Shareholders

Name of Major Institutional Shareholders

Major Shareholders of the Major Institutional Shareholders

Uni-President Enterprises Corp. Kao Chyuan Investment Co., Ltd.

Hsiu-Ling Kao (62.20%), Chih-Hsien Lo (20.71%), Han-Di Kao (5.70%), Zi-Yi Kao (5.26%), Shi-Ai Lo (5.16%), Ching-Yuan Kao (0.97%)

Cathay Life Insurance Co., Ltd. Cathay Financial Holdings Co., Ltd. (100%)

Taipo Investment Co., Ltd. Cheng Ta Investment Co., Ltd.

Wei-Te Wu (22.83%), Chien-Te Wu (22.83%), Ping-Chih Wu (22.83%), Ping-Yuan Wu (22.83%), Chao-Mei Wu Tseng(1.11%), Shu-Nu Wu (1.11%), Su-Mei Huang (1.01%), Chiung-Huei Hung (1.01%), Ching-Mei Wu (0.61%), Ru-Yu Chiang Wu (0.61%)

Young Yuan Investment Co., Ltd. Wu Jyun Jie Charitable Foundation None Available

Major shareholders of the institutional shareholders12.31.2017

7

Major Shareholders of the Institutional Shareholders 12.31.2017

Name of Institutional Shareholders Major Shareholders of the Institutional Shareholders

Joyful Investment Co., Ltd. Chao-Yuan Cheng (50%), Miao-Yu Cheng Hung (24.5%), Li-Ling Cheng (6%), Hung-Yi Cheng (5%), Bi-Huei Cheng (3.5%), Kuo-Bi Cheng (3.5%), Huei-Yi Cheng (3.5%), Bi-Ying Cheng (3%), Kao-Huei Cheng (0.5%), Yu-Cheng Chen (0.5%)

Uni-President Enterprises Corp.

Kao Chyuan Inv. Co., Ltd. (4.91%), BNP Paribas Wealth Management Singapore Branch (3.04%), Po-Ming Hou (2.60%), Saudi Arabian Monetary Agency (2.36%), Po-Yu Hou (2.27%), Government of Singapore (1.86%), Hsiu-Ling Kao (1.64%), T. Rowe Price Emerging Markets Stock (1.55%), Cathay Life Insurance Co., Ltd. (1.55%), Vanguard Emerging Markets Stock Index Fund (1.46%)

Kao Chyuan Investment Co., Ltd. Hsiu-Ling Kao (62.2%), Chih-Hsien Lo (20.71%), Han-Di Kao (5.7%), Zi-Yi Kao (5.26%), Shi-Ai Lo (5.16%), Ching-Yuan Kao (0.97%)

Taipo Investment Co., Ltd. Chao-Mei Wu Tseng (8.48%), Ping-Chih Wu (20.84%), Ping-Yuan Wu (20.84%), Chien-Te Wu (18.95%), Wei-Te Wu (18.95%), Su-Mei Huang (8.88%), Cheng Ta Investment Co., Ltd. (1.41%), Ching-Mei Wu (0.31%), Ru-Yu Chiang Wu (0.31%), Jyuan Chiang Wu (0.31%)

Young Yuan Investment Co., Ltd. Chung-Ho Wu (27.05%), Chung-Chien Wu (24.5%), Wu Jyun Jie Charitable Foundation (24.65%), Bao-Huei Wu (8.5%), Man-Huei Wu (8.5%), Mei-Siang Chen (3.4%), Ai-Gui Huang (3.4%)

Hung Yao Investment Co., Ltd. Shih-Hung Chuang (34%), Hsin-Yi Wu (33%), Yen-Yao Chuang (33%)

Yu Peng Investment Co., Ltd. Po-Ming Hou (76.27%), Yi-Zhen Chang (23.73%)

Cheng Long Investment Co., Ltd. Ying-Chih Chuang (1%), Ying-Nan Chuang (5%), Mei-Yu Chuang Chen (5%), Ching-Chih Chuang Lin (11.5%), Yun-Da Chuang (20%), Hsiu-Wen Wang (12.5%), Chih-Chin Chuang (12.5%), Ting-Ya Chuang (12.5%), Yu-Hsuan Chuang (10%), Ming Hsuan Chuang (10%)

Major Shareholders that are Institutional Shareholders 12.31.2017

Name of Institutional Shareholders

Name of Major Institutional Shareholders

Major Shareholders of the Major Institutional Shareholders

Uni-President Enterprises Corp. Kao Chyuan Investment Co., Ltd.

Hsiu-Ling Kao (62.20%), Chih-Hsien Lo (20.71%), Han-Di Kao (5.70%), Zi-Yi Kao (5.26%), Shi-Ai Lo (5.16%), Ching-Yuan Kao (0.97%)

Cathay Life Insurance Co., Ltd. Cathay Financial Holdings Co., Ltd. (100%)

Taipo Investment Co., Ltd. Cheng Ta Investment Co., Ltd.

Wei-Te Wu (22.83%), Chien-Te Wu (22.83%), Ping-Chih Wu (22.83%), Ping-Yuan Wu (22.83%), Chao-Mei Wu Tseng(1.11%), Shu-Nu Wu (1.11%), Su-Mei Huang (1.01%), Chiung-Huei Hung (1.01%), Ching-Mei Wu (0.61%), Ru-Yu Chiang Wu (0.61%)

Young Yuan Investment Co., Ltd. Wu Jyun Jie Charitable Foundation None Available

Major Shareholders that are Institutional Shareholders12.31.2017

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overnance Report

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overnance Report


Independence and Professional Expertise of Board Members and Supervisors

8

Independence and Professional Expertise of Board Members and Supervisors Criteria

Title & Name

Five or More Years of Experience or Professional Qualification Independence Criteria

(Note) Number of Independent

Directorships Held in Other Public

Companies

Lecturer or above in

Business, Law, Finance,

Accounting or Corporate Business

Related Fields

Qualification of Justice, Procurator,

Attorney, CPA, Specialist or

Technician of National

Examination in Corporate Business

Related Fields

Experience in Business, Law,

Finance, Accounting, or Corporate

Business Related Fields

1 2 3 4 5 6 7 8 9 10

Chairman Uni-President Enterprises Corp. Representative: Chih-Hsien Lo - - - - - - - - - - - - - 0

Vice Chairman

Joyful Inv. Co., Ltd. Representative: Li-Ling Cheng - - - - - - - - - - - - - 0

Director Kao Chyuan Inv. Corp. Representative: Hsiu-Ling Kao - - - - - - - - - - - - - 0

Director Uni-President Enterprises Corp. Representative: Tsung-Ping Wu - - - - - - - - - - - - - 0

Director Chao-Mei Wu Tseng - - P P - - - - P P - P P 0

Director Taipo Inv. Co., Ltd. Representative: Ping-Chih Wu - - - - - - - - - - - - - 0

Director Taipo Inv. Co., Ltd. Representative: Chien-Te Wu - - - - - - - - - - - - - 0

Director Young Yuan Inv. Co., Ltd. Representative: Chung-Ho Wu - - - - - - - - - - - - - 0

Director Hung Yao Inv. Co., Ltd. Representative: Shih-Hung Chuang - - - - - - - - - - - - - 0

Director Po-Yi Hou - - P P - - - P - P - P P 0

Director Yu Peng Inv. Co., Ltd. Representative: Po-Ming Hou - - - - - - - - - - - - - 0

Director Cheng Long Inv. Co., Ltd. Representative: Ying-Chih Chuang - - - - - - - - - - - - - 0

Independent Director Ho-Yi Hung - - P P P P P P P P P P P 0

Independent Director Sheng-Tsai Hsu - P P P P P P P P P P P P 0

Note: Please tick the corresponding boxes if directors or supervisors have been any of the following during the two years prior to being elected or during the term of office: 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. The same does not apply, however, in cases where the person is an independent director of the Company, its

parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 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

amount of 1% or more of the total number of outstanding 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 fifth degree of kinship, of any of the persons in the preceding three subparagraphs. 5. Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares

ranking in the top five in holdings. 6. Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the

Company. 7. Not a professional individual who, or 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. 8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company. 9. Not been a person of any conditions defined in Article 30 of the Company Law. 10. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

Note: Please tick the corresponding boxes if directors or supervisors have been any of the following during the two years prior to being elected or during the term of office: 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. The same does not apply, however, in cases where the person is an independent

director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 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 amount of 1% or more of the total number of outstanding 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 fifth degree of kinship, of any of the persons in the preceding

three subparagraphs. 5. Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the

Company or that holds shares ranking in the top five in holdings. 6. Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business

relationship with the Company. 7. Not a professional individual who, or 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. 8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company. 9. Not been a person of any conditions defined in Article 30 of the Company Law.10. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

3.2.2 Management Team


9

3.2.2 Management Team Unit: Shares; 12.31.2017

Title Nationality Name Gender Date Effective

Shareholding Spouse &

Minor Shareholding

Shareholding by Nominee

Arrangement Experience (Education) Other Position

Managers who are Spouses or Within

Two Degrees of Kinship

Shares Shares Shares Title Name Relation

President R.O.C. Ming-Fan Xie M 7.5.2010 0 0 301,817 0.02% 0 0 MS, Dept. of Civil

Engineering, TamKang Univ.

Chairman of Cheng-Shi Construction Co., Ltd., Prince

Security Co., Ltd. - - -

Vice President of Secretary R.O.C. Yi-Chun Su M 9.1.2013 154,500 0.01% 0 0 0 0

BA, Dept. of Accounting,

National Chung Hsing Univ.

Director of Splendor Hotel, Splendor

Assets Management Co., Ltd.

- - -

Vice President of Sales R.O.C. Wen-Zhen Chiu M 9.1.2013 80,221 0.00% 0 0 0 0

BS, Dept. of Architecture,

National Taiwan Univ. of Science &

Tech.

Director of Prince Security Co., Ltd. - - -

Vice President R.O.C. Mu-Tsun Hou M 9.1.2015 0 0 0 0 0 0 MBA, Boston Univ., USA

President of Ta-Chen Construction &

Engineering Corp. - - -

Vice President of Taichung Branch R.O.C. Xiao-Yu Chiang M 11.3.2016 8,000 0.00% 0 0 0 0

National Taiwan Univ. of Science &

Tech.

Director of Prince Security Co., Ltd. - - -

Assistant Vice President of Planning &

Strategy

R.O.C. Jian-Ying Wu M 9.1.2013 10,300 0.00% 0 0 0 0 MBA, George

Washington Univ., USA

Director of Prince Security Co., Ltd - - -

Assistant Vice President of

Finance R.O.C. Chun-Liang Lin M 9.1.2013 124,909 0.01% 0 0 0 0 MBA, Univ. of

South Australia Supervisor of Prince

Utility Co., Ltd. - - -

Assistant Vice President of

Administration R.O.C. Chun-Cheng

Kuo M 9.1.2013 372,860 0.02% 0 0 0 0 BS, Dept. of Architecture, HuaFan Univ.

Director of Nantex Industry Co., Ltd. - - -

Manager of Accounting R.O.C. Da-Chang Tai M 7.1.2006 313,517 0.02% 0 0 0 0

BA, Dept. of Accounting,

National Cheng Kung Univ.

Chairman of Jin Yi Xing Plywood Co.,

Ltd. - - -

Manager of Planning &

Strategy R.O.C. Yun-Da Chuang M 9.1.2013 9,360,867 0.58% 0 0 0 0

MBA, Central Michigan Univ.,

USA - - - -

Manager of Land Development R.O.C. Xi-Fen Chang M 9.1.2013 0 0 0 0 0 0

MBA, Dept. of Science

Management, National Chiao Tung

Univ.

- - - -

Manager of Design R.O.C. Te-Ju Yen M 9.1.2013 0 0 0 0 0 0

MS, Dept. of Architecture, Chung Yuan

Christian Univ.

- - - -

Manager of Sales R.O.C. Tsung-Liang

Wen M 11.3.2016 154,500 0.01% 0 0 0 0 Kainan High School

of Commerce and Tech.

- - - -

Manager of IT R.O.C. Keng-Wang Chen M 11.3.2016 0 0 0 0 0 0

MBA. National Taiwan

Univ. - - - -

Junior Manager of Audit Office R.O.C. Ya-Ting Xue F 9.1.2013 37,720 0.00% 0 0 0 0

BA, Dept. of Wealth and Taxation Mgmt., National Kaohsiung

Univ. of Applied Sciences

- - - -

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overnance Report

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overnance Report


3.2.3 Remuneration Paid to Directors, Supervisors, President, and Vice Presidents

Remuneration Paid to Directors

10

3.2.3 Remuneration Paid to Directors, Supervisors, President, and Vice Presidents Remuneration Paid to Directors

Title Name

Remuneration Summation of A, B, C,

and D as % of Net Income Salary (A) Pensions (B) Earnings Distribution (C) Allowances (D)

PHD

All

Consolidated Com

panies

PHD

All

Consolidated Com

panies

PHD

All

Consolidated Com

panies

PHD

All

Consolidated Com

panies

PHD

All

Consolidated Com

panies

Chairman Uni-President Enterprises Corp.

- 11 , 4 3 4 - - 4 3 , 7 7 9 4 3 , 7 7 9 8 , 11 4 8 , 11 4 4 . 0 5 % 4 . 9 4 %

Director Joyful Inv. Co., Ltd.

Director Kao Chyuan Inv. Co., Ltd.

Director Hung Yao Inv. Co., Ltd.

Director Taipo Inv. Co., Ltd.

Director Young Yuan Inv. Co., Ltd.

Director Yu Peng Inv. Co., Ltd.

Director Cheng Long Inv. Co., Ltd.

Chairman Chih-Hsien Lo

Chairman Kao-Huei Cheng

Director Li-Ling Cheng

Director Hsiu-Ling Kao

Director Shih-Hung Chuang

Director Chien-Te Wu

Director Ping-Chih Wu

Director Chung-Ho Wu

Director Tsung-Ping Wu

Director Chao-Mei Wu Tseng

Director Po-Ming Hou

Director Po-Yi Hou

Director Ying-Chih Chuang

Independent Director Chian Tai

Independent Director Ho-Yi Hung

Independent Director Sheng-Tsai Hsu

11

Unit: NT$ thousands; 12.31.2017

Compensation to Directors Also Serving as Company Employees Summation of

A, B, C, D, E, F, and G as % of Net Income

Com

pensation from A

ffiliates O

ther than Subsidiaries

Salary, Bonuses, and Special Allowances (E) Pensions (F) Employee Profit Sharing (G)

PHD

All Consolidated Com

panies

PHD


panies

PHD All Consolidated Companies

PHD


panies

Cash

Stock

Cash

Stock

8 , 5 0 8 11 , 3 7 9 - - 2 0 , 2 11 - 2 0 , 2 11 - 6 . 2 9 % 7 . 4 1 % 5 0 , 7 8 2


III

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III

Corporate G

overnance Report


12

Range of Remuneration

Name of Directors

Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)

PHD All Consolidated Companies PHD All Consolidated Companies

Under NT$2,000,000

Chih-Hsien Lo, Hsiu-Ling Kao, Chien-Te Wu, Ping-Chih Wu,

Tsung-Ping Wu, Chung-Ho Wu, Po-Ming Hou, Shih-Hung Chuang, Li-Ling Cheng, Ying-Chih Chuang,

Chian Tai, Ho-Yi Hung, Sheng-Tsai Hsu

Hsiu-Ling Kao, Chien-Te Wu, Ping-Chih Wu, Tsung-Ping Wu, Chung-Ho Wu, Po-Ming Hou,

Shih-Hung Chuang, Li-Ling Cheng, Ying-Chih Chuang, Chian Tai, Ho-Yi Hung, Sheng-Tsai Hsu

Hsiu-Ling Kao, Chien-Te Wu, Ping-Chih Wu, Tsung-Ping Wu, Chung-Ho Wu, Li-Ling Cheng,

Po-Ming Hou, Ying-Chih Chuang, Chian Tai, Ho-Yi Hung,

Sheng-Tsai Hsu

Hsiu-Ling Kao, Chien-Te Wu, Ping-Chih Wu, Tsung-Ping Wu,

Chung-Ho Wu, Ying-Chih Chuang, Chian Tai, Ho-Yi Hung,

Sheng-Tsai Hsu

NT$2,000,000 ~ NT$5,000,000

Kao Chyuan Inv. Corp., Hung Yao Inv. Co., Ltd.,

Young Yuan Inv. Co., Ltd., Yu Peng Inv. Co., Ltd.,

Cheng Long Inv. Co., Ltd., Kao-Huei Cheng, Po-Yi Hou

Chao-Mei Wu Tseng



Cheng Long Inv. Co., Ltd., Chih-Hsien Lo, Po-Yi Hou,

Chao-Mei Wu Tseng



Cheng Long Inv. Co., Ltd., Chao-Mei Wu Tseng,

Po-Yi Hou, Shih-Hung Chuang



Cheng Long Inv. Co., Ltd., Shih-Hung Chuang, Li-Ling Cheng, Chao-Mei Wu Tseng, Po-Ming Hou,

Po-Yi Hou

NT$5,000,000 ~ NT$10,000,000 Taipo Inv. Co., Ltd.

Joyful Inv. Co., Ltd., Taipo Inv. Co., Ltd.,

Kao-Huei Cheng

Joyful Inv. Co., Ltd., Taipo Inv. Co., Ltd.


NT$10,000,000 ~ NT$15,000,000 Uni-President Enterprises Corp. Uni-President Enterprises Corp. Uni-President Enterprises Corp. -

NT$15,000,000 ~ NT$30,000,000 - - Chih-Hsien Lo,

Kao-Huei Cheng Uni-President Enterprises Corp.,

Chih-Hsien Lo

NT$30,000,000 ~ NT$50,000,000 - - Kao-Huei Cheng

NT$50,000,000 ~ NT$100,000,000 - - - -

Over NT$100,000,000 - - - -

Total 24 24 24 24

Compensation Paid to President and Vice Presidents


Title Name

Salary (A) Pensions (B) Bonuses and Special Allowances (C)

Employee Profit Sharing (D)

Summation of A, B, C, and D as % of

Net Income Compensation from Affiliates

Other than Subsidiaries

PHD

All

Consolidated Com

panies

PHD

All

Consolidated Com

panies

PHD

All

Consolidated Com

panies

PHD All Consolidated Companies PH

D

All

Consolidated Com

panies Cash Stock Cash Stock

President Ming-Fan Xie

8 , 9 3 6 9 , 9 7 6 - - 7 3 2 1 , 5 8 2 1 8 , 6 9 8 - 1 8 , 6 9 8 - 2 . 2 1 % 2 . 3 6 % 5,717

Vice President Wen-Zhen Chiu

Vice President Yi-Chun Su

Vice President Mu-Tsun Hou

Vice President Xiao-Yu Chiang

Joyful Inv. Co., Ltd.,

12

Range of Remuneration

Name of Directors

Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)

PHD All Consolidated Companies PHD All Consolidated Companies

Under NT$2,000,000

Chih-Hsien Lo, Hsiu-Ling Kao, Chien-Te Wu, Ping-Chih Wu,

Tsung-Ping Wu, Chung-Ho Wu, Po-Ming Hou, Shih-Hung Chuang, Li-Ling Cheng, Ying-Chih Chuang,

Chian Tai, Ho-Yi Hung, Sheng-Tsai Hsu

Hsiu-Ling Kao, Chien-Te Wu, Ping-Chih Wu, Tsung-Ping Wu, Chung-Ho Wu, Po-Ming Hou,

Shih-Hung Chuang, Li-Ling Cheng, Ying-Chih Chuang, Chian Tai, Ho-Yi Hung, Sheng-Tsai Hsu

Hsiu-Ling Kao, Chien-Te Wu, Ping-Chih Wu, Tsung-Ping Wu, Chung-Ho Wu, Li-Ling Cheng,

Po-Ming Hou, Ying-Chih Chuang, Chian Tai, Ho-Yi Hung,

Sheng-Tsai Hsu

Hsiu-Ling Kao, Chien-Te Wu, Ping-Chih Wu, Tsung-Ping Wu,

Chung-Ho Wu, Ying-Chih Chuang, Chian Tai, Ho-Yi Hung,

Sheng-Tsai Hsu

NT$2,000,000 ~ NT$5,000,000



Cheng Long Inv. Co., Ltd., Kao-Huei Cheng, Po-Yi Hou

Chao-Mei Wu Tseng



Cheng Long Inv. Co., Ltd., Chih-Hsien Lo, Po-Yi Hou,

Chao-Mei Wu Tseng



Cheng Long Inv. Co., Ltd., Chao-Mei Wu Tseng,

Po-Yi Hou, Shih-Hung Chuang



Cheng Long Inv. Co., Ltd., Shih-Hung Chuang, Li-Ling Cheng, Chao-Mei Wu Tseng, Po-Ming Hou,

Po-Yi Hou

NT$5,000,000 ~ NT$10,000,000 Taipo Inv. Co., Ltd.

Joyful Inv. Co., Ltd., Taipo Inv. Co., Ltd.,

Kao-Huei Cheng



NT$10,000,000 ~ NT$15,000,000 Uni-President Enterprises Corp. Uni-President Enterprises Corp. Uni-President Enterprises Corp. -

NT$15,000,000 ~ NT$30,000,000 - - Chih-Hsien Lo,

Kao-Huei Cheng Uni-President Enterprises Corp.,

Chih-Hsien Lo

NT$30,000,000 ~ NT$50,000,000 - - Kao-Huei Cheng

NT$50,000,000 ~ NT$100,000,000 - - - -

Over NT$100,000,000 - - - -

Total 24 24 24 24



Title Name

Salary (A) Pensions (B) Bonuses and Special Allowances (C)

Employee Profit Sharing (D)

Summation of A, B, C, and D as % of

Net Income Compensation from Affiliates

Other than Subsidiaries

PHD

All

Consolidated Com

panies

PHD

All

Consolidated Com

panies

PHD

All

Consolidated Com

panies

PHD All Consolidated Companies PH

D

All

Consolidated Com

panies Cash Stock Cash Stock


8 , 9 3 6 9 , 9 7 6 - - 7 3 2 1 , 5 8 2 1 8 , 6 9 8 - 1 8 , 6 9 8 - 2 . 2 1 % 2 . 3 6 % 5,717





Joyful Inv. Co., Ltd.,



13

Range of Remuneration Name of President and Vice President


Under NT$ 2,000,000 - -

NT$2,000,000 ~ NT$5,000,000 Wen-Zhen Chiu, Yi-Chun Su, Mu-Tsun Hou, Xiao-Yu Chiang

Wen-Zhen Chiu, Yi-Chun Su, Xiao-Yu Chiang

NT$5,000,000 ~ NT$10,000,000 Mu-Tsun Hou

NT$10,000,000 ~ NT$15,000,000 – –

NT$15,000,000 ~ NT$30,000,000 Ming-Fan Xie Ming-Fan Xie

NT$30,000,000 ~ NT$50,000,000 – –

NT$50,000,000 ~ NT$100,000,000 – –

Over NT$100,000,000 – –

Total 5 5

Employee Profit Sharing Granted to Management Team


Title Name Profit Sharing -Stock

Profit Sharing -Cash Total Total Amount as %

of Net Income

Chief Strategy Officer Chih-Hsien Lo

- 50,002 50,002 3.90%

Kao-Huei Cheng

Management Team






Assistant Vice President Jian-Ying Wu

Assistant Vice President Chun-Liang Lin

Assistant Vice President Chun-Cheng Kuo

Manager Yun-Da Chuang

Manager Da-Chang Tai

Manager Xi-Fen Chang

Manager Te-Ju Yen

Manager Tsung-Liang Wen

Manager Keng-Wang Chen

Junior Manager Ya-Ting Xue

13

Range of Remuneration Name of President and Vice President


Under NT$ 2,000,000 - -

NT$2,000,000 ~ NT$5,000,000 Wen-Zhen Chiu, Yi-Chun Su, Mu-Tsun Hou, Xiao-Yu Chiang

Wen-Zhen Chiu, Yi-Chun Su, Xiao-Yu Chiang

NT$5,000,000 ~ NT$10,000,000 Mu-Tsun Hou

NT$10,000,000 ~ NT$15,000,000 – –

NT$15,000,000 ~ NT$30,000,000 Ming-Fan Xie Ming-Fan Xie

NT$30,000,000 ~ NT$50,000,000 – –

NT$50,000,000 ~ NT$100,000,000 – –

Over NT$100,000,000 – –

Total 5 5



Title Name Profit Sharing -Stock

Profit Sharing -Cash Total Total Amount as %

of Net Income

Chief Strategy Officer Chih-Hsien Lo

- 50,002 50,002 3.90%

Kao-Huei Cheng

Management Team











Manager Xi-Fen Chang

Manager Te-Ju Yen



Junior Manager Ya-Ting Xue



III

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14

3.2.4 Comparison of Remuneration for Directors, Supervisors, Presidents and Vice Presidents in the Past Two Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents

Unit: NT$ thousands

Note: The term of supervisors ended on June 21, 2016, and the Audit Committee replaced the position. 3.3! Implementation of Corporate Governance

3.3.1 Board Meeting Operation Information of Board Meeting

The board meetings were held 6 times (A) in 2017. The attendance of directors and supervisors was as follows:

Title Name Attendance in Person(B)

Proxy Attendance

Attendance Rate (%) [B/A] Representative Remarks

Chairman Uni-President Enterprises. Corp. 6 0 100% Chih-Hsien Lo

Chairman Joyful Inv. Co., Ltd. 2 2 50% Kao-Huei Cheng Note (

Director Joyful Inv. Co., Ltd. 1 0 100% Li-Ling Cheng

Director Kao Chyuan Inv. Co., Ltd. 6 0 100% Hsiu-Ling Kao

Director Uni-President Enterprises. Corp. 6 0 100% Tsung-Ping Wu

Director Chao-Mei Wu Tseng 5 1 83%

Director Taipo Inv. Co., Ltd. 6 0 100% Ping-Chih Wu

Director Taipo Inv. Co., Ltd. 5 1 83% Chien-Te Wu

Director Young Yuan Inv. Co., Ltd. 6 0 100% Chung-Ho Wu

Director Hung Yao Inv. Co., Ltd. 6 0 100% Shih-Hung Chuang

Director Po-Yi Hou 4 1 67%

Director Yu Peng Inv. Co., Ltd. 6 0 100% Po-Ming Hou

Director Cheng Long Inv. Co., Ltd. 6 0 100% Ying-Chih Chuang

Independent Director Chian Tai 6 0 100%

Independent Director Ho-Yi Hung 6 0 100%

Independent Director Sheng-Tsai Hsu 6 0 100%

Title

2017 2016

Total Remuneration Net Income

Total Remuneration as % of Net Income



Director PHD 80,612

1,281,101

6.29% 111,016

1,609,189

6.90%

All Consolidated Companies 94,917 7.41% 127,847 7.94%

Supervisor (Note)

PHD - - 9,720 0.60%

All Consolidated Companies - - 11,645 0.72%

President Vice President

PHD 28,366 2.21% 32,714 2.03%


Note (


Unit: NT$ thousands

14


Unit: NT$ thousands

Note: The term of supervisors ended on June 21, 2016, and the Audit Committee replaced the position. 3.3! Implementation of Corporate Governance

3.3.1 Board Meeting Operation Information of Board Meeting



Proxy Attendance

Attendance Rate (%) [B/A] Representative Remarks

Chairman Uni-President Enterprises. Corp. 6 0 100% Chih-Hsien Lo

Chairman Joyful Inv. Co., Ltd. 2 2 50% Kao-Huei Cheng Note (

Director Joyful Inv. Co., Ltd. 1 0 100% Li-Ling Cheng

Director Kao Chyuan Inv. Co., Ltd. 6 0 100% Hsiu-Ling Kao

Director Uni-President Enterprises. Corp. 6 0 100% Tsung-Ping Wu

Director Chao-Mei Wu Tseng 5 1 83%

Director Taipo Inv. Co., Ltd. 6 0 100% Ping-Chih Wu

Director Taipo Inv. Co., Ltd. 5 1 83% Chien-Te Wu

Director Young Yuan Inv. Co., Ltd. 6 0 100% Chung-Ho Wu

Director Hung Yao Inv. Co., Ltd. 6 0 100% Shih-Hung Chuang

Director Po-Yi Hou 4 1 67%

Director Yu Peng Inv. Co., Ltd. 6 0 100% Po-Ming Hou

Director Cheng Long Inv. Co., Ltd. 6 0 100% Ying-Chih Chuang

Independent Director Chian Tai 6 0 100%

Independent Director Ho-Yi Hung 6 0 100%

Independent Director Sheng-Tsai Hsu 6 0 100%

Title

2017 2016





Director PHD 80,612

1,281,101

6.29% 111,016

1,609,189

6.90%


Supervisor (Note)

PHD - - 9,720 0.60%

All Consolidated Companies - - 11,645 0.72%

President Vice President

PHD 28,366 2.21% 32,714 2.03%


Note (

3.3 Implementation of Corporate Governance 3.3.1 Board Meeting Operation

Information of Board Meeting


Note : The term of supervisors ended on June 21, 2016, and the Audit Committee replaced the position.

15

Other Mentionable Items: 1. If any of the following circumstances occur,, the dates of the meetings, sessions, contents of motion, all independent

directors’ opinions and the company’s response should be specified: None. (1) Matters referred to in Article 14-3 of the Securities and Exchange Act. (2) Other matters involving objections or expressed reservations by independent directors that were recorded or stated in

writing that require a resolution by the board of directors. 2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for

avoidance and voting should be specified: The Chairman, Kao-Huei Cheng was approved to serve in the Chief Strategy Officer concurrently, and the Vice Chairman, Chih-Hsien Lo was approved to serve in the Vice Chief Strategy Officer concurrently in the 2nd Board Meeting of Session Fifteen.

3. Measures taken to strengthen the functionality of the board: The Board of Directors has established an Audit Committee and a Remuneration Committee to assist the board in carrying out its various duties. The establishment of the Audit Committee in place of the supervisors’ authority had been resolved in the board meeting of Session Fifteen, and the Audit Committee have hold 3 times of meeting during 2016. The establishment of the Management Committee under the board of directors and the Operation Optimization Task Force under the Management Committee had been resolved in the 1st board meeting of Session Fifteen, for the purpose of the board’s understanding of the company’s operation and strengthening of corporate governance.

Note: (i) If director or supervisor resigned before end of year, company shall show date in note, and attendance rate (%) is attendant times of meeting in

incumbent period. (ii) If there is re-election of director and supervisor, company shall show former, new, reappointed member and date in note. Attendance rate (%) is

attendant times of meeting in incumbent period. (iii) The original representative of Joyful Investment Co., Ltd. Kao-Huei Cheng passed away on August 14, 2017. Before, he had attended the board

meetings 4 times in 2017. The company assigned Li-Ling Cheng as its new representative on August 22, 2017, and she had attended the board meetings 1 time in 2017.

3.3.2 Audit Committee Operation A total of 4 (A) Audit Committee meetings were held in 2017. The attendance of the committee members was as follows:


Proxy Attendance

Attendance Rate (%) [B/A] Remarks

Convener Chian Tai 4 0 100%

Member Ho-Yi Hung 4 0 100%

Member Sheng-Tsai Hsu 4 0 100%

Other mentionable items: 1. If any of the following circumstances occur, the dates of meetings, sessions, contents of motion, resolutions of the Audit Committee and

the Company’s response to the Audit Committee’s opinion should be specified: None. (1) Matters referred to in Article 14-5 of the Securities and Exchange Act. (2) Other matters which were not approved by the Audit Committee but were approved by two-thirds or more of all directors.

2. If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: The appointment of the three independent supervisors as the members of the Compensation Committee of Session Third concurrently had been resolved in the 2nd board meeting of Session Fifteen.

3. Communications between the independent directors, the Company's chief internal auditor and CPAs (e.g. the material items, methods and results of audits of corporate finance or operations, etc.): None.

(1) The internal auditors have communicated the result of the audit reports to the members of the Audit Committee periodically, and have presented the findings of all audit reports in the quarterly meetings of the Audit Committee. Should the urgency of the matter require it, the Company's chief internal auditor will inform the members of the Audit Committee outside of the regular reporting. The communication channel between the Audit Committee and the internal auditor has been functioning well.

(2) The Company’s CPAs have presented the findings or the comments for the quarterly corporate financial reports, as well as those matters communication of which is required by law, in the regular quarterly meetings of the Audit Committee. Under applicable laws and regulations, the CPAs are required to communicate to the Audit Committee any material matters that they have discovered. The communication channel between the Audit Committee and the CPAs has been functioning well.

Other Mentionable Items:1. If any of the following circumstances occur,, the dates of the meetings, sessions, contents of motion,

allindependentdirectors’opinionsandthecompany’sresponseshouldbespecified:None.(1) Matters referred to in Article 14-3 of the Securities and Exchange Act.(2) Other matters involving objections or expressed reservations by independent directors that were

recorded or stated in writing that require a resolution by the board of directors.2. If therearedirectors’avoidanceofmotions inconflictof interest, thedirectors’names,contentsof

motion,causesforavoidanceandvotingshouldbespecified: TheChairman,Kao-HueiChengwasapproved toserve in theChiefStrategyOfficerconcurrently,

and the Vice Chairman, Chih-Hsien Lo was approved to serve in the Vice Chief Strategy Officer concurrently in the 2nd Board Meeting of Session Fifteen.

3. Measures taken to strengthen the functionality of the board: The Board of Directors has established an Audit Committee and a Remuneration Committee to assist the board in carrying out its various duties.

The establishment of the Audit Committee in place of the supervisors’ authority had been resolved in the board meeting of Session Fifteen, and the Audit Committee have hold 3 times of meeting during 2016. The establishment of the Management Committee under the board of directors and the Operation Optimization Task Force under the Management Committee had been resolved in the 1st board meeting of Session Fifteen, for the purpose of the board’s understanding of the company’s operation and strengthening of corporate governance.

Note: (i) If director or supervisor resigned before end of year, company shall show date in note, and

attendance rate (%) is attendant times of meeting in incumbent period.(ii) If there is re-election of director and supervisor, company shall show former, new, reappointed

member and date in note. Attendance rate (%) is attendant times of meeting in incumbent period.(iii) The original representative of Joyful Investment Co., Ltd. Kao-Huei Cheng passed away on

August 14, 2017. Before, he had attended the board meetings 4 times in 2017. The company assigned Li-Ling Cheng as its new representative on August 22, 2017, and she had attended the board meetings 1 time in 2017.

3.3.2 Audit Committee Operation

A total of 4 (A) Audit Committee meetings were held in 2017. The attendance of the committee members was as follows:

Other mentionable items:1. If any of the following circumstances occur, the dates of meetings, sessions, contents of motion,

resolutions of the Audit Committee and the Company’s response to the Audit Committee’s opinion shouldbespecified:None.(1) Matters referred to in Article 14-5 of the Securities and Exchange Act.(2) Other matters which were not approved by the Audit Committee but were approved by two-thirds

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or more of all directors.or more of all directors.

2. Ifthereareindependentdirectors’avoidanceofmotionsinconflictofinterest, thedirectors’names,contentsofmotion,causesforavoidanceandvotingshouldbespecified:

The appointment of the three independent supervisors as the members of the Compensation Committee of Session Third concurrently had been resolved in the 2nd board meeting of Session Fifteen.

3. Communications between the independent directors, the Company's chief internal auditor and CPAs (e.g.thematerialitems,methodsandresultsofauditsofcorporatefinanceoroperations,etc.):None.(1) The internal auditors have communicated the result of the audit reports to the members of the

AuditCommitteeperiodically,andhavepresentedthefindingsofallauditreportsinthequarterlymeetings of the Audit Committee. Should the urgency of the matter require it, the Company's chief internal auditor will inform the members of the Audit Committee outside of the regular reporting. The communication channel between the Audit Committee and the internal auditor has been functioning well.

(2) TheCompany’sCPAshavepresented thefindingsor thecommentsfor thequarterlycorporatefinancial reports, as well as those matters communication of which is required by law, in the regular quarterly meetings of the Audit Committee. Under applicable laws and regulations, the CPAs are required to communicate to the Audit Committee any material matters that they have discovered. The communication channel between the Audit Committee and the CPAs has been functioning well.

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

16

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

Evaluation Item Implementation Status

Deviations from “the Corporate Governance

Best-Practice Principles for TWSE/TPEx Listed

Companies” and Reasons Yes No Abstract Illustration 1. Does the company establish and disclose the

Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?

ü

The establishment of the Corporate Social Responsibility Best-Practice Principles and the Ethical Corporate Management Best Practice had been resolved in the board meeting on November 3 in 2016, and disclosed on the company’s website.

None

2. Shareholding structure & shareholders’ rights (1) Does the company establish an internal

operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure?

(2) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares?

(3) Does the company establish and execute the risk management and firewall system within its conglomerate structure?

(4) Does the company establish internal rules against insiders trading with undisclosed information?

ü

ü

ü

ü

The company has designated appropriate departments to handle shareholders’ suggestions or disputes. The Stock Transfer Agency is responsible for collecting the updated information of the list of major shareholders and the ultimate owners of those shares. There are dedicated units responsible for operations of the company’s affiliates, and they are controlled and audited by the head office. The company has established the internal rules to forbid insiders trading on undisclosed information. The company has also strongly advocated these rules in order to prevent any violations.

None

3. Composition and Responsibilities of the Board of Directors

(1) Does the Board develop and implement a diversified policy for the composition of its members?

(2) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee?

(3) Does the company establish and execute the risk management and firewall system within its conglomerate structure?

(4) Does the company establish internal rules against insiders trading with undisclosed

ü

ü

ü

ü

According to Article 20 of the Corporate Governance Best-Practice Principles, the company had diversified and disclosed the members of board of directors. There are 15 directors including 3 female directors in the board of directors, and the members’ nationality is R.O.C. There were 7 directors with master degree or above mostly major in finance, accounting or business to meet the professional qualification. In addition to the Audit Committee and the Compensation Committee, the establishment of the Management Committee and the Operation Optimization Task Force under the Management Committee had been resolved in the board meeting on June 21, 2016, for the purpose of the board’s understanding of the company’s operation. Furthermore, to strengthen the company’s corporate governance, the Chairman Chih-Hsien Lo were approved to hold a concurrently position as the Chief Strategy Officer during the 1st interim board meeting of the fifteenth term. The company had not established related measures. However the company’s board of directors was devoted to corporate governance according to the principle of good faith for the purpose of ensuring the shareholders’ rights. The board of directors had approved “Financial Reports CPAs’ Independence Assessment” on March 20, 2015. The Accounting Department of the company had accessed the independence of the PwC accountants C.H. Wu and K.H. Wang in 2017, and the result was compliant with the company’s independence evaluation criteria, in which they are proved to be competent CPAs.

None

4. Does the company set up a corporate governance unit or appoint personnel responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their functions, handling work related to meetings of the board of directors and the shareholders' meetings, filing company registration and changes to company registration, and producing minutes of board meetings and shareholders’ meetings)?

ü The company had established the “Corporate Governance Task Force”, whose convener was the President and members were assigned from each department of the company.

None

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Evaluation Item Implementation Status

Deviations from “the Corporate Governance

Best-Practice Principles for TWSE/TPEx Listed

Companies” and Reasons Yes No Abstract Illustration 5. Does the company establish a communication

channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?

ü The company had been dedicated to establish appropriate communication channels for its stakeholders, including customer service hotline, company website, quarterly publication, APP, advertisements, and occasional questionnaires. In addition, the company had provide mailbox, online message system, and 24 hour service counter for the NTU Prince Dormitory. The company’s website had disclosed the contact information for different stakeholders in the Stakeholder Area.

None

6. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?

ü The company had designated President Securities Corp. to deal with shareholder affairs. None

7. Information Disclosure (1) Does the company have a corporate

website to disclose both financial standings and the status of corporate governance?

(2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)?

ü

ü

The company had set up a website to disclose the company’s relevant information. Website: http://www.prince.com.tw The company had assigned specialists to collect and disclose its information, and also has established a spokesperson system according to the regulations.

None

8. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?

ü Employee rights: In addition to purchasing insurance and contributing pensions for employees, the company had built appropriate communication channels for both employees and employers. Directors’ and supervisors’ continuing education: As the following table. Consumer Protection Policy: The company had established service center to process building maintenance, repair, community safety and cleaning service. The Company has purchased D&O insurance for its directors and supervisors.

None

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. According to the results of the Corporate Governance Evaluation System about the company, the improvements or the expectation of future improvements in the previous year are as follow:

(1) The company’s audit fees paid to CPA firms were more than the non-audit fees. (2) The Chinese and English Agenda Handbook for Regular Shareholders’ Meeting were expected to be disclosed on time. (3) More than one-third directors (including one independent director or above) were expected to attend the Regular Shareholder’s Meeting.

Directors’ and Supervisors’ Continuing Education

18


Title Name Assumed Date

Period Sponsoring Organization Course Training

Hours

Conforming to

Regulations From To

Representative of Institutional

Director

Kao-Huei Cheng 6.21.2016

5.9.2017 5.9.2017 Taiwan Corporate

Governance Association

Corporate Governance and the opportunity & Challenge of

Financial Digitalization 3 Yes

4.28.2017 4.28.2017 Taiwan Institute of Directors

Global Political and Financial Changes and Trends 3 Yes


Director

Chih-Hsien Lo 6.21.2016


Enterprises Transformation Led by Corporate Governance under

Platform and Strategy Innovation 3 Yes




Director

Hsiu-Ling Kao 6.21.2016







Director

Li-Ling Cheng 8.22.2017

10.27.2017 10.27.2017 Securities & Futures Institute

Insider Trading and Corporate Social Responsibility 2017 Forum 3 Yes





Director

Po-Ming Hou 6.21.2016






Analysis and Application of Corporate Financial Information 3 Yes




Director

Shih-Hung Chuang 6.21.2016 12.14.2017 12.14.2017

Taiwan Corporate Governance Association

The Corporates’, Directors’ and Supervisors’ Responsibility

According to Securities Exchange Act

3 Yes


Director

Ping-Chih Wu 6.21.2016 4.28.2017 4.28.2017 Taiwan Institute of

Directors Global Political and Financial

Changes and Trends 3 Yes


Director

Tsung-Ping Wu 6.21.2016 4.28.2017 4.28.2017 Taiwan Institute of



3.3.4 Composition, Responsibility and Operations of Compensation Committee (1) Information of Compensation Committee

Criteria Title & Name

Five or More Years’ Experience or below Professional Qualifications Independence Criteria Number of

Remuneration Committee

Memberships Held in

Other Public Companies

Remarks Lecturer or above in Business, Law,

Finance, Accounting or Corporate Business

Related Fields

Qualification of Justice, Procurator, Attorney,

CPA, Specialist or Technician of National


Related Fields




1 2 3 4 5 6 7 8 9 10

Convener Chian Tai ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ 3 Resigned on Nov. 10, 2017

Commissioner Sheng-Tsai Hsu ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ 0

Commissioner Ho-Yi Hung ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ 0

3.3.4 Composition, Responsibility and Operations of Compensation Committee：(1) Information of Compensation Committee:

18


Title Name Assumed Date

Period Sponsoring Organization Course Training

Hours

Conforming to

Regulations From To


Director

Kao-Huei Cheng 6.21.2016



Corporate Governance and the opportunity & Challenge of

Financial Digitalization 3 Yes




Director

Chih-Hsien Lo 6.21.2016







Director

Hsiu-Ling Kao 6.21.2016







Director

Li-Ling Cheng 8.22.2017

10.27.2017 10.27.2017 Securities & Futures Institute

Insider Trading and Corporate Social Responsibility 2017 Forum 3 Yes





Director

Po-Ming Hou 6.21.2016






Analysis and Application of Corporate Financial Information 3 Yes




Director

Shih-Hung Chuang 6.21.2016 12.14.2017 12.14.2017

Taiwan Corporate Governance Association

The Corporates’, Directors’ and Supervisors’ Responsibility

According to Securities Exchange Act

3 Yes


Director

Ping-Chih Wu 6.21.2016 4.28.2017 4.28.2017 Taiwan Institute of




Director

Tsung-Ping Wu 6.21.2016 4.28.2017 4.28.2017 Taiwan Institute of



3.3.4 Composition, Responsibility and Operations of Compensation Committee (1) Information of Compensation Committee

Criteria Title & Name

Five or More Years’ Experience or below Professional Qualifications Independence Criteria Number of

Remuneration Committee

Memberships Held in

Other Public Companies

Remarks Lecturer or above in Business, Law,

Finance, Accounting or Corporate Business

Related Fields

Qualification of Justice, Procurator, Attorney,

CPA, Specialist or Technician of National


Related Fields




1 2 3 4 5 6 7 8 9 10

Convener Chian Tai ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ 3 Resigned on Nov. 10, 2017

Commissioner Sheng-Tsai Hsu ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ 0

Commissioner Ho-Yi Hung ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ 0

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(2) Responsibility of Compensation Committee: a. Establish the regulations of compensation and performance for boards, supervisors and managers. b. Evaluate the compensation of directors and supervisors regularly. Committee should refer to the

industry payment and consider personal performance, company’s operations and future risk rather than seek the higher compensation.

(3) Operation of Compensation Committee: a. Compensation committee was set up on Sep. 30, 2011. b. Current committee is in the second term, which is from Aug. 12, 2013 to Jun. 17, 2016. The board

of directors approved to assign 3 members on Aug. 12, 2013. c. Committee meetings were held 2 times (A) during 2017. The attendance was as follows:

Title Name Attendance in Person

(B)

Proxy Attendance


Convener Chian Tai 2 0 100% Resigned on Nov. 10, 2017

Commissioner Sheng-Tsai Hsu 2 0 100%

Commissioner Ho-Yi Hung 2 0 100%

3.3.5 Implementation of Corporate Social Responsibility

Evaluation Item

Implementation Status Deviations from “the

Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx

Listed Companies” and Reasons

Yes No Abstract Illustration

1. Corporate Governance Implementation (1) Does the company declare its corporate

social responsibility policy and examine the results of the implementation?

(2) Does the company provide educational training on corporate social responsibility on a regular basis?

(3) Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board?

(4) Does the company declare a reasonable salary remuneration policy, and integrate the employee performance appraisal system with its corporate social responsibility policy, as well as establish an effective reward and disciplinary system?

ü

ü

ü

ü

The board of directors decided to establish the Corporate Social Responsibility Best-Practice Principles of the company. The company carries out regular trainings sessions on corporate social responsibility according to Corporate Social Responsibility Best-Practice Principles of the company and related regulations. The company has designated the Planning & Strategy Department as dedicated unit, and authorized specialized institution to prepare the 2014 Corporate Social Responsibility Report. The company has established a complete reward and disciplinary system based on the employee performance appraisal system which includes the corporate social responsibility policy as one of the most important criteria for evaluation. In addition, the remuneration paid to managers is confirmed by the Compensation Committee.

None

2. Sustainable Environment Development (1) Does the company endeavor to utilize all

resources more efficiently and use renewable materials which have low impact on the environment?

(2) Does the company establish proper environmental management systems based on the characteristics of their industries?

(3) Does the company monitor the impact of climate change on its operations and conduct greenhouse gas inspections, as well as establish company strategies for energy conservation and carbon reduction?

ü

ü

ü

The company has effectively decreased the waste of building materials through precise control over project duration. Furthermore, the company selects appropriate renewable raw materials on the basis of regulations to reduce exploitation of natural resources. The green procurement amount is $145 million in 2017. The company emphasizes on environmental protection, treasures resources, and purchases the materials which are tagged green building materials, water-saving, or energy conservation. The amount of green building materials the company purchased in 2014 is NT$ 74 million. Before constructions, the company requires the contractors to submit site management plans to ensure that the air, noise, water and waste pollution situations can be effectively controlled. The company continually dedicates to manage the construction sites, monitor the impact of climate change on the operations, conduct greenhouse gas inspections and disclose the information. In 2017, there are 924.23 tons of greenhouse gas emissions from 17 construction projects, and 300.78 tons from the offices.

None

(2) Responsibility of Compensation Committee:a. Establish the regulations of compensation and performance for boards, supervisors and

managers.b. Evaluate the compensation of directors and supervisors regularly. Committee should refer to

the industry payment and consider personal performance, company’s operations and future risk rather than seek the higher compensation.

(3) Operation of Compensation Committee:a. Compensation committee was set up on Sep. 30, 2011. b. Current committee is in the second term, which is from Aug. 12, 2013 to Jun. 17, 2016. The

board of directors approved to assign 3 members on Aug. 12, 2013. c. Committee meetings were held 2 times (A) during 2017. The attendance was as follows:

19

(2) Responsibility of Compensation Committee: a. Establish the regulations of compensation and performance for boards, supervisors and managers. b. Evaluate the compensation of directors and supervisors regularly. Committee should refer to the

industry payment and consider personal performance, company’s operations and future risk rather than seek the higher compensation.

(3) Operation of Compensation Committee: a. Compensation committee was set up on Sep. 30, 2011. b. Current committee is in the second term, which is from Aug. 12, 2013 to Jun. 17, 2016. The board

of directors approved to assign 3 members on Aug. 12, 2013. c. Committee meetings were held 2 times (A) during 2017. The attendance was as follows:

Title Name Attendance in Person

(B)

Proxy Attendance


Convener Chian Tai 2 0 100% Resigned on Nov. 10, 2017

Commissioner Sheng-Tsai Hsu 2 0 100%

Commissioner Ho-Yi Hung 2 0 100%


Evaluation Item





1. Corporate Governance Implementation (1) Does the company declare its corporate

social responsibility policy and examine the results of the implementation?

(2) Does the company provide educational training on corporate social responsibility on a regular basis?

(3) Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board?

(4) Does the company declare a reasonable salary remuneration policy, and integrate the employee performance appraisal system with its corporate social responsibility policy, as well as establish an effective reward and disciplinary system?

ü

ü

ü

ü

The board of directors decided to establish the Corporate Social Responsibility Best-Practice Principles of the company. The company carries out regular trainings sessions on corporate social responsibility according to Corporate Social Responsibility Best-Practice Principles of the company and related regulations. The company has designated the Planning & Strategy Department as dedicated unit, and authorized specialized institution to prepare the 2014 Corporate Social Responsibility Report. The company has established a complete reward and disciplinary system based on the employee performance appraisal system which includes the corporate social responsibility policy as one of the most important criteria for evaluation. In addition, the remuneration paid to managers is confirmed by the Compensation Committee.

None

2. Sustainable Environment Development (1) Does the company endeavor to utilize all

resources more efficiently and use renewable materials which have low impact on the environment?

(2) Does the company establish proper environmental management systems based on the characteristics of their industries?

(3) Does the company monitor the impact of climate change on its operations and conduct greenhouse gas inspections, as well as establish company strategies for energy conservation and carbon reduction?

ü

ü

ü

The company has effectively decreased the waste of building materials through precise control over project duration. Furthermore, the company selects appropriate renewable raw materials on the basis of regulations to reduce exploitation of natural resources. The green procurement amount is $145 million in 2017. The company emphasizes on environmental protection, treasures resources, and purchases the materials which are tagged green building materials, water-saving, or energy conservation. The amount of green building materials the company purchased in 2014 is NT$ 74 million. Before constructions, the company requires the contractors to submit site management plans to ensure that the air, noise, water and waste pollution situations can be effectively controlled. The company continually dedicates to manage the construction sites, monitor the impact of climate change on the operations, conduct greenhouse gas inspections and disclose the information. In 2017, there are 924.23 tons of greenhouse gas emissions from 17 construction projects, and 300.78 tons from the offices.

None


20

Evaluation Item





3. Preserving Public Welfare (1) Does the company formulate appropriate

management policies and procedures according to relevant regulations and the International Bill of Human Rights?

(2) Has the company set up an employee hotline or grievance mechanism to handle complaints with appropriate solutions?

(3) Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?

(4) Does the company setup a communication channel with employees on a regular basis, as well as reasonably inform employees of any significant changes in operations that may have an impact on them?

(5) Does the company provide its employees with career development and training sessions?

(6) Does the company establish any consumer protection mechanisms and appealing procedures regarding research development, purchasing, producing, operating and service?

(7) Does the company advertise and label its goods and services according to relevant regulations and international standards?

(8) Does the company evaluate the records of suppliers’ impact on the environment and society before taking on business partnerships?

(9) Do the contracts between the company and its major suppliers include termination clauses which come into force once the suppliers breach the corporate social responsibility policy and cause appreciable impact on the environment and society?

ü

ü

ü

ü

ü

ü

ü

ü

ü

The company respects to employee rights through appropriate systems and welfare to protect the employees’ legal rights. All employees of the company can use the employee hotlines to express their grievances, and the dedicated unit will appropriately solve the problems. The company respects to labor safety and health through requiring that all construction site personnel receive trainings on health and safety every day. The company has setup an EIP website for immediate notification on important policies and any information. The company has provides appropriate internal education training courses, and encourages all employees to has continuing education. There are 973.5 external training hours in 2017 (YOY 22.8%), and the total expenses on employee training are $228,000 (YOY 9.4%). The customers can use the company’s website, e-mail or telephone to express their suggestions or grievances. The marketing activities and after-sales services of the company policies are according to relevant regulations. The Cost Control Department of the company is responsible for appropriate evaluation of the suppliers on business partnerships. The contracts between the company and the major suppliers are all confirmed by the legal counsel. The company evaluation the impact on the environment caused by the purchase activities.

None

4. Enhancing Information Disclosure Does the company disclose relevant and reliable information regarding its corporate social responsibility on its website and the Market Observation Post System (MOPS)?

ü

The company enhances information disclosure according to “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”. The company has established the internet declaration system and spokesperson system, which includes one spokesperson and two deputy spokespeople. In addition, the information regarding finance and operations of the company is disclosed on our website.

None

5. If the Company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the Principles and their implementation: The board of directors decided to establish the Corporate Social Responsibility Best-Practice Principles of the company, designated the Planning & Strategy Department as dedicated unit, and authorized specialized institution to prepare the 2014 Corporate Social Responsibility Report. There is no deviation from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”.

6. Other important information to facilitate better understanding of the company’s corporate social responsibility practices： The company cares for the earth and works hard to promote ecological sustainability through designing green buildings, supporting related green activities and making related donations.

7. A clear statement shall be made below if the corporate social responsibility reports were verified by external certification institutions: The company has designated the Planning & Strategy Department as dedicated unit, and authorized specialized institution to prepare the 2017 Corporate Social Responsibility Report.

3.3.6 Implementation of Ethical Corporate Management

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21

Evaluation Item

Implementation Status

Deviations from “the Ethical Corporate

Management Best-Practice Principles for TWSE/TPEx



1. Establishment of ethical corporate management policies and programs

(1) Does the company declare its ethical corporate management policies and procedures in its guidelines and external documents, as well as the commitment from its board to implement the policies?

(2) Does the company establish policies to prevent unethical conduct with clear statements regarding relevant procedures, guidelines of conduct, punishment for violation, rules of appeal, and the commitment to implement the policies?

(3) Does the company establish appropriate precautions against high-potential unethical conducts or listed activities stated in Article 2, Paragraph 7 of the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies?

ü

ü

ü

The board of directors of the company has approved to establish the Ethical Corporate Management Best-Practice Principles, Ethical Corporate Management Operation Procedures and Guidelines on May 4, 2015. The company has established the operation procedures and guidelines based on the Ethical Corporate Management Best-Practice Principles, and implemented punishment for violation and rules of appeal. The company has established effective accounting and internal control systems against high-potential unethical operating activities.

None

2. Fulfill operations integrity policy (1) Does the company evaluate business partners’

ethical records and include ethics-related clauses in business contracts?

(2) Does the company establish an exclusively (or concurrently) dedicated unit supervised by the Board to be in charge of corporate integrity?

(3) Does the company establish policies to

prevent conflicts of interest and provide appropriate communication channels, and implement it?

(4) Has the company established effective systems for both accounting and internal control to facilitate ethical corporate management, and are they audited by either internal auditors or CPAs on a regular basis?

