PCSC - Annual Report 2018 | FinancialReports.eu

PRESIDENT CHAIN STORE CORP. AND

SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2018 AND 2017

-----------------------------------------------------------------------------------------------------------------------------------For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

~1~

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND AUDIT REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2018 AND 2017 CONTENTS

Items 1. Cover 2. Contents 3. Declaration of Consolidated Financial Statements of Affiliated Enterprises 4. Report of independent accountants 5. Consolidated balance sheets 6. Consolidated statements of comprehensive income 7. Consolidated statements of changes in equity 8. Consolidated statements of cash flows 9. Notes to the consolidated financial statements (1) History and organisation (2) Date of authorisation for issuance of the consolidated financial statements and procedures for authorisation (3) Application of new standards, amendments and interpretations (4) Summary of significant accounting policies (5) Critical accounting judgements, estimates and key sources of assumption uncertainty (6) Details of significant accounts (7) Related party transactions (8) Pledged assets (9) Significant contingent liabilities and unrecognized contract commitments (10) Significant disaster loss (11) Significant events after the balance sheet date (12) Others (13) Supplementary disclosures (14) Segment information	Page/Reference
	1 2 3 4~9 10~11 12~13 14 15~16 17~80 17 17 17~21 21~34 34 34~60 60~63 63 63 63 64 64~76 77 78~80

Items
1. Cover
2. Contents
3. Declaration of Consolidated Financial Statements of Affiliated Enterprises
4. Report of independent accountants
5. Consolidated balance sheets
6. Consolidated statements of comprehensive income
7. Consolidated statements of changes in equity
8. Consolidated statements of cash flows
9. Notes to the consolidated financial statements
(1) History and organisation
(2) Date of authorisation for issuance of the consolidated
financial statements and procedures for authorisation
(3) Application of new standards, amendments and interpretations
(4) Summary of significant accounting policies
(5) Critical accounting judgements, estimates and key sources of
assumption uncertainty
(6) Details of significant accounts
(7) Related party transactions
(8) Pledged assets
(9) Significant contingent liabilities and unrecognized contract
commitments
(10) Significant disaster loss
(11) Significant events after the balance sheet date
(12) Others
(13) Supplementary disclosures
(14) Segment information

Page/Reference

1
2
3
4~9
10~11
12~13
14
15~16
17~80
17
17
17~21
21~34
34
34~60
60~63
63
63
63
64
64~76
77
78~80

~2~

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Declaration of Consolidated Financial Statements of Affiliated Enterprises

For the year ended December 31, 2018, pursuant to “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises,” the company that is required to be included in the consolidated financial statements of affiliates, is the same as the company required to be included in the consolidated financial statements under International Financial Reporting Standards 10. And if relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies, it shall not be required to prepare consolidated financial statements of affiliates.

Hereby declare,

PRESIDENT CHAIN STORE CORP. February 27, 2019

~3~

REPORT OF INDEPENDENT ACCOUNTANTS

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, 2018 and 2017, 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, 2018 and 2017, 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, 2018. 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.

~4~

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

Completeness and accuracy of retail sales revenue

Description

Please refer to Notes 4(24) and 6(22) 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.

~5~

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:

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.

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$10,081,554 thousand and NT$8,495,128 thousand, representing 7.9% and 6.1% of total consolidated assets as of December 31, 2018 and 2017, respectively, and total operating revenue of NT$25,801,037 thousand and NT$22,105,951 thousand, representing 10.5% and 10.0% 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

~6~

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 with an explanatory paragraph on the parent company only financial statements of President Chain Store Corp. as of and for the years ended December 31, 2018 and 2017.

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.

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.

~7~

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.
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

~8~

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, 2018 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 27 February, 2019

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.

~9~

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets 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 1510 Financial assets at fair value through profit or loss - non-current 1517 Financial assets at fair value through other comprehensive income - non-current 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	Notes 6(1) 6(2) and 12(4) 6(3) and 7 6(6) 6(28) 6(4) 6(2) 6(5) 12(4) 12(4) 6(6) 6(7)(23), 7 and 8 6(8)(31) and 7 6(9) 6(28) 6(10) and 8	December 31, 2018 AMOUNT % $ 48,530,648 38 844,225 1 5,264,573 4 1,535,507 1 1,139 - 15,121,657 12 1,340,225 1 3,004,894 2 75,642,868 59 85,683 - 845,345 1 - - - - 9,000,580 7 25,292,763 20 1,502,159 1 10,393,880 8 1,727,043 1 3,204,759 3 52,052,212 41 $ 127,695,080 100	December 31, 2017
		AMOUNT $ 48,530,648 844,225 5,264,573 1,535,507 1,139 15,121,657 1,340,225 3,004,894 75,642,868 85,683 845,345 - - 9,000,580 25,292,763 1,502,159 10,393,880 1,727,043 3,204,759 52,052,212 $ 127,695,080	AMOUNT % $ 35,783,291 26 1,560,025 1 4,868,902 3 28,412,101 20 2,097 - 13,387,122 10 1,417,175 1 2,973,547 2 88,404,260 63 - - - - 1,050,734 1 25,721 - 8,655,722 6 24,982,342 18 1,519,115 1 10,656,713 8 1,409,184 1 3,177,469 2 51,477,000 37 $ 139,881,260 100

(Continued)

