PCSC - AGM Information 2018 | FinancialReports.eu

PRESIDENT CHAIN STORE CORPORATION 2018 Annual General Shareholders’ Meeting Minutes

(Translation)

Time: 9:00 a.m. on June 12, 2018 (Tuesday)

Place: No.301, Zhongzheng Rd., Yongkang Dist., Tainan City 710, Taiwan (R.O.C.) (1F, Training Center of Uni-President Enterprises Corp.) Total outstanding PCSC shares � 1,039,622,255 shares

Total shares represented by shareholders present in person or by proxy � 990,874,639 shares

Percentage of shares held by shareholders present in person or by proxy � 95.31%

Chairman � Lo, Chih-Hsien Recorder � Lee, Chia-Fang

Directors present � Lo, Chih-Hsien � Chen, Jui-Tang � Wu, Liang-Feng �

Su, Tsung-Ming � Wu, Kun-Lin � Hwang, Jau-Kai �

Wu, Chung-Pin � Wu, Wen-Chi �

Shu, Pei-Gi (Independent Director)

Sit-in Members �

PRICEWATERHOUSECOOPERS, Taiwan, Hsiao, Chun-Yuan (External auditor) PRICEWATERHOUSECOOPERS Legal, Taiwan, Yang, Chin-Hsing (Attorney) Parliamentary Procedure �

I. Call the Meeting to Order (Report equity represented by attendance)
II. Chairman Remarks
III. Report Item
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1. Business Report for 2017.

Explanation:

The business report for 2017 is attached as Appendix I.

2. Audit Committee’s Review Report.

Explanation:

The Audit Committee Review’s Report for 2017 is attached as Appendix II.

3. Status of Investment in Mainland China in 2017.

Explanation:

The status of the Company’s investment in Mainland China in 2017 is attached as Appendix III.

4. Compensation for Employees and Directors in 2017.

Explanation:

Based on the Articles of Incorporation NO.29, President Chain Store Corp. recognized NT$985,057,141 as compensation for employees, and NT$549,159,011 as compensation for directors in 2017.

IV. Ratification Items

(Proposed by the Board)

1. Ratification of 2017 Business Report and Financial Statements.

Explanation:

(1) PCSC’s 2017 Financial Statements, including Balance Sheet, Comprehensive Income Statement, Statement of Changes in Shareholders’ Equity, and Statement of Cash Flows, were audited by PRICEWATERHOUSECOOPERS Taiwan.
(2) 2017 Business Report, Financial Statements, and Profit Distribution Proposal have been approved by the Board and examined by the Audit Committee.
(3) The Business Report and Financial Statements for 2017 are attached as Appendix I and Appendix IV.
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Voting Result:

Shares represented at the time of voting � 990,874,639 votes.

Voting results	% of the total represented share present
Votes in favor�916,388,037 (including868,453,933 exercised via electronic voting)	92.48%
Votes against�669,656 (including669,656exercised via electronic voting)	0.06%
Votes abstained�73,816,946 (including73,813,640exercised via electronic voting)	7.46%
Votes invalid�0	0%

(4) RESOLVED, that 2017 Business Report and Financial Statements be and hereby were accepted as submitted.

V. Discussion Items

(Proposed by the Board)

1. Adoption of the Proposal for Distribution of 2017 Profits.

Explanation:

(1) The 2017 Profit Allocation Proposal is attached as Appendix V.
(2) The Company’s distributable earnings for 2017 are NT$27,880,720,963. The cash dividend to be distributed is NT$25 per share. It is proposed that the Board of PCSC is authorized to resolve the ex-dividend date and distribution record date.
(3) The total cash dividends allocated to each shareholder were rounded off to one NT$. The fractional stocks less than NT$1 in the allocation were transferred to other income of the Company.
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Voting Result:

Shares represented at the time of voting � 990,874,639 votes.

Voting results	% of the total represented share present
Votes in favor�918,407,892 (including870,473,788 exercised via electronic voting)	92.68%
Votes against�5,656 (including5,656exercised via electronic voting)	0%
Votes abstained�72,461,091 (including72,457,785 exercised via electronic voting)	7.32%
Votes invalid�0	0%

(4) RESOLVED, that the above proposal be and hereby was approved as proposed.

(Proposed by the Board)

2. Amendment to the Articles of Incorporation of the Company.

Explanation:

(1) To meet the operational needs, the Company’s business scope shall add “Retail Sale of Seedling”, and omit “Automobile Liquefied Petroleum Gas Station” due to unapproved applications.
(2) The proposed amendments to the Articles of Incorporation is attached as Appendix VI.
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Voting Result:

Shares represented at the time of voting � 990,874,639 votes.

Voting results	% of the total represented share present
Votes in favor�912,856,885 (including864,922,781 exercised via electronic voting)	92.12%
Votes against�3,943,868 (including3,943,868 exercised via electronic voting)	0.39%
Votes abstained�74,073,886 (including74,070,580 exercised via electronic voting)	7.49%
Votes invalid�0	0%

(3) RESOLVED, that the above proposal be and hereby was approved as proposed.
VI. Election Itemssssion

(Proposed by the Board)

1. Adoption of Re-election of Directors and Independent Directors.

Explanation:

(1) The tenure of the Company’s 11[th] board of directors will be due on June 17, 2018.
(2) The Board of Directors resolved that 13 Directors (including 3 independent directors) will be elected at this Annual General Shareholders’ Meeting. The tenure of newly elected Directors shall commence on June 12, 2018 and expire on June 11, 2021.
(3) In accordance with the Articles of Incorporation and Article 14.4 of the Securities Exchange Act, the Company will constitute the Audit Committee by all the independent directors.The 3[rd] Audit Committee will be constituted once the new independent directors are elected.
(4) The directors shall be elected by adopting candidates’ nomination system in accordance with Article 17 of the Articles of Incorporation. The election of the directors and independent directors should be held together but with the votes counted separately. The qualification of the directors and independent directors are reviewed by the board of directors as follows:
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Candidates of Directors�

NO.	Act. No	Name	Education, Current Position and Major Experience	Shareholdings
1	1	Representative of Uni-President Enterprises Corp.� Lo, Chih-Hsien	1. Current Position Chairman of Uni-President Enterprises Corp. 2. Education MBA, UCLA, U.S.A. 3. Career experience Chairman of Uni-President Enterprises Corp.	471,996,430
2	2303	Representative of Kao Chyuan Investment Co., Ltd.�Kao, Hsiu-Ling	1. Current Position Director of President Chain Store Corp. 2. Education Marymount College, U.S.A. 3. Career experience Director of President Chain Store Corp.	5,176,775
3	1	Representative of Uni-President Enterprises Corp.� Chen, Jui-Tang	1. Current Position President of President Chain Store Corp. 2. Education BA, Department of Economics, National Taiwan University 3. Career experience Director of President Chain Store Corp.	471,996,430
4	1	Representative of Uni-President Enterprises Corp.� Huang, Jui-Tien	1. Current Position Senior Vice President of President Chain Store Corp. 2. Education Master Degree in Marketing, National Kaohsiung First University of Science and Technology 3. Career experience Director of President Chain Store Corp.	471,996,430
5	1	Representative of Uni-President Enterprises Corp.� Wu, Liang-Feng	1. Current Position Senior Vice President of Uni-President Enterprises Corp. 2. Education BA, Department of Japanese, Tamkang University 3. Career experience Directorof President ChainStore Corp.	471,996,430
6	1	Representative of Uni-President Enterprises Corp.� Su, Tsung-Ming	1. Current Position Senior Vice President of Uni-President Enterprises Corp. 2. Education MBA, Iowa State University, U.S.A. 3. Career experience Director of President Chain Store Corp.	471,996,430
7	1	Representative of Uni-President Enterprises Corp.�	1. Current Position Vice President of Uni-President Enterprises Corp. 2. Education	471,996,430

NO.	Act. No	Name	Education, Current Position and Major Experience	Shareholdings
		Wu, Kun-Lin	BA, Department of Business Administration, National Cheng Kung University 3. Career experience Director of President Chain Store Corp.
8	1	Representative of Uni-President Enterprises Corp.� Hwang, Jau-Kai	1. Current Position Senior Vice President of Uni-President Enterprises Corp. 2. Education Accounting, Shih Chien University 3. Career experience Director of President Chain Store Corp.	471,996,430
9	1	Representative of Uni-President Enterprises Corp.� Wu, Tsung-Pin	1. Current Position Chief Accounting Officer of Uni-President Enterprises Corp. 2. Education Accounting, Chung Yuan Christian University 3. Career experience Directorof President ChainStore Corp.	471,996,430
10	1	Representative of Uni-President Enterprises Corp.� Wu, Wen-Chi	1. Current Position Chief Financial Officer of President Chain Store Corp. 2. Education BA, School of Accountancy, University of Missouri at Columbia, U.S.A. 3. Career experience Director of President Chain Store Corp.	471,996,430

Candidates of Independent Directors�

No	Name	Education, Current Position and Major Experience
1	Wang, Wen-Yeu	1. Current Position Professor of College of Law, National Taiwan University 2. Education J.S.D., Stanford University, U.S.A. 3. Career experience Formerly a member of the Fair Trade Commission�a Director of Taiwan Cooperative Bank�a Supervisor of Taiwan Futures Exchange Corporation�a member of the Public Listing Review Board, etc.
2	Shu, Pei-Gi	1. Current Position President of College of Management, Fu Jen Catholic University 2. Education Ph.D. in Business Administration, National Chengchi University 3. Career experience Formerly a Chief of Corporate Governance and Corporate Ethics Center, Fu Jen Catholic University�a member of the Public Listing Review Board, etc.
3	Hung, Yung-Chen	1. Current Position Professor, the Department of Computer Science and Information Management, Soochow University 2. Education Ph.D. in Information Engineering, National Taiwan University 3. Career experience Formerly a Patent Examiner, Intellectual Property Office, Ministry of Economic Affairs�an Arbitrator of Taiwan Construction Arbitration Association�an Arbitrator of the Arbitration Association of the Taiwan�a Visiting Professor of Fulbright Scholar Program, Department of Computer Science, UCLA and USC in the United State.