(5) Does the company regularly hold internal and external educational trainings on operational integrity?

ü

ü

ü

ü

ü

The company includes ethics-related clauses in business contracts of each business partner. The company has established the integrity management promotion team supervised by the Board since Nov. 3, 2016. The company’s integrity management promotion team supervises each department’s implementation of integrity management based on the Ethical Corporate Management Best-Practice Principles of the company and related regulations. The company has established policies to prevent conflicts of interest, in order to identify, monitor, and manage the risks of unethical conducts caused by conflicts of interest. In addition, the Audit Office regularly examines and evaluates operating activities, which providing appropriate communication channels. The company has established effective systems for accounting, internal control, and risk management, and the Audit Office regularly examines the implementation situation. The company reviews the audit’s reports and the results completed by each department annually, and reports to board of directors and supervisors.

None

3. Operation of the integrity channel (1) Does the company establish both a

reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up?

(2) Does the company establish standard operating procedures for confidential reporting on investigating accusation cases?

(3) Does the company provide proper whistleblower protection?

ü

ü

ü

According to Article 21 of the company’s Ethical Corporate Management Operation Procedures and Guidelines, there is confidential integrity hotline set up on the company’s website. The specially-assigned person of Audit Office is responsible for the integrity hotline and e-mail, dealing with the accusations or suggestions provided by the employees, suppliers and customers, and protecting the whistleblowers based on confidential retorting systems. The integrity hotline and e-mail of the company are listed below. Tel: (06)282-1155 #5100 E-mail: [email protected]

None

4. Strengthening information disclosure (1) Does the company disclose its ethical

corporate management policies and the results of its implementation on the company’s website and MOPS?

ü

The information regarding finance, operation, and corporate governance of the company is disclosed to the shareholders and stakeholders on our website.

None

3.3.6 Implementation of Ethical Corporate Management

22

Evaluation Item

Implementation Status

Deviations from “the Ethical Corporate

Management Best-Practice Principles for TWSE/TPEx



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. The board of directors has approved the Ethical Corporate Management Best-Practice Principles of the company on May 4, 2015, and the company will conduct the procedures gradually according to the principles. 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.

3.3.7 Corporate Governance Guidelines and Regulations Please refer to the company’s website (http://www.prince.com.tw), or MOPS (http://mops.twse.com.tw/mops/web/index) 3.3.8 Other Important Information Regarding Corporate Governance The board of directors decided to establish the Compensation Committee in 2011, and approved the Corporate Social Responsibility Best-Practice Principles and Ethical Corporate Management Best-Practice Principles (including Ethical Corporate Management Operation Procedures and Guidelines) in 2015. For better operation understanding of the directors, the Operation Optimization Team was established in the 1st boarding meeting on the fifteenth term. To enhance the corporate governance, the Chairman Chih-Hsien Lo were approved to hold a concurrently position as the Chief Strategy Officer during the interim board meeting on August 18, 2017.

3.3.7 Corporate Governance Guidelines and Regulations

Please refer to the company’s website (http://www.prince.com.tw), or MOPS (http://mops.twse.com.tw/mops/web/index)

3.3.8 Other Important Information Regarding Corporate Governance

The board of directors decided to establish the Compensation Committee in 2011, and approved the Corporate Social Responsibility Best-Practice Principles and Ethical Corporate Management Best-Practice Principles (including Ethical Corporate Management Operation Procedures and Guidelines) in 2015. For better operation understanding of the directors, the Operation OptimizationTeamwasestablishedinthe1stboardingmeetingonthefifteenthterm.Toenhancethe corporate governance, the Chairman Chih-Hsien Lo were approved to hold a concurrently positionastheChiefStrategyOfficerduringtheinterimboardmeetingonAugust18,2017.

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3.3.9 Implementation of Internal Control Systems

Prince Housing and Development CorporationDeclaration of Internal Control

March 20, 2018The internal control system in 2017 is with the following declarations made in accordance with self-inspection conducted:1. We understand it is the responsibility of the company’s management to have internal control system established,

enforced, and maintained. The company internal control system established to provide a reasonable assurance for therealizationofoperatingeffectandefficiency(includingprofits,performance,andassetssafety),thereliability,timelinessandtransparencyoffinancialreport,andtheobedienceofrelevantregulations.

2. Internal control system is designed with limitations; therefore, no matter how perfect it is designed, an effective internal control system is to ensure the realization of the aforementioned three objectives. Due to the change of environment and condition, the effectiveness of an international control system could change at any time. Our internal control system is designed with self-monitoring mechanism; therefore, we are able to have corrective actions initiated upon identifying any nonconformity.

3. We have based on the internal control criteria of “Governing Rules for handling international; control system by public offering companies” (referred to as “the Governing Rules” hereinafter) to determine the effectiveness of internalcontroldesignandenforcement.Theinternalcontroldividedintofiveelements:1.Environmentcontrol,2. Risk analysis, 3. Control process, 4.Information and communication, and 5. Supervision. Each element is subdivided into several items. Please refer to the “Governing Rules” for the details of the said items.

4. We have based on the aforementioned internal control criteria to inspect the effectiveness of internal control design and enforcement.

5. We believe that our audits provide a reasonable basis for our opinion. On December 31, 2017, those standards require that we plan and perform the audit to obtain reasonable assurance about whether the internal control system(including thesupervisionandmanagementover thesubsidiaries) including thefulfillmentofbusinessperformanceandefficiency,thereliability,timelinessandtransparencyoffinancialstatementsandtheobedienceof governing regulations, and the design and enforcement of internal control system is free of material misstatement and is able to ensure the realization of the aforementioned objectives.

6. The Declaration of Internal Control is the content of our annual report and prospectus for the information of the public. For any forgery and concealment of the aforementioned information to the public, we will be held responsible by law in accordance with Securities Transaction Regulation No. 20, No.32, No.171, and No.174.

7. We hereby declared the Declaration of Internal Control was approved by Board of Directors on March 20, 2018 unanimously by the directors at the meeting.

Prince Housing and Development Corporation Chairman: Chih-Hsien Lo President: Ming-Fan Xie

3.3.10 The punishment delivered to the company and the staff of the company, or the punishment delivered by the company to the staff for a violation of internal control system, the major nonconformity, and the corrective action in the most recent years and up to the date of the annual report printed: None.

3.3.11 Major Resolutions of Shareholders’ Meeting and Board Meetings in the Most Recent Years and up to the Date of the Annual Report Printed:

1. Major Resolution and Executions of the 2017 General Shareholders Meeting:(1) Accepted thebusinessreportsandfinancialstatementsforyear2016. Inaccordancewith

thecompany law,all relatedfinancial informationhasbeensubmitted to thegovernmentagency to review.

(2) Approved the distribution of retained earnings for year 2016. The available retained earnings for distribution in 2016 were NT$2.94 billion. The distribution of cash dividend was NT$1 per share. The cash dividend was distributed on Aug. 21, 2017.

(3) Approved the amendments to parts of Articles of Incorporation: Effective on the resolutions at general shareholders meeting, and the company has completed the changes registration to the Ministry of Economic Affairs within 15 days according to the regulations.

(4) Approved the company’s procedures for acquisition and disposal of assets.

2. Major Resolutions during the Board of Directors Meetings in 2017 and to the Publish Date of the Annual Report:5th Board Meeting of the 15th (Mar. 22, 2017)(1) Approved the cancellation of the company’s amount of endorsements and guarantees

provided to Ta-Cheng Construction Corp., which was NT$1.9 billion. (2) ApprovedthefinancialsupporttotheSplendorHotelTaichungduringthenextyear.(3) Approved the arrangement of NT$5 billion corporate bonds issuance in 2017. (4) Approved the amendment to the company's Articles of Incorporation.(5) Approved the declaration of internal control for year 2016.(6) Acceptedthebusinessreportsandfinancialreportsforyear2016.(7) Approved the earning distribution for year 2016.(8) Approved the directors’ and supervisors’ remuneration payment manner in 2016.(9) Approved the evaluation of the CPAs’ independence, and the designation of the CPAs in

2017.(10) Approved the Procedures for Acquisition and Disposal of Assets.(11) Approved the Manager Performance Assessment Plan in 2016 and 2017.(12) Approved the remuneration regulation for the company’s concurrent positions on its

subsidiaries.(13) Approved to hold the 2017 general shareholders meeting.

6th Board Meeting of the 15th (May 4, 2017)Acceptedtheconsolidatedfinancialreportsforthefirstquarterofyear2017.

7th Board Meeting of the 15th (Jun. 22, 2017)(1) Approved that the ex-cash dividend date was July 31, 2017, and the distribution date was

August 21, 2017.

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(2) Accepted the salary adjustments of all managers and employees in 2017.(3) Accepted dismantling the managers’ competition prohibition.

8th Board Meeting of the 15th (Aug. 1, 2017)Acceptedtheconsolidatedfinancialreportsforthesecondquarterofyear2017.

1st Interim Board Meeting of the 15th (Aug. 18, 2017)(1) The original chairman Kao-Huei Cheng passed away. The original vice chairman Chih-

Hsien Lo was elected as the new chairman by all directors.(2) Approvedthechairman’sconcurrentpositionastheChiefStrategyOfficer.

9th Board Meeting of the 15th (Nov. 7, 2017)(1) Approvedtheconsolidatedfinancialreportsforthethirdquarterofyear2017.(2) Approved the amendment of the company’s Rules of Procedure for Board of Directors

Meetings, Organization Rules of Audit Committee, and Rules of Independent Directors’ Responsibility.

(3) Approved the audit plan for year 2018.(4) Approved the bonus distribution of managers in 2017.(5) Approved the implementation plan of Compensation Committee in 2018.(6) Approved to joint sale with Prince Real Estate Co.

10th Board Meeting of the 15th (Jan. 22, 2018)Accepted the assignment of Peng-Ling Nie as the member of Compensation Committee of the third term.

11th Board Meeting of the 15th (Mar. 20, 2018)(1) Reported the large amount of donations, and established the guidance plan for IFRs 16.(2) Approved the arrangement of NT$5 billion corporate bonds issuance in 2018. (3) ApprovedthefinancialsupporttotheSplendorHotelTaichungduringthenextyear.(4) Approved thatTa-ChengConstructionCorp.proposed toprovideshort-termfinancing to

Cheng-Shi Investment Holding Corp.(5) Acceptedthebusinessreportsandfinancialreportsforyear2017.(6) Approved the distribution of retained earnings for year 2017. The distribution of cash

dividend was NT$ 0.65 per share. The amount of cash dividend was NT$1.055 billion.(7) Approvedprofitdistributionofemployee’sbonusanddirectorsremunerationin2017.(8) Approved the evaluation of the CPAs’ independence, and the designation of the CPAs in

2018.(9) Approved the declaration of internal control for year 2017.(10) Approved the Manager Performance Assessment Plan in 2017 and 2018.(11) Approved the by-election of independent director.(12) Approved to hold the 2018 general shareholders meeting.

3.3.12 The Directors or Supervisors who have Objected to the Resolutions Reached by the Board of Directors and the Objections are Recorded or Declared in Writing in the Most Recent Year and up to Date of the Annual Report Printed: None.

3.3.13 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit and R&D in the Most Recent Year and up to Date of the Annual Report Printed:

The chairman Kao-Huei Cheng (representative of Joyful Investment Co., Ltd.) passed away on Aug. 14, 2017. Chih-Hsien Lo (representative of Uni-President Enterprises Corp.) was elected as new chairman on the 1st interim board meeting of the 15th term.

3.4 Information Regarding the Company’s Audit Fee and Independence

(1) Thenon-auditingfeespaidtoCPAs,CPAfirm,andtheCPAform’srelatedpartyaccountedfor over a quarter of the total auditing fees, the auditing amount and non-auditing amount; also, the non-auditing service must be disclosed:

CPAfirm Name Auditing period Note

PWC Chien-Chih Wu Kuo-Hua Wang 2017

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26

Range of Audit Fees and Non-Audit Fees Unit: NT$ thousands

Item

Range of Audit Fees Audit Fees Non-Audit Fees Total

1 Under NT$2,000 - - -

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

3 NT$4,000~ NT$5,999 - 4,400 4,400

4 NT$6,000~ NT$7,999 - - -

5 NT$8,000~ NT$9,999 - - -

6 Over NT$10,000 10,643 - 10,643

Information of Audit Fees

Unit: NT$ thousands

CPA firm CPA Audit

Fees

Non-Audit Fees

Term Remarks System Design

Industrial and Commercial Registration

Human Resource Other Total

PwC

Chien-Chih Wu

10,643 - - 54 4,346 4,400 2017

- Transfer Pricing Reports: NT$1,515 thousands - CSR Reports: NT$1,295 thousands - Financial Reports Translation: NT$954 thousands - Project Consulting: NT$582 thousands

Kuo-Hua Wang

(2) If the auditing fee paid in the year retaining service from another CPA Firms is less than the

auditing fee paid in the year before, the amount of auditing fee before and after the change of CPA Firm and the reasons for the said change must be disclosed: None

(3) If the auditing fee paid in the year retaining service from another CPA Firms is over 15% less than the auditing fee paid in the year before, the amount and ratio of auditing fee reduced and the reasons for the said change must be disclosed: None

3.5 CPA Replacement Information: None 3.6 If the Chairman, President, and Financial or Accounting Manager of the Company

who had Worked for the Independent Auditor or the Related Party in the Most Recent Year, the Name, Title, and Term with the Independent Auditor or the Related Party must be Disclosed: None

Range of Audit fees and Non-Audit FeesUnit: NT$ thousands

26

Range of Audit Fees and Non-Audit Fees Unit: NT$ thousands

Item

Range of Audit Fees Audit Fees Non-Audit Fees Total

1 Under NT$2,000 - - -

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

3 NT$4,000~ NT$5,999 - 4,400 4,400

4 NT$6,000~ NT$7,999 - - -

5 NT$8,000~ NT$9,999 - - -

6 Over NT$10,000 10,643 - 10,643


Unit: NT$ thousands

CPA firm CPA Audit

Fees

Non-Audit Fees

Term Remarks System Design

Industrial and Commercial Registration

Human Resource Other Total

PwC

Chien-Chih Wu

10,643 - - 54 4,346 4,400 2017

- Transfer Pricing Reports: NT$1,515 thousands - CSR Reports: NT$1,295 thousands - Financial Reports Translation: NT$954 thousands - Project Consulting: NT$582 thousands

Kuo-Hua Wang

(2) If the auditing fee paid in the year retaining service from another CPA Firms is less than the

auditing fee paid in the year before, the amount of auditing fee before and after the change of CPA Firm and the reasons for the said change must be disclosed: None


3.5 CPA Replacement Information: None 3.6 If the Chairman, President, and Financial or Accounting Manager of the Company

who had Worked for the Independent Auditor or the Related Party in the Most Recent Year, the Name, Title, and Term with the Independent Auditor or the Related Party must be Disclosed: None


Unit: NT$ thousands

(2) If the auditing fee paid in the year retaining service from another CPA Firms is less than the auditing fee paid in the year before, the amount of auditing fee before and after the change of CPA Firm and the reasons for the said change must be disclosed: None


3.5 CPA Replacement Information: None

3.6 If the Chairman, President, and Financial or Accounting Manager of the Company who had Worked for the Independent Auditor or the Related Party in the Most Recent Year, the Name, Title, and Term with the Independent Auditor or the Related Party must be Disclosed: None

3.7 Equity transferred and equity pledged (or changes thereto) by Directors, Supervisors, Department Heads and Shareholders of 10% Shareholding or More during the preceding fiscal year or in the current fiscal year up to the date of printing of the annual report:

27

3.7! Equity Transferred and Equity Pledged (or changes thereto) by Directors, Supervisors, Department Heads and Shareholders of 10% Shareholding or More during the Preceding Fiscal Year or in the Current Fiscal Year up to the Date of Printing of the Annual Report:

Title Name 2017 As of Apr. 23, 2018

Holding Increase(Decrease)

Pledged Holding Increase(Decrease)



Chairman Uni-President Enterprises Corp. (Note 1)

Chairman Uni-President Enterprises Corp., Rep: Chih-Hsien Lo

Director Joyful Investment Co. Ltd.

Director Joyful Investment Co. Ltd., Rep: Li-Ling Cheng

Director Kao Chyuan Inv. Co., Ltd. 4,220,000

Director Kao Chyuan Inv. Co., Ltd., Rep: Hsiu-Ling Kao

Director Uni-President Enterprises Corp., Rep: Tsung-Ping Wu

Director Chao-Mei Wu Tseng

Director Taipo Investment Co. Ltd. 4,646,000 2,864,000

Director Taipo Investment Co. Ltd., Rep: Chien-Te Wu

Director Taipo Investment Co. Ltd., Rep: Ping-Chih Wu

Director Young Yuan Inv. Co., Ltd.

Director Young Yuan Inv. Co., Ltd., Rep: Chung-Ho Wu

Director Hung Yao Inv. Co., Ltd.

Director Hung Yao Inv. Co., Ltd., Rep: Shih-Hung Chuang

Director Po-Yi Hou

Director Yu-Pong Investment Corp.

Director Yu-Pong Investment Corp. Rep: Po-Ming Hou

Director Cheng-Long Investment Corp.

Director Cheng-Long Investment Corp. Rep: Ying-Chih Chuang

Independent Director Chian Tai Note 3

Independent Director Ho-Yi Hung

Independent Director Sheng-Tsai Hsu

President Ming-Fan Xie (180,909)


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Vice President Xiao-Yu Chiang (18,000)







Manager Xi-Fen Chang (284,550)

Manager Te-Ju Yen


Junior Manager Ya-Ting Xue (90,000)

Note1: Shareholders with a stake of 10 percent or more, the recipient's name shall be disclosed along with a note explaining. Uni-President Enterprises Corp. holds 10.03% of the company. Note2: Where the recipient of the equity transfer or equity pledge has ties to the company, it has to fill in the following tabulation. Note3: The independent director Chian Tai has resigned the position from Nov. 10, 2017..

Shares Trading with Related Parties

Name Reason of Transfer

Date of Transactio

n Transferee

Relationship between Transferee and Directors, Supervisors, Managers and

Major Shareholders Shares

Transaction Price (NT$)

Ming-Fan Xie Grant 7.12.2017 Su-Chun Lu Spouse of President 180,909 N/A

Shares Pledge with Related Parties

Unit: NT$

Name Reason of Pledge

Date of Transaction Transferee

Relationship between Transferee

and Directors, Supervisors, Managers and Major Shareholders

Shares Shares holding

%

Shares Pledged

%

Pledged Amount

None

28
















Manager Te-Ju Yen






Date of Transactio

n Transferee






Unit: NT$






%

Shares Pledged

%

Pledged Amount

None

Note 1: Shareholders with a stake of 10 percent or more, the recipient's name shall be disclosed along with a note explaining. Uni-President Enterprises Corp. holds 10.03% of the company.

Note 2: Where the recipient of the equity transfer or equity pledge has ties to the company, it has to fill in the following tabulation.Note 3: The independent director Chian Tai has resigned the position from Nov. 10, 2017.


Shares Pledge with Related PartiesUnit: NT$

28
















Manager Te-Ju Yen






Date of Transactio

n Transferee






Unit: NT$






%

Shares Pledged

%

Pledged Amount

None

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3.8

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Kao

-Qua

n In

vest

men

t Co.

Ltd

C

hairm

an

Uni

-Pre

side

nt E

nter

pris

es C

o. (R

ep: C

hih-

Hsi

en L

o)

0 0

425,

013

0.03

%

0 0

Kao

-Qua

n In

vest

men

t Co.

Ltd

(Rep

. Hsi

u-Li

ng K

ao)

Spou

se

Taip

o In

v. C

o., L

td.

91,2

50,5

87

5.62

%

0 0

0 0

Uni

-Pre

side

nt E

nter

pris

es C

o.

Dire

ctor

Taip

o In

v. C

o., L

td. (

Rep

: Wei

-De

Wu)

98

,654

0.

01%

0

0 0

0 Zh

ao-M

ei W

u Ze

ng

Mot

her a

nd s

on

Nan

Sha

n Li

fe In

sura

nce

Co.

, Ltd

. 59

,442

,565

3.

66%

0

0 0

0 N

one

Non

e

Nan

Sha

n Li

fe In

sura

nce

Co.

, Ltd

. (R

ep. Y

ing-

Chu

ng D

u)

0 0

0 0

0 0

Non

e N

one

Tain

an S

pinn

ing

Co,

Ltd

. 59

,185

,474

3.

65%

0

0 0

0 N

one

Non

e

Tain

an S

pinn

ing

Co,

Ltd

. (R

ep: B

o-M

ing

Hou

) 22

,923

,624

1.

41%

0

0 0

0 X

ing-

Yon

g-X

ing

Inv,

Co.

Ltd

,. (R

ep: B

o-Y

u H

ou)

Bro

ther

s

Kao

-Qua

n In

vest

men

t Co.

Ltd

52

,457

,308

3.

23%

0

0 0

0 U

ni-P

resi

dent

Ent

erpr

ises

Co.

D

irect

or

Kao

-Qua

n In

vest

men

t Co.

Ltd

(Rep

. Hsi

u-Li

ng K

ao)

425,

013

0.03

%

0 0

0 0

Uni

-Pre

side

nt E

nter

pris

es C

o. (R

ep: C

hih-

Hsi

en L

o)

Spou

se

Zhao

-Mei

Wu

Zeng

39

,023

,030

2.

40%

0

0 0

0 W

e-D

e W

u M

othe

r and

Son

Uni

vers

al C

emen

t Cor

pora

tion

35,6

71,9

48

2.20

%

0 0

0 0

Xin

g-Y

ong-

Xin

g In

v, C

o. L

td,.

(Rep

: Bo-

Yu

Hou

)

Uni

vers

al C

emen

t Cor

pora

tion

(Rep

. Bo-

I Hou

) 13

,701

,215

0.

84%

0

0 0

0 Ta

inan

Spi

nnin

g C

o, L

td. (

Rep

: Bo-

Min

g H

ou)

Joyf

ul In

v. C

o., L

td.

28,1

36,0

24

1.73

%

0 0

0 0

Uni

-Pre

side

nt E

nter

pris

es C

o.

Dire

ctor

Joyf

ul In

v. C

o., L

td. (

Rep

: Li-L

ing

Che

ng)

0 0

0 0

0 0

Non

e N

one

Xin

g-Y

ong-

Xin

g In

v, C

o. L

td,.

26,4

71,1

28

1.63

%

0 0

0 0

Non

e N

one

Xin

g-Y

ong-

Xin

g In

v, C

o. L

td,.

(Rep

: Bo-

Yu

Hou

) 0

0 0

0 0

0 Ta

inan

Spi

nnin

g C

o, L

td.

(R

ep: B

o-M

ing

Hou

) B

roth

ers

Che

ng-L

ong

Inv.

Co,

Ltd

. 25

,882

,643

1.

59%

0

0 0

0 N

one

Non

e

Che

ng-L

ong

Inv.

Co,

Ltd

. (R

ep: Y

ing-

Chi

h C

huan

g)

310,

020

0.02

%

5,62

4,93

3 0.

35%

0

0 N

one

Non

e

3.9 Investments of Directors, Supervisors, managers and directly or indirectly controlled business on the reinvested business and the total shareholdings ratio:

Baseline date: Dec 31, 2017 Unit: Share; %

Total Shareholding Ratio3.9 Investments of Directors, Supervisors, managers and directly or indirectly controlled business on the reinvested business and the total shareholdings ratio:

Total Shareholding Ratio

Baseline date: Dec 31, 2017 Unit: Share; %

Investees Investment of the

Company

Investments from Directors, Supervisors, Managers and directly

or Indirectly Controlled Business

Total Investment

Shares % Shares % Shares % Cheng-Shi Investment Holding Co., Ltd 97,504,950 100.00% - - 97,504,950 100.00%

Ta-Chen Construction & Engineering Corp - - 90,497,528 100.00% 90,497,528 100.00%

Prince Utility Co., Ltd - - 3,070,000 100.00% 3,070,000 100.00% Cheng-Shi Construction Co., Ltd - - 20,100,000 100.00% 20,100,000 100.00% Prince Property Management Consulting Co. 17,146,580 100.00% - - 17,146,580 100.00%

Prince Apartment Management Maintain Co., Ltd - - 3,000,000 100.00% 3,000,000 100.00%

Prince Security Co., Ltd - - 13,172,636 100.00% 13,172,636 100.00% Geng-Ding Co., Ltd 18,000,000 30.00% - - 18,000,000 30.00% Prince Housing Investment Co., Ltd 428 100.00% - - 428 100.00%

Dong-Feng Enterprises Co., Ltd 4,300,000 100.00% - - 4,300,000 100.00% Uni-President Development Corp. 108,000,000 30.00% - - 108,000,000 30.00% The Splendor Hotel Taichung 97,500,000 50.00% - - 97,500,000 50.00% Time Square International Co., Ltd 46,300,000 100.00% - - 46,300,000 100.00% Jin-Yi-Xing plywood Co., Ltd 3,938,168 99.65% - - 3,938,168 99.65% Ming-Da Enterprise Co., Ltd 200,000 20.00% - - 200,000 20.00% Prince Co. 1,000,000 100.00% - - 1,000,000 100.00% Prince Real Estate Corp. 11,208,632 99.65% - - 11,208,632 99.65% PPG Investment Inc. - - 273 27.27% 273 27.30% Queen Holdings Ltd. - - 2,730 27.27% 2,730 27.30% Zhi-Hwa Assets Management Co., Ltd - - 21,644,062 45.21% 21,644,062 45.21%

IV

Corporate G

overnance Report

IV

Corporate G

overnance Report


Capital Overview

Annual Report 2017

Chapter IV

As

of 0

5/15

/201

8

IV.

Cap

ital O

verv

iew

4.1

C

apita

l and

Sha

res

4.1.

1 So

urce

of C

apita

l

A

. Iss

ued

Shar

es

IV. C

apita

l Ove

rvie

w

4.1

Cap

ital a

nd S

hare

s 4.

1.1

Sour

ce o

f Cap

ital

A. I

ssue

d Sh

ares

A

s of 0

5/15

/201

8

Mon

th/

Yea

r

Par

Val

ue

(NTD

)

Aut

horiz

ed C

apita

l Pa

id-in

Cap

ital

Rem

ark

Shar

es

Am

ount

(N

TD)

Shar

es

Am

ount

(N

TD)

Sour

ces o

f Cap

ital

Cap

ital

Incr

ease

d by

A

sset

s Oth

er

than

Cas

h

Oth

er

Mar

200

3 $1

0 90

5,83

9,64

5 9,

058,

396,

450

905,

839,

645

9,05

8,39

6,45

0 C

ance

llatio

n of

Tre

asur

e sh

ares

N

one

Oct

200

5 $1

0 1,

200,

000,

000

12,0

00,0

00,0

00

901,

333,

032

9,01

3,33

0,32

0 C

apita

lizat

ion

of re

tain

ed e

arni

ngs a

nd

canc

ella

tion

of T

reas

ure

shar

es

Non

e

May

200

6 $1

0 1,

200,

000,

000

12,0

00,0

00,0

00

865,

126,

032

8,65

1,26

0,32

0 C

ance

llatio

n of

Tre

asur

e sh

ares

N

one

O

ct 2

007

$10

1,20

0,00

0,00

0 12

,000

,000

,000

93

0,01

0,48

4 9,

300,

104,

840

Cap

italiz

atio

n of

reta

ined

ear

ning

s N

one

O

ct 2

008

$10

1,20

0,00

0,00

0 12

,000

,000

,000

95

7,91

0,79

8 9,

579,

107,

980

Cap

italiz

atio

n of

reta

ined

ear

ning

s N

one

Oct

201

0 $1

0 1,

200,

000,

000

12,0

00,0

00,0

00

996,

227,

230

9,96

2,27

2,30

0 Su

rplu

s and

cap

ital r

eser

ve –

capi

taliz

atio

n of

Tre

asur

e sh

ares

N

one

Oct

201

1 $1

0 1,

200,

000,

000

12,0

00,0

00,0

00

1,08

5,88

7,68

1 10

,858

,876

,810

C

apita

lizat

ion

of re

tain

ed e

arni

ngs

Non

e

Oct

. 201

2 $1

0 1,

200,

000,

000

12,0

00,0

00,0

00

1,19

4,47

6,44

9 11

,944

,764

,490

C

apita

lizat

ion

of re

tain

ed e

arni

ngs

N

one

Se

p 20

13

$10

1,60

0,00

0,00

0 16

,000

,000

,000

1,

313,

924,

094

13,1

39,2

40,9

40

Cap

italiz

atio

n of

reta

ined

ear

ning

s N

one

A

pr 2

014

$14.

45

2,00

0,00

0,00

0 20

,000

,000

,000

1,

613,

924,

094

16,1

39,2

40,9

40

Cap

ital i

ncre

ase

by c

ash

Non

e

Sept

, 201

4 $1

0 2,

000,

000,

000

20,0

00,0

00,0

00

1,66

2,34

1,81

7 16

,623

,418

,170

C

apita

lizat

ion

of re

tain

ed e

arni

ngs

Non

e

Nov

. 201

5 $1

0 2,

000,

000,

000

20,0

00,0

00,0

00

1,62

3,32

6,14

7 16

,233

,261

,470

C

ance

llatio

n of

Tre

asur

e sh

ares

N

one

B

. Typ

e of

Sto

ck

As o

f 04/

23/2

018

Shar

e Ty

pe

Aut

horiz

ed C

apita

l R

emar

ks

Issu

ed S

hare

s U

n-is

sued

Sha

res

Tota

l Sha

res

Com

mon

Sto

ck

1,62

3,32

6,14

7 37

6,67

3,85

3 2,

000,

000,

000

C

. Agg

rega

ted

decl

arat

ion

info

rmat

ion:

N/A

IV. C

apita

l Ove

rvie

w

4.1

Cap

ital a

nd S

hare

s 4.

1.1

Sour

ce o

f Cap

ital

A. I

ssue

d Sh

ares

A

s of 0

5/15

/201

8

Mon

th/

Yea

r

Par

Val

ue

(NTD

)

Aut

horiz

ed C

apita

l Pa

id-in

Cap

ital

Rem

ark

Shar

es

Am

ount

(N

TD)

Shar

es

Am

ount

(N

TD)

Sour

ces o

f Cap

ital

Cap

ital

Incr

ease

d by

A

sset

s Oth

er

than

Cas

h

Oth

er

Mar

200

3 $1

0 90

5,83

9,64

5 9,

058,

396,

450

905,

839,

645

9,05

8,39

6,45

0 C

ance

llatio

n of

Tre

asur

e sh

ares

N

one

Oct

200

5 $1

0 1,

200,

000,

000

12,0

00,0

00,0

00

901,

333,

032

9,01

3,33

0,32

0 C

apita

lizat

ion

of re

tain

ed e

arni

ngs a

nd

canc

ella

tion

of T

reas

ure

shar

es

Non

e

May

200

6 $1

0 1,

200,

000,

000

12,0

00,0

00,0

00

865,

126,

032

8,65

1,26

0,32

0 C

ance

llatio

n of

Tre

asur

e sh

ares

N

one

O

ct 2

007

$10

1,20

0,00

0,00

0 12

,000

,000

,000

93

0,01

0,48

4 9,

300,

104,

840

Cap

italiz

atio

n of

reta

ined

ear

ning

s N

one

O

ct 2

008

$10

1,20

0,00

0,00

0 12

,000

,000

,000

95

7,91

0,79

8 9,

579,

107,

980

Cap

italiz

atio

n of

reta

ined

ear

ning

s N

one

Oct

201

0 $1

0 1,

200,

000,

000

12,0

00,0

00,0

00

996,

227,

230

9,96

2,27

2,30

0 Su

rplu

s and

cap

ital r

eser

ve –

capi

taliz

atio

n of

Tre

asur

e sh

ares

N

one

Oct

201

1 $1

0 1,

200,

000,

000

12,0

00,0

00,0

00

1,08

5,88

7,68

1 10

,858

,876

,810

C

apita

lizat

ion

of re

tain

ed e

arni

ngs

Non

e

Oct

. 201

2 $1

0 1,

200,

000,

000

12,0

00,0

00,0

00

1,19

4,47

6,44

9 11

,944

,764

,490

C

apita

lizat

ion

of re

tain

ed e

arni

ngs

N

one

Se

p 20

13

$10

1,60

0,00

0,00

0 16

,000

,000

,000

1,

313,

924,

094

13,1

39,2

40,9

40

Cap

italiz

atio

n of

reta

ined

ear

ning

s N

one

A

pr 2

014

$14.

45

2,00

0,00

0,00

0 20

,000

,000

,000

1,

613,

924,

094

16,1

39,2

40,9

40

Cap

ital i

ncre

ase

by c

ash

Non

e

Sept

, 201

4 $1

0 2,

000,

000,

000

20,0

00,0

00,0

00

1,66

2,34

1,81

7 16

,623

,418

,170

C

apita

lizat

ion

of re

tain

ed e

arni

ngs

Non

e

Nov

. 201

5 $1

0 2,

000,

000,

000

20,0

00,0

00,0

00

1,62

3,32

6,14

7 16

,233

,261

,470

C

ance

llatio

n of

Tre

asur

e sh

ares

N

one

B

. Typ

e of

Sto

ck

As o

f 04/

23/2

018

Shar

e Ty

pe

Aut

horiz

ed C

apita

l R

emar

ks

Issu

ed S

hare

s U

n-is

sued

Sha

res

Tota

l Sha

res

Com

mon

Sto

ck

1,62

3,32

6,14

7 37

6,67

3,85

3 2,

000,

000,

000

C

. Agg

rega

ted

decl

arat

ion

info

rmat

ion:

N/A

B. T

ype

of S

tock

C. A

ggre

gate

d de

clar

atio

n in

form

atio

n: N

/A

IV

Corporate G

overnance Report

IV

Corporate G

overnance Report


4.1.

2 St

atus

of S

hare

hold

ers

As o

f 04/

23/2

018

Item

G

over

nmen

t Age

ncie

s Fi

nanc

ial I

nstit

utio

ns

Oth

er Ju

ridic

al

Pers

on

Dom

estic

Nat

ural

Pe

rson

s Fo

reig

n In

stitu

tions

&

Nat

ural

Per

sons

To

tal

Num

ber o

f Sha

reho

lder

s -

- 14

7 65

,286

21

0 65

,650

Sh

areh

oldi

ng (s

hare

s)

- -

763,

050,

390

695,

056,

439

165,

219,

318

1,62

3,32

6,14

7 Pe

rcen

tage

(%)

- -

47.0

0%

42.8

2%

10.1

8%

100.

00%

4.

1.3

Shar

ehol

ding

Dis

trib

utio

n St

atus

A

. Com

mon

Sha

res (

The

par v

alue

for e

ach

shar

e is

NT$

10)

As o

f 04/

24/2

017

Cla

ss o

f Sha

reho

ldin

g (U

nit :

Sha

re)

Num

ber o

f Sha

reho

lder

s Sh

areh

oldi

ng (S

hare

s)

Perc

enta

ge

1 ~

999

36

,295

6,04

3,87

2

0.

371,

000

~ 5,

000

18,2

24

39,3

02,8

83

2.42

5,

001

~ 10

,000

44,5

9833

,380

,158

,

2.

0610

,001

~ 1

5,00

0 2,

126

25,5

54,3

94

1.57

15

,001

~ 2

0,00

0 1,

004

17,7

34,7

93

1.09

20

,001

~ 3

0,00

0 1,

111

27,0

17,7

52

1.67

30

,001

~ 5

0,00

0

838

32

,602

,810

2.

0150

,001

~ 1

00,0

00

692

48,7

18,2

93

3.00

10

0,00

1 ~

200,

000

34

0

46,1

41,3

91

2.84

200,

001

~ 40

0,00

0 16

7 46

,750

,465

2.

88

400,

001

~ 60

0,00

0

78

38,3

56,4

54

2.36

600,

001

~ 80

0,00

0 40

27

,598

,841

1.

70

800,

001

~ 1,

000,

000

18

16

,162

,419

1.

001,

000,

001

or o

ver

13

3

1,21

7,69

1,62

2

75.0

3To

tal

65

,650

1,

623,

326,

147

10

0.00

4.1.

2 St

atus

of S

hare

hold

ers

As o

f 04/

23/2

018

Item

G

over

nmen

t Age

ncie

s Fi

nanc

ial I

nstit

utio

ns

Oth

er Ju

ridic

al

Pers

on

Dom

estic

Nat

ural

Pe

rson

s Fo

reig

n In

stitu

tions

&

Nat

ural

Per

sons

To

tal

Num

ber o

f Sha

reho

lder

s -

- 14

7 65

,286

21

0 65

,650

Sh

areh

oldi

ng (s

hare

s)

- -

763,

050,

390

695,

056,

439

165,

219,

318

1,62

3,32

6,14

7 Pe

rcen

tage

(%)

- -

47.0

0%

42.8

2%

10.1

8%

100.

00%

4.

1.3

Shar

ehol

ding

Dis

trib

utio

n St

atus

A

. Com

mon

Sha

res (

The

par v

alue

for e

ach

shar

e is

NT$

10)

As o

f 04/

24/2

017

Cla

ss o

f Sha

reho

ldin

g (U

nit :

Sha

re)

Num

ber o

f Sha

reho

lder

s Sh

areh

oldi

ng (S

hare

s)

Perc

enta

ge

1 ~

999

36

,295

6,04

3,87

2

0.

371,

000

~ 5,

000

18,2

24

39,3

02,8

83

2.42

5,

001

~ 10

,000

44,5

9833

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8 4.1.4 List of Major Shareholders As of 04/24/2018

Shareholder's Name Shareholding

Shares Percentage Uni-President Enterprises Corp. 162,743,264 10.03% Taipo Inv. Co., Ltd. 91,250,587 5.62% Nan Shan Life Insurance Co., Ltd 59,442,565 3.66% Tainan Spinning Co, Ltd. 59,185,474 3.65% Kao-Quan Investment Co. Ltd 52,457,308 3.23% Zhao Mei Wu Zeng 39,023,030 2.40% Universal Cement Corporation 35,671,948 2.20% Joyful Inv. Co., Ltd. 28,136,024 1.73% Xing-Yong-Xing Inv, Co. Ltd,. 26,471,128 1.63% Cheng Long Investment Corp 25,882,643 1.59%

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

Unit: NT$

Item 2016 2017 01/01/2018- 03/31/2018

Market Price per Share

Highest Market Price 12.75 12.40 13.15

Lowest Market Price 8.50 10.30 11.30

Average Market Price 11.03 11.56 12.25

Net Worth per Share

Before Distribution 14.97 14.70 14.86

After Distribution 13.97 Note 4 N/A

Earnings per Share

Weighted Average Shares 1,622,670,723 1,622,670,723 1,662,670,723

Diluted Earnings Per Share 0.99 0.79 0.16

Adjusted Diluted Earnings Per Share 0.99 Note 4

Dividends per Share

Cash Dividends 1.0 Note 4 N/A

Stock Dividends

� Dividends from Retained Earnings 0 Note 4 N/A

� Dividends from Capital Surplus 0 Note 4 N/A

Accumulated Undistributed Dividends 0 0 N/A

Return on Investment

Price / Earnings Ratio (Note 1) 11.14 14.63 N/A

Price / Dividend Ratio (Note 2) 11.03 Note 4 N/A

Cash Dividend Yield Rate (Note 3) 0.09 Note 4 N/A Note 1: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 2: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 3: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price Note 4: Pending Shareholders’ Meeting Resolution

4.1.4 List of Major ShareholdersAs of 04/24/20184.1.4 List of Major Shareholders

As of 04/24/2018

Shareholder's Name Shareholding

Shares Percentage Uni-President Enterprises Corp. 162,743,264 10.03% Taipo Inv. Co., Ltd. 91,250,587 5.62% Nan Shan Life Insurance Co., Ltd 59,442,565 3.66% Tainan Spinning Co, Ltd. 59,185,474 3.65% Kao-Quan Investment Co. Ltd 52,457,308 3.23% Zhao Mei Wu Zeng 39,023,030 2.40% Universal Cement Corporation 35,671,948 2.20% Joyful Inv. Co., Ltd. 28,136,024 1.73% Xing-Yong-Xing Inv, Co. Ltd,. 26,471,128 1.63% Cheng Long Investment Corp 25,882,643 1.59%

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

Unit: NT$

Item 2016 2017 01/01/2018- 03/31/2018

Market Price per Share

Highest Market Price 12.75 12.40 13.15

Lowest Market Price 8.50 10.30 11.30

Average Market Price 11.03 11.56 12.25

Net Worth per Share

Before Distribution 14.97 14.70 14.86

After Distribution 13.97 Note 4 N/A

Earnings per Share

Weighted Average Shares 1,622,670,723 1,622,670,723 1,662,670,723

Diluted Earnings Per Share 0.99 0.79 0.16

Adjusted Diluted Earnings Per Share 0.99 Note 4

Dividends per Share

Cash Dividends 1.0 Note 4 N/A

Stock Dividends

� Dividends from Retained Earnings 0 Note 4 N/A

� Dividends from Capital Surplus 0 Note 4 N/A

Accumulated Undistributed Dividends 0 0 N/A

Return on Investment

Price / Earnings Ratio (Note 1) 11.14 14.63 N/A

Price / Dividend Ratio (Note 2) 11.03 Note 4 N/A

Cash Dividend Yield Rate (Note 3) 0.09 Note 4 N/A Note 1: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 2: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 3: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price Note 4: Pending Shareholders’ Meeting Resolution

4.1.5 Market Price, Net Worth, Earnings, and Dividends per ShareUnit: NT$

Note 1: Price / Earnings Ratio = Average Market Price / Earnings per ShareNote 2: Price / Dividend Ratio = Average Market Price / Cash Dividends per ShareNote 3: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market PriceNote 4: Pending Shareholders’ Meeting Resolution

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4.1.6 Dividend Policy and Implementation Status A. Dividend Policy If there are earnings for distribution at the end of each fiscal year, after offsetting any loss of prior year(s) and paying all taxes and dues, 10% of the remaining net earnings shall be set aside as legal reserve, then would be appropriated as special reserve in accordance with Securities Exchange Law. The remaining net earnings can be distributed together with prior accumulated unappropriated retained earnings. The Board of Directors will consider the factors that were mentioned above to make the dividend distribution proposal. The dividend should be set in the range from 50% to 100% of the accumulated unappropriated retained earnings and the amount of cash dividend shall exceed 30% of the total amount of dividends distribution. The dividends could be distributed in accordance with the resolution that is approved by the Board of Directors and the Annual Shareholders' Meeting. B. Implementation

Year Item Cash Dividends Stock Dividends

2007 0.3 0.3 2008 - - 2009 0.2 0.4 2010 0.9 0.9 2011 0.5 1.0 2012 0.5 1.0 2013 0.3 0.3 2014 0.8 - 2015 1.1 - 2016 1.0 -

2017 Discussed at Shareholders’ meeting Discussed at Shareholders’ meeting

C. Proposed Distribution of Dividend Unit: NT $

1. Available for distribution a. Undistributed Earnings in the beginning 1,316,767,977 b. Plus: Net income 1,281,100,609 c. Less: Provision for legal reserve (128,110,061) d. Less: Actuarial loss on defined benefit plan (8,243,344) e. Available for distributed earnings 2,464,515,181 2. Items Payment of cash dividends ($0.65 per share) (1,055,161,996) 3. Accumulated un-distributed earnings 1,406,353,185

4.1.7 The effect of business performance, earnings per stock, and return on investment by stock dividend. No preparation and declaration of any financial forecast in 2017, therefore, no need to disclose the effect of issuance of bonus shares.

4.1.6 Dividend Policy and Implementation Status

A. Dividend PolicyIf thereareearningsfordistributionat theendofeachfiscalyear,afteroffsettinganylossofprioryear(s) and paying all taxes and dues, 10% of the remaining net earnings shall be set aside as legal reserve, then would be appropriated as special reserve in accordance with Securities Exchange Law. The remaining net earnings can be distributed together with prior accumulated unappropriated retained earnings. The Board of Directors will consider the factors that were mentioned above to make the dividend distribution proposal. The dividend should be set in the range from 50% to 100% of the accumulated unappropriated retained earnings and the amountof cash dividend shall exceed 30% of the total amount of dividends distribution. The dividends could be distributed in accordance with the resolution that is approved by the Board of Directors and the Annual Shareholders' Meeting.

B. Implementation

C. Proposed Distribution of Dividend

1. Available for distribution a. Undistributed Earnings in the beginning 1,316,767,977 b. Plus: Net income 1,281,100,609 c. Less: Provision for legal reserve (128,110,061) d.Less:Actuariallossondefinedbenefitplan (8,243,344) e. Available for distributed earnings 2,464,515,181

2. Items Payment of cash dividends ($0.65 per share) (1,055,161,996)

3. Accumulated un-distributed earnings 1,406,353,185

Unit: NT$

4.1.7 The effect of business performance, earnings per stock, and return on investment by stock dividend.

Nopreparationanddeclarationofanyfinancialforecast in2017, therefore,noneedtodisclosethe effect of issuance of bonus shares.

4.1.8 Employee Bonus and Directors' and Supervisors' Remuneration

A. Information Relating to Employee Bonus and Directors’ and Supervisors’ Remuneration in the Articles of Incorporation

Ifearningsareavailablefordistributionat theendofafiscalyear,10%ofnetearnings– that is,after offsetting any loss from prior year(s) and paying all taxes and dues – shall be set aside as legal reserve and appropriated in accordance with the Securities Exchange Law. The remaining net earnings can be distributed along with prior accumulated unappropriated retained earnings. The Board of Directors will consider the above-mentioned factors when making the dividend distribution proposal.

The company charter prescribes the following for the employee bonus and compensation for directors and supervisors:

1. not lower than 2 % as a bonus for employees;2. not over 3 % as compensation for directors and supervisors;

The above-mentioned bonus for employees might be a cash bonus or a stock bonus, The Board of Directors is authorized to work out the conditions and procedures of making such distribution. It may also be distributed to employees of subsidiary companies.

B. The base of allocate employee bonus, directors’ and supervisors’ remuneration and stock dividends:

Employee Bonus – in Cash $128,682,392Directors' and Supervisors' Remuneration $43,778,545

There is no difference from the decided amount and the recognized amount in 2016.

C. Profit Distribution Approved in Board of Directors Meeting for Employee Bonus and Directors’ and Supervisors’ Remuneration

(1) Recommended Distribution of Employee Bonus and Directors’ and Supervisors’ Remuneration: Employee Bonus – in Cash $128,682,392Directors' and Supervisors' Remuneration $43,778,545

(2) Ratio of Recommended Employee Stock Bonus to Capitalization of Earnings: None

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D. Information of 2017 Earnings Set Aside to Employee Bonus and Directors’ and Supervisors’ Remuneration:

None

4.1.9 Buyback of Treasury Stock: None

4.2 Issuance of Corporate Bonds

A. On March 26th, 2012, Board of Directors decided to issue NTD 2 billion of domestic secured corporate bonds. This issuance completed on July 12, 2012.

B. On March 15th, 2013, Board of Directors decided to issue NTD 2.5 billion of domestic secured corporate bonds. This issuance completed on Nov. 21, 2013.

C. On March 22th, 2017, Board of Directors decided to issue NTD 2 billion of domestic secured corporate bonds. This issuance completed on Jun. 19, 2017.

D. On March 20th, 2018, Board of Directors decided to issue 5 years period domestic secured corporate bonds which not more than NTD 5 billion.

4.2 Issuance of Corporate Bonds A. On March 26th, 2012, Board of Directors decided to issue NTD 2 billion of domestic secured corporate bonds. This issuance completed on July 12, 2012. B. On March 15th, 2013, Board of Directors decided to issue NTD 2.5 billion of domestic secured corporate bonds. This issuance completed on Nov. 21, 2013. C. On March 22th, 2017, Board of Directors decided to issue NTD 2 billion of domestic secured corporate bonds. This issuance completed on Jun. 19, 2017. D. On March 20th, 2018, Board of Directors decided to issue 5 years period domestic secured corporate bonds which not more than NTD 5 billion. Issuance of Corporate Bonds Type of Corporate Bonds 1st Domestic Secured

Corporate Bonds 2012 1st Domestic Secured Corporate Bonds 2013

1st Domestic Secured Corporate Bonds 2017

Issuance Date 2012.7.12 2013.11.21 2017.06.19

Par Value $100,000 $100,000 $1,000,000

Issuance price As Par As Par As Par

Total Price $2 billions $2.5 billions $2 billions

Rate Fixed rate 1.33% Fixed rate 1.55% Fixed rate 1.05%

Period 5 years. Mature date:2017.7.12 5 years. Mature date:2018.11.21 5 years. Mature date:2122.06.19

Guarantee Agency Bank of Taiwan Bank of Taiwan & AgriBank Bank of Taiwan

Trustee Mega International Commercial Bank Taipei Fubon Bank Taipei Fubon Bank

Underwriter MasterLink Securities Corporate. Capital Securities Corporate. BankTaiwan Securities Co.,Ltd.

Lawyer Ho Yen, Yen Ho Yen, Yen Wen Yun, Yang and San Chun, Lin

Certified Public Accountant Yi Cheng, Lin and Su Chung,Cheng

Yi Cheng, Lin and Kao Hwa, Wang

Gian Zhi Wu and Kao Hwa, Wang

Repayment Bullet Bullet Bullet

Outstanding $2 millions $2.5 millions $2 millions Redemption or Early Repayment Clause None None None

Covenants None None None

Credit Rating None None None Other Rights of Bondholders None None None

Conversion Rights None None None Amount of Converted or Exchanged Common Shares, ADRs or Other Securities

None None None

Dilution Effect and Other Adverse Effects on Existing Shareholders

None None None

Custodian None None None

4.3 Issuance of Preferred Shares: None

4.4 Global depository receipts: None

4.5 Employee Stock Options: None

4.6 Status of New Shares Issuance in Connection with Mergers and Acquisitions: None

4.7 Information on Implementation of the Company’s Funds Utilization Plans

(a) Description of the plans: The decisions made by Board of Directors of issuance of bonds in 2011 willbeimplementeddependonourfinancialneeds.

We expect to issue 5 years period domestic secured corporate bonds which not more than NTD 5

billiontostrengththefinancialstructureandrepaythesecuredcorporatebondsissuedfrompreviousyears.

(b) Status of implementation: - The 2012 fist secured corporate bonds have implemented on July 12, 2012, with total NTD$2

billiontopaybackourshort-termloans.Thisimplementationhasefficientlylowerourdebtrateandstrengthens our financial structures. The 2013 fist secured corporate bonds have implemented on Nov 21, 2013, with total NTD$2.5 billion to payback our short-term loans. This implementation has efficiently lower our debt rate and strengthens our financial structures. The 2017 fist secured corporatebondshaveimplementedonJun19,2017,with totalNTD$2billion topaybackthefirst2012 secured corporate bonds.

Also, we issue 300 million of new common stock to increase the capital by cash, NT$10 par value with issue price of NT$14.45. We total raised NT$ 4.34 billion. The stock has been listed for trading on Mar 21, 2014. The purpose for increasing the capital by cash is to repay the bank loans and reduce interest expense.

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Operational Highlights

Annual Report 2017

Chapter VV. Operational Highlights

5.1 Business Activities5.1.1 Business Scope

A. Main areas of business operations 1. Construction: Design, build, operate, rent, and agency of land, commercial and residential buildings;

Manufacturing, transaction and consignment of construction raw materials; Urban renewal, land rezoning and developing; Any domestic and international construction project, architecture design of professional building etc.

2. Hotel and Tourism: National Taiwan University and National Cheng Kung University dormitory BOT projects which we built, operate and manage them; Also, we enter hotel market by investing, building, and entrust operating and management rights to the professional team. So far, we have Time-Square International hotel (W Hotel) and Splendor Hotel Taichung. We invest Howard Beach Resort Kenting as well.

3. Others: Security, Apartment Management and Maintenance, Real Estate Development, Lease and Sale, Utility Facility Design, Design and Construction. In addition to the licensing business, an operating act is not prohibited or restricted.

B. Revenue distributionUnit；NT$ Thousands

Major Divisions Total Sales (%) of total salesConstruction Income 7,074,663 64%

Hotel and Tourism Income 3,088,681 28%Other Operating Income 825,636 8%

Total 10,988,980 100%

C. Current product line, future service and new products development Current products and services would be the basis to develop the future plan. 1. Operating business A. Products - Core Business: Focus on building and selling residential and commercial projects. - Construction: Mainly on undertake public project and other construction cases. B. Business management - implement performance management system - emphasize on human resources - Byusingcomputerandinformationtoolstostrengthentheefficiencyandqualityofdecision. 2. Hotel and Tourism and other business

- Leisure service: Howard Beach Resort Kenting, Splendor Hotel Taichung, Time Square International Hotel and BOT projects.

- Apartment Management and Lease: Rent out the commercial building, house and land; Integrating security service and apartment management.

- Biochemical Science and Technology: Taiwan Scino Pharm, Prince Tech,

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5.1.2 Industry Overview

Construction: Inthepastfewyears,wefocusondevelopingsuburbsareas,thelandsnearmaintrafficnetworks, and rezoned cities.

Hotel and Tourism and others: The occupancy rate of hotels and resorts under Prince Housing has already over 80%. The lease of house and land is providing a stable income as well.

The correlation among upstream, midstream and downstreamConstruction:Upstream: The main raw materials of upstream are lands and construction materials. The source of land is from purchasing, country-owned land releasing, and cooperation

method. We are also looking for the new material and facilities to improve our product quality.Midstream: Contractors of building the project.Downstream: Real estate breakage is responsible for the sales

5.1.3 Research and Development

Research and development is our target to keep pursuing. Because of the shortage of construction workers and lands, Prince focuses on research and improving our construction skills. Also, we dispatch employees to Japan on a regular basis to learn the latest and the most environmental standardized construction method. In internal management, we use digitized and standardized progress to spread the information over the company to lower operation cost.

Besides, Prince is running “Cloud service system” in order to combine all the basis life services to enhance the living environment into a better level.

5.1.4 Long-term and Short-term Development

A. Short-term DevelopmentConstruction: Searchingthe landsnearmain trafficnetworksandnewdevelopingcities to launchthe

projects and planning the perfect products depend on customers’ need.Hotels and Tourism and others: Integrating marketing channel, fashion topic, and market trend to

meet customer’s need on shopping, lodging, and dinning in order to increase the occupancy rate and margin.

B. Long-term DevelopmentConstruction: Focus on the need of residential and commercial building; keep assets activating; cost

control effectively; providing good quality and fair price products to public; nurturing talentsandprudentinvestment,tomakethemaximumprofitforourshareholders.

Hotels and Tourism and others: Keep improving the software/hardware and service quality; providing personalized service and products; nurturing talents and increase efficiency.