~10~

Liabilities and Equity	Notes 6(12) and 8 6(22) 7 7 6(13) 6(28) 6(14) 6(22) 6(15) and 8 6(28) 6(16) 6(17) 6(18) 6(19) 6(20) 6(21)	December 31,2018 December 31,2017 AMOUNT % AMOUNT % $ 7,237,785 6 $ 965,180 1 - - 250,000 - 2,843,189 2 - - 1,866,610 2 2,066,511 2 20,673,579 16 18,849,947 13 2,475,104 2 2,321,016 2 27,954,181 22 30,980,251 22 1,801,229 1 4,834,364 3 3,260,538 3 5,352,651 4 68,112,215 54 65,619,920 47 234,421 - - - 847,040 1 1,105,451 1 5,386,839 4 4,652,948 3 4,732,549 4 4,574,800 3 4,356,989 3 4,421,731 3 15,557,838 12 14,754,930 10 83,670,053 66 80,374,850 57 10,396,223 8 10,396,223 8 45,059 - 43,875 - 12,293,442 10 9,191,733 7 398,859 - - - 12,064,862 9 31,381,290 22 53,605 - ( 398,859) ( 1) 35,252,050 27 50,614,262 36 8,772,977 7 8,892,148 7 44,025,027 34 59,506,410 43 $ 127,695,080 100 $ 139,881,260 100
		AMOUNT $ 7,237,785 - 2,843,189 1,866,610 20,673,579 2,475,104 27,954,181 1,801,229 3,260,538 68,112,215 234,421 847,040 5,386,839 4,732,549 4,356,989 15,557,838 83,670,053 10,396,223 45,059 12,293,442 398,859 12,064,862 53,605 35,252,050 8,772,977 44,025,027 $ 127,695,080
Current Liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2130 Contract liabilities - current 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 2527 Contract liabilities - non-current 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 3320 Special 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

The accompanying notes are an integral part of these consolidated financial statements.

Chairman: Lo, Chih-Hsien President: Huang, Jui-Tien Accounting Manager: Kuo, Ying-Chih

~11~

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
4000
Operating revenue
5000
Operating costs
5900
Gross profit
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6450
Expected credit losses
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

For theyears ended December 31
2018
2017
Notes
AMOUNT
%
AMOUNT
%
6(22) and 7
$ 244,887,853
100
$ 221,132,082
100
6(4)(23) and 7
(
160,811,161 ) (
66) (
147,698,072) (
67 )
84,076,692
34
73,434,010
33
6(23)(24)
(
62,536,030 ) (
25) (
53,630,951) (
24 )
(
8,688,758 ) (
4) (
9,380,899) (
4 )
12(2)
(
17,080 )
-
-
-
(
71,241,868 ) (
29) (
63,011,850) (
28 )
12,834,824
5
10,422,160
5
6(25)
2,425,273
1
2,946,735
1
6(26)
(
137,186 )
-
26,313,566
12
6(27)
(
144,662 )
-
(
94,511)
-
6(6)
424,098
-
1,793,738
1
2,567,523
1
30,959,528
14
15,402,347
6
41,381,688
19
6(28)
(
3,658,069 ) (
1) (
9,063,616) (
4 )
11,744,278
5
32,318,072
15
$ 11,744,278
5
$ 32,318,072
15

(Continued)

~12~

Items	Forthe years endedDecember31	Forthe years endedDecember31
	2018	2017
	AMOUNT ($ 156,420 ) ( 143,849 ) ( 5,526 ) 79,842 ( 225,953) 526,768 - ( 1,537 ) 3,233 - 528,464 $ 302,511 $ 12,046,789 $ 10,206,388 1,537,890 $ 11,744,278 $ 10,631,150 1,415,639 $ 12,046,789 $
Other comprehensive income (loss) 8311 Remeasurements of net actuarial loss on defined benefit plan 8316 Unrealized gain on valuation of equity instruments at fair value through other comprehensive income 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 on valuation of available-for-sale financial assets 8367 Unrealized loss on valuation of bond instruments at fair value through other comprehensive income 8370 Share of other comprehensive income (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 income (loss) that will be reclassified to profit or loss 8300 Total other comprehensive income (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)
	$

The accompanying notes are an integral part of these consolidated financial statements.

Chairman: Lo, Chih-Hsien President : Huang, Jui-Tien Accounting Manager: Kuo, Ying-Chih ~13~

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

				Equity attr	ib	utable to owners o	f the parent	f the parent						Non-controlling Interest
Share capital - common stock	Capital surplus		R	etained earnings					O	ther equityinterest			Total
		Legal reserve		Special reserve	r	Unappropriated etained earnings	Exchange differences from translation of foreign operations		l	Unrealized gain or oss on valuation of financial assets at fair value through other comprehensive Income	c	Equity directly related to non- urrent assets held forsale
$ 10,396,223 - - - - - - - - $ 10,396,223 $ 10,396,223 - 10,396,223 - - - - - - - - - $ 10,396,223	$ 1,158 - - - - - ( 164 ) 42,881 - $ 43,875 $ 43,875 - 43,875 - - - - - - - 536 648 $ 45,059	$ 8,208,064 - - - 983,669 - - - - $ 9,191,733 $ 9,191,733 - 9,191,733 - - - 3,101,709 - - - - - $ 12,293,442		$ - - - - - - - - - $ - $ - - - - - - - 398,859 - - - - $ 398,859		$ 9,839,244 31,017,094 ( 174,401 ) 30,842,693 ( 983,669 ) ( 8,316,978 ) - - - $ 31,381,290 $ 31,381,290 25,463 31,406,753 10,206,388 ( 57,155 ) 10,149,233 ( 3,101,709 ) ( 398,859 ) ( 25,990,556 ) - - - $ 12,064,862		($ 186,228 ) - ( 720,080 ) ( 720,080 ) - - - - - ($ 906,308 ) ($ 906,308 ) - ( 906,308 ) - 626,479 626,479 - - - - - - ($ 279,829 )		$ - - - - - - - - - $ - $ - 477,996 477,996 - ( 144,562 ) ( 144,562 ) - - - - - - $ 333,434		$ 357,817 - 149,632 149,632 - - - - - $ 507,449 $ 507,449 ( 507,449 ) - - - - - - - - - - $ -	$ 28,616,278 31,017,094 ( 744,849 ) 30,272,245 - ( 8,316,978 ) ( 164 ) 42,881 - $ 50,614,262 $ 50,614,262 ( 3,990 ) 50,610,272 10,206,388 424,762 10,631,150 - - ( 25,990,556 ) - 536 648 $ 35,252,050	$ 4,644,652 1,300,978 ( 132,943 ) 1,168,035 - - - - 3,079,461 $ 8,892,148 $ 8,892,148 ( 5,203 ) 8,886,945 1,537,890 ( 122,251 ) 1,415,639 - - - ( 1,529,607 ) - - $ 8,772,977	$ 33,260,930 32,318,072 ( 877,792 ) 31,440,280 - ( 8,316,978 ) ( 164 ) 42,881 3,079,461 $ 59,506,410 $ 59,506,410 ( 9,193 ) 59,497,217 11,744,278 302,511 12,046,789 - - ( 25,990,556 ) ( 1,529,607 ) 536 648 $ 44,025,027