Election Result:

13 directors (including 3 independent directors) were elected by the shareholders present. The list of newly elected directors with votes received follows �

Directors �

No.	Act. No	Name	Votes Received	Election Result
1	1	Representative of Uni-President Enterprises Corp.: Lo, Chih-Hsien	982,047,725	be elected
2	2303	Representative of Kao Chyuan Investment Co., Ltd. : Kao, Hsiu-Ling	952,937,133	be elected
3	1	Representative of Uni-President Enterprises Corp. : Chen, Jui-Tang	868,941,849	be elected
4	1	Representative of Uni-President Enterprises Corp. : Huang, Jui-Tien	863,067,119	be elected
5	1	Representative of Uni-President Enterprises Corp. : Wu, Liang-Feng	855,769,135	be elected
6	1	Representative of Uni-President Enterprises Corp. : Su, Tsung-Ming	852,776,107	be elected
7	1	Representative of Uni-President Enterprises Corp. : Wu, Kun-Lin	846,423,935	be elected
8	1	Representative of Uni-President Enterprises Corp. : Hwang, Jau-Kai	855,348,680	be elected
9	1	Representative of Uni-President Enterprises Corp. : Wu, Tsung-Pin	845,398,975	be elected
10	1	Representative of Uni-President Enterprises Corp. : Wu, Wen-Chi	831,645,502	be elected

Independent Directors �

ID No	Name	VotesReceived	Election Result
A10338****	Wang, Wen-Yeu	848,644,799	be elected
A12180****	Shu, Pei-Gi	849,422,179	be elected
S10045****	Hung, Yung-Chen	850,763,779	be elected

VII. Other Proposals

(Proposed by the Board)

1. Adoption of the Proposal for Releasing Directors from Non-competition.

Explanation:

(1) In accordance with Article 209 of the Company Act, the directors of the Company have simultaneously undertaken directors or managerial positions in other companies that engage in similar business activities as the Company do. Their involvements are not considered to constitute any conflicts to the Company. For this reason, the Company agrees to remove restrictive clauses on directors’ and independent directors’ involvements in other companies to conform to regulations.
(2) Details of the duties subject to newly elected directors and independent directors from non-competition are attached as Appendix VII.

Voting Result:

Shares represented at the time of voting � 990,874,639 votes.

Voting results	% of the total represented share present
Votes in favor�876,582,657 (including828,648,553 exercised via electronic voting)	88.46%
Votes against�5,367,151 (including5,367,151 exercised via electronic voting)	0.54%
Votes abstained�108,924,831 (including108,921,525 exercised via electronic voting)	11.00%
Votes invalid�0	0%

(3) RESOLVED, that the above proposal be and hereby was approved as proposed.

VIII. Other Special Motions � None.

IX. Dissolution

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Appendix I

2017 Business Report

Dear Shareholders,

In 2017, the global economy continued its slow recovery. In Taiwan, the government substantially adjusted labor laws and businesses still face significant challenges. Despite an unstable external operating environment, President Chain Store Corporation (PCSC) continues to serve as a convenient, safe, welcoming community center that offers consumers innovative and convenient services. Together with the hard work of our domestic and overseas subsidiaries, PCSC achieved consolidated revenue of NT$221.13 billion and net profits of NT$32.32 billion in 2017. Even excluding gains from the disposal of a long-term investment, these are still record breaking results. Furthermore, PCSC was again listed in the Forbes Global 2000.

PCSC aims to provide 7-ELEVEN Taiwan customers with an ever more comfortable, friendly place to shop. Not only large layout and featured stores launches but also each store’s design incorporates the personality of the surrounding neighborhood with the concept of “future lifestyle”. To ensure food safety, PCSC sources directly from contract farms and employs in-field management. PCSC also implements a food traceability system, hierarchical supplier management and field evaluation system, regular inspections of logistic centers and retail locations, and random lab testing of raw materials and products. Together, these initiatives enable PCSC to control the supply chain and create a rigorous food safety net to protect our customers. 7-ELEVEN, in technical cooperation with Japanese vendors, launched a diverse selection of delicious new fresh food products. PCSC has continued to improve CITY CAFE coffee quality and flavor and for the first time began offering bubble tea, which together drove turnover growth. By offering our iseLect, UNIDESIGN and international products, we could provide our customers with these premium foods, beverages, and daily necessities. In 2017, we handled pickup and delivery of more than 150 million parcels.By offering ibon kiosks with the ibon app, we could provide our customers with convenient and time-saving digital service. We keep increasing more channels for icasH card and have launched a variety of new OPENPOINT programs that help customers build a convenient digital lifestyle.

As for subsidiaries, PCSC operates a total of 8,900 stores in 2017. 7-ELEVEN Philippines

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grew to over 2,200 stores and also actively strengthens digital services. Overseas operations achieved another milestone in 2017 when PCSC received official authorization to operate 7-ELEVEN in China’s Zhejiang Province. Starbucks Taiwan continued to build differentiated stores and enhanced the customer experience. In recent years, Books.com has actively expanded non-book product offerings and began ebook services as an exciting new option for customers. Wisdom Distribution Service Corp. continued to improve efficiency through warehouse integration and concurrent software and hardware upgrades.

For many years PCSC has worked tirelessly to achieve sustainable operations and fulfill our responsibilities in the areas of corporate governance, social engagement, and environmental protection. For the third year running, PCSC ranked among the top 5% of all TWSE-/TPEx-listed companies in the annual Corporate Governance Evaluation. PCSC was also selected as a constituent stock of the MSCI Global Sustainability Indices, FTSE4Good Emerging Index, and Taiwan Sustainability Index. As part of our community outreach efforts, PCSC OPEN! Children's Reading Spaces have been set up in more than 100 stores to spread the love of reading in their communities. The President Chain Store Good Neighbor Foundation has long supported education in Taiwan’s remote areas and encouraged studying. PCSC has worked with the Mennonite Social Welfare Foundation to expand rural meal delivery services.Taipei City Government recognized our environmental protection efforts by naming PCSC among its 2017 Outstanding Green Procurement Enterprises.

Economic uncertainties both domestically and abroad will continue into 2018. Nevertheless, PCSC will maintain integrity and honesty in our business operations, while continuing to develop the seven key building elements of our company: people, stores, products, systems, logistics, policies, and culture. Through structural changes, PCSC expects to create sustainable growth. 7-ELEVEN Taiwan will utilize ever-changing technology to provide customers with a convenient, safe, and welcoming shopping experience.

Through a focus on operations and consolidation of company resources, PCSC's affiliates will also continue to achieve outstanding performance. The total number of 7-ELEVEN Philippines stores is expected to exceed 2,600 this year. President Transnet Corp. will upgrade cold chain delivery operations to provide even more outstanding logistics and delivery services. COSMED will introduce an even wider variety of innovative products and high quality services. Through an exceptional selection of fresh foods and services, 7-ELEVEN Shanghai and Zhejiang will provide consumers with a convenient, varied shopping experience.

PCSC is "determined to become the most outstanding retailer by offering convenient services

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and being a good corporate citizen". To achieve this vision, PCSC focuses on three core goals, creating a happy company, positively impacting society, and achieving environmental sustainability. We strive to make life more convenient for all our customers, ensure steady profitability of our franchisees, create a fair and friendly working environment for our employees, and increase value for our shareholders.

Lo, Chih-Hsien Chen, Jui-Tang Kuo, Ying-Chih Chairman President Chief Accounting Officer

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Appendix II

President Chain Store Corporation Audit Committee’s Review Report (Translation)

The Board of Directors has prepared the Company’s 2017 Business Report, Financial Statements, and Proposal for Allocation of 2017 profits. The independent auditors, Hsiao, Chun-Yuan and Chou, Chien-Hung, of PRICEWATERHOUSECOOPERS, audited PCSC’s Financial Statements and issued an audit report relating to the Financial Statements. The Business Report, Financial Statements, and Profit Allocation Proposal have been reviewed and determined to be correct and accurate by the Audit Committee members of President Chain Store Corp.. According to Article 219 of the Company Act, we hererby submit this report.

2018 Annual General Shareholders’ Meeting of President Chain Store Corp.

President Chain Store Corp.

Chairman of the Audit Committee Shu, Pei Gi

Date: April 24th, 2018

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Appendix III

President Chain Store Corporation Status of Investment in Mainland China in 2017

	Unit: USD Investment in 2017 Accumulated Investment Indirect Shareholdings 8,878,366 77,337,258 100% 8,816,917 8,816,917 100% - 5,170,585 100% - 9,417,282 100% - 4,078,354 55% 4,813,840 17,826,340 100% 8,854,390 32,739,030 100% - 2,000,000 100% - 9,176,150 100% 31,363,513 166,561,916	Unit: USD Investment in 2017 Accumulated Investment Indirect Shareholdings 8,878,366 77,337,258 100% 8,816,917 8,816,917 100% - 5,170,585 100% - 9,417,282 100% - 4,078,354 55% 4,813,840 17,826,340 100% 8,854,390 32,739,030 100% - 2,000,000 100% - 9,176,150 100% 31,363,513 166,561,916	Unit: USD Investment in 2017 Accumulated Investment Indirect Shareholdings 8,878,366 77,337,258 100% 8,816,917 8,816,917 100% - 5,170,585 100% - 9,417,282 100% - 4,078,354 55% 4,813,840 17,826,340 100% 8,854,390 32,739,030 100% - 2,000,000 100% - 9,176,150 100% 31,363,513 166,561,916
Name of Investee in Mainland China	Investment in 2017	Accumulated Investment	Indirect Shareholdings
President Chain Store(Shanghai)Ltd.	8,878,366	77,337,258	100%
President Chain Store(Zhejiang)Ltd.	8,816,917	8,816,917	100%
Shanghai President Chain Store Corporation Trade Co.,Ltd.	-	5,170,585	100%
President Cosmed Chain Store (Shen Zhen) Co., Ltd.	-	9,417,282	100%
Shan Dong President Yinzuo Commercial Limited	-	4,078,354	55%
PCSC(Chengdu)Hypermarket Limited	4,813,840	17,826,340	100%
Shanghai Cold Stone Ice Cream Corporation	8,854,390	32,739,030	100%
Shanghai President Logistic Co.,Ltd.	-	2,000,000	100%
President Chain Store(Taizhou)Ltd.	-	9,176,150	100%
Total	31,363,513	166,561,916

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Appendix IV

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Stockholders of President Chain Store Corp.