5.2 Market and Sales Overview

5.2.1 Market Analysis

A. Sales (Service) Region

Area Commercial Building Housing Note

Taipei

1. Neihu Financial Center 1. Prince Global Village 12. Guishan Global Village Taipei Area: 2. Prince Building 2. Shan Ger Li La 13. Prince Jin-Hua 1. Taipei City 3. President International Tower 3. Prince International Village 14. Prince Sky Building 2. New Taipei City

4. Prince Sun Town 15. Prince College 3. Taoyoan City/country 5. Prince Phoenix Town 16. Taipei Sinyi 4. Hsinchu City/Country 6. Prince Tun Yuan 17. Central Park

7. Prince Beauty Hall 18. Prince Fu 8. Prince Mei Sui 19. Prince Fu II 9. Prince Vacation 20. Prince Fu III

10. Prince 101 11.Sansia International Village

21.Prince YuDing 22. Prince HwaWei 23. Prince W 24. Prince Shin-Yi (XinChung)

Taichung

Wanton Financial Center 1. Prince New Generation 13. Prince Ju Taichung Area: 2. Prince Manor 14. Prince Hui 1. Taichung City

3. Ping Chun Fung Chia 15. Prince Dau 2. Chunghwa City/Country

4. Prince Sen Huo 16. Prince Fu 5. Prince Yuan Ye 17. Jing Yun Sian 6. Lin Tung Boulevard 18. The Cloud Century 7. Prince Zuo Shin Ming A 19. Prince Hai Yan 8. Chan Chan Prince 20.Ching Fung Jing 9. Prince Culture 21.Prince YuDing 10. Prince Yo Life 22.The Cloudy Century SA 11. Sung Guan Prince 23.Prince W

12. Yun Yun Prince 24. Prince Chun

Tainan

1. Prince Building 1. Century Empire 13. Prince Fung Ho Tainan Area: 2. Prince Finance Building 2. Fashion Spring 14. Nan Ger Zi Li 1. Tainan City

3. Southern Taiwan Science Splendor 15. Prince New Culture II 2. Yuling City/Country

4. Prince Golden Brick 16. Prince Hua Bo II 3. Chiayi City/Country 5. Century Splendor 17. Prince Mei Xue 6. Wen Yuan Hall 18. Prince Hua Bo III 7. Fashion House 19. Prince Fung Yun Hui 8. Prince Fu Di 20. Prince i-Cloud 9. Prince Wen Yuan 21. Prince WIN 10. Prince. New Culture 22. Prince Hua Bo V 11. Golden Age 23. Prince Chen Fung Hei 12. Culture Hall 24. Prince Fun Yun

Kaohsiung

None 1. Prince Space 13. Prince New York 57th Street Kaohsiung Area:

2. Prince Harvard 14. Prince Culture 1. Kaohsiung City 3. Prince Chun Di 15. Prince Yuan-Shan 2. Pitung City/Country 4. Prince Dragon House 16. Prince Town 5. Prince In Mon Hu 17. Prince Shi Bo 6. Prince Chun Pin 18. Prince Shi Yun 7. Prince Chun Pin Haw Chia 19. Prince Hua Yang 8. Prince Dian Sha 20. Prince Bon 9. Prince Sha Lui Di 21. Prince Cloud C 10. Prince Seattle 22. Prince Cloud D

11. Prince Tun-Yuan 23. Prince Siao

12. Prince Dragon 24. Prince Cloud E

5.2 Market and Sales Overview

5.2.1 Market Analysis

A. Sales (Service) Region

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Area Construction Projects Hotel and Tourism Note

Taipei

1. Taipei City Hall Bus Terminal Station BOT 2. Taoyoan Airport MRT station (partial) 3. Sun Bao Beito project 4. Shin Chung Fu Do Hsin commercial and

residential building 5. National Palace Museum (Partial) 6. Canon Business Center 7. Dun-Sun Art Village

1. NTU Chung Shin Dormitory

2. NTU Shia Yuan Dormitory 3. NTU Hsiu Chi House 4. Time-Square International

Hotel

Taipei Area: 1. Taipei City 2. New Taipei City 3. Taoyoan

City/country 4. Hsinchu

City/Country

Taichung 1. National Taiwan Hospital, Yuling Branch 2. Shi Bin Express (partial) 3. High Speed Railway Chunghwa Station

project

1. Splendor Hotel Taichung Taichung Area: 1. Taichung City 2. Chunghwa

City/Country

Tainan

1. Wu Hu Lio Bridge project 2. Tainan Spinning Dream Mall Project 3. Shi Bin Express (partial) 4. Jun-Jia Center

1. NTKU Prince Dormitory 2. ZenDa Suites

Tainan Area: 1. Tainan City 2. Yulinf

City/Country 3. Chiayi

City/Country

Kaohsiung

1. Kaohsiung MRT (partial) 2. Budda Memorial Center 3. Chia Chao Station 4. Hun Shan Shin Shin Section Project 5. Landscape project of Chen Jin Lo

1. Howard Beach Resort Kenting (investment holdings)

Kaohsiung Area: 1. Kaohsiung City 2. Pitung

City/Country

B. Market Share (%) of Major Product Having no overall sales data of Taiwan, it is not sufficient enough to estimate the market share of our sales of real estate. C. Market Demand and Supply 1. Supply Construction: Product diversification Hotel and Tourism and others: More hotels have been operated in the metropolitan area and well-known scenic spot. Total hotel room numbers has grown fast.

2. Demand

Construction: - Basic Market: For personal use. The demanders in this category are the real estate demanders because they usually change or buy houses not affected by the economic boom.

- Investment Market: a. Investment market demand: people take the real estate as an investment tool. b. Speculative market demand: it usually happens during the booming economic period.

Hotels and Tourism and others: Tourism industry has grown fast in the past few years and

so does tourists. Besides, government tries hard to push no-chimney industry and allow the tourists from Mainland China. Consequently, the demand for hotel rooms increase.

3. Growth Construction: Prince already focus on its selling and marketing on integrating real estate and high-tech industry. Customers can collect new information, shop, watch entertainment show and understand how Prince manages the communities via internet at home. In the other hand, Prince releases the application system in the smart phone online store which can attract the potential customers to view the case online via smart phone. Customers can also contact us via internet if they have any problem and we could improve the after-sale service time after time. Hotels and Tourism and others: According to the population and region in Taiwan, tourism industry will have a limited growth. Helping customer either from domestic or international build loyalty is important.

B. Market Share (%) of Major Product HavingnooverallsalesdataofTaiwan,itisnotsufficientenoughtoestimatethemarketshareofoursales of real estate.

C. Market demand and supply1. SupplyConstruction: ProductdiversificationHotel and Tourism and others: More hotels have been operated in the metropolitan area and well-

known scenic spot. Total hotel room numbers has grown fast.

2. DemandConstruction:

- Basic Market: For personal use. The demanders in this category are the real estate demanders because they usually change or buy houses not affected by the economic boom.

- Investment Market: a. Investment market demand: people take the real estate as an investment tool.b. Speculative market demand: it usually happens during the booming economic period.

Hotels and Tourism and others: Tourism industry has grown fast in the past few years and so does tourists. Besides, government tries hard to push no-chimney industry and allow the tourists from Mainland China. Consequently, the demand for hotel rooms increase.

3. GrowthConstruction: Prince already focus on its selling and marketing on integrating real estate and high-

tech industry. Customers can collect new information, shop, watch entertainment show and understand how Prince manages the communities via internet at home. In the other hand, Prince releases the application system in the smart phone online store which can attract the potential customers to view the case online via smart phone. Customers can also contact us via internet if they have any problem and we could improve the after-sale service time after time.

Hotels and Tourism and others: According to the population and region in Taiwan, tourism industry will have a limited growth. Helping customer either from domestic or international build loyalty is important.

D. Favorable and Unfavorable Factors in the Long-range Future1. CompetitivenessConstruction: Since 1973, we insist our spirit of “good location, good design, good quality, and good

price.” Also, Tainan Group provides us lot of resource to make the best building in Taiwan.

Hotel and Tourism and others: Hotels that owned or invested by Prince are located in a metropolitan area and well-known scenic spots. Furthermore, we operate hotels with world famous hotel chain stores.

2. StrengthConstruction:

A. Under circumstance of limited supply of land, market price will keep stable.B. Government opens the real estate market to foreign and China and they can invest the market

directly.C. Consumers ask more about the living quality which make them willing to change or purchase a

new house.D. Administrative region re-design (Taichung, Tainan, and Kaohsiung) and new public transportation

(high speed rail, MRT, and high way) has been completed or extended from original route. We expected that will expand the urban living area.

Hotels and Tourism and others: The brand positioning and market segmentation of W Hotel is very clear. We have a great and experienced operation team. Those are the reason why we can attract the top consumers. Also, the hotel is Shin-Yi district which is the most modern cosmopolitan district of Taipei.

3. WeaknessConstruction:

A. A lot of pre-sale cases in the past few years made a large amount of inventory.B. Government policies are trying to slow down the selling price and speculation.C.Theconsumptionabilitydeclineandinflationaffecttheeconomic.

Hotels and Tourism and others: More and more new competitors joint the 5 stars hotels market in Taipei, like, Humble House Taipei, Mandarin Oriental Taipei, and Eslite Hotel. Some of the old hotels are remolding and will back to the market soon, like, Grand Hyatt Taipei, and Shangri-La’s Far Eastern Plaza Hotel Taipei.

4. Corresponding PolicyConstructions: We will focus our project on the spirit of “good location, good design, good quality and

good price” plus good after-sale services which will help us keep customers.Hotels and Tourism and others:

- Interior: Keep improving software/hardware, facilities and service quality and strengthening employees’ education and training.

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- External part: Integrating marketing channels. Keep creating tops and making publics to put focus on us.

5.2.2 The Production Procedures of Main Products

A. Major Products and Their Main UsesConstruction: Prince’s main products are residential buildings, houses, apartments, high-end residential

buildings,stores,andhigh-endofficebuildings.Hotels and Tourism and others: lease of commercial building, hotels, shopping plaza, dormitory BOT

project and investment income.

B. Major Products and Their Production Processes

Land developing

Design and plan

Advertisement Project contracts

Sales Construct

Completion and house inspection

Completion and turn in house

After-sale service

Project contracts Marketing

Market research and evaluate

5.2.3 Supply Status of Main Materials

Constructions:1. Location:Baseonthelandinformation,weevaluateitbyresearching,aroughlyplanning,andprofit

ability analyzing. If we think the land is workable after evaluating it, we would choose it as our construction site.

2. Plan and design: We will analyze again about the land features, laws, market, product position and businessplan.Also,dosomedetaildiscussionabouttheflatspace,façade,structureandfacilitiesofthe product.

3. Sales: Product cost analyzing, selling price planning, advertisement and promotion, and marketing.4. Project: After getting permission from government, we would start to construct the site base on the

permitted design.5. Registration: After we receive the license and apply for double checking the area, we could register

the land to keep the property right.6. Turn in house: Customer would check before accept the completed and licensed building. After that,

Prince will transfer the property right and building to customer. 7. After-sale service: Prince will set up a service center which will provide the services of maintenance

of buildings, repair, community safety, and cleanness.

V

Operational H

ighlights

V

Operational H

ighlights


Uni

t: N

T$ th

ousa

nds

7.2.

4 M

ajor

Sup

plie

rs a

nd C

lient

s A

. M

ajor

Clie

nts

Info

rmat

ion

for

the

Las

t Tw

o C

alen

dar

Yea

rs

Uni

t: N

T$ th

ousa

nds

2016

20

17

2018

Q1

Com

pany

Nam

e A

mou

nt

%

Rel

atio

n w

ith

Com

pany

Nam

e A

mou

nt

%

Rel

atio

n w

ith

Com

pany

Nam

e A

mou

nt

%

Rel

atio

n w

ith

Issu

er

Issu

er

Issu

er

Sunp

ower

Dev

elop

men

t & C

onst

ruct

ion

Co.

, Ltd

, 64

2,79

5 5.

33

Non

e C

yber

Pow

er S

yste

ms

2,55

6,66

7 23

.27

Non

e D

irect

orat

e ge

nera

l of H

ighw

ays,

MO

TC, m

iddl

e re

gion

con

stru

ctio

n di

visi

on o

f wes

tern

hig

hway

s

104,

273

5.37

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one

Dire

ctor

ate

gene

ral o

f Hig

hway

s, M

OTC

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e re

gion

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rn h

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ays

61

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e D

irect

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e ge

nera

l of H

ighw

ays,

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mid

dle

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on c

onst

ruct

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divi

sion

of

wes

tern

hig

hway

s

602,

606

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one

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e

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nghu

a C

ount

y G

over

nmen

t 39

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e C

anon

Co.

Ltd

24

6,41

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Non

e Ta

i-Kun

g D

evel

opm

ent &

C

onst

ruct

ion

Co.

, Ltd

, 56

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2.

89

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e

Shu

356,

366

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ower

Dev

elop

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t & C

onst

ruct

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Co.

, Ltd

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16

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anon

Co.

Ltd

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ower

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elop

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onst

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Co.

, Ltd

, 30

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9 2.

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ng S

hung

Hou

sing

Co.

,Ltd

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92

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e W

ei-H

ao C

onst

ruct

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lway

Rec

onst

ruct

ion

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eau

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ung

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elop

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Co.

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, 83

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e C

hang

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e

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on C

o. L

td

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one

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g Sh

ung

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snin

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o., L

td

66,0

75

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e Li

u 35

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ng H

ousi

ng C

o.,L

td

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Lin,

Lin

, Lin

53

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e Li

n 34

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79

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g Sh

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snin

g C

o., L

td

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one

Lin

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one

Lu, C

heng

29

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54

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e

Tain

an S

pinn

ing

Co,

Ltd

. 77

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0.

64

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e W

ang

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one

Peng

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e

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ers

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2 76

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ther

s 7,

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201

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4

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ers

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Net

Sal

es

12,0

60,3

02

100

N

et S

ales

10

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10

0

Net

Sal

es

1,94

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1 10

0

5.2.

4 M

ajor

Sup

plie

rs a

nd C

lient

s

A. M

ajor

Clie

nts I

nfor

mat

ion

for

the

Las

t Tw

o C

alen

dar Y

ears

Uni

t: N

T$ th

ousa

nds

B.

Maj

or S

uppl

iers

Info

rmat

ion

for

the

Las

t Tw

o C

alen

dar

Yea

rs

Uni

t: N

T$ th

ousa

nds

2016

20

17

2018

Q1

Com

pany

Nam

e A

mou

nt

%

Rel

atio

n w

ith

Com

pany

Nam

e A

mou

nt

%

Rel

atio

n w

ith

Com

pany

Nam

e A

mou

nt

%

Rel

atio

n w

ith

Issu

er

Issu

er

Issu

er

Taiw

an S

ugar

Cor

pora

tion,

K

aohs

iung

53

7,96

7 4.

99

Non

e Fo

n H

sin

Iron

Co.

, Ltd

25

2,43

6 3.

03

Non

e Tu

ng H

o St

eel E

nter

pris

e C

orp.

43

,019

1.

78

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e

Cho

n Y

an In

teiri

or C

o., L

td

289,

949

2.69

N

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n C

ontru

ctio

n C

o., L

td

154,

354

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one

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Sung

Cor

p.

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66

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-Li U

tility

19

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77

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e H

ien

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Fah

Iron

Co.

, Ltd

11

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1 1.

33

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e Fo

n H

sin

Iron

Co.

, Ltd

30

,488

1.

26

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e

Sun

Lia

Inte

irior

Co.

, Ltd

16

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6 1.

57

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e Y

eh H

sin

Cor

prat

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101,

581

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g-Su

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orp.

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Hsi

n Ir

on C

o., L

td

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Con

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98

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eh H

sin

Cor

prat

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Hsi

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97

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eb H

on C

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Co.

, Ltd

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roun

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aste

r Con

sruc

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Co.

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.&M

ice

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neer

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Con

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nts C

o.

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n Te

ch C

o., L

td

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sten

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h C

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Co.

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97

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nive

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ent C

orpo

ratio

n 72

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hon

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Inte

irior

Co.

, Ltd

16

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0.

69

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e

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Hsu

n Sy

sten

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h C

o., L

td

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64

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one

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an C

emm

ent C

o., L

td

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57

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e U

nive

rsal

Cem

ent C

orpo

ratio

n 15

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0.

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e

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Zon

Con

truct

ion

Co.

, Ltd

79

,565

0.

74

Non

e Lu

ng-Y

un U

tility

Cor

p.

59,2

13

0.71

N

one

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g-C

hin

Cor

p.

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65

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one

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ers

9,00

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8 83

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ers

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7 86

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ers

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4 89

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Net

Pur

chas

es

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88,3

90

100

Net

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chas

es

8,33

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4 10

0 To

tal P

urch

ases

2,

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067

100

B.

Maj

or S

uppl

iers

Info

rmat

ion

for

the

Las

t Tw

o C

alen

dar Y

ears

V

Operational H

ighlights

V

Operational H

ighlights


Unit；Pin / NTD thousands5.2.6 Sales over the Last Two Years

2016 2017

Local Local

Quantity Amount Quantity AmountHouse 24,814.51 5,274,930 22,554.73 5,734,056Total 24,814.51 5,274,930 22,554.73 5,734,056

YearSales

Major Products

5.3 Human Resources

Year 2016 2017 01/01/2018- 03/31/2018

Number of Employees

Employees 1,553 1,625 1,665Technician 780 817 614

Others 270 296 288Total 2,603 2,738 2,567

Average Age 42.96 42.45 42.14Average Years of Service 5.27 4.43 4.73

Education

Ph.D. 0% 0% 0%Masters 5% 5% 5%

Bachelor’s Degree 51% 54% 54%Senior High School 37% 30% 30%Below Senior High

School 8% 11% 11%

Unit；Pin / NTD thousands5.2.5 Production over the Last Two Years

2016 2017

Capacity Quantity Capacity Quantity

House 18,365.99 2,555,220 23,891.98 4,708,948Total 18,365.99 2,555,220 23,891.98 4,708,948

YearOutput

Major Products

5.4 Disbursement for Environmental Protection

Under construction period, mud, sands and litters would result in a mess of the environment pollution. Therefore, Prince dispatches our employees to Japan to learn about the construction skills and environmental management. We always try our best to keep the site area being mess up.

5.5 Labor Relations

A. Management System: Promotion, welfare, rewards and punishments, vacations, pension, and redundancy payments etc.

B. Welfare: Employee welfare committee, education grant, employees' children scholarships, employee training, domestic/foreign company trip, site accident insurance, and etc.

C. Prince is in order to enhance the quality of human resources and development advantages, we always hold the education events and training programs in domestic and foreign.

D. The company suffered due to loss of labor disputes as so far: None

V

Operational H

ighlights

V

Operational H

ighlights


5.6

Impo

rtan

t Con

trac

ts

Agr

eem

ent

Party

Star

t Dat

eC

onte

ntR

estri

ctio

n

BO

T

Prin

ce H

ousi

ng (A

)N

atio

nal T

aiw

an U

nive

rsity

(B)

Mar

17,

200

5

B s

houl

d re

spon

se f

or a

cces

s th

e ow

ners

hip

and

the

righ

t of

use

of

the

land

in th

is p

rogr

am. A

sho

uld

com

plet

e th

e co

nstru

ctio

n in

3 y

ears

an

d op

erat

e it

for 4

4 ye

ars.

Stu

dent

s pa

y th

e re

nt a

nd o

ther

exp

ense

to A

.

1. D

urin

g th

e co

nstru

ctio

n pe

riod,

the

ratio

of o

wn

fund

s to

inve

st in

this

pro

gram

cou

ld n

ot lo

wer

th

an 3

0%.

2. D

urin

g th

e op

erat

ion,

the

ratio

of

stoc

k eq

uity

to

tota

l acc

ess

coul

d lo

wer

than

25%

. The

ratio

of

cur

rent

ass

ets

to c

urre

nt li

abili

ty c

ould

not

lo

wer

than

100

%/

3. N

one

trans

fera

ble

BO

T

Prin

ce H

ousi

ng (A

)N

atio

nal C

heng

Kun

g U

nive

rsity

(B)

May

10,

200

5

B s

houl

d re

spon

se f

or a

cces

s th

e ow

ners

hip

and

the

righ

t of

use

of

the

land

in th

is p

rogr

am. A

sho

uld

get t

he li

cens

e w

ithin

3 y

ears

star

ted

from

the

dat

e co

ntra

ct s

igne

d.

Cha

rter

ed p

erio

d fo

r s

tude

nt

dorm

itory

is 3

5 ye

ars

and

shop

ping

m

all a

nd h

otel

is 5

0yea

rs.

Non

e tra

nsfe

rabl

e

Cre

dit c

ase

Prin

ce H

ousi

ng (A

)M

ega

Inte

rnat

iona

l Com

mer

cial

B

ank

(B)

May

2, 2

006

Tota

l am

ount

is

0.78

5 bi

llion

. The

ite

ms

are

incl

udin

g m

ediu

m-t

erm

lo

ans

and

com

mer

cial

pap

er. T

he

foun

datio

n is

pro

vide

d to

est

ablis

h an

d op

erat

e do

rmit

ory

BO

T o

f N

CK

U.

Cur

rent

rat

io, d

ebt r

atio

, and

inte

rest

cov

erag

e ra

tio c

ould

n’t l

ower

than

the

rest

rictio

n nu

mbe

r.B

ank

will

che

ck it

onc

e a

year

.

Synd

icat

ed L

oan

Prin

ce H

ousi

ng (A

)M

ega

Inte

rnat

iona

l Com

mer

cial

Bankandother7financial

inst

itutio

ns (B

)

Jan

4, 2

006

Tota

l am

ount

is

21.6

bill

ion.

The

ite

ms

are

incl

udin

g lo

ng-te

rm lo

ans

and

guar

ante

e re

ceiv

able

.

Cur

rent

rat

io, d

ebt r

atio

, and

inte

rest

cov

erag

e ra

tio c

ould

n’t l

ower

than

the

rest

rictio

n nu

mbe

r.B

ank

will

che

ck it

onc

e a

year

.

Agr

eem

ent

Party

Star

t Dat

eC

onte

ntR

estri

ctio

n

Synd

icat

ed L

oan

Sple

ndor

Hot

el T

aich

ung

(A)

Ban

k Si

noPa

c an

d ot

her 3

financialinstitutions(B

)O

ct 9

, 201

3To

tal a

mou

nt is

3.3

bill

ion.

Prin

ce

Hou

sing

and

Chi

na M

etal

are

gu

aran

tors

.

Eith

er P

rince

Hou

sing

or

Chi

na M

etal

Cur

rent

’s

rati

o, d

ebt

rati

o, a

nd i

nter

est

cove

rage

rat

io

coul

dn’t

low

er th

an th

e re

stric

tion

num

ber.

Coo

pera

tion

in th

e co

nstru

ctio

n of

ho

usin

g

Prin

ce H

ousi

ng (A

)Ts

ai-Y

uan,

Fan

g (B

)W

orld

Vis

ion

Uni

ted

Co.

, Ltd

(B

)

Mar

ch 5

, 201

2Ju

ly 1

7, 2

012

Mai

nly

for t

he tr

ansa

ctio

n of

Zh

i San

Sec

. Lot

No.

602

& 5

72 o

f Sh

i Lin

Dis

trict

(Tai

pei)

Acc

ordi

ng to

the

cont

ract

, nee

d to

pay

for t

he

depo

sit o

f $35

0,00

0 an

d $1

9,57

0. A

s of

Dec

31,

20

12, t

he b

alan

ce o

f dep

osit

was

$35

0,00

0 an

d $1

9,57

0.

Coo

pera

tion

in th

e co

nstru

ctio

n of

ho

usin

g

Prin

ce H

ousi

ng (A

)Ta

iwan

Sug

ar C

orpo

ratio

n (B

)

Jan

20, 2

014

Feb

10, 2

014

Dec

27,

201

4

Mai

nly

for t

he tr

ansa

ctio

n of

Ta

ichu

ng K

ou A

n Se

ctio

n Lo

t No.

59

1-1,

Tai

nan

Ho

Kua

n Se

ctio

n Lo

t N

o. 3

4 &

Kao

hsia

ng N

an Z

hi

Sect

ion

Lot N

o. 1

58.

Agr

eed

to p

ay f

or t

he c

onst

ruct

ion

and

sale

s re

late

d ex

pens

es.

No

com

pens

atio

n fo

r an

y re

ason

. Acc

ordi

ng to

the

cont

ract

, nee

d to

pay

for

the

depo

sit o

f $63

,880

, $83

,080

and

$12

5,54

0.

Coo

pera

tion

in th

e co

nstru

ctio

n of

ho

usin

g

Prin

ce H

ousi

ng (A

)M

ega

Inte

rnat

iona

l C

omm

erci

al B

ank

and

othe

r 3

financialinstitutions(B

)

Sept

18,

201

5

Tota

l am

ount

is

1.06

bill

ion.

The

ite

ms

are

incl

udin

g m

ediu

m-t

erm

lo

ans.

The

fou

ndat

ion

is p

rovi

ded

to e

stab

lish

resi

dent

ial

build

ings

in

Pin

g-Sh

in S

ecti

on,

Dai

-Pin

g D

istri

ct, T

aich

ung.

Shou

ld p

ay th

e ba

lanc

e in

to a

lum

p su

m o

n th

e ex

pira

tion

date

.

Synd

icat

ed L

oan

Prin

ce H

ousi

ng (A

)C

TBC

ban

k an

d ot

her 6

financialinstitutions(B)

June

23,

2016

Tota

l am

ount

is

2.1

bill

ion.

The

ite

ms

are

incl

udin

g m

ediu

m-t

erm

lo

ans.

Tan

Mei

Bui

ldin

g is

hel

d in

pl

edge

.

Prov

ide

wor

king

cap

ital f

or th

e co

ntra

ct p

erio

d an

d sh

ould

pay

back

full

amou

nt o

n th

e ex

pira

tion

date

.

Synd

icat

ed L

oan

Prin

ce H

ousi

ng (A

)B

ank

of T

aiw

an a

nd o

ther

3

financialinstitutions(B)

Nov

. 21

2013

Tota

l am

ount

is

3.45

bill

ion.

The

ite

ms

are

incl

udin

g m

ediu

m-t

erm

lo

ans.

2.45

bill

ion

for c

orpo

rate

bon

d gu

aran

tee

and

0.5

billionforpaybackfinancialliabilities.

VI

Financial Information


V

Operational H

ighlights

64


Annual Report 2017

Chapter VIVI. Financial Information

6.1 Five-Year Financial Summary 6.1.1 Condensed Balance Sheets and Statements of Comprehensive Income-IFRS

Condensed Consolidated Balance Sheets

Five-Year Financial Summary Mar. 31, 20182013 2014 2015 2016 2017

Current assets 28,449,122 34,239,845 32,959,394 31,059,275 30,297,691 30,092,703

Property, plant and equipment 7,014,898 6,957,966 6,742,932 6,513,554 6,422,886 6,371,803

Intangible assets 2,425,016 2,362,995 2,302,523 2,240,916 2,179,473 2,163,896

Other assets 14,883,459 12,490,162 12,471,062 11,471,099 11,375,075 11,484,116

Total assets 52,772,495 56,050,968 54,475,911 51,284,844 50,275,125 50,112,518

Current liabilities

Before distribution 15,650,361 17,219,734 12,410,602 12,211,690 15,345,260 15,468,352

After distribution 16,134,538 18,549,607 14,196,261 13,835,016 NA NA

Non-current liabilities 18,547,636 14,520,290 16,890,738 14,445,861 10,753,213 10,207,158

Total liabilities



Equity attributable to owners of the parent 18,208,759 23,964,652 24,831,076 24,296,631 23,862,270 24,130,317

Share capital 13,139,241 16,623,418 16,233,261 16,233,261 16,233,261 16,233,261

Capital surplus 521,293 1,929,793 2,260,513 2,260,513 2,260,513 2,260,513

Retained earnings



Other equity 1,999,611 1,436,219 1,409,109 1,058,270 974,377 988,066

Treasure stock (60,440) (60,440) (1,003) (1,003) (1,003) (1,003)

Non-controlling interest 365,739 346,292 343,495 330,662 314,382 306,691

Total equity



Item

Year

Unit；NT $ thousands

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Five-Year Financial Summary From Jan. 1, 2017 to Mar.

31, 20182013 2014 2015 2016 2017

Operating revenue 17,242,007 19,424,465 16,108,506 12,060,302 10,988,980 1,941,891

Grossprofit 4,699,497 5,207,579 5,175,160 3,935,844 3,266,249 687,767

Operating income 2,019,543 2,465,294 2,451,399 1,513,733 1,078,105 214,085

Non-operating income and expenses (288,671) 77,807 70,261 391,951 261,737 38,170

Profitbeforeincometax 1,730,872 2,543,101 2,521,660 1,905,684 1,339,842 252,255

Netprofitfromcontinuingoperation 1,635,472 2,379,634 2,233,568 1,599,215 1,264,821 246,454

Loss from discontinuing operation 0 0 0 0 0 0

Netprofit 1,635,472 2,379,634 2,233,568 1,599,215 1,264,821 246,454

Other comprehensive income (after income tax) 404,732 (567,511) (41,503) (357,975) (92,136) (11,709)

Total comprehensive income 2,040,204 1,812,123 2,192,065 1,241,240 1,172,685 234,745

Netprofit(owners of the parent) 1,652,753 2,398,718 2,237,800 1,609,189 1,281,101 254,145

Netprofit(non-controlling interest) (17,281) (19,084) (4,232) (9,974) (16,280) (7,691)

Comprehensive income (owners of the parent) 2,057,023 1,831,570 2,196,297 1,251,214 1,188,965 242,436

Comprehensive income (non-controlling interest) (16,819) (19,447) (4,232) (9,974) (16,280) (7,691)

Earnings per share (NT$) 1.26 1.51 1.38 0.99 0.79 0.16

Item

Year

Condensed Consolidated Statements of Comprehensive Income


Condensed Non-Consolidated Balance Sheets

Five-Year Financial Summary Mar. 31, 20182013 2014 2015 2016 2017

Current assets 24,360,677 28,613,156 26,749,012 25,713,914 24,983,347

N/A

Property, plant and equipment 504,988 590,726 596,757 572,089 552,780

Intangible assets 2,422,945 2,361,692 2,300,439 2,239,187 2,177,934

Other assets 15,576,754 15,048,711 16,206,820 14,995,261 15,407,872

Total assets 42,865,364 46,614,285 45,853,028 43,520,451 43,121,933

Current liabilities

Before distribution 11,397,412 13,482,042 9,376,137 9,127,557 9,853,908

After distribution 11,881,589 14,811,915 11,161,796 10,750,883 NA

Non-current liabilities 13,259,193 9,167,591 11,645,815 10,096,263 9,405,755

Total liabilities



Share capital 13,139,241 16,623,418 16,233,261 16,233,261 16,233,261

Capital surplus 521,293 1,929,793 2,260,513 2,260,513 2,260,513

Retained earnings



Other equity 1,999,611 1,436,219 1,409,109 1,058,270 974,377

Treasure stock (60,440) (60,440) (1,003) (1,003) (1,003)

Total equity




Item

Year

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Five-Year Financial Summary From Jan. 1, 2017 to Mar.

31, 20182013 2014 2015 2016 2017

Operating revenue 8,571,288 10,892,210 8,763,040 6,004,370 5,734,056

N/A

Grossprofit 2,873,723 3,575,742 3,131,922 2,265,184 1,313,408

Operating income 1,428,187 1,986,869 1,606,015 1,021,485 300,947

Non-operating income and expenses 279,345 514,019 841,035 836,727 985,877

Profitbeforeincometax 1,707,532 2,500,888 2,447,050 1,858,212 1,286,824

Netprofitfromcontinuingoperation 1,652,753 2,398,718 2,237,800 1,609,189 1,281,101

Loss from discontinuing operation 0 0 0 0 0

Netprofit 1,652,753 2,398,718 2,237,800 1,609,189 1,281,101

Other comprehensive income (after income tax) 404,270 (567,148) (41,503) (357,975) (92,136)

Total comprehensive income 2,057,023 1,831,570 2,196,297 1,251,214 1,188,965

Earnings per share (NT$) 1.30 1.51 1.38 0.99 0.79

Item

Year

Condensed Non-Consolidated Statements of Comprehensive Income


6.1.2 Condensed Balance Sheets and Statements of Income - ROC GAAPUnit；NT $ thousands

Year CPA Firm CPA's Name Auditing Opinion2013 PWC Taiwan Y.C. Lin & K.H. Wang Non-standardunqualifiedopinion

2014 PWC Taiwan Y.C. Lin & C.H. Wu Non-standardunqualifiedopinion

2015 PWC Taiwan Y.C. Lin & C.H. Wu Non-standardunqualifiedopinion

2016 PWC Taiwan unqualifiedopinion Unqualifiedopinion

2017 PWC Taiwan Y.C. Lin & C.H. Wu Unqualifiedopinion

6.2 Five-Year Financial Analysis6.2.1 Financial Analysis (IFRs, Consolidated)

Financialanalysisinthepastfiveyears 20183.312013 2014 2015 2016 2017

Financial structure (%)

Ratio of liabilities to assets 65 57 53 51 51 51

Ratio of long-term capitaltofixedassets 529 553 610 585 538 538

Solvency (%)

Current ratio 182 199 266 242 197 194

Quick ratio 52 56 59 57 41 40

Times interest earned ratio 3.79 5.40 5.97 5.04 3.66 2.96

Operating ability

Accounts receivable turnover (turns) 4.78 3.68 3.84 7.15 12.53 2.37

Average collection period 76 99 95 51 29 38

Inventory turnover (turns) 0.86 0.77 0.50 0.36 0.34 0.05

Accounts payable turnover (turns) 3.29 3.34 2.57 2.24 2.89 0.61

Average days in sales 424 472 730 1013 1073 1608

Fixed assets turnover (turns) 2.45 2.78 2.35 1.81 1.69 0.30

Total assets turnover (turns) 0.34 0.36 0.29 0.22 0.21 0.03

Profitability

Return on total assets (%) 3.83 4.91 4.54 3.40 2.76 0.56

Return on stockholders' equity (%) 9.16 11.29 9.15 6.51 5.25 1.02

Pre-tax income to issued capital (%) 13.17 15.30 15.53 11.73 8.25 1.55

Profitratio(%) 9.49 12.25 13.86 13.26 11.51 12.69

Earnings per share ($) 1.30 1.51 1.38 0.99 0.79 0.16

Cashflow

Cashflowratio(%) Note1 Note1 28.83 12.14 7.98 Note1

Cashflowadequacyratio(%) Note1 Note1 41.74 1.03 39.49 39.23

Cash reinvestment ratio (%) Note1 Note1 7.35 Note1 Note1 Note1

LeverageOperating leverage 1.49 1.54 1.50 1.78 2.01 1.00

Financial leverage 1.23 1.16 1.15 1.19 1.18 1.25

Item

Year

Note 1: Not applicable.

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6.2.2 Financial Analysis (IFRs, Non-Consolidated)

Financialanalysisinthepastfiveyears 20183.312013 2014 2015 2016 2017


Ratio of liabilities to assets 58 49 45 44 44

N/A

Ratio of long-term capitaltofixedassets 6231 5609 6112 6011 6018

Solvency (%)

Current ratio 214 212 285 281 253

Quick ratio 39 43 33 36 28

Times interest earned ratio 4.23 6.08 6.44 5.36 3.80

Operating ability

Accounts receivable turnover (turns) 3.61 2.83 3.11 10.78 33.17

Average collection period 101 129 117 33 11

Inventory turnover (turns) 0.39 0.42 0.27 0.17 0.20

Accounts payable turnover (turns) 2.29 2.81 2.07 1.78 3.38

Average days in sales 936 877 1351 2147 1759

Fixed assets turnover (turns) 16.42 19.88 14.75 10.27 10.19

Total assets turnover (turns) 0.21 0.24 0.19 0.13 0.13

Profitability

Return on total assets (%) 4.58 5.87 5.35 3.97 3.21

Return on stockholders' equity (%) 9.46 11.38 9.17 6.55 5.32

Pre-tax income to issued capital (%) 13.00 15.04 15.07 11.44 7.92

Profitratio(%) 19.28 22.02 25.53 26.80 22.34

Earnings per share ($) 1.30 1.51 1.38 0.99 0.79

Cashflow

Cashflowratio(%) NA NA 30.82 6.42 4.79

Cashflowadequacyratio(%) NA NA 32.05 0.85 14.62

Cash reinvestment ratio (%) NA NA 6.00 NA NA

LeverageOperating leverage 1.32 1.33 1.35 1.48 0.29

Financial leverage 1.26 1.16 1.21 1.24 1.14

Item

Year

6.2.3 Financial Analysis (Domestic Financial Accounting Principle, Non-Consolidated)

Financialanalysisinthepastfiveyears

2012 2013 2014 2015 2016


Ratio of liabilities to assets 58

N/A N/A N/A N/A

Ratiooflong-termcapitaltofixedassets 274

Solvency (%)

Current ratio 156

Quick ratio 54

Times interest earned ratio 5.62

Operating ability

Accounts receivable turnover (turns) 6.76

Average collection period 54

Inventory turnover (turns) 0.26

Accounts payable turnover (turns) 2.68

Average days in sales 1404

Fixed assets turnover (turns) 0.81

Total assets turnover (turns) 0.19

Profitability

Return on total assets (%) 5.12

Return on stockholders' equity (%) 11

Operating income 13

Pre-tax income 15

Profitratio(%) 23

Earnings per share ($)1.54

1.67

Cashflow

Cashflowratio(%) 61.88

Cashflowadequacyratio(%) 83.94

Cash reinvestment ratio (%) 32.84

LeverageOperating leverage 1.48

Financial leverage 1.34

Item

Year

Ratio to issued

capital (%)

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6.2.4 Financial Analysis (Domestic Financial Accounting Principle, Consolidated)

Financialanalysisinthepastfiveyears

2012 2013 2014 2015 2016


Ratio of liabilities to assets 64.2

N/A N/A N/A N/A

Ratiooflong-termcapitaltofixedassets 188.1

Solvency (%)

Current ratio 147.8

Quick ratio 53.8

Times interest earned ratio 3.9

Operating ability

Accounts receivable turnover (turns) 7.6

Average collection period 48

Inventory turnover (turns) 0.5

Accounts payable turnover (turns) 3.7

Average days in sales 747

Fixed assets turnover (turns) 0.9

Total assets turnover (turns) 0.3

Profitability

Return on total assets (%) 4.3

Return on stockholders' equity (%) 10.8

Operating income 15.8

Pre-tax income 15.2

Profitratio(%) 12.1

Earnings per share ($)1.54

49

CashflowCashflowratio(%) 84.7

Cashflowadequacyratio(%) 23.8

LeverageOperating leverage 2

Financial leverage 1.3

Item

Year

Ratio to issued

capital (%)

Prince Housing & Development Corporation Audit Report by the Audit Committee

Sheng-cai HsuAudit Committee Chairman

Prince Housing & Development Corporation

Date: May 8, 2018

This is to approve that

The2017BusinessReport,2017FinancialStatementsand2017ProposalforProfitDistributionpreparedby the Board of Directors. The 2017 Financial Statements have been approved by CPA Jian-zhi Wu and CPA Guo-hua Wang who have also issued an audit report. After auditing the 2017 Business Report, 2017 Financial Statements and 2017 Proposal for Profit Distribution, this Committee found no non-conformities and thus issued this report in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

ToThe 2018 Annual General Meeting of Shareholders of Prince Housing & Development Corporation

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Declaration of Consolidated Financial Statements of Affiliated Enterprises

For the year ended December 31, 2017, pursuant to “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises,” the company that is required to be included in the consolidated financial statements of affiliates, is thesameas thecompanyrequired tobe included in theconsolidatedfinancialstatementsof parent and subsidiary companies under International Financial Reporting Standard No. 10. And if relevantinformationthatshouldbedisclosedintheconsolidatedfinancialstatementsofaffiliateshasallbeendisclosedintheconsolidatedfinancialstatementsofparentandsubsidiarycompanies,itshallnotberequiredtoprepareseparateconsolidatedfinancialstatementsofaffiliates.

Hereby declare,

PRINCE HOUSING & DEVELOPMENT CORP.By LUO ZHI XIANChairmanMarch 20, 2018.

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financialstatementshavebeentranslatedintoEnglishfromtheoriginalChineseversionpreparedandusedinthe Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financialstatementsshallprevail.

PRINCE HOUSING & DEVELOPMENT

CORP. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF

INDEPENDENT ACCOUNTANTS

DECEMBER 31, 2017 AND 2016

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For the year ended December 31, 2017, pursuant to “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises,” the company that is required to be included in the consolidated financial statements of affiliates, is thesameas thecompanyrequired tobe included in theconsolidatedfinancialstatementsof parent and subsidiary companies under International Financial Reporting Standard No. 10. And if relevantinformationthatshouldbedisclosedintheconsolidatedfinancialstatementsofaffiliateshasallbeendisclosedintheconsolidatedfinancialstatementsofparentandsubsidiarycompanies,itshallnotberequiredtoprepareseparateconsolidatedfinancialstatementsofaffiliates.

Hereby declare,

PRINCE HOUSING & DEVELOPMENT CORP.ByLUO ZHI XIANChairmanMarch 20, 2018.

DeclarationofConsolidatedFinancialStatementsofAffiliatedEnterprises

PWCR 17003777To the Board of Directors and Shareholders of Prince Housing & Development Corp.

OpinionWe have audited the accompanying consolidated balance sheets of Prince Housing & Development Corp. and its subsidiaries (the “Group”) as at December 31, 2017 and 2016, and the related consolidated statementsofcomprehensiveincome,ofchanges inequityandofcashflowsfor theyears thenended,and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other independent accountants (please refer to the “othermatter”sectionofourreport),theaccompanyingconsolidatedfinancialstatementspresentfairly,inallmaterial respects, theconsolidatedfinancialpositionof theGroupasatDecember31,2017and2016,anditsconsolidatedfinancialperformanceanditsconsolidatedcashflowsfortheyearsthenendedin accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinionWe conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report.WeareindependentoftheGroupinaccordancewiththeCodeofProfessionalEthicsforCertifiedPublic Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained and the report of other independent accountants are sufficient and appropriate to provide a basis for our opinion.

Key audit mattersKeyauditmattersare thosematters that, inourprofessional judgement,wereofmostsignificance inourauditoftheconsolidatedfinancialstatementsofthecurrentperiod.Thesematterswereaddressedinthecontextofourauditoftheconsolidatedfinancialstatementsasawholeand,informingouropinionthereon, we do not provide a separate opinion on these matters.Themostsignificantkeyauditmattersinourauditoftheconsolidatedfinancialstatementsofthecurrentperiod are as follows:

The accuracy of building and land sales revenue recognition timing

Description

Please refer to Note 4(30) for accounting policies on sales revenue, and Note 6(26) for details. For the year ended December 31, 2017, building and land sales revenue amounted to NT$ 5,741,984 thousand, representing 52.25% of consolidated operating revenue.

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

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TheGrouprecognisesbuildingand landsales revenueandprofitor losswhen transferringownershipand handing over the property. Since to the Group has diverse customers, the information delivery and recording process between segments in the Group usually involved manual work, and thus may result in inappropriate timing of revenue recognition around the balance sheet date. Considering that the building and land sales revenue form most of the Group’s operating revenue, we identified the accuracy of building and land sales revenue recognition timing as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:A. We obtained an understanding and assessed the reasonableness of internal controls on building and

land sales revenue, and tested whether the process of building and land sales revenue recognition timing had been executed effectively, including verifying documents related to the date of ownership transfer and property handover and the accuracy of recognition timing; and

B. We performed cut-off test on building and land transactions around the end of the reporting period, includingverifying landregistration,houseownershipcertificateandcustomersignedreceipts forhanding over of property to confirm the building and land sales revenue recognition timing was adequate.

Recognition of construction revenue- the stage of completion estimate

Description

Please refer to Note 4(13) and (30) for accounting policies on construction contracts and revenue recognition, and Note 6(26) for details. For the year ended December 31, 2017, construction revenue amounted to NT$ 1,332,679 thousand, representing 12.13% of consolidated operating revenue.

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

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


We performed the following audit procedures on the above key audit matter:A. We obtained an understanding of the nature of business and industry of the Group and assessed the

reasonableness of internal process of estimating total construction cost, including the procedure of estimating each construction cost and overhead, and the consistency of applying the estimation method;

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

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

D.Weobtaineddetailsofconstructionprofitor lossandperformedsubstantiveprocedures, includingrandomly checking the incurred cost of current period with the appropriate evidence, and additional or less work with the supporting documents, and recalculated the stage of completion.

Other matter – Scope of the AuditWedidnotaudit thefinancialstatementsofawholly-ownedconsolidatedsubsidiaryand investmentsrecognisedundertheequitymethodthatareincludedinthefinancialstatements.Totalassets(includinginvestments accounted for under equity method) of NT$ 580,967 thousand and NT$ 1,497,276 thousand as at December 31, 2017 and 2016, constituted 1.16% and 2.92% of consolidated total assets. Operating income of NT$ 418 thousand and NT$ 599,445 thousand, for the years ended December 31, 2017 and 2016, constituted 0% and 4.97% of consolidated total operating income; comprehensive income accounted for under equity method of NT$ 21,888 thousand and NT$ 44,904 thousand for the years ended December 31, 2017 and 2016, constituted 1.87% and 3.62% of consolidated total comprehensive income,respectively.Thosefinancialstatementswereauditedbyother independentaccountantswhosereport thereon have been furnished to us, and our opinion expressed herein is based solely on the reports of the other independent accountants.

Other matter – Parent company only financial reportsWehaveauditedandexpressedanunqualifiedopinionontheparentcompanyonlyfinancialstatementsof Prince Housing & Development Corp. as at and for the years ended December 31, 2017 and 2016. Responsibilities of management and those charged with governance for the consolidated financial statementsManagement is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparationofconsolidatedfinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraud or error.

Inpreparingtheconsolidatedfinancialstatements,managementisresponsibleforassessingtheGroup’sability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including audit committee, are responsible for overseeing the Group’s financialreportingprocess.

Auditor’s responsibilities for the audit of the consolidated financial statementsOurobjectivesare toobtainreasonableassuranceaboutwhether theconsolidatedfinancialstatements

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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,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisoftheseconsolidatedfinancialstatements.

As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:A. Identify and assess the risks of material misstatement of the consolidated financial statements,

whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtainauditevidencethatissufficientandappropriatetoprovideabasisforouropinion.Theriskofnot detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditionsthatmaycastsignificantdoubtontheGroup’sabilitytocontinueasagoingconcern.Ifweconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelateddisclosuresintheconsolidatedfinancialstatementsor,ifsuchdisclosuresareinadequate,to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

E. Evaluate the overall presentation, structure and content of the consolidated financial statements, includingthedisclosures,andwhethertheconsolidatedfinancialstatementsrepresenttheunderlyingtransactions and events in a manner that achieves fair presentation.

F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivitieswithin theGrouptoexpressanopinionontheconsolidatedfinancialstatements.We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope andtimingof theauditandsignificantauditfindings, includinganysignificantdeficiencies in internalcontrol that we identify during our audit.

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doingsowouldreasonablybeexpectedtooutweighthepublicinterestbenefitsofsuchcommunication.

The accompanying consolidated financial statements are not intended to present the financial position and resultsofoperationsandcashflowsinaccordancewithaccountingprinciplesgenerallyacceptedincountriesand jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of Chinagoverningtheauditofsuchfinancialstatementsmaydifferfromthosegenerallyacceptedincountriesand jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.Asthefinancialstatementsaretheresponsibilityofthemanagement,PricewaterhouseCooperscannotacceptany liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

Wu, Chien-Chih Wang, Kuo-Hua

For and on behalf of PricewaterhouseCoopers, TaiwanMarch 20, 2018

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PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2017 AND 2016 (Expressed in thousands of New Taiwan dollars)

~9~

December 31, 2017 December 31, 2016 Assets Notes AMOUNT % AMOUNT %

Current assets 1100 Cash and cash equivalents 6(1) 1110 Financial assets at fair value

through profit or loss - current 6(2) and 8

1150 Notes receivable, net 6(3) 1170 Accounts receivable, net 6(4) 1180 Accounts receivable - related

parties 7

1190 Receivables from customers on construction contracts

6(5)

1200 Other receivables 1220 Current income tax assets 130X Inventories, net 6(6) and 8 1410 Prepayments 1476 Other financial assets - current 8 1479 Other current assets 6(7) 11XX Current Assets Non-current assets 1510 Financial assets at fair value

through profit or loss - non-current

6(2) and 8

1523 Available-for-sale financial assets - non-current

6(8) and 8

1543 Financial assets carried at cost - non-current

6(9) and 8

1550 Investments accounted for under equity method

6(10) and 8

1600 Property, plant and equipment, net

6(11) and 8

1760 Investment property, net 6(12) and 8 1780 Intangible assets, net 6(13) 1840 Deferred income tax assets 6(31) 1920 Refundable deposits 7 and 9 1980 Other financial assets - non-

current 8

1990 Other non-current assets 15XX Non-current assets 1XXX Total assets

(Continued)

PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2017 AND 2016(Expressed in thousands of New Taiwan dollars)

(Continued)

PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS


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

~10~

December 31, 2017 December 31, 2016 Liabilities and Equity Notes AMOUNT % AMOUNT %

Current liabilities 2100 Short-term borrowings 6(14) and 8 2110 Short-term notes and bills payable 6(15) and 8 2150 Notes payable 2170 Accounts payable 2190 Payables to customers on

construction contracts 6(5)

2200 Other payables 2220 Other payables - related parties 7 2230 Current income tax liabilities 2310 Receipts in advance 6(16) 2320 Long-term liabilities, current

portion 6(17)(18) and 8

2399 Other current liabilities 21XX Current Liabilities Non-current liabilities 2530 Bonds payable 6(17) 2540 Long-term borrowings 6(18) and 8 2550 Provisions for liabilities - non-

current 6(19)

2570 Deferred income tax liabilities 6(31) 2610 Long-term notes and accounts

payable

2620 Long-term notes and accounts payable to related parties

7

2640 Net defined benefit liability - non-current

6(20)

2645 Guarantee deposits received 2670 Other non-current liabilities 6(10) 25XX Non-current liabilities 2XXX Total Liabilities Equity attributable to owners of

parent

Share capital 3110 common stock 6(21) Capital surplus 6(22) 3200 Capital surplus Retained earnings 6(23)(31) 3310 Legal reserve 3350 Unappropriated retained earnings Other equity interest 6(24) 3400 Other equity interest 3500 Treasury stocks 6(21) 31XX Equity attributable to owners

of the parent

36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities

and unrecognised contract commitments

9

3X2X Total liabilities and equity

PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS


Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.

VI


VI



PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (Expressed in thousands of New Taiwan dollars)

~11~

Years ended December 31 2017 2016

Items Notes AMOUNT % AMOUNT %

4000 Sales revenue 6(26) and 7

5000 Operating costs 6(6)(13)(30)

5900 Gross profit

Operating expenses 6(13)(30) and 7

6100 Selling expenses

6200 General and administrative

expenses

6000 Total operating expenses

6900 Operating profit

Non-operating income and

expenses

7010 Other income 6(27)

7020 Other gains and losses 6(2)(28)

7050 Finance costs 6(6)(29)

7060 Share of profit of associates and

joint ventures accounted for

under equity method

6(10)

7000 Total non-operating income

and expenses

7900 Profit before income tax

7950 Income tax expense 6(31)

8200 Profit for the year

(Continued)

PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016(Expressed in thousands of New Taiwan dollars)

(Continued)

PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



~12~

Years ended December 31 2017 2016

Items Notes AMOUNT % AMOUNT % Other comprehensive income Components of other

comprehensive loss that will not be reclassified to profit or loss

8311 Actuarial loss on defined benefit plan

6(20)

8320 Share of other comprehensive income of associates and joint ventures accounted for under equity method, components of other comprehensive income that will not be reclassified to profit or loss

8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss

6(31)

8310 Components of other comprehensive loss that will not be reclassified to profit or loss

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

8361 Exchange differences arising on translation of foreign operations

8362 Other comprehensive loss, before tax, available- for-sale financial assets

6(8)

8360 Components of other comprehensive loss that will be reclassified to profit or loss

8300 Total other comprehensive loss for the year

8500 Total comprehensive income for the year

Profit (loss), attributable to: 8610 Owners of the parent 8620 Non-controlling interest Comprehensive loss attributable

to:

8710 Owners of the parent 8720 Non-controlling interest Earnings per share (in dollars) 6(32) 9750 Basic earnings per share 9850 Diluted earnings per share

PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



VI


VI



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PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS


Notes Years ended December 31

2017 2016

~14~

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Income and expenses having no effect on cash flows Net loss (gain) on financial assets at fair value through profit or loss 6(2)(28) Reversal of provision for bad debts 6(4) Write-off of uncollectible accounts 6(3)(4) Share of profit of associates and joint ventures accounted for under

equity method 6(10)

Loss on disposal of property, plant and equipment Loss (gain) on disposal of investment property Property, plant and equipment transferred to expenses Depreciation 6(30) Amortization 6(13)(30) Interest expense 6(29) Interest income 6(27) Dividend income 6(27) Loss on unrealized foreign exchange Changes in assets/liabilities relating to operating activities Changes in operating assets Financial assets at fair value through profit or loss - current Notes receivable Accounts receivable Accounts receivable - related parties Receivables from customers on construction contracts Other receivables Inventories Prepayments Other current assets Other non-current liabilities Changes in operating liabilities Notes payable Accounts payable Payables to customers on construction contracts Other payables Other payables - related parties Receipts in advance Other current liabilities Provisions for liabilities - non-current Long-term notes and accounts payable Long-term notes and accounts payable-related parties Net defined benefit liability - non-current Other non-current liabilities Cash inflow generated from operations Interest received Cash dividend received Interest paid Income tax paid Net cash flows from operating activities

(Continued)

PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS


(Continued)

VI


VI



PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS


Notes Years ended December 31

2017 2016


~15~

CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease in other financial assets - current Return of share capital from available-for-sale financial assets - non-

current

Decrease in available-for-sale financial assets - non-current Return of share capital from financial assets carried at cost Return of share capital from investments accounted for under equity

method

Acquisition of property, plant and equipment 6(11) Proceeds from disposal of property, plant and equipment Proceeds from disposal of investment property Increase in intangible assets 6(13) (Increase) decrease in refundable deposits (Increase) decrease in other financial assets - non-current

Net cash flows (used in) from investing activities

CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings Increase (decrease) in short-term notes and bills payable Repayment of bonds Proceeds from issuing bonds Repayment of long-term borrowings Proceeds from long-term borrowings Increase (decrease) in long-term notes and accounts payable Increase (decrease) in guarantee deposits received Cash dividends paid 6(23) Changes in non-controlling interest

Net cash flows used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

PRINCE HOUSING & DEVELOPMENT CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS



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


(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED) 1. HISTORY AND ORGANIZATION

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

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

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

Theseconsolidatedfinancialstatementswereauthorizedfor issuanceby theBoardofDirectorsonMarch 20, 2018.

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 the FSC effective from 2017 are as follows:

~16~

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

DECEMBER 31, 2017 AND 2016 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE

INDICATED) 1. HISTORY AND ORGANIZATION

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

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

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION These consolidated financial statements were authorized for issuance by the Board of Directors on March 20, 2018.

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 the FSC effective from 2017 are as follows:

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

Amendments to IFRS 10, IFRS 12 and IAS 28, ‘Investment entities: Applying the consolidationexception’

January 1, 2016

Amendments to IFRS 11, ‘Accounting for acquisition of interests in joint operations’ January 1, 2016

IFRS 14, ‘Regulatory deferral accounts’ January 1, 2016

Amendments to IAS 1, ‘Disclosure initiative’ January 1, 2016

Amendments to IAS 16 and IAS 38, ‘Clarification of acceptable methods of depreciation andamortization’ ()

January 1, 2016

Amendments to IAS 16 and IAS 41, ‘Agriculture: bearer plants’ January 1, 2016

Amendments to IAS 19, ‘Defined benefit plans: employee contributions’ July 1, 2014

Amendments to IAS 27,‘Equity method in separate financial statements’ January 1, 2016

Amendments to IAS 36, ‘Recoverable amount disclosures for non-financial assets’ January 1, 2014

Amendments to IAS 39,‘Novation of derivatives and continuation of hedgeaccounting’

January 1, 2014

IFRIC 21, ‘Levies’ January 1, 2014

VI


VI



~17~

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

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

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

Except for the following, the above standards and interpretations have no significant impact to the Croup’s financial condition and financial performance based on the Croup’s assessment. A. IFRS 9, ‘Financial instruments’

(a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.