The accompanying notes are an integral part of these consolidated financial statements.

Chairman: Lo, Chih-Hsien

President: Huang, Jui-Tien ~14~

Accounting Manager: Kuo, Ying-Chih

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

(Expressed in thousands of New Taiwan dollars)

				For theyears ended December 31	For theyears ended December 31
	Notes			2018	2017
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated profit before income tax for the year			$	15,402,347 $	41,381,688
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	6(2) and 12(4)
profit or loss		(		12,411 ) (	1,490 )
Provision for doubtful accounts	12(4)			-	18,141
Expected credit losses	12(2)			17,080	-
Depreciation on property, plant and equipment	6(7)			5,993,847	5,135,228
Amortization				584,009	356,507
Depreciation on investment property	6(8)			16,956	16,916
Finance costs	6(27)			144,662	94,511
Share of profit of associates and joint ventures	6(6)
accounted for using equity method		(		424,098 ) (	1,793,738 )
Gain on disposal of investments accounted for using the	6(26)and 7
equity method		(		59 ) (	26,637,450 )
Loss on disposal of property, plant and equipment, net	6(26)			33,275	53,095
Interest income	6(25)	(		699,385 ) (	172,023 )
Dividend income	6(25)	(		65,124 ) (	1,135,332 )
Impairment loss on intangible assets	6(9)			819	-
Impairment loss on property, plant and equipment	6(7)			9,969	11,853
Impairment loss on investment property				-	3,813
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				728,211	39,419
Accounts receivable		(		326,504 ) (	578,251 )
Other receivables				122,931 (	164,774 )
Inventories		(		1,734,535 ) (	1,009,533 )
Prepayments				76,950 (	29,716 )
Other current assets				24,955 (	381,243 )
Net changes in liabilities relating to operating
activities
Contract liabilities - current		(		1,092,169 )	-
Accounts payable				1,977,720	810,619
Notes payable		(		199,901 ) (	141,754 )
Other payables				18,646	3,569,675
Advance receipts				1,678,593	921,293
Contract liabilities - non-current		(		111,590 )	-
Net defined benefit liabilities - non-current				157,749	132,178
Cash generated from operations				22,322,943	20,499,632
Interest received				697,286	177,703
Income tax paid		(		6,194,372 ) (	2,106,774 )
Interest paid		(		144,711 ) (	94,836 )
Dividends received				1,236,783	2,155,134
Net cash provided by operating activities				17,917,929	20,630,859
(Continued)

~15~

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of investments accounted for using	6(6)and7
the equity method			$	25,644,556 $	-
Acquisition of subsidiary	6(6)	(		3,226,806 )	-
Proceeds from disposal of financial assets measured at cost -
non-current				-	1,773
Acquisition of property, plant and equipment	6(32)	(		6,671,500 ) (	6,727,782 )
Acquisition of investment property	6(8)			- (	149,305 )
Proceeds from disposal of property, plant and equipment				81,397	139,989
Return of capital from available-for-sale financial assets -
non-current				-	116
Proceeds from business combinations	6(30)			-	700,961
Increase in guarantee deposits paid		(		110,493 ) (	279,932 )
Acquisition of intangible assets	6(9)	(		196,984 ) (	313,175 )
Decrease (increase) in other non-current assets				83,203 (	7,055 )
Net cash provided by (used in) investing activities				15,603,373 (	6,634,410 )
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings	6(33)			6,272,605 (	695,645 )
Decrease in short-term notes and bills payable	6(33)	(		250,000 ) (	24,000 )
Increase in long-term borrowings	6(33)			289,511	569,856
Repayment of long-term borrowings	6(33)	(		473,646 ) (	237,687 )
Increase in guarantee deposits received	6(33)			58,093	115,984
Increase (decrease) in other non-current liabilities	6(33)			223,176 (	114,846 )
Change in non-controlling interests		(		23,138 )	48,109
Payment of cash dividends - the Company	6(20)	(		25,990,556 ) (	8,316,978 )
Payment of cash dividends - subsidiaries		(		1,506,469 ) (	841,504 )
Net cash used in financing activities		(		21,400,424 ) (	9,496,711 )
Effect of foreign exchange rate changes on cash and cash
equivalents				626,479 (	720,080 )
Increase in cash and cash equivalents				12,747,357	3,779,658
Cash and cash equivalents at beginning of year				35,783,291	32,003,633
Cash and cash equivalents at end of year			$	48,530,648 $	35,783,291