Opinion

We have audited the accompanying consolidated balance sheets of President Chain Store Corp. and its subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of comprehensive income, of changes in equity, and of cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other independent accountants (which are described in the Other matters section of our report), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of President Chain Store Corp. and its subsidiaries as of December 31, 2017 and 2016, and its consolidated financial performance and its consolidated cash flows for the years then ended, in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of President Chain Store Corp. and its subsidiaries in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with this Code. Based on our audits and the reports of other independent accountants, we believe 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 consolidated financial statements for the year ended December 31, 2017. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Group’s consolidated financial statements of the year ended December 31,2017 are stated as follows:

Completeness and accuracy of retail sales revenue

Description

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Please refer to Notes 4(24) and 6(23) to the consolidated financial statements for the accounting policy and the details of accounting relating to this key audit matter.

Retail sales revenue is generated by point-of-sale (POS) terminals, which record the merchandise name, quantity, sales price and total sales amount of each transaction using pre-established merchandise master file data (including merchandise name, cost of inventory, retail price, sales promotions, etc.). After the daily closing process, each store manager uploads their sales information to the ERP (enterprise resource planning) system, which summarizes all sales and automatically generates sales revenue journal entries. Each store manager also prepares a daily cash report to record the sales information and payment methods (including cash, gift certificates, credit cards and electronic payment devices, etc.) and the cash deposited to the bank.

As retail sales revenue comprises numerous small amount transactions and highly relies on the POS and ERP systems, the process of summarizing and recording sales revenue by these systems is important with regard to the completeness and accuracy of the retail sales revenue, and thus has been identified as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above included the following:

Inspected whether additions and changes to the merchandise master file data had been properly approved and supported by relevant documents;
Inspected whether approved additions and changes to the merchandise master file data had been correctly entered in the merchandise master file;
Inspected whether merchandise master file data had been periodically transferred to POS terminals in stores;
Inspected whether sales information in POS terminals was periodically and completely transferred to the ERP system and automatically generated sales revenue journal entries;
Inspected manual sales revenue journal entries and relevant documents;
Inspected daily cash reports and relevant documents;
Inspected whether cash deposit amounts recorded in daily cash reports were in agreement with bank remittance amounts.

Cost-to-retail ratio of retail inventory method

Description

Please refer to Notes 4(12) and 6(4) to the consolidated financial statements for the accounting policy and the details of accounting relating to this key audit matter.

As there are various kinds of merchandise, the retail inventory method is used to estimate the cost of inventory and the cost of goods sold. The retail inventory method uses the ratio of the cost of goods purchased to the retail value of goods purchased (known as cost-to-retail ratio) to calculate the cost of inventory and the cost of goods sold. The calculation of the cost-to-retail ratio highly relies on the goods purchased both at cost and retail price, and thus has been identified as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above included the following:

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Interviewed management to understand the calculation of the cost-to-retail ratio under the retail inventory method, and inspected whether it had been consistently applied in the comparative periods of the financial statements;
Inspected whether additions and changes to the merchandise master file data (including merchandise name, cost of inventory, retail price, sales promotions, etc.) had been properly approved and the data correctly entered in the merchandise master file;
Inspected whether the cost and retail price of inventory purchased as per delivery receipts were in agreement with POS purchase records after acceptance of the inventory;
Inspected whether the POS records for the cost and retail price of inventory purchased were periodically and completely transferred to the ERP system and ascertain whether the records could not be changed manually;
Calculated the cost-to-retail ratio to verify its accuracy.

Significant acquisition

Description

Please refer to Notes 4(25) and 6(31) to the consolidated financial statements for the accounting policy and the details of accounting relating to this key audit matter.

President Chain Store Corp. originally held 30% shares of President Starbucks Coffee Corp. as joint venture investor which accounted for using equity method. In December 2017, President Chain Store Corp. acquired additional 30% shares of President Starbucks Coffee Corp. for a cash consideration amounted to NT$3,226,806 thousand and obtained control over President Starbucks Coffee Corp.

The accounting treatment of the acquisition of additional shares in President Starbucks Coffee Corp. was in accordance with International Financial Reporting Standards (“IFRS”) 3 “Business Combinations”. The recognition and measurement of identifiable intangible assets resulting from the acquisition are based on management’s expectations for the future operations and prospects of President Starbucks Coffee Corp., which were based on management’s subjective judgement and critical estimates, and thus has been identified as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above included the following:

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Interviewed management to understand the purpose of the acquisition, evaluation process, determination of the consideration, and reviewed the Board of Directors’ meeting minutes and the acquisition agreements to verify the related meeting resolutions were consistent with the acquisition agreement;
Assessed the competence and objectivity of the independent appraisers engaged by the management, and reviewed the reasonableness of major assumptions and original data used in recognizing and measuring the identifiable intangible assets in the Purchase Price Allocation report. Procedures performed by auditors and auditor’s internal experts were as follows:
(1) Reviewed the valuation methods and the calculations formula used by the independent appraisers.
(2) Reviewed and compared the expected growth rate as well as gross margin with historical data.
(3) Reviewed the discount rate and compared with the rate of return from similar assets in the trade markets.
(4) Evaluated the basis used in assessing the useful life of identifiable intangible assets.
Reviewed the accounting treatments and disclosures in the financial statements.

Other matter – Using the work of other auditors

We did not audit the financial statements of certain consolidated subsidiaries, which reflect total assets of NT$8,495,128 thousand and NT$7,791,931 thousand, representing 6.1% and 8.2% of total consolidated assets as of December 31, 2017 and 2016, respectively, and total operating revenue of NT$22,105,951 thousand and NT$21,895,513 thousand, representing 10.0% and 10.2% of total consolidated operating revenue for the years then ended, respectively. Those financial statements were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included in the financial statements and the information on investees disclosed in Note 13 were based solely on the reports of other independent accountants.

Other matters – Parent company-only financial reports

We have audited and expressed an unmodified opinion on the parent company only financial statements of President Chain Store Corp. as of and for the years ended December 31, 2017 and 2016.

Responsibilities of management and those charged with governance for

the consolidated financial statements

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

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In preparing the consolidated financial statements, management is responsible for assessing the ability of President Chain Store Corp. and its subsidiaries 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 President Chain Store Corp. and its subsidiaries 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 financial reporting process of President Chain Store Corp. and its subsidiaries.

Auditor’s responsibilities for the audit of the consolidated financial statements

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

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement in the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
Obtain an understanding of internal controls 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 internal controls of President Chain Store Corp. and its subsidiaries.
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 ability of President Chain Store Corp. and its subsidiaries to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause President Chain Store Corp. and its subsidiaries to cease to continue as a going concern.
20 -
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within President Chain Store Corp. and its subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of President Chain Store Corp. and its subsidiaries 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 controls that we identify during our audit.

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2017 and are, therefore, considered to be the key audit matters. We describe these matters in our auditor’s report unless the law or regulations preclude 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.

Chun-Yuan, Hsiao Chien-Hung, Chou

for and on behalf of PricewaterhouseCoopers, Taiwan 23 February, 2018

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

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

21 -

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2017 Notes AMOUNT % 6(1) $ 35,783,291 26 6(2) 1,560,025 1 6(3) and 7 4,868,902 3 6(7) 28,412,101 20 6(28) 2,097 - 6(4) 13,387,122 10 1,417,175 1 2,973,547 2 88,404,260 63 6(5) 1,050,734 1 6(6) 25,721 - 6(7) 8,655,722 6 6(8)(24), 7 and 8 24,982,342 18 6(9)(32) and 7 1,519,115 1 6(10)(31) 10,656,713 8 6(28) 1,409,184 1 6(11) and 8 3,177,469 2 51,477,000 37 $ 139,881,260 100 (Continued)	December 31, 2016
		AMOUNT % $ 32,003,633 34 847,954 1 4,325,889 4 1,143,071 1 1,448 - 12,043,420 13 1,387,459 1 2,570,118 3 54,322,992 57 899,490 1 27,494 - 11,071,449 12 22,329,291 24 1,359,189 1 1,076,176 1 1,208,032 1 2,824,404 3 40,795,525 43 $ 95,118,517 100
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1170 Accounts receivable, net 1200 Other receivables 1220 Current income tax assets 130X Inventories, net 1410 Prepayments 1470 Other current assets 11XX Total current assets Non-current assets 1523 Available-for-sale financial assets - non-current 1543 Financial assets measured at cost - non-current 1550 Investments accounted for using equity method 1600 Property, plant and equipment, net 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets

22 -

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	December 31,2016	December 31,2016
	AMOUNT $ 1,660,825 274,000 2,207,113 17,582,498 2,344,741 22,942,333 1,151,241 4,431,973 52,594,724 869,479 10,219 4,265,972 4,117,193 9,262,863 61,857,587 10,396,223 1,158 8,208,064 9,839,244 171,589 28,616,278 4,644,652 33,260,930 $ 95,118,517	%
Current Liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2230 Current income tax liabilities 2300 Other current liabilities 21XX Total current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2640 Net defined benefit liability - non-current 2670 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity attributable to owners of the parent Share capital 3110 Share capital - common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3350 Unappropriated retained earnings Other equity 3400 Other equity interest 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity 3X2X Total liabilities and equity		2 - 2 19 2 24 1 5
		55
		1 - 5 4
		10
		65
		11 - 9 10 -
		30
		5
		35
		100

23 -

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Items	For theyears ended December 31 2017 2016 Notes AMOUNT % AMOUNT % 6(23) and 7 $ 221,132,082 100 $ 215,359,089 100 6(4)(24) and 7 ( 147,698,072 ) ( 67) ( 144,752,447 ) ( 67 ) 73,434,010 33 70,606,642 33 6(24)(25) ( 53,630,951 ) ( 24) ( 51,620,116 ) ( 24 ) ( 9,380,899 ) ( 4) ( 8,581,906 ) ( 4 ) ( 63,011,850 ) ( 28) ( 60,202,022 ) ( 28 ) 10,422,160 5 10,404,620 5 6(26) 2,946,735 1 1,739,886 1 6(27) 26,313,566 12 ( 303,634 ) - 6(13)(16) ( 94,511 ) - ( 94,859 ) - 6(7) 1,793,738 1 1,615,845 - 30,959,528 14 2,957,238 1 41,381,688 19 13,361,858 6 6(28) ( 9,063,616 ) ( 4) ( 2,223,289 ) ( 1 ) 32,318,072 15 11,138,569 5 $ 32,318,072 15 $ 11,138,569 5
4000 Operating revenue 5000 Operating costs 5900 Gross profit Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of associates and joint ventures accounted for using equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8000 Profit for the year from continuing operations 8200 Profit for the year

Items

For theyears ended December 31
2017
2016
Notes
AMOUNT
%
AMOUNT
%
6(23) and 7
$ 221,132,082
100
$ 215,359,089
100
6(4)(24) and 7
(
147,698,072 ) (
67) (
144,752,447 ) (
67 )
73,434,010
33
70,606,642
33
6(24)(25)
(
53,630,951 ) (
24) (
51,620,116 ) (
24 )
(
9,380,899 ) (
4) (
8,581,906 ) (
4 )
(
63,011,850 ) (
28) (
60,202,022 ) (
28 )
10,422,160
5
10,404,620
5
6(26)
2,946,735
1
1,739,886
1
6(27)
26,313,566
12
(
303,634 )
-
6(13)(16)
(
94,511 )
-
(
94,859 )
-
6(7)
1,793,738
1
1,615,845
-
30,959,528
14
2,957,238
1
41,381,688
19
13,361,858
6
6(28)
(
9,063,616 ) (
4) (
2,223,289 ) (
1 )
32,318,072
15
11,138,569
5
$ 32,318,072
15
$ 11,138,569
5

4000
Operating revenue
5000
Operating costs
5900
Gross profit
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit of associates and joint
ventures accounted for using equity
method
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8000
Profit for the year from continuing
operations
8200
Profit for the year

(Continued)

24 -

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Items	Forthe years endedDecember31	Forthe years endedDecember31
	2017	2016
			%
Other comprehensive income (loss) 8311 Remeasurements of net actuarial loss on defined benefit plan 8320 Share of other comprehensive loss of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to the components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive loss that will not be reclassified to profit or loss 8361 Exchange differences from translation of foreign operations 8362 Unrealized gain (loss) on valuation of available-for-sale financial assets 8370 Share of other comprehensive loss of associates and joint ventures accounted for using equity method, components of other comprehensive loss that will be reclassified to profit or loss 8399 Income tax relating to the components of other comprehensive loss that will be reclassified to profit or loss 8360 Components of other comprehensive loss that will be reclassified to profit or loss 8300 Total other comprehensive loss for the year 8500 Total comprehensive income for the year Profit attributable to: 8610 Owners of the parent 8620 Non-controlling interests Comprehensive income attributable to: 8710 Owners of the parent 8720 Non-controlling interests 9750 Basic earnings per share (in dollars) 9850 Diluted earnings per share (in dollars)			- - -
			-
			- - - -
			-
			-
			5
			4 1
			5
			4 1
			5
			9.46
	$	$	9.43

25 -

												Total equity		$ 31,091,502		-	( 7,485,280 )	11,138,569	( 734,950 )	( 266,428 )		( 21 )	( 482,462 )	$ 33,260,930		$ 33,260,930		-	( 8,316,978 )	32,318,072	( 877,792 )		( 164 )		42,881	3,079,461	$ 59,506,410
PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	(Expressed in thousands of New Taiwan dollars)	Equity attributable toowners of the parent	Retained Earnings Other Equity Interest	Financial	statements	exchange Unrealized	differences gain or loss	from on	Share capital Unappropriate translation available-for- Non-contr	- common Capital Legal dretained of foreign sale financial olling	stock surplus reserve earnings operations assets Total interest		$ 10,396,223 $ 7,733 $ 7,384,165 $ 8,733,029 $ 209,326 $ 383,210 $ 27,113,686 $ 3,977,816		- - 823,899 ( 823,899 ) - - - -	- - - ( 7,485,280 ) - - ( 7,485,280 ) -	- - - 9,836,690 - - 9,836,690 1,301,879	- - - ( 180,722 ) ( 395,554 ) ( 25,393 ) ( 601,669 ) ( 133,281 )	- ( 6,554 ) - ( 240,574 ) - - ( 247,128 ) ( 19,300 )		- ( 21 ) - - - - ( 21 ) -	- - - - - - - ( 482,462 )	$ 10,396,223 $ 1,158 $8,208,064 $ 9,839,244 ( $ 186,228 ) $ 357,817 $ 28,616,278 $ 4,644,652		$ 10,396,223 $ 1,158 $ 8,208,064 $ 9,839,244 ( $ 186,228 ) $ 357,817 $ 28,616,278 $ 4,644,652		- - 983,669 ( 983,669 ) - - - -	- - - ( 8,316,978 ) - - ( 8,316,978 ) -	- - - 31,017,094 - - 31,017,094 1,300,978	- - - ( 174,401 ) ( 720,080 ) 149,632 ( 744,849 ) ( 132,943 )		- ( 164 ) - - - - ( 164 ) -		- 42,881 - - - - 42,881 -	- - - - - - - 3,079,461	$ 10,396,223 $ 43,875 $ 9,191,733 $ 31,381,290 ( $ 906,308 ) $ 507,449 $ 50,614,262 $ 8,892,148	- 26 -
												Notes			6(21)				6(22)	6(30)							6(21)							6(22)		6(31)
													For the year ended December 31, 2016	Balance at January 1, 2016	Distribution of 2015 earnings:	Legal reserve	Cash dividends	Profit for the year	Other comprehensive loss for the year	Acquisition of additional equity interest in a subsidiary	Adjustment of capital surplus due to associates' adjustment of capital	surplus	Non-controlling interest	Balance at December 31, 2016	For the year ended December 31, 2017	Balance at January 1, 2017	Distribution of 2016 earnings:	Legal reserve	Cash dividends	Profit for the year	Other comprehensive loss for the year	Adjustment of capital surplus due to associates' adjustment of capital	surplus	Adjustment to capital surplus due to non-proportional investment	accounted for using equity method	Non-controlling interest	Balance at December 31, 2017

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated profit before income tax for the year
Adjustments to reconcile profit before income tax to net
cash provided by operating activities
Income and expenses having no effect on cash flows
Gain on valuation of financial assets at fair value
through profit or loss

Provision for doubtful accounts

Depreciation on property, plant and equipment

Amortization
Depreciation on investment property

Finance costs
Share of profit of associates and joint ventures
accounted for using equity method
Gain on disposal of investments accounted for using the
equity method

Loss on disposal of property, plant and equipment,
net

Interest income

Dividend income

Impairment loss on property, plant and equipment

Impairment loss on investment property

Impairment loss on intangible assets

Changes in assets/liabilities relating to operating
activities
Net changes in assets relating to operating activities
Financial assets at fair value through profit or loss
Accounts receivable
Other receivables
Inventories
Prepayments
Other current assets
Net changes in liabilities relating to operating activities
Accounts payable
Notes payable
Other payables
Advance receipts
Net defined benefit liabilities - non-current
Cash generated from operations
Interest received
Income tax paid
Interest paid
Dividends received
Net cash provided by operating activities

For theyears ended December 31
Notes
2017
2016
$ 41,381,688 $ 13,361,858
6(2)
(
1,490 ) (
561 )
6(3)
18,141
16,379
6(8)
5,135,228
5,169,678
356,507
332,981
6(9)
16,916
17,401
94,511
94,859
(
1,793,738 ) (
1,615,845 )
6(7)(27)
(
26,637,450 ) (
114,212 )
6(27)
53,095
35,203
6(26)
(
172,023 ) (
150,027 )
6(26)
(
1,135,332 ) (
26,669 )
6(8)(12)
11,853
59,639
6(9)(12)
3,813
-
6(10)(12)
-
11,574

39,419
4,772,993
(
578,251 ) (
14,793 )
(
164,774 )
177,623
(
1,009,533 ) (
492,867 )
(
29,716 ) (
163,633 )
(
381,243 ) (
569,679 )

810,619
718,156
(
141,754 )
1,060,121
3,569,675
1,684,931
921,293
596,772
132,178(
38,245)
20,499,632
24,923,637
177,703
132,975
(
2,106,774 ) (
2,307,701 )
(
94,836 ) (
94,897 )
2,155,134
986,514