Annual improvements to IFRSs 2010-2012 cycle July 1, 2014Annual improvements to IFRSs 2011-2013 cycle July 1, 2014Annual improvements to IFRSs 2012-2014 cycle January 1, 2016


Amendments to IFRS 2,‘Classification and measurement of share-based payment transactions’ January 1, 2018

Amendments to IFRS 4,‘Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts’ January 1, 2018

IFRS 9, ‘Financial instruments’ January 1, 2018

IFRS 15, ‘Revenue from contracts with customers’ January 1, 2018

Amendments to IFRS 15,‘Clarifications to IFRS 15, Revenue from contracts with customers’ January 1, 2018


Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealised losses’ January 1, 2017

Amendments to IAS 40,‘Transfers of investment property’ January 1, 2018

IFRS 22, ‘Foreign currency transactions and advance consideration’ January 1, 2018

Annual improvements to IFRSs 2014-2016 cycle-Amendments to IFRS 1, ‘First-time adoption of International Financial Reporting Standards’

January 1, 2018

Annual improvements to IFRSs 2014-2016 cycle-Amendments to IFRS 12, ‘Disclosure of interests in other entities’

January 1, 2017

Annual improvements to IFRSs 2014-2016 cycle-Amendments to IAS 28, ‘Investments in associates and joint ventures’

January 1, 2018

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



~17~

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



Except for the following, the above standards and interpretations have no significant impact to the Croup’s financial condition and financial performance based on the Croup’s assessment. A. IFRS 9, ‘Financial instruments’

(a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.


Annual improvements to IFRSs 2010-2012 cycle July 1, 2014Annual improvements to IFRSs 2011-2013 cycle July 1, 2014Annual improvements to IFRSs 2012-2014 cycle January 1, 2016


Amendments to IFRS 2,‘Classification and measurement of share-based payment transactions’ January 1, 2018

Amendments to IFRS 4,‘Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts’ January 1, 2018



Amendments to IFRS 15,‘Clarifications to IFRS 15, Revenue from contracts with customers’ January 1, 2018


Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealised losses’ January 1, 2017

Amendments to IAS 40,‘Transfers of investment property’ January 1, 2018

IFRS 22, ‘Foreign currency transactions and advance consideration’ January 1, 2018


January 1, 2018


January 1, 2017


January 1, 2018

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and operating result based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete.

A. IFRS 9, ‘Financial instruments’(a) Classification of debt instruments is driven by the entity’s business model and the

contractualcashflowcharacteristicsofthefinancialassets,whichwouldbeclassifiedasfinancialassetat fairvalue throughprofitor loss,financialassetmeasuredat fairvaluethroughothercomprehensiveincomeorfinancialassetmeasuredatamortisedcost.Equityinstrumentswouldbeclassifiedasfinancialassetatfairvaluethroughprofitorloss,unlessan entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.

(b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significantincreaseincreditriskonthatinstrumentsinceinitialrecognitiontorecognise12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Group shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significantfinancingcomponent.

B. IFRS 15, ‘Revenue from contracts with customers’IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11 ‘Construction contracts’, IAS 18 ‘Revenue’ and relevant interpretations. According to IFRS 15, revenue is recognised when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially alloftheremainingbenefitsfrom,theasset.The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promisedgoodsorservicestocustomersinanamountthatreflectstheconsiderationtowhichthe entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps:Step 1: Identify contracts with customerStep 2: Identify separate performance obligations in the contract(s)Step 3: Determine the transaction priceStep 4: Allocate the transaction price.Step5:Recogniserevenuewhentheperformanceobligationissatisfied.Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entitytodisclosesufficientinformationtoenableusersoffinancialstatementstounderstandthenature,amount,timinganduncertaintyofrevenueandcashflowsarisingfromcontractswith customers.

C. Amendments to IAS 40, ‘Transfers of investment property’The amendment clarified that to transfer to, or from, investment properties there must be a change in use. A change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A change in management’s intentions, in isolation, does not provide evidence of the change in use. In addition, the amendments added examples for the evidence of a change in use. The examples include assets under construction or development (not completed properties) transfer from investment property to owner-occupied property at commencement of development with a view to owner-occupation and transfer from inventories to investment property at inception of an operating lease to another party.When adopting the new standards endorsed by the FSC effective from 2018, the Group will apply the new rules under IFRS 9 retrospectively from January 1, 2018, with the practical expedients permitted under the statement. The significant effects of applying the new standards as of January 1, 2018 are summarised below:

VI


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(a) In accordance with IFRS 9, the Group expects to reclassify available-for sale financial assets-non-currentandfinancialassetsatcost-non-current in theamountsof$1,133,158and $855,030 and make an irrevocable election at initial recognition on equity instruments notheldfordealingortradingpurpose,byincreasingfinancialassetsatfairvaluethroughother comprehensive income, and other equity interest in the amounts of $2,013,799 and $25,611, respectively.

(b) Presentation of contract assets and contract liabilities In line with IFRS 15 requirements, the Group expects to change the presentation of certain

accounts in the balance sheet as follows: According to IFRS 15, contract revenue related to construction shall be recognised as

contract assets before which the consideration is paid by the customer or the payment can be collected from customer. Contract liabilities shall be recognised when the payment has been paid by the customer or the payment can be collected from customer before the goods or services transferred to customer. Under IAS 11, ‘construction contract’, net outcome of the progress billings, recognised cost and profits (loss) in relation to construction contract in previous period shall be presented as receivables (payables) from customers on construction contracts.

Accordingly, receivables from customers on construction contracts and payables from customers on construction contracts will have to be decreased by $370,577 and $10,202 on January 1, 2018, respectively, and contract assets and contract liabilities increased by $370,577 and $10,202, respectively.

(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:

~19~

When adopting the new standards endorsed by the FSC effective from 2018, the Group will apply the new rules under IFRS 9 retrospectively from January 1, 2018, with the practical expedients permitted under the statement. The significant effects of applying the new standards as of January 1, 2018 are summarised below: (a) In accordance with IFRS 9, the Group expects to reclassify available-for sale financial assets-

non-current and financial assets at cost-non-current in the amounts of $1,133,158 and $855,030 and make an irrevocable election at initial recognition on equity instruments not held for dealing or trading purpose, by increasing financial assets at fair value through other comprehensive income, and other equity interest in the amounts of $2,013,799 and $25,611, respectively.

(b) Presentation of contract assets and contract liabilities In line with IFRS 15 requirements, the Group expects to change the presentation of certain accounts in the balance sheet as follows: According to IFRS 15, contract revenue related to construction shall be recognised as contract assets before which the consideration is paid by the customer or the payment can be collected from customer. Contract liabilities shall be recognised when the payment has been paid by the customer or the payment can be collected from customer before the goods or services transferred to customer. Under IAS 11, ‘construction contract’, net outcome of the progress billings, recognised cost and profits (loss) in relation to construction contract in previous period shall be presented as receivables (payables) from customers on construction contracts. Accordingly, receivables from customers on construction contracts and payables from customers on construction contracts will have to be decreased by $370,577 and $10,202 on January 1, 2018, respectively, and contract assets and contract liabilities increased by $370,577 and $10,202, respectively.

(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:

Except for the following, the above standards and interpretations have no significant impact to the


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

Amendments to IFRS 10 and IAS 28,‘Sale of contribution of assets between an investor andits associate or joint venture’

To be determined by InternationalAccounting Standards Board

IFRS 16, ‘Leases’ January 1, 2019

IFRS 17, ‘Insurance contracts’ January 1, 2021

Amendments to IFRS 19,‘Plan amendment, curtailment or settlemet’

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

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

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

Except for thefollowing, theabovestandardsand interpretationshavenosignificant impact totheGroup’sfinancialconditionandfinancialperformancebasedontheGroup’sassessment.Thequantitative impact will be disclosed when the assessment is complete.

IFRS 16, ‘Leases’ 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,whichistoclassifytheirleasesaseitherfinanceleasesoroperatingleasesandaccountforthose two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Theprincipalaccountingpoliciesappliedinthepreparationoftheseconsolidatedfinancialstatementsare set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.(1) Compliance statement Theconsolidatedfinancialstatementsof theGrouphavebeenprepared inaccordancewith the

“Rules Governing the Preparation of Financial Statements by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparationA. Except for thefollowing items, theseconsolidatedfinancialstatementshavebeenprepared

under the historical cost convention:(a) Financial assets and financial liabilities (including derivative instruments) at fair value

throughprofitorloss.(b)Available-for-salefinancialassetsmeasuredatfairvalue.(c)Definedbenefitliabilitiesrecognisedbasedonthenetamountofpensionfundassetsless

unrecognisedactuarialgainsandpresentvalueofdefinedbenefitobligation.B. ThepreparationoffinancialstatementsinconformitywithIFRSsrequirestheuseofcertain

critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree ofjudgementorcomplexity,orareaswhereassumptionsandestimatesaresignificanttotheconsolidatedfinancialstatementsaredisclosedinNote5.

(3) Basis of consolidationA.Basisforpreparationofconsolidatedfinancialstatements:

(a)AllsubsidiariesareincludedintheGroup’sconsolidatedfinancialstatements.Subsidiariesare all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

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

(c)Profitor lossandeachcomponentofothercomprehensive incomeareattributed to theowners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this

VI


VI



resultsinthenon-controllinginterestshavingadeficitbalance.(d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent

losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.

(e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised inprofitor loss.Allamountspreviously recognised inothercomprehensiveincomeinrelationtothesubsidiaryarereclassifiedtoprofitorlossonthesamebasisaswould be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity toprofitor loss, ifsuchgainsor losseswouldbereclassified toprofitor losswhen therelated assets or liabilities are disposed of.

B.Subsidiariesincludedintheconsolidatedfinancialstatements:

~21~

when the Group loses control of the subsidiaries. (b) Inter-company transactions, balances and unrealised gains or losses on transactions between

companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

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

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

(e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

B. Subsidiaries included in the consolidated financial statements:

Main business

Name of investor Name of subsidiary activities December 31, 2017 December 31, 2016Prince Housing & Development Corp.

Prince Property Management Consulting Co., Ltd.

Real estate managers 100 100

Cheng-Shi Investment Holdings Co., Ltd.

General investments 100 100

Prince Housing Investment Co., Ltd.

Overseas investment 100 100

Dong-Feng Enterprises Co., Ltd.

Housebuilders and sales

100 100

The Splendor Hotel Taichung

Hotels and catering 50 50

Ownership (%)Note: The Group does not directly or indirectly own above 50% of voting shares of The Splendor Hotel Taichung. However, as the

Grouphascontroloverthefinanceandoperationsofthecompany,itisincludedintheconsolidatedfinancialstatements.

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

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

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

E. Significant restrictions: None.

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

The Group’s non-controlling interest is not material and thus, is not applicable. (4) Foreign currency translation

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

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

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

Main business

Name of investor Name of subsidiary activities December 31, 2017 December 31, 2016

Ownership (%)

Time Square International Co., Ltd.

Hotels and catering 100 100

Jin-Yi-Xing Plywood Co., Ltd.

Manufacture of plywood

99.65 99.65

Prince Industrial Co., Ltd. Development of public housing and building

100 100

Prince Real Estate Co., Ltd. Real estate trading and leasing

99.65 99.65


Prince Apartment Management Maintain Co., Ltd.

Management of apartment

100 100

Prince Security Co., Ltd. Security 100 100

Cheng-Shi InvestmentHoldings Co., Ltd.

Ta-Chen Construction & Engineering Corp.

Construction 100 100

Prince Utility Co., Ltd. Electricity and water pipe maintenance

100 100

Cheng-Shi Construction Co., Ltd.

Construction 100 100

C.Subsidiariesnotincludedintheconsolidatedfinancialstatements:None.D. Adjustments for subsidiaries with different balance sheet dates: None.E. Significantrestrictions:None.F. Subsidiaries that have non-controlling interests that are material to the Group: The Group’s non-controlling interest is not material and thus, is not applicable.

(4) Foreign currency translation Items included in the financial statements of each of the Group’s entities are measured using

the currency of the primary economic environment in which the entity operates (the “functional currency”).TheconsolidatedfinancialstatementsarepresentedinNewTaiwandollars,whichisthe Company’s functional and the Group’s presentation currency.A. Foreign currency transactions and balances

(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactionsarerecognisedinprofitorlossintheperiodinwhichtheyarise.

(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arisinguponre-translationatthebalancesheetdatearerecognisedinprofitorloss.

(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value

through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income.

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However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

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

B. Translation of foreign operations(a)Theoperatingresultsandfinancialpositionofall thegroupentities,associatesandjoint

arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:i. Assets and liabilities for each balance sheet presented are translated at the closing

exchange rate at the date of that balance sheet;ii. Income and expenses for each statement of comprehensive income are translated at

average exchange rates of that period; andiii. All resulting exchange differences are recognised in other comprehensive income.

(b) When the foreign operation partially disposed of or sold is an associate or joint arrangements, exchange differences that were recorded in other comprehensive income are proportionatelyreclassifiedtoprofitorlossaspartofthegainorlossonsale.Inaddition,even when the Group still retains partial interest in the former foreign associate or joint arrangementsafterlosingsignificantinfluenceovertheformerforeignassociate,orlosingjoint control of the former joint arrangements, such transactions should be accounted for as disposal of all interest in these foreign operations.

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

(5) Classificationofcurrentandnon-currentitemsA. Ifassetsandliabilitiesarerelatedtotheconstructionbusiness,theyareclassifiedascurrent

or non-current according to their operating cycles; if they are not related to the construction business,theyareclassifiedbyannualbasis.

B. Assetsthatmeetoneofthefollowingcriteriaareclassifiedascurrentassets;otherwisetheyareclassifiedasnon-currentassets:(a) Assets arising from operating activities that are expected to be realised, or are intended to

be sold or consumed within the normal operating cycle;(b) Assets held mainly for trading purposes;(c) Assets that are expected to be realised within twelve months from the balance sheet date;(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those

that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

C. Liabilitiesthatmeetoneofthefollowingcriteriaareclassifiedascurrentliabilities;otherwisetheyareclassifiedasnon-currentliabilities:(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.

(6) Cash equivalents Cash equivalents refer to short-term, highly liquid investments that are readily convertible to

knownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue.Timedepositsmaturewithinthreemonthsandbondswithcallbackoptionsmeetthedefinitionaboveandareheldforthepurposeofmeetingshort-termcashcommitmentsinoperationsareclassifiedas cash equivalents.

(7) FinancialassetsatfairvaluethroughprofitorlossA. Financial assets at fair value through profit or loss are financial assets held for trading.

Financialassetsareclassifiedin thiscategoryofheldfor tradingifacquiredprincipallyforthe purpose of selling in the short-term.

B.Onaregularwaypurchaseorsalebasis,financialassetsatfairvaluethroughprofitorlossarerecognised and derecognised using trade date accounting.

C.Financialassetsatfairvaluethroughprofitorlossareinitiallyrecognisedatfairvalue.Relatedtransaction costs are expensed in profit or loss. These financial assets are subsequently remeasuredandstatedatfairvalue,andanychangesinthefairvalueofthesefinancialassetsarerecognisedinprofitorloss.

(8) Available-for-salefinancialassetsA. Available-for-sale financial assets are non-derivatives that are either designated in this

categoryornotclassifiedinanyoftheothercategories.B.Onaregularwaypurchaseorsalebasis,available-for-salefinancialassetsarerecognisedand

derecognised using trade date accounting. C.Available-for-salefinancialassetsareinitiallyrecognisedatfairvalueplustransactioncosts.

Thesefinancialassetsaresubsequentlyremeasuredandstatedatfairvalue,andanychangesin the fair value of these financial assets are recognised in other comprehensive income. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must besettledbydeliveryofsuchunquotedequityinstrumentsarepresentedin‘financialassetsmeasured at cost’.

(9) Receivables Accounts receivable are loans and receivables originated by the entity. They are created by the

entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(10) ImpairmentoffinancialassetsA. The Group assesses at each balance sheet date whether there is objective evidence that a

financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events)hasan impacton theestimatedfuturecashflowsof thefinancialassetorgroupof

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financialassetsthatcanbereliablyestimated.B. The criteria that the Group uses to determine whether there is objective evidence of an

impairment loss is as follows:(a) Significantfinancialdifficultyoftheissuerordebtor;(b) A breach of contract, such as a default or delinquency in interest or principal payments;(c) The disappearance of an active market for that financial asset because of financial

difficulties;(d) It becomes probable that the borrower will enter bankruptcy or other financial

reorganisation;(e) Observable data indicating that there is a measurable decrease in the estimated future cash

flowsfromagroupoffinancialassetssincetheinitialrecognitionofthoseassets,althoughthe decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;

(f) Informationaboutsignificantchangeswithanadverseeffectthathavetakenplaceinthetechnology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; or a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.

C. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the categoryoffinancialassets:(a) Financial assets measured at amortised cost The amount of the impairment loss is measured as the difference between the asset’s

carryingamountand thepresentvalueofestimatedfuturecashflowsdiscountedat thefinancialasset’soriginaleffectiveinterestrate,andisrecognisedinprofitorloss.If,inasubsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previouslyrecognisedimpairmentlossisreversedthroughprofitorlosstotheextentthatthe carrying amount of the asset does not exceed its amortised cost that would have been at the date of reversal had the impairment loss not been recognised previously. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(b) Financial assets measured at cost The amount of the impairment loss is measured as the difference between the asset’s

carryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedatcurrentmarketreturnrateofsimilarfinancialasset,andisrecognisedinprofitorloss.Impairmentloss recognised for this category shall not be reversed subsequently. Impairment loss is recognised by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(c)Available-for-salefinancialassets The amount of the impairment loss is measured as the difference between the asset’s

acquisition cost (less any principal repayment and amortisation) and current fair value, lessanyimpairmentlossonthatfinancialassetpreviouslyrecognisedinprofitorloss,andisreclassifiedfrom‘othercomprehensive income’ to‘profitor loss’. If, inasubsequent

period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognised, then suchimpairmentlossisreversedthroughprofitorloss.Impairmentlossofaninvestmentinanequityinstrumentrecognisedinprofitorlossshallnotbereversedthroughprofitorloss. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(11) Derecognitionoffinancialassets TheGroupderecognisesafinancialassetwhenoneofthefollowingconditionsismet:

A. Thecontractualrightstoreceivethecashflowsfromthefinancialassetexpire.B. Thecontractualrightstoreceivecashflowsofthefinancialassethavebeentransferredand

theGrouphas transferredsubstantiallyall risksandrewardsofownershipof thefinancialasset.

C. The contractual rights to receive cash flows of the financial asset have been transferred; however,theGrouphasnotretainedcontrolofthefinancialasset.

(12) Inventories Except for gains or losses occurring from construction contracts that are recognised using the

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

(13) Construction contractsA. IAS11, ‘ConstructionContracts’,definesaconstructioncontractasacontractspecifically

negotiated for the construction of an asset. If the outcome of a construction contract can be estimatedreliablyanditisprobablethatthiscontractwouldmakeaprofit,contractrevenueshould be recognised by reference to the stage of completion of the contract activity, using the percentage-of-completion method of accounting, over the contract term. Contract costs are expensed as incurred. The stage of completion of a contract is measured by the proportion of contract costs incurred for work performed to date to the estimated total costs for the contract. An expected loss where total contract costs will exceed total contract revenue on a construction contract should be recognised as an expense as soon as such loss is probable. If the outcome of a construction contract cannot be estimated reliably, contract revenue should be recognised only to the extent of contract costs incurred that it is probable will be recoverable.

B. Contract revenue should include the revenue arising from variations from the original contract work, claims and incentive payments that are agreed by the customer and can be measured reliably.

C. Theexcessof thecumulativecosts incurredplusrecognisedprofits(lessrecognisedlosses)over the progress billings on each construction contract is presented as an asset within ‘receivables from customers on construction contracts’. While, the excess of the progress billingsover thecumulativecosts incurredplus recognisedprofits (less recognised losses)on each construction contract is presented as a liability within ‘payables to customers on construction contracts’.

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D. In accordance with IFRIC 15, ‘Agreements for the Construction of Real Estate’, if the buyer is able to specify the major structural elements of the design of the real estate before construction begins and/or specify major structural changes once construction is in progress, theconstructioncontractmeetsthedefinitionofconstructioncontractandcriteriainIAS11,‘Construction Contracts’. In accordance with the recognition criteria on the sale of goods as provided in IAS 18, ‘Revenue’, the Group recognises sales revenue for contracts of pre-sellingofbuildingsthatdonotmeetthedefinitionofconstructioncontracts.Fortransactionsthatmeet thedefinitionofconstructioncontracts, theGrouprecognisescontractrevenueinaccordance with IAS 11.

(14) Investments accounted for using equity method / associatesA. Associates are all entities over which the Group has significant influence but not control.

In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.

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

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

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

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

F. Uponlossofsignificant influenceoveranassociate, theGroupremeasuresany investmentretained in the former associate at its fair value. Any difference between fair value and carryingamountisrecognisedinprofitorloss.

G. WhentheGroupdisposesitsinvestmentinanassociateandlosessignificantinfluenceoverthis associate, the amounts previously recognised in other comprehensive income in relation to theassociate,arereclassifiedtoprofitor loss,on thesamebasisaswouldberequired iftherelevantassetsorliabilitiesweredisposedof.If itretainssignificantinfluenceoverthis

associate, then the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

H.WhentheGroupdisposes its investment inanassociateandlosessignificant influenceoverthis associate, the amounts previously recognised as capital surplus in relation to the associate aretransferredtoprofitorloss.Ifitretainssignificantinfluenceoverthisassociate,thentheamounts previously recognised as capital surplus in relation to the associate are transferred to profitorlossproportionately.

(15) Property, plant and equipmentA. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during

the construction period are capitalised.B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate

asset,asappropriate,onlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththe itemwillflowto theCompanyandthecostof the itemcanbemeasuredreliably. Thecarrying amount of the replaced part is derecognised. All other repairs and maintenance are chargedtoprofitorlossduringthefinancialperiodinwhichtheyareincurred.

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.Eachpartofanitemofproperty,plant,andequipmentwithacostthatissignificantinrelation to the total cost of the item must be depreciated separately.

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

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

(15) Property, plant and equipment

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

B.Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the 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 cost of the item must be depreciated separately.

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

(16) Operating leases (lessor/ lessee)

Rental income from operating leases (excluding any benefits provided to lessee) or payments for operating leases (excluding any benefits received from lessor) are recognised as profit or loss for the period over the leasing period on a straight line basis.

Buildings and structures 50 ~ 60 yearsMachinery and equipment 2 ~ 10 yearsComputer and communication equipment 5 yearsTransportation equipment 3 ~ 5 yearsOffice equipment 5 ~ 15 yearsLeasehold improvements 5 ~ 20 yearsOther equipment 5 ~ 15 years

(16) Operating leases (lessor/ lessee)Rentalincomefromoperatingleases(excludinganybenefitsprovidedtolessee)orpaymentsforoperatingleases(excludinganybenefitsreceivedfromlessor)arerecognisedasprofitorlossforthe period over the leasing period on a straight line basis.

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

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(18) Intangible assetsGoodwill, patent rights, computer software cost and service concession are stated at acquisition cost and amortised on a straight line basis. The useful life of major intangible assets is 3~5 years, while service concession is 44 years.

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

(20) BorrowingsA. Borrowings are recognised initially at fair value, net of transaction costs incurred.

Borrowings are subsequently stated at amortised cost; any difference between the proceeds (netof transactioncosts)and theredemptionvalue is recognised inprofitor lossover theperiod of the borrowings using the effective interest method.

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

(21) Notes and accounts payableNotes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(22) DerecognitionoffinancialliabilitiesA financial liability is derecognised when the obligation under the liability specified in the contract is discharged or cancelled or expires.

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

(24) Financial liabilitiesBonds payableOrdinary corporate bonds issued by the Group 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 deductionfrombondspayable,whichisamortisedinprofitorlossasanadjustmenttothe‘financecosts’ over the period of bond circulation using the effective interest method.

(25) ProvisionsProvisions are recognised when the Group has a present legal or constructive obligation as a resultofpastevents,anditisprobablethatanoutflowofeconomicresourceswillberequiredtosettle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the currentmarketassessmentsof the timevalueofmoneyandtherisksspecific to theobligation.When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

(26) EmployeebenefitsA. Short-termemployeebenefits

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

B. Pensions(a)Definedcontributionplans Fordefinedcontributionplans,thecontributionsarerecognisedaspensionexpenseswhen

they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

(b)Definedbenefitplansi. Net obligation under a defined benefit plan is defined as the present value of an

amountofpensionbenefitsthatemployeeswillreceiveonretirementfortheirserviceswith the Group in current period. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet) of a currency and term consistent withthecurrencyandtermoftheemploymentbenefitobligations.

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

iii. Pastservicecostsarerecognisedimmediatelyinprofitorloss.C. Employees’ compensation and directors’ remuneration Employees’ compensation and directors’ remuneration are recognised as expenses and

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

(27) Income taxA. The tax expense for the period comprises current and deferred tax. Tax is recognised in

profitorloss,excepttotheextentthatitrelatestoitemsrecognisedinothercomprehensiveincome or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

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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 10% 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 taxableprofitor loss.Deferredincometaxisprovidedontemporarydifferencesarisingon investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

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

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

F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equityinvestmentstotheextentthatitispossiblethatfuturetaxableprofitwillbeavailableagainst which the unused tax credits can be utilised.

G. Consolidatedincometaxreturnfor taxfilingsofcertaindomesticsubsidiaries in theGroupaccounted for in accordance with individual reporting situations. And subsidiaries have selected the consolidated income tax return for tax filings and pay additional 10% tax on their undistributed retained earnings. If there is any tax effect due to the adoption of the consolidated tax system, the subsidiaries can proportionately allocate the effects on tax expense(benefit),deferredincometaxandtaxpayable(taxrefundreceivable).

(28) Share capitalOrdinarysharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofnewshares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

(29) DividendsDividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividendsarerecordedasstockdividendstobedistributedandarereclassifiedtoordinaryshareson the effective date of new shares issuance.

(30) Revenue recognitionA. Sales of goods The Group sub-contracts construction projects, sale and lease of public housings and business

buildings. Revenue arising from the sales of goods is recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably anditisprobablethatthefutureeconomicbenefitsassociatedwiththetransactionwillflowto the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there isobjectiveevidenceshowing thatallacceptanceprovisionshavebeensatisfied.Forpre-selling of housing that the Group has sub-contracted to construction companies to build, as stated in Note 4(13), sales revenue is recognised in accordance with IAS 18, ‘Revenue’. Thus, the Group has carried over costs and recognised profit or loss when it completes transfer of title and settlement of housing. Only when housing was actually settled (or only when ownership was transferred) before balance sheet date, and related risk return was transferred would sales revenue be recognised.

B. Sales of services The Group serves as a real estate agency, manages apartment buildings and provides security.

Revenue is recognised when transactions of service rendered can be reliably measured and futureeconomicbenefitmaybecomeinflowstotheGroup.

C. Construction contract revenue Please refer to Note 4(13) for construction contract services provided by the Group.D. Service concession revenue Please refer to Note 4(31) for service concession contracts provided by the Group.

(31) Service concession arrangementsA. The Group was contracted by National Taiwan University (grantor) to provide construction

for the government’s infrastructure assets for public services and operate those assets for Changxing St. Campus for 44 years and 6 months, and for Shuiyuan Campus for 44 years and 4 months after construction is completed. When the term of operating period expires, the underlying infrastructure assets will be transferred to National Taiwan University without consideration. The Group allocates the fair value of the consideration received or receivable in respect of the service concession arrangement between construction services and operating services provided based on their relative fair values, and recognises such allocated amounts as revenues in accordance with IAS 11, ‘Construction Contracts’, and IAS 18, ‘Revenue’, respectively.

B. Costs incurred on provision of construction services or upgrading services under a service concession arrangement are accounted for in accordance with IAS 11, ‘Construction Contracts’.

VI


VI



C. The consideration received or receivable from the grantor in respect of the service concession arrangement is recognised at its fair value. Such considerations are recognised as an intangible asset based on how the considerations from the grantor to the operator are made as specifiedinthearrangement.

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

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

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financialyear.Theaboveinformationisaddressedbelow:(1) Critical judgements in applying the Group’s accounting policies

A. Financial assets-impairment of equity investmentsThe Group follows the guidance of IAS 39 to determine whether a financial asset-equity investment is impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance,changesintechnologyandoperationalandfinancingcashflow.If the decline of the fair value of an individual equity investment below cost was considered significantorprolonged,theGroupwouldsufferalossinitsfinancialstatements,beingthetransfer of the accumulated fair value adjustments recognised in other comprehensive income ontheimpairedavailable-for-salefinancialassetstoprofitorlossorbeingtherecognitionoftheimpairmentlossontheimpairedfinancialassetsmeasuredatcostinprofitorloss.

B. Investment propertyThe Group uses a portion of the property for its own use and another portion to earn rentals or for capital appreciation. When these portions cannot be sold separately and cannot be leased outseparatelyunderafinancelease,thepropertyisclassifiedasinvestmentpropertyonlyiftheown-useportionaccountsforlessinsignificantportionoftheproperty.

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

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

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

B. TherepurchasebondsheldbytheGrouphashighliquidity,so theywereclassifiedascashequivalents.

(2) Financialassetsatfairvaluethroughprofitorloss

~36~

6. DETAILS OF SIGNIFICANT ACCOUNTS(1) Cash and cash equivalents


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

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

A. The Group recognised net gain (loss) of $34,635 and ($15,349) for the years ended December 31,

2017 and 2016, respectively.

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

December 31, 2017 December 31, 2016

Cash on hand and revolving funds $ 10,948 $ 172,942

Checking accounts and demand

deposits 3,990,901 3,318,600

Time deposits - 217,293

Repurchase bonds 220,000 940,080 $ 4,221,849 $ 4,648,915

Items December 31, 2017 December 31, 2016Current items: Financial assets held for trading Listed (TSE and OTC) stocks 264,520$ 264,520$

Beneficiary certificates 540,620 400,000 805,140 664,520

Financial assets held for trading valuation adjustments 33,967 369)(

839,107$ 664,151$

Non-current items: Financial assets held for trading Beneficiary certificates 76,000$ 76,000$ Financial asscts held for trading valuation adjustments 2,552 2,253

78,552$ 78,253$

~36~



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


A. The Group recognised net gain (loss) of $34,635 and ($15,349) for the years ended December 31,

2017 and 2016, respectively.

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



Checking accounts and demand

deposits 3,990,901 3,318,600

Time deposits - 217,293

Repurchase bonds 220,000 940,080 $ 4,221,849 $ 4,648,915

Items December 31, 2017 December 31, 2016Current items: Financial assets held for trading Listed (TSE and OTC) stocks 264,520$ 264,520$

Beneficiary certificates 540,620 400,000 805,140 664,520

Financial assets held for trading valuation adjustments 33,967 369)(

839,107$ 664,151$

Non-current items: Financial assets held for trading Beneficiary certificates 76,000$ 76,000$ Financial asscts held for trading valuation adjustments 2,552 2,253

78,552$ 78,253$

A. The Group recognised net gain (loss) of $34,635 and ($15,349) for the years ended December 31, 2017 and 2016, respectively.

B. DetailsoftheGroup’sfinancialassetsatfairvaluethroughprofitorlosspledgedtoothersascollateral are provided in Note 8.

VI


VI



(3) Notes receivable, net

A. The Group’s notes receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scaleofbusinessandprofitability.

B. Movementanalysisoffinancialassetsthatwereimpaired(allowancefordoubtfulaccountsofnotes receivable) is as follows:

~37~


A. The Group’s notes receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scale of business and profitability.

B. Movement analysis of financial assets that were impaired (allowance for doubtful accounts of notes receivable) is as follows:

The Group analyses impairment based on any changes to credit quality in notes receivable of individual customers from the initial granting date until the financial period-end, historical experience and current financial condition, to estimate the amount that may not be recovered.

C. The Group does not hold any collateral as security.

(4) Accounts receivable, net

A.The Group’s accounts receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scale of business and profitability. Accounts receivable are classified into 3 categories:

(a) Sale of real estate: collection of customers’ loans from banks.

(b) Construction contracts and sales of service: from customers with optimal collection record.

(c) Receivables from travel department: mainly from credit card payments.


Notes receivable $ 97,488 $ 102,339

2017 2016

At January 1 $ - $ 344

Write-offs during the period - 344)(

At December 31 -$ -$


Accounts receivable $ 699,397 $ 826,755Less: Allowance for doubtful accounts 4,621)( 4,298)(

694,776$ 822,457$

~37~













2017 2016






694,776$ 822,457$

The Group analyses impairment based on any changes to credit quality in notes receivable of individualcustomersfromthe initialgrantingdateuntil thefinancialperiod-end,historicalexperienceandcurrentfinancialcondition,toestimatetheamountthatmaynotberecovered.

C. The Group does not hold any collateral as security.(4) Accounts receivable, net

~37~













2017 2016






694,776$ 822,457$

A. The Group’s accounts receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics,scaleofbusinessandprofitability.Accounts receivableareclassified into3categories:(a) Sale of real estate: collection of customers’ loans from banks.(b) Construction contracts and sales of service: from customers with optimal collection

record.(c) Receivables from travel department: mainly from credit card payments.

B. The ageing analysis of accounts receivable that were past due but not impaired is as follows:

~38~


The above ageing analysis was based on past due date.

C. Movement analysis of financial assets that were impaired (allowance for doubtful accounts of accounts receivable) is as follows:

The Group analyses impairment based on any changes to credit quality in accounts receivable of individual customers from the initial granting date until the financial period-end, historical experience and current financial condition, to estimate the amount that may not be recovered.

D.The Group does not hold any collateral as security.

(5) Construction contracts receivable (payable)

As of December 31, 2017, and 2016, the retainage relating to construction contracts amounted to $318,758 and $618,729, respectively; the advances received before the related construction contracts are performed amounted to $0 and $719,619, respectively.


Up to 60 days 5,795$ 3,943$ 61 to 120 days 287 536 121 to 180 days 170 35 Over 180 days 1,083 1,809

7,335$ 6,323$

2017 2016

At January 1 4,298$ 4,104$

Provsion for impairment loss 649 194

Write-offs duing the periods 326)( -

At December 31 4,621$ 4,298$


Aggregate cost incurred plus

recognised profits (less recognised losses) 6,718,521$ 18,283,104$

Less: Progress billings 6,358,146)( 17,447,436)(

Net balance sheet position for

construction in progress 360,375$ 835,668$

Presented as:

Receivables from customers on construction 370,577$ 1,058,750$

contracts

Payables to customers on construction contracts 10,202)( 223,082)(

360,375$ 835,668$


C. Movementanalysisoffinancialassetsthatwereimpaired(allowancefordoubtfulaccountsofaccounts receivable) is as follows:

~38~










7,335$ 6,323$

2017 2016

At January 1 4,298$ 4,104$



At December 31 4,621$ 4,298$







Presented as:


contracts


360,375$ 835,668$

The Group analyses based on any changes to credit quality in accounts receivable of individualcustomersfromthe initialgrantingdateuntil thefinancialperiod-end,historicalexperienceandcurrentfinancialcondition,toestimatetheamountthatmaynotberecovered.

D. The Group does not hold any collateral as security.(5) Construction contracts receivable (payable)

~38~










7,335$ 6,323$

2017 2016

At January 1 4,298$ 4,104$



At December 31 4,621$ 4,298$







Presented as:


contracts


360,375$ 835,668$


(6) Inventories

~39~

(6) Inventories

A. The cost of inventories recognised as expense for the years ended December 31, 2017 and 2016 was $7,722,731 and $8,124,458, respectively, including the amounts of $11,023 and $203, respectively, that the Group wrote down from cost to net realisable value accounted for as cost of goods sold.

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

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

Allowance for Cost valuation loss Book value

Land held for construction site $ 10,214,457 ($ 64,249) $ 10,150,208

Construction in progress 5,284,594 - 5,284,594

Buildings and land held for sale 5,497,948 ( 39,329) 5,458,619

Prepayment for land 187,026 - 187,026Prepayment for buildings and land

945,903 - 945,903

Merchandise 36,129 - 36,129

$ 22,166,057 ($ 103,578) $ 22,062,479

December 31, 2017






954,027 - 954,027


$ 22,385,455 ($ 114,601) $ 22,270,854

December 31, 2016

2017 2016

Interest paid before capitalization 411,994$ 425,984$

Interest capitalized 242,088$ 184,105$

Annual interest rate used for capitalization 0.41%-3.84% 0.36%-3.93%

Years ended December 31,

VI


VI



~39~

(6) Inventories









945,903 - 945,903


$ 22,166,057 ($ 103,578) $ 22,062,479

December 31, 2017






954,027 - 954,027


$ 22,385,455 ($ 114,601) $ 22,270,854

December 31, 2016

2017 2016






B. Details of the Group’s inventories pledged to others as collateral are provided in Note 8.C. The interest capitalized as cost of inventory is as follows:

~39~

(6) Inventories









945,903 - 945,903


$ 22,166,057 ($ 103,578) $ 22,062,479

December 31, 2017






954,027 - 954,027


$ 22,385,455 ($ 114,601) $ 22,270,854

December 31, 2016

2017 2016





D. Detailsofsignificantinventories:(a) Buildings and land in progress

~40~

D. Details of significant inventories:

(a)Buildings and land in progress

Taipei branch December 31, 2017 December 31, 2016

Ling Ko Dist. Li Shing Section No. 1209, etc. 1,675,282$ 1,515,855$

W Prince (New Taipei City Shing Jheng Section No.883, etc.) 1,035,789 950,762

Bali Dist Chung Chang Section No.2222 and 211-1, etc. 688,073 686,428

Prince Hua Wei (Shilin Dist. Zhishan Section No. 602, etc.) 591,174 269,237

Jhong Li City Shuang Ling Section No. 1449, etc. 590,070 447,678

Prince Shin Yi (XinZhuang Fuduxin) - 2,022,377

Prince Fu III (Taoyuan Qing Sun Section No. 446) - 1,438,248

4,580,388$ 7,330,585$

Taichung branch December 31, 2017 December 31, 2016

Prince Yu Ding (Hui Li Section No. 195) 1,067,003$ 855,004$

Ping Hsin Section No. 694, etc. 1,053,354 897,690

Chaotun Section No. 755, etc. 475,092 320,984

Kao An Section No. 591-1 370,019 139,576

Hsinfuliao Section No. 1096, No. 1098, NO.1097, No. 1108, etc. 315,167 184,609

Jin Shuei Dist. Wu Show Section No. 1037, No. 1038, No. 1040, etc. 206,877 206,249

Others 7 7

3,487,519$ 2,604,119$

Tainan branch December 31, 2017 December 31, 2016

Prince Feng Yun (Hsin Ying Section No. 841-9) 897,501$ 665,265$

Jin Hua Section No. 1361 688,235 688,200

Prince Jum Fon Huei (Yu Ming Section No. 681-8) 585,323 375,447

Chin An Section No. 296, No. 297, etc. 239,505 156,124

Shan Chia Section No. 939, etc. 154,181 152,384

Others 3,738 3,525

2,568,483$ 2,040,945$

~40~




Ling Ko Dist. Li Shing Section No. 1209, etc. 1,675,282$ 1,515,855$

W Prince (New Taipei City Shing Jheng Section No.883, etc.) 1,035,789 950,762

Bali Dist Chung Chang Section No.2222 and 211-1, etc. 688,073 686,428

Prince Hua Wei (Shilin Dist. Zhishan Section No. 602, etc.) 591,174 269,237

Jhong Li City Shuang Ling Section No. 1449, etc. 590,070 447,678

Prince Shin Yi (XinZhuang Fuduxin) - 2,022,377

Prince Fu III (Taoyuan Qing Sun Section No. 446) - 1,438,248

4,580,388$ 7,330,585$


Prince Yu Ding (Hui Li Section No. 195) 1,067,003$ 855,004$

Ping Hsin Section No. 694, etc. 1,053,354 897,690

Chaotun Section No. 755, etc. 475,092 320,984

Kao An Section No. 591-1 370,019 139,576

Hsinfuliao Section No. 1096, No. 1098, NO.1097, No. 1108, etc. 315,167 184,609

Jin Shuei Dist. Wu Show Section No. 1037, No. 1038, No. 1040, etc. 206,877 206,249

Others 7 7

3,487,519$ 2,604,119$


Prince Feng Yun (Hsin Ying Section No. 841-9) 897,501$ 665,265$

Jin Hua Section No. 1361 688,235 688,200

Prince Jum Fon Huei (Yu Ming Section No. 681-8) 585,323 375,447

Chin An Section No. 296, No. 297, etc. 239,505 156,124

Shan Chia Section No. 939, etc. 154,181 152,384

Others 3,738 3,525

2,568,483$ 2,040,945$

~41~

(b)Land held for construction site

Kaohsiung branch December 31, 2017 December 31, 2016

Prince Yun (Nanzi subsection No. 158 ) 680,998$ 125,629$ Prince Cloud C apartment (Ren Wu New Hougang West Section No. 69-148 etc.)

504,977 161,013

Prince Cloud B (Ren Wu New Hougang West Section No .42, etc.) 379,133 379,133

Ren Wu New Hougang West Section No. 88 experimental house 72,929 72,929

Prince Cloud C townhouse (Ren Wu New Hougang West Section No .69, etc. ) - 265,807

Others 348 4

1,638,385$ 1,004,515$

Total buildings and land in progress $ 12,274,775 $ 12,980,164


Zhong Li Pu Ren Lot No. 720, etc. 140,156$ 140,156$

Others 5,978 5,978

146,134$ 146,134$


Song Quan Lot No. 164 etc. 175,661$ 175,661$

Wu Feng Lot No. 365~855 etc. 137,697 176,296

Tu Ku Section No. 9-7, etc. 55,167 55,167

Song Chang Lot No. 577 etc. 19,912 19,912

Hou Long Zi Section No. 133-004 19,513 19,513

Xi Zhou Lot No. 112-54 etc. 11,941 11,941

Others 18,780 18,780

438,671$ 477,270$


Shan Zhong Lot No. 1468, 1475 & 1476 etc. 234,699$ 234,699$

Xue Zhong Lot No. 679, etc. 50,798 50,798

Chin An Section No. 294. 49,640 -

Yong Kang Ding An Lot No. 879, etc. 28,610 28,610

Bei An Section No. 54-3, etc. 15,344 15,344

Chin An Section No. 373~377 15,139 15,139

Bao An Lot No. 882, etc. 10,325 10,325

Others 14,550 14,550

$ 419,105 $ 369,465

VI


VI



(b) Land held for construction site

~41~



Prince Yun (Nanzi subsection No. 158 ) 680,998$ 125,629$ Prince Cloud C apartment (Ren Wu New Hougang West Section No. 69-148 etc.)

504,977 161,013

Prince Cloud B (Ren Wu New Hougang West Section No .42, etc.) 379,133 379,133

Ren Wu New Hougang West Section No. 88 experimental house 72,929 72,929

Prince Cloud C townhouse (Ren Wu New Hougang West Section No .69, etc. ) - 265,807

Others 348 4

1,638,385$ 1,004,515$

Total buildings and land in progress $ 12,274,775 $ 12,980,164



Others 5,978 5,978

146,134$ 146,134$


Song Quan Lot No. 164 etc. 175,661$ 175,661$

Wu Feng Lot No. 365~855 etc. 137,697 176,296


Song Chang Lot No. 577 etc. 19,912 19,912

Hou Long Zi Section No. 133-004 19,513 19,513

Xi Zhou Lot No. 112-54 etc. 11,941 11,941

Others 18,780 18,780

438,671$ 477,270$


Shan Zhong Lot No. 1468, 1475 & 1476 etc. 234,699$ 234,699$


Chin An Section No. 294. 49,640 -



Chin An Section No. 373~377 15,139 15,139

Bao An Lot No. 882, etc. 10,325 10,325

Others 14,550 14,550

$ 419,105 $ 369,465

~42~

(c)Buildings and land held for sale


Ren Wu New Hougang West Section No. 53, etc. $ 968,071 $ 987,079

Ren Wu New Hougang West Section No. 30 & 52-74 407,357 407,357

Da Hua Lot No. 434 & 436 13,923 13,923

$ 1,389,351 $ 1,408,359

Total land held for construction site $ 2,393,261 $ 2,401,227


Taipei Shin Yi (Xin Zhuang Fuduxin) $ 2,012,385 $ -

Prince Fu III 1,690,994 -

Prince Fu II 110,680 287,735

Prince Dragon House III 42,432 42,432

Prince Da Din 12,446 12,446

Prince Guo Boa 5,738 5,738

Prince Tanmei - 2,270,855

Others 546 546

$ 3,875,221 $ 2,619,752


Chin Fon Gin $ 170,233 $ 403,492

Prince Fu 27,417 27,417

The Cloud Century A - 292,529

Jing Yun Sian - 13,418

Others 6,118 10,889

$ 203,768 $ 747,745


Flower Bo Five $ 968,124 $ 1,273,009

Jun Chan LV 19,725 19,725

Prince Golden Age 7,284 19,572

Tun Sha Building III 104 28,376

Others 2,188 2,188

$ 997,425 $ 1,342,870


Prince Cloud D $ 196,339 $ 222,345

Prince Cloud C townhouse 182,449

Prince Hua Yang 81,294 81,242

Prince Dai Din 9,125 9,777

$ 469,207 $ 313,364

Total buildings and land held for sale $ 5,545,621 $ 5,023,731

(c) Buildings and land held for sale

~42~





Da Hua Lot No. 434 & 436 13,923 13,923

$ 1,389,351 $ 1,408,359

Total land held for construction site $ 2,393,261 $ 2,401,227


Taipei Shin Yi (Xin Zhuang Fuduxin) $ 2,012,385 $ -


Prince Fu II 110,680 287,735





Others 546 546

$ 3,875,221 $ 2,619,752


Chin Fon Gin $ 170,233 $ 403,492

Prince Fu 27,417 27,417

The Cloud Century A - 292,529


Others 6,118 10,889

$ 203,768 $ 747,745


Flower Bo Five $ 968,124 $ 1,273,009

Jun Chan LV 19,725 19,725



Others 2,188 2,188

$ 997,425 $ 1,342,870


Prince Cloud D $ 196,339 $ 222,345

Prince Cloud C townhouse 182,449



$ 469,207 $ 313,364


(d) Prepayment for land

(e) Prepayment for buildings and land

~43~

(d)Prepayment for land

(e)Prepayment for buildings and land

(Remainder of page intentionally left blank)


Tainan branch



Taisugar Nanzi Section $ 786,213 $ 786,213

Taisugar Kao An Section 159,690 95,814

Prince Shin Yi (Xin Zhuang Fuduxin) - 72,000

945,903$ 954,027$

~43~

(d)Prepayment for land

(e)Prepayment for buildings and land

(Remainder of page intentionally left blank)


Tainan branch





Prince Shin Yi (Xin Zhuang Fuduxin) - 72,000

945,903$ 954,027$

VI


VI



E.D

isclosureofsignificantconstructions:

(a)AsofDecem

ber31,2017,significantconstructionsaresetforth

below

:

~44~

E.

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~44~

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(7) Other current assets

~45~


(8) Available-for-sale financial assets

A. The Group recognised $83,893 and $349,085 in other comprehensive loss for fair value change for

the years ended December 31, 2017 and 2016, respectively. B. Details of the Group’s available-for-sale financial assets pledged to others as collateral are provided

in Note 8. (9) Financial assets carried at cost

A. Based on the Group’s intention, its investment in President Energy Development Ltd. and President International Development Corp. should be classified as ‘available-for-sale financial assets’. However, as President Energy Development Ltd. and President International Development Corp. stocks are not traded in an active market, and no sufficient industry information of companies similar to President Energy Development Ltd. and President International Development Corp. can be obtained, the fair value of the investment in President Energy Development Ltd. and President International Development Corp. stocks cannot be measured reliably. Accordingly, the Group classified those stocks as ‘financial assets measured at cost’.

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

Items December 31, 2017 December 31, 2016Deferred sales commission 223,298$ 292,538$ Others 7,347 6,789

230,645$ 299,327$

Items December 31, 2017 December 31, 2016Non-current items: Listed ( TSE and OTC ) stocks 116,176$ 116,685$ Unlisted stocks 44,601 44,603

160,777 161,288 Valuation adjustment of available- for-sale financial assets

1,133,158$ 1,212,673$ 972,381 1,051,385

Items December 31, 2017 December 31, 2016Non-current items: Unlisted stocks $ 855,030 $ 877,800

(8) Available-for-salefinancialassets

~45~









230,645$ 299,327$



1,133,158$ 1,212,673$ 972,381 1,051,385


A. The Group recognised $83,893 and $349,085 in other comprehensive loss for fair value change for the years ended December 31, 2017 and 2016, respectively.

B. Detailsof theGroup’savailable-for-salefinancialassetspledgedtoothersascollateralareprovided in Note 8.

(9) Financial assets carried at cost

~45~









230,645$ 299,327$



1,133,158$ 1,212,673$ 972,381 1,051,385


A. Based on the Group’s intention, its investment in President Energy Development Ltd. and President International Development Corp. should be classified as ‘available-for-sale financialassets’.However,asPresidentEnergyDevelopmentLtd.andPresidentInternationalDevelopment Corp. stocks are not traded in an active market, and no sufficient industry information of companies similar to President Energy Development Ltd. and President International Development Corp. can be obtained, the fair value of the investment in President Energy Development Ltd. and President International Development Corp. stocks cannot be measured reliably. Accordingly, the Group classified those stocks as ‘financial assets measured at cost’.

B. Detailsof theGroup’sfinancialassetsmeasuredatcostpledged toothersascollateralareprovided in Note 8.

VI


VI



(10) Investments accounted for under equity method

~46~


Note : As of December 31, 2017 and 2016, the book value of the Company’s investment in Amida

Truslink Assets Management Co., Ltd. was a credit balance thus, the investment was transferred to other non-current liabilities which amounted to $138,830 and $137,346, respectively.

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

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

Balance sheet

Carrying Percentage of Carrying Percentage of

Name of associates amount ownership amount ownership

Geng-Ding Co., Ltd. $ 299,577 30.00% $ 320,555 30.00%

Uni-President Development Corp. 1,126,160 30.00% 1,229,770 30.00%

PPG Investment Inc. 5,451 27.30% 12,974 27.30%

Queen Holdings Ltd. 369,575 27.30% 390,856 27.30%

Ming-Da Enterprise Co., Ltd. 29,483 20.00% 75,341 20.00%

Amida Truslink Assets Management Co., Ltd. (Note) - 45.21% - 45.21%

$ 1,830,246 $ 2,029,496


Principal place Nature of Method ofCompany name of business relationship measurement

Uni President Taiwan The Group holds Equity method

Development Corp. more than 20% of

voting rights


Current assets 208,093$ 265,427$

Non-current assets 8,703,214 9,127,538

Current liabilities 3,432,033)( 3,319,592)(

Non-current liabilities 1,725,406)( 1,974,139)(

Total net assets 3,753,868$ 4,099,234$

Share in associate's net assets 1,126,160$ 1,229,770$

Uni President Development Corp.

~46~






Balance sheet



Geng-Ding Co., Ltd. $ 299,577 30.00% $ 320,555 30.00%






$ 1,830,246 $ 2,029,496





voting rights






Total net assets 3,753,868$ 4,099,234$



Note 1: As of December 31, 2017 and 2016, the book value of the Company’s investment in Amida Truslink Assets Management Co., Ltd. was a credit balance thus, the investment was transferred to other non-current liabilities which amounted to $138,830 and $137,346, respectively.

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


Balance sheet

~46~






Balance sheet



Geng-Ding Co., Ltd. $ 299,577 30.00% $ 320,555 30.00%






$ 1,830,246 $ 2,029,496





voting rights






Total net assets 3,753,868$ 4,099,234$



Statement of comprehensive income

~47~

Statements of comprehensive income

C. The carrying amount of the Group’s interests in all individually immaterial associates and the

Group’s share of the operating results are summarized below:

As of December 31, 2017 and 2016, the carrying amount of the Group’s individually immaterial associates amounted to $565,256 and $662,380, respectively.

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

E. Share of profit of associates and joint ventures accounted for using equity method was $56,018 and $119,118 for the years ended December 31, 2017 and 2016, respectively.

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

(11) Property, plant and equipment A. Details of book values are as follows:

2017 2016

Revenue 949,102$ 981,167$

Profit for the period from continuing operations 111,834$ 143,048$

Total comprehensive income 111,834$ 143,048$



2017 2016Income for the period from continuing operations 47,390$ 310,213$ Other comprehensive (loss) income, net of tax 1,363)( 1,396 Total comprehensive income 46,027$ 311,609$


December 31, 2017 December 31, 2016Land $ 2,865,610 $ 2,865,610Buildings 3,148,409 3,212,229Machinery and equipment 6,304 6,937Computer and communication equipment 6,866 10,474Transportation equipment 4,905 3,766Office equipment 303,233 320,805Leasehold improvements 22,996 24,323Other equipment 57,385 61,353Construction in progress and equipment under acceptance 7,178 8,057

$ 6,422,886 $ 6,513,554

~47~









2017 2016

Revenue 949,102$ 981,167$








$ 6,422,886 $ 6,513,554

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


D. The Group’s investments had no quoted market price.E. Shareofprofitofassociatesandjointventuresaccountedforusingequitymethodwas$56,018

and $119,118 for the years ended December 31, 2017 and 2016, respectively.F. Details of the Group’s investments accounted for under equity method pledged to others as

collateral are provided in Note 8(11) Property, plant and equipment

A. Details of book values are as follows:

~47~









2017 2016

Revenue 949,102$ 981,167$








$ 6,422,886 $ 6,513,554

VI


VI



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

~48~

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

Opening net Closing netCost book amount Additions Disposals Reclassifications book amount

Land 2,865,610$ -$ -$ -$ 2,865,610$ Buildings and structures 4,456,675 24,077 13,110)( 87,287 4,554,929 Machinery and equipment 14,476 838 - - 15,314 Computer and communication equipment 62,147 1,116 1,654)( - 61,609

Transportation equipment 11,803 3,503 1,611)( - 13,695 Office equipment 814,179 28,003 35,849)( 35,555 841,888 Leasehold improvements 73,533 - - - 73,533 Other equipment 91,943 3,831 2,820)( 126)( 92,828 Construction in progress and equipment under acceptance 8,057 122,019 - 122,898)( 7,178

$ 8,398,423 $ 183,387 ($ 55,044) 182)($ $ 8,526,584

Year ended December 31, 2017


Land 2,858,947$ 6,663$ -$ -$ 2,865,610$ Buildings and structures 4,445,929 10,453 821)( 1,114 4,456,675 Machinery and equipment 14,476 - - - 14,476 Computer and communication equipment 61,662 485 - - 62,147

Transportation equipment 12,657 146 1,000)( - 11,803 Office equipment 800,944 32,312 23,721)( 4,644 814,179 Leasehold improvements 73,533 - - - 73,533 Other equipment 91,935 2,613 2,570)( 35)( 91,943 Construction in progress and prepayments for equipment 5,296 8,807 - 6,046)( 8,057

8,365,379$ 61,479$ 28,112)($ 323)($ 8,398,423$


Opening net Closing net

Accumulated depreciation book amount Additions Disposals Reclassifications book amount

Buildings and structures $ 1,244,446 $ 173,246 ($ 11,172) $ - $ 1,406,520

Machinery and equipment 7,539 1,471 - - 9,010 Computer and communication equipment 51,673 4,700 ( 1,630) - 54,743

Transportation equipment 8,037 1,142 ( 389) - 8,790

Office equipment 493,374 80,057 ( 34,776) - 538,655

Leasehold improvements 49,210 1,327 - - 50,537

Other equipment 30,590 4,964 111)( - 35,443

$ 1,884,869 $ 266,907 48,078)($ -$ $ 2,103,698


~49~

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

in Note 8. (12) Investment property


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



Buildings and structures $ 1,054,500 $ 190,668 ($ 722) $ - $ 1,244,446Machinery and equipment 6,103 1,436 - - 7,539 Computer and communication equipment 46,057 5,616 - - 51,673

Transportation equipment 7,869 974 ( 806) - 8,037



Other equipment 25,596 5,084 90)( - 30,590

$ 1,622,447 $ 287,307 24,885)($ -$ $ 1,884,869


December 31, 2017 December 31, 2016Land 265,550$ $ 265,550Leased assets-land 2,592,078 2,592,149Leased assets-buildings 3,010,257 3,099,594

5,867,885$ $ 5,957,293


Cost book amount Additions Disposals Reclassifications book amount

Land $ 265,550 $ - $ - $ - $ 265,550

Leased assets-land 2,592,149 - ( 71) - 2,592,078

Leased assets-buildings 3,928,100 - 5,440)( - 3,922,660

$ 6,785,799 -$ 5,511)($ -$ $ 6,780,288




Land $ 265,550 $ - $ - $ - $ 265,550



$ 6,790,254 -$ 4,455)($ -$ $ 6,785,799




Leased assets-buildings $ 828,506 $ 84,994 1,097)($ -$ $ 912,403


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

(12) Investment propertyA. Details of book values are as follows:

~49~











Other equipment 25,596 5,084 90)( - 30,590

$ 1,622,447 $ 287,307 24,885)($ -$ $ 1,884,869



5,867,885$ $ 5,957,293



Land $ 265,550 $ - $ - $ - $ 265,550



$ 6,785,799 -$ 5,511)($ -$ $ 6,780,288




Land $ 265,550 $ - $ - $ - $ 265,550



$ 6,790,254 -$ 4,455)($ -$ $ 6,785,799






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

~49~











Other equipment 25,596 5,084 90)( - 30,590

$ 1,622,447 $ 287,307 24,885)($ -$ $ 1,884,869



5,867,885$ $ 5,957,293



Land $ 265,550 $ - $ - $ - $ 265,550



$ 6,785,799 -$ 5,511)($ -$ $ 6,780,288




Land $ 265,550 $ - $ - $ - $ 265,550



$ 6,790,254 -$ 4,455)($ -$ $ 6,785,799






~50~

C. Rental income from the lease of the investment property and direct operating expenses arising

from the investment property are shown below:

D. As of December 31, 2017 and 2016, the fair value of the investment property held by the Group

was $12,704,664 and $12,870,800, respectively. The Group management estimated the fair value based on market evidence on transaction price of similar property and assessed value.

