FEDS - Audit Report / Information 2018

Far Eastern Department Stores, Ltd.

Financial Statements for the Years Ended December 31, 2018 and 2017 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Far Eastern Department Stores, Ltd.

Opinion

We have audited the accompanying financial statements of Far Eastern Department Stores, Ltd. (the “Company”), which comprise the balance sheets as of December 31, 2018 and 2017, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2018. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s financial statements for the year ended December 31, 2018 are stated as follows:

Evaluation of Impairment Loss of Goodwill on Investments in Subsidiaries

Carrying amounts of investments in the Company’s subsidiaries include goodwill, which was acquired through indirect investment on Pacific Liu Tong Investment Co. Ltd. for operating segments in mainland China. Under IAS 36, the management of the Company must test for impairment annually. When testing goodwill for impairment, the management should evaluate whether the recoverable amount is higher than the carrying amount. In determining the recoverable amount, management should estimate the future cash flows from operating segments in mainland

China and determine the optimal discount rate. Significant assumptions involve both judgments made by management and material estimation uncertainty. Thus, the evaluation of impairment loss of goodwill in subsidiaries is considered a key audit matter. For the accounting policy related to investments in subsidiaries, please refer to Notes 4(6) and 5(1) of the accompanying financial statements, in which goodwill impairment of investments in subsidiaries is included.

Our key audit procedures for the aforementioned key audit matter are as follows:

We evaluated the expertise, competency and independence of external valuation specialists mandated by management. We verified the qualification of valuation specialists to ensure their objectivity and assignment were not influenced or restricted, and the methodology conducted was under regulation.
We understood the process of management’s estimation of the future sales growth rate and profit margin predicted by the operating segments in mainland China.
As a consideration for the assessment reliability in the year of 2019 and for succeeding years, we compared 2018 budget and actual operating results of the operating segments in mainland China, estimating the accuracy of management's historical forecast.
We confirmed whether the management used the appropriate discount rate to assess impairment by using the same evaluation model used to calculate the weighted average cost of capital ratio and whether the weighted average cost of capital used by management was significantly different.

Fair Value Evaluation of Investment Properties

As of December 31, 2018, the carrying amount of investment properties was NT$9,062,640 thousand, accounting for 15% of the total assets, which is material to the financial statements. The Company’s investment properties are subsequently measured using the fair value model. In the process of fair value assessment, valuation technique and inputs require consideration of the future scheme of investment properties to estimate the discounted fair value of future cash flows. Future cash flows are extrapolated using the existing lease contracts of the Company and market rentals.

Since the cash flow forecasts are subject to economic conditions, which have a high level of measurement uncertainty, we have resultantly identified the fair value evaluation of investment properties as a key audit matter. Please refer to Notes 4(9), 5(2) and 15 to the accompanying financial statements for the relevant detailed information.

Our key audit procedures for the aforementioned key audit matter are as follows:

We evaluated the expertise, competency and independence of external valuation specialists mandated by management. We verified the qualification of valuation specialists to ensure that their objectivity and assignment were not influenced or restricted, and the methodology conducted was under regulation.
We reviewed the significant lease contracts to ensure the accuracy of fundamental information for cash flow forecasts.
We assessed the reasonableness of the valuer’s assumptions and methods used in the valuation.
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Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
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Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2018 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Shu-Chuan Yeh and Ming-Hsing Cho.

Deloitte & Touche Taipei, Taiwan Republic of China

March 20, 2019

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

FAR EASTERN DEPARTMENT STORES, LTD.

BALANCE SHEETS DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash (Note 6) Financial assets at amortized cost - current (Note 8) Notes receivable (Note 11) Trade receivables (Note 11) Trade receivables from related parties (Notes 11 and 30) Other receivables (Notes 11 and 30) Inventories (Note 12) Prepayments (Note 30) Other current assets (Note 18) Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Notes 7 and 31) Available-for-sale financial assets - non-current (Notes 9, 30 and 31) Financial assets measured at cost - non-current (Note 10) Investments accounted for using the equity method (Notes 13, 20 and 31) Property, plant and equipment (Notes 14, 15, 31 and 32) Investment properties (Notes 15 and 31) Intangible assets (Note 16) Deferred tax assets (Note 25) Long-term prepayments for lease (Note 17) Other non-current assets (Notes 18 and 30) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 19 and 31) Short-term bills payable (Note 19) Contract liabilities - current (Note 23) Notes payable and trade payables Trade payables to related parties (Note 30) Other payables (Notes 20 and 30) Current tax liabilities (Note 25) Deferred revenue - current (Note 20) Advance receipts (Note 30) Current portion of long-term borrowings (Notes 19 and 31) Other current liabilities (Notes 20 and 30) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 19 and 31) Deferred tax liabilities (Note 25) Net defined benefit liabilities (Note 21) Other non-current liabilities (Notes 13, 20, 27 and 30) Total non-current liabilities Total liabilities EQUITY Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity TOTAL		2018 Amount % $ 746,181 1 25,095 - 140 - 710,140 1 70,052 - 337,628 1 378,188 1 237,820 - 13,780 - 2,519,024 4 2,354,351 4 - - - - 19,570,715 32 25,314,067 41 9,062,640 15 50,207 - 192,145 - 2,173,763 4 321,053 - 59,038,941 96 $ 61,557,965 100 $ 6,710,000 11 2,299,032 4 2,847,832 5 4,878,840 8 76,148 - 1,284,856 2 148,613 - - - 188,206 - - - 154,900 - 18,588,427 30 11,100,000 18 2,064,540 4 89,001 - 192,091 - 13,445,632 22 32,034,059 52 14,169,406 23 3,315,420 5 3,166,880 5 2,656,286 4 2,081,772 4 7,904,938 13 4,231,252 7 (97,110) - 29,523,906 48 $ 61,557,965 100		2017
				Amount % $ 731,111 1 - - - - 445,110 1 58,247 - 86,428 - 331,080 1 222,711 - 11,408 - 1,886,095 3 - - 1,945,059 3 103,894 - 20,151,049 33 25,020,048 41 9,120,816 15 50,001 - 111,621 - 2,236,168 4 266,326 1 59,004,982 97 $ 60,891,077 100 $ 6,300,000 10 1,699,188 3 - - 5,026,846 8 85,055 - 1,226,591 2 124,398 - 37,604 - 2,885,830 5 3,500,000 6 113,556 - 20,999,068 34 8,600,000 14 1,884,830 3 237,508 1 170,953 - 10,893,291 18 31,892,359 52 14,169,406 23 3,315,931 6 3,013,281 5 2,643,743 4 2,274,946 4 7,931,970 13 3,678,521 6 (97,110) - 28,998,718 48 $ 60,891,077 100

The accompanying notes are an integral part of the financial statements.

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 23 and 30) OPERATING COSTS (Notes 12, 24 and 30) GROSS PROFIT OPERATING EXPENSES (Notes 24 and 30) Selling and marketing expenses General and administrative expenses Expected credit loss reversed Total operating expenses OPERATING PROFIT NON-OPERATING INCOME AND EXPENSES Other income (Note 24) Other gains and losses (Notes 24 and 30) Finance costs (Notes 24 and 30) Share of loss of subsidiaries and associates accounted for using the equity method Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 25) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE (LOSS) INCOME (Notes 21, 22 and 25) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain on investments in equity instruments at fair value through other comprehensive income		2018 Amount % $ 10,781,588 100 4,285,132 40 6,496,456 60 375,165 4 4,031,963 37 (11) - 4,407,117 41 2,089,339 19 335,487 3 (14,332) - (169,089) (1) (607,556) (6) (455,490) (4) 1,633,849 15 315,699 3 1,318,150 12 (5,559) - 311,658 3		2017
				Amount % $ 10,581,149 100 4,097,426 39 6,483,723 61 402,891 4 4,198,675 39 - - 4,601,566 43 1,882,157 18 72,518 1 170,706 1 (199,285) (2) (144,445) (1) (100,506) (1) 1,781,651 17 245,665 2 1,535,986 15 (22,745) - - - (Continued)

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Share of other comprehensive income (loss) of subsidiaries and associates accounted for using the equity method Income tax relating to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Unrealized loss on available-for-sale financial assets Share of other comprehensive income (loss) of subsidiaries and associates accounted for using the equity method Other comprehensive (loss) income for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE, NT$ (Note 26) Basic Diluted		2018 Amount % $ 390,615 4 5,528 - 702,242 7 - - 9,034 - 9,034 - 711,276 7 $ 2,029,426 19 $ 0.94 $ 0.93		2017
				Amount % $ (36,272) (1) 3,867 - (55,150) (1) (26,854) - (90,025) (1) (116,879) (1) (172,029) (2) $ 1,363,957 13 $ 1.09 $ 1.09




		$		$

The accompanying notes are an integral part of the financial statements.

(Concluded)

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

Share Capital Capital Surplus (Note 22) (Note 22) BALANCE AT JANUARY 1, 2017 $ 14,169,406 $ 3,319,868 Appropriation of 2016 earnings Legal reserve - - Special reserve - - Cash dividends - - - - Net profit for the year ended December 31, 2017 - - Other comprehensive (loss) income for the year ended December 31, 2017, net of income tax - - Total comprehensive income (loss) for the year ended December 31, 2017 - - Adjustments resulting from investments in subsidiaries and associates accounted for using the equity method - (3,937) BALANCE AT DECEMBER 31, 2017 14,169,406 3,315,931 Effect of retrospective application and retrospective restatement - - BALANCE AT JANUARY 1, 2018 AS RESTATED 14,169,406 3,315,931 Appropriation of 2017 earnings Legal reserve - - Special reserve - - Cash dividends - - - - Net profit for the year ended December 31, 2018 - - Other comprehensive (loss) income for the year ended December 31, 2018, net of income tax - - Total comprehensive income for the year ended December 31, 2018 - - Difference between equity purchase price and carrying amount arising from actual acquisition of subsidiary - (511) Adjustments resulting from investments in subsidiaries and associates accounted for using the equity method - - BALANCE AT DECEMBER 31, 2018 $ 14,169,406 $ 3,315,420	Retained Earnings (Notes 21, 22and 25) Unappropriated Legal Reserve Special Reserve Earnings $ 2,899,856 $ 2,529,594 $ 2,013,557 113,425 - (113,425 ) - 114,149 (114,149 ) - - (991,858) 113,425 114,149 (1,219,432) - - 1,535,986 - - (55,150) - - 1,480,836 - - (15) 3,013,281 2,643,743 2,274,946 - - 92,444 3,013,281 2,643,743 2,367,390 153,599 - (153,599 ) - 12,543 (12,543 ) - - (1,416,940) 153,599 12,543 (1,583,082) - - 1,318,150 - - (24,850) - - 1,293,300 - - (28) - - 4,192 $ 3,166,880 $ 2,656,286 $ 2,081,772	Other Equity (Note 22) Unrealized Gain (Loss) on Financial Assets at Fair Exchange Unrealized (Loss) Value Through Differences on Gain on Other Translating Available-for-sale Comprehensive Gain on Property Treasury Shares Foreign Operations Financial Assets Income Revaluation (Note 22) Total Equity $ 58,273 $ 1,566,157 $ - $ 2,170,970 $ (97,110) $ 28,630,571 - - - - - - - - - - - - - - - - - (991,858) - - - - - (991,858) - - - - - 1,535,986 27,775 (144,654) - - - (172,029) 27,775 (144,654) - - - 1,363,957 - - - - - (3,952) 86,048 1,421,503 - 2,170,970 (97,110 ) 28,998,718 - (1,421,503) 1,242,300 - - (86,759) 86,048 - 1,242,300 2,170,970 (97,110) 28,911,959 - - - - - - - - - - - - - - - - - (1,416,940) - - - - - (1,416,940) - - - - - 1,318,150 4,606 - 731,520 - - 711,276 4,606 - 731,520 - - 2,029,426 - - - - - (539) - - (4,192) - - - $ 90,654 $ - $ 1,969,628 $ 2,170,970 $ (97,110) $ 29,523,906

The accompanying notes are an integral part of the financial statements.

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss reversed on trade receivables Amortization of prepayments Finance costs Reversal of deferred revenue Share of loss of subsidiaries and associates accounted for using the equity method Interest income Dividend income Loss on disposal of property, plant and equipment Loss on disposal of investment properties Gain on disposal of investments Impairment loss recognized on financial assets Loss (gain) on changes in fair value of investment properties Net changes in operating assets and liabilities Notes receivable Trade receivables Trade receivables from related parties Other receivables Inventories Prepayments Other current assets Contract liabilities Notes payable and trade payables Trade payables to related parties Other payables Deferred revenue Advance receipts Other current liabilities Net defined benefit liabilities Cash generated from operations Interest paid Interest received Dividends received Income tax returned Income tax paid Net cash generated from operating activities	2018 $ 1,633,849 1,016,063 18,678 (11) 476 169,089 - 607,556 (160) (85,322) 6,439 90,700 - - (32,218) (140) (261,485) (11,805) (251,557) (47,108) (15,109) (2,372) 166,895 (148,006) (8,907) 26,491 - 36,068 41,344 (154,066) 2,795,382 (210,771) 160 378,552 170 (186,940) 2,776,553	2017 $ 1,781,651 1,187,359 12,481 - 715 199,285 (37,161) 144,445 (38) (72,480) 7,062 166 (194,022) 2,055 78,539 14,890 (83,591) (18,051) (15,574) 52,187 32,970 (1,408) - 1,803,137 25,621 (74,995) 37,604 131,025 (16,934) (99,798) 4,897,140 (229,773) 38 228,650 3,123 (230,313) 4,668,865 (Continued)

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets measured at cost Proceeds from sale of available-for-sale financial assets Acquisition of investments accounted for using the equity method Payments for property, plant and equipment Payments for investment properties Increase in other non-current assets Payments for intangible assets Proceeds from disposal of property, plant and equipment Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from short-term bills payable Repayments of short-term bills payable Proceeds from long-term borrowings Repayments of long-term borrowings Increase in other non-current liabilities Dividends paid Net cash used in financing activities NET INCREASE IN CASH CASH AT THE BEGINNING OF THE YEAR CASH AT THE END OF THE YEAR	2018 $ (25,095) - - (1,272,504) (306) (54,007) (13,155) 26 (1,365,041) 93,400,000 (92,990,000) 16,610,243 (16,010,399) 61,000,000 (62,000,000) 8,561 (1,414,847) (1,396,442) 15,070 731,111 $ 746,181	2017 $ - 547,125 (3,843,327) (969,786) (2,193) (34,160) (25,979) 998 (4,327,322) 90,450,000 (88,050,000) 13,340,889 (12,791,179) 55,450,000 (57,546,916) 11,488 (992,035) (127,753) 213,790 517,321 $ 731,111

The accompanying notes are an integral part of the financial statements.

(Concluded)

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NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

FAR EASTERN DEPARTMENT STORES, LTD.

1. GENERAL INFORMATION

Far Eastern Department Stores, Ltd. (the “Company” or “FEDS”) was incorporated in the Republic of China (ROC) in August 31, 1967 and operates a nationwide chain of department stores. The Company’s shares have been listed on the Taiwan Stock Exchange since October 11, 1978.

The financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the board of directors and authorized for issue on March 20, 2019.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC would not have any material impact on the Company’s accounting policies:

1) IFRS 9 “Financial Instruments” and related amendments

IFRS 9 supersedes IAS 39 “Financial Instruments: Recognition and Measurement”, with consequential amendments to IFRS 7 “Financial Instruments: Disclosures” and other standards. IFRS 9 sets out the requirements for classification, measurement and impairment of financial assets and hedge accounting. Refer to Note 4 for information relating to the relevant accounting policies.

Classification, measurement and impairment of financial assets

On the basis of the facts and circumstances that existed as of January 1, 2018, the Company has performed an assessment of the classification of recognized financial assets and has elected not to restate prior reporting periods.

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The following table shows the original measurement categories and carrying amount under IAS 39 and the new measurement categories and carrying amount under IFRS 9 for each class of the Company’s financial assets and financial liabilities as of January 1, 2018.

Financial Assets
Cash

Equity securities

Notes receivable, trade
receivables and other
receivables

Refundable deposits

Financial Assets
FVTOCI
Equity instruments
Add: Reclassification from
available-for-sale (IAS 39)
Amortized cost
Add: Reclassification from loans and
receivables (IAS 39)
Investments accounted for
using the equity method

Measurement Category
Carrying Amount
IAS 39
IFRS 9
IAS 39
IFRS 9
Remark
Loans and receivables
Amortized cost
$ 731,111 $ 731,111
c)
Available‑for‑sale
Fair value through other
comprehensive income
(FVTOCI) - equity
instruments
2,048,953
2,042,693
a)
Loans and receivables
Amortized cost
589,785
592,962
b)
Loans and receivables
Amortized cost
211,419
211,419
c)
IAS 39
Carrying
Amount as of
January 1, 2018 Reclassifications
Re-
measurements
IFRS 9
Carrying
Amount as of
January 1, 2018
Retained
Earnings
Effect on
January 1, 2018
Other Equity
Effect on
January 1, 2018
Remark
$ -
$ 2,048,953
$ (6,260 ) $ 2,042,693
$ 90,897
$ (97,157 )
a)

-
589,785
3,177
592,962
3,177
-
b)

20,151,049

-

(83,676)

20,067,373

(1,630)

(82,046)
d)
$ 20,151,049
$ 2,638,738
$ (86,759)
$ 22,703,028
$ 92,444
$ (179,203)

a) The Company elected to classify all of its investments in equity securities previously classified as available-for-sale under IAS 39 as at FVTPL and FVTOCI under IFRS 9. And the Company recognized under IAS 39 impairment loss on certain investments in equity securities previously classified as available-for-sale and the loss was accumulated in retained earnings. Since those investments were designated as at FVTOCI under IFRS 9 and no impairment assessment is required. As a result, the related other equity - unrealized gain on available-for-sale financial assets was reclassified to retained earnings in the amount of $90,897 thousand and to other equity - unrealized loss on financial assets at FVTOCI in the amount of $90,897 thousand on January 1, 2018.

Investments in unlisted shares previously measured at cost under IAS 39 have been designated as at FVTOCI under IFRS 9 and were remeasured at fair value. Consequently, a decrease of $6,260 thousand was recognized in both financial assets at FVTOCI and other equity - unrealized loss on financial assets at FVTOCI on January 1, 2018.

b) Notes receivable, trade receivables and other receivables that were previously classified as loans and receivables under IAS 39 are classified as at amortized cost with an assessment of expected credit losses under IFRS 9. As a result of retrospective application, the adjustments comprised a decrease in the loss allowance of $3,177 thousand and an increase in retained earnings of $3,177 thousand on January 1, 2018.
c) Cash and refundable deposits that were previously classified as loans and receivables under IAS 39 are classified as at amortized cost with an assessment of expected credit losses under IFRS 9.
d) For investments in subsidiaries and associates accounted for using the equity method, the adjustments comprised a decrease of $83,676 thousand impacting the IFRS and a decrease of $1,630 thousand in retained earnings and an decrease of $82,046 thousand in unrealized gain on other equity - FVTOCI.
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2) IFRS 15 “Revenue from Contracts with Customers” and related amendments

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers and supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations. Refer to Note 4 for related accounting policies.