20,630,859
23,640,528

(Continued)

27 -

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

					For theyears ended	December 31
		Notes			2017	2016
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of financial assets measured at
cost - non-current				$	1,773 $	-
Acquisition of property, plant and equipment	6(33)		(		6,727,782 ) (	5,747,445 )
Acquisition of investment property	6(9)		(		149,305 )	-
Proceeds from disposal of property, plant and equipment					139,989	162,782
Return of capital from available-for-sale financial assets
- non-current					116	151
Proceeds from disposal of investments in subsidiaries					-	241,222
Proceeds from business combinations	6(31)				700,961	-
Increase in guarantee deposits paid			(		279,932 ) (	55,524 )
Acquisition of intangible assets	6(10)		(		313,175 ) (	127,603 )
Increase in other non-current assets			(		7,055 ) (	166,047 )
Net cash used in investing activities			(		6,634,410 ) (	5,692,464 )
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings			(		695,645 ) (	793,474 )
Decrease in short-term notes and bills payable			(		24,000 ) (	121,000 )
Increase in long-term borrowings					569,856	588,341
Repayment of long-term borrowings			(		237,687 ) (	299,388 )
Acquisition of equity interest in subsidiaries	6(30)				- (	266,428 )
Increase in guarantee deposits received					115,984	183,268
(Increase) decrease in other non-current liabilities			(		114,846 )	137,232
Change in non-controlling interests					48,109 (	94,832 )
Payment of cash dividends - the company	6(21)		(		8,316,978 ) (	7,485,280 )
Payment of cash dividends - subsidiaries			(		841,504 ) (	387,630 )
Net cash used in financing activities			(		9,496,711 ) (	8,539,191 )
Effect of foreign exchange rate changes on cash and
cash equivalents			(		720,080 ) (	395,554 )
Increase in cash and cash equivalents					3,779,658	9,013,319
Cash and cash equivalents at beginning of year					32,003,633	22,990,314
Cash and cash equivalents at end of year				$	35,783,291$	32,003,633

28 -

REPORT OF INDEPENDENT ACCOUNTANTS

TRANSLATED FROM CHINESE

To the Board of Directors and Stockholders of President Chain Store Corp.

Opinion

We have audited the accompanying parent company only balance sheets of President Chain Store Corp. as of December 31, 2017 and 2016, and the related parent company only statements of comprehensive income, of changes in equity, and of cash flows for the years then ended, and the notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other independent accountants (which are described in the Other matters section of our report), the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of President Chain Store Corp. as of December 31, 2017 and 2016, and its parent company only financial performance and its parent company only cash flows for the years then ended, in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of President Chain Store Corp. in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with this Code. Based on our audits and the reports of other independent accountants, we believe 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 parent company only financial statements for the year ended December 31, 2017. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Company’s parent company only financial statements of the year ended December 31,2017 are stated as follows:

29 -

Completeness and accuracy of retail sales revenue

Description

Please refer to Notes 4(22) and 6(18) to the parent company only financial statements for the accounting policy and the details of accounting relating to this key audit matter.

Retail sales revenue is generated by point-of-sale (POS) terminals, which record the merchandise name, quantity, sales price and total sales amount of each transaction using pre-established merchandise master file data (including merchandise name, cost of inventory, retail price, sales promotions, etc.). After the daily closing process, each store manager uploads the sales information to the ERP (enterprise resource planning) system, which summarizes all sales and automatically generates sales revenue journal entries. Each store manager also prepares a daily cash report to record the sales information and payment methods (including cash, gift certificates, credit cards and electronic payment devices, etc.) and the cash deposited to the bank.

How our audit addressed the matter

Our key audit procedures performed in respect of the above included the following:

Inspected whether additions and changes to the merchandise master file data had been properly approved and supported by relevant documents;
Inspected whether approved additions and changes to the merchandise master file data had been correctly entered in the merchandise master file;
Inspected whether merchandise master file data had been periodically transferred to POS terminals in stores;
Inspected whether sales information in POS terminals was periodically and completely transferred to the ERP system and automatically generated sales revenue journal entries;
Inspected manual sales revenue journal entries and relevant documents;
Inspected daily cash reports and relevant documents;
Inspected whether cash deposit amounts recorded in daily cash reports were in agreement with bank remittance amounts.

Cost-to-retail ratio of retail inventory method

Description

Please refer to Notes 4(11) and 6(3) to the parent company only financial statements for the accounting policy and the details of accounting relating to this key audit matter.

30 -

has been identified as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above included the following:

Interviewed management to understand the calculation of the cost-to-retail ratio under the retail inventory method, and inspected whether it had been consistently applied in the comparative periods of the financial statements;
Inspected whether additions and changes to the merchandise master file data (including merchandise name, cost of inventory, retail price, sales promotions, etc.) had been properly approved and the data correctly entered in the merchandise master file;
Inspected whether the cost and retail price of inventory purchased as per delivery receipts were in agreement with POS purchase records after acceptance of the inventory;
Inspected whether the POS records for the cost and retail price of inventory purchased were periodically and completely transferred to the ERP system and ascertain whether the records could not be changed manually;
Calculated the cost-to-retail ratio to verify its accuracy.

Significant acquisition

Description

Please refer to Notes 4(23) and 6(6) to the parent company only financial statements for the accounting policy and the details of accounting relating to this key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above included the following:

Interviewed management to understand the purpose of the acquisition, evaluation process, determination of the consideration, and reviewed the Board of Directors’ meeting minutes and the acquisition agreements to verify the related meeting resolutions were consistent with the acquisition agreement;
Assessed the competence and objectivity of the independent appraisers engaged by the management, and reviewed the reasonableness of major assumptions and original data
31 -

used in recognizing and measuring the identifiable intangible assets in the Purchase Price Allocation report. Procedures performed by auditors and auditor’s internal experts were as follows:

(1) Reviewed the valuation methods and the calculations formula used by the independent appraisers.
(2) Reviewed and compared the expected growth rate as well as gross margin with historical data.
(3) Reviewed the discount rate and compared with the rate of return from similar assets in the trade markets.
(4) Evaluated the basis used in assessing the useful life of identifiable intangible assets.
Reviewed the accounting treatments and disclosures in the financial statements.

Other matter –Using the work of other auditors

We did not audit the financial statements of certain investee companies. The balance of these investments accounted for using equity method amounted to NT$1,920,960 thousand and NT$1,763,320 thousand, representing 1.9% and 2.6% of total assets as of December 31, 2017 and 2016, respectively, and the related total comprehensive net income (including share of profit of subsidiaries, associates and joint ventures accounted for using equity method and share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method) amounted to NT$401,705 thousand and NT$422,849 thousand, representing 1.3% and 4.6% of total comprehensive net income for the years then ended, respectively. Those financial statements were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included in the financial statements and the information on investees disclosed in Note 13 were based solely on the reports of other independent accountants.

Responsibilities of management and those charged with governance for the parent company only financial statements

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

In preparing the parent company only financial statements, management is responsible for assessing the ability of President Chain Store Corp. 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 President Chain Store Corp. 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 financial reporting process of President Chain Store Corp.

32 -

Auditor’s responsibilities for the audit of the parent company only financial statements

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

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement in the parent company only 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 controls.
Obtain an understanding of internal controls 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 internal controls of President Chain Store Corp.
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 ability of President Chain Store Corp. to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause President Chain Store Corp. to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within President Chain Store Corp. to express an opinion on the parent company only financial statements. We are responsible for the direction,
33 -

supervision and performance of the audit. We remain solely responsible for our audit opinion.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2017 and are, therefore, considered to be the key audit matters. We describe these matters in our auditor’s report unless the law or regulations preclude 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.

Chun-Yuan, Hsiao Chien-Hung, Chou for and on behalf of PricewaterhouseCoopers, Taiwan 23 February, 2018

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

34 -

PRESIDENT CHAIN STORE CORP.

PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 7(3) 6(3) 6(4) 6(5) 6(6) 6(7) 6(8) 6(9) 6(23) 6(10)	December 31, 2017 AMOUNT % $ 22,422,981 22 600,671 1 7,556,281 7 7,194,707 7 267,738 - 1,646,623 2 39,689,001 39 848,575 1 25,721 - 47,983,892 48 8,946,459 9 1,196,819 1 211,865 - 673,959 1 1,176,722 1 61,064,012 61 $ 100,753,013 100	December 31, 2016 AMOUNT % $ 22,292,169 33 513,190 1 1,781,453 3 6,003,727 9 196,516 - 1,621,933 2 32,408,988 48 696,505 1 25,721 - 22,286,379 33 8,608,695 13 1,028,377 2 278,320 - 604,251 1 1,252,541 2 34,780,789 52 $ 67,189,777 100
		AMOUNT $ 22,422,981 600,671 7,556,281 7,194,707 267,738 1,646,623 39,689,001 848,575 25,721 47,983,892 8,946,459 1,196,819 211,865 673,959 1,176,722 61,064,012 $ 100,753,013	AMOUNT $ 22,292,169 513,190 1,781,453 6,003,727 196,516 1,621,933 32,408,988 696,505 25,721 22,286,379 8,608,695 1,028,377 278,320 604,251 1,252,541 34,780,789 $ 67,189,777
Current assets 1100 Cash and cash equivalents 1170 Accounts receivable, net 1200 Other receivables 130X Inventory, net 1410 Prepayments 1470 Other current assets 11XX Total current assets Non-current assets 1523 Available-for-sale financial assets - non-current 1543 Financial assets measured at cost - non-current 1550 Investments accounted for using equity method 1600 Property, plant and equipment, net 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets

(Continued)

35 -

PRESIDENT CHAIN STORE CORP.

PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	December 31, 2017 Notes AMOUNT % $ 1,488,293 2 7(3) 4,251,017 4 1,662,063 2 7(3) 7,099,859 7 6(11) 22,286,764 22 6(23) 1,713,191 2 6(12) 2,459,527 2 40,960,714 41 6(23) 3,373,090 3 6(13) 2,842,380 3 2,435,662 2 526,905 1 9,178,037 9 50,138,751 50 6(14) 10,396,223 10 6(15) 43,875 - 6(16) 9,191,733 9 31,381,290 31 6(17) ( 398,859 ) - 50,614,262 50 $ 100,753,013 100	December 31, 2016 AMOUNT % $ 1,563,628 2 4,069,433 6 1,641,608 2 7,567,186 11 15,205,974 23 657,191 1 2,421,518 4 33,126,538 49 9,413 - 2,673,749 4 2,314,037 3 449,762 1 5,446,961 8 38,573,499 57 10,396,223 15 1,158 - 8,208,064 12 9,839,244 15 171,589 1 28,616,278 43 $ 67,189,777 100
		AMOUNT $ 1,563,628 4,069,433 1,641,608 7,567,186 15,205,974 657,191 2,421,518 33,126,538 9,413 2,673,749 2,314,037 449,762 5,446,961 38,573,499 10,396,223 1,158 8,208,064 9,839,244 171,589 28,616,278 $ 67,189,777
Current liabilities 2150 Notes payable 2160 Notes payable - related parties 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2230 Current income tax liabilities 2310 Advance receipts 21XX Total current liabilities Non-current liabilities 2570 Deferred income tax liabilities 2640 Net defined benefit liability 2645 Guarantee deposit received 2670 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Share capital - common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3350 Unappropriated retained earnings Other equity 3400 Other equity interest 3XXX Total equity 3X2X Total liabilities and equity

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

36 -

PRESIDENT CHAIN STORE CORP.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

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

Items	Forthe years endedDecember31	Forthe years endedDecember31
	2017	2016
			%
4000 Operating revenue 5000 Operating costs 5900 Gross profit Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of subsidiaries, associates and joint ventures accounted for using equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year Other comprehensive loss 8311 Remeasurements of net actuarial loss on defined benefit plan 8330 Share of other comprehensive loss of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive loss that will not be reclassified to profit or loss 8361 Exchange differences from translation of foreign operations 8362 Unrealized gain (loss) on valuation of available-for-sale financial assets 8380 Share of other comprehensive loss of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Income tax relating to the components of other comprehensive income that will be reclassified to profit or loss 8360 Components of other comprehensive loss that will be reclassified to profit or loss 8300 Total other comprehensive loss for the year 8500 Total comprehensive income for the year 9750 Basic earnings per share (in dollars) 9850 Diluted earnings per share (in dollars)
	$

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

37 -

PRESIDENT CHAIN STORE CORP.	PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY	(Expressed in thousands of New Taiwan dollars)	RetainedEarnings Other Equity Interest	Exchange Unrealized	differences gain or loss	from on	Share capital Unappropriat translation of available-for-	- common Capital Legal edretained foreign sale financial	Notes stock surplus reserve earnings operations assets Total equity	For the year ended December 31, 2016	Balance at January 1, 2016 $10,396,223 $ 7,733 $ 7,384,165 $ 8,733,029 $ 209,326 $ 383,210 $ 27,113,686	Distribution of 2015 earnings: 6(16)	Legal reserve - - 823,899 ( 823,899 ) - - -	Cash dividends - - - ( 7,485,280 ) - - ( 7,485,280 )	Acquisition of additional equity interest in a subsidiary 6(27) - ( 6,554 ) - ( 240,574 ) - - ( 247,128 )	Adjustment of capital surplus due to	associates’ adjustment of capital surplus - ( 21 ) - - - - ( 21 )	Profit for the year - - - 9,836,690 - - 9,836,690	Other comprehensive loss for the year 6(17) - - - ( 180,722 ) ( 395,554 ) ( 25,393 )( 601,669 )	Balance at December 31, 2016 $10,396,223 $ 1,158 $ 8,208,064 $9,839,244 ($ 186,228 ) $ 357,817 $ 28,616,278	For the year ended December 31, 2017	Balance at January 1, 2017 $10,396,223 $ 1,158 $ 8,208,064 $ 9,839,244 ($ 186,228 ) $ 357,817 $ 28,616,278	Distribution of 2016 earnings: 6(16)	Legal reserve - - 983,669 ( 983,669 ) - - -	Cash dividends - - - ( 8,316,978 ) - - ( 8,316,978 )	Profit for the year - - - 31,017,094 - - 31,017,094	Other comprehensive income (loss) for the year 6(17) - - - ( 174,401 ) ( 720,080 ) 149,632 ( 744,849 )	Adjustment of capital surplus due to	associates’ adjustment of capital surplus - ( 164 ) - - - - ( 164 )	Adjustment to capital surplus due to	non-proportional investment accounted for	using equity method - 42,881 - - - - 42,881	Balance at December 31, 2017 $10,396,223 $ 43,875 $ 9,191,733 $31,381,290 ($ 906,308 ) $ 507,449 $ 50,614,262	The accompanying notes are an integral part of these parent company only financial statements.

PRESIDENT CHAIN STORE CORP.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax for the year
Adjustments to reconcile profit before income tax to net
cash provided by operating activities
Income and expenses having no effect on cash flows
Provision for doubtful accounts

Depreciation on property, plant and equipment

Amortization

Finance costs
Share of profit of subsidiaries, associates and joint
ventures accounted for using equity method
Depreciation on investment property

Gain on disposal of investments accounted for
using equity

Interest income

Dividend income

Impairment loss on property, plant and equipment

Impairment loss on investment property

Loss on disposal of property, plant and equipment,
net

Gain on disposal of investments in subsidiaries

Changes in assets/liabilities relating to operating
activities
Net changes in assets relating to operating
activities
Financial assets at fair value through profit or loss
Accounts receivable
Other receivables
Inventory
Prepayments
Other current assets
Other non-current assets
Net changes in liabilities relating to operating
activities
Notes payable
Accounts payable
Other payables
Advance receipts
Net defined benefit liability - non-current
Other non-current liabilities
Cash generated from operations
Interest received
Income tax paid

Interest paid
Dividends received
Net cash provided by operating activities

For the years ended December 31
Notes
2017

2016
$ 36,501,051 $ 11,112,701

6(2)
422
8,798
6(7)(21)
1,936,919
2,109,877
6(9)(21)
99,475
96,858
30,491
30,755
(
26,930,861 ) (
3,316,251 )
6(8)
7,414
7,908
6(6)(20)
(
2,099,503 )
-
6(19)
(
104,826 ) (
98,695 )
6(19)
(
17,311 ) (
26,669 )
6(7)
10,110
68,099
6(8)
3,813
-
6(20)
14,868
14,157
6(20)
- (
114,212 )

-
4,400,000
(
87,903 ) (
47,344 )
(
834,668 ) (
380,864 )
(
1,190,980 )
125,298
(
71,222 ) (
6,684 )
(
24,690 ) (
388,422 )
75,819 (
147,507 )
106,249
1,256,853
(
446,872 )
508,735
3,824,312
1,784,823
38,009
452,537
(
11,581 ) (
29,609 )
(
147,704 )
13,752
10,680,831
17,434,894
104,826
84,855
6(23)
(
1,109,634 ) (
1,360,880 )
(
20,645 ) (
21,311 )
2,003,782
1,364,693
11,659,160
17,502,251

(Continued)

39 -

PRESIDENT CHAIN STORE CORP.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investments accounted for using
equity method

Return of capital from available-for-sale
financial assets - non-current
Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and
equipment
Acquisition of intangible assets

Proceeds from disposal of investments in
subsidiaries

Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of cash dividends

Increase in guarantee deposit received
Net cash flows used in financing
activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

For the years ended December 31
Notes
2017

2016
6(6)
( $ 1,065,434 ) ( $ 1,143,181 )
116
151
6(26)
(
2,279,236 ) (
1,859,540 )
44,579
77,838
6(9)
(
33,020 )
-
6(6)
-
238,032
(
3,332,995) (
2,686,700)
6(16)
(
8,316,978 ) (
7,485,280 )
121,625
122,841
(
8,195,353) (
7,362,439)
130,812
7,453,112

22,292,169
14,839,057
$ 22,422,981$ 22,292,169

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

40 -

Appendix V

Profit Allocation Proposal for 2017

		Unit: NTD	Unit: NTD
Item		Amount
Retained earnings-unappropriated in previous year		$ 538,595,521
Less: Remeasurements of net actuarial loss on defined benefit plan		(174,400,385)
Adjusted retained earnings-unappropriated		364,195,136
Add: Net income in 2017		31,017,094,191
Subtotal		31,381,289,327
Less: Legal reserve		(3,101,709,419)
Less: Special reserve			(398,858,945)
Distributable earnings in 2017		27,880,720,963
Less: Cash dividends to common shareholders	(25,990,556,375)
(NT$25per shares)
Retained earnings-unappropriated, at the end of 2017		$ 1,890,164,588

Note�1.The earnings of 2017 were allocated as the first priority in the current year, and the deficit was made up by the earnings unappropriated at the end of 2016.
2.The total cash dividends allocated to each shareholder were rounded off to one NT$.
3.The fractional stocks less than NT$1 in the allocation were transferred to other income of the Company.