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

(13) Intangible assets A. Details of book values are as follows:






2017 2016

Rental revenue from the lease of the investment property 313,196$ 294,709$

Direct operating expenses arising from the investment property that generated rental income in the period 161,710$ 156,323$ Direct operating expenses arising from the investment property that did not generate rental income in the period -$ -$



Service concession 2,177,934$ 2,239,187$

Software 1,539 1,729

Trademarks and licences - -

2,179,473$ 2,240,916$


Service concession 2,868,372$ -$ -$ -$ 2,868,372$

Software 4,278 864 43)( - 5,099

Trademarks and licences 3,139 - - - 3,139 $ 2,875,789 $ 864 43)($ -$ $ 2,876,610




Software 3,762 516 - - 4,278

Trademarks and licences 3,139 - - - 3,139 $ 2,875,273 $ 516 -$ -$ $ 2,875,789


VI


VI



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

~50~












2017 2016








2,179,473$ 2,240,916$



Software 4,278 864 43)( - 5,099





Software 3,762 516 - - 4,278



D. As of December 31, 2017 and 2016, the fair value of the investment property held by the Group was $12,704,664 and $12,870,800, respectively. The Group management estimated the fair value based on market evidence on transaction price of similar property and assessed value.


(13) Intangible assetsA. Details of book values are as follows:

~50~












2017 2016








2,179,473$ 2,240,916$



Software 4,278 864 43)( - 5,099





Software 3,762 516 - - 4,278




~50~












2017 2016








2,179,473$ 2,240,916$



Software 4,278 864 43)( - 5,099





Software 3,762 516 - - 4,278



~51~

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

(14) Short-term borrowings

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

(15) Short-term notes and bills payable

A. The above commercial papers were issued by banks and bills financial institutions.B. For details of pledged assets, please refer to Note 8.

(16) Receipts in advance

Opening net Closing netAccumulated Amortization book amount Additions Disposals Reclassifications book amount

Service concession 629,185$ 61,253$ -$ -$ 690,438$

Software 2,549 1,054 43)( - 3,560

Trademarks and licences 3,139 - - - 3,139 $ 634,873 $ 62,307 43)($ -$ $ 697,137




Software 1,892 657 - - 2,549

Trademarks and licences 2,925 214 - - 3,139 $ 572,750 $ 62,123 -$ -$ $ 634,873


2017 2016Operating costs 61,253$ 61,252$ Administrative expenses 1,054 871

62,307$ 62,123$


December 31, 2017 December 31, 2016Unsecured bank borrowings 860,000$ 2,135,659$ Secured bank borrowings - 140,000

860,000$ 2,275,659$ Interest rate range 1.53%~1.85% 1.53%~2.70%

December 31, 2017 December 31, 2016Commercial papers 1,055,900$ 490,000$ Less: Unamortized discount 342)( 306)(

1,055,558$ 489,694$

Interest rate range 0.48%~1.67% 0.58%~1.59%

Items December 31, 2017 December 31, 2016Advance real estate receipts 1,014,918$ 1,123,109$ Advance rent 117,588 132,495 Other advance receipts 131,818 131,851

1,264,324$ 1,387,455$


~51~









Software 2,549 1,054 43)( - 3,560





Software 1,892 657 - - 2,549




62,307$ 62,123$





1,055,558$ 489,694$



1,264,324$ 1,387,455$


For details of pledged assets, please refer to Note 8.(15) Short-term notes and bills payable

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

~51~









Software 2,549 1,054 43)( - 3,560





Software 1,892 657 - - 2,549




62,307$ 62,123$





1,055,558$ 489,694$



1,264,324$ 1,387,455$

~51~









Software 2,549 1,054 43)( - 3,560





Software 1,892 657 - - 2,549




62,307$ 62,123$





1,055,558$ 489,694$



1,264,324$ 1,387,455$

VI


VI




(17) Bonds payable

A. TheGroupissuedsecuredordinarybondspayableinJuly2012.Thesignificanttermsofthebonds are as follows:(a) Total issue amount: $2,000,000(b) Issue price: At par value of $100 per bond(c) Coupon rate: 1.33%(d) Terms of interest repayment: The bonds interest is calculated on simple rate every year

starting July 2012 based on the coupon rate.(e) Repayment term: The bonds are repaid upon the maturity of the bonds.(f) Period: 5 years, from July 12, 2012 to July 12, 2017(g) The way of security: The bonds are secured by Bank of Taiwan.(h) Guarantee Bank: The bonds are guaranteed by Mega International Commercial Bank.

B. TheGroupissuedsecuredordinarybondspayableinNovember2013.Thesignificanttermsof the bonds are as follows:(a) Total issue amount: $2,500,000(b) Issue price: At par value of $100 per bond(c) Coupon rate: 1.55%(d) Terms of interest repayment: The bonds interest is calculated on simple rate every year

starting November 2013 based on the coupon rate.(e) Repayment term: The bonds are repaid upon the maturity of the bonds.(f) Period: 5 years, from November 21, 2013 to November 21, 2018(g) The way of security: $1.5 billion and $1 billion secured by Bank of Taiwan and

Agricultural Bank of Taiwan, respectively.(h) Guarantee Bank: The bonds are guaranteed by Taipei Fubon Commercial Bank.

B. TheGroupissuedsecuredordinarybondspayableinJune2017.Thesignificanttermsofthebonds are as follows:(a) Total issue amount: $2,000,000(b) Issue price: At par value of $1,000 per bond(c) Coupon rate: 1.05%

~51~









Software 2,549 1,054 43)( - 3,560





Software 1,892 657 - - 2,549




62,307$ 62,123$





1,055,558$ 489,694$



1,264,324$ 1,387,455$

~52~

(17) Bonds payable

A. The Group issued secured ordinary bonds payable in July 2012. The significant terms of the bonds

are as follows:

(a)Total issue amount: $2,000,000

(b)Issue price: At par value of $100 per bond

(c)Coupon rate: 1.33%

(d)Terms of interest repayment: The bonds interest is calculated on simple rate every year starting July 2012 based on the coupon rate.

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

(f)Period: 5 years, from July 12, 2012 to July 12, 2017

(g)The way of security: The bonds are secured by Bank of Taiwan.

(h)Guarantee Bank: The bonds are guaranteed by Mega International Commercial Bank.

B.The Group issued secured ordinary bonds payable in November 2013. The significant terms of the bonds are as follows:




(d)Terms of interest repayment: The bonds interest is calculated on simple rate every year starting November 2013 based on the coupon rate.


(f)Period: 5 years, from November 21, 2013 to November 21, 2018

(g)The way of security: $1.5 billion and $1 billion secured by Bank of Taiwan and Agricultural Bank of Taiwan, respectively.

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


2012 1st secured ordinary bonds payable $ - $ 2,000,000

2013 1st secured ordinary bonds payable 2,500,000 2,500,000 2017 1st secured ordinary bonds payable 2,000,000 -

4,500,000 4,500,000

Less: Expiring within one year 2,500,000)( 2,000,000)( 2,000,000$ 2,500,000$

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

(e) Repayment term: The bonds are repaid upon the maturity of the bonds.(f) Period: 5 years, from June 19, 2017 to June 19, 2022.(g) The way of security:Secured by Bank of Taiwan.(h) Guarantee Bank: The bonds are guaranteed by Taipei Fubon Commercial Bank.

(18) Long-term borrowings

~53~

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


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


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


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

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



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

B. The Group and financial institutions entered into a contract for a syndicated borrowing. The Group shall redraw the revolving credit line to issue abovementioned commercial paper during the credit term. For the related information, please refer to Note 9(9) to 9(11).

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


Secured bank borrowings $ 9,850,688 $ 8,682,632

Unsecured bank borrowings 1,975,000 100,000

11,825,688 8,782,632

Less: Current portion 6,188,322)( 1,322,904)(

5,637,366 7,459,728

Commerical papers 960,000 2,339,600

Less: Unamortized discount 1,213)( 2,260)(

958,787 2,337,340

Total 6,596,153$ 9,797,068$

Range of maturity dates 2018.07.27~2027.11.02 2017.02.08~2027.11.02

Range of maturity rates 0.58%~2.47% 0.55%~2.70%

A. Fordetails of restrictive covenants, please refer to Note 9.B. TheGroupandfinancial institutionsenteredintoacontractforasyndicatedborrowing.

The Group shall redraw the revolving credit line to issue abovementioned commercial paper during the credit term. For the related information, please refer to Note 9(9) to 9(11).

C. For details of pledged assets, please refer to Note 8.(19) Provisions-replacement cost

~54~

(19) Provisions-replacement cost

(20) Pension

A.(a)The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contributions to cover the deficit by next March.

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

2017 2016

At January 1 75,207$ 84,517$

Additions 63,468 33,470

Used 39,136)( 42,780)(

At December 31 99,539$ 75,207$


Present value of defined benefit

obligation 192,667)($ 202,924)($

Fair value of plan assets 99,893 111,815

Net defined benefit liability 92,774)($ 91,109)($

(20) PensionA. (a) The Company and its domestic subsidiaries have a defined benefit pension plan in

accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accruedforeachyearofservicefor thefirst15yearsandoneunit foreachadditionalyear thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months

VI


VI



prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contributions to coverthedeficitbynextMarch.


~54~

(19) Provisions-replacement cost

(20) Pension

A.(a)The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contributions to cover the deficit by next March.


2017 2016

At January 1 75,207$ 84,517$

Additions 63,468 33,470

Used 39,136)( 42,780)(

At December 31 99,539$ 75,207$


Present value of defined benefit

obligation 192,667)($ 202,924)($



(c) Changesinnetdefinedbenefitliabilityareasfollows:

~55~

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

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

Present value of

defined benefit Fair value of Net definedobligation plan assets benefit liability


At January 1 202,924)($ 111,815$ 91,109)($

Current service cost 1,098)( - 1,098)(

Interest (expense) income 2,779)( 1,428 1,351)(

206,801)( 113,243 93,558)(

Remeasurement:

Change in financial assumptions 6,379)( - 6,379)(

Experience adjustments 6,703)( 787)( 7,490)(

13,082)( 787)( 13,869)(

Pension fund contribution - 10,194 10,194

Paid pension 27,216 22,757)( 4,459

At December 31 192,667)($ 99,893$ 92,774)($

Present value of



At January 1 199,398)($ 58,323$ 141,075)($

Current service cost 964)( - 964)(

Interest (expense) income 3,376)( 558 2,818)(

203,738)( 58,881 144,857)(

Remeasurement:



7,655)( 457)( 8,112)(


Paid pension 8,469 3,681)( 4,788

At December 31 202,924)($ 111,815$ 91,109)($

2017 2016Discount rate 0.90%~1.10% 1.20%~1.40%Future salary increases 1.50%~2.00% 1.50%~2.00%


~55~



Present value of



At January 1 202,924)($ 111,815$ 91,109)($



206,801)( 113,243 93,558)(

Remeasurement:



13,082)( 787)( 13,869)(


Paid pension 27,216 22,757)( 4,459

At December 31 192,667)($ 99,893$ 92,774)($

Present value of



At January 1 199,398)($ 58,323$ 141,075)($



203,738)( 58,881 144,857)(

Remeasurement:



7,655)( 457)( 8,112)(


Paid pension 8,469 3,681)( 4,788

At December 31 202,924)($ 111,815$ 91,109)($


Years ended December 31, (d) The principal actuarial assumptions used were as follows:

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

Becausethemainactuarialassumptionchanged,thepresentvalueofdefinedbenefitobligation is affected. The analysis was as follows:

~55~



Present value of



At January 1 202,924)($ 111,815$ 91,109)($



206,801)( 113,243 93,558)(

Remeasurement:



13,082)( 787)( 13,869)(


Paid pension 27,216 22,757)( 4,459

At December 31 192,667)($ 99,893$ 92,774)($

Present value of



At January 1 199,398)($ 58,323$ 141,075)($



203,738)( 58,881 144,857)(

Remeasurement:



7,655)( 457)( 8,112)(


Paid pension 8,469 3,681)( 4,788

At December 31 202,924)($ 111,815$ 91,109)($



~56~


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

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

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

(e) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2018 amounts to $4,517.

(f) As of December 31, 2017, the weighted average duration of that retirement plan is 8~11 years.

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

(b)The pension costs under the defined contribution pension plans of the Company and its domestic subsidiaries for the years ended December 31, 2017 and 2016, were $67,373 and $62,768, respectively.

(21) Share capital A. Movements in the number of the Company’s ordinary shares outstanding are as follows:

(Units: in thousand shares)

Increase Decrease Increase Decrease0.25% 0.25% 0.25% 0.25%

December 31, 2017

Effect on present value of

defined benefit obligation 4,478)($ 4,574$ 4,114$ 4,003)($

December 31, 2016

Effect on present value of

defined benefit obligation 4,604)($ 4,687$ 4,238$ 4,120)($

Discount rate Future salary increases

The sensitivity analysis above is based on other conditions that are unchanged but only one assumption is changed. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

VI


VI



(e) ExpectedcontributionstothedefinedbenefitpensionplansoftheGroupfortheyearending December 31, 2018 amounts to $4,517.

(f) As of December 31, 2017, the weighted average duration of that retirement plan is 8~11 years.

B. (a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a definedcontributionpensionplan(the“NewPlan”)undertheLaborPensionAct(the“Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accountsattheBureauofLaborInsurance.Thebenefitsaccruedarepaidmonthlyorinlump sum upon termination of employment.

(b) ThepensioncostsunderthedefinedcontributionpensionplansoftheCompanyanditsdomestic subsidiaries for the years ended December 31, 2017 and 2016, were $67,373 and $62,768, respectively.

(21) Share capitalA. Movements in the number of the Company’s ordinary shares outstanding are as follows: (Units: in thousand shares)

~57~

B. As of December 31, 2017, the Company’s authorized capital was $20,000,000, and the paid-in

capital was $16,233,261 with a par value of NT$10 per share, consisting of 1,623,326 thousand shares of ordinary stock.

C. As of December 31, 2017 and 2016, the Company’s subsidiary, Prince Apartment Management Maintain Co., Ltd., held the Company’s stocks to maintain equity interest in the Company. The amount of shares held by the subsidiary was all 655 thousand shares, the average par value was all NT$1.53 per share, and the fair value was NT$12.05 and NT$10.50 per share, respectively.

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

(23) Retained earnings

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

2017 2016Shares at January 1 and December 31 1,622,671 1,622,671

Share Treasury share2017 premium transaction Others Total

At January 1, 2017 (At December 31, 2017)

1,375,442$ 877,839$ 7,232$ 2,260,513$



1,375,442$ 877,839$ 7,232$ 2,260,513$

Capital surplus

Capital surplus

B. As of December 31, 2017, the Company’s authorized capital was $20,000,000, and the paid-in capital was $16,233,261 with a par value of NT$10 per share, consisting of 1,623,326 thousand shares of ordinary stock.


(22) Capital surplusPursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of parvalueonissuanceofcommonstocksanddonationscanbeusedtocoveraccumulateddeficitor to issue new stocks or cash to shareholders in proportion to their share ownership, provided thattheCompanyhasnoaccumulateddeficit.Further,theR.O.C.SecuritiesandExchangeLawrequires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficitunlessthelegalreserveisinsufficient.

~57~

B. As of December 31, 2017, the Company’s authorized capital was $20,000,000, and the paid-in

capital was $16,233,261 with a par value of NT$10 per share, consisting of 1,623,326 thousand shares of ordinary stock.




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




1,375,442$ 877,839$ 7,232$ 2,260,513$



1,375,442$ 877,839$ 7,232$ 2,260,513$

Capital surplus

Capital surplus

(23) Retained earningsA. In accordance with the Company’s Articles of Incorporation, the Company will take into

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

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

C. The Company recognised dividends distributed to owners amounting to $1,623,326 ($1.0 (in dollars) per share) and $1,785,659 ($1.1 (in dollars) per share) for the years ended December 31, 2017 and 2016, respectively. On March 20, 2018, the Board of Directors proposed that total dividends for the distribution of earnings for 2017 was $1,055,162 with $0.65 (in dollars) per share.

(24) Other equity items

~58~

the appropriation of earnings is proposed by the Board of Directors and resolved by the shareholders.


C. The Company recognised dividends distributed to owners amounting to $1,623,326 ($1.0 (in dollars) per share) and $1,785,659 ($1.1 (in dollars) per share) for the years ended December 31, 2017 and 2016, respectively. On March 20, 2018, the Board of Directors proposed that total dividends for the distribution of earnings for 2017 was $1,055,162 with $0.65 (in dollars) per share.


(25) Maturity analysis of assets and liabilities

The construction related assets and liabilities are classified as current and non-current based on the

operating cycle. Related recognised amount expected to be recovered or repaid within or after 12

months from the balance sheet date is as follows:

Available-for-sale Currencyinvestment translation Total

At January 1, 2017 1,058,318$ 48)($ 1,058,270$

Available-for-sale investment:

-Loss on fair value 83,893)( - 83,893)(

At December 31, 2017 974,425$ 48)($ 974,377$


At January 1, 2016 1,407,403$ 1,706$ 1,409,109$

Available-for-sale investment:

-Loss on fair value 349,085)( - 349,085)(

Currency translation differences:

-Group - 1,754)( 1,754)(

At December 31, 2016 1,058,318$ 48)($ 1,058,270$

VI


VI



(25) Maturity analysis of assets and liabilitiesTheconstructionrelatedassetsandliabilitiesareclassifiedascurrentandnon-currentbasedonthe operating cycle. Related recognised amount expected to be recovered or repaid within or after 12 months from the balance sheet date is as follows:

~59~

(26) Operating revenue

Within 12 months Over 12 months Total

December 31, 2017Assets Notes receivable, net 11,438$ 55,851$ 67,289$ Accounts receivable, net(including related parties) 440,959 96,039 536,998 Inventories 9,709,478 12,316,872 22,026,350 Construction contract receivable 228,580 141,997 370,577

10,390,455$ 12,610,759$ 23,001,214$

Liabilities Notes payable 5,793$ -$ 5,793$ Accounts payable 1,214,597 956,900 2,171,497 Construction contract payable 2,156 8,046 10,202 Long-term notes and accounts payable - 11,456 11,456

1,222,546$ 976,402$ 2,198,948$


December 31, 2016Assets Notes receivable, net 26,538$ 16,930$ 43,468$ Accounts receivable, net(including related parties) 380,354 316,679 697,033 Inventories 8,681,727 13,548,668 22,230,395 Construction contract receivable 476,931 581,819 1,058,750

9,565,550$ 14,464,096$ 24,029,646$

Liabilities Notes payable 32,236$ -$ 32,236$ Accounts payable 1,325,909 1,471,736 2,797,645 Construction contract payable 81,924 141,158 223,082 Long-term notes and accounts payable - 11,456 11,456

1,440,069$ 1,624,350$ 3,064,419$

2017 2016

Home sales revenue 5,741,984$ 5,274,930$ Hospitality services revenue 2,721,598 2,856,156 Service revenue 593,671 547,080 Construction contract revenues 1,332,679 2,781,948 Service concession revenue -Operating service revenue 367,083 372,719 Other operating revenue 231,965 227,469

10,988,980$ 12,060,302$

Years ended December 31,(26) Operating revenue

~59~



December 31, 2017Assets Notes receivable, net 11,438$ 55,851$ 67,289$ Accounts receivable, net(including related parties) 440,959 96,039 536,998 Inventories 9,709,478 12,316,872 22,026,350 Construction contract receivable 228,580 141,997 370,577

10,390,455$ 12,610,759$ 23,001,214$

Liabilities Notes payable 5,793$ -$ 5,793$ Accounts payable 1,214,597 956,900 2,171,497 Construction contract payable 2,156 8,046 10,202 Long-term notes and accounts payable - 11,456 11,456

1,222,546$ 976,402$ 2,198,948$


December 31, 2016Assets Notes receivable, net 26,538$ 16,930$ 43,468$ Accounts receivable, net(including related parties) 380,354 316,679 697,033 Inventories 8,681,727 13,548,668 22,230,395 Construction contract receivable 476,931 581,819 1,058,750

9,565,550$ 14,464,096$ 24,029,646$

Liabilities Notes payable 32,236$ -$ 32,236$ Accounts payable 1,325,909 1,471,736 2,797,645 Construction contract payable 81,924 141,158 223,082 Long-term notes and accounts payable - 11,456 11,456

1,440,069$ 1,624,350$ 3,064,419$

2017 2016

Home sales revenue 5,741,984$ 5,274,930$ Hospitality services revenue 2,721,598 2,856,156 Service revenue 593,671 547,080 Construction contract revenues 1,332,679 2,781,948 Service concession revenue -Operating service revenue 367,083 372,719 Other operating revenue 231,965 227,469

10,988,980$ 12,060,302$


(27) Other income

(28) Other gains and losses

~60~

(27) Other income


(29) Finance costs

(30) Expenses by nature

2017 2016

Interest income 8,161$ 10,033$ Dividend income 103,288 118,461 Others 107,909 172,642

219,358$ 301,136$


2017 2016Net currency exchange loss 36,296)($ 6,650)($ Net gain (loss) on financial assets at fair value through profit or loss 34,635 15,349)( Others 159,128 236,775

157,467$ 214,776$


2017 2016Interest expense: Bank borrowings 128,713$ 164,752$ Commercial paper 11,529 16,049 Ordinary bonds 28,242 59,596 Others 1,422 1,482 Other finance expenses 1,200 1,200

171,106$ 243,079$


Operating costs Operating expenses TotalEmployee benefit expense Wages and salaries 877,762$ 700,855$ 1,578,617$ Labor and health insurance fees 77,929 62,108 140,037 Pension costs 39,640 30,182 69,822 Other employee benefit expense 12,626 33,993 46,619

1,007,957$ 827,138$ 1,835,095$

Depreciation charges 84,994$ 266,907$ 351,901$

Amortization charges 61,253$ 1,054$ 62,307$


~60~

(27) Other income


(29) Finance costs


2017 2016


219,358$ 301,136$



157,467$ 214,776$



171,106$ 243,079$



1,007,957$ 827,138$ 1,835,095$




(29) Finance costs

~60~

(27) Other income


(29) Finance costs


2017 2016


219,358$ 301,136$



157,467$ 214,776$



171,106$ 243,079$



1,007,957$ 827,138$ 1,835,095$



Year ended December 31, 2017(30) Expenses by nature

~60~

(27) Other income


(29) Finance costs


2017 2016


219,358$ 301,136$



157,467$ 214,776$



171,106$ 243,079$



1,007,957$ 827,138$ 1,835,095$




VI


VI



~61~

A. According to the Articles of Incorporation of the Company, when distributing earnings, the

Company shall distribute compensation to the employees and pay remuneration to the directors that account for at least 2% and no higher than 3%, respectively, of distributable profit of the current period. If a company has accumulated deficit, earnings should be channeled to cover losses. Employees’ compensation can be distributed in the form of shares or in cash. Qualified employees, including the employees of subsidiaries of the company meeting certain specific requirements, are entitled to receive aforementioned stock or cash. Abovementioned distributable profit of the current period refers to the pre-tax profit before deduction of employees’ compensation and directors’ remuneration.

B. For the years ended December 31, 2017 and 2016, employees’ compensation was accrued at $128,682 and $185,821, respectively; while directors’ remuneration was accrued at $43,779 and $63,218, respectively. The aforementioned amounts were recognised in salary expenses. The employees’ compensation and directors’ remuneration were accrued based on the percentage as prescribed in the Company’s Articles of Incorporation and distributable profit of current period for the year ended December 31, 2017. The distributed amounts resolved by the Board of Directors were in agreement with the accrued amounts. The employees’ compensation will be distributed in the form of cash. Employees’ compensation and directors’ remuneration of 2016 as resolved at the meeting of Board of Directors were in agreement with those amounts recognised in the 2016 financial statements. Information about employees’ compensation and directors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.


912,498$ 904,082$ 1,816,580$


Amortization charges 61,252$ 871$ 62,123$


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

Employees’ compensation can be distributed in the form of shares or in cash. Qualified employees,includingtheemployeesofsubsidiariesofthecompanymeetingcertainspecificrequirements, are entitled to receive aforementioned stock or cash.

Abovementioneddistributableprofitof thecurrentperiodrefers to thepre-taxprofitbeforededuction of employees’ compensation and directors’ remuneration.

B. For the years ended December 31, 2017 and 2016, employees’ compensation was accrued at $128,682 and $185,821, respectively; while directors’ remuneration was accrued at $43,779 and $63,218, respectively. The aforementioned amounts were recognised in salary expenses.

The employees’ compensation and directors’ remuneration were accrued based on the percentageasprescribedin theCompany’sArticlesofIncorporationanddistributableprofitof current period for the year ended December 31, 2017. The distributed amounts resolved by the Board of Directors were in agreement with the accrued amounts. The employees’ compensation will be distributed in the form of cash.

Employees’ compensation and directors’ remuneration of 2016 as resolved at the meeting of BoardofDirectorswere inagreementwith thoseamountsrecognisedin the2016financialstatements.

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

(31) Income taxA. Income tax expense (income)

(a) Components of income tax expense:

~62~

(31) Income tax A. Income tax expense (Income)


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

income is as follows:

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

2017 2016

Current tax: Current tax on profits for the period 62,199$ 256,531$ Tax on undistributed surplus earnings 2,501 27,485 Under provision of prior year's income tax 931 7,952

Land value increment tax recognised in income tax for the period 53,508 82,183 Total current tax 119,139 374,151

Deferred tax: Origination and reversal of temporary differences

44,118)( 67,682)(

Total deferred tax 44,118)( 67,682)(

Income tax expense 75,021$ 306,469$


2017 2016

Remeasurement of defined benefit plans 122$ 560)($


2017 2016

Tax calculated based on profit before tax 227,773$ 323,966$

and statutory tax rate

Effect recognised from adjustments under 195,648)( 98,349)(

tax regulations

Additional 10% tax on undistributed

earnings 2,501 27,485

Effect from investment tax credits - 24,113)(

Prior year's income tax under estimation 931 7,952

Land value increment tax 53,508 82,183

Loss carryforward 14,044)( 12,655)(



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

(c)Reconciliationbetweenincometaxexpenseandaccountingprofit:

~62~






2017 2016




44,118)( 67,682)(




2017 2016



2017 2016




tax regulations


earnings 2,501 27,485







~62~






2017 2016




44,118)( 67,682)(




2017 2016



2017 2016




tax regulations


earnings 2,501 27,485







VI


VI



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

~63~

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

Recognised in Recognised in other

January 1 profit or loss comprehensive income December 31

Deferred tax assets

Temporary difference:

Rent adjusted using the straight-line

method 102,946$ 2,840)($ -$ 100,106$

Pensions 138 244 122)( 260

Employee benefits 36 15)( - 21

Unused compensated absences 548 190 - 738

Unrealised compensation losses - 21,515 - 21,515

Allowance for bad debts - 24 - 24

Net operating loss carryforward 867 - - 867

104,535$ 19,118$ 122)($ 123,531$

Deferred tax liabilities


Provision for land revaluation

increment tax 345,839$ 25,000)($ -$ 320,839$


Recognised in Recognised in other

January 1 profit or loss comprehensive income December 31

Deferred tax assets


Rent adjusted using the straight-line

method 104,991$ 2,045)($ -$ 102,946$

Pensions 1,214 1,636)( 560 138

Employee benefits 254 218)( - 36

Unused compensated absences - 548 - 548

Net operating loss carryforward - 867 - 867

106,459$ 2,484)($ 560$ 104,535$

Deferred tax liabilities


Provision for land revaluation

increment tax 416,005$ 70,166)($ -$ 345,839$


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

~64~


D. As of December 31, 2017, the Company’s income tax returns through 2015 have been assessed

and approved by the Tax Authority

E. With the abolishment of the imputation tax system under the amendments to the Income Tax Act promulgated by the President of the Republic of China in February, 2018, the information on unappropriated retained earnings and the balance of the imputation credit account as of December 31, 2017, as well as the estimated creditable tax rate for the year ended December 31, 2017 is no longer disclosed.

Unappropriated retained earnings on December 31, 2016:

F. As of December 31, 2016, the balance of the imputation tax credit account was $83,807. The

creditable tax rate was 8.80% for the year ended December 31, 2016.

Amount filed / Unused Unrecognised deferred Usable

Year incurred assessed amount tax assets Until

In and before 2011 year ended Amount assessed 934,266$ 934,266$ 2021

December 31, 2012 year ended Amount assessed 11,475 11,475 2022



December 31, 2015 year ended Amount filed 15,065 15,065 2025



1,078,725$ 1,077,858$

December 31, 2017



In and before 2011 year ended Amount assessed 1,145,299$ 1,145,299$ 2021





December 31, 2016 year ended Amount filed 20,721 19,854 20261,258,928$ 1,258,061$

December 31, 2016

December 31, 2016

Earnings generated in and after 1998 3,101,014$

D. As of December 31, 2017, the Company’s income tax returns through 2015 have been assessed and approved by the Tax Authority



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D. As of December 31, 2017, the Company’s income tax returns through 2015 have been assessed

and approved by the Tax Authority



F. As of December 31, 2016, the balance of the imputation tax credit account was $83,807. The

creditable tax rate was 8.80% for the year ended December 31, 2016.



In and before 2011 year ended Amount assessed 934,266$ 934,266$ 2021







1,078,725$ 1,077,858$

December 31, 2017



In and before 2011 year ended Amount assessed 1,145,299$ 1,145,299$ 2021





December 31, 2016 year ended Amount filed 20,721 19,854 20261,258,928$ 1,258,061$

December 31, 2016

December 31, 2016


F. As of December 31, 2016, the balance of the imputation tax credit account was $83,807. The creditable tax rate was 8.80% for the year ended December 31, 2016.

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(32) Earnings per share

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(33) Operating leases

The Company’s subsidiary leases office and business area under non-cancellable operating lease agreements. The lease terms are between 2011 and 2035, and all these lease agreements are renewable at the end of the lease period. Rental payment is calculated based on an agreed upon rate of revenue. The Company’s subsidiary recognised rental expense of $387,246 both for the years ended December 31, 2017 and 2016. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Weighted averagenumber of ordinary Earnings shares outstanding per share

Basic earnings per share Amount after tax (shares in thousands) (in dollars) Profit attributable to ordinary shareholders of the parent

1,281,101$ 1,622,671 0.79$

Diluted earnings per share Profit attributable to ordinary shareholders of the parent

1,281,101$ 1,622,671

Assumed conversion of all dilutive potential ordinary shares Employees’ compensation - 11,645 Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 1,281,101$ 1,634,316 0.78$


Weighted averagenumber of ordinary Earnings shares outstanding per share

Basic earnings per share Amount after tax (shares in thousands) (in dollars) Profit attributable to ordinary shareholders of the parent

1,609,189$ 1,622,671 0.99$

Diluted earnings per share Profit attributable to ordinary shareholders of the parent

1,609,189$ 1,622,671

Assumed conversion of all dilutive potential ordinary shares Employees’compensations - 19,768 Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 1,609,189$ 1,642,439 0.98$


(33) Operating leasesTheCompany’ssubsidiaryleasesofficeandbusinessareaundernon-cancellableoperatingleaseagreements. The lease terms are between 2011 and 2035, and all these lease agreements are renewable at the end of the lease period. Rental payment is calculated based on an agreed upon rate of revenue. The Company’s subsidiary recognised rental expense of $387,246 both for the years ended December 31, 2017 and 2016. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

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(34) Supplemental cash flow information

Investing and financing activities with no cash flow effects:

7. RELATED PARTY TRANSACTIONS(1) Names of related parties and relationship with the Company

(2) Significant related party transactions and balances

A. Sales of goods: (a)

The contract prices of construction for related parties are based on expected construction cost plus reasonable management expenses and profit, and are determined based on mutual agreements. The construction payments are collected based on the contract terms. As of December 31, 2017 and 2016, the status of the construction of the related parties undertaken by the Group was as follows:


Not later than one year 404,376$ 403,952$

Later than one year but not later than

five years 2,051,176 2,041,364

Later than five years 5,152,133 5,566,321 7,607,685$ 8,011,637$

2017 2016Property, plant and equipment transferred to prepayments 83$ -$


Names of related parties Relatonship with the Company

Uni-President Development Corp. AssociatesMing-Da Enterprise Co., Ltd. AssociatesTone Sang Construction Corp. Other related partiesTainan Spinning Co., Ltd. Other related partiesPresident Chain Store Corp. Other related partiesC-maan Health Limited Company Other related partiesMan Strong Manpower MGT Co., Ltd. Other related parties

2017 2016

Construction subcontracting Other related parties 113,181$ 183,885$ Associates 12,371 113,781

125,552$ 297,666$


(34) SupplementalcashflowinformationInvestingandfinancingactivitieswithnocashfloweffects:

7. RELATED PARTY TRANSACTIONS

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

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five years 2,051,176 2,041,364






2017 2016


125,552$ 297,666$


~66~










five years 2,051,176 2,041,364






2017 2016


125,552$ 297,666$


(2) Significantrelatedpartytransactionsandbalances A. Sales of goods:

(a)

~66~










five years 2,051,176 2,041,364






2017 2016


125,552$ 297,666$


The contract prices of construction for related parties are based on expected construction costplusreasonablemanagementexpensesandprofit,andaredeterminedbasedonmutualagreements. The construction payments are collected based on the contract terms. As of December 31, 2017 and 2016, the status of the construction of the related parties undertaken by the Group was as follows:

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(b)

Rent is determined by mutual agreements and is collected monthly.

B. Accounts receivable

C. Rental payables

December 31, 2017 December 31, 2016Tainan Spinning Co., Ltd.: Total amount of construction contracts that were signed but had not been settled yet 2,140,409$ 4,813,233$ Construction payments received 8,826)( 4,790,226)( Construction payments receivable 2,131,583$ 23,007$


Associates:

Total amount of construction contracts that -$ 318,329$ were signed but had not been settled yet

Construction payments received - 271,887)(

Construction payments receivable -$ 46,442$


Other related parties: Total amount of construction contracts that 241,913$ 241,000$ were signed but had not been settled yetConstruction payments received 208,047)( 96,476)( Construction payments receivable 33,866$ 144,524$

Rental income: 2017 2016 Other related parties 62,141$ 47,775$


December 31, 2017 December 31, 2016Accounts receivable - related parties: Other related parties 14,190$ 20,000$ －Associates - 2,660

14,190$ 22,660$


Other payables: Uni-President Development Corp. 64,651$ 112,663$

Long-term notes and accounts payable Uni-President Development Corp. 571,727$ 588,857$

(b)

Rent is determined by mutual agreements and is collected monthly.B. Accounts receivable

C. Rental payables

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(b)



C. Rental payables



Associates:









14,190$ 22,660$




~67~

(b)



C. Rental payables



Associates:









14,190$ 22,660$




~67~

(b)



C. Rental payables



Associates:









14,190$ 22,660$




D. Others(a)

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D. Others (a)

(b)

E. On June 20, 2006, the Company and China Metal Products Co., Ltd. (“A party”) jointly signed a

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

F. Certain short and long-term borrowings of the Company were guaranteed by its Chairman and General Manager.

(3) Key management compensation

2017 2016

Rental expenses: Uni-President Development Corp. 434,209$ 497,030$ Other related parties 7,292 6,594

441,501$ 503,624$


December 31, 2017 December 31, 2016Refundable deposits: Uni-President Development Corp. 67,808$ 66,831$

2017 2016Salaries and other short-term employee benefits 130,545$ 100,723$ Post-employment benefits - - Other long-term benefits - - Termination benefit - - Share-based payment - -

130,545$ 100,723$


(b)

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D. Others (a)

(b)





2017 2016


441,501$ 503,624$




130,545$ 100,723$


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



~68~

D. Others (a)

(b)





2017 2016


441,501$ 503,624$




130,545$ 100,723$


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VI



8. PLEDGED ASSETS

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

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8. PLEDGED ASSETS The Group’s assets pledged as collateral are as follows:

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS(1) Summary of endorsements and guarantees and financial support commitments is as follows:

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

Pledged asset December 31, 2017 December 31, 2016 Purpose

Time deposits, demand deposits and checking 1,952,168$ 1,490,134$ To obtain a higher credit for client, performance

deposits (shown as "other financial assets guarantee, construction performance guarantee,

- current" and "other financial assets - short-term and long-term borrowings,

non-current") short-term commercial papers issue, member

reward points and gift coupons trust account

Financial assets at fair value through profit 313,552 296,753 Construction performance guarantees,

or loss short-term and long-term borrowings

Land held for construction site 5,997,376 7,808,509 Short-term borrowings, notes and bills payable

and long-term borrwings

Construction in progress 3,504,289 2,803,892 Short-term borrowings, notes and bills payable


Buildings and land held for sale - 2,270,855 Long-term notes and bills payable

Available-for-sale financial assets 708,513 757,036 Short-term borrowings, notes and bills payable

Financial assets carried at cost 575,426 575,426 Short-term borrowings, notes and bills payable

Investments accounted for under equity method 1,325,878 1,443,473 Short-term borrowings, notes and bills payable

Land 2,729,051 2,729,051 Construction performance guarantees,

short-term borrowings, notes and bills

payable and long-term borrowings

Buildings 1,934,451 1,990,294 Short-term borrowings, notes and bills


Investment property 3,818,154 3,851,473 Construction performance guarantees,



22,858,858$ 26,016,896$

Total endorsement Total endorsement

Name of company amount Amount drawn amount Amount drawn

The Splendor Hotel Taichung 2,000,000$ 1,683,308$ 2,000,000$ 1,682,206$

Prince Real Estate Co., Ltd. 2,500,000 258,000 2,500,000 780,000 Ta-Chen Construction & Engineering Corp. - - 1,900,000 -

4,500,000$ 1,941,308$ 6,400,000$ 2,462,206$


9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

(1) Summaryofendorsementsandguaranteesandfinancialsupportcommitmentsisasfollows:A. Summary of endorsements and guarantees provided by the Company to subsidiaries is as

follows:

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8. PLEDGED ASSETS The Group’s assets pledged as collateral are as follows:

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS(1) Summary of endorsements and guarantees and financial support commitments is as follows:



Time deposits, demand deposits and checking 1,952,168$ 1,490,134$ To obtain a higher credit for client, performance

deposits (shown as "other financial assets guarantee, construction performance guarantee,

- current" and "other financial assets - short-term and long-term borrowings,

non-current") short-term commercial papers issue, member

reward points and gift coupons trust account

Financial assets at fair value through profit 313,552 296,753 Construction performance guarantees,

or loss short-term and long-term borrowings

Land held for construction site 5,997,376 7,808,509 Short-term borrowings, notes and bills payable


Construction in progress 3,504,289 2,803,892 Short-term borrowings, notes and bills payable


Buildings and land held for sale - 2,270,855 Long-term notes and bills payable

Available-for-sale financial assets 708,513 757,036 Short-term borrowings, notes and bills payable

Financial assets carried at cost 575,426 575,426 Short-term borrowings, notes and bills payable

Investments accounted for under equity method 1,325,878 1,443,473 Short-term borrowings, notes and bills payable

Land 2,729,051 2,729,051 Construction performance guarantees,



Buildings 1,934,451 1,990,294 Short-term borrowings, notes and bills


Investment property 3,818,154 3,851,473 Construction performance guarantees,



22,858,858$ 26,016,896$




Prince Real Estate Co., Ltd. 2,500,000 258,000 2,500,000 780,000 Ta-Chen Construction & Engineering Corp. - - 1,900,000 -

4,500,000$ 1,941,308$ 6,400,000$ 2,462,206$


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

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

D. The accumulated operating losses of the subsidiary, the Splendor Hotel, had exceeded 50% of its paid-in capital and its current liabilities were greater than its current assets. The Company wascommitted togive theSplendorHotelfinancialsupport for itscontinuingoperationsforoneyearfromthedateofthefinancialsupportletter.

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

(3) Operating lease agreements: Please refer to Note 6 (33) for details.(4) According to the sale contracts, the Company should provide warranty on the house structure and

major facilities for one year from the handover day for the houses it sold. However, any damage to the houses caused by disasters, additions to the houses made by the buyers, or events that are not attributed to the Company is not included in the scope of warranty.

(5) On March 17, 2005, the Company (“A party”) signed a contract with National Taiwan University (“B party”) relating to the construction and operation of dormitories on Chang-Hsing St. and Shui-Yuan Campus. The major terms of the contract are as follows:A. Under the contract, B party should be responsible for acquiring the ownership or land-use right

for this project, and let A party use the land; A party must complete the construction within 3 years fromtheregistrationof thesuperficies,andmayoperate thedormitoriesfor44years,collect dormitory rentals and use fees of other facilities from students, and should return the related assets to B party on the expiry of the contract.

B. A party should give B party a performance guarantee of $60,000 for the construction on the signing date and $30,000 for operations before the start of operation. As of December 31,

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D. The accumulated operating losses of the subsidiary, the Splendor Hotel, had exceeded 50% of its

paid-in capital and its current liabilities were greater than its current assets. The Company was committed to give the Splendor Hotel financial support for its continuing operations for one year from the date of the financial support letter.

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

(3)Operating lease agreements:

Please refer to Note 6 (33) for details.

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

(5)On March 17, 2005, the Company (“A party”) signed a contract with National Taiwan University (“B party”) relating to the construction and operation of dormitories on Chang-Hsing St. and Shui-Yuan Campus. The major terms of the contract are as follows: A. Under the contract, B party should be responsible for acquiring the ownership or land-use right

for this project, and let A party use the land; A party must complete the construction within 3 years from the registration of the superficies, and may operate the dormitories for 44 years, collect dormitory rentals and use fees of other facilities from students, and should return the



Prince Real Estate Co., Ltd. 2,500,000$ 1,513,309$ 2,500,000$ 2,035,309$


927,889 - 927,889 -

Prince Utility Co., Ltd. 900,000 638,763 900,000 638,763

4,327,889$ 2,152,072$ 4,327,889$ 2,674,072$


Subsidiaries being Total endorsement Total endorsement

Name of subsidiaries endorsed/guaranteed amount Amount drawn amount Amount drawn


Prince Security Co., Ltd. 20,000$ 20,000$ 20,000$ 10,000$


Prince Security Co., Ltd. 56,000 - 56,000 10,000

76,000$ 20,000$ 76,000$ 20,000$



Property, plant and equipment 18,524$ 3,104$

~70~















927,889 - 927,889 -


4,327,889$ 2,152,072$ 4,327,889$ 2,674,072$








76,000$ 20,000$ 76,000$ 20,000$




~70~















927,889 - 927,889 -


4,327,889$ 2,152,072$ 4,327,889$ 2,674,072$








76,000$ 20,000$ 76,000$ 20,000$




VI


VI



2017, and 2016, A party had provided performance guarantee with a guarantee letter issued by the bank, all amounting to $30,000.

C. A party should pay B party land rentals from the registration of the superficies, according to the terms of the contract, and pay B party operating royalties from the third year of the operation, based on 0.5% of dormitory rentals and use fees of other facilities collected from students.

D. Terms of restrictions for A party:(a) The ratio of A party’s own capital utilized in this project to total construction cost of this

project should be at least 30%;(b) During the operation period, the ratio of shareholders’ equity to total assets should be at

least 25%; and current ratio (current assets/current liabilities) should be at least 100%;(c)AllrightsacquiredbyApartyunderthecontract,exceptforotherconditionsspecifiedin

the contract and approved by B party, should not be transferred, leased, registered as a liability/obligation or become an executed object of civil litigation.

(6) On May 10, 2005, the Company (“A party”) signed a contract with National Cheng Kung University (“B party”) relating to the construction and operation of student dormitories and alumni hall. The major terms of the contract are as follows:A. Under the contract, B party should be responsible for acquiring the ownership or land-use

rightforthisproject,andletApartyusethelandbywayofregistrationofthesuperficies;Aparty must obtain the user license within 3 years after the signing date, and may operate the dormitories and motorcycle parking lots for 35 years from the start of operation and collect dormitory rentals and use fees of other facilities from students for 50 years from the start of construction, and should return the related assets to B party on the expiry of the contract.

B. A party should give B party performance guarantee of $50,000 for this project on the signing date, which will be returned in installment according to the contractual terms. As of December 31, 2017 and 2016, A party had provided performance guarantee with a guarantee letter issued by the bank, both amounting to $20,000.

C. During the operation period, A party should pay B party dormitory operating royalties based on 2% of annual operating revenue of the dormitories and auxiliary facilities operating royalties based on 4% of annual operating revenue of the auxiliary facilities. A party should pay such operating royalties for prior year before the end of June every year. Further, according to thesuperficiescontractsignedby the twoparties,ApartyshouldpayBpartylandrentalsfromtheregistrationofsuperficies.

D.AllrightsacquiredbyApartyunderthecontract,exceptforotherconditionsspecifiedinthecontract and approved by B party, should not be transferred, leased, registered as a liability/obligation or become an executed object of civil litigation.

(7) The Company signed a syndicated loan contract with 7 banks - Mega International Commercial Bank as the lead bank for a credit line of $2.16 billion. The syndicated loans include long-term (secured) loans and guarantee payments receivable (secured), which are used to fund the construction of dormitories in Changxing St. Campus and Shuiyuan Campus of National Taiwan University.During the loanperiod, theCompanyshouldmaintainfinancialcommitmentssuchas current ratio, liability ratio and interest coverage; those financial ratios/restrictions shall be reviewed at least once every year, based on the Company’s audited annual non-consolidated financialstatements.If theCompanyviolatestheabovefinancialcommitments,itshall improveitsfinancialpositionbycapitalincreaseorotherwaysbeforetheendofOctoberofthefollowing

year from the year of violation; it would not be regarded as a default if the managing bank confirmsthatitsfinancialpositionhasimprovedcompletely.Incaseofviolation,interestontheloanswouldbechargedattheloanratespecifiedinthecontractplusadditional0.25%perannumfromthenotificationdateofthemanagingbanktothecompletiondateoffinancialimprovementor to the date the Company gains the relief from the consortium for its violation.

(8) The Company signed a loan contract with Mega International Commercial Bank for a credit line of $785 million. The loans include long-term (secured) loans and guarantee payments receivable (secured), which are used to fund the construction of student dormitories and alumnus hall of NationalChengKungUniversity.Duringtheloanperiod,theCompanyshouldmaintainfinancialcommitments such as current ratio, liability ratio and interest coverage; those financial ratios/restrictions shall be reviewed at least once every year. Current ratio and liability ratio shall be reviewed based on the Company’s audited annual non-consolidated financial statements, and interest coverage based on the Company’s revenue and expenditure table for the related project. IftheCompanyviolatestheabovefinancialcommitments,itshallimproveitsfinancialpositionby capital increase or other ways before the end of October of the following year from the year of violation;itwouldnotberegardedasadefaultifthebankconfirmsthatitsfinancialpositionhasimproved completely. In case of violation, interest on the loans would be charged at the loan rate specifiedinthecontractplusadditional0.25%perannumfromthenotificationdateofthebanktothecompletiondateoffinancialimprovementortothedatetheCompanyobtainsawaiverfromthe bank for its violation.

(9) TheCompanysignedasyndicatedloancontractwith3financialinstitutions-MegaInternationalCommercial Bank as the lead bank for a credit line of $1.06 billion. The syndicated loans include medium-term (secured) loans and commercial paper guarantees, which are used for purchases of 4 tracts of PingHsin Sections No. 694, 706, 708 and 709 in Taiping Dist., Taichung City and construction payment of residential buildings. Furthermore, the Company shall repay in full for the balance of unpaid principal on maturity date.

(10) The Company signed a syndicated loan contract with 6 financial institutions – CTBC Bank Co., Ltd. as the lead bank for a credit line of $2.1 billion for medium-term commercial paper, financing the working capital of the Company which provides Tanmei office building as collateral. Commercial papers issued by the Company should be 90 days. However, commercial papers issued in the terms of other commercial papers issued before the due date should be the same. The syndicated loan can be redrawn in the credit term and pay off the loan immediately.

The syndicated loan contract had been completely repaid at maturity in May 2017.(11) TheCompanysignedasyndicated loancontractwith3financial institutions–BankofTaiwan

Co., Ltd. as the lead bank for a credit line of $3.045 billion. The syndicated loans include medium-term guarantee payments receivable (secured) and medium-term commercial paper guarantees (secured). Bank of Taiwan and Agricultural Bank of Taiwan provided medium-term guarantee payments receivable (secured) with a credit line of $2.545 billion which are used by the Company to apply for the guarantee of corporate bond issued by the bank. International Bills Finance Corp provides medium-term commercial paper guarantees (secured) with a credit line of $500millionwhichareusedbytheCompanytorepaytheborrowingtothefinancialinstitutionsand improvefinancialstructure.These threefinancial institutionsshall renewthecontractwiththe Company for another 1 year based on their individual commitments and establish the facility documentation, which is similar to the commercial paper guarantees, letter of purchase contract and others. In addition, no matter whether the bondholders receive the payment or not, the banks’

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VI



guarantee responsibility will be released after the debtor returns the payables to the agency.(12) On January 20, February 10 and December 27, 2014, the Company signed a contract with

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

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

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

(13)The Company signed an agreement with Mr. Fang Tsai-Yuan and World Vision United Co., Ltd. on

March 5, 2012 and July 17, 2012, respectively, for joint construction of houses. Under those agreements, Mr. Fang Tsai-Yuan and World Vision United Co., Ltd., the owners of land, shall provide the land located at Nos. 572 and 602, Sec. Zhi-Shan 1, Shilin District, Taipei City, respectively, and the Company is responsible for the construction; the houses built would be allocated to both sides based on the specified proportion. In addition, the Company shall give performance bond in the amount of $350,000 and $19,570 to Mr. Fang Tsai-Yuan and World Vision United Co., Ltd., respectively, which would be returned to the Group in installments. As of December 31, 2017 and 2016, balance of the performance bonds were as follows:


Taichung City Koan An Section No. 591-1 63,880$ 63,880$ Nanzi Dist., Kaohsiung City Nanzi 1st Section No. 158 etc 125,540$ 125,540$

(13) The Company signed an agreement with Mr. Fang Tsai-Yuan and World Vision United Co., Ltd. on March 5, 2012 and July 17, 2012, respectively, for joint construction of houses. Under those agreements, Mr. Fang Tsai-Yuan and World Vision United Co., Ltd., the owners of land, shall provide the land located at Nos. 572 and 602, Sec. Zhi-Shan 1, Shilin District, Taipei City, respectively, and the Company is responsible for the construction; the houses built would be allocated to both sides based on the specified proportion. In addition, the Company shall give performance bond in the amount of $350,000 and $19,570 to Mr. Fang Tsai-Yuan and World Vision United Co., Ltd., respectively, which would be returned to the Group in installments. As of December 31, 2017 and 2016, balance of the performance bonds were as follows:

~74~

In 2017, the Company asked the owners of the land to return the 50% performance bond after completion of the construction of roof-slab. However, the owners of the land refused to return the 50% performance bond in the form of cash against the joint construction agreement which stated that the owners of the land can use allocated buildings and lands to offset the performance bond, which the Company disagrees with. In addition, the Company expects to obtain a use permit by December 31, 2017, but the use permit is pending approval from the Taipei City Government as of the audit report date. Currently, the Company is in continuous communication with the Taipei City Government in order to obtain the use permit in accordance with regulations, and has sent a legal confirmation letter to the owners of the land for the collection of the performance bond. As of December 31, 2017, the Company’s construction cost in this joint construction agreement amounted to $591,174.

(14)As of December 31, 2017 and 2016, performance guarantee letters issued for construction undertaking, warranty and leases of subsidiary, Ta-Chen Construction & Engineering Corp., amounted to $291,053 and $223,564, respectively.

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

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

December 31, 2017 December 31, 2016No. 602, Sec. Zhi-Shan 1, Shilin District, Taipei City 350,000$ 350,000$ No. 572, Sec. Zhi-Shan 1, Shilin District, Taipei City 19,570$ 19,570$

In 2017, the Company asked the owners of the land to return the 50% performance bond after completion of the construction of roof-slab. However, the owners of the land refused to return the 50% performance bond in the form of cash against the joint construction agreement which stated that the owners of the land can use allocated buildings and lands to offset the performance bond, which the Company disagrees with. In addition, the Company expects to obtain a use permit by December 31, 2017, but the use permit is pending approval from the Taipei City Government as of the audit report date. Currently, the Company is in continuous communication with the Taipei City Government in order to obtain the use permit in accordance with regulations, and has sent alegalconfirmationletter to theownersof thelandfor thecollectionof theperformancebond.As of December 31, 2017, the Company’s construction cost in this joint construction agreement amounted to $591,174.

(14) As of December 31, 2017 and 2016, performance guarantee letters issued for construction undertaking, warranty and leases of subsidiary, Ta-Chen Construction & Engineering Corp., amounted to $291,053 and $223,564, respectively.

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

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

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management TheGroup’scapitalmanagement is toensure ithassufficientfinancial resourceandoperating

plans to meet operational capital for future needs, capital expenditure, obligation repayment and dividend distribution. The Group adjusts borrowing amount in accordance with construction progress and capital needed for operations.

(2) Financial instrumentsA. Fairvalueinformationoffinancialinstruments The carrying amount of cash and cash equivalents and financial instruments measured at

amortized cost (including notes and accounts receivable, other receivables, other financial assets, refundable deposits, short-term borrowings, short-term notes and bills payable, notes and accounts payable, other payables, corporate bonds payable, long-term borrowings, long-term notes and accounts payable and guarantee deposits received) are approximate to their fairvalues.Furthermore,theGroup’smanagementbelievesthecarryingamountsoffinancialassets and liabilities not measured at fair value are approximate to their fair value or their

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fair value cannot be reliably measured. Thus, the carrying amount is the estimated fair value. ThefairvalueinformationoffinancialinstrumentsmeasuredatfairvalueisprovidedinNote12(3).