Under IFRS 15, the net effect of revenue recognized and consideration received and receivable is recognized as a contract asset or a contract liability. Currently, the receivable and the deferred revenue are recognized when revenue is recognized for contracts under IAS 18.

The Company elected only to retrospectively apply IFRS 15 to contracts that were not complete as of January 1, 2018 and didn’t to restate the comparative information in 2017.

The impact on assets, liabilities and equity as of January 1, 2018 from the initial application of IFRS 15 is set out below:

As Originally Stated Adjustments Arising from Initial Application Provisions $ 2,885,830 $ (2,643,333) Deferred revenue - current 37,604 (37,604) Contract liabilities - current - 2,680,937 Total effect on liabilities $ 2,923,434 $ -	Restated $ 242,497 - 2,680,937 $ 2,923,434

Had the Company applied IAS 18 in the current year, the following adjustments should be made to reflect the line items and balances under IAS 18.

Impact on assets, liabilities and equity for current year

	December 31,
	2018
Decrease in contract liabilities - current	$ (2,847,832)
Increase in provisions	2,807,936
Increase in deferred revenue	39,896
Increase (decrease) in liabilities	$ -

3) Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Losses”

The amendments clarify that the difference between the carrying amount of the debt instrument measured at fair value and its tax base gives rise to a temporary difference, even though there are unrealized losses on that asset, irrespective of whether the Company expects to recover the carrying amount of the debt instrument by sale or by holding it and collecting contractual cash flows.

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In addition, in determining whether to recognize a deferred tax asset, the Company should assess a deductible temporary difference in combination with all of its other deductible temporary differences, unless the tax law restricts the utilization of losses as deduction against income of a specific type, in which case, a deductible temporary difference is assessed in combination only with other deductible temporary differences of the appropriate type. The amendments also stipulate that, when determining whether to recognize a deferred tax asset, the estimate of probable future taxable profit may include some of the Company’s assets for more than their carrying amount if there is sufficient evidence that it is probable that the Company will achieve the higher amount and that the estimate for future taxable profit should exclude tax deductions resulting from the reversal of deductible temporary differences.

4) IFRIC 22 “Foreign Currency Transactions and Advance Consideration”

IAS 21 stipulated that a foreign currency transaction shall be recorded on initial recognition in the functional currency by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. IFRIC 22 further explains that the date of the transaction is the date on which an entity recognizes a non-monetary asset or non-monetary liability from payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the entity shall determine the date of the transaction for each payment or receipt of advance consideration.

The Company applied IFRIC 22 prospectively to all assets, expenses and income recognized on or after January 1, 2018 within the scope of the Interpretation.

b. Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed by the FSC for application starting from 2019

New IFRSs Annual Improvements to IFRSs 2015-2017 Cycle Amendment to IFRS 9 “Advance Repayment Characteristics with Negative Compensation” IFRS 16 “Leases” Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement” Amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures” IFRIC 23 “Uncertainty over Income Tax Treatments”	Effective Date Announced by IASB (Note 1)
	January 1, 2019 January 1, 2019 (Note 2) January 1, 2019 January 1, 2019 (Note 3) January 1, 2019 January 1, 2019

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

Note 2: The FSC permits the election for early adoption of the amendments starting from 2018.

Note 3: The Company shall apply these amendments to plan amendments, curtailments or settlements occurring on or after January 1, 2019.
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1) IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations.

Definition of a lease

Upon initial application of IFRS 16, the Company will elect to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 will not be reassessed and will be accounted for in accordance with the transitional provisions under IFRS 16.

The Company as lessee

Upon initial application of IFRS 16, the Company will recognize right-of-use assets, or investment properties if the right-of-use assets meet the definition of investment properties, and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value asset and short-term leases will be recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Company will present the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities will be classified within financing activities; cash payments for the interest portion will be classified within operating activities. Currently, payments under operating lease contracts, including property interest qualified as investment properties, are recognized as expenses on a straight-line basis. Prepaid lease payments for land use rights of land are recognized as prepayments for leases. The difference between the actual payments and the expenses, as adjusted for lease incentives, is recognized as other payables and other non-current liabilities. Cash flows for operating leases are classified within operating activities on the consolidated statements of cash flows. Leased assets and finance lease payables are recognized for contracts classified as finance leases.

The Company anticipates applying IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized on January 1, 2019. Comparative information will not be restated.

Except for the leases of investment properties mentioned below, lease liabilities will be recognized on January 1, 2019 for leases currently classified as operating leases with the application of IAS 17. Lease liabilities will be measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets will be measured at an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments. Except for the following practical expedients which are to be applied, the Company will apply IAS 36 to all right-of-use assets.

Part of the lease which is currently accounted for as an operating lease under IAS 17, qualifies as an investment property. A lease liability for that leasehold building will be recognized and measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Related right-of-use assets will be measured at fair value and presented as investment properties and any difference will be recognized under retained earnings. There will not be any adjustments made for lease which is currently accounted for as an investment property.

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The Company expects to apply the following practical expedients:

a) The Company will account for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
b) The Company will exclude initial direct costs from the measurement of right-of-use assets on January 1, 2019.
c) The Company will use hindsight, such as in determining lease terms, to measure lease liabilities.

For leases currently classified as finance leases under IAS 17, the carrying amounts of right-of-use assets and lease liabilities on January 1, 2019 will be determined as at the carrying amounts of the respective leased assets and finance lease payables as of December 31, 2018.

The Company as lessor

The Company will not make any adjustments for leases in which it is a lessor and will account for those leases with the application of IFRS 16 starting from January 1, 2019.

Anticipated impact on assets, liabilities and equity

Property, plant and equipment Right-of-use assets Long-term prepayments for lease Total effect on assets Lease liabilities - current Other payables Lease liabilities - non-current Total effect on liabilities	Carrying Amount as of December 31, 2018 $ 25,314,067 - 2,173,763 $ 27,487,830 $ - 1,284,856 - $ 1,284,856	Adjustments Arising from Initial Application Adjusted Carrying Amount as of January 1, 2019 $ (7,466,818) $ 17,847,249 17,705,822 17,705,822 3,514,819 5,688,582 $ 13,753,823 $ 41,241,653 $ 847,462 $ 847,462 (100,350) 1,184,506 13,006,711 13,006,711 $ 13,753,823 $ 15,038,679

2) IFRIC 23 “Uncertainty over Income Tax Treatments”

IFRIC 23 clarifies that when there is uncertainty over income tax treatments, the Company should assume that the taxation authority will have full knowledge of all related information when making related examinations. If the Company concludes that it is probable that the taxation authority will accept an uncertain tax treatment, the Company should determine the taxable profit, tax bases, unused tax losses, unused tax credits or tax rates consistently with the tax treatments used or planned to be used in its income tax filings. If it is not probable that the taxation authority will accept an uncertain tax treatment, the Company should make estimates using either the most likely amount or the expected value of the tax treatment, depending on which method the Company expects to better predict the resolution of the uncertainty. The Company has to reassess its judgments and estimates if facts and circumstances change.

Except for the above impacts, as of the date the consolidated financial statements were authorized for issue, the Company continues assessing other possible impacts that the application of the aforementioned amendments and the related amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers will have on the Company’s financial position and financial performance and will disclose these other impacts when the assessment is completed.

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c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs

Effective Date Announced by IASB (Note 1)

Amendments to IFRS 3 “Definition of a Business” January 1, 2020 (Note 2) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2021 Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020 (Note 3)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The Company shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 3: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

As of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis of Preparation

The financial statements have been prepared on the historical cost basis except for financial instruments and investment properties which are measured at fair value, and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of the plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

a. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
b. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
c. Level 3 inputs are unobservable inputs for the asset or liability.
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When preparing the Company’s financial statements, the Company used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owner of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatment between the parent company only basis and consolidated basis were made to investments accounted for using the equity method, share of profit or loss of subsidiaries and associates accounted for using the equity method, share of other comprehensive income of subsidiaries and associates accounted for using the equity method and related equity items, as appropriate, in the Company’s financial statements.

Classification of Current and Non-current Assets and Liabilities

Current assets include:

a. Assets held primarily for the purpose of trading;
b. Assets expected to be realized within 12 months after the reporting period; and
c. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

a) Liabilities held primarily for the purpose of trading;
b) Liabilities due to be settled within 12 months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue; and
c) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Assets and liabilities that are not classified as current are classified as non-current.

Foreign Currencies

In preparing the Company’s financial statements, transactions in currencies other than Company’s functional currency (i.e. foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purposes of presenting the Company’s financial statements, the assets and liabilities of the Company’s foreign operations (including the subsidiaries and associates in other countries or subsidiaries which use currencies that are different from the Company) are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognized in other comprehensive income.

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Inventories

Inventories are stated at the lower of weighted-average cost or net realizable value, using the retail method. The difference between cost and net realizable value is compared between items by the retail department. Net realizable value is the estimated selling price of inventories less all estimated costs necessary to make the sale.

Investments in Subsidiaries

The Company uses the equity method of accounting to recognize its investments in subsidiaries. A subsidiary is an entity that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and is adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. In addition, the Company recognizes the changes in the Company’s share of equity of subsidiaries attributable to the Company.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. Any difference between the carrying amounts of the Company’s interests and the fair value of the consideration paid or received is recognized directly in equity.

When the Company’s share of losses of a subsidiary equals or exceeds its interest in that subsidiary (which includes any carrying amount of the investment in the subsidiary accounted for using the equity method and long-term interests that, in substance for part of the Company’s net investment in the subsidiary), the proportionate share of losses is recognized.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the fair value of the net identifiable assets and liabilities over the cost of the acquisition is recognized immediately in profit or loss.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

Profits and losses from downstream transactions with a subsidiary are eliminated in full in the Company’s financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized in the parent company only financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

Investments in Associates

An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. The Company uses the equity method of accounting to recognize its investments in associates.

Under the equity method, an investment in an associate is initially recognized at cost and is adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate. The Company also recognizes the changes in the Company’s share of the equity of associates attributable to the Company.

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When the Company subscribes for additional new shares of the associate, at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus. If the Company’s ownership interest is reduced due to the additional subscription of new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

When the Company’s share of losses of an associate equals or exceeds its interest in that associate (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the associate), the Company discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Company discontinues the use of the equity method from the date on which its investment in the associate ceases. Any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on the disposal of the associate. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities.

When the Company transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Company’s financial statements only to the extent of interests in the associate that are not related to the Company.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and subsequent accumulated impairment loss.

Property, plant and equipment in the course of construction are measured at cost, less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such properties are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

Depreciation on property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. Assets are depreciated over the shorter of their lease terms and their useful lives using the straight-line method.

On derecognize the asset of property, plant and equipment, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss for the year.

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Investment Properties

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties also include land held for a currently undetermined use in the future.

Investment properties are initially measured at cost (including transaction costs), and are subsequently measured using the fair value model. Gains or losses arising from changes in the fair value of investment properties are included in profit or loss for the period in which they arise.

For a transfer from property, plant and equipment to investment property at the end of owner-occupation, any difference between the fair value of the property at the transfer date and its previous carrying amount is recognized in other comprehensive income.

To derecognize an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss for the year.

Intangible Assets

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis during their expected useful lives. The estimated useful lives, residual values, and amortization method are reviewed at the end of each reporting period with the effect of any changes in estimates accounted for on a prospective basis.

To derecognize an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss for the year.

Impairment of Tangible and Intangible Assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets other than goodwill to determine whether there is any indication of impairment loss on those assets. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the smallest group of cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. The impairment loss is recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount (deducting amortization or depreciation) that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

Financial Instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

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Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a. Measurement category

2018

Financial assets are classified into the following categories: Financial assets at amortized cost and investments in equity instruments at FVTOCI.

1) Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

a) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash, trade receivables at amortized cost and refundable deposits, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss. Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset.

2) Investments in equity instruments at FVTOCI

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

2017

Financial assets are classified into the following categories: Financial assets at FVTPL, available-for-sale financial assets and loans and receivables.

1) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at FVTPL.

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Available-for-sale financial assets are measured at fair value. Dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income. When the investments are disposed of or are determined to be impaired, the cumulative gain or loss previously recognized in other comprehensive income is reclassified to profit or loss. Fair value determination is disclosed in Note 29.

Dividends on available-for-sale equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established.

Available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment loss at the end of each reporting period and presented as a separate line item as financial assets measured at cost. If, in a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets are remeasured at fair value. The difference between the carrying amount and the fair value of such financial assets is recognized in other comprehensive income. Any impairment losses are recognized in profit and loss.

2) Loans and receivables

Loans and receivables (including notes receivable, trade receivables, other receivables, cash and cash equivalents, debt investments with no active market and refundable deposits) are measured at amortized cost using the effective interest method less any impairment, except for short-term receivables when the effect of discounting is immaterial.

b. Impairment of financial assets

2018

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

The Company always recognizes lifetime expected credit losses (ECLs) for trade receivables. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Company recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

2017

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

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For financial assets measured at amortized cost, the assets are assessed for impairment on a collective basis even if they were assessed as not impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Company’s past experience of collecting payments, as well as observable changes in national or local economic conditions that correlate with defaults on receivables.

For financial assets measured at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment (at the date on which the impairment is reversed) does not exceed what the amortized cost would have been had the impairment not been recognized.

For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, the objective evidence of impairment could include significant financial difficulty of the issuer or counterparty, breach of contract, such as a default or delinquency in interest or principal payments, it becoming probable that the borrower will enter bankruptcy or financial reorganization, or the disappearance of an active market for that financial asset because of financial difficulties.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

For available-for-sale equity securities, impairment losses previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. In respect of available-for-sale debt securities, the impairment loss is subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

For financial assets measured at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When trade receivable are considered uncollectible, they are written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss, except for uncollectible trade receivables that are written off against the allowance account.

c. Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

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2018

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2017

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss.

Financial liabilities

a. Subsequent measurement

Financial liabilities are measured at amortized cost using the effective interest method.

b. Derecognition of financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

Revenue Recognition

2018

The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

Revenue from the sale of goods are recognized as revenue when the goods are shipped or delivered because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently.

When the other party participates in providing goods or services to customers, the Company obtains control of the specified goods or services before they are transferred to the customers and, therefore, is acting as a principal in the transaction. On the contrary, the other party is acting as an agent. As the principal, the total amount of the consideration that is expected to be obtained in exchange for the transfer of goods or services is recognized as income. As an agent, the amount of any fees or commissions that the other party expected to obtained in exchange for the provision of goods or services, recognized as income. The charge or commission of the Company may be the net amount of the consideration. The income retained by the Company in exchange for goods or services is the amount retained after payment to the other party.

Customer Loyalty Program, the Company offers award credits which can be used for future purchases when the customer shops. The award credits provides a material right to the customer. The transaction price allocated to the award credits is recognized as a contract liability when collected and will be recognized as revenue when the award credits is redeemed or has expired.

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2017

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Allowances for sales returns and liabilities for returns are recognized at the time of sale provided the seller can reliably estimate future returns based on previous experience and other relevant factors.

a. Sale of goods

Revenue from the sale of goods is recognized when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:

1) The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
2) The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
3) The amount of revenue can be measured reliably;
4) It is probable that the economic benefits associated with the transaction will flow to the Company; and
5) The costs incurred or to be incurred in respect of the transaction can be measured reliably.

Sales of goods that resulted in awarded credits for customers, under the Company’s award scheme, are accounted for as multiple element revenue transactions, and the fair value of the consideration received or receivable is allocated between the goods supplied and the awarded credits granted. The consideration allocated to the awarded credits is measured with reference to their fair value, the amount for which the awarded credits could be sold separately. Such consideration is not recognized as revenue at the time of the initial sale transaction but is deferred and recognized as revenue when the awarded credits are redeemed and the Company’s obligations have been fulfilled.

b. Commissions from concessionaires’ sales

Commissions from concessionaires’ sales are recognized as goods sold.

c. Maintenance and promotion fee income

According to contract agreements, maintenance and promotion fee income are recognized on the right to receive the income signed or as services are provided.

d. Dividend and interest income

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, with reference to the principal outstanding and at the effective interest rate applicable.

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Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

a. The Company as a lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and amortized on a straight-line basis over the lease term.

Lease incentives included in the operating lease are recognized as an asset. The aggregate cost of incentives is recognized as a reduction of rental income on a straight-line basis over the lease term.

Contingent rents arising under operating leases are recognized as income in the period in which they are incurred.

b. The Company as a lessee

Assets held under finance leases are initially recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheets as a finance lease obligation.

In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis. Contingent rents arising under operating leases are recognized as an expense in the period in which they are incurred.

c. Leasehold land and buildings

When a lease includes both land and building elements, the Company assesses the classification of each element as a finance or an operating lease separately based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Company. The minimum lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of the lease.

If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with their classification of lease. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases, in which case the entire lease is classified as an operating lease.

Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

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Retirement Benefit Costs

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expenses when the plan amendment or curtailment occurs. Remeasurement, comprising actuarial gains and losses (the effect of the changes to the asset ceiling) and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income (loss) is reflected immediately in retained earnings and will not be reclassified subsequently to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Company’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

a. Current tax

According to the Income Tax Law, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current period’s income tax expenses.

b. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these investments are recognized only to the extent that it is probable that there will be sufficient taxable profits against which to use the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

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Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. For investment properties that are measured using the fair value model, the carrying amounts of such assets are presumed to be recovered entirely through their sale.

c. Current and deferred tax for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

When current taxes or deferred taxes arise from the initial accounting for the acquisition of subsidiaries, the tax effect is included in the accounting for investment in subsidiaries.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

a. Impairment assessment of tangible and intangible assets

For impairment tests of assets, the Company evaluates and decides the independent cash flows of certain assets, useful lives of those assets and their probable future profit or loss based on subjective judgment, asset-usage models and department store industry characteristics. Any change in national and local economic conditions or the Company’s strategy may cause a significant impairment loss.

Management should evaluate if any tangible and intangible asset is impaired. If any such indication exists, the recoverable amount of the asset is estimated and compared to its carrying amount to determine the impairment loss.

b. Fair value measurement and valuation process

Third-party qualified valuers were engaged to perform the fair value evaluation of the Company’s investment properties using the appropriate valuation techniques for fair value measurements.

The valuers of the Company determined the appropriate inputs by referring to the analyses of the financial position and the operation results of investees, recent transaction prices and prices of the same equity instruments not quoted in active markets in the vicinity of the Company’s investment properties. If there are changes in the actual inputs in the future which differ from expectation, the fair value might vary accordingly. The Company updates inputs every quarter to confirm the appropriateness of the fair value measurement.