Chairman: Lo, Chih-Hsien President : Huang, Jui-Tien Accounting Manager: Kuo, Ying-Chih

~16~

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANISATION

(1) President Chain Store Corporation (the “Company”) was established on June 10, 1987. The main businesses of the Company and its subsidiaries (collectively referred herein as the “Group”) are managing convenience stores, restaurants, drugstores, department stores, supermarkets and online shopping stores. Business areas include Taiwan, Mainland China, Philippines and Japan. The common shares of the Company have been listed on the Taiwan Stock Exchange since August 22, 1997. Details of the Group’s main operating activities and segment information are provided in Notes 4 and 14.
(2) The Group’s ultimate parent company is Uni-President Enterprises Corp., which holds 45.4% equity interest in the Company.
DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorized for issuance by the Board of Directors on February 27, 2019.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)
A. New standards, interpretations and amendments endorsed by FSC effective from 2018 are as follows:

follows:
New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard
Amendments to IFRS 2, ‘Classification and measurement of share- based payment transactions’ Amendments to IFRS 4, ‘Applying IFRS 9, Financial instruments with IFRS 4,Insurance contracts’ IFRS 9, ‘Financial instruments’ IFRS 15, ‘Revenue from contracts with customers’ Amendments to IFRS 15, ‘Clarifications to IFRS 15, Revenue from contracts with customers’ Amendments to IAS 7, ‘Disclosure initiative’ Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealized Amendments to IAS 40, ‘Transfers of investment property’ IFRIC 22, ‘Foreign currency transactions and advance consideration’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 1,‘First-time adoption of International Financial Reporting Standards’	January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018 January 1, 2018

follows:

New Standards,Interpretations andAmendments

Effective date by
International Accounting
StandardsBoard

Amendments to IFRS 2, ‘Classification and measurement of share-
based payment transactions’
Amendments to IFRS 4, ‘Applying IFRS 9, Financial instruments
with IFRS 4,Insurance contracts’
IFRS 9, ‘Financial instruments’
IFRS 15, ‘Revenue from contracts with customers’
Amendments to IFRS 15, ‘Clarifications to IFRS 15, Revenue from
contracts with customers’
Amendments to IAS 7, ‘Disclosure initiative’
Amendments to IAS 12, ‘Recognition of deferred tax assets for
unrealized
Amendments to IAS 40, ‘Transfers of investment property’
IFRIC 22, ‘Foreign currency transactions and advance
consideration’
Annual improvements to IFRSs 2014-2016 cycle - Amendments to
IFRS 1,‘First-time adoption of International Financial Reporting
Standards’

January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018

January 1, 2018
January 1, 2017
January 1, 2017
January 1, 2018
January 1, 2018
January 1, 2018

~17~

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 12,‘Disclosure of interests in other entities’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28,‘Investments in associates and joint ventures’	January 1, 2017 January 1, 2018

B. Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

IFRS 9, “Financial instruments”

(a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortized cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.
(b) The impairment losses of debt instruments are assessed using an “expected credit loss” approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognize 12-month expected credit losses (“ECL”) or lifetime ECL (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Group shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.
C. In adopting the new standards endorsed by the FSC effective from 2018, the Group has adopted the modified retrospective approach in IFRS 9 and IFRS 15. The Group also applied transitional provisions of IFRS 15 to incomplete contracts at the date of January 1, 2018. The significant effects of applying the new standards as of January 1, 2018 are summarized below:

Consolidated balance sheet Affected items		2017 version IFRSs amount $ 4,868,902 83,535,358 - - 1,050,734 ( 25,721 ( 8,655,722 41,744,823 $ 139,881,260	Effect of adoption of new standards $ 69,169 56,302 85,833 990,622 1,050,734 ) 25,721 ) 1,696 - $ 127,167	2018 version IFRSs amount $ 4,938,071 83,591,660 85,833 990,622 - - 8,657,418 41,744,823 $ 140,008,427	Remark (a)(b) (a) (c) (d) (c)(d) (c) (e)
January 1, 2018 Accounts receivable, net Other current assets Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income - non-current Available-for-sale financial assets - non-current Financial assets measured at cost - non-current Investment accounted using for equity method Other non-current assets Total affected assets

~18~

Consolidated balance sheet Affected items January 1, 2018 Current liabilities Other current liabilities Contract liabilities - current Refund liabilities Contract liabilities - non-current Other non-current liabilities Total affected liabilities Share capital Capital surplus Retained earnings Other equity interest ( Non-controlling interest Total affected equity Total affected liabilities and equity	2017 version IFRSs amount $ 60,267,269 5,352,651 ( - - - 14,754,930 ( 80,374,850 10,396,223 43,875 40,573,023 398,859 ) ( 8,892,148 ( 59,506,410 ( $ 139,881,260	Effect of adoption of new standards $ - 3,935,358 ) 3,935,358 136,360 346,011 346,011 ) 136,360 - - 25,463 29,453 ) ( 5,203 ) 9,193 ) $ 127,167	2018 version IFRSs amount $ 60,267,269 1,417,293 3,935,358 136,360 346,011 14,408,919 80,511,210 10,396,223 43,875 40,598,486 428,312 ) 8,886,945 59,497,217 $ 140,008,427	Remark (f) (f) (a) (f) (f) (b)(c)(e) (c)(e) (b)

Explanation:

(a) Under IFRS 15, if the customer returns a product, the Group is obliged to refund the purchase price. Therefore, a gross contract liability (refund liability) for the expected refunds to customers is recognized as adjustment to revenue. At the same time, the Group has a right to recover the product from the customer where the customer exercises his right of return and recognizes an asset and a corresponding adjustment to cost of sales. The asset is measured by reference to the former carrying amount of the product as the products are not material.