B. Financial risk management policies(a) The Group’s activities expose it to a variety of financial risks: market risk (including

foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial marketsandseekstominimizepotentialadverseeffectsontheGroup’sfinancialpositionandfinancialperformance.

(b) Risk management is carried out by a central treasury department (Group's finance & accountingdivision)underpoliciesapprovedbytheBoardofDirectors.Group'sfinance& accounting division evaluates and hedges financial risks in close cooperation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreignexchangerisk,interestraterisk,creditrisk,useofderivativefinancialinstrumentsandnon-derivativefinancialinstruments,andinvestmentofexcessliquidity.

C. Significantfinancialrisksanddegreesoffinancialrisks(a) Market risk

Foreign exchange riskThe Group operates internationally and the currencies primarily used are NTD and USD. Foreign exchange risk arises from recognised assets and liabilities and net investments in foreign operations. Management has set up a policy to require the Group entities to manage their foreign exchange risk against their functional currency. The Group entities arerequiredtomanagetheirentireforeignexchangeriskexposurewiththeGroupfinance& accounting division. Foreign exchange risk does not have significant impact to the Group. Interest rate riskThe Group’s interest rate risk arises from short-term and long-term borrowings (not including commercial paper). Borrowings issued at variable rates expose the Group to cashflowinterestrateriskwhichispartiallyoffsetbycashandcashequivalentsheldatvariablerates.BorrowingsissuedatfixedratesexposetheGrouptofairvalueinterestraterisk. The Group’s borrowings at variable rate were denominated in the NTD. If interest rates on borrowings had been 0.1% basis point higher/lower with all other variables held constant,pre-taxprofitfortheyearsendedDecember31,2017and2016wouldhavebeen$12,686 and $11,058 lower/higher, respectively.Price risk The Group has investments in equity instruments, and the prices would change due to the change of the future value of investee companies. However, the Group has set a stop-loss pointanditwasassessedthattheGroupwasnotexposedtosignificantpricerisk.Iftheprices of these equity securities had increased/decreased by 10% with all other variables heldconstant,pre-taxprofitfortheyearsendedDecember31,2017and2016wouldhaveincreased/decreased by $88,114 and $74,052, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $16,078 and $16,129, respectively, as a result ofgains/lossesonequitysecuritiesclassifiedasavailable-for-sale.

(b) Credit riski. CreditriskreferstotheriskoffinanciallosstotheGrouparisingfromdefaultbythe

clientsorcounterpartiesoffinancial instrumentson thecontractobligations.Creditrisk arises from cash and deposits with banks and financial institutions, including outstanding receivables.

ii. The Group’s receivables, which are the receivables from pre-selling of housing before completing construction and transferring the title, are installments received from customers of pre-construction real estate. Therefore, it was assessed that the Group wasnotexposedtosignificantcreditriskfromreceivables.

iii. For the years ended December 31, 2017 and 2016, the management does not expect anysignificantlossesfromnon-performancebythesecounterparties.

(c) Liquidity riski. Cash flow forecasting is performed in the operating entities of the Group and

aggregatedbyGroup’sfinance&accountingdivision.Group'sfinance&accountingdivision monitors rolling forecasts of the Group’s liquidity requirements to ensure it hassufficientcash tomeetoperationalneedswhilemaintainingsufficientheadroomon its undrawn committed borrowing facilities at all times.

ii. ThetablebelowanalysestheGroup’snon-derivativefinancialliabilitiesintorelevantmaturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosedinthetablearethecontractualundiscountedcashflows.

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iii. For the years ended December 31, 2017 and 2016, the management does not expect any significant losses from non-performance by these counterparties.

(c) Liquidity risk

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

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

Within 1 year Between 1 to 3 years Over 3 years

Non-derivative financial liabilities:

Short-term borrowings 865,035$ -$ -$

Short-term notes and bills payable 1,055,900 - -

Notes payable 17,160 - 7

Accounts payable 1,347,166 956,219 1,962 Other payables (including related parties) 1,058,548 13,324 1,670

Guarantee deposits received 72,629 41,178 22,391

Bonds payable (including current portion) 2,559,750 42,000 2,042,000

Long-term borrowings (including current portion) 6,379,860 4,094,553 2,533,305

Long-term notes and accounts payable (including related parties) - 1,304,617 11,456

December 31, 2017

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

(3) Fair value information

A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value are provided in Note 12(2)A. Details of the fair value of the Group’s investment property measured at cost are provided in Note 6(12).

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. The fair value of the Group’s investment in listed stocks and beneficiary certificates is included in Level 1.

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

Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investment without active market 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, 2017 and 2016 is as follows:


Non-derivative financial liabilities:

Short-term borrowings 2,299,706$ -$ -$

Short-term notes and bills payable 490,000 - -

Notes payable 46,409 - 7

Accounts payable 1,489,691 1,414,964 57,268 Other payables (including related parties) 1,256,061 10,752 1,822

Guarantee deposits received 67,418 38,858 29,074

Bonds payable 2,065,350 2,538,750 -

Long-term borrowings (including current portion) 1,343,764 7,450,870 2,989,561

Long-term notes and accounts payable (including related parties) - 1,299,963 11,456

December 31, 2016

iii. The Group does not expect the timing of occurrence of the cash flows estimated throughthematuritydateanalysiswillbesignificantlyearlier,norexpect theactualcashflowamountwillbesignificantlydifferent.

(3) Fair value informationA. DetailsofthefairvalueoftheGroup’sfinancialassetsandfinancialliabilitiesnotmeasured

at fair value are provided in Note 12(2)A. Details of the fair value of the Group’s investment property measured at cost are provided in Note 6(12).

B. The different levels that the inputs to valuation techniques are used to measure fair value of financialandnon-financialinstrumentshavebeendefinedasfollows: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 amarket inwhich transactionsfor theassetor liability takeplacewithsufficientfrequency and volume to provide pricing information on an ongoing basis. The fairvalueof theGroup’s investment in listedstocksandbeneficiarycertificates isincluded in Level 1.


Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investment without active market 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, 2017 and 2016 is as follows:

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D.The methods and assumptions the Group used to measure fair value are as follows: The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

E. For the years ended December 31, 2017 and 2016, there was no transfer between Level 1 and Level 2. F. The following chart is the movement of Level 3 for the years ended December 30, 2017 and 2016:

Note: Recorded as unrealised valuation gain or loss of available-for-sale financial assets.

December 31, 2017 Level 1 Level 2 Level 3 Total Assets:Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities 917,659$ -$ -$ 917,659$ Available-for-sale financial assets Equity securities 1,027,873 - 105,285 1,133,158

1,945,532$ -$ 105,285$ 2,050,817$


1,788,302$ -$ 166,775$ 1,955,077$

Listed shares Open-end fund

Market quoted price Closing price Net asset value

2017 2016

Non-derivative equity Non-derivative equityinstruments instruments

At January 1 166,775$ 200,146$

Loss recognised in other comprehensive

income (Note) 61,490)( 31,794)(

Capital deducted by returning shares - 1,577)(

December 31 105,285$ 166,775$

D. The methods and assumptions the Group used to measure fair value are as follows: The instruments the Group used market quoted prices as their fair values (that is, Level 1) are

listed below by characteristics:

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1,945,532$ -$ 105,285$ 2,050,817$


1,788,302$ -$ 166,775$ 1,955,077$



2017 2016


At January 1 166,775$ 200,146$


income (Note) 61,490)( 31,794)(


December 31 105,285$ 166,775$

E. For the years ended December 31, 2017 and 2016, there was no transfer between Level 1 and Level 2.

F. The following chart is the movement of Level 3 for the years ended December 30, 2017 and 2016:

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1,945,532$ -$ 105,285$ 2,050,817$


1,788,302$ -$ 166,775$ 1,955,077$



2017 2016


At January 1 166,775$ 200,146$


income (Note) 61,490)( 31,794)(


December 31 105,285$ 166,775$

Note:Recordedasunrealisedvaluationgainorlossofavailable-for-salefinancialassets.

G. For the years ended December 31, 2017 and 2016, there was no transfer into or out from Level 3.

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

I. ThefollowingisthequalitativeinformationofsignificantunobservableinputsandsensitivityanalysisofchangesinsignificantunobservableinputstovaluationmodelusedinLevel3fairvalue measurement:

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G. For the years ended December 31, 2017 and 2016, there was no transfer into or out from Level 3. H. Finance and Accounting segment is in charge of valuation procedures for fair value measurements

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

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

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

Fair value at December 31, 2017

Valuationtechnique

Significantunobservable input

Range(weightedaverage)

Relationship of inputsto fair value

Non-derivative equityUnlisted shares 105,285$ Net asset

valueNet asset

valueN/A The higher the net asset value,

the higher the fair value


Valuationtechnique





valueNet asset



Input

Change Favourable

change

Unfavourable

change Favourable

change

Unfavourable

changeFinancial assets

Equity instruments 44,601 ±1% -$ -$ 446$ 446)($

December 31, 2017 Recognised in profit or

loss Recognised in other

comprehensive income

J. The Group has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement.ThefollowingistheeffectofprofitorlossorofothercomprehensiveincomefromfinancialassetsandliabilitiescategorizedwithinLevel3iftheinputsusedtovaluationmodels have changed:

~80~

G. For the years ended December 31, 2017 and 2016, there was no transfer into or out from Level 3. H. Finance and Accounting segment is in charge of valuation procedures for fair value measurements

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


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


Valuationtechnique





valueNet asset




Valuationtechnique





valueNet asset



Input

Change Favourable

change

Unfavourable

change Favourable

change

Unfavourable






~81~

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

table 5. F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to

table 6. G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in

capital or more: Please refer to table 7. H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please

refer to table 8. I. Trading in derivative instruments undertaken during the reporting periods: None. J. Significant inter-company transactions during the reporting periods: Please refer to table 9.

(2) Information on investees Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 10.

(3) Information on investments in Mainland China None.

14. SEGMENT INFORMATION (1) General information

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

Input

Change Favourable

change

Unfavourable

change Favourable

change

Unfavourable







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

to table 5.F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to

table 6.G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in

capital or more: Please refer to table 7.H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more:

Please refer to table 8.I. Trading in derivative instruments undertaken during the reporting periods: None.J.Significantinter-companytransactionsduringthereportingperiods:Pleaserefertotable9.

(2) Information on investees Names, locations and other information of investee companies (not including investees in

Mainland China): Please refer to table 10.(3) Information on investments in Mainland China

None.

14. SEGMENT INFORMATION

(1) General information Management has determined the reportable operating segments based on the reports reviewed

by the Chief Operating Decision-Maker that are used to make strategic decisions. The Group’s corporate composition, basis for segmentation, and basis for measurement of segment’s information had no significant changes for the period. The Chief Operating Decision-Maker considers the business from a product perspective.

(2) Measurement of segment information The Chief Operating Decision-Maker assesses the performance of the operating segments based

on theprofit (loss)before taxes.Thismeasurementbasisexcludes theeffectsofnon-recurringrevenues/expenditures from the operating segments. Accounting policies of operating segments are the same as the summary of significant accounting policies in Note 4 to the consolidated financialstatements.

(3) Informationaboutsegmentprofitorlossandassets The segment information provided to the Chief Operating Decision-Maker for the reportable

segments is as follows:

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

(3) Information about segment profit or loss and assets

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

Write-off and

Item Construction Hotel Others Adjustment Total

External operating revenue-net 7,074,663$ 3,088,681$ 825,636$ -$ 10,988,980$

Internal operating revenue-net 1,488,516 - 51,694 1,540,210)( -

Total segment revenue 8,563,179 3,088,681 877,330 - 10,988,980

Costs and expenses 8,092,615)( 2,694,964)( 661,894)( 1,538,598 9,910,875)(

Segment income 470,564 393,717 215,436 - 1,078,105

Other income 236,972 5,445 9,870 32,929)( 219,358

Other gains and losses 168,622 3,478)( 7,677)( - 157,467

Finance costs 138,901)( 57,285)( 241)( 25,321 171,106)( Share of profit of associates and joint ventures accounted for under equity method 788,953 - 21,265 754,200)( 56,018

Profit from continuing operations before tax 1,526,210 338,399 238,653 1,339,842

Income tax expense 36,258)( 31,824)( 6,939)( - 75,021)(

Net income for the period 1,489,952$ 306,575$ 231,714$ 1,264,821$

Segment assets 47,379,127$ 7,372,166$ 906,643$ 5,382,811)( 50,275,125$


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

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

(6) Geographical information The Group operates mainly in Taiwan and it has no external customer revenue from other regions.

(7) Major customer information Major customer information of the Group for the years ended December 31, 2017 and 2016 is as follows:

Write-off and




Total segment revenue 9,179,119 3,228,875 826,497 12,060,302


Segment income 727,207 438,386 179,100 1,513,733

Other income 665,887 5,930 45,129 415,810)( 301,136

Other gains and losses 169,324)( 1,163)( 1,392 383,871 214,776

Finance costs 208,489)( 58,487)( 4,130)( 28,027 243,079)( Share of profit of associates and joint ventures accounted for under equity method 559,388 - 23,539 463,809)( 119,118




Segment assets 46,542,938$ 7,302,370$ 2,372,255$ 4,932,719)( 51,284,844$


Revenue Segment Revenue Segment

A 2,556,667$ Construction $ - Construction

Year ended December 31, 2017 Year ended December 31, 2016

(4) Reconciliation for segment income (loss) and assets The revenue from external parties, segment income and segment assets reported to the Chief

OperatingDecision-Makeraremeasuredinamannerconsistentwith therevenue,profitbeforetaxes,andtotalassetsinthefinancialstatements.Informationonadjustedconsolidatedtotalprofit(loss), reportable segment profit after taxes and total assets, and reconciliation for reportable segment assets for this period is provided in Note 14(3).

(5) Information on products and services The Chief Operating Decision-Maker considers the business from a product type perspective.

Information about products is provided in Notes 6(26) and 14(3).(6) Geographical information The Group operates mainly in Taiwan and it has no external customer revenue from other regions.(7) Major customer information Major customer information of the Group for the years ended December 31, 2017 and 2016 is as

follows:

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

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

(6) Geographical information The Group operates mainly in Taiwan and it has no external customer revenue from other regions.

(7) Major customer information Major customer information of the Group for the years ended December 31, 2017 and 2016 is as follows:

Write-off and




Total segment revenue 9,179,119 3,228,875 826,497 12,060,302


Segment income 727,207 438,386 179,100 1,513,733

Other income 665,887 5,930 45,129 415,810)( 301,136

Other gains and losses 169,324)( 1,163)( 1,392 383,871 214,776

Finance costs 208,489)( 58,487)( 4,130)( 28,027 243,079)( Share of profit of associates and joint ventures accounted for under equity method 559,388 - 23,539 463,809)( 119,118




Segment assets 46,542,938$ 7,302,370$ 2,372,255$ 4,932,719)( 51,284,844$


Revenue Segment Revenue Segment

A 2,556,667$ Construction $ - Construction

Year ended December 31, 2017 Year ended December 31, 2016

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For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financialstatementshavebeentranslatedintoEnglishfromtheoriginalChineseversionpreparedandusedinthe Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financialstatementsshallprevail.


CORP.

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND REPORT OF INDEPENDENT

ACCOUNTANTS


REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR17000341To the Board of Directors and Shareholders of Prince Housing & Development Corp.

Opinion

We have audited the accompanying balance sheets of Prince Housing & Development Corp. (the “Company”) as at December 31, 2017 and 2016, and the related statements of comprehensive income, ofchanges inequityandofcashflowsfor theyears thenended,andnotes to thefinancialstatements,includingasummaryofsignificantaccountingpolicies.In our opinion, based on our audits and the report of other independent accountants (please refer to the “othermatter”sectionofourreport),theaccompanyingfinancialstatementspresentfairly,inallmaterialrespects, the financial position of the Company as at December 31, 2017 and 2016, and its financial performanceanditscashflowsfortheyearsthenendedinaccordancewiththe“RegulationsGoverningthe Preparations 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 and the reportofotherindependentaccountantsaresufficientandappropriatetoprovideabasisforouropinion.

Key audit matters

Keyauditmattersarethosemattersthat,inourprofessionaljudgement,wereofmostsignificanceinourauditof thefinancialstatementsof thecurrentperiod.Thesematterswereaddressed in thecontextofourauditofthefinancialstatementsasawholeand,informingouropinionthereon,wedonotprovideaseparate opinion on these matters.Themostsignificantkeyauditmattersinourauditofthefinancialstatementsofthecurrentperiodareasfollows:

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The accuracy of building and land sales revenue recognition timing

Description

Please refer to Note 4(29) for accounting policies on sales revenue, and Note 6(25) for details. For the year ended December 31, 2017, building and land sales revenue amounted to NT$ 4,994,154 thousand, representing 87 % of operating revenue.TheCompanyrecognisesbuildingandlandsalesrevenueandprofitorlosswhentransferringownershipand handing over the property. Since the Company has diverse customers, the information delivery and recording process between segments in the Company usually involved manual work, and thus may result in inappropriate timing of revenue recognition around the balance sheet date. Considering that thebuildingand landsalesrevenueformmostof theCompany’soperatingrevenue,we identified theaccuracy of building and land sales revenue recognition timing as a key audit matter.


We performed the following audit procedures on the above key audit matter:A. We obtained an understanding and assessed the reasonableness of internal controls on building and

land sales revenue, and tested whether the process of building and land sales revenue recognition timing had been executed effectively, including verifying documents related to the date of ownership transfer and property handover and the accuracy of recognition timing; and

B. We performed cut-off test on building and land transactions around the end of the reporting period, includingverifyinglandregistration,houseownershipcertificateandcustomersignedreceiptsforhanding over of property to confirm the building and land sales revenue recognition timing was adequate.

Investments accounted for under equity method- Ta-Chen Construction & Engineering Corp., which was held through subsidiary, Cheng-Shi Investment Holdings Co., Ltd.- recognition of construction revenue- the stage of completion estimate

Description

Please refer to Note 4(13) for accounting policies on investments accounted for under equity method, and Note 6(9) for details.Ta-Chen Construction & Engineering Corp., which was held by the Company through subsidiary, Cheng-ShiInvestmentHoldingsCo.,Ltd.,wasrecognisedasasignificantcompanysince thefinancialperformance of Ta-Chen Construction & Engineering Corp. had a material effect on the Company’s financialstatements.Ta-Chen Construction & Engineering Corp. provided property construction related services. During the duration of a contract, the recognition of revenue is based on the stage of completion of a contract. The stage of completion is determined by reference to the contract costs incurred to date and the proportion that contract costs incurred for work performed to date compared to the estimated total contract costs. Aforementioned estimated total contract costs were based on contract budget details compiled by owner’s design drawing, considering the changes in construction scale caused by additional or less work, and the pricefluctuationsintherecentmarkettoestimatethecontractwork,overheadandrelevantcosts.As the complexity of aforementioned total cost usually involves subjective judgement and contains a high degree of uncertainty, and the estimate of total cost affects the stage of completion and the recognition of construction revenue, thus we consider the reasonableness of the stage of completion which was applied

on construction revenue recognition as above mentioned as a key audit matter.


We performed the following audit procedures on the above key audit matter:A. We obtained an understanding of the nature of business and industry of Ta-Chen Construction

& Engineering Corp. and assessed the reasonableness of internal process of estimating total construction cost, including the procedure of estimating each construction cost and overhead, and the consistency of applying the estimation method;

B. We assessed and tested the internal controls which would affect the changes of estimated total cost of Ta-Chen Construction & Engineering Corp., including verifying the evidence of additional or less work and constructions.

C. We inspected the constructing site accompanied by the supervisor and other appropriate staff of Ta-Chen Construction & Engineering Corp. at the end of the reporting period to assess the reasonableness of the stage of completion method result.

D. WeobtainedTa-ChenConstruction&EngineeringCorp’sdetailsofconstructionprofitor lossandperformed substantive procedures, including randomly checking the incurred cost of current period with the appropriate evidence, and additional or less work with the supporting documents, and recalculated the stage of completion

Other matter – Scope of the Audit

We did not audit the financial statements of investments recognized under the equity method that are includedinthefinancialstatements.AforementionedinvestmentsaccountedforunderequitymethodofNT$ 147,765 thousand and NT$ 897,432 thousand as at December 31, 2017 and 2016, constituted 0.34% and 2.06% of total assets; comprehensive income of aforementioned company of NT$ 650 thousand and NT$ 82,591 thousand for the years then ended, constituted 0% and 6.60% of total comprehensive income,respectively.Thosefinancialstatementswereauditedbyother independentaccountantswhosereport thereon have been furnished to us, and our opinion expressed herein is based solely on the audit reports of the other independent accountants.

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 Preparations of Financial Reports by Securities Issuers”, and for such internal control as management determines is necessary to enable the preparation offinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.Inpreparingthefinancialstatements,managementisresponsibleforassessingtheCompany’sabilitytocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including audit committee, are responsible for overseeing the Company’sfinancialreportingprocess.

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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,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:A. 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.

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

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

D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditionsthatmaycastsignificantdoubtontheCompany’sabilitytocontinueasagoingconcern.If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s reporttotherelateddisclosuresinthefinancialstatementsor,ifsuchdisclosuresareinadequate,tomodify 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.

E. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,andwhetherthefinancialstatementsrepresenttheunderlyingtransactionsandeventsina manner that achieves fair presentation.

F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivitieswithin theCompany toexpressanopinionon thefinancialstatements.Weareresponsible 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 andtimingof theauditandsignificantauditfindings, includinganysignificantdeficiencies in internalcontrol 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 wereofmostsignificanceintheauditofthefinancialstatementsofthecurrentperiodandarethereforethe 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 reasonablybeexpectedtooutweighthepublicinterestbenefitsofsuchcommunication.

Wu Chien-Chih Wang Kuo-Hua

For and on behalf of PricewaterhouseCoopers, TaiwanMarch 20, 2018

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Theaccompanyingparentcompanyonlyfinancialstatementsarenot intended topresent thefinancialposition and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures andpracticesintheRepublicofChinagoverningtheauditofsuchfinancialstatementsmaydifferfromthose generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, theaccompanyingparentcompanyonlyfinancialstatementsandreportof independentaccountantsarenot intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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(Continued)

PRINCE HOUSING & DEVELOPMENT CORP. PARENT COMPANY ONLY BALANCE SHEETS


~8~

Assets Notes December 31, 2017 December 31, 2016 Current assets 1100 Cash and cash equivalents 6(1) 1110 Financial assets at fair value

through profit or loss - current 6(2)

1150 Notes receivable, net 6(3) 1170 Accounts receivable, net 6(4) 1200 Other receivables 1220 Current income tax assets 130X Inventories, net 6(5), 7 and 8 1410 Prepayments 1476 Other financial assets - current 8 1479 Other current assets 6(6) 11XX Total current Assets Non-current assets 1510 Financial assets at fair value

through profit or loss - non-

current

6(2) and 8

1523 Available-for-sale financial assets

- non-current 6(7) and 8

1543 Financial assets carried at cost -

non-current 6(8) and 8

1550 Investments accounted for under

equity method 6(9) and 8

1600 Property, plant and equipment,

net 6(10) and 8

1760 Investment property, net 6(11) and 8 1780 Intangible assets, net 6(12) 1840 Deferred income tax assets 6(30) 1920 Refundable deposits 9 1980 Other financial assets - non-

current 8

1990 Other non-current assets 7 15XX Total non-current assets 1XXX Total assets

(Continued)

PRINCE HOUSING & DEVELOPMENT CORP.PARENT COMPANY ONLY BALANCE SHEETS


PRINCE HOUSING & DEVELOPMENT CORP. PARENT COMPANY ONLY BALANCE SHEETS


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

~9~

Liabilities and Equity Notes December 31, 2017 December 31, 2016 Current liabilities 2100 Short-term borrowings 6(13) and 8 2110 Short-term notes and bills payable 6(14) and 8 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 7 2200 Other payables 2230 Current income tax liabilities 2310 Receipts in advance 6(15) 2320 Long-term liabilities, current

portion 6(16)(17) and 8

2399 Other current liabilities 21XX Total current Liabilities Non-current liabilities 2530 Bonds payable 6(16) 2540 Long-term borrowings 6(17) and 8 2550 Provisions for liabilities - non-

current 6(18)

2640 Net defined benefit liabilities -

non-current 6(19)

2645 Guarantee deposits received 2670 Other non-current liabilities 6(9) 25XX Total non-current liabilities 2XXX Total Liabilities Equity Share capital 3110 common stock 6(20) Capital surplus 6(21) 3200 Capital surplus Retained earnings 6(22)(30) 3310 Legal reserve 3350 Unappropriated retained earnings Other equity interest 6(23) 3400 Other equity interest 3500 Treasury stocks 6(20) 3XXX Total equity Significant contingent liabilities

and unrecognised contract

commitments

9

3X2X Total liabilities and equity

PRINCE HOUSING & DEVELOPMENT CORP.PARENT COMPANY ONLY BALANCE SHEETS


Theaccompanyingnotesareanintegralpartoftheseparentcompanyonlyfinancialstatements.

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PRINCE HOUSING & DEVELOPMENT CORP. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

FOR YEARS ENDED DECEMBER 31, 2017 AND 2016 (Expressed in thousands of New Taiwan dollars, except earnings per share amount)


~10~

Year ended December 31 Items Notes 2017 2016

4000 Sales revenue 6(25) and 7 5000 Operating costs 6(5)(12)(29) and 7 5900 Gross profit Operating expenses 6(29) and 7 6100 Selling expenses 6200 General & administrative expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 6(26) 7020 Other gains and losses 6(2)(27) 7050 Finance costs 6(5)(28) 7070 Share of profit of subsidiaries, associates

and joint ventures accounted for under equity method, net

6(9)

7000 Total non-operating income and expenses

7900 Profit before income tax 7950 Income tax (expense) benefit 6(30) 8200 Profit for the year Other comprehensive income Components of other comprehensive

income that will not be reclassified to profit or loss

8311 Other comprehensive income, before tax, actuarial gains (losses) on defined benefit plans

6(19)

8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for under equity method, components of other comprehensive income that will not be reclassified to profit or loss

8310 Components of other comprehensive loss that will not be reclassified to profit or loss

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

8362 Other comprehensive loss, before tax, available-for-sale financial assets

6(7)

8380 Total share of other comprehensive income of subsidiaries, associates and joint ventures accounted for under equity method, components of other comprehensive income that will be reclassified to profit or loss

8360 Components of other comprehensive loss that will be reclassified to profit or loss

8300 Other comprehensive loss for the year 8500 Total comprehensive income for the year Earnings per share (in dollars) 6(31) 9750 Basic earnings per share 9850 Diluted earnings per share Assuming the Company treated the stocks held by a subsidiary as long-term investments rather than treasury stock, the pro forma information is as follows: Comprehensive income Earnings per share (in dollars) Basic earnings per share

PRINCE HOUSING & DEVELOPMENT CORP.PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

FOR YEARS ENDED DECEMBER 31, 2017 AND 2016(Expressed in thousands of New Taiwan dollars, except earnings per share amount)


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VI


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(Continued)

PRINCE HOUSING & DEVELOPMENT CORP. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2017 AND 2016 (Expressed in thousands of New Taiwan dollars)

Years ended December 31 Notes 2017 2016

~12~

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Gain on financial assets at fair value through profit or

loss 6(2)(27)

Write-off of uncollectible accounts 6(3) Share of profit of subsidiaries, associates and joint

ventures accounted for under equity method 6(9)

Loss on disposal of property, plant and equipment 6(27) Depreciation 6(29) Amortization 6(12)(29) Interest expense 6(28) Interest income 6(26) Dividend income 6(26) Loss on unrealised foreign exchange 6(27) Changes in operating assets and liabilities Changes in operating assets Current financial assets at fair value through profit or

loss

Notes receivable Accounts receivable Other receivables Inventories Prepayments Other current assets Changes in operating liabilities Notes payable Accounts payable Accounts payable - related parties Other payables Receipts in advance Other current liabilities Provisions for liabilities - non-current Net defined benefit liabilities - non-current Cash inflow generated from operations Interest received Cash dividend received Interest paid Income tax paid Net cash flows from operating activities

(Continued)

PRINCE HOUSING & DEVELOPMENT CORP.PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2017 AND 2016(Expressed in thousands of New Taiwan dollars)

PRINCE HOUSING & DEVELOPMENT CORP. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2017 AND 2016 (Expressed in thousands of New Taiwan dollars)

Years ended December 31 Notes 2017 2016


~13~

CASH FLOWS FROM INVESTING ACTIVITIES Decrease in other financial assets - current Return of share capital from available-for-sale financial

assets - non-current

Decrease in available-for-sale financial assets - non-current Proceeds from capital reduction of financial assets

measured at cost

Return of share capital from investments accounted for

under equity method

Proceeds from disposal of investments accounted for under

equity method

Acquisition of property, plant and equipment 6(10) Proceeds from disposal of property, plant and equipment Decrease in refundable deposits (Increase) Decrease in other financial assets - non-current Net cash flows (used in) from investing activities

CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings Increase (decrease) in short-term notes and bills payable Repayment of bonds Proceeds from issuing bonds Repayment of long-term borrowings Proceeds from long-term borrowings Increase in guarantee deposit received Cash dividends paid 6(22) Net cash flows used in financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

PRINCE HOUSING & DEVELOPMENT CORP.PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2017 AND 2016(Expressed in thousands of New Taiwan dollars)


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PRINCE HOUSING & DEVELOPMENT CORP.NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS


(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED) 1. HISTORY AND ORGANIZATION

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

2. THE 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 20, 2018.

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”)


PRINCE HOUSING & DEVELOPMENT CORP.

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED)

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

2. THE 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 20, 2018.

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 the FSC effective from 2017 are as follows:


Amendments to IFRS 10, IFRS 12 and IAS 28, Investment entities: Applying theconsolidation exception

January 1, 2016

Amendments to IFRS 11, Accounting for acquisition of interests in joint operations January 1, 2016

IFRS 14, ‘Regulatory deferral accounts’ January 1, 2016

Amendments to IAS 1, Disclosure initiative January 1, 2016

Amendments to IAS 16 and IAS 38, Clarification of acceptable methods ofdepreciation and amortization ()

January 1, 2016

Amendments to IAS 16 and IAS 41, Agriculture: bearer plants January 1, 2016

Amendments to IAS 19, Defined benefit plans: employee contributions July 1, 2014

Amendments to IAS 27, Equity method in separate financial statements January 1, 2016

Amendments to IAS 36 Recoverable amount disclosures for non-financial assets January 1, 2014

Amendments to IAS 39, Novation of derivatives and continuation of hedge accounting January 1, 2014IFRIC 21, ‘Levies’ January 1, 2014

Annual improvements to IFRSs 2010-2012 July 1, 2014Annual improvements to IFRSs 2011-2013 July 1, 2014Annual improvements to IFRSs 2012-2014 January 1, 2016

Theabovestandardsand interpretationshavenosignificant impact to theCompany’sfinancialconditionandfinancialperformancebasedontheCompany’sassessment.

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


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

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


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. A. IFRS 9, ‘Financial instruments’

(a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortized cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.

(b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Group shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade


Amendments to IFRS 2, Classification and measurement of share-based payment transactions January 1, 2018Amendments to IFRS 4, Applying IFRS 9 Financial instruments with IFRS 4 Insurancecontracts’

January 1, 2018



Amendments to IFRS 15 Clarifications to IFRS 15, Revenue from contracts with customers’ January 1, 2018

Amendments to IAS 7 Disclosure initiative January 1, 2017

Amendments to IAS 12, Recognition of deferred tax assets for unrealised losses January 1, 2017

Amendments to IAS 40, Transfers of investment property January 1, 2018

IFRIC 22, ‘Foreign currency transactions and advance consideration’ January 1, 2018


January 1, 2018


January 1, 2017


January 1, 2018

Exceptforthefollowing,theabovestandardsandinterpretationshavenosignificantimpacttotheCompany’sfinancialconditionandfinancialperformancebasedontheCompany’sassessment.

A. IFRS 9, ‘Financial instruments’(a) Classificationofdebt instruments isdrivenby theentity’sbusinessmodeland thecontractual

cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensiveincomeorfinancialassetmeasuredatamortizedcost.Equityinstrumentswouldbe classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.

(b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. Anentityassessesateachbalancesheetdatewhether therehasbeenasignificant increase incredit risk on that instrument since initial recognition to recognise 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Group shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivablesthatdonotcontainasignificantfinancingcomponent.

B. IFRS 15,‘Revenue from contracts with customers’IFRS15, ‘Revenue from contracts with customers’ replaces IAS 11 ‘Construction contracts’, IAS 18 ‘Revenue’ and relevant interpretations. According to IFRS 15, revenue is recognised when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the

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remainingbenefitsfrom,theasset.The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps:Step 1: Identify contracts with customerStep 2: Identify separate performance obligations in the contract(s)Step 3: Determine the transaction priceStep 4: Allocate the transaction price.Step5:Recogniserevenuewhentheperformanceobligationissatisfied.Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entity todisclosesufficient information toenableusersoffinancialstatements tounderstand thenature,amount,timinganduncertaintyofrevenueandcashflowsarisingfromcontractswithcustomers.

C. Theamendmentclarifiedthattotransferto,orfrom,investmentpropertiestheremustbeachangeinuse.Achangeinuseoccurswhenthepropertymeets,orceasestomeet,thedefinitionofinvestmentproperty and there is evidence of the change in use. A change in management’s intentions, in isolation, does not provide evidence of the change in use. In addition, the amendments added examples for the evidence of a change in use. The examples include assets under construction or development (not completed properties) transfer from investment property to owner-occupied property at commencement of development with a view to owner-occupation and transfer from inventories to investment property at inception of an operating lease to another party.

When adopting the new standards endorsed by the FSC effective from 2018, the Company will apply the new rules under IFRS 9 retrospectively from January 1, 2018, with the practical expedients permittedunderthestatement.ThesignificanteffectsofapplyingthenewstandardsasofJanuary1,2018 are summarized below:

InaccordancewithIFRS9, theCompanyexpects to reclassifyavailable-forsalefinancialassets-non-current and financial assets at cost-non-current in the amounts of $1,095,108 and $855,030 and make an irrevocable election at initial recognition on equity instruments not held for dealing or tradingpurpose,by increasingfinancialassetsat fairvalue throughothercomprehensive income,and other equity interest in the amounts of $1,975,749 and $25,611, respectively.

(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:

(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:

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. The quantitative impact will be disclosed when the assessment is complete.

IFRS 16, ‘Leases’ 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.

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

These parent company only financial statements are prepared by the Company in accordance with the Regulations Governing the Preparation of Financial Statements by Securities Issuers

(2) Basis of preparation

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

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

(b)Available-for-sale financial assets measured at fair value.


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

Amendments to IFRS 10 and IAS 28, Sale of contribution of assets between an investorand its associate or joint venture

To be determined by InternationalAccounting Standards Board

IFRS 16, ‘Leases’ January 1, 2019

IFRS 17, ‘Insurance contracts’ January 1, 2021

Amendments to IFRS 19, Plan amendment, curtailment or settlemet

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Theprincipalaccountingpoliciesapplied in thepreparationof theseparentcompanyonlyfinancialstatements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.(1) Compliance statement TheseparentcompanyonlyfinancialstatementsarepreparedbytheCompanyinaccordancewith

the “Regulations Governing the Preparation of Financial Statements by Securities Issuers.”(2) Basis of preparation

A. Except for the following items, these parent company only financial statements have been prepared under the historical cost convention:(a) Financial assets and financial liabilities (including derivative instruments) at fair value

throughprofitorloss.(b)Available-for-salefinancialassetsmeasuredatfairvalue.(c)Definedbenefitliabilitiesrecognizedbasedonthenetamountofpensionfundassetsless

unrecognizedactuarialgainsandpresentvalueofdefinedbenefitobligation.B. The preparation of financial statements in conformity with the 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 judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significanttotheparentcompanyonlyfinancialstatementsaredisclosedinNote5.

(3) Foreign currency translation TheparentcompanyonlyfinancialstatementsarepresentedinNewTaiwandollars,whichisthe

Company’s functional and presentation currency.A. Foreign currency transactions and balances

(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactionsarerecognizedinprofitorlossintheperiodinwhichtheyarise.

(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arisinguponre-translationatthebalancesheetdatearerecognizedinprofitorloss.

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

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

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B. Translation of foreign operations(a)Theoperatingresultsandfinancialpositionofall theCompanyentities,associatesand

jointly controlled entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:i. Assets and liabilities for each balance sheet presented are translated at the closing

exchange rate at the date of that balance sheet;ii. Income and expenses for each statement of comprehensive income are translated at

average exchange rates of that period; andiii. All resulting exchange differences are recognized in other comprehensive income.

(b) When the foreign operation partially disposed of or sold is an associate or jointly controlled entity, exchange differences that were recorded in other comprehensive incomeareproportionatelyreclassifiedtoprofitorlossaspartofthegainorlossonsale.In addition, even when the Company still retains partial interest in the former foreign associate or jointly controlled entity after losing significant influence over the former foreign associate, or losing joint control of the former jointly controlled entity, such transactions should be accounted for as disposal of all interest in these foreign operations.

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

(4) Classificationofcurrentandnon-currentitemsA. Ifassetsandliabilitiesarerelatedtotheconstructionbusiness,theyareclassifiedascurrent

or non-current according to their operating cycle; if they are not related to the construction business,theyareclassifiedbyannualbasis.

B.Assets thatmeetoneof thefollowingcriteriaareclassifiedascurrentassets;otherwise theyareclassifiedasnon-currentassets:(a) Assets arising from operating activities that are expected to be realised, or are intended to

be sold or consumed within the normal operating cycle;(b) Assets held mainly for trading purposes;(c) Assets that are expected to be realised within twelve months from the balance sheet date;(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those

that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

C.Liabilitiesthatmeetoneofthefollowingcriteriaareclassifiedascurrentliabilities;otherwisetheyareclassifiedasnon-currentliabilities:(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.

(5) Cash equivalents Cash equivalents refer to short-term, highly liquid investments that are readily convertible to

knownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue.Timedepositsmaturewithinthreemonthsandbondswithcallbackoptionsmeetthedefinitionaboveandareheldforthepurposeofmeetingshort-termcashcommitmentsinoperationsareclassifiedas cash equivalents.

(6) FinancialassetsatfairvaluethroughprofitorlossA. Financial assets at fair value through profit or loss are financial assets held for trading.

Financialassetsareclassifiedin thiscategoryofheldfor tradingifacquiredprincipallyforthe purpose of selling in the short-term.

B.Onaregularwaypurchaseorsalebasis,financialassetsatfairvaluethroughprofitorlossarerecognized and derecognised using trade date accounting.

C. Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financialassetsarerecognizedinprofitorloss.

(7) Available-for-salefinancialassetsA. Available-for-sale financial assets are non-derivatives that are either designated in this

categoryornotclassifiedinanyoftheothercategories.B.Onaregularwaypurchaseorsalebasis,available-for-salefinancialassetsarerecognizedand

derecognised using trade date accounting.C.Available-for-salefinancialassetsareinitiallyrecognizedatfairvalueplustransactioncosts.

Thesefinancialassetsaresubsequentlyremeasuredandstatedatfairvalue,andanychangesin the fair value of these financial assets are recognized in other comprehensive income. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must besettledbydeliveryofsuchunquotedequityinstrumentsarepresentedin‘financialassetsmeasured at cost’.

(8) Receivables Accounts receivable are loans and receivables originated by the entity. They are created by the

entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(9) ImpairmentoffinancialassetsA. The Company assesses at each balance sheet date whether there is objective evidence that

afinancialassetoragroupoffinancialassets is impairedasaresultofoneormoreeventsthat occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events)hasan impacton theestimatedfuturecashflowsof thefinancialassetorgroupoffinancialassetsthatcanbereliablyestimated.

B. The criteria that the Company uses to determine whether there is objective evidence of an impairment loss is as follows:(a)Significantfinancialdifficultyoftheissuerordebtor;(b) A breach of contract, such as a default or delinquency in interest or principal payments;

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(c) The disappearance of an active market for that financial asset because of financial difficulties;

(d) It becomes probable that the borrower will enter bankruptcy or other financial reorganization;

(e) Observable data indicating that there is a measurable decrease in the estimated future cash flowsfromagroupoffinancialassetssincetheinitialrecognitionofthoseassets,althoughthedecreasecannotyetbe identifiedwith the individualfinancialasset in thecompany,including adverse changes in the payment status of borrowers in the company or national or local economic conditions that correlate with defaults on the assets in the company;

(f)Informationaboutsignificantchangeswithanadverseeffectthathavetakenplaceinthetechnology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered.

C. When the Company assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the categoryoffinancialassets:(a) Financial assets measured at amortised cost The amount of the impairment loss is measured as the difference between the asset’s

carryingamountand thepresentvalueofestimatedfuturecashflowsdiscountedat thefinancialasset’soriginaleffective interest rate,and is recognized inprofitor loss. If, ina subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, thepreviouslyrecognizedimpairmentlossisreversedthroughprofitorlosstotheextentthat the carrying amount of the asset does not exceed its amortised cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(b) Financial assets measured at cost The amount of the impairment loss is measured as the difference between the asset’s

carryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedatcurrentmarketreturnrateofsimilarfinancialasset,andisrecognizedinprofitorloss.Impairmentloss recognized for this category shall not be reversed subsequently. Impairment loss is recognized by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(c)Available-for-salefinancialassets The amount of the impairment loss is measured as the difference between the asset’s

acquisition cost (less any principal repayment and amortisation) and current fair value, lessanyimpairmentlossonthatfinancialassetpreviouslyrecognizedinprofitorloss,andisreclassifiedfrom‘othercomprehensive income’ to‘profitor loss’. If, inasubsequentperiod, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognized, then suchimpairmentlossisreversedthroughprofitorloss.Impairmentlossofaninvestmentinanequityinstrumentrecognizedinprofitorlossshallnotbereversedthroughprofitorloss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(10) Derecognitionoffinancialassets TheCompanyderecognisesafinancialassetwhenoneofthefollowingconditionsismet:

A. Thecontractualrightstoreceivethecashflowsfromthefinancialassetexpire.B. Thecontractualrights toreceivecashflowsof thefinancialassethavebeentransferredand

theCompanyhastransferredsubstantiallyallrisksandrewardsofownershipofthefinancialasset.

C. The contractual rights to receive cash flows of the financial asset have been transferred; however,theCompanyhasnotretainedcontrolofthefinancialasset.

(11) Inventories Inventories including “land held for construction”, “construction in progress”, and “buildings

and land held for sale” are stated at cost and evaluated at the lower of cost or net realisable value at the end of period. The individual item approach is used in the comparison of cost and net realisable value. The calculation of net realisable value is based on the estimated selling price in the normal course of business, net of estimated costs of completion and related adjusted selling expenses. The interest costs related to construction in progress are capitalised during the construction.

(12) Construction contracts In accordance with IFRIC 15, ‘Agreements for the Construction of Real Estate’, if the buyer is

able to specify the major structural elements of the design of the real estate before construction begins and/or specify major structural changes once construction is in progress, the construction contract meets the definition of construction contract and criteria in IAS 11, ‘Construction Contracts’. In accordance with IAS 18, ‘Revenue’, the Company recognises sales revenue for contracts of presale of buildings that do not meet the definition of construction contract. For transactions thatmeet thedefinitionofconstructioncontract, theCompanyrecognisescontractrevenue in accordance with IAS 11.

(13) Investments accounted for using equity method / subsidiaries, associatesA. 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. Unrealisedprofit(loss)arisingfromthetransactionsbetweentheCompanyandsubsidiarieshave been offset. The accounting policies of the subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

C. TheCompany’sshareof itssubsidiaries’post-acquisitionprofitsor losses is recognized inprofitor loss,and itsshareofpost-acquisitionmovements inothercomprehensive incomeis recognized in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise losses proportionate to its ownership.

D. If changes in shareholdings in subsidiaries do not result to a loss on control (transaction with non-controlling interest), transactions shall be considered as equity transactions, which are transactions between owners. Difference of adjustment of non-controlling interest and fair value of consideration paid or received is recognized in equity.

E. When the Company loses its control in a subsidiary, the Company revalues the remaining investment in the prior subsidiary at fair value, that fair value is regarded as the fair value on initialrecognitionofafinancialassetorthecostoninitialrecognitionoftheassociateorjoint

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venture,andrecognisesthedifferencebetweenfairvalueandbookvalueintheprofitorlossfor the period. The accounting treatment on the previously recognized amount related to the subsidiary in other comprehensive income is the same as the basis if the Company directly disposes related assets or liabilities, which means if the Company has recognized gain or loss in other comprehensive income, the Company should reclassify the gain or loss on disposal ofrelatedassetsor liabilities toprofitor loss;andwhen theCompanylosescontrol in thesubsidiary,thegainorlossshouldbereclassifiedfromequitytoprofitorloss.

F.AssociatesareallentitiesoverwhichtheCompanyhassignificantinfluencebutnotcontrol.Ingeneral,itispresumedthattheinvestorhassignificantinfluence,ifaninvestorholds,directlyor indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.

G. The Company’s share of its associates’ post-acquisition profits or losses is recognized in profitor loss,and itsshareofpost-acquisitionmovements inothercomprehensive incomeis recognized in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, the Company does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

H. When changes in an associate’s equity are not recognized in profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the associate, the Company recognises the Company’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.

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

J. In the case that an associate issues new shares and the Company does not subscribe or acquire new shares proportionately, which results in a change in the Company’s ownership percentageoftheassociatebutmaintainssignificantinfluenceontheassociate,then‘capitalsurplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Company’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate arereclassifiedtoprofitorlossproportionatelyonthesamebasisaswouldberequirediftherelevant assets or liabilities were disposed of.

K.Uponlossofsignificantinfluenceoveranassociate,theCompanyremeasuresanyinvestmentretained in the former associate at its fair value. Any difference between fair value and carryingamountisrecognizedinprofitorloss.

L.WhentheCompanydisposesitsinvestmentinanassociateandlosessignificantinfluenceoverthis associate, the amounts previously recognized in other comprehensive income in relation to theassociate,arereclassified toprofitor loss,on thesamebasisaswouldberequired iftherelevantassetsor liabilitiesweredisposedof. If it retainssignificant influenceover thisassociate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

M. When the Company disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associatearetransferredtoprofitorloss.Ifitretainssignificantinfluenceoverthisassociate,then the amounts previously recognized as capital surplus in relation to the associate are transferredtoprofitorlossproportionately.

N. Pursuant to the “Regulations Governing the Preparation of Financial Reports 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 parentinthefinancialstatementspreparedwithbasisforconsolidation.Owners’equityintheparentcompanyonlyfinancialstatementsshallequal toequityattributable toownersof theparentinthefinancialstatementspreparedwithbasisforconsolidation.

(14) Property, plant and equipmentA. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during

the construction period are capitalised.B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate

asset,asappropriate,onlywhenit isprobablethatfutureeconomicbenefitsassociatedwiththe itemwillflowto theCompanyand thecostof the itemcanbemeasuredreliably.Thecarrying amount of the replaced part is derecognised. All other repairs and maintenance are chargedtoprofitorlossduringthefinancialperiodinwhichtheyareincurred.

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.Eachpartofanitemofproperty,plant,andequipmentwithacostthatissignificantinrelation to the total cost of the item must be depreciated separately.

D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economicbenefitsembodiedintheassetshavechangedsignificantly,anychangeisaccountedfor 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:

(15) Operating leases (lessor/ lessee) Rentalincomefromoperatingleases(excludinganybenefitsprovidedtolessee)orpaymentsfor

operatingleases(excludinganybenefitsreceivedfromlessor)arerecognizedasprofitorlossforthe period over the leasing period on a straight line basis.

(16) Investment property An investment property is stated initially at its cost and measured subsequently using the cost

model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 44 ~ 60 years.

(17) Intangible assets Intangible assets consist of service concession, which are stated at acquisition cost and amortised

on a straight line basis over its useful life of 44 years.(18) Impairmentofnon-financialassets 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

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by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(19) BorrowingsA. Borrowings are recognized initially at fair value, net of transaction costs incurred.

Borrowings are subsequently stated at amortised cost; any difference between the proceeds (netof transactioncosts)and the redemptionvalue is recognized inprofitor lossover theperiod of the borrowings using the effective interest method.

B. Fees paid on the establishment of loan facilities are recognized 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 drawdedown, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(20) Notes and accounts payable Notes and accounts payable are obligations to pay for goods or services that have been acquired

in the ordinary course of business from suppliers. They are recognized initially at fair value and subsequently measured at amortised cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(21) Derecognitionoffinancialliabilities A financial liability is derecognised when the obligation under the liability specified in the

contract is discharged or cancelled or expires. (22) Offsettingfinancialinstruments Financial assets and liabilities are offset and reported in the net amount in the balance sheet when

there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

(23) Financial liabilities Bonds payable Ordinary corporate bonds issued by the Company are initially recognized 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 deductionfrombondspayable,whichisamortisedinprofitorlossasanadjustmenttothe‘financecosts’ over the period of bond circulation using the effective interest method.

(24) Provisions Provisions are recognized when the Company has a present legal or constructive obligation as a

resultofpastevents,anditisprobablethatanoutflowofeconomicresourceswillberequiredtosettle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the currentmarketassessmentsof the timevalueofmoneyandtherisksspecific to theobligation.When discounting is used, the increase in the provision due to passage of time is recognized as

interest expense. Provisions are not recognized for future operating losses.(25) Employeebenefits

A. Short-termemployeebenefits 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 recognized as expenses in that period when the employees render service.

B. Pensions(a)Definedcontributionplan Fordefinedcontributionplan,thecontributionsarerecognizedaspensionexpenseswhen

they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments.

(b)Definedbenefitplani. Netobligationunderadefinedbenefitplanisdefinedasthepresentvalueofanamount

ofpensionbenefits thatemployeeswill receiveonretirementfor theirserviceswiththe Company in current period or prior periods. The liability recognized in the balance sheetinrespectofthedefinedbenefitpensionplanisthepresentvalueofthedefinedbenefit obligation at the balance sheet date less the fair value of plan assets. The definedbenefitnetobligation iscalculatedannuallyby independentactuariesusingthe projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in whichthebenefitswillbepaid,andthathavetermstomaturityapproximatingtotheterms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Company uses interest rates of government bonds (at the balance sheet date) instead.

ii. Actuarial gains and losses arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise.

iii. Pastservicecostsarerecognizedimmediatelyinprofitorloss.C. Employees’ compensation and directors’ and supervisors’ remuneration Employees’ compensation and directors’ and supervisors’ remuneration are recognized as

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

(26) Income taxA. The tax expense for the period comprises current and deferred tax. Tax is recognized in

profitorloss,excepttotheextentthatitrelatestoitemsrecognizedinothercomprehensiveincome or items recognized directly in equity, in which cases the tax is recognized 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

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be paid to the tax authorities. An additional 10% 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 recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the non-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 taxableprofitor loss.Deferredincometaxisprovidedontemporarydifferencesarisingon investments in subsidiaries and associates, 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 recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognized deferred income tax assets are reassessed.

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

F. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equityinvestmentstotheextentthatitispossiblethatfuturetaxableprofitwillbeavailableagainst which the unused tax credits can be utilised.

(27) Share capital Ordinarysharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofnew

shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.(28) 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 dividendsarerecordedasstockdividendstobedistributedandarereclassifiedtoordinaryshareon the effective date of new shares issuance.

(29) Revenue recognitionA. Sales of goods The Company subcontracts building construction, sale and lease of public housings and

business buildings. Revenue arising from the sales of goods should be recognized when the Company has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transactionwillflowto theentity.Thedeliveryofgoods iscompletedwhenthesignificant

risks and rewards of ownership have been transferred to the customer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have beensatisfied.Forpre-sellingofhousingthattheCompanyhassubcontractedtoconstructioncompanies to build, as stated in Note 4(12), sales revenue is recognized in accordance with IAS18,‘Revenue’.Thus, theCompanyhascarriedovercostsandrecognizedprofitor losswhen it completes transfer of title and settlement of housing. Only when housing was actually settled (or only when ownership was transferred) before balance sheet date, and related risk return was transferred would sales revenue be recognized.

B. Service concession revenue Please refer to Note 4(30) for service concession contracts provided by the Company.

(30) Service concession arrangementsA. The Company was contracted by National Taiwan University (grantor) to provide

construction for the government’s infrastructure assets for public services and operate those assets for Chang Hsing St. Campus for 44 years and 6 months, and for Shui Yuan Campus for 44 years and 4 months after construction is completed. When the term of operating period expires, the underlying infrastructure assets will be transferred to National Taiwan University without consideration. The Company allocates the fair value of the consideration received or receivable in respect of the service concession arrangement between construction services and operating services provided based on their relative fair values, and recognises such allocated amounts as revenues in accordance with IAS 11, ‘Construction Contracts’, and IAS 18, ‘Revenue’, respectively.

B. Costs incurred on provision of construction services or upgrading services under a service concession arrangement are accounted for in accordance with IAS 11, ‘Construction Contracts’.

C. The consideration received or receivable from the grantor in respect of the service concession arrangementisrecognizedatitsfairvalue.Suchconsiderationsarerecognizedasafinancialasset or an intangible asset based on how the considerations from the grantor to the operator aremadeasspecifiedinthearrangement.

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 are continually evaluated and adjusted basedonhistoricalexperienceandotherfactors.Suchassumptionsandestimateshaveasignificantrisk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financialyear.Theaboveinformationisaddressedbelow:(1) Critical judgements in applying the Company’s accounting policies

A. Financial assets—impairment of equity investments TheCompanyfollowstheguidanceofIAS39todeterminewhetherafinancialasset—equity

investment is impaired. This determination requires significant judgement. In making this judgement, the Company evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and

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short-term business outlook for the investee, including factors such as industry and sector performance,changesintechnologyandoperationalandfinancingcashflow.

If the decline of the fair value of an individual equity investment below cost was considered significant or prolonged, the Company would suffer an additional loss in its financial statements, being the transfer of the accumulated fair value adjustments recognized in other comprehensiveincomeontheimpairedavailable-for-salefinancialassetstoprofitorlossorbeingtherecognitionoftheimpairmentlossontheimpairedfinancialassetsmeasuredatcostinprofitorloss.

B. Investment property The Company uses a portion of the property for its own use and another portion to earn

rentals or for capital appreciation. When these portions cannot be sold separately and cannot be leased out separately under a finance lease, the property is classified as investment propertyonlyiftheown-useportionaccountsforaninsignificantportionoftheproperty.

(2) Critical accounting estimates and assumptions No assumptions and estimates have a significant risk of causing a material adjustment to the

carryingamountsofassetsandliabilitieswithinthenextfinancialyear.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

If the decline of the fair value of an individual equity investment below cost was considered significant or prolonged, the Company would suffer an additional loss in its financial statements, being the transfer of the accumulated fair value adjustments recognized in other comprehensive income on the impaired available-for-sale financial assets to profit or loss or being the recognition of the impairment loss on the impaired financial assets measured at cost in profit or loss.

B. Investment property

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

(2) Critical accounting estimates and assumptions No 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.


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.

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



Checking accounts and demand deposits 2,422,586 2,354,383

Repurchase bonds - 500,080 $ 2,426,891 $ 2,856,845

A. TheCompanytransactswithavarietyoffinancialinstitutionsallwithhighcreditqualitytodisperse credit risk, so it expects that the probability of counterparty default is remote.

B. TherepurchasebondsheldbytheCompanyhashighliquidity,sotheywereclassifiedascashequivalents.

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

A. The Company recognized net gain of $2,242 and $384 for the years ended December 31, 2017 and 2016, respectively.

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


A. The Company’s notes receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scale of business and profitability.


The Company analyses impairment based on any changes to credit quality in notes receivable of individual customers from the initial granting date until the financial period-end, historical experience and current financial condition, to estimate the amount that may not be recovered.