Information on the valuation techniques and inputs used in determining the fair value of investment properties is disclosed in Note 15.

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6. CASH

December 31 2018 2017 Cash on hand and revolving funds $ 30,370 $ 35,289 Checking accounts and demand deposits 715,811 695,822 $ 746,181 $ 731,111 The market rate intervals of cash in bank at the end of the reporting period are as follows: December 31 2018 2017 Cash in bank 0.01%-0.43% 0.001%-0.300% FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - 2018 December 31, 2018 Investments in equity instruments at FVTOCI Domestic investments Listed shares and emerging market shares $ 2,254,523 Unlisted shares 99,828 $ 2,354,351 Current $ - Non-current 2,354,351 $ 2,354,351		December 31

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - 2018

a. These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Company’s strategy of holding these investments for long-term purposes. These investments in equity instruments were classified as available-for-sale under IAS 39. Refer to Note 3 and Note 9 for information relating to their reclassification and comparative information for 2017.
b. Refer to Note 31 for information relating to investments in equity instruments at FVTOCI pledged as security.
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8. FINANCIAL ASSETS AT AMORTIZED COST - 2018

	December 31,
	2018
Current
Time deposits with original maturities of more than 3 months	$ 25,095
December 31, 2018
	At Amortized
	Cost
Gross carrying amount	$ 25,095
Less: Allowance for impairment loss	-
Amortized cost	$ 25,095

a. The credit risk of financial instruments such as bank deposits is measured and monitored by the accounting department. The Company chooses the transaction object and the other party performs good credit with the bank.
b. The interest rates for financial assets at amortized cost are from 0.78% as at the end of the reporting period.

9. AVAILABLE-FOR-SALE FINANCIAL ASSETS - 2017

	December 31,
	2017
Non-current
Domestic listed and OTC shares	$ 1,945,059

a. On August 18, 2017, the Company sold its shareholdings of Far Eastern International Bank amounting to 25,771 thousand shares using the block trading - paired trade method to the subsidiary of Far Eastern New Century Corporation - Yuan Tong Investment Co., Ltd. and recognized a gain of $74,341 thousand on the disposal of the investment.
b. In December 2017, the Company sold its shareholdings of Asia Cement Corporation amounting to 9,000 thousand shares to its related party - Tranquil Enterprise Ltd., and recognized a gain of $97,970 thousand on the disposal of the investment.
c. Refer to Note 31 for information relating to available-for-sale financial assets pledged as security.

10. FINANCIAL ASSETS MEASURED AT COST - 2017

December 31, 2017

Non-current

Domestic unlisted ordinary shares

$ 103,894

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Management believed that the above investments of unlisted ordinary shares held by the Company had fair values which could not be reliably measured as the range of the reasonable fair value estimates was so significant; therefore, they were measured at cost less impairment at the end of the reporting period.

11. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES (INCLUDING RELATED PARTIES)

a. Notes receivables

Operating Non-operating Less: Allowance for impairment loss		December	31
		2018 $ 140 1,794 (1,794) $ 140	2017 $ - 1,794 (1,794) $ -

The Company considers any changes of the credit quality of notes receivable from the original credit date to the balance sheet date while determining the recoverability of the notes receivable. If notes receivable is not redeemed at the expiration date, a 100% allowance will be drawn.

b. Trade receivables

Trade receivables Less: Allowance for impairment loss 2018		December 31	December 31
		2018 $ 780,216 (24) $ 780,192	2017 $ 506,926 (3,569) $ 503,357

The Company’s trade receivables pertained to revenue on credit cards and goods coupons. The average credit period for revenue from credit cards was 2 to 3 days, and for goods coupons, 15 days. In determining the recoverability of a trade receivable, the Company considered any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period. Allowances for impairment loss were recognized against trade receivables based on estimated irrecoverable amounts determined with reference to past default experience of the counterparties and an analysis of their current financial position.

The Company’s revenue is derived from cash transactions. The revenue generated from the sales of debiting trade receivables is only recognized when authorization is given.

For the trade receivables balances that were past due at the end of the reporting period, the Company did not recognize an allowance for impairment loss, because there were no significant changes in credit quality and the amounts were still considered recoverable. The Company did not hold any collateral or other credit enhancements for these balances.

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The Company applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all trade receivables. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of economic conditions at the reporting date. As the Company’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Company’s different customer base.

The Company writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of trade receivables based on the Company’s provision matrix.

December 31, 2018

Not Past Due Less than 30 Days 31 to 60 Days 61 to 90 Days Over 90 Days Expected credit loss rate 0.0003% 0.0076% 0.3703% 1.0321% 100% Gross carrying amount $ 761,372 $ 18,289 $ 536 $ - $ 19 Loss allowance (Lifetime ECL) (2) (1) (2) - (19) Amortized cost $ 761,370 $ 18,288 $ 534 $ - $ -	Total $ 780,216 (24) $ 780,192

The movements of the loss allowance of trade receivables were as follows:

Balance at January 1, 2018 per IAS 39 Adjustment on initial application of IFRS 9 Balance at January 1, 2018 per IFRS 9 Less: Impairment losses reversed Balance at December 31, 2018	2018 $ 3,569 (3,534) 35 (11) $ 24

2017

The credit policy of the Company in 2017 is as the same as 2018. Allowances for impairment loss were recognized against trade receivables based on estimated irrecoverable amounts determined with reference to past default experience of the counterparties and an analysis of their current financial position.

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The aging of trade receivables is as follows:

	December 31,
	2017
Not overdue	$ 473,124
Days overdue
Up to 30 days	31,557
31 to 60 days	1,713
More than 60 days	532
	$ 506,926

The above aging schedule presented is based on the past due days from the end of the credit term.

The aging of trade receivables that were past due but not impaired is as follows:

	December 31,
	2017
Up to 30 days	$ 31,557
31 to 60 days	1,713
More than 60 days	513
	$ 33,783

The above aging schedule presented is based on the past due days from the end of the credit term.

The movements of the allowance for impairment loss for trade receivables are as follows:

Individually Assessed for Impairment Balance at December 31, 2017 and January 1, 2017 $ 19 c. Other receivables Other receivables Less: Allowance for impairment loss	Collectively Assessed for Impairment $ 3,550 December	Collectively Assessed for Impairment $ 3,550 December	Total $ 3,569 31
		2018 $ 359,035 (21,407) $ 337,628	2017 $ 107,478 (21,050) $ 86,428

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The following table details the loss allowance of trade receivables based on the Company’s provision matrix.

December 31, 2018

Not Past Due Less than 30 Days 31 to 60 Days 61 to 90 Days Over 90 Days Expected credit loss rate 0.0002% 0.0063% 0.3046% 0.8361% 100% Gross carrying amount $ 337,628 $ - $ - $ - $ 21,407 Loss allowance (Lifetime ECL) - - - - (21,407) Amortized cost $ 337,628 $ - $ - $ - $ -	Total $ 359,035 (21,407) $ 337,628

The movements of the loss allowance of trade receivables were as follows:

Balance at January 1, 2018 per IAS 39 Adjustment on initial application of IFRS 9 Balance at January 1 and December 31, 2018 per IFRS 9	2018 $ 21,050 357
	$ 21,407

2017

For the balances of other receivables that were past due at the end of the reporting period, the Company did not recognize an allowance for impairment loss, because there were no significant changes in credit quality and the amounts were still considered recoverable. The Company did not hold any collateral or other credit enhancements for these balances.

The aging of other receivables that were past due but not impaired is as follows:

	December	December	31,
		2017
Up to 30 days	$		-
31 to 60 days			-
More than 60 days		357
	$	357

The above aging schedule presented is based on the past due days from the end of the credit term.

12. INVENTORIES

Merchandise		December 31	December 31
		2018 $ 378,188	2017 $ 331,080

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2018 and 2017 were $4,094,492 thousand and $3,920,283 thousand, respectively.

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13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates a. Investments in subsidiaries		December 31	December 31
		2018 $ 17,468,257 2,102,458 $ 19,570,715	2017 $ 18,025,927 2,125,122 $ 20,151,049

Bai Yang Investment Co., Ltd. (BYIC) Pacific Liu Tong Investment Co., Ltd. (PLTI) Bai Ding Investment Co., Ltd. (BDIC) FEDS Development Ltd. (FEDS Development) Far Eastern Ai Mai Co., Ltd. (AIMAI) Far Eastern CitySuper Co., Ltd. (FECS) Ya Tung Department Stores, Ltd. (YTDS) Yu Ming Advertising Agency Co., Ltd. (YMAC) Far Eastern Hon Li Do Co., Ltd. (FEHLD) Asians Merchandise Company (AMC) Add: Credit balance on the carrying amounts of investments accounted for using the equity method and reclassified to other liabilities Less: Ordinary shares held by subsidiary and reclassified from long-term investments to treasury shares BDIC Less: The differences of accounting treatments from the consolidated financial statements (Note)		December 31	December 31
		2018 $ 9,131,939 3,838,530 2,205,608 1,411,729 1,298,433 60,382 (5,018) 95,804 12,480 4,534 18,054,421 5,018 97,110 17,962,329 494,072 $ 17,468,257	2017 $ 9,717,789 3,704,783 2,236,472 1,393,499 1,314,056 92,847 85,410 82,986 11,801 4,342 18,643,985 - 97,110 18,546,875 520,948 $ 18,025,927

Note: Part of the Company’s investment properties leased to subsidiaries was evaluated under fair value method, but these investment properties were recognized as property, plant and equipment in the consolidated financial statements. In order to agree with the amount of net profit for the year, other comprehensive (loss) income and equity attributable to the owner of the Company in the consolidated financial statements, the difference of the accounting treatment between the Company only basis and the consolidated basis was adjusted under the heading of investments accounted for using the equity method, the share of (loss) profit of subsidiaries and associates was accounted for using the equity method, and the share of other comprehensive (loss) income of subsidiaries and associates was accounted for using the equity method and related equity items.

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BYIC PLTI BDIC FEDS Development AIMAI FECS YTDS YMAC FEHLD AMC	Proportion of Ownership and Voting Rights
	December 31
	2018 2017 100% 100% 35% 35% 67% 67% 54% 54% 100% 100% 96% 96% 100% 100% 100% 100% 56% 56% 100% 100%

Refer to Note 33 for the details of the subsidiaries indirectly held by the Company.

The Company had a 35% equity interest in PLTI. However, the proportion of the combined equity of PLTI in the Company and its subsidiaries reached 56.6%; thus, this investee was recognized as an entity over which the Company had control.

In December 2018, BYIC undertook the registration of a capital reduction to offset the deficit, which resulted in a decrease of 78,000 thousand shares in the Company’s equity in BYIC.

In April 2017, BYIC issued shares for an increase in cash capital, and the Company acquired 350,000 thousand shares at $10 per share totaling $3,500,000 thousand.

In June 2017, AIMAI undertook the registration of a capital reduction to offset the deficit, which resulted in a decrease of 82,000 thousand shares in the Company’s equity in AIMAI.

In July 2017, YTDS undertook the registration of a capital reduction to offset the deficit in which resulted in a decrease of 16,000 thousand shares in the Company’s equity in YTDS. YTDS issued shares for an increase in cash capital, and the Company acquired 20,000 thousand shares at $10 per share totaling $200,000 thousand.

The investments in subsidiaries accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2018 and 2017 were based on the subsidiaries’ financial statements audited for the same years by other auditors.

b. Investments in associates

Associates that are not individually material		December 31	December 31
		2018 $ 2,102,458	2017 $ 2,125,122

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Aggregate information of associates that are not individually material are summarized as follows:

The Company’s share of Net loss for the year Other comprehensive loss Total comprehensive loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ (25,044) 11,123 $ (13,921)	2017 $ (73,824) (2,983) $ (76,807)

The Company and its grandson company, Pacific Sogo Department Stores Co., Ltd. (SOGO) invested in Ding Integrated Marketing Service Co., Ltd. (DDIM) and Yuan Hsin Digital Payment Co., Ltd. (YHDP), in amounts totaling 20% of each Company’s shares. As a result, these investments were accounted for using the equity method.

In June 2018, DDIM undertook the registration of a capital reduction to offset the deficit, which resulted in a decrease in the Company’s equity in DDIM of 3,540 thousand shares.

In November 2018, YHDP undertook the registration of a capital reduction to offset the deficit, which resulted in a decrease in the Company’s equity in YHDP of 3,403 thousand shares.

In July 2017, YHDP undertook the registration of a capital reduction to offset the deficit, which resulted in a decrease in the Company’s equity in YHDP of 5,113 thousand shares. The Company acquired 7,500 thousand shares based on the percentage of ownership at $10 per share, and the investment amount totaled $75,000 thousand.

In April 2017, the Company subscribed for 6,833 thousand shares of Far Eastern Electronic Commerce Co., Ltd. (FEEC), and the investment amount totaled $68,327 thousand. As the subscription was not based on the original percentage of ownership, the new percentage of ownership increased to 11.36% and the capital surplus was adjusted downwards in the amount of $2,714 thousand.

In June 2017, FEEC undertook the registration of a capital reduction to offset the deficit, which resulted in a decrease in the Company’s equity in FEEC of 10,199 thousand shares.

In order to integrate the e-commerce business and resources to enhance competitiveness, the board of directors of FEEC approved the merger with Hiiir Inc. (Hiiir) on June 27, 2017. The merger record date was on August 1, 2017, with Hiiir as the surviving company and FEEC dissolved. Upon the completion of the aforesaid merger, the surviving company was renamed Yuanshi Digital Technology Co., Ltd. (YSDT). The Company acquired 1,041 thousand shares of YSDT in exchange for 1,619 thousand shares of FEEC. The percentage of ownership decreased from 11.36% to 1%. The management evaluated that the Company no longer had significant influence over YSDT, therefore, this investee had not been recognized by using the equity method since August 2017. The aforementioned merger was applied and approved by the authorities on August 30, 2017.

The investments in associates accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2018 and 2017 were based on the associates’ financial statements audited for the same years by other auditors.

Refer to Note 31 for the information on the carrying amounts of investments in associates accounted for using the equity method that were pledged as security.

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14. PROPERTY, PLANT AND EQUIPMENT

													Plant,
												Transportation
										Equipment Held			and
						Buildings and			Decorative	Under Finance		Miscellaneous		Construction		in
		Land		Buildings			Facilities		Facilities		Leases	Equipment			Progress		Total
Cost
Balance at January 1, 2017	$	7,940,978	$	9,351,776		$	5,618,653	$	5,799,744	$	5,717,881	$	605,128	$	2,486,037		$ 37,520,197
Additions		-			-		77,862		120,827		3,059		18,338		637,250		857,336
Disposals		-			-		(10,446 )		(79,881 )		-		(9,214 )			-	(99,541 )
Transfer from investment
properties		97,619		18,933			5,117		-		-		-			-	121,669
Reclassifications		-			-		671		638		-		31			-	1,340
Balance at December 31,
2017	$	8,038,597	$	9,370,709		$	5,691,857	$	5,841,328	$	5,720,940	$	614,283	$	3,123,287		$ 38,401,001
Accumulated depreciation
and impairment
Balance at January 1, 2017	$	-	$	(1,933,964 )		$	(3,312,246 )	$	(4,537,964 )	$	(1,970,330 )	$	(379,904 )				$ (12,134,408 )
Disposals		-			-		8,314		70,983		-		8,806				88,103
Depreciation expense		-		(161,062)			(422,553)		(488,322)		(200,104)		(62,607)				(1,334,648)
Balance at December 31,
2017	$	-	$	(2,095,026)		$	(3,726,485)	$	(4,955,303)	$	(2,170,434)	$	(433,705)				$ (13,380,953)
Carrying amount at
December 31, 2017	$	8,038,597	$	7,275,683		$	1,965,372	$	886,025	$	3,550,506	$	180,578	$	3,123,287		$ 25,020,048
Cost
Balance at January 1, 2018	$	8,038,597	$	9,370,709		$	5,691,857	$	5,841,328	$	5,720,940	$	614,283	$	3,123,287		$ 38,401,001
Additions		-			-		104,241		33,652		-		15,060		1,217,489		1,370,442
Disposals		-			-		(8,269 )		(60,339 )		(1,474,493 )		(6,285 )			-	(1,549,386 )
Reclassifications		-			-		40,088		-		450,373		100		(454,097)		36,464
Balance at December 31,
2018	$	8,038,597	$	9,370,709		$	5,827,917	$	5,814,641	$	4,696,820	$	623,158	$	3,886,679		$ 38.258.521
Accumulated depreciation
and impairment
Balance at January 1, 2018	$	-	$	(2,095,026 )		$	(3,726,485 )	$	(4,955,303 )	$	(2,170,434 )	$	(433,705 )				$ (13,380,953 )
Disposals		-			-		7,146		54,737		1,474,493		6,058				1,542,434
Depreciation expense		-		(161,727)			(413,612)		(318.551)		(157,568)		(54,477)				(1,105,935)
Balance at December 31,
2018	$	-	$	(2,256,753)		$	(4,132,951)	$	(5,219.117)	$	(853,509)	$	(482,124)				$ (12,944,454)
Carrying amount at
December 31, 2018	$	8,038.597	$	7,113,956		$	1,694,966	$	595.524	$	3,843,311	$	141,034	$	3,886,679		$ 25,314,067
The above items of property,			plant and equipment are						depreciate on a straight-line basis over their estimated
useful lives as follows:
Buildings																	55 years
Buildings and facilities																	8-15 years
Decorative facilities																	6 years
Equipment held under finance				leases													35-50 years
Plant, transportation, and miscellaneous equipment																	5-8 years

The above items of property, plant and equipment are depreciate on a straight-line basis over their estimated useful lives as follows:

Some of the investment properties were transferred to property, plant and equipment at their fair value as the use of these assets changed to self-use for the year ended December 31, 2017.

Refer to Note 31 for the information on the carrying amounts of property, plant and equipment that were pledged as security.

39 -

15. INVESTMENT PROPERTIES

Balance at January 1, 2017 Transfers to property, plant and equipment Additions Disposals Gain (loss) on changes in the fair value of investment properties Balance at December 31, 2017 Additions Disposals Gain (loss) on changes in the fair value of investment properties Balance at December 31, 2018	Land Buildings and Facilities $ 6,313,808 $ 3,005,189 (97,619) (24,050) - 2,193 - (166) 5,991 (84,530) 6,222,180 2,898,636 - 306 - (90,700) 27,792 4,426 $ 6,249,972 $ 2,812,668	Total $ 9,318,997 (121,669) 2,193 (166) (78,539) 9,120,816 306 (90,700) 32,218 $ 9,062,640

The investment properties located in the Hualien area were affected by the earthquake which occurred on February 6, 2018, which caused significant damage to the investment properties. The Company demolished the building in March 2018 and recognized loss on disposal of investment properties of $90,621 thousand in 2018.