Liabilities in relation to expected sales discounts and allowances were previously presented as accounts receivable - allowance for sales discounts in the balance sheet. As a result of these changes in accounting policies, accounts receivable was increased by $80,058, refund liability increased by $136,360 and other current assets increased by $56,302 on January 1, 2018.

(b) In line with the regulations of IFRS 9 on provision for impairment, accounts receivable was reduced by $10,889, retained earnings and non-controlling interests decreased by $5,686 and $5,203, respectively.
(c) In accordance with IFRS 9, the Group reclassified available-for-sale financial assets and financial assets at cost in the amounts of $60,112 and $25,721, respectively, by increasing financial assets at fair value through profit or loss and retained earnings in the amounts of $85,833 and $22,498, respectively, and decreasing other equity interest in the amount of $22,498.
(d) In accordance with IFRS 9, the Group reclassified available-for-sale financial assets in the amount of $990,622 and made an irrevocable election at initial recognition on equity instruments not held for dealing or trading purpose, by increasing financial assets at fair value through other comprehensive income in the amount of $990,622.
(e) The Group’s investee accounted for using the equity method made certain reclassifications in accordance with IFRS 9. Accordingly, the Group increased investments accounted for using the equity method and retained earnings in the amounts of $1,696 and $8,651, respectively, and decreased other equity interest in the amount of $6,955.

~19~

(f) Presentation of contract liabilities:
In line with IFRS 15 requirements, the Group changed the presentation of certain accounts in the balance sheet as follows:
(i) Under IFRS 15, Advance sales receipts in relation to sales of gift cards, and franchise agreements are recognized as contract liabilities, but were previously presented as other current liabilities in the balance sheet. As of January 1, 2018, the balance amounted to $3,935,358.
(ii) Under IFRS 15, liabilities in relation to the customer loyalty program are recognized as contract liabilities, but were previously presented as deferred revenue (shown as other non-current liabilities) in the balance sheet. As of January 1, 2018, the balance amounted to $346,011.
(g) Please refer to Notes 12(4) and 12(5) for other disclosure(s) in relation to the first application of IFRS 9 and IFRS 15.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Company

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

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative compensation’ IFRS 16, ‘Leases’ Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete.

IFRS 16, “Leases”

IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognize a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

The Group expects to recognize the lease contract of lessees in line with IFRS 16. However, the Group does not intend to restate the financial statements of prior period (collectively referred herein as the “modified retrospective approach”). On January 1, 2019, it is expected that ‘right-of-use asset’ and lease liability will be increased by $51,894,004 and $52,201,605, respectively.

~20~

(3) IFRSs issued by IASB but not yet endorsed by the FSC

A. New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

as endorsed by the FSC are as follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’	January 1, 2020 January 1, 2020 To be determined by International Accounting Standards Board January 1, 2021

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting polices applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
(a) Financial assets and financial liabilities at fair value through profit or loss.
(b) Financial assets and liabilities at fair value through other comprehensive income.
(c) Defined benefit liabilities recognized based on the net amount of pension fund assets less the present value of defined benefit obligations.
B. The preparation of financial statements, in conformity with IFRSs, requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Group elected to apply modified retrospective approach whereby the cumulative impact of the adoption was recognized as retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 were not restated. The financial statements for the year ended December 31, 2017 were prepared in compliance with International Accounting Standard 39 (‘IAS 39’),

~21~

International Accounting Standard 18 (‘IAS 18’) and related financial reporting interpretations. Please refer to Notes 12(4) and (5) for details of significant accounting policies and details of significant accounts.

(3) Basis of consolidation

A. The basis for preparation of consolidated financial statements is as follows:
(a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
(b)Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
(c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.
(d)Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity.
(e)When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

~22~

B. The subsidiaries included in the consolidated financial statements are as follows:

Main business activities Professional investment Professional investment Logistics and warehousing of publication Sales of cosmetics, medicine and daily items Professional investment Enterprise management consultancy Art and cultural exhibition	Ownership (%) December 31, 2018 December 31, 2017 100.00 100.00 92.20 92.20 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 90.00 90.00 86.76 86.76 86.00 86.00 80.87 80.87 73.74 73.74 70.00 70.00 70.00 70.00 70.00 70.00 60.00 60.00 60.00 60.00 51.00 51.00 51.00 51.00 50.03 50.03 25.00 25.00 100.00 100.00 100.00 100.00 100.00 100.00	Description
	December 31, 2018 100.00 92.20 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 90.00 86.76 86.00 80.87 73.74 70.00 70.00 70.00 60.00 60.00 51.00 51.00 50.03 25.00 100.00 100.00 100.00
		(a) (b)
Sales of ice cream
Life and property insurance Operation of chain restaurants Sports and entertainment business Bread and pastry retailer Enterprise management consultancy Electronic ticketing Food manufacturing Information software service Enterprise information management and consultancy Gas station and elevator installation Sales of various health care products, cosmetics, and pharmaceuticals Collection agent Department stores Delivery service Low-temperature logistics and warehousing Coffee chain store Cleaning instruments leasing and selling Operation of restaurants Retail business without shop Room-temperature logistics and warehousing Professional investment Professional investment Wholesale of merchandise