Chairman: Lo, Chih-Hsieh

President: Chen, Jui-Tang

Chief Accounting Officer: Kuo, Ying-Chih

41 -

Appendix VI

Contrast Table for Amendments to the“Articles of Incorporation of President Chain Store Corporation”

No.	After amendment	Before amendment	Remark
2	The Company’s business lines include: 1.F203020 Tobacco and alcohol retail 2.F206020 Daily supplies retail 3.F203010 Foods, groceries and beverage retail 4.F208040 Cosmetics retail 5.F399990 Other retails 6.IZ01010 Photocopy 7.F201070 Flowers and plants retail 8.F209060 Education, musical instruments and entertainment appliances retail 9.JE01010 Lease 10.IE01010 Agent of telecommunication subscribers’ numbers 11.I401010 General advertising service 12.F207050 Fertilizer retail 13.F210010 Timepiece retail 14.F210020 Eyeglasses retail 15.F216010 Photographic equipment retail 16.JZ99030 Photographing 17.F204110 Clothe, dresses, shoes, hats, umbrellas and apparels retail 18.A102060 Food supply 19.F213010 Electric appliances retail 20.F208031 Medical facilities retail 21.F205040 Furniture, bedding	The Company’s business lines include: 1.F203020 Tobacco and alcohol retail 2.F206020 Daily supplies retail 3.F203010 Foods, groceries and beverage retail 4.F208040 Cosmetics retail 5.F399990 Other retails 6.IZ01010 Photocopy 7.F201070 Flowers and plants retail 8.F209060 Education, musical instruments and entertainment appliances retail 9.JE01010 Lease 10.IE01010 Agent of telecommunication subscribers’ numbers 11.I401010 General advertising service 12.F207050 Fertilizer retail 13.F210010 Timepiece retail 14.F210020 Eyeglasses retail 15.F216010 Photographic equipment retail 16.JZ99030 Photographing 17.F204110 Clothe, dresses, shoes, hats, umbrellas and apparels retail 18.A102060 Food supply 19.F213010 Electric appliances retail 20.F208031 Medical facilities retail 21.F205040 Furniture, bedding	To meet the operational needs.

42 -

		22.F207030 Daily supplies retail. 23.F401010 International trade 24.JA01010 Motor repair service 25.F214030 Auto and motorcycle spare parts and outfit retail 26.G202010 Parking lot management 27.IZ14011 Public welfare lottery agency 28.JZ99050 Intermediary service 29.IZ99990 Other industrial and commercial service 30.F401161 Cigarette products importer 31.F401171 Alcohol products importer 32.ZZ99999 Any business not prohibited or restricted by laws and regulations other than the business requiring special approval 33.F301010 Department stores 34.F301020 Supermarket 35.F399010 Convenience stores 36.F501030 Beverage shop 37.F501060 Restaurant 38.G902011 2nd class telecommunication business 39.I301010 Information software service 40.I301030 Electronic information supply service 41.F206010 Ironware retail 42.F212011 Gas station 43.F212050 Petrolem product retail 44.JA01990 Other automobile services 45.I101090 Food consultation service 46.IZ09010 Management system certification	22.F207030 Daily supplies retail. 23.F401010 International trade 24.JA01010 Motor repair service 25.F214030 Auto and motorcycle spare parts and outfit retail 26.G202010 Parking lot management 27.IZ14011 Public welfare lottery agency 28.JZ99050 Intermediary service 29.IZ99990 Other industrial and commercial service 30.F401161 Cigarette products importer 31.F401171 Alcohol products importer 32.ZZ99999 Any business not prohibited or restricted by laws and regulations other than the business requiring special approval 33.F301010 Department stores 34.F301020 Supermarket 35.F399010 Convenience stores 36.F501030 Beverage shop 37.F501060 Restaurant 38.G902011 2nd class telecommunication business 39.I301010 Information software service 40.I301030 Electronic information supply service 41.F206010 Ironware retail 42.F212011 Gas station 43.F212050 Petrolem product retail 44.JA01990 Other automobile services 45.F212061 CNG station 46.I101090 Food consultation service 47.IZ09010 Management

43 -

		47.J701020 Theme park 48.F102040 Beverage wholesale 49.F102170 Foods and groceries wholesale 50.F106020 Daily supplies wholesale 51.I103060 Management advisor 52.J304010 Book publisher 53.J303010 Magazine (journal) publisher 54.IZ12010 Staffing 55.JA03010 Laundry service 56.F201010 Retail sale of agricultural products 57.F501990 Other eating and drinking places not elsewhere classified 58. F208050 Retail Sale of the Second Type Patent Medicine 59. F201061 Retail sale of Seedling	system certification 48.J701020 Theme park 49.F102040 Beverage wholesale 50.F102170 Foods and groceries wholesale 51.F106020 Daily supplies wholesale 52.I103060 Management advisor 53.J304010 Book publisher 54.J303010 Magazine (journal) publisher 55.IZ12010 Staffing 56.JA03010 Laundry service 57.F201010 Retail sale of agricultural products 58.F501990 Other eating and drinking places not elsewhere classified 59. F208050 Retail Sale of the Second Type Patent Medicine
33		These Articles of Incorporation were made upon agreement of all incorporators on June 4, 1987. 25th amendment was made on June 17, 2013. 26thamendment was made on June 15,2016. 27thamendment was made on June 13,2017. 28thamendment was made on June 12,2018.	These Articles of Incorporation were made upon agreement of all incorporators on June 4, 1987. 25th amendment was made on June 17, 2013. 26thamendment was made on June 15,2016. 27thamendment was made on June 13,2017.	Newly added

44 -

Appendix VII

Details of the Duties Subject to Releasing the Candidates of Directors and Independent Directors from Non-competition

As of April 24[th] ,2018 Name Current Position in Other Companies Representative of Chairman�Uni-President Enterprises Corp., President Natural Industrial Uni-President Corp., Ton Yi Industrial Corp, TTET Union Corp, Kai Yu Enterprises Corp., Investment Co., Ltd., President Packaging Corp., President Lo, Chih-Hsien International Development Corp., Uni-President Cold-Chain Corp., Presco Netmarketing Inc., Uni-President Dream Parks Corp., Uni-OAO Travel Service Corp., Kai Nan Investment Co., Ltd., President Century Corp., Tong Yu Investment Corp., President Property Corporation, Uni-President (Vietnam) Co., Ltd., Uni-President (Thailand) Ltd., Uni-President (Philippines) Corp., Changjiagang President Nisshin Food Co., Ltd., Uni-President China Holdings Ltd., Uni-President Enterprises (China) Investment Co., Ltd., Tong Ren Corp. Limited, Prince Housing & Development Corp., Cheng-Shi Investment Holding Co., Time Square International Co., Ltd., Dong Feng Enterprises Co., Ltd., Prince Corp., Prince Real Estate Co., Ltd., ScinoPharm Taiwan Ltd. Vice Chairman�President Nisshin Corp. Director�President Baseball Team Corp., Nanlien International Corp., Tone Sang Construction Corp., Retail Support International Corp., Presicarre Corp., President Fair Development Corp., President Starbucks Coffee Corp., Uni-President Organics Corp., PK Venture Capital Corp., Uni-President Glass Industrial Co., Ltd., Kuang Chuan Dairy Co., Ltd., Kuang Chuan Foods Co., Ltd., Uni-President Development Corp., Tait Marketing & Distribution Co., Ltd., Weilih Food Corp., Keng Ting Enterprises Co., Ltd., Prince Property Management, Kao Chyuan Investment Co., Ltd., President Chain Store (BVI) Holdings Ltd., President Chain Store (Labuan) Holdings Ltd., Cayman President Holdings Ltd., Kai Yu (BVI) Investment Co., Ltd., President Packing Holdings Ltd., Uni-President Southeast Asia Holdings Ltd., PT. ABC President Indonesia, President Energy Development (Cayman Islands) Ltd., Uni-President Asia Holdings Ltd., Uni-President Hong Kong Holdings Limited, Champ Green Capital Co., Limited, Champ Green (Shanghai) Consulting Co., Ltd., Yantai Tongli Beverage Industries Co., Ltd., Beijing President Enterprises Drinks Co., Ltd., Wuhan President Enterprises Food Co., Ltd., Kunshan President Enterprises Food Co., Ltd., Kunming President Enterprises Food Co., Ltd., Chengdu President Enterprises Food Co., Ltd., Xinjiang President Enterprises Food Co., Ltd., President Enterprise (Kunshan) Food Technology Co., Ltd., Beijing President Enterprise Drink & Food Co., Ltd., Uni-President Enterprises (Shanghai) Drink & Food Co., Ltd., Guangzhou President Enterprises Co., Ltd.,