Some of the Company’s investment properties had been leased out under operating leases having lease terms between 1-20 years. Except for the minimum lease payments, some of the Company’s lease contracts included contingent lease clauses, and the Company should adjust rentals on the basis of the Consumer Price Index per annum. The rental incomes generated for the years ended December 31, 2018 and 2017 were $159,813 thousand and $130,996 thousand, respectively.

The commitments on future minimum lease payments under non-cancellable operating leases are as follows:

Not later than 1 year 1 year to 5 years Later than 5 years		December 31	December 31
		2018 $ 189,184 375,047 252,863 $ 817,094	2017 $ 130,567 327,273 267,457 $ 725,297

The fair values of the investment properties as of December 31, 2018 and 2017 were based on the valuations carried out at those dates, on a recurring basis by independent qualified professional valuers, Hong-Kai Chang, Yi-Chih Chang, Yu-Fen Yeh, and Kuang-Ping Tai from Savills Real Estate Appraiser Office, a member of certified ROC real estate appraisers.

40 -

Except for undeveloped lands, the fair values of investment properties were measured using the income approach and the significant assumptions used are the increase in the estimated future net cash inflows, or the decrease in discount rates that would result in increases in the fair values.

Expected future cash inflows Expected future cash outflows Expected future cash inflows, net Discount rate		December 31	December 31
		2018 $ 21,573,710 2,272,008 $ 19,301,702 4.345%	2017 $ 22,143,254 2,390,743 $ 19,752,511 4.345%

The market rentals in the area where the investment properties are located were between $1 thousand and $2 thousand per ping (i.e. per 3.3 square meters). The market rentals for comparable properties were between $1 thousand and $4 thousand per ping (i.e. per 3.3 square meters).

The expected future cash inflows generated by investment properties referred to rental income, interest income on rental deposits and disposal value. The rental income was extrapolated using the existing lease contracts of the Company and comparative market rentals covering 5-10 years, taking into account the annual rental growth rate. The interest income on rental deposits was extrapolated by the one-year average deposit interest rate, and the disposal value was determined by the direct capitalization method under the income approach. The expected future cash outflows on investment properties included expenditures such as property taxes, insurance premiums, management fees, maintenance costs and replacement allowances. These expenditures were extrapolated on the basis of the current level of expenditures, taking into account the future adjustments to the government-announced land value, the tax rate promulgated under the Construction Cost Index and the House Tax Act and construction costs.

The discount rate was determined with reference to the interest rate for two-year time deposits of Chunghwa Post Co., Ltd. plus 0.75% and the risk premium of investment properties of 2.5%.

Part of the land owned by the Company, where is located in the east of Taiwan, was not developed yet. The fair value of the undeveloped land area was measured by the land development analysis approach. The increase in the estimated total sales price, the increase in the rate of return, or the decrease in the overall capital interest rate would result in increase in the fair value. The significant assumptions used are as follows:

Estimated total sales price Rate of return Overall capital interest rate		December 31	December 31
		2018 $ 1,965,503 16%-20% 1.49%-3.90%	2017 $ 801,791 16%-18% 2.20%-3.29%

The total sales price is estimated on the basis of the most effective use of land or property available for sale after development is completed, taking into account the related regulations, optimism of domestic macroeconomic prospects, local land use, and comparable market prices.

Refer to Note 31 for the information on the carrying amounts of investment properties pledged as security.

41 -

16. INTANGIBLE ASSETS

Cost
Balance at January 1, 2017

Additions
Reclassifications

Balance at December 31, 2017

Accumulated amortization and impairment
Balance at January 1, 2017

Amortization expenses

Balance at December 31, 2017

Carrying amount at December 31, 2017

Cost
Balance at January 1, 2018

Additions
Reclassifications

Balance at December 31, 2018

Accumulated amortization and impairment
Balance at January 1, 2018

Amortization expenses

Balance at December 31, 2018

Carrying amount at December 31, 2018

Computer
Software
$ 52,682
25,979

12,314
$ 90,975
$ (28,493)

(12,481)
$ (40,974)
$ 50,001
$ 90,975
13,155

5,729
$ 109,859
$ (40,974)

(18,678)
$ (59,652)
$ 50,207

The following intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Computer software 3-5 years

17. LONG-TERM PREPAYMENTS FOR LEASES

Xinyi Division A13 - land use rights		December 31	December 31
		2018 $ 2,173,763	2017 $ 2,236,168

42 -

In September 2003, the Company acquired the land use rights for No. A13 in Xinyi District of Taipei City, which is owned by the Taipei City Government. The total amount of the land use rights was $3,196,888 thousand, and the Company completed the registration of its acquisition of the land use rights in October 2003. Under the contract, the Company has the right to use the land for 50 years from the time of completion of the land use rights’ registration. The initial monthly rental is $3,771 thousand, to be adjusted annually in accordance with the assessed and publicly announced land value on the contract date.

18. OTHER ASSETS

Refundable deposits (Note 27) Prepayments Leasing incentives Others (Note 31) Current Non-current		December 31	December 31
		2018 $ 122,173 45,262 153,218 14,180 $ 334,833 $ 13,780 321,053 $ 334,833	2017 $ 211,419 45,011 9,419 11,885 $ 277,734 $ 11,408 266,326 $ 277,734

19. BORROWINGS

a. Short-term borrowings Credit loans Secured loans (Note 31) Interest rate intervals are as follows: Credit loans Secured loans b. Short-term bills payable Commercial papers Less: Unamortized discount on bills payable		December 31	December 31
		2018 2017 $ 5,800,000 $ 5,600,000 910,000 700,000 $ 6,710,000 $ 6,300,000 0.89%-0.98% 0.90%-0.92% 0.92%-1.23% 0.92% December 31
		2018 $ 2,300,000 968 $ 2,299,032	2017 $ 1,700,000 812 $ 1,699,188

43 -

Outstanding short-term bills payable are as follows:

December 31, 2018

Promissory Institution Commercial papers Mega Bills Finance Shanghai Bank China Bills Finance Grand Finance International Bills Finance Taiwan Cooperative Bills Finance Taiwan Bills Finance Ta Ching Bill Finance December 31, 2017 Promissory Institution Commercial papers Mega Bills China Bills Finance International Bills Finance Taiwan Finance Taiwan Cooperative Bills Finance Grand Bills Finance	Nominal Amount $ 550,000 500,000 350,000 200,000 200,000 200,000 150,000 150,000 $ 2,300,000 Nominal Amount $ 600,000 350,000 200,000 200,000 200,000 150,000 $ 1,700,000	Discount Amount $ 28 391 232 17 33 94 68 105 $ 968 Discount Amount $ 373 87 55 50 206 41 $ 812	Carrying Amount Interest Rate Collateral $ 549,972 0.77% - 499,609 0.60% - 349,768 0.49% - 199,983 0.88% - 199,967 0.68% - 199,906 0.86% - 149,932 0.75% - 149,895 0.91% - $ 2,299,032 Carrying Amount Interest Rate Collateral $ 599,627 0.760% - 349,913 0.430% - 199,945 0.570% - 199,950 0.750% - 199,794 0.690% - 149,959 0.750% - $ 1,699,188	Carrying Amount of Collateral $ - - - - - - - -
				$ -
				Carrying Amount of Collateral $ - - - - - -
				$ -

c. Long-term borrowings

Secured loans Credit loans Less: Current portion Long-term borrowings Interest rate intervals are as follows:		December 31	December 31
		2018 $ 10,100,000 1,000,000 11,100,000 - $ 11,100,000	2017 $ 10,500,000 1,600,000 12,100,000 3,500,000 $ 8,600,000

Secured loans Credit loans	December 31
	2018 2017 0.90%-1.72% 0.900%-1.801% 0.90%-0.92% 0.850%-0.900%

44 -

20. OTHER LIABILITIES

Other payables Payables for salaries and bonus Payables for purchase of equipment Payables for remuneration of directors Payables for employees’ compensation Others Deferred revenue Arising from customer loyalty program Other liabilities Lease incentives Deposits received Credit balance on the carrying amount of investments accounted for using the equity method Others Current Other payables Deferred revenue Other liabilities Non-current Other liabilities		December 31	December 31
		2018 $ 262,213 226,902 152,049 57,184 586,508 $ 1,284,856 $ - $ 100,350 86,723 5,018 154,900 $ 346,991 $ 1,284,856 $ - $ 154,900 $ 192,091	2017 $ 263,099 206,633 156,010 65,882 534,967 $ 1,226,591 $ 37,604 $ 92,791 78,162 - 113,556 $ 284,509 $ 1,226,591 $ 37,604 $ 113,556 $ 170,953

21. RETIREMENT BENEFIT PLANS

a. Defined contribution plan

The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plan

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contribute amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the following year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the following year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy.

45 -

The amounts included in the balance sheets in respect of the Company’s defined benefit plan are as follows:

Present value of the defined benefit obligation Fair value of the plan assets Net defined benefit liabilities Movements in net defined benefit liabilities are as follows: Present Value of the Defined Benefit Obligation Balance at January 1, 2017 $ 805,974 Service cost Current service cost 8,329 Net interest expense (income) 9,963 Recognized in profit or loss 18,292 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial loss - changes in demographic assumptions 6,394 Actuarial loss - experience adjustments 866 Recognized in other comprehensive income 7,260 Contributions from the employer - Benefits paid (88,629) Balance at December 31, 2017 742,897 Service cost Current service cost 7,088 Net interest expense (income) 9,286 Recognized in profit or loss 16,374 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial loss - changes in demographic assumptions 6,684 Actuarial loss - changes in financial assumptions 8,750 Actuarial loss - experience adjustments 33,482 Recognized in other comprehensive income 48,916 Contributions from the employer - Benefits paid (140,371) Balance at December 31, 2018 $ 667,816	December 31
	2018 2017 $ 667,816 $ 742,897 (578,815) (505,389) $ 89,001 $ 237,508 Fair Value of the Plan Assets Net Defined Benefit Liabilities $ (491,413) $ 314,561 - 8,329 (6,031) 3,932 (6,031) 12,261 15,485 15,485 - 6,394 - 866 15,485 22,745 (112,059) (112,059) 88,629 - (505,389) 237,508 - 7,088 (6,356) 2,930 (6,356) 10,018 (43,357) (43,357) - 6,684 - 8,750 - 33,482 (43,357) 5,559 (164,084) (164,084) 140,371 - $ (578,815) $ 89,001

Present value of the defined benefit obligation

Fair value of the plan assets

Net defined benefit liabilities

Movements in net defined benefit liabilities are as follows:
Present Value
of the Defined
Benefit
Obligation
Balance at January 1, 2017
$ 805,974

Service cost
Current service cost
8,329
Net interest expense (income)

9,963

Recognized in profit or loss

18,292

Remeasurement
Return on plan assets (excluding amounts
included in net interest)
-
Actuarial loss - changes in demographic
assumptions
6,394
Actuarial loss - experience adjustments

866

Recognized in other comprehensive income

7,260

Contributions from the employer

-

Benefits paid

(88,629)

Balance at December 31, 2017
742,897

Service cost
Current service cost
7,088
Net interest expense (income)

9,286

Recognized in profit or loss

16,374

Remeasurement
Return on plan assets (excluding amounts
included in net interest)
-
Actuarial loss - changes in demographic
assumptions
6,684
Actuarial loss - changes in financial
assumptions
8,750
Actuarial loss - experience adjustments

33,482

Recognized in other comprehensive income

48,916

Contributions from the employer

-

Benefits paid
(140,371)

Balance at December 31, 2018
$ 667,816

**December 31 **

2018
2017
$ 667,816
$ 742,897
(578,815)
(505,389)
$ 89,001
$ 237,508
Fair Value of
the Plan Assets
Net Defined
Benefit
Liabilities
$ (491,413)
$ 314,561
-
8,329

(6,031)

3,932

(6,031)

12,261
15,485
15,485
-
6,394

-

866

15,485

22,745
(112,059)
(112,059)

88,629

-
(505,389)
237,508
-
7,088

(6,356)

2,930

(6,356)

10,018
(43,357)
(43,357)
-
6,684
-
8,750

-

33,482

(43,357)

5,559
(164,084)
(164,084)

140,371

-
$ (578,815)
$ 89,001

46 -

Through the defined benefit plan under the Labor Standards Law, the Company is exposed to the following risks:

1) Investment risk: The plan assets are invested in equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments of the plan assets.
3) Salary risk: The present value of the defined benefit obligation is calculated with reference to the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations are as follows:

Discount rate Expected rate of salary increase	December 31
	2018 2017 1.125% 1.25% 2.000% 2.00%

If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease		December	31
		2018 $ (17,528) $ 18,207 $ 17,728 $ (17,156)	2017 $ (19,490) $ 20,244 $ 19,729 $ (19,093)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
		2018 $ 5,680 10.7 years	2017 $ 6,200 10.8 years

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22. EQUITY

a. Share capital

Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2018 1,750,000 $ 17,500,000 1,416,941 $ 14,169,406	2017 1,750,000 $ 17,500,000 1,416,941 $ 14,169,406

Fully paid ordinary shares, which have a par value of $10, are entitled to one vote and a right to receive dividends per share.

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note) Issuance in excess of ordinary shares Treasury share transactions May only be used to offset a deficit Changes in percentage of ownership interest in subsidiaries and associates		December 31	December 31
		2018 $ 2,142,074 1,173,346 - $ 3,315,420	2017 $ 2,142,074 1,173,346 511 $ 3,315,931

Note: Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year).

Balance at January 1, 2017 Changes in percentage of ownership interest in subsidiaries and associates Balance at December 31, 2017 Changes in percentage of ownership interest in subsidiaries and associates Balance at December 31, 2018	Issuance in Excess of Ordinary Shares Treasury Share Transactions Changes in Percentage of Ownership Interest in Subsidiaries and Associates $ 2,142,074 $ 1,173,346 $ 4,448 - - (3,937) 2,142,074 1,173,346 511 - - (511) $ 2,142,074 $ 1,173.346 $ -	Total $ 3,319,868 (3,937) 3,315,931 (511) $ 3,315,420

48 -

c. Retained earnings and dividend policy

According to the Company’s Articles of Incorporation, net income should be used to pay its business income tax and offset deficits. From any remaining net income, 10% will be appropriated as a legal reserve, and a special reserve as required by government regulations. After adding prior years’ unappropriated earnings, the Company could retain a certain amount for expansion plans and then make the appropriation equally to each shareholder. However, if there is an increase in capital during the year, bonuses appropriated to new shareholders should be allocated based on the resolution passed in the shareholders’ meeting. For information about the policies of employees’ compensation and remuneration of directors prior to and after the amendments to the Company’s Articles of Incorporation, refer to Note 24.

The Company’s distribution of dividends would be in consideration of economic conditions, tax obligations, and operating requirements for cash. For an orderly system of dividend distribution, the dividends are distributed in accordance with the Articles of Incorporation. In addition, improvements of the financial structure and support for investment, capacity expansion or other major capital expenditures. The cash dividends to be distributed should not be below 50% than the current year’s post-tax net profit deduction, offsetting losses of previous years, the statutory surplus reserve and the special surplus reserve, except for the improvement of financial structure and the transfer of funds, capacity expansion or other major capital expenditures. The cash dividends to be distributed should not be below 10% of the total cash and share dividends for the current accounting year.

Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Under Order No. 1010012865, Order No. 1010047490 and Order No. 1030006415 issued by the FSC and the directive titled Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs, the Company should appropriate or reverse to a special reserve.

The appropriations of earnings for 2017 and 2016, which were approved in the shareholders’ meetings on June 21, 2018 and June 20, 2017, respectively, are as follows:

Legal reserve Special reserve Cash dividends	Appropriation of Earnings 2017 2016 $ 153,599 $ 113,425 12,543 114,149 1,416,940 991,858	Dividends Per Share(NT$)
		2017 2016 $ 1.0 $ 0.7

The appropriation of earnings for 2018 was proposed by the board of directors on March 20, 2019. The appropriations and dividends per share are as follows:

	Appropriation	Appropriation	Dividends Per	Dividends Per
	of	Earnings	Share	(NT$)
Legal reserve	$	131,815
Special reserve		73,330
Cash dividends		1,204,400	$	0.85

The appropriation of earnings for 2018 was resolved in the shareholders’ meeting held on June 25, 2019.

49 -

d. Special reserve

Balance, beginning of year Appropriation in respect of net increases in the fair value of investment properties Balance, end of year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 2,643,743 12,543 $ 2,656,286	2017 $ 2,529,594 114,149 $ 2,643,743

On the initial application of the fair value model to investment properties, the Company appropriated for a special reserve at the amount that was the same as the net increase arising from fair value measurement and transferred to retained earnings. The additional special reserve should be appropriated for subsequent net increases in fair value. The amount appropriated may be reversed to the extent that the cumulative net increases in fair value decrease or on the disposal of investment properties.

e. Other equity items

1) Exchange differences on translating the financial statements of foreign operations

	For the Year Ended December 31	For the Year Ended December 31
	2018	2017
Balance, beginning of year	$ 86,048	$ 58,273
Share of exchange difference of subsidiaries and associates
accounted for using the equity method	4,606	27,775
Balance, end of year	$ 90,654	$ 86,048
Unrealized (loss) gain on available-for-sale financial assets
	For the Year
		Ended
	December 31,
		2017
Balance, beginning of year	$	1,566,157
Unrealized gain (loss) arising on revaluation of available-for-sale financial assets		167,168
Cumulative gain reclassified to profit or loss on sale of available-for-sale
financial assets		(194,022)
Share of unrealized loss on available-for-sale financial assets of subsidiaries and
associates accounted for using the equity method		(117,800)
Balance, end of year	$	1,421,503
Balance at January 1, 2018 per IAS 39	$	1,421,503
Adjustment on initial application of IFRS 9		(1,421,503)
Balance at January 1, 2018 per IFRS 9	$	-

2) Unrealized (loss) gain on available-for-sale financial assets

Unrealized (loss) gain on available-for-sale financial assets is the cumulative gains or losses generated from the fair value measurement of available-for-sale financial assets which are recognized under other comprehensive income and deducted from the disposal proceeds or the amount of impairment reclassified to profit or loss.

50 -
3) Unrealized gain (loss) on financial assets at FVTOCI

	For the Year	For the Year
		Ended
	December 31,
		2018
Balance at January 1 per IAS 39	$	-
Adjustment on initial application of IFRS 9		1,242,300
Balance at January 1 per IFRS 9		1,242,300
Recognized for the year
Unrealized gain (loss) - equity instruments		311,658
Share from associates accounted for using the equity
method		419,862
Reclassification adjustment
Cumulative unrealized gain/(loss) of equity instruments
transferred to retained earnings due to disposal		(4,192)
Balance at December 31	$	1,969,628

f. Treasury shares

(In Thousands of Shares)

	Shares Held by
	the Company’s
Purpose of Buy-back	Subsidiaries
Number of shares at December 31, 2018 and 2017	8,207

The shares that the subsidiaries held were acquired before the Company Act was amended. The Company’s shares held by its subsidiaries at the end of the reporting period are as follows:

(In Thousands of Shares)

December 31, 2018 Name of Subsidiary Number of Shares Held Bai Ding Investment 8,207 December 31, 2017 Name of Subsidiary Number of Shares Held Bai Ding Investment 8,207	Carrying Amount Market Price $ 97,110 $ 128,837 Carrying Amount Market Price $ 97,110 $ 123,093

Under the Securities and Exchange Act, the Company shall neither pledge treasury shares nor exercise shareholders’ rights on these shares, such as the rights to dividends and to vote. The subsidiaries holding treasury shares, however, retain shareholders’ rights, except the rights to participate in any share issuances for cash and to vote.