~23~

Name of investor Wisdom Distribution Service Corp. Wisdom Distribution Service Corp. Uni-President Cold-Chain Corp. Uni-President Cold-Chain Corp. Retail Support International Corp. Retail Support International Corp. Retail Support Taiwan Corp. President Logistics International Corp. Duskin Serve Taiwan Co. Books.com. Co., Ltd. Books.com. (BVI) Ltd. Mech-President Corp. President Pharmaceutical Corp. President Pharmaceutical (Hong Kong) Holdings Limited President Chain Store (Labuan) Holdings Ltd. Philippine Seven Corporation President Chain Store (Hong Kong) Holdings Limited President Chain Store (Hong Kong) Holdings Limited President Chain Store (Hong Kong) Holdings Limited President Chain Store (Hong Kong) Holdings Limited President Chain Store (Hong Kong) Holdings Limited President Chain Store (Hong Kong) Holdings Limited President Chain Store (Hong Kong) Holdings Limited President Chain Store (Hong Kong) Holdings Limited President Chain Store (Hong Kong) Holdings Limited President Chain Store (Hong Kong) Holdings Limited Shanghai President Logistics Co., Ltd. Shanghai President Logistics	Name of subsidiary President Logistics International Corp. Vision Distribution Service Corp. President Logistics International Corp. Uni-President Logistics (BVI) Holdings Limited Retail Support Taiwan Corp. President Logistics International Corp. President Logistics International Corp. Chieh-Shuen Logistics International Corp. Duskin China (BVI) Holdings Limited Books.com. (BVI) Ltd. Bejing Bokelai Customer Co. President Jing Corp. President Pharmaceutical (Hong Kong) Holdings Limited President (Shanghai) Health Product Trading Company Ltd. Philippine Seven Corporation Convenience Distribution Inc. PCSC (China) Drugstore Limited President Chain Store (Shanghai) Ltd. Shanghai President Logistics Co., Ltd. PCSC Restaurant (Cayman) Holdings Limited Shan Dong President Yinzuo Commercial Limited PCSC (Chengdu) Hypermarket Limited Shanghai Cold Stone Ice Cream Corporation President Chain Store (Taizhou) Ltd. President Chain Store (Zhejiang) Ltd. Beauty Wonder (Zhejiang) Trading Co.,Ltd. Zhejiang Uni-Champion Logistics Development Co., Ltd. President Logistics Shan Dong Co., Ltd.	Main business activities Trucking Magazines and book publishing industry Trucking Professional investment Room-temperature logistics and warehousing Trucking Trucking Trucking Professional investment Professional investment Enterprise information consulting, network technology development and services Gas station Sales of various health care products, cosmetics, and pharmaceuticals Sales of various health care products, cosmetics, and pharmaceuticals Operation of chain store Logistics and warehousing Professional investment Operation of chain store Logistics and warehousing Professional investment Supermarkets Retail hypermarket Sales of ice cream Logistics and warehousing Operation of chain store Sales of cosmetics and medicine Logistics and warehousing Logistics and warehousing		Ownership (%) December 31, 2018 December 31, 2017 20.00 20.00 60.00 60.00 25.00 25.00 100.00 100.00 51.00 51.00 49.00 49.00 6.00 6.00 100.00 100.00 - - 100.00 100.00 100.00 100.00 60.00 60.00 100.00 100.00 100.00 100.00 52.22 52.22 100.00 100.00 7.80 7.80 100.00 100.00 100.00 100.00 100.00 100.00 40.00 40.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 - 50.00 50.00 100.00 100.00	Description
				December 31, 2018 20.00 60.00 25.00 100.00 51.00 49.00 6.00 100.00 - 100.00 100.00 60.00 100.00 100.00 52.22 100.00 7.80 100.00 100.00 100.00 40.00 100.00 100.00 100.00 100.00 100.00 50.00 100.00
					(c) (d)

President Chain Store (Labuan) Philippine Seven Corporation Holdings Ltd. Philippine Seven Corporation Convenience Distribution Inc. President Chain Store (Hong PCSC (China) Drugstore Limited Kong) Holdings Limited President Chain Store (Hong President Chain Store (Shanghai) Ltd. Kong) Holdings Limited President Chain Store (Hong Shanghai President Logistics Co., Ltd. Kong) Holdings Limited President Chain Store (Hong PCSC Restaurant (Cayman) Holdings Kong) Holdings Limited Limited President Chain Store (Hong Shan Dong President Yinzuo Commercial Kong) Holdings Limited Limited President Chain Store (Hong PCSC (Chengdu) Hypermarket Limited Kong) Holdings Limited President Chain Store (Hong Shanghai Cold Stone Ice Cream Corporation Kong) Holdings Limited President Chain Store (Hong President Chain Store (Taizhou) Ltd. Kong) Holdings Limited President Chain Store (Hong President Chain Store (Zhejiang) Ltd. Kong) Holdings Limited President Chain Store (Hong Beauty Wonder (Zhejiang) Trading Kong) Holdings Limited Co.,Ltd. Shanghai President Logistics Zhejiang Uni-Champion Logistics Co., Ltd. Development Co., Ltd. Shanghai President Logistics President Logistics Shan Dong Co., Ltd. Co., Ltd.