C. The Company does not hold any collateral as security.

Items December 31, 2017 December 31, 2016

Current items:

Financial assets held for trading

Beneficiary certificates 100,620$ 300,000$

Non-current items:



Financial assets held for trading valuation

adjustments 2,552 2,253 78,552$ 78,253$



2017 2016


Write-ofs during the period - 344)(

At December 31 $ - $ -



B. Detailsof theCompany’sfinancialassetsand liabilitiesat fairvalue throughprofitor losspledged to others as collateral are provided in Note 8.











Current items:



Non-current items:




adjustments 2,552 2,253 78,552$ 78,253$



2017 2016





A. The Company’s notes receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics,scaleofbusinessandprofitability.

B. Movementanalysisoffinancialassetsthatwereimpaired(allowancefordoubtfulaccountsofnotes receivable) is as follows:










Current items:



Non-current items:




adjustments 2,552 2,253 78,552$ 78,253$



2017 2016





The Company analyses impairment based on any changes to credit quality in notes receivable ofindividualcustomersfromtheinitialgrantingdateuntilthefinancialperiod-end,historicalexperienceandcurrentfinancialcondition,toestimatetheamountthatmaynotberecovered.

C. The Company does not hold any collateral as security.(4) Accounts receivable, net


A.The Company’s accounts receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scale of business and profitability. Accounts receivable are classified into 2 categories:


(b) Receivables from travel department: mainly from credit card payments.


The above is analysed based on number of days overdue.


The Company analyses based on any changes to credit quality in accounts receivable of individual customers from the initial grant date until the financial period-end, historical experience and current financial condition, to estimate the amount that may not be recovered.

D. The Company does not hold any collateral as security.


Accounts receivable $ 88,619 $ 89,992

Less: Allowance for doubtful accounts ( 3,743) ( 3,743) $ 84,876 $ 86,249


Up to 60 days $ 31 $ -61 to 120 days 37 - 121 to 180 days - - Over 181 days 1,083 1,117

$ 1,151 $ 1,117

2017 2016

Balance as of January 1 and December 31 $ 3,743 $ 3,743


A. The Company’s accounts receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scaleofbusinessandprofitability.Accounts receivableareclassified into2categories:(a) Sale of real estate: collection of customers’ loans from banks.(b) Receivables from travel department: mainly from credit card payments.
















$ 1,151 $ 1,117

2017 2016




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C. Movementanalysisoffinancialassetsthatwereimpaired(allowancefordoubtfulaccountsofaccounts receivable) is as follows:















$ 1,151 $ 1,117

2017 2016



The Company analyses based on any changes to credit quality in accounts receivable of individual customers from the initial grant date until the financial period-end, historical experienceandcurrentfinancialcondition,toestimatetheamountthatmaynotberecovered.

D. The Company does not hold any collateral as security.(5) Inventories

(5) Inventories

A. The cost of inventories recognized as expense for the years ended December 31, 2017 and 2016

was $4,420,648 and $3,739,186, respectively, including the amounts of $11,023 and $203, respectively that the Company wrote down from cost to net realisable value accounted for as cost of goods sold.

B. Details of the Company’s inventories pledged to others as collateral are provided in Note 8. C. The interest capitalized as cost of inventory is as follows:





Prepayment for land 187,026 - 187,026

Prepayment for buildings and land 945,903 - 945,903Merchandise 1,519 - 1,519

$ 21,348,105 ($ 103,578) $ 21,244,527

December 31, 2017





Prepayment for land 132,652 - 132,652Prepayment for buildings and land 954,027 - 954,027Merchandise 1,453 - 1,453

$ 21,493,254 ($ 114,601) $ 21,378,653

December 31, 2016

2017 2016

Interest paid before capitalization $ 372,538 $ 384,261

Interest capitalized $ 240,220 $ 181,888



A. The cost of inventories recognized as expense for the years ended December 31, 2017 and 2016 was $4,420,648 and $3,739,186, respectively, including the amounts of $11,023 and $203, respectively that the Company wrote down from cost to net realisable value accounted for as cost of goods sold.

B. Details of the Company’s inventories pledged to others as collateral are provided in Note 8.C. The interest capitalized as cost of inventory is as follows:

(5) Inventories

A. The cost of inventories recognized as expense for the years ended December 31, 2017 and 2016

was $4,420,648 and $3,739,186, respectively, including the amounts of $11,023 and $203, respectively that the Company wrote down from cost to net realisable value accounted for as cost of goods sold.

B. Details of the Company’s inventories pledged to others as collateral are provided in Note 8. C. The interest capitalized as cost of inventory is as follows:





Prepayment for land 187,026 - 187,026

Prepayment for buildings and land 945,903 - 945,903Merchandise 1,519 - 1,519

$ 21,348,105 ($ 103,578) $ 21,244,527

December 31, 2017





Prepayment for land 132,652 - 132,652Prepayment for buildings and land 954,027 - 954,027Merchandise 1,453 - 1,453

$ 21,493,254 ($ 114,601) $ 21,378,653

December 31, 2016

2017 2016

Interest paid before capitalization $ 372,538 $ 384,261

Interest capitalized $ 240,220 $ 181,888



D. Detailsofsignificantinventories:(a) Buildings and land in progress




Ling Ko Dist. Li Shing Section No. 1209, etc. 1,675,282$ 1,515,855$ Prince W (New Taipei City Shing Jheng Section No. 883, etc.) 1,035,789 950,762 Bali Dist Chung Chang Section No. 2222 and 211-1, etc. 688,073 686,428 Prince Hua Wei (Shilin Dist. Zhishan Section No. 602, etc.) 591,174 269,237 Jhong Li City Shuang Ling Section No. 1449, etc. 590,070 447,678

Prince HsinYi (XinZhuang Fuduxin) - 2,022,377 Prince Fu III (Taoyuan Qing Sun Section No. 446) - 1,438,248

4,580,388$ 7,330,585$

Taichung branch December 31, 2017 December 31, 2016 Prince Yu Ding (Hui Li Section No. 195) 1,067,003$ 855,004$ Ping Hsin Section No. 694, etc. 1,053,354 897,690 Prince County(Chaotun Section No. 755, etc.) 475,092 320,984 W Epoch(Kao an Section No. 591-1.) 370,019 139,576

Hsinfuliao Section No. 1096, No.1907, No. 1098, No. 1108, etc. 315,167 184,609

Jin Shuei Dist. Wu Show Section No. 1037, No. 1038, No. 1040, etc. 206,877 206,249 Others 7 7

3,487,519$ 2,604,119$

Tainan branch December 31, 2017 December 31, 2016 Prince Feng Yun (Hsin Ying Section No. 841-9) 897,501$ 665,265$ Jin Hua Section No. 1361 688,235 688,200 Prince Jum Fon Huei (Yu Ming Section No. 681-8) 585,323 375,447 Chin An Section No. 296, No. 297, etc. 239,505 156,124 Shan Chia Section No. 939, etc. 154,181 152,384 Others 3,738 3,525

2,568,483$ 2,040,945$

Kaohsiung branch December 31, 2017 December 31, 2016 Prince Yun (Nanzi subsection No. 158) 680,998$ 125,629$

Prince Cloud C townhouse (Ren Wu New Hougang West Section No .69, etc.) 504,977 161,013 Prince Cloud B (Ren Wu New Hougang West Section No .42, etc.) 379,133 379,133 Ren Wu New Hougang West Section No. 88 experimental house 72,929 72,929

Prince Cloud C apartment (Ren Wu New Hougang West Section No. 69-148 etc.) - 265,807 Others 348 4

1,638,385 1,004,515 Total buildings and land in progress $ 12,274,775 12,980,164$

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(b) Land held for construction site




Others 5,978 5,978 146,134$ 146,134$


Wu Feng Lot No. 365~ 855, etc. 175,661$ 175,661$

Song Quan Lot No. 164, etc. 137,697 176,296


Song Chang Lot No. 557, etc. 19,912 19,912

Hong Long Zub Section No. 133-004 19,513 19,513

Xi Zhou Lot No. 112-54, etc. 11,941 11,941

Others 18,780 18,780

438,671$ 477,270$


Shan Zhong Lot No. 1468, 1475 & 1476, etc. 234,699$ 234,699$


Chin An Section No. 294, etc. 49,640 -



Chin An Section No. 373-377, etc. 15,139 15,139

Bao An Lot No. 882, etc. 10,325 10,325

Others 14,550 14,550

419,105$ 369,465$


Ren Wu New Hougang West Section No. 53, etc. 968,071$ 987,079$


Da Hua Lot No. 434 & 436 13,923 13,923

1,389,351$ 1,408,359$

Total land held for construction site 2,393,261$ 2,401,227$

(c) Buildings and land held for sale




Prince HsinYi (XinZhuang Fuduxin) 2,012,385$ -$


Prince Fu II 110,680 287,735





Others 546 546

$ 3,875,221 $ 2,619,752


Chin Fon Gin 170,233$ 403,492$

Prince Fu 27,417 27,417

The Cloud Century Special A - 292,529


Others 6,118 10,889

$ 203,768 $ 747,745


Flower Bo Five 968,124$ 1,273,009$ Jun Chan LV 19,725 19,725



Others 2,188 2,188

$ 997,425 $ 1,342,870


Prince Cloud D $ 196,339 $ 222,345

Prince Cloud townhouse 182,449 -



$ 469,207 $ 313,364








Prince HsinYi (XinZhuang Fuduxin) 2,012,385$ -$


Prince Fu II 110,680 287,735





Others 546 546

$ 3,875,221 $ 2,619,752


Chin Fon Gin 170,233$ 403,492$

Prince Fu 27,417 27,417

The Cloud Century Special A - 292,529


Others 6,118 10,889

$ 203,768 $ 747,745


Flower Bo Five 968,124$ 1,273,009$ Jun Chan LV 19,725 19,725



Others 2,188 2,188

$ 997,425 $ 1,342,870


Prince Cloud D $ 196,339 $ 222,345

Prince Cloud townhouse 182,449 -



$ 469,207 $ 313,364








A. The Company recognized $86,405 and $355,139 in other comprehensive loss for fair value change and

reclassified $0 and $2,219 from equity to loss for the years ended December 31, 2017 and 2016, respectively.

B. Details of the Company’s available-for-sale financial assets pledged to others as collateral are provided in Note 8.

(8) Financial assets measured at cost

A. Based on the Company’s intention, its investment in President Energy Development Ltd. and President International Development Corp. should be classified as ‘available-for-sale financial assets’. However, as President Energy Development Ltd. and President International Development Corp. stocks are not traded in an active market, and no sufficient industry information of companies similar to President Energy Development Ltd. and President International Development Corp. can be obtained, the fair value of the investment in President Energy Development Ltd. and President International Development Corp. stocks cannot be measured reliably. Thus, the Company classified those stocks as ‘financial assets measured at cost’.




Prince HsinYi (XinZhuang Fuduxin) - 72,000

945,903$ $ 954,027


Deferred sales commission $ 213,558 $ 246,014

Items December 31, 2017 December 31, 2016Non-current items: Listed ( TSE and OTC ) stocks $ 103,523 $ 104,033

Unlisted stocks 29,234 29,234

132,757 133,267Valuation adjustment of available-for-sale financial assets 962,351 1,048,756

1,095,108$ 1,182,023$


Non-current items: Unlisted stocks $ 855,030 $ 877,800

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945,903$ $ 954,027






1,095,108$ 1,182,023$



(7) Available-for-salefinancialassets













945,903$ $ 954,027






1,095,108$ 1,182,023$



A. The Company recognized $86,405 and $355,139 in other comprehensive loss for fair value changeandreclassified$0and$2,219fromequitytolossfortheyearsendedDecember31,2017 and 2016, respectively.

B. DetailsoftheCompany’savailable-for-salefinancialassetspledgedtoothersascollateralareprovided in Note 8.














945,903$ $ 954,027






1,095,108$ 1,182,023$



A. Based on the Company’s intention, its investment in President Energy Development Ltd. and President International Development Corp. should be classified as ‘available-for-sale financialassets’.However,asPresidentEnergyDevelopmentLtd.andPresidentInternationalDevelopment Corp. stocks are not traded in an active market, and no sufficient industry information of companies similar to President Energy Development Ltd. and President International Development Corp. can be obtained, the fair value of the investment in President Energy Development Ltd. and President International Development Corp. stocks cannotbemeasuredreliably.Thus, theCompanyclassifiedthosestocksas‘financialassetsmeasured at cost’.

B. DetailsoftheCompany’sfinancialassetsmeasuredatcostpledgedtoothersascollateralareprovided in Note 8.

B.Details of the Company’s financial assets measured at cost pledged to others as collateral are

provided in Note 8.

(9) Investments accounted for under the equity method A. Details of investments accounted for under the equity method are set forth below:

Note As of December 31, 2017 and 2016, the book value of the Company’s investment in Jin Yi Xing Plywood Co., Ltd. and Dong-Feng Enterprises Co., Ltd. were ($351,682) and ($151,812), and ($361,186) and ($151,839), respectively, which was below zero. Thus, the investments were transferred to other non-current liabilities at $503,494 and $513,025, respectively.

B. Subsidiaries

Please refer to Note 4(3) of the Company’s consolidated financial statements for the subsidiaries’ information.


Name of subsidiaries and associates amount ownership amount ownership

Uni-President Development Corp. $ 1,126,160 30.00% $ 1,229,770 30.00%

Prince Real Estate Co., Ltd. 1,631,241 99.65% 1,210,130 99.65%

Cheng-shi Investment Holdings Co., Ltd. 1,005,752 100.00% 1,007,834 100.00%

Time Square International Hotel 619,079 100.00% 462,969 100.00%

Prince Housing Investment Co., Ltd. 437,255 100.00% 446,709 100.00%

The Splendor Hotel Taichung 308,988 50.00% 328,715 50.00%

Geng-Ding Co., Ltd. 299,577 30.00% 320,555 30.00%

Prince Property Management Consulting Co., Ltd. 281,871 100.00% 282,007 100.00%


Jin Yi Xing Plywood Co., Ltd. (Notes) - 99.65% - 99.65%

Dong-Feng Enterprises Co., Ltd. (Note) - 100.00% - 100.00%

Others (individually less than 2%) 9,467 - 9,526 -

$ 5,748,873 $ 5,373,556


B. Subsidiaries Please refer to Note 4(3) of the Company’s consolidated financial statements for the

subsidiaries’ information.C. Associates

a. ThesummarizedfinancialinformationoftheassociatesthatarematerialtotheCompanyisas follows:

Balance sheet

C. Associates

a. The summarized financial information of the associates that are material to the Company is as follows: Balance sheet


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

As of December 31, 2017 and 2016, the carrying amount of the Company’s individually immaterial associates amounted to $329,060 and $395,896, respectively.

D. The Company’s share of profit of subsidiaries, associates and joint ventures accounted for using equity method for the years ended December 31, 2017 and 2016 was $788,953 and $559,388, respectively.

E. The investment income of certain investees for the years ended December 31, 2017 and 2016 accounted for under the equity method was based on their financial statements for the corresponding periods, which were audited by other independent accountants. The investment (loss) income recognized for these investees for the years ended December 31, 2017 and 2016 was $911


Current assets $ 208,093 $ 265,427


Current liabilities ( 3,432,033) ( 3,319,592)

Non-current liabilities ( 1,725,406) ( 1,974,139)

Total net assets $ 3,753,868 $ 4,099,234

Share in associate's net assets $ 1,126,160 $ 1,229,770


2017 2016

Revenue $ 949,102 $ 981,167

Profit for the year from continuing operations $ 111,834 $ 143,048

Total comprehensive income $ 111,834 $ 143,048


2017 2016Profit for the period from continuing

operations $ 4,293 $ 242,267

Other comprehensive income- net of tax ( 1,363) 1,396



(9) Investments accounted for under the equity methodA. Details of investments accounted for under the equity method are set forth below:

Note: As of December 31, 2017 and 2016, the book value of the Company’s investment in Jin Yi Xing Plywood Co., Ltd. and Dong-Feng Enterprises Co., Ltd. were ($351,682) and ($151,812), and ($361,186) and ($151,839), respectively, which was below zero. Thus, the investments were transferred to other non-current liabilities at $503,494 and $513,025, respectively.

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C. Associates

a. The summarized financial information of the associates that are material to the Company is as follows: Balance sheet





E. The investment income of certain investees for the years ended December 31, 2017 and 2016 accounted for under the equity method was based on their financial statements for the corresponding periods, which were audited by other independent accountants. The investment (loss) income recognized for these investees for the years ended December 31, 2017 and 2016 was $911


Current assets $ 208,093 $ 265,427


Current liabilities ( 3,432,033) ( 3,319,592)

Non-current liabilities ( 1,725,406) ( 1,974,139)

Total net assets $ 3,753,868 $ 4,099,234

Share in associate's net assets $ 1,126,160 $ 1,229,770


2017 2016

Revenue $ 949,102 $ 981,167

Profit for the year from continuing operations $ 111,834 $ 143,048



2017 2016Profit for the period from continuing

operations $ 4,293 $ 242,267

Other comprehensive income- net of tax ( 1,363) 1,396




E. The investment income of certain investees for the years ended December 31, 2017 and 2016accountedforunder theequitymethodwasbasedontheirfinancialstatementsfor thecorresponding periods, which were audited by other independent accountants. The investment (loss) income recognized for these investees for the years ended December 31, 2017 and 2016 was $911 and 84,550, respectively. As of December 31, 2017 and 2016, investment balance accounted for under the equity method in these investees were $147,765 and $897,432, respectively.

Theinvesteeswhosefinancialstatementswereauditedbyotherindependentaccountantsforthe years ended December 31, 2017 were as follows:

Geng-Ding Co., Ltd. and Dong-Feng Enterprises Co., Ltd Theinvesteeswhosefinancialstatementswereauditedbyotherindependentaccountantsfor

the years ended December 31, 2016 were as follows: Prince Property Management Consulting Co., Ltd., Geng-Ding Co., Ltd., Prince Housing

Investment Co., Ltd. and Dong-Feng Enterprises Co., Ltd.F. Details of the Company’s investments accounted for under equity method pledged to others

as collateral are provided in Note 8.(10) Property, plant and equipment


and 84,550, respectively. As of December 31, 2017 and 2016, investment balance accounted for under the equity method in these investees were $147,765 and $897,432, respectively.

The investees whose financial statements were audited by other independent accountants for the years ended December 31, 2017 were as follows:

Geng-Ding Co., Ltd. and Dong-Feng Enterprises Co., Ltd


Prince Property Management Consulting Co., Ltd., Geng-Ding Co., Ltd., Prince Housing Investment Co., Ltd. and Dong-Feng Enterprises Co., Ltd.

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



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

December 31, 2017 December 31, 2016Land $ 191,884 $ 191,884Buildings 294,216 302,374Computer and communication equipment 6,572 9,748Transportation equipment 4,445 3,303Office equipment 32,410 40,143Leasehold improvements 22,996 24,323Other equipment 257 314

$ 552,780 $ 572,089



Land $ 191,884 $ - $ - $ - $ 191,884

Buildings 438,331 - - - 438,331

Computer and communication equipment 59,989 1,117 ( 1,063) - 60,043

Transportation equipment 9,767 3,411 ( 1,611) - 11,567

Office equipment 178,475 4,231 ( 526) - 182,180

Leasehold improvements 73,532 - - - 73,532

Other equipment 1,912 1 ( 6) - 1,907

$ 953,890 $ 8,760 ($ 3,206) -$ $ 959,444



and 84,550, respectively. As of December 31, 2017 and 2016, investment balance accounted for under the equity method in these investees were $147,765 and $897,432, respectively.


Geng-Ding Co., Ltd. and Dong-Feng Enterprises Co., Ltd


Prince Property Management Consulting Co., Ltd., Geng-Ding Co., Ltd., Prince Housing Investment Co., Ltd. and Dong-Feng Enterprises Co., Ltd.

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




December 31, 2017 December 31, 2016Land $ 191,884 $ 191,884Buildings 294,216 302,374Computer and communication equipment 6,572 9,748Transportation equipment 4,445 3,303Office equipment 32,410 40,143Leasehold improvements 22,996 24,323Other equipment 257 314

$ 552,780 $ 572,089



Land $ 191,884 $ - $ - $ - $ 191,884

Buildings 438,331 - - - 438,331

Computer and communication equipment 59,989 1,117 ( 1,063) - 60,043

Transportation equipment 9,767 3,411 ( 1,611) - 11,567

Office equipment 178,475 4,231 ( 526) - 182,180


Other equipment 1,912 1 ( 6) - 1,907

$ 953,890 $ 8,760 ($ 3,206) -$ $ 959,444


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



Land $ 191,884 $ - $ - $ - $ 191,884

Buildings 438,331 - - - 438,331

Computer and communication equipment 59,504 485 - - 59,989

Transportation equipment 10,767 - ( 1,000) - 9,767

Office equipment 175,859 2,616 - - 178,475


Other equipment 1,914 - ( 2) - 1,912

$ 951,791 $ 3,101 ($ 1,002) $ - $ 953,890




Land 135,957$ 8,158$ -$ -$ 144,115$

Computer and communication equipment 50,241 4,268 1,038)( - 53,471

Transportation equipment 6,464 1,047 389)( - 7,122

Office equipment 138,332 11,963 525)( - 149,770

Leasehold improvemnets 49,209 1,327 - - 50,536

Other equipment 1,598 52 - - 1,650

381,801$ 26,815$ 1,952)($ -$ 406,664$




Buildings 127,798$ 8,159$ -$ -$ 135,957$

Computer and communication equipment 45,164 5,077 - - 50,241

Transportation equipment 6,370 900 806)( - 6,464




355,034$ 27,573$ 806)($ -$ 381,801$


VI


VI






Land $ 191,884 $ - $ - $ - $ 191,884

Buildings 438,331 - - - 438,331

Computer and communication equipment 59,504 485 - - 59,989

Transportation equipment 10,767 - ( 1,000) - 9,767



Other equipment 1,914 - ( 2) - 1,912

$ 951,791 $ 3,101 ($ 1,002) $ - $ 953,890




Land 135,957$ 8,158$ -$ -$ 144,115$

Computer and communication equipment 50,241 4,268 1,038)( - 53,471

Transportation equipment 6,464 1,047 389)( - 7,122

Office equipment 138,332 11,963 525)( - 149,770

Leasehold improvemnets 49,209 1,327 - - 50,536


381,801$ 26,815$ 1,952)($ -$ 406,664$




Buildings 127,798$ 8,159$ -$ -$ 135,957$

Computer and communication equipment 45,164 5,077 - - 50,241

Transportation equipment 6,370 900 806)( - 6,464




355,034$ 27,573$ 806)($ -$ 381,801$



(11) Investment propertyA. Details of book values are as follows:

~43~

(11) Investment property A. Details of book values are as follows:

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



December 31, 2017 December 31, 2016Land 265,550$ 265,550$ Leased assets-land 2,567,358 2,567,429 Leased assets-buildings 3,047,652 3,137,449

5,880,560$ 5,970,428$



Land $ 265,550 $ - $ - $ - $ 265,550



$ 6,796,165 -$ 5,511)($ -$ $ 6,790,654




Land $ 265,550 $ - $ - $ - $ 265,550



$ 6,800,574 -$ 4,409)($ -$ $ 6,796,165








Leased assets-buildings $ 740,922 $ 85,604 789)($ -$ $ 825,737



~43~

(11) Investment property A. Details of book values are as follows:




December 31, 2017 December 31, 2016Land 265,550$ 265,550$ Leased assets-land 2,567,358 2,567,429 Leased assets-buildings 3,047,652 3,137,449

5,880,560$ 5,970,428$



Land $ 265,550 $ - $ - $ - $ 265,550



$ 6,796,165 -$ 5,511)($ -$ $ 6,790,654




Land $ 265,550 $ - $ - $ - $ 265,550



$ 6,800,574 -$ 4,409)($ -$ $ 6,796,165








Leased assets-buildings $ 740,922 $ 85,604 789)($ -$ $ 825,737


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

~44~

D. As of December 31, 2017 and 2016, the fair value of the investment property held by the Company was $12,720,361 and $12,886,955, respectively. The Company’s management estimated the fair value based on market evidence on transaction price of similar property and assessed value.


(12) Intangible assets


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

2017 2016

Rental revenue from the lease of the investment property $ 312,716 $ 294,260

Direct operating expenses arising from the investment property that generated rental income in the period $ 161,387 $ 156,000

Direct operating expenses arising from the investment property that did not generate rental income in the period -$ -$






Service concession $ 2,868,372 -$ -$ -$ $ 2,868,372







Accumulated Amortisation book amount Additions Disposals Reclassifications book amount

Service concession $ 629,185 $ 61,253 -$ -$ $ 690,438




(12) Intangible assetsA. Details of book values are as follows:

~44~






2017 2016



















~44~






2017 2016




















~45~

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



(14) Short-term notes payable

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

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






2017 2016Operating costs-amortization expenses $ 61,253 $ 61,252

For the years ended December 31,


Secured borrowings 690,000$ 2,135,659$

Unsecured borrowings - 80,000

690,000$ 2,215,659$



Commercial papers 855,900$ 340,000$

Less: Unamortised discount 342)( 306)(

855,558$ 339,694$


Item December 31, 2017 December 31, 2016Advance real estate receipts 823,934$ 880,026$ Advance rent 117,359 132,381 Other advance receipts 1,072 959

942,365$ 1,013,366$

VI


VI




~45~

















690,000$ 2,215,659$





855,558$ 339,694$



942,365$ 1,013,366$



~45~

















690,000$ 2,215,659$





855,558$ 339,694$



942,365$ 1,013,366$


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


~45~

















690,000$ 2,215,659$





855,558$ 339,694$



942,365$ 1,013,366$

~45~

















690,000$ 2,215,659$





855,558$ 339,694$



942,365$ 1,013,366$

(16) Bonds payable

~46~

(16) Bonds payable

A. The Company issued secured ordinary bonds payable in July 2012. The significant terms of the bonds are as follows:




(d)Terms of interest repayment: The bonds interest is calculated on simple rate every year starting July 2012 based on the coupon rate.


(f)Period: 5 years, from July 12, 2012 to July 12, 2017


(h)Guarantee Bank: The bonds are guaranteed by Mega International Commercial Bank.

B. The Company issued secured ordinary bonds payable in November 2013. The significant terms of the bonds are as follows:




(d)Terms of interest repayment: The bonds interest is calculated on simple rate every year starting November 2013 based on the coupon rate.


(f)Period: 5 years, from November 21, 2013 to November 21, 2018

(g)The way of security: $1.5 billion and $1 billion secured by Bank of Taiwan and Agricultural Bank of Taiwan, respectively.


C. The Company issued secured ordinary bonds payable in June 2017. The significant terms of the bonds are as follows:


2012 1st secured ordinary bonds payable -$ 2,000,000$ 2013 1st secured ordinary bonds payable 2,500,000 2,500,000 2017 1st secured ordinary bonds payable 2,000,000 -

4,500,000 4,500,000 Less: Current portion 2,500,000)( 2,000,000)(

2,000,000$ 2,500,000$

A. TheCompanyissuedsecuredordinarybondspayableinJuly2012.Thesignificanttermsofthe bonds are as follows:(a) Total issue amount: $2,000,000(b) Issue price: At par value of $100 per bond(c) Coupon rate: 1.33%

(d) Terms of interest repayment: The bonds interest is calculated on simple rate every year starting July 2012 based on the coupon rate.

(e) Repayment term: The bonds are repaid upon the maturity of the bonds.(f) Period: 5 years, from July 12, 2012 to July 12, 2017(g) The way of security: The bonds are secured by Bank of Taiwan.(h) Guarantee Bank: The bonds are guaranteed by Mega International Commercial Bank.

B. The Company issued secured ordinary bonds payable in November 2013. The significant terms of the bonds are as follows:(a) Total issue amount: $2,500,000(b) Issue price: At par value of $100 per bond(c) Coupon rate: 1.55%(d) Terms of interest repayment: The bonds interest is calculated on simple rate every year

starting November 2013 based on the coupon rate.(e) Repayment term: The bonds are repaid upon the maturity of the bonds.(f) Period: 5 years, from November 21, 2013 to November 21, 2018(g) The way of security: $1.5 billion and $1 billion secured by Bank of Taiwan and

Agricultural Bank of Taiwan, respectively.(h) Guarantee Bank: The bonds are guaranteed by Taipei Fubon Commercial Bank.

C.TheCompanyissuedsecuredordinarybondspayable inJune2017.Thesignificant termsofthe bonds are as follows:(a) Total issue amount: $2,000,000(b) Issue price: At par value of $1,000 per bond(c) Coupon rate: 1.05%(d) Terms of interest repayment: The bonds interest is calculated on simple rate every year

starting June 2017 based on the coupon rate.(e) Repayment term: The bonds are repaid upon the maturity of the bonds.(f) Period: 5 years, from June 19, 2017 to June 19, 2022(g) The way of security: The bonds are secured by Bank of Taiwan.(h) Guarantee Bank: The bonds are guaranteed by Taipei Fubon Commercial Bank.


~47~






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




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

B. The Company and financial institutions entered into a contract for a syndicated borrowing. The Company shall redraw revolving credit line to issue abovementioned commercial paper during the credit term. For the related information, please refer to Note 9(8) and 9(10).

C. For details of pledged assets, please refer to Note 8. (18) Provisions-replacement cost


Secured bank borrowings 6,864,979$ 5,550,034$


8,839,979 5,650,034


5,637,366 4,474,019

Commercial paper 960,000 2,339,600

Less: Unamortised discount 1,213)( 2,260)(

958,787 2,337,340 6,596,153$ 6,811,359$


Range of interest rates 0.58%~2.47% 0.55%~2.70%

2017 2016

At January 1 75,207$ 84,517$

Additions 63,468 33,470

Used 39,136)( 42,780)(

At December 31 99,539$ 75,207$


VI


VI



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

Company shall redraw revolving credit line to issue abovementioned commercial paper during the credit term. For the related information, please refer to Note 9(8) and 9(10).

C. For details of pledged assets, please refer to Note 8.(18) Provisions-replacement cost

~47~






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




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

B. The Company and financial institutions entered into a contract for a syndicated borrowing. The Company shall redraw revolving credit line to issue abovementioned commercial paper during the credit term. For the related information, please refer to Note 9(8) and 9(10).

C. For details of pledged assets, please refer to Note 8. (18) Provisions-replacement cost


Secured bank borrowings 6,864,979$ 5,550,034$


8,839,979 5,650,034


5,637,366 4,474,019

Commercial paper 960,000 2,339,600

Less: Unamortised discount 1,213)( 2,260)(

958,787 2,337,340 6,596,153$ 6,811,359$


Range of interest rates 0.58%~2.47% 0.55%~2.70%

2017 2016

At January 1 75,207$ 84,517$

Additions 63,468 33,470

Used 39,136)( 42,780)(

At December 31 99,539$ 75,207$


(19) PensionA. (a) TheCompanyhasadefinedbenefitpensionplaninaccordancewiththeLaborStandards

Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continuetobesubjecttothepensionmechanismundertheLaw.Underthedefinedbenefitpension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefitsarebasedonthenumberofunitsaccruedandtheaveragemonthlysalariesandwages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify forretirementnextyear,theCompanywillmakecontributionstocoverthedeficitbynextMarch.

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

~48~

(19) Pension

A.(a) The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

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

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


Present value of defined benefit obligations ($ 122,439) ($ 118,729)



(c) Changesinnetdefinedbenefitliabilityareasfollows:

~49~


Present value of

defined benefit Fair value Net defined

obligations of plan assets benefit liability


Balance at January 1 118,729)($ 49,876$ 68,853)($


Interest (expense) income 1,662)( 698 964)(

120,937)( 50,574 70,363)(

Remeasurements:



6,677)( 524)( 7,201)(

Pension fund contribution - 691 691

Paid pension 5,175 5,175)( -

Balance at December 31 122,439)($ 45,566$ 76,873)($

Present value of

defined benefit Fair value Net defined

obligations of plan assets benefit liability


Balance at January 1 111,723)($ 5,009$ 106,714)($



114,267)( 5,094 109,173)(

Remeasurements:



9,250)( 42)( 9,292)(


Paid pension 4,788 - 4,788

Balance at December 31 118,729)($ 49,876$ 68,853)($

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

~50~


Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Mortality Table. Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:


(e) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2018 amounts to $691

(f) As of December 31, 2017, the weighted average duration of that retirement plan is 10 years.

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

(b) The pension costs under the defined contribution pension plan of the Company for the years ended December 31, 2017 and 2016 were $7,649 and $7,624, respectively.

2017 2016

Discount rate 1.00% 1.40%

Future salary increases 1.50% 1.50%


Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%December 31, 2017Effect on present value of defined benefit obligation 2,955)($ 3,059$ 2,728$ 2,653)($





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

VI


VI



~50~


Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Mortality Table. Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:


(e) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2018 amounts to $691


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

(b) The pension costs under the defined contribution pension plan of the Company for the years ended December 31, 2017 and 2016 were $7,649 and $7,624, respectively.

2017 2016

Discount rate 1.00% 1.40%

Future salary increases 1.50% 1.50%







(e) ExpectedcontributionstothedefinedbenefitpensionplansoftheCompanyfortheyearending December 31, 2018 amounts to $691


B. (a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individualpensionaccountsat theBureauofLaborInsurance.Thebenefitsaccrued are paid monthly or in lump sum upon termination of employment.

(b) Thepensioncostsunder thedefinedcontributionpensionplanof theCompanyfor theyears ended December 31, 2017 and 2016 were $7,649 and $7,624, respectively.

(20) Share capitalA. Movements in the number of the Company’s ordinary shares outstanding are as follows: (Units: in thousand shares)

~51~



B. As of December 31, 2017, the Company’s authorized capital was $20,000,000 and the paid-in capital was $16,233,261, with a par value of NT$10 per share, consisting of 1,623,326 thousand shares of ordinary stock.

C. As of December 31, 2017 and 2016, the Company’s subsidiary, Prince Apartment Management Maintain Co., Ltd. held the Company’s stocks for maintaining equity interest in the Company. The amount of shares held by the subsidiaries was 655 thousand, the average par value was both NT$1.53 per share, and the fair value was NT$12.05 and NT$10.50 per share, respectively.



A. In accordance with the Company’s Articles of Incorporation, the Company will take into consideration its future business plans and capital expenditures in determining the amounts of earnings to be retained and to be distributed. In accordance with the Company Law, 10% of the current year’s earnings, after payment of all taxes and after offsetting accumulated deficit, shall be set aside as legal reserve until the balance of legal reserve is equal to that of issued share capital. Afterwards, an amount shall be appropriated or reversed as special reserve in accordance


Years ended December 31


Balances as of January 1 and December 31 1,375,442$ 877,839$ 7,232$ 2,260,513$

Capital surplus



Capital surplus



~51~







A. In accordance with the Company’s Articles of Incorporation, the Company will take into consideration its future business plans and capital expenditures in determining the amounts of earnings to be retained and to be distributed. In accordance with the Company Law, 10% of the current year’s earnings, after payment of all taxes and after offsetting accumulated deficit, shall be set aside as legal reserve until the balance of legal reserve is equal to that of issued share capital. Afterwards, an amount shall be appropriated or reversed as special reserve in accordance


Years ended December 31



Capital surplus



Capital surplus

(21) Capital surplusPursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of parvalueonissuanceofcommonstocksanddonationscanbeusedtocoveraccumulateddeficitor to issue new stocks or cash to shareholders in proportion to their share ownership, provided thattheCompanyhasnoaccumulateddeficit.Further,theR.O.C.SecuritiesandExchangeLawrequires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficitunlessthelegalreserveisinsufficient.

(22) Retained earningsA. In accordance with the Company’s Articles of Incorporation, the Company will take into

consideration its future business plans and capital expenditures in determining the amounts of earnings to be retained and to be distributed. In accordance with the Company Law, 10% of the current year’s earnings, after payment of all taxes and after offsetting accumulated deficit,shallbesetasideas legal reserveuntil thebalanceof legal reserve isequal to thatof issued share capital. Afterwards, an amount shall be appropriated or reversed as special reserve in accordance with applicable legal or regulatory requirements, along with prior years’ accumulated unappropriated retained earnings, and then distribution should be in the following order: stock dividend and bonus to shareholders are not lower than 20% of the accumulated distributable earnings, and cash dividend is at least 30% of the total stock dividend and bonus; the appropriation of earnings is proposed by the Board of Directors and resolved by the shareholders.


C. The Company recognized dividends distributed to owners amounting to $1,623,326 ($1.0 (in dollars) per share) and $1,785,659 ($1.1 (in dollars) per share) for the years ended December 31, 2017 and 2016, respectively. On March 20, 2018, the Board of Directors proposed that total dividends for the distribution of earnings for 2017 was $1,055,162 at $0.65 (in dollars) per share.

VI


VI




~52~

with applicable legal or regulatory requirements, along with prior years’ accumulated unappropriated retained earnings, and then distribution should be in the following order: stock dividend and bonus to shareholders are not lower than 20% of the accumulated distributable earnings, and cash dividend is at least 30% of the total stock dividend and bonus; the appropriation of earnings is proposed by the Board of Directors and resolved by the shareholders.


C. The Company recognized dividends distributed to owners amounting to $1,623,326 ($1.0 (in dollars) per share) and $1,785,659 ($1.1 (in dollars) per share) for the years ended December 31, 2017 and 2016, respectively. On March 20, 2018, the Board of Directors proposed that total dividends for the distribution of earnings for 2017 was $1,055,162 at $0.65 (in dollars) per share.



At January 1, 2017 1,058,318$ 48)($ 1,058,270$ Available-for-sale investment: -Loss at fair value 83,893)( - 83,893)( At December 31, 2017 974,425$ 48)($ 974,377$


At January 1, 2016 1,407,403$ 1,706$ 1,409,109$ Available-for-sale investment: -Loss at fair value 349,085)( - 349,085)( Currency translation differences: -Group - 1,754)( 1,754)( At December 31, 2016 1,058,318$ 48)($ 1,058,270$

(24) Maturity analysis of assets and liabilitiesTheconstructionrelatedassetsandliabilitiesareclassifiedascurrentandnon-currentbasedonthe operating cycle. Related recognized amount expected to be recovered or repaid within or after 12 months from the balance sheet date is as follows:

~53~

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


Within 12 months Over 12 months TotalDecember 31, 2017Assets Notes receivable, net 11,438$ 55,851$ 67,289$ Accounts receivable, net 78,384 3,689 82,073 Inventories 10,158,891 11,084,117 21,243,008

10,248,713$ 11,143,657$ 21,392,370$ Liabilities Notes payable 5,793$ -$ 5,793$ Accounts payable (including related parties) 670,171 409,517 1,079,688

675,964$ 409,517$ 1,085,481$



760,624$ 678,229$ 1,438,853$

2017 2016

Construction revenues 4,994,154$ 5,274,930$ Rental revenues 369,518 353,578 Service concession revenue -Operating service revenue 367,083 372,719 Other operating revenues 3,301 3,143

5,734,056$ 6,004,370$



~53~

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




675,964$ 409,517$ 1,085,481$



760,624$ 678,229$ 1,438,853$

2017 2016

Construction revenues 4,994,154$ 5,274,930$ Rental revenues 369,518 353,578 Service concession revenue -Operating service revenue 367,083 372,719 Other operating revenues 3,301 3,143

5,734,056$ 6,004,370$


(26) Other income


(28) Finance costs

~54~

(26) Other income


(28) Finance costs

2017 2016


188,712$ 232,977$


2017 2016

Net currency exchange losses 36,866)($ 7,185)($

profit or loss 2,242 384 Loss on disposal of property, plant and equipment (including investment property) 1,640)( 1,473)( Others 176,794 255,010

140,530$ 246,736$


Net gain on financial assets at fair value through

2017 2016

Interest expense: Bank borrowings 70,994$ 102,270$ Commercial paper 11,515 14,824 Ordinary bond 28,242 59,596 Endorsement and guarantee 20,157 24,208 Others 1,410 1,476

132,318$ 202,374$


~54~

(26) Other income


(28) Finance costs

2017 2016


188,712$ 232,977$


2017 2016



140,530$ 246,736$



2017 2016


132,318$ 202,374$


~54~

(26) Other income


(28) Finance costs

2017 2016


188,712$ 232,977$


2017 2016



140,530$ 246,736$



2017 2016


132,318$ 202,374$


VI


VI




~55~


A. According to the Articles of Incorporation of the Company, the ratio of distributable profit of

the current year shall not be lower than 2% for employees’ compensation and shall not be higher than 3% for directors’ and supervisors’ remuneration. If a company has accumulated deficit, earnings should be channelled to cover losses. Employees’ compensation will be distributed in the form of cash or shares and includes employees of subsidiaries who satisfy certain conditions and are qualified. Aforementioned distributable profit of the current year is profit before tax of the current year before deduction of employees’ compensation and directors’ and supervisors’ remuneration.

B. For the years ended December 31, 2017 and 2016, employees’ compensation was accrued at $128,682 and $185,821, respectively; while directors’ remuneration was accrued at $43,779 and $63,218, respectively. The aforementioned amounts were recognized in salary expenses. The employees’ compensation and directors’ remuneration were accrued based on the percentage as prescribed in the Company’s Articles of Incorporation of distributable profit of current year for the year ended December 31, 2017. The distributed amounts resolved by the Board of Directors were in agreement with the accrued amounts. The employees’ compensation will be

Operating costs Operating expenses Total

Employee benefit expense Wages and salaries 7,655$ 349,433$ 357,088$ Labor and health insurance fees - 20,148 20,148 Pension costs - 9,159 9,159 Other employee benefit expense - 20,854 20,854

7,655$ 399,594$ 407,249$

Depreciation 85,454$ 26,815$ 112,269$

Amortisation 61,253$ -$ 61,253$


Operating costs Operating expenses Total

Employee benefit expense Wages and salaries 1,136$ 417,054$ 418,190$ Labor and health insurance fees - 22,279 22,279 Pension costs - 10,083 10,083 Other employee benefit expense - 22,392 22,392

1,136$ 471,808$ 472,944$

Depreciation 85,604$ 27,573$ 113,177$

Amortisation 61,252$ -$ 61,252$


A. According to theArticlesof Incorporationof theCompany, theratioofdistributableprofitof the current year shall not be lower than 2% for employees’ compensation and shall not be higher than 3% for directors’ and supervisors’ remuneration. If a company has accumulated deficit,earningsshouldbechannelledtocoverlosses.

Employees’ compensation will be distributed in the form of cash or shares and includes employeesofsubsidiarieswhosatisfycertainconditionsandarequalified.

Aforementioneddistributableprofitofthecurrentyearisprofitbeforetaxofthecurrentyearbefore deduction of employees’ compensation and directors’ and supervisors’ remuneration.

B. For the years ended December 31, 2017 and 2016, employees’ compensation was accrued at $128,682 and $185,821, respectively; while directors’ remuneration was accrued at $43,779 and $63,218, respectively. The aforementioned amounts were recognized in salary expenses.

The employees’ compensation and directors’ remuneration were accrued based on the percentage as prescribed in the Company’s Articles of Incorporation of distributable profit of current year for the year ended December 31, 2017. The distributed amounts resolved by the Board of Directors were in agreement with the accrued amounts. The employees’ compensation will be distributed in the form of cash.

Employees’ compensation and directors’ remuneration for 2016 as resolved by the shareholdersduringtheirmeetingwereinagreementwiththoseamountsrecognisedinprofitor loss for 2016.

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

(30) Income taxA. Income tax expense


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distributed in the form of cash. Employees’ compensation and directors’ remuneration for 2016 as resolved by the shareholders during their meeting were in agreement with those amounts recognised in profit or loss for 2016. Information about employees’ compensation and directors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(30) Income tax A. Income tax expense


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

2017 2016

Current tax:-$ 147,978$ - 21,397

4,970)( 2,535)(

32,208 82,183 Total current tax 27,238 249,023

Deferred tax:21,515)( -

Income tax expense 5,723$ 249,023$ Origination and reversal of temporary differences


Current tax on profits for the year Additional 10% tax on undistributed earnings Piror year income tax overestimation Land value increment tax recognized in income tax for the year

2017 2016

Tax calculated based on profit before tax and 218,760$ 315,896$

statutory tax rate

Effect recognized from adjustments under tax 240,276)( 143,805)(

regulations

Additional 10% tax on undistributed earnings - 21,397


Prior year income tax overestimation 4,970)( 2,535)(



Years ended December 31,(b)Reconciliationbetweenincometaxexpenseandaccountingprofit:

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distributed in the form of cash. Employees’ compensation and directors’ remuneration for 2016 as resolved by the shareholders during their meeting were in agreement with those amounts recognised in profit or loss for 2016. Information about employees’ compensation and directors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(30) Income tax A. Income tax expense


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

2017 2016

Current tax:-$ 147,978$ - 21,397

4,970)( 2,535)(

32,208 82,183 Total current tax 27,238 249,023

Deferred tax:21,515)( -

Income tax expense 5,723$ 249,023$ Origination and reversal of temporary differences


Current tax on profits for the year Additional 10% tax on undistributed earnings Piror year income tax overestimation Land value increment tax recognized in income tax for the year

2017 2016

Tax calculated based on profit before tax and 218,760$ 315,896$

statutory tax rate

Effect recognized from adjustments under tax 240,276)( 143,805)(

regulations

Additional 10% tax on undistributed earnings - 21,397


Prior year income tax overestimation 4,970)( 2,535)(




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

The Company did not have any unrecognized deferred tax assets for the year ended December 31, 2016.

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B. Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows: The Company did not have any unrecognized deferred tax assets for the year ended December 31, 2016.

C. As of December 31, 2017, the Company’s income tax returns through 2015 have been assessed

and approved by the Tax Authority D. With the abolishment of the imputation tax system under the amendments to the Income Tax Act

promulgated by the President of the Republic of China in February, 2018, the information on unappropriated retained earnings and the balance of the imputation credit account as of December 31, 2017, as well as the estimated creditable tax rate for the year ended December 31, 2017 is no longer disclosed. Unappropriated retained earnings on December 31, 2016:

E. As of December 31, 2016, the balance of the imputation tax credit account was $83,807. The creditable tax rate was 8.80% for 2016.


January 1 Recognised in profit or loss December 31,Temporary differences:-Deferred tax assets:

Unrealised compensation losses -$ 21,515$ 21,515$

2017

December 31, 2016


Weighted average

number of ordinary Earnings

shares outstanding per share

Amount after tax (shares in thousands) (in dollars)

Basic earnings per share

Profit attributable to ordinary shareholders 1,281,101$ 1,622,671 0.79$

Diluted earnings per share

Profit attributable to ordinary shareholders 1,281,101$ 1,622,671

Assumed conversion of all dilutive

potential ordinary shares

Employees’compensation - 11,645

Profit attributable to ordinary shareholders

plus assumed conversion of all dilutive

potential ordinary shares 1,281,101$ 1,634,316 0.78$


C. As of December 31, 2017, the Company’s income tax returns through 2015 have been assessed and approved by the Tax Authority

VI


VI



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2017

December 31, 2016


Weighted average















D. With the abolishment of the imputation tax system under the amendments to the Income Tax Act promulgated by the President of the Republic of China in February, 2018, the information on unappropriated retained earnings and the balance of the imputation credit account as of December 31, 2017, as well as the estimated creditable tax rate for the year ended December 31, 2017 is no longer disclosed.


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2017

December 31, 2016


Weighted average

















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(1) Names of related parties and their relationship with the Company

Weighted average










Employees’ compensation - 19,768





Names of related parties Relationship with the Company

Dong-Feng Enterprises Co., Ltd. The Company’s subsidiaryTime Square International Co., Ltd. The Company’s subsidiaryPrince Industrial Co., Ltd. The Company’s subsidiaryPrince Real Estate Co., Ltd. (Prince Real Estate) The Company’s subsidiaryJin Yi Xing Plywood Co., Ltd. (Jin Yi Xing) The Company’s subsidiaryThe Splendor Hotel Taichung (The Splendor) The Company’s subsidiaryTa-Chen Construction & Engineering Corp. (Ta-Chen Construction & Engineering)Prince Utility Co., Ltd. (Prince Utility) The subsidiary of CSIHCCheng-Shi Construction Co., Ltd. (Cheng-Shi Construction)Prince Security Co., Ltd. (Prince Security) The subsidiary of PPMCCPrince Apartment Management Maintain Co., Ltd. (Prince Apartment)Uni-President Development Corp. The Company’s associatesTainan Spinning Co., Ltd. The Company’s other related partyPresident Chain Store Corporation The Company’s other related party

The subsidiary of CSIHC


The subsidiary of PPMCC



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Weighted average










Employees’ compensation - 19,768





Names of related parties Relationship with the Company

Dong-Feng Enterprises Co., Ltd. The Company’s subsidiaryTime Square International Co., Ltd. The Company’s subsidiaryPrince Industrial Co., Ltd. The Company’s subsidiaryPrince Real Estate Co., Ltd. (Prince Real Estate) The Company’s subsidiaryJin Yi Xing Plywood Co., Ltd. (Jin Yi Xing) The Company’s subsidiaryThe Splendor Hotel Taichung (The Splendor) The Company’s subsidiaryTa-Chen Construction & Engineering Corp. (Ta-Chen Construction & Engineering)Prince Utility Co., Ltd. (Prince Utility) The subsidiary of CSIHCCheng-Shi Construction Co., Ltd. (Cheng-Shi Construction)Prince Security Co., Ltd. (Prince Security) The subsidiary of PPMCCPrince Apartment Management Maintain Co., Ltd. (Prince Apartment)Uni-President Development Corp. The Company’s associatesTainan Spinning Co., Ltd. The Company’s other related partyPresident Chain Store Corporation The Company’s other related party



The subsidiary of PPMCC

ForotherrelatedpartiesoverwhichtheCompanyexercisessignificantinfluencebutwithwhichthe Company had no material transaction, please refer to Note 13 for related information.

(2) SignificantrelatedpartytransactionsandbalancesA. Sales

(a) Rental income:

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For other related parties over which the Company exercises significant influence but with which the Company had no material transaction, please refer to Note 13 for related information.


A. Sales

(a)Rental income:


B.Purchases (a) Details of the Company’s subcontracting to related parties and its purchases from related parties

are as follows:

The Company subcontracted building construction and utilities engineering to related parties, Ta-Chen Construction Company and Prince Utility Company and Chen-Shi Construction Company. Under those subcontracts, acceptance would be done according to the progress of the construction and engineering; payments would be made based on agreed-upon terms of the two parties. Purchases from related parties, Prince Security Company, Prince Apartment and Chen-shi, Construction Company, are based on negotiated terms because the related purchase transactions are unique and not available from third parties.

(b)As of December 31, 2017 and 2016, unsettled construction contracts that were signed by the Company and Chen-Shi Construction Company totaled $2,515,959 and $2,232,449, respectively; payments already made for those contracts amounted to $1,047,250 and $493,139, respectively; and future payments required under those contracts amounted to $1,468,709 and $1,739,310, respectively.

2017 2016- Other related parties 47,443$ 47,775$ - Subsidiaries 2,231 3,045

49,674$ 50,820$


2017 2016Construction subcontracting: －Cheng-Shi Construction 865,798$ 605,366$ －Prince Utility 483,750 300,288 －Ta- Chen Construction $ Engintering 55,109 69,971 Purchases of services: －Subsidiaries 40,474 15,846 Purchases of goods: －Subsidiaries 2,301 12,074

1,447,432$ 1,003,545$



VI


VI



B. Purchases(a) Details of the Company’s subcontracting to related parties and its purchases from related

parties are as follows:

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For other related parties over which the Company exercises significant influence but with which the Company had no material transaction, please refer to Note 13 for related information.


A. Sales

(a)Rental income:


B.Purchases (a) Details of the Company’s subcontracting to related parties and its purchases from related parties

are as follows:


(b)As of December 31, 2017 and 2016, unsettled construction contracts that were signed by the Company and Chen-Shi Construction Company totaled $2,515,959 and $2,232,449, respectively; payments already made for those contracts amounted to $1,047,250 and $493,139, respectively; and future payments required under those contracts amounted to $1,468,709 and $1,739,310, respectively.

2017 2016- Other related parties 47,443$ 47,775$ - Subsidiaries 2,231 3,045

49,674$ 50,820$


2017 2016Construction subcontracting: －Cheng-Shi Construction 865,798$ 605,366$ －Prince Utility 483,750 300,288 －Ta- Chen Construction $ Engintering 55,109 69,971 Purchases of services: －Subsidiaries 40,474 15,846 Purchases of goods: －Subsidiaries 2,301 12,074

1,447,432$ 1,003,545$



(b )As of December 31, 2017 and 2016, unsettled construction contracts that were signed by the Company and Chen-Shi Construction Company totaled $2,515,959 and $2,232,449, respectively; payments already made for those contracts amounted to $1,047,250 and $493,139, respectively; and future payments required under those contracts amounted to $1,468,709 and $1,739,310, respectively.

(c) As of December 31, 2017 and 2016, unsettled construction contracts that were signed by the Company and Ta-Chen Construction Company totaled to $120,994 and $259,621, respectively; payments already made for those contracts amounted to $101,000 and $180,123, respectively; and future payments required under those contracts amounted to $19,994 and $79,498, respectively.

(d) As of December 31, 2017 and 2016, unsettled construction contracts that were signed by the Company and Prince Utility Company totaled $970,198 and $1,240,645, respectively; payments already made for those contracts amounted to $361,800 and $233,970, respectively; and future payments required under those contracts amounted to $608,398 and $1,006,675, respectively.

C. Other assets(a) On June 20, 2006, the Company and China Metal Products Co., Ltd. (“A party”) jointly

signed a creditor’s rights transfer contract with Amida Trustlink Assets Management Co., Ltd. (“B party”). Under the contract, the Company and A party should pay $2,100,000 each (totaling $4,200,000) to jointly acquire whole creditor’s rights of mortgages, security interests and other dependent claims (collectively referred herein as the creditor’s rights) on the Splendor Hotel Taichung Building, and each bears 50% rights and obligations

of this acquisition; when all creditor’s rights of this object turn into property rights, the Company and A party should pay B party totaling $1,000,000 as the cost and reward of B party for it is entrusted with the task to help turn the creditor’s rights as stated above into property rights, but any excess cost over $1,000,000 if incurred on this task shall be borne by B party on its own; the Company should pay B party $300,000 before June 30, 2006, and the Company and A party should jointly issue a promissory note of $1,800,000 to B party on the signing date; payment should be done before July 15, 2006. The title to the creditor’s rights as stated above had been transferred to the Company and A party on August 2, 2006. The acquisition price of the creditor’s rights amounted to $5,200,000, which the Company and A party bear 50% of the price each. The Company had paid its share. Furthermore, the Company and A party jointly established the Splendor Hotel Taichung and $450,000 invested in the share capital was drawn down from the abovementioned price of the creditor’s rights.

(b) The Company and China Metal Products Co., Ltd. jointly established The Splendor Hotel Taichung (“A party”) by contributing 50% of the investment each. On November 1, 2006, A party signed a certain assets transfer contract with The Splendor Hotel Chunggang (“B party”). Under the contract, A party should pay B party for employees’ services, goods purchases and taxes. The above payments of $352,310 required of A party were made from the share capital of its initial establishment.

The Company’s creditor’s rights above amounting to $2,375,000 were originally receivable from B party. After B party and A party signed a certain assets transfer contract in December, 2006, the creditor’s right to the above receivables were transferred to A party. And A party repaid $1,800,000 to the Company in June 2007. As of December 31, 2017 and 2016, the Company’s creditor’s rights receivable from A party both amounted to $575,000.