51 -

23. REVENUE

Sale of goods (Note) Commissions from concessionaires’ sales (Note) Maintenance and promotion fee income Rental income from property Others Note: Gross revenue is presented as follows: Concessionaires’ sales Sale of goods Contact Balances Contract liabilities - non current Sale of goods Customer loyalty programs	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2018 2017 $ 4,919,075 $ 4,734,678 3,980,764 4,279,470 780,782 644,538 692,912 514,699 408,055 407,764 $ 10,781,588 $ 10,581,149 For the Year Ended December 31
		2018 $ 37,076,151 5,189,052 $ 42,265,203	2017 $ 37,169,938 4,966,634 $ 42,136,572 For the Year Ended December 31, 2018 $ 2,807,936 39,896 $ 2,847,832

Refer to Note 11 for the information of notes receivables and trade receivables.

The changes in the balance of contract liabilities primarily result from the timing difference between the Company’s performance and the respective customer’s payment.

Revenue of the reporting period recognized from the beginning contract liabilities which were satisfied in the previous periods is as follows:

	For the Year
	Ended
	December 31,
	2018
From the beginning contract liabilities
Sale of goods	$ 1,198,864
Customer loyalty programs	37,604
	$ 1,236,468

52 -

24. NET PROFIT FOR THE YEAR

Net profit for the year includes the following items:

a. Operating costs

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2018 2017 $ 4,094,492 $ 3,920,283 153,132 140,093 37,508 37,050 $ 4,285,132 $ 4,097,426 For the Year Ended December 31
2018 $ 160 85,322 250,005 $ 335,487 For the Year Ended		2017 $ 38 72,480 - $ 72,518 December 31
2018 $ - (90,700) 614 (6,439) 32,218 61,003 (11,028) $ (14,332) For the Year Ended		2017 $ 194,022 (166) (180) (7,062) (78,539) 75,112 (12,481) $ 170,706 December 31
	2018 $ 210,066 17,676 227,742 (58,653) $ 169,089	2017 $ 233,056 23,810 256,866 (57,581) $ 199,285

b. Other income

c. Other gains and losses

d. Finance costs

53 -

Information about capitalized interest is as follows:

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2018 2017 $ 58,653 $ 57,581 0.98%-1.05% 1.05%-1.29% For the Year Ended December 31
2018 2017 $ 1,105,935 $ 1,334,648 (89,872) (147,289) 1,016,063 1,187,359 18,678 12,481 $ 1,034,741 $ 1,199,840 $ 68,723 $ 56,371 947,340 1,130,988 $ 1,016,063 $ 1,187,359 $ 18,678 $ 12,481 For the Year Ended December 31
2018 $ 43,798 56,286 $ 100,084 For the Year Ended			2017 $ 50,458 70,585 $ 121,043 December 31
	2018 $ 31,166 10,018 41,184 1,102,057 $ 1,143,241 $ 1,143,241	2017 $ 31,355 12,261 43,616 1,120,446 $ 1,164,062 $ 1,164,062

54 -

h. Employees’ compensation and remuneration of directors

The Company accrued employees’ compensation and remuneration of directors at a rate of 2% to 3.5% and a rate of no higher than 2.5%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2018 and 2017, which have been approved by the Company’s board of directors on March 20, 2019 and March 21, 2018, respectively, are as follows:

Accrual rate

Employees’ compensation Remuneration of directors Amount Employees’ compensation Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2018 2017 3.2% 3.2% 2.4% 2.4% For the Year Ended December 31
	2018 Cash $ 55,384 41,538	2017
		Cash $ 60,395 45,296

If there is a change in the amounts after the annual financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the financial statements for the years ended December 31, 2017 and 2016.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2019 and 2018 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

25. INCOME TAX

a. Major components of income tax expense recognized in profit or loss are as follows:

Current income tax In respect of the current year Adjustments for the prior year Deferred income tax In respect of the current year Effect of tax rate changes Adjustments for the prior year Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2018 $ 210,927 58 210,985 26,916 143,241 (65,443) 104,714 $ 315,699	2017 $ 124,399 (792) 123,607 118,611 - 3,447 122,058 $ 245,665

55 -

A reconciliation of accounting profit and income tax expenses are as follows:

Profit before income tax from continuing operations Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Tax-exempt income Unrecognized deductible temporary differences Effect of tax rate changes Adjustments for prior years’ income tax Adjustments for prior years’ deferred tax Land value increment tax Others Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 1,633,849 $ 326,770 680 (64,791) 6,004 143,241 58 (65,443) (25,275) (5,545) $ 315,699	2017 $ 1,781,651 $ 302,880 40 (62,396) 1,771 - (792) 3,447 - 715 $ 245,665

In 2017, the applicable corporate income tax rate used by the Company is 17%. However, the Income Tax Act in the ROC was amended in February 2018, and the corporate income tax rate was adjusted from 17% to 20%, effective in 2018. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings will be reduced from 10% to 5%.

As the status of the 2019 appropriation of earnings is uncertain, the potential income tax consequences of the 2018 unappropriated earnings are not reliably determinable.

b. Income tax recognized in other comprehensive income

Deferred tax In respect of the current year Effect of tax rate changes Remeasurement on defined benefit plans	For the Year Ended	For the Year Ended	December 31
		2018 $ 4,416 1,112 $ 5,528	2017 $ - 3,867 $ 3,867

c. Current tax assets and liabilities

Current tax assets Tax refund receivable Current tax liabilities Income tax payable		December 31	December 31
		2018 $ - $ 148,613	2017 $ - $ 124,398

56 -

d. Deferred tax assets and liabilities

The movements of deferred tax assets and liabilities are as follows:

For the year ended December 31, 2018

Deferred tax assets Temporary differences Investments accounted for using the equity method Promotion expense on coupons Lease incentives Differences of pension in determining taxable income Others Deferred tax liabilities Temporary differences Depreciation Reserve for land revaluation increment tax Investment properties Investments accounted for using the equity method Others	Balance, Beginning of Year Effect of Tax Rate Change $ 23,383 $ 4,126 14,238 2,513 15,775 2,784 40,376 7,125 17,849 3,150 $ 111,621 $ 19,698 $ 925,938 $ 163,400 391,157 - 369,362 (39,885) 196,147 34,614 2,226 394 $ 1,884,830 $ 158,523	Recognized in Profit or Loss $ 83,976 746 1,512 (30,714) 4,194 $ 59,714 $ (67,817) - 53,511 6,014 29,479 $ 21,187	Recognized in Other Comprehen sive Income Balance, End of Year $ - $ 111,485 - 17,497 - 20,071 1,112 17,899 - 25,193 $ 1,112 $ 192,145 $ - $ 1,021,521 - 391,157 - 382,988 - 236,775 - 32,099 $ - $ 2,064,540

For the year ended December 31, 2017

					Recognized in	Recognized in
		Balance,				Other
	Beginning of		Recognized in		Comprehen		Balance, End
		Year	Profit or Loss		sive Income			of Year
Deferred tax assets
Temporary differences
Investments accounted for
using the equity method	$	180,338	$	(156,955)	$	-	$	23,383
Promotion expense on
coupons		17,387		(3,149)		-		14,238
Lease incentives		14,375		1,400		-		15,775
								(Continued)

57 -

Differences of pension in
determining taxable
income

Others

Deferred tax liabilities
Temporary differences
Depreciation

Reserve for land revaluation
increment tax
Investment properties
Investments accounted for
using the equity method
Others

Balance,
Beginning of
Year
Recognized in
Profit or Loss
Recognized in
Other
Comprehen
sive Income
Balance, End
of Year
$ 53,475 $ (16,966) $ 3,867 $ 40,376

16,662

1,187

-

17,849
$ 282,237
$ (174,483)
$ 3,867
$ 111,621
$ 916,988 $ 8,950 $ - $ 925,938
391,157
-
-
391,157
445,333
(75,971)
-
369,362
178,247
17,900
-
196,147

5,530

(3,304)

-

2,226
$ 1,937,255
$ (52,425)
$ -
$ 1,884,830
(Concluded)

e. Deductible temporary differences for which no deferred tax assets were recognized in the balance sheets

Deductible temporary differences		December 31	December 31
		2018 $ 624,916	2017 $ 983,038

f. Income tax assessments

The income tax returns through 2016 have been assessed by the tax authorities.

26. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31
		2018 $ 0.94 $ 0.93	2017 $ 1.09 $ 1.09

58 -

Earnings and weighted average number of ordinary shares outstanding for the computation of earnings per share are as follows:

Net Profit for the Year

Net profit for the year Effect of potential dilutive ordinary shares: Employees’ compensation Earnings used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 1,318,150 - $ 1,318,150	2017 $ 1,535,986 - $ 1,535,986

Weighted average number of ordinary shares outstanding in computation of basic earnings per share Effect of potential dilutive ordinary shares: Employees’ compensation Weighted average number of ordinary shares outstanding in computation of dilutive earnings per share	(In Thousand Shares) For the Year Ended December 31	(In Thousand Shares) For the Year Ended December 31	(In Thousand Shares) For the Year Ended December 31
		2018 1,408,734 4,931 1,413,665	2017 1,408,734 5,237 1,413,971

If the Company offered to settle the compensation paid to employees in cash or shares, the Company assumed the entire amount of the compensation or bonus will be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares was included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in their meeting in the following year.

27. OPERATING LEASE ARRANGEMENTS

a. The Company as lessee

In addition to the transaction described in Note 17 to the financial statements, the Company signed operating lease arrangements with related parties and unrelated parties in line with its business operations.

As of December 31, 2018 and 2017, the deposit paid for operating lease arrangements was $67,739 thousand and $157,739 thousand, respectively.

59 -

The future minimum lease payments of non-cancellable operating lease commitments are as follows:

Not later than 1 year Later than 1 year but not later than 5 years Later than 5 years		December 31	December 31
		2018 $ 849,693 3,355,437 11,556,802 $ 15,761,932	2017 $ 785,022 2,757,013 10,767,690 $ 14,309,725

The lease payments recognized in profit or loss are as follows:

Minimum lease payments Contingent rentals	For the Year Ended	For the Year Ended	December 31
		2018 $ 893,445 23,925 $ 917,370	2017 $ 819,591 22,986 $ 842,577

Liabilities recognized in respect of non-cancellable operating leases are as follows:

Lease incentives (Note 20) Non-current		December 31	December 31
		2018 $ 100,350	2017 $ 92,791

b. The Company as lessor

For investment properties that are leased out under operating lease agreements, refer to Note 15.

As of December 31, 2018 and 2017, the deposits received by the Company through operating lease contracts were $70,373 thousand and $62,387 thousand, respectively.

The future minimum lease payments of non-cancellable operating leases are as follows:

Not later than 1 year Later than 1 year but not later than 5 years Later than 5 years		December 31	December 31
		2018 $ 499,698 1,824,153 3,572,451 $ 5,896,302	2017 $ 302,489 790,006 694,798 $ 1,787,293

28. CAPITAL MANAGEMENT

Under its operating development schemes and related government rules, the Company manages its capital to ensure it can continue to operate as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance.

60 -

The capital structure of the Company consists of net debt (borrowings offset by cash) and equity of the Company (comprising share capital, capital surplus, retained earnings and other equity). The Company’s capital management concerns its capital expenditures for capital structure and relative risks to ensure the optimal capital structure, and the Company may adjust the amount of dividends paid to shareholders, the number of new shares issued, proceeds from borrowings and repayments of borrowings, in order to balance the overall capital structure.

29. FINANCIAL INSTRUMENTS

a. Fair value information - financial instruments not measured at fair value

The financial instruments not measured at fair value are either those with due dates in the near future or those with a future collection value which approximately equals its carrying amount. Thus, the fair value of these financial instruments are estimated at their carrying amounts on the financial reporting date.

b. Fair value information - financial instruments measured at fair value on a recurring basis

Fair value hierarchy as at December 31, 2018

Level 1 Financial assets at FVTOCI Equity investments Domestic listed ordinary shares $ 2,254,523 Domestic unlisted ordinary shares - $ 2,254,523 Fair value hierarchy as at December 31, 2017 Level 1 Available-for-sale financial assets Domestic listed ordinary shares Equity investments $ 1,945,059	Level 2 $ - - $ - Level 2 $ -	Level 3 $ - 99,828 $ 99,828 Level 3 $ -	Total $ 2,254,523 99,828
			$ 2,354,351
			Total $ 1,945,059
Available-for-sale financial assets Domestic listed ordinary shares Equity investments

There were no transfers between Level 1 and 2 in both 2018 and 2017.

Reconciliation of Level 3 fair value measurements of financial instruments

Financial Instruments Valuation Techniques and Inputs Domestic unlisted shares a) Asset-based approach. Valuation based on the fair value of an investee, calculated through each investment of the investee using the income approach, market approach or a combination of the two approaches, while also taking the liquidity premium into consideration.

b) Transaction method of market approach. The approach is a valuation strategy that looks at market ratios of companies with similar profitability at the end of the reporting period, while taking the liquidity premium into consideration.

61 -
c. Categories of financial instruments

Financial assets Loans and receivables (1) Available-for-sale financial assets (2) Financial assets at amortized cost (3) Financial assets at FVTOCI Financial liabilities Measured at amortized cost (4)	December 31
	2018 2017 $ - $ 1,528,662 - 2,048,953 2,011,409 - 2,354,351 - 26,435,599 26,515,842

1) The balances included the carrying amount of cash, debt investments with no active market, notes receivable and trade receivables (including related parties), other receivables and refundable deposits, which are measured at amortized cost.
2) The balances included the carrying amount of available-for-sale financial assets measured at cost.
3) The balances include financial assets at amortized cost, which comprise cash, debt investments, and notes receivable and trade receivables. Those reclassified to held-for-sale disposal groups are also included.
4) The balances included the carrying amount of short-term borrowings, short-term bills payable, notes payable and trade payables (including related parties), other payables, bonds payable (including the current portion), long-term borrowings including the current portion and deposits received, which are measured at amortized cost.
d. Financial risk management objectives and policies

The Company’s financial risk management pertains to the management’s operations-related market risks (including exchange rate risk, interest rate and other price risks), credit risks and liquidity risks. To reduce its financial risk, the Company is committed to identifying, assessing and avoiding the market uncertainties and reducing negative effects of these market changes on the Company’s financial performance.

The main financial activities of the Company are governed by the Company’s internal management and approved by the board of directors. The financial schemes, which include fund raising plans should be carried out in compliance with the Company’s policies.

1) Market risk

a) Interest rate risk

The Company was exposed to interest rate risk because the Company borrowed funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix of fixed and floating rate borrowings.

62 -

The carrying amount of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period are as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities Sensitivity analysis	December 31
	2018 2017 $ 25,095 $ - 2,000,000 3,500,000 53,154 74,546 18,109,032 16,599,188

The sensitivity analyses below were determined based on the Company’s exposure to interest rates for financial assets and financial liabilities at the end of the reporting period. For sensitivity analysis purposes, the sensitivity rate was adjusted as a result of the volatile financial market. The measurement of the increase or decrease in the interest rates is based on 100 basis points, which is reported to the senior management denoting the management’s assessment for the reasonableness of the fluctuation of the interest rates.

If interest rates had been 100 basis points higher or lower and all other variables had been held constant, the profit before income tax for the years ended December 31, 2018 and 2017 would decrease/increase by $180,559 thousand and $165,246 thousand, respectively.

b) Other price risks

The Company was exposed to equity price risks involving equity investments in listed companies and beneficial certificates. The Company’s investments in listed companies and beneficial certificates should be in compliance with the rules made by the board of directors in order to achieve the goal of risk management and maximize the returns on investments.

Sensitivity analysis

The sensitivity analyses below were determined based on the exposure to equity price risks at the end of the reporting period. For sensitivity analysis purposes, the sensitivity rate was adjusted as a result of the volatile financial market.

If equity prices had been 5% higher or lower, pre-tax other comprehensive income for the years ended December 31, 2018 and 2017 would increase/decrease by $117,718 thousand and $97,253 thousand, respectively, as a result of the changes in fair value of available-for-sale financial assets.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. At the end of the reporting period, the Company’s credit risk was mainly contributed from trade receivables in operating activities, bank deposits and financial instruments in financial activities.

63 -

To maintain the quality of trade receivables, the Company manages credit risk by assessing customers’ credit status in terms of financial status, historical transactions, etc., and obtains an adequate amount of collaterals as guarantees from the customers with high credit risk. In addition, the Company reviews the recoverable amount of each trade debt at the end of the reporting period to ensure that adequate allowances are made for irrecoverable amounts. On the credit risk management of bank deposits and other financial instruments, the Company trades with counterparties which comprise banks with good credit ratings.

3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the use of bank borrowings and ensures compliance with loan covenants.

On the demand for capital payments for a particular purpose, the Company maintains adequate cash by way of long-term financing/borrowings. For the management of cash shortage, the Company monitors cash management and allocates cash appropriately to maintain financial flexibility and ensure the mitigation of liquidity risk.

The following table details the Company’s remaining contractual maturities for its non-derivative financial liabilities with agreed repayment periods.

December 31, 2018

	On	Demand or
	Not	Later than										Later than
		1 Year		1-2 Years		2-3 Years		3-4 Years		4-5 Years		5 Years		Total
Non-derivative financial liabilities
Short-term borrowings	$	6,710,000	$	-	$	-	$	-	$	-	$	-	$	6,710,000
Short-term bills payable		2,299,032		-		-		-		-		-		2,299,032
Trade payables		4,878,840		-		-		-		-		-		4,878,840
Trade payables to related parties		76,148		-		-		-		-		-		76,148
Other payables		1,284,856		-		-		-		-		-		1,284,856
Long-term borrowings (including
current portion)		-		8,500,000		2,600,000		-		-		-		11,100,000
Deposits received		12,902		21,201		9,334		3,084		3,842		36,360		86,723
December 31, 2017
	On	Demand or
	Not	Later than										Later than
		1 Year		1-2 Years		2-3 Years		3-4 Years		4-5 Years		5 Years		Total
Non-derivative financial liabilities
Short-term borrowings	$	6,300,000	$	-	$	-	$	-	$	-	$	-	$	6,300,000
Short-term bills payable		1,699,188		-		-		-		-		-		1,699,188
Trade payables		5,026,846		-		-		-		-		-		5,026,846
Trade payables to related parties		85,055		-		-		-		-		-		85,055
Other payables		1,226,591		-		-		-		-		-		1,226,591
Long-term borrowings (including
current portion)		3,500,000		5,600,000		3,000,000		-		-		-		12,100,000
Deposits received		46,368		4,485		16,514		1,580		6,752		2,463		78,162

64 -

30. TRANSACTIONS WITH RELATED PARTIES

The transactions between the Company and its related parties, other than those disclosed in other notes, are summarized as follows:

a. The Company’s related parties and their relationships

Related Party
Far Eastern Ai Mai Co., Ltd. (AIMAI)

Ya Tung Department Stores, Ltd. (YTDS)

Yu Ming Advertising Agency Co., Ltd.
(YMAC)

Far Eastern CitySuper Co., Ltd. (FECS)

Bai Ding Investment Co., Ltd. (BDIC)

Bai Yang Investment Co., Ltd. (BYIC)

Far Eastern Hon Li Do Co., Ltd. (FEHLD)

Chubei New Century Shopping Mall Co., Ltd.
FEDS Asia Pacific Development Co., Ltd.