~24~

Name of investor PCSC Restaurant (Cayman) Holdings Limited Uni-President Logistics (BVI) Holdings Limited Ren-Hui Investment Corp. Ren-Hui Holdings Co., Ltd.	Name of subsidiary Shanghai President Chain Store Corporation Trade Co., Ltd. Zhejiang Uni-Champion Logistics Development Co., Ltd. Ren Hui Holding Co., Ltd. Shan Dong President Yinzuo Commercial Limited .	Main business activities Trade of food and commodities Logistics and warehousing Professional investment Supermarkets		Ownership (%) December 31, 2018 December 31, 2017 100.00 100.00 50.00 50.00 100.00 100.00 15.00 15.00	Description
				December 31, 2018 100.00 50.00 100.00 15.00

(a) The Company acquired an additional 30% shares of Uni-Wonder Corp. (formerly “President Starbucks Coffee Corp.”), in December 2017 having control over it. Please refer to Note 6(6)C.
(b) As the Company controls the financial and operating policies of Retail Support International Corp., the latter is included as a subsidiary in the consolidated financial statements.
(c) The Company liquidated the subsidiary, Duskin China (BVI) Holdings Limited, and the process of cancellation of registration has been completed in January 2018.
(d) The subsidiary of the Company was established in June 2018.
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group: None.

(4) Foreign currency translation

Items included in the financial statements of the Group are measured using the currency of the primary economic environment in which the Group operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollars, which is the Company’s functional currency.

A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All foreign exchange gains and losses based on the nature of those transactions are presented

~25~

in the statement of comprehensive income within other gains and losses.

B. Translation of foreign operations
- (a) The operating results and financial position of all the subsidiaries, associates and jointly arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
  - i.. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
  - ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
  - iii. All resulting exchange differences are recognized in other comprehensive income.
- (b) When the foreign operation partially disposed of or sold is an associate or jointly arrangements exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, if the Group retains partial interest in the former foreign associate or jointly arrangements after losing significant influence over the former foreign associate, or losing joint control of the former jointly arrangements, such transactions should be accounted for as disposal of all interest in these foreign operations.
- (c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.
- (d) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.
(5) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- (a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;
- (b) Assets held mainly for trading purposes;
- (c) Assets that are expected to be realized within twelve months from the balance sheet date;
- (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- (a) Liabilities that are expected to be paid off within the normal operating cycle;

~26~

(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be paid off within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

(7) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortized cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using settlement date accounting.
C. At initial recognition, the Group measures the financial assets at fair value and recognizes the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.
D. The Group recognizes the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(8) Financial assets at fair value through other comprehensive income

A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:
(a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and
(b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and derecognized using settlement date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:
(a) The changes in fair value of equity investments that were recognized in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognized as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(b) Except for the recognition of impairment loss, interest income and gain or loss on foreign exchange which are recognized in profit or loss, the changes in fair value of debt instruments are taken through other comprehensive income. When the financial asset is derecognized,

~27~

the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

(9) Accounts and notes receivable

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

For debt instruments measured at fair value through other comprehensive income and financial assets at amortized cost, at each reporting date, the Group recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognizes the impairment provision for lifetime ECLs.

(11) Leases (Lessor)

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

(12) Inventories

A. Inventories are initially recorded at cost. Cost of consolidated entities which manage convenience stores is determined using the retail inventory method while cost of other subsidiaries is determined in accordance with the type of business.
B. Ending inventories are stated at the lower of cost and net realizable value. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(13) Investments accounted for using equity method - associates

A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes the Group’s share of change in equity of the associate in “capital surplus” in proportion to its ownership.

~28~

D. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then “capital surplus” and “investments accounted for using the equity method” shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.
F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss.
G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amount previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
H. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss proportionately.
(14) Investment accounted for using the equity method joint ventures
The Group accounts for its investment interests in joint ventures using the equity method. Unrealized profits and losses arising from transactions between the Group and joint ventures are eliminated to the extent of the Group’s interest in the joint venture. However, when the transaction provides evidence of a reduction in the net realizable value of current assets or an impairment loss, all such losses shall be recognized immediately. When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture together with any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the joint venture.
(15) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

~29~

C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are audited, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings 3~50 years Transportation equipment 3~8 years Office equipment 1~15 years Leasehold assets 1~20 years

(16) Leases (Lessee)

Payments made under an operating lease (net of any incentives received from the lessor) are recognized in profit or loss on a straight-line basis over the lease term.

(17) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 10 to 50 years.

(18) Intangible assets

A. Computer software

Computer software is stated at cost and amortized on a straight-line basis over its estimated useful life of 1 to 10 years.

B. Goodwill

Goodwill arises in a business combination accounted for by applying the acquisition method.

C. License agreement and customer list and other intangible assets

License agreement and customer list acquired in business combination are recognized at fair value at the acquisition date. Other intangible assets are separately acquired trademarks and licenses which are stated at historical cost. The latter has a finite useful life and is amortized on a straight-line basis over it’s estimated useful life .

(19) Impairment of non-financial assets

A. The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal

~30~

should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.

B. The recoverable amounts of goodwill are evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall not be reversed in the following years.
C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

(20) Notes and accounts payable

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

(21) Provisions

The Group’s provisions are presented in “Other non-current liabilities”. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognized as interest expense. Provisions are not recognized for future operating losses.

(22) Employee benefits

A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expense in that period when the employees render service.

B. Pensions

(a) Defined contribution plans

For defined contribution plans, the contributions are recognized as pension expense when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments.

(b) Defined benefit plans
i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of

~31~

government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.

ii. Remeasurements arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.
iii. Past service costs are recognized immediately in profit or loss.
C. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognizes expense when it can no longer withdraw an offer of termination benefits or it recognizes related restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.