(c) Details of the Company’s capital investment in The Splendor Hotel Taichung in the past are as follows:

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Company’s creditor’s rights receivable from A party both amounted to $575,000. (c) Details of the Company’s capital investment in The Splendor Hotel Taichung in the past are as

follows:

D. Accounts payable

E. Rent expense

F. The information on endorsement, guarantees and financial support commitments among related parties are described in Note 9(1).

G. Certain short and long-term borrowings of the Company were guaranteed by its Chairman and General Manager.


2006 225,000$ 2008 105,000 2009 615,000 2010 30,000

975,000$

December 31, 2017 December 31, 2016Subsidiaries 16,391$ 5,948$

2017 2016

Uni-President Developmment Corp. 32,488$ 32,138$


2017 2016

Salaries and other short-term employee benefits 130,545$ 100,723$ Termination benefits - - Post-employment benefits - - Other long-term benefits - - Share-based payments - -

130,545$ 100,723$


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follows:

D. Accounts payable

E. Rent expense




2006 225,000$ 2008 105,000 2009 615,000 2010 30,000

975,000$


2017 2016



2017 2016


130,545$ 100,723$


D. Accounts payable

E. Rent expense


VI


VI





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follows:

D. Accounts payable

E. Rent expense




2006 225,000$ 2008 105,000 2009 615,000 2010 30,000

975,000$


2017 2016



2017 2016


130,545$ 100,723$


8. PLEDGED ASSETS

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

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8. PLEDGED ASSETS


9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

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



Demand deposits, certificate of deposit and 1,145,392$ 1,033,201$ To obtain a higher credit for client, performance checking deposit (shown as "other financial guarantee, construction performance guarantee, assets - current" and "other financial assets - short-term and long-term borrowings. non-current")Financial assets at fair value through profit or loss 78,552 78,253 Long-term borrowingsLand held for construction 5,997,376 7,808,509 Short-term borrowings, notes and bills

payable and long-term borrowingsConstruction in progress 3,504,289 2,803,892 Short-term borrowings, notes and bills

payable and long-term borrowingsBuildings as held for sale - 2,270,855 Issued long-term notes and billsAvailable-for-sale financial assets 708,513 757,036 Short-term borrowings, notes and bills payableFinancial assets carried at cost 575,426 575,426 Short-term borrowings, notes and bills payableInvestments accounted for under equity method 1,325,878 1,443,473 Short-term borrowings, notes and bills payableLand 91,782 91,782 Short-term borrowings, notes and bills

payable and long-term borrowingsBuildings and structures 209,629 215,511 Short-term borrowings, notes and bills

payable and long-term borrowingsInvestment property 3,783,563 3,816,598 Short-term borrowings, notes and bills

payable and long-term borrowings17,420,400$ 20,894,536$

Total Total

endorsement Amount endorsement Amount

Name of company amount drawn amount drawn


Prince Real Estate Co., Ltd. 2,500,000 258,000 2,500,000 780,000

Ta-Chen Construction & Engineering Corp. - - 1,900,000 -

4,500,000$ 1,941,308$ 6,400,000$ 2,462,206$



(1) Summaryofendorsementsandguaranteesandfinancialsupportcommitmentsisasfollows:A. Summary of endorsements and guarantees provided by the Company to subsidiaries is as

follows:

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8. PLEDGED ASSETS



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



Demand deposits, certificate of deposit and 1,145,392$ 1,033,201$ To obtain a higher credit for client, performance checking deposit (shown as "other financial guarantee, construction performance guarantee, assets - current" and "other financial assets - short-term and long-term borrowings. non-current")Financial assets at fair value through profit or loss 78,552 78,253 Long-term borrowingsLand held for construction 5,997,376 7,808,509 Short-term borrowings, notes and bills

payable and long-term borrowingsConstruction in progress 3,504,289 2,803,892 Short-term borrowings, notes and bills

payable and long-term borrowingsBuildings as held for sale - 2,270,855 Issued long-term notes and billsAvailable-for-sale financial assets 708,513 757,036 Short-term borrowings, notes and bills payableFinancial assets carried at cost 575,426 575,426 Short-term borrowings, notes and bills payableInvestments accounted for under equity method 1,325,878 1,443,473 Short-term borrowings, notes and bills payableLand 91,782 91,782 Short-term borrowings, notes and bills

payable and long-term borrowingsBuildings and structures 209,629 215,511 Short-term borrowings, notes and bills

payable and long-term borrowingsInvestment property 3,783,563 3,816,598 Short-term borrowings, notes and bills

payable and long-term borrowings17,420,400$ 20,894,536$

Total Total

endorsement Amount endorsement Amount



Prince Real Estate Co., Ltd. 2,500,000 258,000 2,500,000 780,000

Ta-Chen Construction & Engineering Corp. - - 1,900,000 -

4,500,000$ 1,941,308$ 6,400,000$ 2,462,206$



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C. The accumulated operating losses of the subsidiary, The Splendor Hotel, had exceeded 50% of

its paid-in capital and its current liabilities were greater than current assets. The Company was committed to give the Splendor Hotel financial support for its continuing operations for one year from the date of the financial support letter.

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

(3) Information on the commitments of the Company relating to financial support to related parties is described in Note 7(2).

(4) On March 17, 2005, the Company (“A party”) signed a contract with National Taiwan University (“B party”) relating to the construction and operation of dormitories on Chang-Hsing St. and Shui-Yuan Campus. The major terms of the contract are as follows: A. Under the contract, B party should be responsible for acquiring the ownership or land-use right for

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

B. A party should give B party a performance guarantee of $60,000 for the construction on the signing date and $30,000 for operations before the start of operation. As of December 31, 2017 and 2016, A party had provided performance guarantee with a guarantee letter issued by the bank, both amounting to $30,000.


D. Terms of restrictions for A party: (a) The ratio of A party’s own capital utilized in this project to total construction cost of this project

should be at least 30%;

Total Total endorsement Amount endorsement Amount


Prince Real Estate Co., Ltd. 2,500,000$ 1,513,309$ 2,500,000$ 2,035,309$ Ta-Chen Construction & Engineering Corp. 927,889 - 927,889 - Prince Utility Co., Ltd. 900,000 638,763 900,000 638,763

4,327,889$ 2,152,072$ 4,327,889$ 2,674,072$


C. The accumulated operating losses of the subsidiary, The Splendor Hotel, had exceeded 50% of its paid-in capital and its current liabilities were greater than current assets. The Company wascommittedtogivetheSplendorHotelfinancialsupportforitscontinuingoperationsforoneyearfromthedateofthefinancialsupportletter.

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

(3) InformationonthecommitmentsoftheCompanyrelatingtofinancialsupporttorelatedpartiesisdescribed in Note 7(2).

(4) On March 17, 2005, the Company (“A party”) signed a contract with National Taiwan University (“B party”) relating to the construction and operation of dormitories on Chang-Hsing St. and Shui-Yuan Campus. The major terms of the contract are as follows:A. Under the contract, B party should be responsible for acquiring the ownership or land-use

right for this project, and let A party use the land; A party must complete the construction within3years fromtheregistrationof thesuperficies,andmayoperate thedormitories for44 years, collect dormitory rentals and use fees of other facilities from students, and should return the related assets to B party on the expiry of the contract.

B. A party should give B party a performance guarantee of $60,000 for the construction on the signing date and $30,000 for operations before the start of operation. As of December 31, 2017 and 2016, A party had provided performance guarantee with a guarantee letter issued by the bank, both amounting to $30,000.


D. Terms of restrictions for A party:(a) The ratio of A party’s own capital utilized in this project to total construction cost of this

project should be at least 30%; (b) During the operation period, the ratio of shareholders’ equity to total assets should be at

least 25%; and current ratio (current assets/current liabilities) should be at least 100%;(c)AllrightsacquiredbyApartyunderthecontract,exceptforotherconditionsspecifiedin

the contract and approved by B party, should not be transferred, leased, registered as a

VI


VI



liability/obligation or become an executed object of civil litigation.(5) On May 10, 2005, the Company (“A party”) signed a contract with National Cheng Kung

University (“B party”) relating to the construction and operation of student dormitories and alumni hall. The major terms of the contract are as follows:A. Under the contract, B party should be responsible for acquiring the ownership or land-use

rightfor thisproject,andletApartyuse the landbywayofregistrationof thesuperficies;A party must obtain the user license within 3 years after the signing date, and may operate the student dormitories and motorcycle parking lots for 35 years from the start of operations and collect dormitory rentals and use fees of other facilities from students for 50 years from the start of construction, and should return the related assets to B party on the expiry of the contract.

B. A party should give B party performance guarantee of $50,000 for this project on the signing date, which will be returned in installment according to the contractual terms. As of December 31, 2017 and 2016, A party had provided performance guarantee with a guarantee letter issued by the bank, both amounting to $20,000.

C. During the operation period, A party should pay B party dormitory operating royalties based on 2% of annual operating revenue of the dormitories and auxiliary facilities operating royalties based on 4% of annual operating revenue of the auxiliary facilities. A party should pay such operating royalties for prior year before the end of June every year. Further, according to thesuperficiescontractsignedby the twoparties,ApartyshouldpayBpartylandrentalsfromtheregistrationofsuperficies.

D.AllrightsacquiredbyApartyunderthecontract,exceptforotherconditionsspecifiedinthecontract and approved by B party, should not be transferred, leased, registered as a liability/obligation or become an executed object of civil litigation.

(6) The Company signed a syndicated loan contract with 7 banks - Mega International Commercial Bank as the lead bank for a credit line of $2.16 billion. The syndicated loans include long-term (secured) loans and guarantee payments receivable (secured), which are used to fund the construction of dormitories in Changxing St. Campus and Shuiyuan Campus of National Taiwan University.During the loanperiod, theCompanyshouldmaintainfinancialcommitmentssuchas current ratio, liability ratio and interest coverage; those financial ratios/restrictions shall be reviewed at least once every year, based on the Company’s audited annual parent company only financialstatements.If theCompanyviolatestheabovefinancialcommitments,itshall improveitsfinancialpositionbycapitalincreaseorotherwaysbeforetheendofOctoberofthefollowingyear from the year of violation; it would not be regarded as a default if the managing bank confirmsthatitsfinancialpositionhasimprovedcompletely.Incaseofviolation,interestontheloanswouldbechargedattheloanratespecifiedinthecontractplusadditional0.25%perannumfromthenotificationdateofthemanagingbanktothecompletiondateoffinancialimprovementor to the date the Company gains the relief from the consortium for its violation.

(7) The Company signed a loan contract with Mega International Commercial Bank for a credit line of $785 million. The loans include long-term (secured) loans and guarantee payments receivable (secured), which are used to fund the construction of student dormitories and alumnus hall of NationalChengKungUniversity.Duringtheloanperiod,theCompanyshouldmaintainfinancialcommitments such as current ratio, liability ratio and interest coverage; those financial ratios/restrictions shall be reviewed at least once every year. Current ratio and liability ratio shall be reviewed based on the Company’s audited annual non-consolidated financial statements, and

interest coverage based on the Company’s revenue and expenditure table for the related project. IftheCompanyviolatestheabovefinancialcommitments,itshallimproveitsfinancialpositionby capital increase or other ways before the end of October of the following year from the year of violation;itwouldnotberegardedasadefaultifthebankconfirmsthatitsfinancialpositionhasimproved completely. In case of violation, interest on the loans would be charged at the loan rate specifiedinthecontractplusadditional0.25%perannumfromthenotificationdateofthebanktothecompletiondateoffinancialimprovementortothedatetheCompanyobtainsawaiverfromthe bank for its violation.

(8)TheCompanysignedasyndicatedloancontractwith3financialinstitutions-MegaInternationalCommercial Bank as the lead bank for a credit line of $1.06 billion. The syndicated loans include medium-term (secured) loans and commercial paper guarantees, which are used as the fund for purchase of 4 tracts of PingHsin Sections No. 694, 706, 708 and 709 in Taiping Dist., Taichung City and construction payment of residential buildings. Furthermore, the Company shall repay in full for the balance of unpaid principal on maturity date.

(9)TheCompanysignedasyndicatedloancontractwith6financial institutions-CTBCBankCo.,Ltd. as the lead bank for a credit line of $2.1 billion. The syndicated loans include medium-term (secured)commercialpaperguaranteeswiththeofficebuildinginTanmeiascollateral,providedworking capital to the Company. The duration of commercial paper should be 90 days, however, commercial paper issued within the duration should have the same maturity date with issued commercial papers. It could be redrawn during the credit period and the Company shall repay in full for the balance of unpaid principal on maturity date. In May, 2017, the syndicated loan has been settled at maturity.

(10) The Company signed a syndicated loan contract with 3 banks - Bank of Taiwan Co., Ltd. as the lead bank for a credit line of $3.045 billion. The syndicated loans include medium-term (secured) guarantee payments receivable and medium-term (secured) commercial paper guarantees. Bank of Taiwan Co., Ltd. and the Agricultural Bank of Taiwan lent medium-term (secured) guarantee payments receivable of $2,545 million which are used as guarantee for issuing corporate bonds. Prudential Securities lent medium-term (secured) commercial paper guarantees of $500 million which are used for repayment of financial institutions and to improve the financial structure. Depending on the individual credit line, the Company should renew the contract with the securities annually and sign guarantee letters such as ‘guarantee of commercial paper’ or ‘purchase contract’. In addition, no matter whether the bondholders receive the payment or not, the banks’ guarantee responsibility will be released after the debtor returns the payables to the agency.

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

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annually and sign guarantee letters such as ‘guarantee of commercial paper’ or ‘purchase contract’. In addition, no matter whether the bondholders receive the payment or not, the banks’ guarantee responsibility will be released after the debtor returns the payables to the agency.


(12) The Company signed an agreement with Mr. Fang Tsai-Yuan and World Vision United Co., Ltd. on

March 5, 2012 and July 17, 2012, respectively, for joint construction of houses. Under those agreements, Mr. Fang Tsai-Yuan and World Vision United Co., Ltd., the owners of land, shall provide the land located at Nos. 572 and 602, Sec. Zhi-Shan 1, Shilin District, Taipei City, respectively, and the Company is responsible for the construction; the houses built would be allocated to both parties based on the specified proportion. In addition, the Company shall give performance bond in the amount of $350,000 and $19,570 to Mr. Fang Tsai-Yuan and World Vision United Co., Ltd., respectively, which would be returned to the Company in installments. As of December 31, 2017 and 2016, balance of the performance bonds were as follows:

In 2017, the Company asked the owners of land to return the 50 % performance bond after completion of the construction of roof-slab. However, the owners of land refused to return the 50% performance bond in the form of cash claiming that the joint construction agreement states that the owners of land can use allocated buildings and lands to offset the performance bond. The Company disagreed with the aforementioned claim. In addition, the Company expects to obtain a use permit by December 31,


Taichung City Koan An Section No.591-1 $ 63,880 $ 63,880

Nanzi Dist., Kaohsiung City Nanzi 1st sectionNo. 158,etc. 125,540$ 125,540$

December 31, 2017 December 31, 2016Nos. 602, Sec. Zhi-Shan 1, Shilin District, Taipei City

350,000$ 350,000$

Nos. 572, Sec. Zhi-Shan 1, Shilin District, Taipei City

19,570$ 19,570$

(12) The Company signed an agreement with Mr. Fang Tsai-Yuan and World Vision United Co., Ltd. on March 5, 2012 and July 17, 2012, respectively, for joint construction of houses. Under those agreements, Mr. Fang Tsai-Yuan and World Vision United Co., Ltd., the owners of land, shall provide the land located at Nos. 572 and 602, Sec. Zhi-Shan 1, Shilin District, Taipei City, respectively, and the Company is responsible for the construction; the houses built would be allocated tobothpartiesbasedonthespecifiedproportion. Inaddition, theCompanyshallgiveperformance bond in the amount of $350,000 and $19,570 to Mr. Fang Tsai-Yuan and World Vision United Co., Ltd., respectively, which would be returned to the Company in installments. As of December 31, 2017 and 2016, balance of the performance bonds were as follows:

~66~

annually and sign guarantee letters such as ‘guarantee of commercial paper’ or ‘purchase contract’. In addition, no matter whether the bondholders receive the payment or not, the banks’ guarantee responsibility will be released after the debtor returns the payables to the agency.


(12) The Company signed an agreement with Mr. Fang Tsai-Yuan and World Vision United Co., Ltd. on

March 5, 2012 and July 17, 2012, respectively, for joint construction of houses. Under those agreements, Mr. Fang Tsai-Yuan and World Vision United Co., Ltd., the owners of land, shall provide the land located at Nos. 572 and 602, Sec. Zhi-Shan 1, Shilin District, Taipei City, respectively, and the Company is responsible for the construction; the houses built would be allocated to both parties based on the specified proportion. In addition, the Company shall give performance bond in the amount of $350,000 and $19,570 to Mr. Fang Tsai-Yuan and World Vision United Co., Ltd., respectively, which would be returned to the Company in installments. As of December 31, 2017 and 2016, balance of the performance bonds were as follows:

In 2017, the Company asked the owners of land to return the 50 % performance bond after completion of the construction of roof-slab. However, the owners of land refused to return the 50% performance bond in the form of cash claiming that the joint construction agreement states that the owners of land can use allocated buildings and lands to offset the performance bond. The Company disagreed with the aforementioned claim. In addition, the Company expects to obtain a use permit by December 31,


Taichung City Koan An Section No.591-1 $ 63,880 $ 63,880

Nanzi Dist., Kaohsiung City Nanzi 1st sectionNo. 158,etc. 125,540$ 125,540$

December 31, 2017 December 31, 2016Nos. 602, Sec. Zhi-Shan 1, Shilin District, Taipei City

350,000$ 350,000$

Nos. 572, Sec. Zhi-Shan 1, Shilin District, Taipei City

19,570$ 19,570$

In 2017, the Company asked the owners of land to return the 50 % performance bond after completion of the construction of roof-slab. However, the owners of land refused to return the 50% performance bond in the form of cash claiming that the joint construction agreement states that the owners of land can use allocated buildings and lands to offset the performance bond. The Company disagreed with the aforementioned claim. In addition, the Company expects to obtain a use permit by December 31, 2017, but the use permit is still pending approval from the Taipei City Government as of audit report date. Currently, the Company is continuously communicating with the Taipei City Government in order to obtain the use permit in accordance with regulations, and has sent the legal demand letter to the owners of land for the collection of the performance bond. As of December 31, 2017, the Company’s construction cost in this joint construction agreement amounted to $591,174.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management TheCompany’scapitalmanagementistoensureithassufficientfinancialresourceandoperating

plans to meet operational capital for future needs, capital expenditures, obligation repayment and dividend distribution. The Company adjusts borrowing amount in accordance with construction progress and capital needed for operations.

(2) Financial instrumentsA. Fairvalueinformationoffinancialinstruments The carrying amount of cash and cash equivalents and financial instruments measured at

amortised cost (including notes and accounts receivable, other receivables, other current financial assets, refundable deposits short-term borrowings, short-term notes and bills payable, notes and accounts payable, other payables, corporate bonds payable, long-term borrowings and guarantee deposits received) are approximate to their fair values. Furthermore, theCompany’smanagementbelieves thecarryingamountsoffinancialassetsand liabilities not measured at fair value are approximate to their fair value or their fair value cannot be reliably measured. Thus, the carrying amount is the estimated fair value. The fair valueinformationoffinancialinstrumentsmeasuredatfairvalueisprovidedinNote12(3).

B. Financial risk management policies(a)TheCompany’sactivitiesexposeit toavarietyoffinancialrisks:marketrisk(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 offinancialmarketsandseeks tominimizepotentialadverseeffectson theCompany’sfinancialpositionandfinancialperformance.

(b) Risk management is carried out by a treasury department (Company's finance & accounting division) under policies approved by the Board of Directors. The Company's finance&accountingdivisionevaluatesandhedgesfinancial risks inclosecooperationwith the Company’s operating units. The Board provides written principles for overall riskmanagement,aswellaswrittenpoliciescoveringspecificareasandmatters,suchasforeignexchangerisk,interestraterisk,creditrisk,useofderivativefinancialinstrumentsandnon-derivativefinancialinstruments,andinvestmentofexcessliquidity.

C. Significantfinancialrisksanddegreesoffinancialrisks(a) Market risk Foreign exchange risk The Company operates internationally and the currencies primarily used are NTD

and USD. Foreign exchange risk arises from recognized assets and liabilities and net investments in foreign operations. Management has set up a policy to require the Company to manage its foreign exchange risk against its functional currency. The Company is required to manage its entire foreign exchange risk exposure with the Company treasury. ForeignexchangeriskdoesnothavesignificantimpacttotheCompany.

Interest rate risk The Company’s interest rate risk arises from short-term and long-term borrowings (not

including commercial paper). Borrowings issued at variable rates expose the Company to cashflowinterestrateriskwhichispartiallyoffsetbycashandcashequivalentsheldatvariablerates.BorrowingsissuedatfixedratesexposetheCompanytofairvalueinterestrate risk. The Company’s borrowings at variable rate were denominated in the NTD. If interest rates on borrowings had been 0.1% basis point higher/lower with all other variablesheldconstant,pre-taxprofitfor theyearsendedDecember31,2017and2016would have been $9,530 and $7,866 lower/higher, respectively.

Price risk The Company has investments in equity instruments, and the prices would change due

to the change of the future value of investee companies. However, the Company has set

VI


VI



a stop-loss point and it was assessed that the Company was not exposed to significant price risk. If the prices of these equity securities had increased/decreased by 10% with allothervariablesheldconstant,pre-taxprofit for theyearsendedDecember31,2017and 2016 would have increased/decreased by $17,662 and $37,600, respectively, as a resultofgains/lossesonequitysecuritiesclassifiedasatfairvaluethroughprofitorloss.Other components of equity would have increased/decreased by $13,276 and $13,327 respectively,asaresultofgains/lossesonequitysecuritiesclassifiedasavailable-for-sale.

(b) Credit riski. CreditriskreferstotheriskoffinanciallosstotheCompanyarisingfromdefaultby

theclientsorcounterpartiesoffinancialinstrumentsonthecontractobligations.Creditrisk arises from cash and deposits with banks and financial institutions, including outstanding receivables.

ii. The Company’s receivables, which are the receivables from preselling of housing

before completing construction and transferring the title, are installments received from customers of pre-construction real estate. Therefore, it was assessed that the Companywasnotexposedtosignificantcreditriskfromreceivables.

iii. For the years ended December 31, 2017 and 2016, the management does not expect anysignificantlossesfromnon-performancebythesecounterparties.

(c) Liquidity riski. CashflowforecastingisperformedbytheCompany’sfinance&accountingdivision.

The Company's finance & accounting division monitors rolling forecasts of the Company’sliquidityrequirementstoensureithassufficientcashtomeetoperationalneeds while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times.

ii. The table below analyses the Company’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to thecontractualmaturitydatefornon-derivativefinancial liabilities.Theamountsdisclosedinthetablearethecontractualundiscountedcashflows.

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ii. The Company’s receivables, which are the receivables from preselling of housing before completing construction and transferring the title, are installments received from customers of pre-construction real estate. Therefore, it was assessed that the Company was not exposed to significant credit risk from receivables.

iii. For the years ended December 31, 2017 and 2016, the management does not expect any significant losses from non-performance by these counterparties.

(c) Liquidity risk

i. Cash flow forecasting is performed by the Company’s finance & accounting division. The Company's finance & accounting division 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.

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


Non-derivative financial liabilities: Short-term borrowings 694,848$ -$ -$ Short-term notes and bills payable 855,900 - - Notes payable 5,793 - - Accounts payable (including related party) 690,663 409,517 - Other payables 525,715 - - Guarantee deposits received 72,003 35,302 22,391 Bonds payable 2,559,750 42,000 2,042,000 Long-term borrowings (including current portion) 3,355,193 3,134,553 2,533,305

December 31, 2017

~70~

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

(3) Fair value estimation

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(2)A. Details of the fair value of the Company’s investment property measured at cost are provided in Note 6(11).

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. The fair value of the Company’s investment in listed stocks and beneficiary certificates is included in Level 1.


Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investment in equity investment without active market 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, 2017 and 2016, is as follows:


Non-derivative financial liabilities: Short-term borrowings 2,239,654$ -$ -$ Short-term notes and bills payable 340,000 - - Notes payable 15,052 - - Accounts payable 817,127 678,229 - Other payables 672,161 - - Guarantee deposits received 67,150 31,651 29,018 Bonds payable 2,065,350 2,538,750 - Long-term borrowings (including current portion) 1,194,401 4,402,930 2,989,561

December 31, 2016

iii.TheCompanydoesnotexpect the timingofoccurrenceof thecashflowsestimatedthroughthematuritydateanalysiswillbesignificantlyearlier,norexpect theactualcashflowamountwillbesignificantlydifferent.

(3) Fair value estimation 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(2)A. Details of the fair value of the Company’s investment property measured at cost are provided in Note 6(11).

B. The different levels that the inputs to valuation techniques are used to measure fair value of financialandnon-financialinstrumentshavebeendefinedasfollows: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 amarket inwhich transactionsfor theassetor liability takeplacewithsufficientfrequency and volume to provide pricing information on an ongoing basis. The fair valueof theCompany’s investment in listedstocksandbeneficiarycertificates isincluded in Level 1.


Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investment in equity investment without active market 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, 2017 and 2016, is as follows:

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D. The methods and assumptions the Company used to measure fair value are as follows:

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




December 31, 2017 Level 1 Level 2 Level 3 Total

Assets:

Recurring fair value measurements

Financial assets at fair value through

profit or loss

Equity securities 179,172$ -$ -$ 179,172$

Available-for-sale financial assets

Equity securities 1,018,855 - 76,253 1,095,108 1,198,027$ -$ 76,253$ 1,274,280$


Assets:



profit or loss




Listed shares Open-end fundMarket quoted price Closing preice Net asset value

Non-derivative equity instruments 2017 2016

At January 1 142,996$ 192,557$

Losses recognised in other comprehensive income (Note) 66,743)( 47,984)( Proceeds from capital reduction - 1,577)(

At December 31 76,253$ 142,996$

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Assets:



profit or loss





Assets:



profit or loss






At January 1 142,996$ 192,557$


At December 31 76,253$ 142,996$

D. The methods and assumptions the Company used to measure fair value are as follows: The instruments the Company used market quoted prices as their fair values (that is, Level 1)

are listed below by characteristics:

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Assets:



profit or loss





Assets:



profit or loss






At January 1 142,996$ 192,557$


At December 31 76,253$ 142,996$



~71~







Assets:



profit or loss





Assets:



profit or loss






At January 1 142,996$ 192,557$


At December 31 76,253$ 142,996$



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

I.ThefollowingisthequalitativeinformationofsignificantunobservableinputsandsensitivityanalysisofchangesinsignificantunobservableinputstovaluationmodelusedinLevel3fairvalue measurement:

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

Fair value at Valuation Significant Range Relationship of inputs

December 31, 2017 technique unobservable input (weighted average) to fair value

Non-derivative equity

Unlisted shares 76,253$ Net asset value Net asset value N/A The higher the net

asset value, the higher

the fair value






the fair value

Favourable Unfavourable Favourable Unfavourable

Imput Change change change change change

Financial assets

Equity instruments 29,234$ -$ -$ 292$ 292)($

December 31, 2017

Recognised in other

Recognised in profit or loss comprehensive income

J. The Company has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in different measurement. The following is the effectofprofitorlossorofothercomprehensiveincomefromfinancialassetsandliabilitiescategorized within Level 3 if the inputs used to valuation models have changed:

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






the fair value






the fair value



Financial assets


December 31, 2017

Recognised in other


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

table 5. F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to

table 6. G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in

capital or more: Please refer to table 7. H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please

refer to table 8. I. Trading in derivative instruments undertaken during the reporting periods: None. J. Significant inter-company transactions during the reporting periods: Please refer to table 9.

(2) Information on investees Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 10.

(3) Information on investments in Mainland China None.

14. SEGMENT INFORMATION Not applicable.



Financial assets


December 31, 2016

Recognised in other



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

to table 5.F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to

table 6.

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G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 7.

H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 8.

I. Trading in derivative instruments undertaken during the reporting periods: None.J.Significantinter-companytransactionsduringthereportingperiods:Pleaserefertotable9.

(2) Information on investees Names, locations and other information of investee companies (not including investees in

Mainland China): Please refer to table 10.(3) Information on investments in Mainland China

None.

14. SEGMENT INFORMATION

Not applicable.

Review of Financial Conditions, Operating Results, and Risk Management

Annual Report 2017

Chapter VII

VII

Review

of Financial Conditions, O

perating Results, and R

isk Managem

ent

VII

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VII. Review of Financial Conditions, Operating Results, and Risk Management

7.1 Analysis of Financial Status

2016 2015Difference

Amount % Note

Current Assets 30,297,691 31,059,275 (761,584) -2.45% 1

Financial Assets-non current 2,066,740 2,168,726 (101,986) -4.70% 1

Equity Method Investment 1,830,246 2,029,496 (199,250) -9.82% 1

Fixed Assets 6,422,886 6,513,554 (90,668) -1.39% 1

Investment Property 5,867,885 5,957,293 (89,408) -1.50% 1

Intangible Assets 2,179,473 2,240,916 (61,443) -2.74% 1

Other Assets 1,610,204 1,315,584 294,620 22.39% 2

Total Assets 50,275,125 51,284,844 (1,009,719) -1.97% 1

Current Liabilities 15,345,260 12,211,690 3,133,570 25.66% 3

Long-term Liabilities 8,596,153 12,297,068 (3,700,915) -30.10% 3

Other Liabilities 2,157,060 2,148,793 8,267 0.38% 1

Total Liabilities 26,098,473 26,657,551 (559,078) -2.10% 1

Capital stock 16,233,261 16,233,261 0 0.00% 1

Capital surplus 2,260,513 2,260,513 0 0.00% 1

Retained Earnings 4,395,122 4,745,590 (350,468) -7.39% 1

Other Equity 974,377 1,058,270 (83,893) -7.93% 1

Treasury Stock (1,003) (1,003) 0 0.00% 1

Minority Equity 314,382 330,662 (16,280) -4.92% 1

Total Stockholders' Equity 24,176,652 24,627,293 (450,641) -1.83% 1

Item

Year

$NTD Thousands

1. Changes do not over 20%.2. Other Assets: due to the increase in other financial assets-non currents.3. Current and long-term Liabilities: increased in current portion of long-term loans.

7.2 Analysis of Operating Results

2017 2016Difference

Amount %

Sales 11,128,796 12,183,756 (1,054,960) -8.66%

Less: Sales Returns (139,816) (123,454) 16,362 13.25%

Net Sales 10,988,980 12,060,302 (1,071,322) -8.88%

Cost of Sales (7,722,731) (8,124,458) (401,727) -4.94%

GrossProfit 3,266,249 3,935,844 (669,595) -17.01%

Operating Expenses (2,188,144) (2,422,111) (233,967) -9.66%

Operating Income 1,078,105 1,513,733 (435,628) -28.78%

Other Income 219,358 301,136 (81,778) -27.16%

Other Income and Loss 157,467 214,776 (57,309) -26.68%

Financial Cost (171,106) (243,079) (71,973) 29.61%

Shareofprofitofsubsidiaries,associates and joint venturesaccounted for under equitymethod

56,018 119,118 (63,100) -52.97%

Profitbeforeincometax 1,339,842 1,905,684 (565,842) -29.69%

TaxBenefit(Expense) (75,021) (306,469) (231,448) -75.52%

Net Income 1,264,821 1,599,215 (334,394) -20.91%

Item

Year

$NTD Thousands

7.3 Analysis of Cash Flow

7.3.1 Cash Flow Analysis for the Current Year

Cash and Cash Equivalents, Beginning of

Year (1)

Net Cash Flow from Operating

Activities (2)

CashOutflow(3)

Cash Surplus(Deficit)

(1)+(2)-(3)

LeverageofCashDeficit

Investment Plans

Financing Plans

4,648,915 1,224,814 (1,651,880) 4,221,849 None None

Cashflowin2017:1.Cashoutflowfromoperatingactivities:$1,224,8142.Cashinflowfrominvestingactivities:($861,904)3.Cashinflowfromfinancingactivities:($785,986) 4. Foreign changes adjustments: ($3,990)

$NTD Thousands

VII

Review



isk Managem

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VII

Review



isk Managem

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2017 2016 Variance (%)

Cash Flow Ratio (%) 7.98 12.14 -34.27%

Cash Flow Adequacy Ratio (%) 39.49 1.03 373.40%

Cash Reinvestment Ratio (%) N/A N/A N/A

ItemYear

7.3.2 Remedy for Cash Deficit and Liquidity Analysis

7.3.3 Cash Flow Analysis for the Current Year

7.4 Major Capital Expenditure Items:

Major capital expenditure occurred recent years is coming from cash flow from operating

activities.

7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year:

Share of profits of investment under equity recognized 2017 is $56,018 thousand N T D . A n d

there is no foresee major investment next year.

7.6 Analysis of Risk Management

7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

(1) Interest rate

In the future, the company will carefully monitor interest rate movements and adopt proper

hedgingstrategiesandothercapitalmarketsfinancinginstrumentstoensurethatourfinancing

costs are at a comparatively low level.

Cash and Cash Equivalents, Beginning of

Year (1)

Net Cash Flow from Operating

Activities (2)

CashOutflow(3)

Cash Surplus(Deficit)

(1)+(2)-(3)

LeverageofCashDeficit

Investment Plans

Financing Plans

4,221,849 1,163,573 (1,730,285) 3,655,137 None None

Cashflowin2018:1.Cashinflowfromoperatingactivities:Completionofcurrentconstructioninprogress.2.Cashoutflowfrominvestingactivities:Nomajorestimatedinvestment.3.Cashoutflowfromfinancingactivities:Loanrepaymentandpaymentofcashdividend.

(2) Foreign exchange rates

None.

(3) Inflation

Ourstrategyforinflationimpactisjointprocurementtoachievebestcostcontrol.

7.6.2 Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions

The company did not engage in any high-risk or high-leveraged investments. The transactions

and procedures related to lending and endorsement are based on the Company’s “Procedures of

Lending” and “Procedures of Endorsement Guarantee.”.

7.6.3 Future Research & Development Projects and Corresponding Budget

None.

7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales

Prince always pays close attention to any changes in local and foreign policies and makes

appropriate amendments to our systems when necessary. During 2017 and as of the date of

publication of this annual report, changes in related laws had impacted the investors’ willing to

purchase. Prince has now broadened our business to income-producing property to balance the

wave in local and foreign policies.

7.6.5 Effects of and Response to Changes in Technology and in Industry Relating to Corporate Finance and Sales

None.

7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures

None.

7.6.7 Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans

None.

7.6.8 Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans

None.

VII

Review



isk Managem

ent

VII

Review



isk Managem

ent


7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration

None.

7.6.10 Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10%

None.

7.6.11 Effects of, Risks Relating to and Response to Changes in Control over the Company

None.

7.6.12 Litigation or Non-litigation Matters

●TheJudgmentoffirstinstanceoftradingsuitlocatedinNorthDistrict,Tainan.

This case according to the land purchase agreement signed on 2007/10/26, term

2 second statement. The total estimated sales of this target NTD 340 million,

bothpartiedagreeaftersixmonthsgettingusablelicense,tofinalizetheexacttotalsales,ifthe

sales is over the estimated sales amount, then use the premium(exclude the sales tax) deduct the

interest paid by the land load. The 40% of the remaining amount should be the increment of the

transaction.

The total amout we should pay is NTD 102,049,670 and starting from 2012/5/31

and 2017/02/09, the interest should pay upon 5% of annual interst of NTD

84,988,302andNTD17,061,368.Weplannedtofileanappealtothethirdinstance.

7.6.13 Other Major Risks

None.

7.7 Other major matters:

None.

Special Disclosure

Annual Report 2017

Chapter VIII

VIII

Special Disclosure

VIII

Special Disclosure


VII

I. Sp

ecia

l Dis

clos

ure

100%

100%

Che

ng-S

hi In

vest

men

t Hol

ding

Co.

, Ltd

The

Sple

ndor

Hot

el T

aich

ung

100%

100%

99.6

5%

100%

100%

50%

100%

100%

99.6

5%

Prin

ce In

dust

rial,

Cor

p.

Jin-

Yi-X

ing

plyw

ood

Co.

, Ltd

Pr

ince

Hou

sing

Inve

stm

ent C

o., L

td

Don

g-Fe

ng E

nter

pris

es C

o., L

td

Tim

e Sq

uare

Inte

rnat

iona

l Co.

, Ltd

Pr

ince

Rea

l Est

ate

Co.

,Ltd

.

Prin

ce P

rope

rty M

anag

emen

t C

onsu

lting

Co.

Prin

ce A

partm

ent M

anag

emen

t Main

tain

Co.,

Ltd

Prin

ce S

ecur

ity C

o., L

td

100%

100%

100%

Ta C

hen

Con

tstu

ctio

n &

En

gine

erin

g C

orp.

Che

n-Sh

i Con

stru

cito

n C

o., L

td

Prin

ce U

tility

Co.

, Ltd

.

Prin

ce H

ousi

ng&

D

evel

opm

ent C

orp.

1.

Rel

ated

Par

ty

(1)Consolidatedfinancialstatementsoftherelatedparty

1. R

elat

ed p

arty

(1)

Org

aniz

atio

nal s

truct

ure

of re

late

d pa

rty:

(2)BasicInform

ationofAffiliatedEn

terprises

Nam

e of

Cor

pora

tion

Dat

e of

Es

tabl

ishm

ent

Add

ress

Cap

ital

Maj

or B

usin

ess/

Prod

uctio

n Ite

ms

Prin

ce H

ousi

ng&

Dev

elop

men

t C

orp.

1973

.09.

2219

F., N

o.30

, Zho

ngzh

eng

S. R

d., Y

ongk

ang

Dis

t., T

aina

n C

ity$1

6,62

3,41

8B

uild

pub

ic h

ousi

ng, c

omm

eric

al b

uild

ings

, pa

rkin

g Lo

t, pa

rkin

g to

wer

and

sal

e an

d re

nt

Che

ng-S

hi In

vest

men

t Hol

ding

C

o.20

13.0

3.13

19F.

, No.

30, Z

hong

zhen

g S.

Rd.

, Yon

gkan

g D

ist.,

Tai

nan

City

975,

048

Inve

stm

ent

Ta-C

hen

Con

stru

ctio

n &

En

gine

erin

g C

orp.

1959

.05.

1119

F., N

o.30

, Zho

ngzh

eng

S. R

d., Y

ongk

ang

Dis

t., T

aina

n C

ity90

4,97

5A

rchi

tect

ure

desi

gn a

nd c

onst

ruct

ion

Che

ng-S

hi C

onst

ruct

ion

Co.

, Ltd

.19

76.0

1.22

19F.

, No.

30, Z

hong

zhen

g S.

Rd.

, Yon

gkan

g D

ist.,

Tai

nan

City

201,

000

Con

stru

ctio

n in

dust

ry

Prin

ce U

tility

Co.

, Ltd

.19

77.0

3.01

19F.

, No.

30, Z

hong

zhen

g S.

Rd.

, Yon

gkan

g D

ist.,

Tai

nan

City

30,7

00El

ectri

c Po

wer

and

wat

er s

uppl

y pi

pelin

e se

tup

Prin

ce P

rope

rty M

anag

emen

t C

onsu

lting

Co.

199

2.11

.09

19F.

, No.

30, Z

hong

zhen

g S.

Rd.

, Yon

gkan

g D

ist.,

Tai

nan

City

171,

466

Man

agem

ent t

he le

asin

g of

resi

dent

ial a

nd

com

mer

cial

bui

ldin

g an

d re

al e

stat

e

Prin

ce S

ecur

ity C

o., L

td20

00.0

4.07

17F.

, No.

30, Z

hong

zhen

g S.

Rd.

, Yon

gkan

g D

ist.,

Tai

nan

City

131,

726

Secu

rity

serv

ice

Prin

ce A

partm

ent M

anag

emen

t M

aint

ain

Co.

, Ltd

.19

96.0

8.05

18F.

, No.

30, Z

hong

zhen

g S.

Rd.

, Yon

gkan

g D

ist.,

Tai

nan

City

30,0

00A

partm

ent m

anag

emen

t and

mai

ntai

n se

rvic

eTi

me

Squa

re In

tern

atio

nal C

o.,

Ltd.

2007

.01.

22N

o.10

, Sec

. 5, Z

hong

xiao

E. R

d., X

inyi

D

ist.,

Tai

pei C

ity46

3,00

0H

otel

The

Sple

ndor

Hot

el T

aich

ung

2006

.10.

25N

o.10

49, J

ianx

ing

Rd.

, Wes

t Dis

t., T

aich

ung

City

1,95

0,00

0To

uris

t Hot

el

Don

g-Fe

ng E

nter

pris

es C

o., L

td.

1963

.02.

2819

F., N

o.30

, Zho

ngzh

eng

S. R

d., Y

ongk

ang

Dis

t., T

aina

n C

ity43

,000

Investmentofculturedfish,waterpond,

arch

itect

ure

and

cem

ent i

ndus

tries

Prin

ce H

ousi

ng In

vest

men

t Co.

, Lt

d19

97.0

6.27

Citc

o B

uild

ing

Wic

kham

s C

ay.

P. O

Box

622

, Roa

d To

wn,

Tor

tol,

Brit

ish

Virg

in Is

land

s14

0,41

3O

vers

eas

Inve

stm

ents

The

Sple

ndor

Hot

el T

aich

ung

2006

.10.

25N

o.10

49, J

ianx

ing

Rd.

, Wes

t Dis

t., T

aich

ung

City

1,95

0,00

0To

uris

t Hot

el

Uni

t ；N

T $

thou

sand

s

VIII

Special Disclosure

VIII

Special Disclosure


Nam

e of

Cor

pora

tion

Dat

e of

Es

tabl

ishm

ent

Add

ress

Cap

ital

Maj

or B

usin

ess/

Prod

uctio

n Ite

ms

Jin-

Yi-X

ing

Plyw

ood

Co.

, Ltd

.19

69.0

3.10

18F.

, No.

30, Z

hong

zhen

g S.

Rd.

, Yon

gkan

g D

ist.,

Tai

nan

City

39,5

20Pa

rticl

e bo

ard

man

ufac

ture

Prin

ce R

eal E

stat

e C

o.20

15.0

9.24

8F.,

No.

398,

Sec

. 1, Z

hong

hua

E. R

d., E

ast

Dis

t., T

aina

n C

ity

112,

480

Rea

l est

ate

tradi

ng a

nd p

lyw

ood

man

ufac

turin

g

Prin

ce In

dust

rial C

orp.

2013

.2.2

721

F., N

o.11

, Son

ggao

Rd.

, Xin

yi D

ist.,

Ta

ipei

City

10,0

00D

evel

opm

ent o

f res

iden

tial a

nd b

usin

ess

build

ings

(3)DataofC

ommonShareholdersofTreared-asContro

lledCom

paniesandAffiliates:None

(4)BusinessofPrin

ceHousing&DevelopmentC

oanditsAffiliatedEn

terprises

(i)

The

busi

ness

of P

rince

Hou

sing

& D

evel

opm

ent C

o. c

over

s: c

onst

ruct

ion,

pow

er a

nd w

ater

sup

ply

pipe

line

setu

p, re

al e

stat

e ap

prai

sal a

nd

agen

t, ov

erse

as in

vest

men

ts, R

ecre

atio

n an

d en

terta

inm

ent m

anag

emen

t, R

&D

of m

akin

g m

edic

ine

with

bio

tech

nolo

gy a

nd e

xpor

t/im

port

fung

icid

e, A

partm

ent m

anag

emen

t and

mai

ntai

n se

rvic

e, S

ecur

ity s

ervi

ce, h

otel

, and

par

ticle

boa

rd m

anuf

actu

re e

tc.

(ii)Businesswithrelationshipam

ongaffiliatedenterprisesasfollowing:

O

ur p

roje

cts

are

cons

igne

d to

Ta-

Che

n C

onst

ruct

ion

& E

ngin

eerin

g C

orpo

ratio

n, C

heng

-Shi

Con

stru

ctio

n C

o., L

td a

nd P

rince

Util

ity C

o.,

Ltd.

For

sav

ing

cost

, par

ts o

f re

sidu

al h

ouse

s w

ere

cons

igne

d to

Prin

ce R

eal e

stat

e A

gent

Co.

, Ltd

to s

ell.

To s

uppl

y af

ter-

sell

serv

ices

,

parts

of b

uild

ings

wer

e co

nsig

ned

to P

rince

Apa

rtmen

t Man

agem

ent M

aint

ain

Co.

, Ltd

and

Prin

ce S

ecur

ity C

o., L

td.

(5)Directors,Supervisors,andPresidentofA

ffiliatedenterprises

Nam

e of

Cor

pora

tion

Title

Nam

e or

Rep

rese

ntat

ive

Shar

ehol

ding

Shar

es%

Prin

ce H

ousi

ng&

D

evel

opm

ent C

orp.

Cha

irman

Uni

-Pre

side

nt E

nter

pris

es C

o., L

td.

162,

743,

264

10.0

3%

Cha

irman

(Uni

-Pris

eden

t Rep

.)C

hih-

Hsi

en L

o-

-

Dire

ctor

Uni

-Pre

side

nt E

nter

pris

es C

o., L

td.

162,

743,

264

10.0

3%

Dire

ctor

(Uni

-Pris

eden

t Rep

.)Ts

ung-

Ping

Wu

--

Dire

ctor

Cha

o-M

ei W

u Ts

eng

39,0

23,0

302.

40%

Dire

ctor

Taip

o In

v. C

o., L

td.

88,3

86,5

875.

44%

Dire

ctor

(Tai

po R

ep.)

Ping

-Chi

h W

u12

,888

,695

0.79

%D

irect

orYo

ung

Yun

Inv.

Co.

, Ltd

.14

,969

,463

0.92

%D

irect

or(Y

oung

Yun

Rep

.)C

hung

-Ho

Wu

5,20

9,84

70.

32%

Dire

ctor

Taip

o In

v. C

o., L

td.

88,3

86,5

875.

44%

Dire

ctor

(Tai

po R

ep.)

Gen

-De

Wu

9,65

6,94

30.

59%

Dire

ctor

Hon

g-Ya

o In

vest

men

t Co.

, Ltd

.2,

346,

491

0.14

%D

irect

or(H

ong

Yao

Rep

.)Sh

ih-H

ung

Chu

ang

1,68

7,74

80.

10%

Dire

ctor

Po-Y

i Hou

13,7

01,2

150.

84%

Dire

ctor

Yu P

ong

Inv.

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Ltd

.,66

9,97

50.

04%

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ctor

(Yu

Pong

. Rep

.)Po

-Min

g H

ou22

,923

,624

1.41

%D

irect

orC

hun

Long

Inv.

Co.

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.,25

,882

,643

1.59

%D

irect

or(C

hun

Long

Rep

.)Y

ing-

Chi

h C

huan

g31

0,02

00.

02%

Dire

ctor

Kao

Chy

uan

Inv.

Co.

, Ltd

.52

,457

,308

3.23

%D

irect

or(K

ao C

hyua

n R

ep.)

Hsi

u-Li

ng K

ao42

5,01

30.

03%

Dire

ctor

Jiu

Fu In

v. C

o. L

td.,

28,1

36,0

241.

73%

Dire

ctor

(Jiu

Fu

Rep

.)Li

Lin

g C

heng

--

Inde

pend

ent D

irect

orH

ey Y

i Hon

g-

-In

depe

nden

t Dire

ctor

Shen

g C

ia, X

u-

-

VIII

Special Disclosure

VIII

Special Disclosure


Nam

e of

Cor

pora

tion

Title

Nam

e or

Rep

rese

ntat

ive

Shar

ehol

ding

Shar

es%

Che

ng-S

hi In

vest

men

t H

oldi

ng C

o.

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ctor

and

Sup

ervi

sor

Prin

ce H

ousi

ng &

Dev

elop

men

t Cor

p.97

,504

,758

100.

00%

Dire

ctor

(Prin

ce R

ep.)

Chi

h-H

sien

Lo

-

- D

irect

or (P

rince

Rep

.)M

ing-

Fan

Xie

-

- D

irect

or (P

rince

Rep

.)B

o-M

ing,

Hou

-

- D

irect

or (P

rince

Rep

.)Zh

ong-

Ho,

Wu

-

- Su

perv

isor

(Prin

ce R

ep.)

June

Che

n K

ao

-

-

Ta-C

hen

Con

stru

ctio

n &

En

gine

erin

g C

orp

Cha

irman

/Sup

ervi

sor

Che

ng-S

hi In

vest

men

t Hol

ding

Co.

90.4

97.5

2810

0.00

%C

hairm

an (

Che

ng-S

hi R

ep.)

Ron

g-Ti

an Z

hang

-

- D

irect

or(C

heng

-Shi

Rep

.)M

o C

hun

Hou

-

- D

irect

or(C

heng

-Shi

Rep

.)Ju

ne C

hen

Kao

-

- Su

perv

isor

( Che

ng-S

hi R

ep.)

Yi C

hun

Su

-

-

Che

ng-S

hi C

onst

ruct

ion

Cor

p.

Dire

ctor

and

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sor

Che

ng-S

hi In

vest

men

t Hol

ding

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20,1

00,0

0010

0%C

hairm

an (C

heng

-Shi

Inve

stm

ent R

ep.)

Min

g-Fa

n X

ie

-

-

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ctor

(Che

ng-S

hi In

vest

men

t Rep

.)C

hun-

Long

Chi

e

-

-

Dire

ctor

(Che

ng-S

hi In

vest

men

t Rep

.)X

iao-

Yu J

iang

-

- Su

perv

isor

(Che

ng-S

hi In

vest

men

t Rep

.)D

a-C

hang

Dai

-

-

Prin

ce U

tility

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, Ltd

Cha

irman

/Sup

ervi

sor

Che

ng-S

hi In

vest

men

t Hol

ding

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3,07

0,00

010

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%C

hairm

an( C

heng

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Rep

.)M

ing-

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-

- D

irect

or( C

heng

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Rep

.)K

un-B

o Ye

-

- D

irect

or( C

heng

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Rep

.)Ji

an-Y

ing

Wu

-

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irect

or( C

heng

-Shi

Rep

.)W

en-Z

hen

Qiu

-

- Su

perv

isor

( Prin

ce R

ep.)

Jun-

Lian

g Li

n

-

-

Nam

e of

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pora

tion

Title

Nam

e or

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rese

ntat

ive

Shar

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ding

Shar

es%

Prin

ce P

rope

rty

Man

agem

ent C

onsu

lting

C

o.

Cha

irman

/Sup

ervi

sor

Prin

ce P

rope

rty M

anag

emen

t Con

sulti

ng C

o.17

,146

,580

100.

00%

Cha

irman

( Prin

ce P

rope

rty R

ep.)

Min

g-Fa

n X

ie

-

-

Dire

ctor

( Prin

ce P

rope

rty R

ep.)

Li L

ing

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ng

-

-

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ctor

( Prin

ce P

rope

rty R

ep.)

Chi

h-H

sien

Lo

-

- D

irect

or( P

rince

Pro

perty

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.)Po

-Min

g H

ou

-

-

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ctor

( Prin

ce P

rope

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ep.)

Zhon

g-Ja

n, W

u

-

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rvis

or (

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ce P

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ep.)

June

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n K

ao

-

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Prin

ce S

ecur

ity C

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td.

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and

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Prin

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hairm

an (P

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perty

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.)M

ing-

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or(P

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pery

Rep

.)X

iao-

Yu J

iang

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irect

or(P

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pery

Rep

.)W

en-Z

hen

Qiu

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- D

irect

or(P

rince

Pro

pery

Rep

.)Y

i Shu

n Su

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or(P

rince

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pery

Rep

.)Ju

ne C

hen

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-

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perv

isor

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ce P

rope

ry R

ep.)

Da-

Cha

ng D

ai

-

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Prin

ce A

partm

ent

Man

agem

ent M

aint

ain

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, Ltd

Dire

ctor

and

Sup

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sor

Prin

ce P

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anag

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000,

000

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00%

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irman

(Prin

ce R

ep.)

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g-Fa

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ie

-

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ctor

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ep.)

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n K

ao

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ctor

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ng

-

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ctor

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ep.)

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hun

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-

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ctor

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ce R

ep.)

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-Zhe

n Q

iu

-

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rvis

or(P

rince

Rep

.)D

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VIII

Special Disclosure

VIII

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VIII

Special Disclosure

VIII

Special Disclosure


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-

- 2. AffiliatesOperationsOverview

Company Name Capital Totalassets

Totalliabilities Equity

Operating Revenue

Operating Income

Net Income EPS

(After tax)

(After tax)

Prince Housing & Development Corp. 16,233,261 43,121,933 19,259,663 23,862,270 5,734,056 300,947 1,281,101 0.79

Cheng-Shi Investment Holding Co.

975,048 1,133,191 7,592 1,125,599 - (166) 137,286 1.41

Ta Chen Construction & Engineering Corp.

904,975 1,584,926 767,516 817,410 1,384,153 36,955 91,337 1.01

Cheng-Shi Construction Corp 201,000 561,918 329,250 232,668 881,482 22,343 19,792 0.98

Prince Water and Electricity Corp. 30,700 275,364 202,189 73,175 558,874 24,414 26,672 8.69

Prince Property Management Consulting Co.

171,466 295,771 1,216 294,555 3,873 (421) 12,506 0.73

Prince Security Group 131,726 269,335 55,910 213,425 366,278 15,402 13,338 1.01

Prince Apartment management and maintenance corp.

30,000 109,452 36,082 73,370 275,213 8,648 917 0.31

Time Square International Hotel 463,000 1,534,176 915,097 619,079 1,803,027 183,776 156,109 3.37

Splendor Hotel 1,950,000 5,837,990 5,220,013 617,977 773,987 23,771 (35,704) (0.37)

Don-Fung Corp. 43,000 45,196 395 44,801 418 (2) (120) (0.03)

Prince Housing Investments Corp. 140,413 460,407 18 460,389 - (99) 27,412 64,046.73

Chin-I-Shin Plywood Corp. 39,520 6,447 390 6,057 - (149) (149) (0.04)

Prince Real Estate Co. 112,480 1,832,597 297,482 1,535,115 747,830 461,400 449,480 40.10

Prince Industrial Corp. 10,000 9,468 1 9,467 - (66) (59) (0.06)


VIII

Special Disclosure

VIII

Special Disclosure


8.1.

2 A

ffilia

tes c

onso

lidat

ed fi

nanc

ial s

tate

men

ts

Plea

se re

fer t

o C

hapt

er 6

.

8.1.

3 R

epor

ts o

n re

latio

ns b

etw

een ：

Non

e 。

8.2

Info

rmat

ion

of p

riva

te o

ffer

ed se

curi

ties ：

Non

e

8.3

The

Sha

res i

n th

e C

ompa

ny H

eld

or D

ispo

sed

of b

y Su

bsid

iari

es in

the

Mos

t Rec

ent Y

ears

:

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e of s

ubsid

iary

Stoc

k ca

pita

l co

llect

edFu

nd

sour

ce

Share

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ng

ratio

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co

mpan

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Date

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es an

d am

ount

ac

quire

d

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es an

d am

ount

di

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ed o

f

Inve

stmen

t ga

in (l

oss)

Share

holdi

ngs

& am

ount

in the

mo

st rec

ent y

earM

ortga

geEn

dorse

ment

amou

nt ma

de fo

r the

subsi

diary

Amou

nt loa

ned t

o the

su

bsidi

ary

Prin

ce A

partm

ent

man

agem

ent a

nd

mai

nten

ance

corp

.

$30,

000

(Not

e)O

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ting

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tal

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e0

00

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shar

esN

one

(Not

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(Not

e)0

(Not

e)0

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8.4

Oth

er N

eces

sary

Sup

plem

ent:

Non

e 。

Uni

t ；N

T $

thou

sand

ss; %

Not

e: u

ntil

Apr

. 30,

201

8


CORP.

Chih-Hsien, Lo , Chairman

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