FEDS New Century Development Co., Ltd.

Far Eastern Big City Shopping Malls Co., Ltd.
Pacific Sogo Department Stores Co., Ltd.
(SOGO)

Ding Ding Integrated Marketing Service Co.,
Ltd. (DDIM)

Oriental Securities Corporation (OSC)

Far Eastern Electronic Commerce Co., Ltd.
(FEEC)

Yuan Hsin Digital Payment Co., Ltd. (YHDP)
Far Eastern New Century Corporation (FENC)
Far EasTone Telecommunications Co., Ltd.

New Century InfoComm Tech Co., Ltd.

Far Eastern General Contractor Inc. (FEGC)

Far Eastern Construction Co., Ltd. (FEC)

Far Eastern Resources Development Co., Ltd.
Ding Ding Hotel Co., Ltd.

Far Eastern Electronic Toll Collection Co.,
Ltd.

Relationship with the Company

Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate
Associate
Associate (Note)
Associate
The investor that has significant influence over the
Company (equity method investor of FEDS)
The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
(Continued)

65 -

Related Party
Far Eastern Apparel Co., Ltd.

Yuan Ding Co., Ltd. (YDC)

Yuan Tong Investment Co., Ltd. (YTIC)

YDT Technology International Co., Ltd.

Far Eastern Technical Consultants Co., Ltd.

Yuanshi Digital Technology Co., Ltd.

Asia Cement Corporation

Ya Tung Ready Mixed Concrete Co., Ltd.

Everest Textile Co., Ltd.

Far Eastern International Bank (FEIB)

Yuan Bo Asset Management Corporation

Oriental Union Chemical Corporation

Yuan Ze University

Far Eastern Medical Foundation

Tranquil Enterprise Ltd. (TEL)

Relationship with the Company

The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
The associate of the investor that has significant
influence over the Company (the subsidiary of
FENC)
The associate of the investor that has significant
influence over the Company (the associate of
FENC)
The associate of the investor that has significant
influence over the Company (the associate of
FENC)
The associate of the investor that has significant
influence over the Company (the associate of
FENC)
Other related party (the chairman of Company, also
the vice chairman of FEIB)
Other related party (the subsidiary of Far eastern
international leasing corporation)
Other related party (the same chairman)
Other related party (the same chairman)
Other related party (the same chairman)
Other related party (the same chairman)
(Concluded)

Note: The board of directors of both FEEC and Hiiir approved the merger on June 27, 2017, with Hiiir as the surviving company and FEEC dissolved. Upon the completion of the aforesaid merger, the surviving company was renamed YSDT.

66 -

b. Operating revenue

Sales of goods (Note) The associate of the investor that has significant influence over the Company Subsidiaries Other related parties Associates	For the Year Ended	For the Year Ended	December 31
		2018 $ 37,334 31,994 1,284 - $ 70,612	2017 $ 35,473 35,586 752 2,122 $ 73,933

Note: Sales to related parties and unrelated parties were made under normal terms.

Other operating revenue Other related parties Subsidiaries The associate of the investor that has significant influence over the Company Associates c. Operating costs and expenses Operating costs (Note) The associate of the investor that has significant influence over the Company Subsidiaries	For the Year Ended	For the Year Ended	December 31
	2018 $ 69,210 27,290 24,388 2,949 $ 123,837 For the Year Ended		2017 $ 25,641 28,080 19,313 7,894 $ 80,928 December 31
		2018 $ 24,163 3,035 $ 27,198	2017 $ 24,918 2,448 $ 27,366

Note: Purchases from related parties and unrelated parties were made under normal terms.

Operating expenses (Note) The associate of the investor that has significant influence over the Company Subsidiaries Investor that has significant influence over the Company Associates Other related parties	For the Year Ended	For the Year Ended	December 31
		2018 $ 326,670 240,161 73,187 42,893 2,671 $ 685,582	2017 $ 332,970 240,069 72,752 42,868 3,484 $ 692,143

67 -

Note: The rental pertaining to related parties is based on market rates and is received or paid monthly or yearly.

d. Other gains and losses

Other gains Other related parties FEIB TEL The associate of the investor that has significant influence over the Company Others YTIC Subsidiaries SOGO Others Investor that has significant influence over the Company Associates Other losses Associates OSC Investor that has significant influence over the Company	For the Year Ended	For the Year Ended	December 31
		2018 $ 18,298 - 18,298 19 - 19 17,794 1,603 19,397 - 337 $ 38,051 $ 7,176 1 $ 7,177	2017 $ 17,528 97,970 115,498 2 74,341 74,343 17,432 2,234 19,666 2,870 235 $ 212,612 $ 7,216 2 $ 7,218

e. Finance costs

Subsidiaries SOGO Other related parties	For the Year Ended	For the Year Ended	December 31
		2018 $ 11,100 - $ 11,100	2017 $ 10,517 827 $ 11,344

68 -

f. Receivables from related parties

Trade receivables, net Other related parties The associate of the investor that has significant influence over the Company Subsidiaries Associates Investor that has significant influence over the Company Other receivables Subsidiaries The associate of the investor that has significant influence over the Company Other related parties g. Other assets Other non-current assets Lease incentives The associate of the investor that has significant influence over the Company YDC Other related parties FEIB Refundable deposits The associate of the investor that has significant influence over the Company h. Payables to related parties Trade payables The associate of the investor that has significant influence over the Company Subsidiaries		December 31	December 31
		2018 2017 $ 39,427 $ 11,859 25,074 18,852 3,669 23,763 1,232 1,463 650 2,310 $ 70,052 $ 58,247 $ 8,681 $ 5,603 3,412 3,018 8,356 18 $ 20,449 $ 8,639 December 31
		2018 2017 $ 9,142 $ 7,924 1,314 1,494 $ 10,456 $ 9,418 $ 7,741 $ 7,743 December 31
		2018 $ 44,249 31,899 $ 76,148	2017 $ 51,109 33,946 $ 85,055 (Continued)

69 -

Other payables The associate of the investor that has significant influence over the Company FEGC Other Associates Subsidiaries Investor that has significant influence over the Company Other related parties i. Other liabilities Advance receipts The associate of the investor that has significant influence over the Company Other current liabilities Associates Subsidiaries The associate of the investor that has significant influence over the Company Other non-current liabilities Lease incentives The associate of the investor that has significant influence over the Company FEC Deposits received The associate of the investor that has significant influence over the Company YDC Other Other related parties Subsidiaries		December 31	December 31
		2018 2017 $ 118,796 $ 118,796 52,419 60,349 171,215 179,145 72,563 48,424 66,208 68,217 32,057 31,902 82 69 $ 342,125 $ 327,757 (Concluded) December 31
		2018 2017 $ 895 $ 747 $ 1,031 $ 1,013 17 123 - 163 $ 1,048 $ 1,299 $ 91,142 $ 92,791 December 31
		2018 $ 36,173 86 36,259 1,023 881 $ 38,163	2017 $ 28,187 86 28,273 1,023 881 $ 30,177

70 -
j. Disposals of financial assets

For the year ended December 31, 2017

Related Party Name Item Number of Shares Underlying Assets YTIC Available-for-sale financial assets - current 25,771 Ordinary shares TEL Available-for-sale financial assets - non-current 9,000 Ordinary shares	Proceeds $ 254,111 $ 239,787	Gain on Disposal $ 74,341 $ 97,970

k. Construction projects

The associates of investor that has significant influence over the Company Associates		December 31	December 31
		2018 $ 720,918 540 $ 721,458	2017 $ 357,775 - $ 357,775

l. Compensation of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended	For the Year Ended	December 31
		2018 $ 58,544 216 $ 58,760	2017 $ 62,919 241 $ 63,160

The compensation to directors and other key management personnel were determined by the Compensation Committee of the Company in accordance with the individual performance and the market trends.

31. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings:

Available-for-sale financial assets Financial assets at FVTOCI Investments accounted for using the equity method Property, plant and equipment Investment properties Other non-current assets		December 31	December 31
		2018 $ - 1,188,250 1,156,262 13,908,063 1,384,999 400 $ 17,637,974	2017 $ 987,000 - 1,149,413 14,053,678 1,490,894 - $ 17,680,985

71 -

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Company as of December 31, 2018 and 2017 are as follows:

a. Significant commitments

The amount of unrecognized commitments are as follows:

The amount of unrecognized commitments are as follows:
Acquisition of property, plant and equipment Acquisition of intangible assets		December 31
		2018 $ 1,774,925 $ 500,000	2017 $ 1,809,004 $ -

b. A letter from the Ministry of Economic Affairs (MOEA) on July 28, 2011 stated that the term of the board of directors and supervisors (the “Board”) of SOGO was terminated, and the election of the Board should be held by October 28, 2011. On August 26, 2011, in the shareholders’ meeting, Douglas Hsu, Ching-Wen Huang, Mao-De Huang, Hsiao-Yi Wang and Satoshi Inoue were elected to be the representatives of the Board and Jing-Yi Wang was elected as a supervisor. On September 2, 2011, the registration of the Board was submitted to the MOEA, and on August 30, 2013, the registration of the Board was approved and completed by the MOEA.

For the resolution passed in the shareholders’ meeting, SOGO’s shareholders filed an appeal for an invalid resolution and for the withdrawal of the resolution of the shareholders’ meeting. As of March 17, 2017, many verdicts, including the Year 100 Letter Su No. 3965 verdict made by the TTDC, the Year 104 Letter Tsai Shang No. 90 verdict made by the Supreme Administrative Court (SAC), the Year 101 Letter Kun No. 1589 and No. 1681 verdicts made by the THC, and the Year 106 Letter Tsai Shang No. 86 verdict made by the SAC, confirmed that the shareholders’ meeting was legal and rejected the appeal of the SOGO shareholders.

Also, Heng-Long Li filed an appeal against SOGO and PLTI, alleging that the decisions made in the SOGO shareholders’ meeting on August 26, 2011 were invalid. After the TTDC rejected the appeal in the Year 103 Letter Shang No. 1014 verdict, the THC rejected the appeal once more.

Moreover, the former chairman of PLTI, Heng-Long Li, stated that he appointed Chun-Chih Weng, Chao-Chuan Chu, Shen-Yi Li, Jui-Tsun Liu and Yu-Ying Chin as members of the Board of SOGO to replace Ching-Wen Huang, Satoshi Inoue, Douglas Hsu, Hsiao-Yi Wang and Mao-De Huang. Furthermore, those individuals (Chun-Chih Weng, Chao-Chuan Chu, Shen-Yi Li, Jui-Tsun Liu and Yu-Ying Chin) elected Chun-Chih Weng as the chairman of PLTI and applied to the MOEA for the registration of a change of the Board and supervisor of SOGO on August 8, 2011. However, the application of the registration was rejected by the MOEA, due to the election being held by the former chairman of PLTI, Heng-Long Li. Chun-Chih Weng, Chao-Chuan Chu, Shen-Yi Li, Jui-Tsun Liu and Yu-Ying Chin not only announced publicly that they are the five members of the Board of SOGO but also that they held the SOGO shareholders’ meetings on September 5, 2011 and September 6, 2011. However, the decisions made in these two shareholders’ meetings on September 5, 2011 and September 6, 2011 were not approved and not consented to by all of SOGO’s shareholders. According to the Year 100 Letter Su No. 4224 verdict from the TTDC on January 22, 2014, the TTDC declared that the decisions made in the shareholders’ meeting on September 5, 2011 were not approved legally; according to the Year 100 Letter Su No. 4164 verdict on November 28, 2013, the TTDC confirmed that the decisions made in the shareholders’ meeting on September 6, 2011 were not approved legally. The THC passed the Year 103 Letter Shang No. 330 verdict on May 31, 2016 rejecting the appeal and confirmed that the resolutions of the shareholders’ meeting on September 5, 2011 were not approved legally. In the Year 103 Letter Shang No. 87 verdict from the THC on August 17, 2016, the THC rejected the appeal and confirmed that the decisions made in the shareholders’ meeting on September 6, 2011 were not approved legally. Chun-Chih Weng has filed an appeal against each of the judgments,

72 -

and as of the date that these financial statements were approved, both appeals are still pending in the SAC.

c. In April 2017, under a ruling by the MOEA whereby “the terms and conditions of coupons for certain goods and for certain services within the retail industry should be documented in a standard contract while others should not”, the Company and SOGO signed an agreement to have mutual performance guarantees on gift certificates bought by customers. The guarantee period was from April 1, 2017 to March 31, 2018. As of December 31, 2017, the Company’s guarantee amount for SOGO was $4,544,806 thousand and that of SOGO for the Company was $2,848,393 thousand.

33. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and b. investees:
1) Financing provided to others: Table 1.
2) Endorsements/guarantees provided: Table 2.
3) Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Table 3.
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: Table 4.
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None.
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: None.
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 5.
9) Trading in derivative instruments: None.
10) Information on investees: Table 6.
c. Information on investments in mainland China:
1) Name of the investees in mainland China, main business and products, paid-in capital, method of investment, information on inflow or outflow of capital, percentage of ownership, investment income or loss, ending balance of investment, repatriation of investment income, and the limit of investment in mainland China: Table 7.
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses:
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: None.
73 -
b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: None.
c) The amount of property transactions and the amount of the resultant gains or losses: None.
d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: Table 2.
e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: Table 1.
f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: None.
74 -

TABLE 1

FAR EASTERN DEPARTMENT STORES, LTD.

FINANCING PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period	Ending Balance	Actual Borrowing Amount	Interest Rate	Nature of Financing	Business Transaction Amounts	Reason for Short-term Financing	Allowance for Impairment Loss	Colla	teral	Financing Limit for Each Borrower	Aggregate Financing Limits
													Item	Value
1	Pacific Sogo Department Stores Co., Ltd.	Pacific China Holdings Ltd.	Other receivables	Y	$ 2,000,000	$ 2,000,000	$ -	-	(Note A)	$ -	Transaction	$ --	-	$ --	$ 4,433,405 (Note B)	$ 4,433,405 (Note B)
2	Chongqing FEDS Co., Ltd.	Chongqing Pacific Consultant & Management Co., Ltd. Dalian Pacific Department Store Co., Ltd. Chengdu FEDS Co., Ltd. Chengdu Quanxing Building Pacific Department Store Co., Ltd.	Other receivables Other receivables Other receivables Other receivables	Y Y Y Y	760,801 (RMB 170,000 ) 447,530 (RMB 100,000 ) 1,342,590 (RMB 300,000 ) 223,765 (RMB 50,000 )	760,801 (RMB 170,000 ) 447,530 (RMB 100,000 ) - 223,765 (RMB 50,000 )	554,937 (RMB 124,000 ) 185,725 (RMB 41,500 ) - 67,130 (RMB 15,000 )	4.35%- 4.353514% 4.353514% 4.353514% 4.353514%	(Note A) (Note A) (Note A) (Note A)	- - - -	Transaction Transaction Transaction Transaction	- - - -	- - - -	- - - -	11,809,562 (Note D) 11,809,562 (Note D) 11,809,562 (Note D) 11,809,562 (Note D)	11,809,562 (Note D) 11,809,562 (Note D) 11,809,562 (Note D) 11,809,562 (Note D)
3	Chongqing Metropolitan Plaza Pacific Department Store Co., Ltd.	Chongqing FEDS Co., Ltd. Chongqing Pacific Consultant & Management Co., Ltd.	Other receivables Other receivables	Y Y	313,271 (RMB 70,000 ) 313,271 (RMB 70,000 )	313,271 (RMB 70,000 ) -	255,092 (RMB 57,000 ) -	4.08% 4.35%	(Note A) (Note A)	- -	Transaction Transaction	- -	- -	- -	11,809,562 (Note D) 11,809,562 (Note D)	11,809,562 (Note D) 11,809,562 (Note D)
4	Pacific China Holding Ltd.	Chengdu FEDS Co., Ltd. Pacific China Holdings (HK) Limited	Other receivables Other receivables	Y Y	1,566,465 (US$ 51,000 ) 307,150 (US$ 10,000 )	737,160 (US$ 24,000 ) 307,150 (US$ 10,000 )	645,015 (US$ 21,000 ) -	3.81425%- 4.59694% -	(Note A) (Note A)	- -	Transaction Transaction	- -	- -	- -	11,809,562 (Note D) 11,809,562 (Note D)	11,809,562 (Note D) 11,809,562 (Note D)
5	Pacific China Holdings (HK) Limited	Pacific China Holding Ltd.	Other receivables	Y	307,150 (US$ 10,000 )	307,150 (US$ 10,000 )	106,888 (US$ 3,480 )	2.52%-3.66%	(Note A)	-	Transaction	-	-	-	11,809,562 (Note D)	11,809,562 (Note D)
6	Pacific (China) Investment Co., Ltd.	Chongqing FEDS Co., Ltd.	Other receivables	Y	44,753 (RMB 10,000 )	44,753 (RMB 10,000 )	-	4.08%	(Note A)	-	Transaction	-	-	-	11,809,562 (Note D)	11,809,562 (Note D)
7	FEDS Development Ltd.	Yuan Ding Enterprise (Shanghai) Co., Ltd. Far Eastern New Century (China) Investment Co., Ltd.	Other receivables Other receivables	Y Y	520,820 (RMB 116,337 ) 1,926,169 (RMB 430,400 )	364,186 (RMB 81,377 ) 969,798 (RMB 216,700 )	256,777 (RMB 57,377 ) 969,171 (RMB 216,560 )	- -	(Note A) (Note A)	- -	Transaction Transaction	- -	- -	- -	5,904,781 (Note C) 5,904,781 (Note C)	11,809,562 (Note D) 11,809,562 (Note D)

Note A: Short-term financing.

Note B: 40% of the financing company’s net assets.

Note C: 20% of the financing company’s net assets of ultimate parent company, Far Eastern Department Stores, Ltd.

Note D: 40% of the financing company’s net assets of ultimate parent company, Far Eastern Department Stores, Ltd.