45 -

Name	Current Position in Other Companies
	Shenyang President Enterprises Co., Ltd., Harbin President Enterprises Co., Ltd., Hefei President Enterprises Co., Ltd., Fuzhou President Enterprises Co., Ltd., Nanchang President Enterprises Co., Ltd., Zhenzhou President Enterprises Co., Ltd., Changsha President Enterprises Co., Ltd., Zhanjiang President Enterprises Co., Ltd., Nanning President Enterprises Co., Ltd., Taizhou President Enterprises Co., Ltd., Chongqing President Enterprises Co., Ltd., Changchun President Enterprises Co., Ltd., Shijiazhuang President Enterprises Co., Ltd., Hainan President Enterprises Co., Ltd., Jinan President Enterprises Co., Ltd., Baiyin President Enterprises Co., Ltd., Xuzhou President Enterprises Co., Ltd., Guiyang President Enterprises Co., Ltd., Akesu President Enterprises Co., Ltd., Hangzhou President Enterprises Co., Ltd., Henan President Enterprises Co., Ltd., Shaanxi President Enterprises Co., Ltd., President Enterprises (Shanghai) Co., Ltd., Ningxia President Enterprises Co., Ltd., President Enterprises (Inner Mongolia) Co., Ltd., Shanxi President Enterprises Co., Ltd., Uni-President Enterprises (Tianjin) Co., Ltd., Jiangsu President Enterprises Co., Ltd., Uni-President Enterprises (Hunan) Co., Ltd., President (Kunshan) Trading Co., Ltd., Uni-President Trading (Hubei) Co., Ltd., President (Shanghai) Trading Co., Ltd., Changbaishan Mountain President Enterprises (Jilin) Mineral Water Co., Ltd., Wuyuan President Enterprises Mineral Water Co., Ltd., Bama President Mineral Water Co., Ltd., Wuxue President Mineral Water Co., Ltd., Uni-President Enterprise (Hutubi) Tomato Products Technology Co., Ltd., Uni-President (Shanghai) Pearly Century Co., Ltd., Uni-President Shanghai Managment Consulting Co., Ltd., Uni-President Enterprises (Kunshan) Real Estate Development Co., Ltd. President�Presco NetmarketingInc.
Representative of Kao Chyuan Investment Co., Ltd., Kao, Shiow-Ling	Chairman�Kao Chyuan Investment Co., Ltd., President Being Corp., Uni-President Department Store Corp, President Pharmaceutical Corp., President Fair Development Corp., President Drugstore Business Corp., Afternoon Tea Taiwan Co., Ltd. Director �Uni-President Enterprises Corp., Ton Yi Industrial Corp., ScinoPharm Taiwan Ltd., President International Development Corp., Prince Housing & Development Corp., President Securities Corp., Uni-President Development Corp., Time Square International Co., Ltd., President Starbucks Coffee Corporation, President (Shanghai) Health Product Trading Co., Ltd. President�Kao Chyuan Investment Co.,Ltd.
Representative of Uni-President Enterprises Corp., Chen, Jui-Tang	Chairman�President Yilan Art and Culture Corp., President Transnet Corp., President Collect Services Co., Ltd., President Starbucks Coffee Corp., Retail Support International Corp., Uni-President Superior Commissary Corp., Ren-Hui Investment Corp., President Chain Store (Shanghai) Ltd., President Chain Store (Zhejiang) Ltd., President (Shanghai) Health Product Trading Company Ltd.

46 -

Name	Current Position in Other Companies
	Director�Uni-President Enterprises Corp., President Drugstore Business Corp., President Being Corp., President Pharmaceutical Corp., Uni-President Department Store Corp., 21 Century Enterprise Co., Ltd., Wisdom Distribution Service Corp., Uni-President Cold-Chain Corp., President Development Corp., President International Development Corp., Philippine Seven Corp., Shan Dong President Yinzuo Commercial Limited, President Chain Store (BVI) Holdings Ltd., PCSC (China) Drugstore Limited, President Chain Store (Labuan) Holdings Ltd., President Chain Store (Hong Kong) Holdings Limited, Uni-President Logistics (BVI) Holdings Limited., Nanlien International Corp., President Fair Development Corp. President�Ren-Hui Investment Corp.
Representative of Uni-President Enterprises Corp., Huang, Jui-Tien	Chairman�Capital Inventory Services Corp., iCASH Corp., Tait Marketing & Distribution Co., Ltd., Shanghai Songjiang President Enterprises Co., Ltd. Director�President Pharmaceutical Corp., Uni-President Cold-Chain Corp., Retail Support International Corp., President Information Corp., President International Development Corp., Philippine Seven Corp., Shan Dong President Yinzuo Commercial Limited, President Pharmaceutical (Hong Kong) Holdings Limited, Ren Hui Holding Co., Ltd., Uni-President Foodstuff (BVI) Holdings Ltd., President Nisshin Corp., Dr. C. Y. Kao's Non-Profit Foundation of Culture & Education (In Memory of His Mother), Zhongshan President Enterprises Co., Ltd., Changjiagang President Nisshin Food Co., Ltd. President�President Pharmaceutical Corp., President Pharmaceutical (Hong Kong) Holdings Limited
Representative of Uni-President Enterprises Corp., Wu, Liang-Feng	Chairman�President Entertainment Corp., Master channels corporation, Tianjiang President Enterprises Food Co., Ltd., Qingdao President Feed & Livestock Co., Ltd., Zhongshan President Enterprises Co., Ltd. Director�President Nisshin Corp., TTET Union Corp., Changjiagang President Nisshin Food Co., Ltd., Uni-President(Vietnam) Co.,Ltd. President�President Entertainment Corp., Changjiagang President Nisshin Food Co., Ltd.
Representative of Uni-President Enterprises Corp., Su, Tsung-Ming	Chairman�Uni-President Development Corp., President Life Sciences Co., Ltd., AndroSciences Corp. Director�Kai Yu Investment Co., Ltd., Grand Bills Finance Corporation, President Fair Development Corp., ScinoPharm Taiwan, Ltd., President Tokyo Corp., President Tokyo Auto Leasing Corp., Tong-Sheng Finance Leasing Co., Ltd., Tong-Sheng (Suzhou) Car Rental Co., Ltd., Kai Nan Investment Co., Ltd., President International Development Corp., Tong Yu Investment Corp., CDIM & Partners Investment Holding Corp., President Property Corporation, Uni-President China Holdings Ltd. Uni-President Hong Kong Holdings Limited, Xiang Lu Industrial Ltd., Tanvex Biologics, Inc., President Life Sciences Cayman Co., Ltd., President (BVI) International Investment Holdings Ltd., President Energy Development (Cayman Islands) Ltd.

47 -

Name	Current Position in Other Companies
	Independent Director�Senao International Co., Ltd. President�President International Development Corp., President Life Sciences Co., Ltd., President Property Corporation.
Representative of Uni-President Enterprises Corp., Wu, Kun-Lin	Chairman�PT. Uni President Indonesia Director�President Nisshin Corp., Changjiagang President Nisshin Food Co., Ltd., Uni-President Oven Bakery Corp., PT. ABC President Indonesia
Representative of Uni-President Enterprises Corp., Hwang, Jau-Kai	Chairman�Tung Ang Enterprises Corp. Director�Ton Yi Industrial Corp., Mech-President Corp., Uni-President Cold-Chain Corp., Tung-You Internation Corp., President Pharmaceutical Corp., Uni-President (Vietnam) Co., Ltd.
Representative of Uni-President Enterprises Corp., Wu, Tsung-Pin	Chairman�Uni-President Assets Management Co., Ltd. Director�President International Trade & Investment Corp., Prince Housing & Development Corp., Prince Real Estate Co., Ltd., Time Square International Co., Ltd., Ton Yi Pharmaceutical Corp., ScinoPharm Taiwan Ltd., Kuang Chuan Dairy Co., Ltd., Kuang Chuan Foods Co., Tong Yu Investment Corp., Ltd., Uni-President Hong Kong Holdings Limited, Uni-President (Vietnam) Co., Ltd.
Representative of Uni-President Enterprises Corp., Wu, Wen-Chi	Vice Chairman�Philippine Seven Corp. Director�PCSC Restaurant (Cayman) Holdings Limited, Grand Bills Finance Corporation
Wang,Wen-Yeu	Independent Director�Xintec Inc.,KGI Bank,Global UnichipCorp.
Hung,Yung-Chen	Director�Vincera Capital Company

Note � The proposal of releasing directors and independent directors from non-competition will be made

once they are elected.

48 -

AI assistant

PCSC — AGM Information 2018

52232_rns_2018-06-26_7c575d05-a28a-41bf-b28a-d2732ccf04d9.pdf

PRESIDENT CHAIN STORE CORPORATION 2018 Annual General Shareholders’ Meeting Minutes

(Translation)

1. Business Report for 2017.

2. Audit Committee’s Review Report.

3. Status of Investment in Mainland China in 2017.

4. Compensation for Employees and Directors in 2017.

IV. Ratification Items

(Proposed by the Board)

1. Ratification of 2017 Business Report and Financial Statements.

V. Discussion Items

(Proposed by the Board)

1. Adoption of the Proposal for Distribution of 2017 Profits.

(Proposed by the Board)

2. Amendment to the Articles of Incorporation of the Company.

Voting Result:

Shares represented at the time of voting � 990,874,639 votes.

(Proposed by the Board)

1. Adoption of Re-election of Directors and Independent Directors.

Candidates of Directors�

Candidates of Independent Directors�

Election Result:

Directors �

Independent Directors �

VII. Other Proposals

(Proposed by the Board)

1. Adoption of the Proposal for Releasing Directors from Non-competition.

Shares represented at the time of voting � 990,874,639 votes.

VIII. Other Special Motions � None.

Appendix I

2017 Business Report

Dear Shareholders,

Appendix II

President Chain Store Corporation Audit Committee’s Review Report (Translation)

President Chain Store Corporation Status of Investment in Mainland China in 2017

Appendix IV

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

Opinion

Basis for opinion

Key audit matters

Completeness and accuracy of retail sales revenue

Cost-to-retail ratio of retail inventory method

Description

How our audit addressed the matter

Significant acquisition

Description

How our audit addressed the matter

Other matter – Using the work of other auditors

Other matters – Parent company-only financial reports

Responsibilities of management and those charged with governance for

the consolidated financial statements

Auditor’s responsibilities for the audit of the consolidated financial statements

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

REPORT OF INDEPENDENT ACCOUNTANTS

TRANSLATED FROM CHINESE

Opinion

Basis for opinion

Key audit matters

Completeness and accuracy of retail sales revenue

Description

How our audit addressed the matter

Cost-to-retail ratio of retail inventory method

Description

How our audit addressed the matter

Significant acquisition

Description

How our audit addressed the matter

Other matter –Using the work of other auditors

Responsibilities of management and those charged with governance for the parent company only financial statements

Auditor’s responsibilities for the audit of the parent company only financial statements

PRESIDENT CHAIN STORE CORP.

PARENT COMPANY ONLY BALANCE SHEETS

PRESIDENT CHAIN STORE CORP.

PCSC AGM Information 2018