Note E: The amount of Lian Ching Investment Co., Ltd. had been written off to zero, no liabilities were undertaken by the Company and the accounts are not disclosed in the financial statement.

75 -

TABLE 2

FAR EASTERN DEPARTMENT STORES, LTD.

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Maximum Endorsement/ Guarantee Amounts Allowable	Endorsement/ Guarantee Provided by Parent Company	Endorsement/ Guarantee Provided by A Subsidiary	Endorsement/ Guarantee Provided to Mainland China
		Name	Nature of Relationship (Note F)
0	Far Eastern Department Stores, Ltd.	FEDS New Century Development Co., Ltd. Bai Yang Investment Co., Ltd. Bai Ding Investment Co., Ltd. FEDS Development Ltd. Chubei New Century Shopping Mall Co., Ltd. Far Eastern CitySuper Co., Ltd. Pacific Sogo Department Stores Co., Ltd.	2 2 2 2 2 2 2	$ 17,714,344 (Note A) 17,714,344 (Note A) 17,714,344 (Note A) 17,714,344 (Note A) 17,714,344 (Note A) 17,714,344 (Note A) 17,714,344 (Note A)	$ 30,000 400,000 700,000 2,874,924 (US$ 93,600) 3,700,000 160,000 4,798,653	$ 30,000 400,000 700,000 2,874,924 (US$ 93,600) 3,700,000 160,000 4,544,806	$ - - 350,000 1,106,478 (US$ 247,241) - - 4,544,806	$ - - - - - - -	- 1 2 10 13 1 15	$ 29,523,906 (Note B) 29,523,906 (Note B) 29,523,906 (Note B) 29,523,906 (Note B) 29,523,906 (Note B) 29,523,906 (Note B) 29,523,906 (Note B)	Y Y Y Y Y Y Y	- - - - - - -	- - - - - - -
1	Pacific Sogo Department Stores Co., Ltd.	Pacific China Holdings Ltd. Dalian Pacific Department Store Co., Ltd. Chongqing Metropolitan Plaza Pacific Department Store Co., Ltd. Far Eastern Department Stores, Ltd.	2 2 2 3	17,714,344 (Note C) 17,714,344 (Note C) 17,714,344 (Note C) 17,714,344 (Note C)	8,345,266 (US$ 271,700) 410,503 (RMB 78,000) (US$ 2,000) 307,150 (US$ 10,000) 3,005,901	8,345,266 (US$ 271,700) 410,503 (RMB 78,000) (US$ 2,000) 307,150 (US$ 10,000) 2,848,393	3,848,774 (US$ 125,306) - - 2,848,393	- - - -	28 1 1 10	29,523,906 (Note D) 29,523,906 (Note D) 29,523,906 (Note D) 29,523,906 (Note D)	- - - -	- - - Y	- Y Y -
2	Pacific China Holdings Ltd.	Chongqing Pacific Consultant & Management Co., Ltd.	2	17,714,344 (Note C)	279,706 (RMB 62,500)	134,259 (RMB 30,000)	134,259 (RMB 30,000)	-	-	29,523,906 (Note D)	-	-	Y
3	Far Eastern Big City Shopping Malls Co., Ltd.	Pacific Sogo Department Stores Co., Ltd.	3	362,860 (Note A)	164,396	154,325	154,325	-	1	604,766 (Note B)	-	-	-

Note A: The amount is 60% of net assets based on the latest financial statements of the endorser/guarantor.

Note B: The amount is 100% of net assets based on the latest financial statements of the endorser/guarantor.

Note C: The amount is 60% of the net assets based on the latest financial statements of the final parent company - Far Eastern Department Stores, Ltd. (the “Company”).

Note D: The amount is 100% of the net assets based on the latest financial statements of the final parent company - Far Eastern Department Stores, Ltd. (the “Company”).

Note E: As to Pacific Sogo Investment Co., Ltd. was under liquidation and the amount of Lian Ching Investment Co., Ltd. had been written off to zero, no liabilities were undertaken by the Company and the accounts are not disclosed in the financial statement.

Note F: Relationships between the endorsement/guarantee provider and the guaranteed party:

Trading partner.
The Company that directly and indirectly hold more than 50% of the voting shares.

(Continued)

76 -

(Concluded)

The companies that directly and indirectly hold more than 50% of the Company’s voting rights.
The Company that directly and indirectly holds more than 90% of the voting shares.
Guaranteed by the Company according to the construction contract.
An investee company. The guarantees were provided based on the Company’s proportionate share in the investee company.
Companies in the same industry provide among themselves joint and several securities as performance guarantees of sales contracts for pre-construction homes pursuant to the Consumer Protection Act.
77 -

TABLE 3

FAR EASTERN DEPARTMENT STORES, LTD.

MARKETABLE SECURITIES HELD DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company	Type and Name of Marketable Securities	Relationship with the Holding Company (Note A)	Financial Statement Account		December 31, 2018	December 31, 2018		Note
				Shares (Thousands)	Carrying Amount	Percentage of Ownership (%)	Fair Value
Far Eastern Department Stores, Ltd. (the Company) Bai Ding Investment Co., Ltd. Bai Yang Investment Co., Ltd. Far Eastern Hon Li Do Co., Ltd.	Shares Asia Cement Corporation Far Eastern New Century Corporation Kaohsiung Rapid Transit Corporation Yuan Ding Leasing Corp. Yuan Ding Co., Ltd. Yuan Shi Digital Technology Co., Ltd. Shares Far Eastern Department Stores, Ltd. Asia Cement Corporation Far Eastern New Century Corporation Chung-Nan Textile Co., Ltd. Ding Ding Management Consultants Co., Ltd. Yue Ding Industry Co., Ltd. Oriental Securities Investment Advisory Co., Ltd. Ding Sheng Investment Co., Ltd. Shares Far Eastern International Bank Asia Cement Corporation U-Ming Marine Transport Corp. Oriental Securities Investment Advisory Co., Ltd. Beneficiary certificate DWS Taiwan Money Market Fund	4 3 - - 4 4 2 7 6 - 8 7 8 - 8 7 8 8 -	Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current	50,000 19,964 6,286 7,309 3 1,041 8,207 14,814 15,812 2,984 216 2,476 1 39,600 22,102 3,849 200 1 986	$ 1,697,517 557,006 29,355 69,892 10 571 128,850 502,949 441,141 81,531 5,168 43,301 10 345,312 221,023 130,690 6,450 10 11,522	1 - 2 9 - 1 1 - - 5 5 2 - 18 1 - - - -	$ 1,697,517 557,006 29,355 69,892 10 571 128,850 502,949 441,141 81,531 5,168 43,301 10 345,312 221,023 130,690 6,450 10 11,522	35,000 thousand shares of Asia Cement Corporation pledged for loans and commercial papers issued of the investor company 5,200 thousand shares of Asia Cement Corporation pledged for commercial papers issued of the investor company 15,000 thousand shares of Far Eastern New Century Corporation pledged for loans of the investor company

(Continued)

78 -

Holding Company	Type and Name of Marketable Securities	Relationship with the Holding Company (Note A)	Financial Statement Account		December 31, 2018	December 31, 2018		Note
				Shares (Thousands)	Carrying Amount	Percentage of Ownership (%)	Fair Value
Yu Ming Advertising Agency Co., Ltd. FEDS New Century Development Co., Ltd. FEDS Development Ltd. Pacific Sogo Department Stores Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Pacific China Holdings Ltd.	Beneficiary certificate DWS Taiwan Money Market Fund Shares Asia Cement Corporation Beneficiary certificate DWS Taiwan Money Market Fund Shares Kowloon Cement Corp., Ltd. Shares CMC Magnetics Corp. Quanta computer Inc. Pacific Construction Co., Ltd. DBTEL Inc. Oriental Union Chemical Corp. U-Ming Marine Transport Corp. Pacific Liu Tong Investment Co., Ltd. E-Shou Hi-tech Co., Ltd. Tain Yuan Investment Co., Ltd. PURETEK Corp. Pacific 88 Co., Ltd. Yuan Shi Digital Technology Co., Ltd. Beneficiary certificate DWS Taiwan Money Market Fund Shares Oversea Development Corp. Taiwan Ocean Farming Corp.	- 7 - 7 - - - - 8 8 1 - - - - 7 - - -	Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current	2,730 1,506 8,503 46 297 1 7,931 10 546 300 800 18,300 98,000 119 16 1,041 17,273 2,250 2,250	$ 31,892 51,115 99,312 8,903 1,993 38 91,206 29 14,087 9,675 4,019 - - - - - 201,755 - -	- - - 2 - - 2 - - - - 15 20 - 1 1 - 15 15	$ 31,892 51,115 99,312 8,903 1,993 38 91,206 29 14,087 9,675 4,019 - - - - - 201,755 - -

Note A: 1. Subsidiary of FEDS.
Parent company.
Investor that has significant influence over the Company.
The associate of investor that has significant influence over the Company. 5. Other related party.
Investor that has significant influence over FEDS.
The associate of investor that has significant influence over FEDS.
Other related party of FEDS.

(Concluded)

79 -

TABLE 4

FAR EASTERN DEPARTMENT STORES, LTD.

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars)

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counter party	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition			Disposal			Ending	Balance
					Shares (In Thousands)	Amount	Shares (In Thousands)	Amount	Shares (In Thousands)	Amount	Carrying Amount	Gain (Loss) on Disposal	Adjusted Item (Note C)	Shares (In Thousands)	Amount
Bai Yang Investment Co., Ltd. FEDS New Century Development Co., Ltd. Pacific (China) Investment Co., Ltd.	Shares FEDS New Century Development Co., Ltd. Shares Chubei New Century Shopping Mall Co., Ltd. Shares Chengdu FEDS Co., Ltd.	Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method	- - -	Subsidiary Subsidiary Subsidiary	72,000 40,000 -	$ 782,939 393,353 (652,536)	78,000 78,000 -	$ 780,000 (Note A) 780,000 (Note A) 637,742 (Note B)	- - -	$ - - -	$ - - -	$ - - -	$ 6,217 (1,435) (63,760)	150,000 118,000 -	$ 1,569,156 1,171,918 (78,554)

Note A: There was an increase in cash capital.

Note B: There was an increase of NT$21,500 thousand in cash capital.

Note C: The share of comprehensive profit or loss using the equity method.

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TABLE 5

FAR EASTERN DEPARTMENT STORES, LTD.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
Pacific Sogo Department Stores Co., Ltd. FEDS Development Ltd. (BVI) Chongqing Metropolitan Plaza Pacific Department Store Co., Ltd Pacific China Holdings Ltd. Pacific China Holdings (HK) Limited. Chongqing FEDS Co., Ltd. Chengdu FEDS Co., Ltd. Chongqing Pacific Consultant & Management Co., Ltd.	Sogo Department Store Co., Ltd. Far Eastern Big City Shopping Malls Co., Ltd. Far Eastern New Century (China) Investment Co., Ltd. Yuan Ding Enterprise (Shanghai) Co., Ltd. Chongqing FEDS Co., Ltd. Chongqing FEDS Co., Ltd. Chengdu FEDS Co., Ltd. Pacific China Holdings Ltd. Chongqing Pacific Consultant & Management Co., Ltd. Dalian Pacific Department Store Co., Ltd. Chengdu Quanxing Pacific Department Store Co., Ltd. Chengdu BYIC Co., Ltd.	Associate Subsidiary The associate of investor that has significant influence over the Company. The associate of investor that has significant influence over the Company. Subsidiary Same ultimate parent company Subsidiary Subsidiary Same ultimate parent company Same ultimate parent company Same ultimate parent company Associate	$ 125,035 101,231 969,171 (Note B) 256,777 (Note B) 1,119,720 (Note A) 258,827 (Note B) 652,520 (Note B) 107,868 (Note B) 557,018 (Note B) 186,186 (Note B) 427,905 108,414 (Note A)	- - - - - - - - - - -	$ 125,035 - - - - - - - - - - -	Collection expedited - - - - - - - - - - -	$ 532 - - - - - - - - - - -	$ 125,035 - - - - - - - - - - -

Note A: The cash dividend receivable.

Note B: This balance refers to fund lending.

81 -

TABLE 6

FAR EASTERN DEPARTMENT STORES, LTD.

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as of December 31, 2018	Balance as of December 31, 2018	Balance as of December 31, 2018	Net Income (Loss) of the Investee	Share of (Loss) Profit	Note A
				December 31, 2018	December 31, 2017	Shares (In Thousands)	Percentage of Ownership (%)	Carrying Amount
Far Eastern Department Stores, Ltd. Bai Ding Investment Co., Ltd. FEDS Asia Pacific Development Co., Ltd. FEDS New Century Development Co., Ltd. Bai Yang Investment Co., Ltd. Ya Tung Department Stores, Ltd. Yu Ming Advertising Agency Co., Ltd. Far Eastern Hon Li Do Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Pacific Sogo Department Stores Co., Ltd.	Bai Yang Investment Co., Ltd. Oriental Securities Corporation Pacific Liu Tong Investment Co., Ltd. Bai Ding Investment Co., Ltd. Far Eastern Ai Mai Co., Ltd. FEDS Development Ltd. Yu Ming Advertising Agency Co., Ltd. Ya Tung Department Stores, Ltd. Ding Ding Integrated Marketing Service Co. Asians Merchandise Company Far Eastern Hon Li Do Co., Ltd. Far Eastern CitySuper Co., Ltd. Yuan Hsin Digital Payment Co., Ltd. Oriental Securities Corporation Pacific Liu Tong Investment Co., Ltd. Far Eastern International Leasing Corp. Pacific Sogo Department Stores Co., Ltd. Yu Ming Trading Co. Far Eastern Hon Li Do Co., Ltd. Far Eastern CitySuper Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Chubei New Century Shopping Mall Co., Ltd. FEDS Asia Pacific Development Co., Ltd. Far Eastern International Leasing Corp. Bai Ding Investment Co., Ltd. FEDS New Century Development Co., Ltd. Pacific Liu Tong Investment Co., Ltd. FEDS Development Ltd. Pacific China Holdings (HK) Limited Far Eastern Big City Shopping Malls Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Pacific Liu Tong Investment Co., Ltd. Pacific Sogo Department Stores Co., Ltd. Pacific Department Store Co., Ltd. Pacific China Holdings (HK) Limited Pacific Department Store Co., Ltd. Lian Ching Investment Co., Ltd. Pacific Venture Investment Ltd. Sogo Department Store Co., Ltd. Pacific Sogo Investment Co., Ltd. Ding Ding Integrated Marketing Service Co Far Eastern Big City Shopping Malls Co., Ltd. Yuan Hsin Digital Payment Co., Ltd.	Taiwan Taiwan Taiwan Taiwan Taiwan British Virgin Island Taiwan Taiwan Taiwan USA Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan British Virgin Island Hong Kong Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Hong Kong Taiwan Taiwan Hong Kong Taiwan Taiwan Taiwan Taiwan Taiwan	Investment Securities brokerage Investment Investment Hypermarket Investment Advertising and importation of certain merchandise Department store Marketing Trading Building rental Hypermarket Other financing and supporting services Securities brokerage Investment Leasing Department store Importation of certain merchandise Building rental Hypermarket Investment Investment Department store Shopping mall Leasing Investment Shopping mall Investment Investment Investment Department store Investment Investment Investment Department store Department store Investment Department store Investment Investment Credit card business Investment Marketing Department store Other financing and supporting services	$ 8,922,181 143,652 1,764,210 33,357 1,535,538 125,058 33,000 519,292 64,500 5,316 40,278 478,269 238,292 163,563 658,129 301,125 33,490 21,291 28,672 - 99,000 99,000 1,180,000 1,522,761 1,555,590 577,457 1,425,272 99,000 723,946 3,597,868 200,000 55,000 1,200 8,400 4,469,904 62,480 5,733,286 599,000 270,641 357,050 32,984 - 64,500 300,000 238,292	$ 8,922,181 143,652 1,764,210 33,357 1,535,538 125,058 33,000 519,292 64,500 5,316 40,278 478,269 238,292 163,563 658,129 301,125 33,490 21,291 28,672 - 99,000 99,000 400,000 1,522,761 1,555,590 577,457 645,272 99,000 723,946 3,597,868 200,000 55,000 1,200 8,400 4,469,904 62,480 5,733,286 599,000 270,641 357,050 32,984 999,900 64,500 300,000 238,292	924,991 140,297 281,734 119,981 87,744 218 3,500 21,000 3,399 950 1,571 47,827 15,313 97,116 100,250 22,203 11,254 4,901 1,259 2 19,800 19,800 118,000 149,100 132,388 60,019 150,000 19,800 185 45,600 20,000 11,000 200 1,400 650,817 6,840 53,520 60,296 26,764 100,000 7,120 - 3,399 30,000 15,313	100 20 35 67 100 54 100 100 10 100 56 96 15 14 13 5 1 47 44 - 2 2 100 70 30 33 100 2 46 40 40 1 - - 79 3 60 29 50 48 34 - 10 60 15	$ 9,131,939 1,949,756 3,838,530 2,108,498 (Note B) 1,298,433 1,411,729 95,804 (5,018 ) 36,191 4,534 12,480 60,382 116,511 1,349,755 1,379,566 321,278 150,736 75,181 13,418 1 289,681 289,681 1,171,918 1,789,737 1,651,953 1,070,297 1,569,156 289,681 1,202,100 (652,143 ) 241,907 160,690 2,728 18,473 10,030,616 141,402 (120,287 ) 1,026,265 - - - - 36,191 362,860 116,511	$ (694,448 ) 46,790 321,223 90,435 1,421 38,764 7,085 (94,863 ) 23,617 52 489 (33,938 ) (244,148 ) 46,790 321,223 57,007 428,934 3,324 489 (33,938 ) 321,223 321,223 (1,435 ) 152,406 57,007 90,435 4,831 321,223 38.764 (2,340,062 ) 93,904 321,223 321,223 321,223 428,934 100,612 (2,340,062 ) 100,612 - - - - 23,617 93,904 (244,148 )	$ (694,417 ) 9,196 112,843 60,945 1,421 30,071 7,085 (94,863 ) 2,382 52 390 (32,465 ) (36,622 )	2 1 2 2 2 2 2 2 1 2 2 2 1 1 2 1 2 1 2 2 2 2 2 2 1 2 2 2 2 2 2 2 2 2 2 1 2 1 2 1 1 2 1 2 1
											(Continued)

82 -

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as of December 31, 2018	Balance as of December 31, 2018	Balance as of December 31, 2018	Net Income (Loss) of the Investee	Share of (Loss) Profit	Note A
				December 31, 2018	December 31, 2017	Shares (In Thousands)	Percentage of Ownership (%)	Carrying Amount
Pacific China Holdings (HK) Limited Pacific China Holdings Ltd.	Pacific China Holdings Ltd. Bai Fa China Holdings (HK), Limited	British Virgin Island Hong Kong	Investment Investment	$ 4,115,810 46	$ 4,115,810 46	109,200 2	100 100	$ (439,800 ) 46	$ (655,202 ) -		2 2

Note A: 1. Associate.

Subsidiary.

Note B: The foreign-currency investments were translated at the rate of US$1:NT$30.715 prevailing on December 31, 2018.

Note C: The amount is the investment accounted for using the equity method to $2,205,608 thousand deduct the parent company shares reclassification to treasury shares of $97,110 thousand.

Note D: The amount of Lian Ching Investment Co., Ltd. had been written off to zero, no liabilities were undertaken by the Company and the accounts are not disclosed in the financial statement.

(Concluded)

83 -

TABLE 7

FAR EASTERN DEPARTMENT STORES, LTD.

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital (Note A)	Method of Investment (Note G)	Accumulated Outflow of Investment from Taiwan as of January 1, 2018 (Note A)	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2018 (Note A)	Net Income (Loss) of the Investee (Note E)	% Ownership of Direct or Indirect Investment	Share of (Loss) Profit (Note E)	Carrying Amount as of December 31, 2018	Accumulated Repatriation of Investment Income as of December 31, 2018
					Outflow	Inflow
Shanghai Pacific Department Stores Co., Ltd. Chengdu Quanxing Mansion Pacific Department Store Co., Ltd. Chongqing Metropolitan Plaza Pacific Department Store Co., Ltd. Chongqing Pacific Consultant & Management Co., Ltd. Shanghai Pacific Consultant & Management Co., Ltd. Shanghai Bai Ding Consultant & Management Co., Ltd. Chongqing FEDS Co., Ltd. Chengdu Baiyang Industry Co., Ltd. Dalian Pacific Department Store Co., Ltd. Pacific (China) Investment Co., Ltd. Chengdu FEDS Co., Ltd. Chengdu Beicheng FEDS Co., Ltd.	Department store Department store Department store Consulting service Consulting service Consulting service Department store Department store, logistics and storehouse Department store Investment Department store Department store	$ 543,456 30,408 92,145 2,242,195 10,750 3,072 86,002 1,006,946 71,605 6,634,440 4,115,810 -	2 2 2 2 2 2 2 2 2 2 2 2	$ 394,150 (Note B) 30,408 (Note B) 92,145 (Note B) 6,143 (Note B) 5,268 (Note B) - - - - - - -	$ - - - - - - - - - - - -	$ - - - - - - - - - - - -	$ 394,150 (Note B) 30,408 (Note B) 92,145 (Note B) 6,143 (Note B) 5,268 (Note B) - - - - - - -	$ 91,418 (115,079) (162,266) (23,393) 264 (25,635) 194,767 44,131 (26,773) (106,838) (57,787) (8,706)	49 67 67 67 33 100 100 22 67 67 67 67	$ 19,281 (77,292) (108,985) (15,711) 87 (25,635) 194,767 740 (17,982) (71,096) (38,812) (5,847)	$ 158,168 (389,764) 183,405 805,569 6,156 11,235 1,218,719 1,194,518 23,722 32,203 (52,761) -	$ - - - - - - - - - - - -

Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2018	Investment Amounts Authorized by Investment Commission, MOEA		Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$ - (Note C)	$243,048 (US$7,913 thousand) (Notes A and C)		$ - (Note F)

Note A: Translated at the rate of US$1:NT$30.715 prevailing on December 31, 2018.

Note B: The payment was made by Pacific Construction Co., Ltd. (the former shareholder).

Note C: The payment made by the Company and the investment amount approved by the Investment Commission, except for the payment made by subsidiary and the subsidiary’s investment amount approved by the Investment Commission.

Note D: The financial report was audited by an international accounting firm with a cooperative working relationship.

(Continued)

84 -

(Concluded)

Note E: There is no upper limit, as stated in the Principles Governing the Review of Investment or Technical Corporation in Mainland China (No. 10720421530), which was issued by the Industrial Development Bureau, Ministry of Economic Affairs, ROC.

Note F: Three investment types are as follows:

The Company made the investment directly.
The Company made the investment through a company registered in a third region. The companies registered in a third region were FEDS Development Ltd. and Pacific China Holdings Ltd.
Others.
85 -

FAR EASTERN DEPARTMENT STORES, LTD.

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

Item

Major Accounting Items in Assets, Liabilities and Equity
Statement of cash
Statement of accounts receivable
Statement of other receivables
Statement of inventories
Statement of change in financial assets at fair value through other comprehensive
income
Statement of changes in investments accounted for using equity method
Statement of changes in property, plant and equipment
Statement of changes in accumulated depreciation and accumulated impairment of
property, plant and equipment
Statement of changes in investment properties
Statement of long-term prepayments for lease
Statement of short-term borrowing
Statement of short-term bills payable
Statement of notes and accounts payable
Statement of other payable
Statement of long-term borrowing
Statement of deferred tax liabilities
Major Accounting Items in Profit or Loss
Statement of operating revenues
Statement of operating cost
Statement of operating expenses
Statement of other gains and losses
Statement of finance costs
Statement of labor, depreciation and amortization by function

**Statement Index **

1
2
3
4
5
6
Note 14
Note 14
Note 15
Note 17
7
8
9
Note 20
10
Note 25
Note 23
11
12
Note 24
Note 24
13

86 -

STATEMENT 1

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF CASH DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Rate (%) Cash on hand Revolving funds Checking accounts Demand deposits (Note) 0.01-0.43	Amount $ 635 29,735 662,657 53,154 $ 746,181

Note: The accounts includes foreign currency deposit of US$48,609.52, EUR2,388.16 and AUD8,478.17, at an exchange rate of US$1=NT$30.715, EUR1=NT$35.200 and AUD1=NT$21.665.

87 -

STATEMENT 2

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Client Name Related parties Non-related parties National credit card center of R.O.C Others (Note) Less: Allowance for doubtful accounts	Amount $ 70,052 464,024 246,140 710,164 24 $ 780,192

Note: The amount of individual client included in others does not exceed 5% of the account balance.

88 -

STATEMENT 3

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF OTHER RECEIVABLES DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Client Name Fubon insurance Others (Note)	Amount $ 250,000 87,628 $ 337,628

Note: The amount of individual client included in others does not exceed 5% of the account balance.

89 -

STATEMENT 4

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF INVENTORIES DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Item Merchandise Cosmetics and boutiques Supermarket and restaurants Men’s fashion Ladies’ fashion Living and lifestyle		Amount
		Cost Net Realizable Value $ 361,607 $ 498,723 11,148 16,911 4,940 10,629 16 16 477 629 $ 378,188 $ 526,908

90 -

STATEMENT 5

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investees Shares Asia Cement Corporation Far Eastern New Century Corporation Yuan Ding Leasing Corp. Kaohsiung Rapid Transit Corporation Yuanshi Digital Technology Co., Ltd. Yuan Ding Co., Ltd.	Balance, January 1, 2018 Shares (In Thousands) Amount - $ - - - - - - - - - - - $ -	Adjustment on Initial Application of IFRS 9 Shares (In Thousands) Amount 50,000 $ 1,410,014 19,964 535,045 7,309 69,898 6,286 27,155 1,041 571 3 10 $ 2,042,693	Additions in Investment Shares (In Thousands) Amount - $ - - - - - - - - - - - $ -	Decrease in Investment Shares (In Thousands) Amount - $ - - - - - - - - - - - $ -	Unrealized Profit or Loss Amount (Note 3) $ 287,503 21,961 (6) 2,200 - - $ 311,658	Balance, December 31, 2018 Shares (In Thousands) Amount Collateral 50,000 $ 1,697,517 Including 35,000thousand shares provided as collateral for bank borrowings and issuance 19,964 557,006 Nil 7,309 69,892 Nil 6,286 29,355 Nil 1,041 571 Nil 3 10 Nil $ 2,354,351
	Shares (In Thousands) - - - - - -	Shares (In Thousands) 50,000 19,964 7,309 6,286 1,041 3	Shares (In Thousands) - - - - - -	Shares (In Thousands) - - - - - -		Shares (In Thousands) 50,000 19,964 7,309 6,286 1,041 3

91 -

STATEMENT 6

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF CHANGE IN INVESTMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Balance, January 1, 2018 Shares (In Thousands) Amount 1,002,991 $ 9,717,789 281,734 3,704,783 119,981 2,236,472 140,297 1,938,207 87,744 1,314,056 218 1,393,499 47,827 92,847 18,716 153,133 3,500 82,986 6,939 33,782 1,571 11,801 950 4,342 21,000 85,410 20,769,107 - 97,110 20,671,997 520,948 $ 20,151,049		Changes in	Investment		Balance, December 31, 2018 Shares (In Thousands) (Note A) % Amount 924,991 100 $ 9,131,939 281,734 35 3,838,530 119,981 67 2,205,608 140,297 20 1,949,756 87,744 100 1,298,433 218 54 1,411,729 47,827 96 60,382 15,313 15 116,511 3,500 100 95,804 3,399 10 36,191 1,571 56 12,480 950 100 4,534 21,000 100 (5,018) 20,156,879 5,018 97,110 20,064,787 494,072 $ 19,570,715	Market Value or Net Assets Value	Market Value or Net Assets Value
	Addition/Decrease in Investment (Note B) Shares (In Thousands) Amount (78,000 ) $ - - - - - - - - - - - - - (3,403 ) - - - (3,540 ) - - - - - - - $ -	Share of Loss of Subsidiaries and Associates Accounted for Using the Equity Method Amount $ (694,417 ) 112,843 60,495 9,196 1,421 30,071 (32,465 ) (36,622 ) 7,085 2,382 390 52 (94,863) (634,432 ) (26,876 ) $ (607,556)	Unrealized Gain or Loss on Financial Assets At FVTOCI Amount $ 134,494 105,175 154,980 12,093 - - - - 8,732 4 282 - 4,102 $ 419,862	Exchange Differences on Translating Foreign Operations Amount $ 7,425 6,312 1,894 387 - (11,841 ) - - 4 22 17 140 246 $ 4,606
					Shares (In Thousands) (Note A) % 924,991 100 281,734 35 119,981 67 140,297 20 87,744 100 218 54 47,827 96 15,313 15 3,500 100 3,399 10 1,571 56 950 100 21,000 100
Shares (In Thousands) 1,002,991 281,734 119,981 140,297 87,744 218 47,827 18,716 3,500 6,939 1,571 950 21,000	Shares (In Thousands) (78,000 ) - - - - - - (3,403 ) - (3,540 ) - - -					Unit Price (NT$) $ 9.91 13.55 17.99 13.90 9.97 5,845.53 2.15 7.61 27.37 10.65 10.65 4.77 (0.24 )	Total Amount $ 9,164,964 3,817,197 2,159,055 1,949,485 875,214 1,273,157 102,820 116,511 95,804 36,191 16,734 4,534 (5,018) $ 19,606,648

Note A: Including 83,200 thousand shares of OSC provided as collateral of bank borrowings and bills payables.

Note B: BYIC has capital reduction in December 2018. The Company reduced 78,000 shares in accordance with existing ownership percentage. YHDP has capital reduction in November 2018. The Company reduced 3,403 shares in accordance with existing ownership percentage. DDIM has undertook the registration of a capital reduction to offset the deficit, which resulted in a decrease of 3,540 thousand shares in the Company’s equity in DDIM.

Note C: The decrease of $511 thousand in capital surplus, decrease of $28 thousand in retained earnings, decrease of $24,819 thousand in actuarial loss and decrease of $293,230 thousand in cash dividends are in accordance with the existing capital surplus percentage.

92 -

STATEMENT 7

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Type
Contract Period
Interest Rates
(%)
Credit loans
First Commercial Bank
2018/12/14-2019/01/11
0.95

Taishin International Bank
2018/12/07-2019/01/07
0.91
Land Bank of Taiwan
2018/12/13-2019/01/04
0.95-0.96
Bank of Taiwan
2018/12/17-2019/01/31
0.92
Mizuho Corporate Bank Ltd.
2018/12/12-2019/01/14
0.89
Bank SinoPac Company Limited
2018/12/28-2019/01/28
0.90
HSBC Bank (Taiwan) Limited
2018/12/28-2019/01/28
0.98
Hua Nan Commercial Bank
2018/12/14-2019/01/11
0.90

Secured loans
Bank of Taiwan
2018/11/30-2019/02/22
0.92
Chinatrust Commercial Bank
2018/12/28-2019/01/14
1.23

Balance,
End of Year
Loan
Commitments
Collateral
$ 1,500,000 $ 1,500,000
-
1,200,000
1,500,000
-
800,000
800,000
-
800,000
800,000
-
700,000
700,000
-
300,000
300,000
-
300,000
300,000
-

200,000

250,000
-

5,800,000

6,150,000
560,000
560,000 Land and buildings

350,000

3,500,000
Land and buildings

910,000

4,060,000
$ 6,710,000
$ 10,210,000

93 -

STATEMENT 8

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF SHORT-TERM BILLS PAYABLE DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Promissory Institution Contract Period Interest Rates (%) Mega Bills Finance Co., Ltd. 2018.12.07-2019.01.03 0.77 The Shanghai Commercial & Savings Bank 2018.12.28-2019.12.28 0.60 China Bills Finance Corporation 2018.12.27-2019.01.25 0.49 Grand Bills Finance Corporation 2018.12.14-2019.01.04 0.88 International Bills Finance Corporation 2018.12.21-2018.01.07 0.68 Taiwan Cooperative Bills Finance Corporation 2018.12.21-2019.01.17 0.86 Taiwan Finance Corporation 2018.12.27-2019.01.17 0.75 Ta Ching Bills Finance Corporation 2018.12.27-2019.01.23 0.91	Nominal Amount $ 550,000 500,000 350,000 200,000 200,000 200,000 150,000 150,000 $ 2,300,000	Discount Amount $ 28 391 232 17 33 94 68 105 $ 968	Carrying Amount Collateral $ 549,972 - 499,609 - 349,768 - 199,983 - 199,967 - 199,906 - 149,932 - 149,895 - $ 2,299,032

94 -

STATEMENT 9

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF NOTES AND ACCOUNTS PAYABLE DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Vendor Name Associate (Note) Unrelated parties Others (Note)	Amount $ 76,148 4,878,840 $ 4,954,988

Note: The amount of individual vendor in others does not exceed 5% of the account balance.

95 -

STATEMENT 10

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF LONG-TERM BORROWING DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Type and Contract Repayment Interest Rates Creditor Period Terms (%) Secured loans Bank of Taiwan 2021.01.18 A revolving line of credit of loans is allowed 0.92 Hua Nan Commercial Bank 2020.08.03 A revolving line of credit of loans is not allowed 0.90 Hua Nan Commercial Bank 2020.03.04 A non-revolving line of credit 1.72 Credit loans Bank of China 2020.07.18 A revolving line of credit of loans is allowed 0.90 Bank of Taiwan 2021.01.18 A revolving line of credit of loans is allowed 0.92	Current $ - - - - - - - $ -	Non-current $ 2,100,000 6,000,000 2,000,000 10,100,000 500,000 500,000 1,000,000 $ 11,100,000	Total Collateral $ 2,100,000 Land and building 6,000,000 Land and building 2,000,000 Land and building 10,100,000 500,000 - 500,000 - 1,000,000 $ 11,100,000

96 -

STATEMENT 11

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF OPERATING COST FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Item Cost of goods sold Inventories, beginning of year Add: Purchases Less: Inventories, end of year Less: Transferred to operating expenses Rental cost Others	Amount $ 331,080 4,142,038 (378,188) (438) 4,094,492 153,132 37,508 $ 4,285,132

97 -

STATEMENT 12

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Item Advertising Payroll Depreciation Rentals Utilities Tax Others (Note)	Selling and Marketing Expenses General and Administrative Expenses $ 289,931 $ - - 991,720 - 947,340 - 835,063 - 261,377 - 242,121 85,234 754,342 $ 375,165 $ 4,031,963	Expected Credit Loss Reversed $ - - - - - - (11) $ (11)	Total $ 289,931 991,720 947,340 835,063 261,377 242,121 839,565 $ 4,407,117

Note: The amount of each item in others does not exceed 5% of the account balance.

98 -

STATEMENT 13

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENT OF LABOR, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Labor cost (Note) Salary and bonus Labor and health insurance Pension Others Depreciation Amortization			2018	Total $ 949,390 79,150 41,184 42,330 31,187 $ 1,143,241 $ 1,016,063 $ 18,678			2017
		Classified as Cost of Revenue $ - - - - - $ - $ 68,723 $ -	Classified as Operating Expenses $ 949,390 79,150 41,184 42,330 31,187 $ 1,143,241 $ 947,340 $ 18,678			Classified as Cost of Revenue $ - - - - - $ - $ 56,371 $ -	Classified as Operating Expenses $ 962,032 81,300 43,616 46,088 31,026 $ 1,164,062 $ 1,130,988 $ 12,481	Total $ 962,032 81,300 43,616 46,088 31,026 $ 1,164,062 $ 1,187,359 $ 12,481

Note: As of December 31, 2018 and 2017, the Company had 1,301 and 1,396 employees, both of which include 7 directors not serving concurrently as employees, respectively.

99 -

AI assistant

FEDS — Audit Report / Information 2018

52225_rns_2018-11-14_862cbbca-ba66-4d29-a132-94193266322b.pdf

Far Eastern Department Stores, Ltd.

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Evaluation of Impairment Loss of Goodwill on Investments in Subsidiaries

Fair Value Evaluation of Investment Properties

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Auditors’ Responsibilities for the Audit of the Financial Statements

Notice to Readers

FAR EASTERN DEPARTMENT STORES, LTD.

BALANCE SHEETS DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

FAR EASTERN DEPARTMENT STORES, LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

FAR EASTERN DEPARTMENT STORES, LTD.

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

Classification, measurement and impairment of financial assets

Impact on assets, liabilities and equity for current year

Definition of a lease

The Company as lessee

The Company as lessor

New IFRSs

Effective Date Announced by IASB (Note 1)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

Basis of Preparation

Classification of Current and Non-current Assets and Liabilities

Foreign Currencies

Inventories

Investments in Subsidiaries

Investments in Associates

Property, Plant and Equipment

Investment Properties

Intangible Assets

Impairment of Tangible and Intangible Assets

Financial Instruments

Financial assets

a. Measurement category

2018

2017

b. Impairment of financial assets

2018

2017

2017

Financial liabilities

Revenue Recognition

2018

Leasing

Borrowing Costs

Retirement Benefit Costs

Taxation

b. Deferred tax

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH

8. FINANCIAL ASSETS AT AMORTIZED COST - 2018

9. AVAILABLE-FOR-SALE FINANCIAL ASSETS - 2017

10. FINANCIAL ASSETS MEASURED AT COST - 2017

11. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES (INCLUDING RELATED PARTIES)

a. Notes receivables

b. Trade receivables

December 31, 2018

December 31, 2018

2017

12. INVENTORIES

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

14. PROPERTY, PLANT AND EQUIPMENT

15. INVESTMENT PROPERTIES

FEDS Audit Report / Information 2018