D. Employees’, directors’ and supervisors’ remuneration

Employees’ remuneration and directors’ and supervisors’ remuneration are recognized as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is distributed by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

(23) Income tax

A. The tax expense for the year comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group and its subsidiaries operate and generate taxable income. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

~32~

D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognized and recognized deferred tax assets are reassessed.
(24) Revenue recognition
A. Sales of goods
- (a)The Group operates a chain of retail stores. Revenue from the sale of goods is recognized when the Group sells a product to the customer.
- (b)Payment of the transaction price is due immediately when the customer purchases the product. It is the Group’s policy to sell its products to the end customer with a right of return. Therefore, a refund liability and a right to the returned goods (included in other current assets) are recognized for the products expected to be returned. Accumulated experience is used to estimate such returns using the expected value method. Because the number of products returned has been steady for years, it is highly probable that a significant reversal in the cumulative revenue recognized will not occur. The validity of this assumption and the estimated amount of returns are reassessed at each reporting date.
- (c)The Group operates a loyalty program where retail customers accumulate points for purchases made which entitle them to discount on future purchases. The points provide a material right to customers that they would not receive without entering into a contract. Therefore, the promise to provide points to the customer is a separate performance obligation. The transaction price is allocated to the product and the points on a relative stand-alone selling price basis. The stand-alone selling price per point is estimated on the basis of the discount granted when the points are redeemed and on the basis of the likelihood of redemption, based on past experience. The stand-alone selling price of the product sold is estimated on the basis of the retail price. A contract liability is recognized for the transaction price which is allocated to the points and revenue is recognized when the points are redeemed or expire.
B. Sales of services
- The Group provides delivery services. Revenue from delivering services is recognized when the services have been provided.
C. Financing components
- The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

(25) Business Combination

A. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisitionrelated costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. For each business combination, the Group measures at the acquisition date components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to the proportionate share of the entity’s net assets in the event of liquidation at either fair value or the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets. All other non-controlling interests should be

~33~

measured at the acquisition-date fair value.

B. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the acquisition date. If the total of consideration transferred, non-controlling interest in the acquire recognized and the fair value of previously held equity interest in the acquiree is less than the fair value of the identifiable assets acquired and the liabilities assumed, the difference is recognized directly in profit or loss on the acquisition date.

(26) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION

UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. The Group has no such assumptions and estimates which may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand and petty cash Checking accounts and demand deposits Cash equivalents Time deposits Short-term financial instruments	December 31, 2018 $ 1,958,556 12,560,158 25,867,905 8,144,029 $ 48,530,648	December 31, 2017 $ 1,791,733 14,483,269 10,178,300 9,329,989 $ 35,783,291

A. The Group transacts with a variety of financial institutions, all with high credit quality, to disperse credit risk, so it considers the probability of counterparty default as remote.
B. Information on time deposits provided as security for performance guarantees and reclassified as “Other non-current assets – guarantee deposits paid” is provided in Note 8.
(2) Financial assets at fair value through profit or loss

“Other non-current assets – guarantee deposits paid” is provided in Note 8. inancial assets at fair value through profit or loss
	December 31, 2018
Current items:
Beneficiary certificates	$ 844,170
Valuation adjustment	55
	$ 844,225

~34~

	December 31, 2018
Non-current items:
Unlisted stocks	$ 275,403
Valuation adjustment	( 189,720)
	$ 85,683

A. The Group recognized valuation gain of $12,411 in relation to financial assets at fair value through profit or loss for the year ended December 31, 2018.
B. No financial assets at fair value through profit or loss of the Group were pledged to others.
C. Information relating to credit risk is provided in Note 12(2).
D. Information on December 31, 2017 is provided in Note 12(4).

(3) Accounts receivable

Accounts receivable Less: Allowance for sales returns and discounts Allowance for doubtful accounts ( A. The ageing analysis of accounts receivable that were Not past due Up to 90 days 91 to 180 days 181 to 365 days Over 365 days	December 31, 2018 December 31, 2017 $ 5,320,037 $ 5,010,640 - ( 93,267 ) 55,464) ( 48,471 ) $ 5,264,573 $ 4,868,902 past due but not impaired is as follows: December 31, 2018 $ 5,144,165 149,698 18,175 2,917 5,082 $ 5,320,037

A. The ageing analysis of accounts receivable that were past due but not impaired is as follows:

The above aging analysis was based on past due date. Information on December 31, 2017 is provided in Note 12(4)

B. Details of the Group’s notes and accounts receivable pledged to others as collateral are provided in Note 8
C. As at December 31, 2018 and 2017, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s accounts receivable were $5,264,573 and $4,868,902, respectively.
D. Information relating to credit risk is provided in Note 12(2).

~35~

(4) Inventories

Inventories
	December 31, 2018
		Allowance for
	Cost	valuation loss	Book value
Raw materials and work in process	$ 65,446	$ -	$ 65,446
Merchandise and finished goods	15,151,897 (	95,686)	15,056,211
	$ 15,217,343 (	$ 95,686)	$ 15,121,657
Raw materials and work in process Merchandise and finished goods	December 31, 2017 Cost Allowance for valuation loss Book value $ 78,013 $ - $ 78,013 13,444,900 ( 135,791) 13,309,109 $ 13,522,913 ($ 135,791) $ 13,387,122
	Cost $ 78,013 13,444,900 ( $ 13,522,913 (	Allowance for valuation loss $ - 135,791) $ 135,791)

The cost of inventories recognized as expense for the year:

The cost of inventories recognized as expense for the year:
For the year ended December 31, 2018 Cost of goods sold $ 158,799,134 Gain on reversal of valuation of inventories ( 40,105 ) Spoilage 1,775,150 Others 276,982 $ 160,811,161	For the year ended December 31, 2017
	$ 145,925,125 ( 127,587) 1,657,419 243,115
	$ 147,698,072

The Group reversed a previous inventory write-down because the Group sold certain inventories which were previously provided with allowance during the year ended December 31, 2018 and 2017. (5) Financial assets at fair value through other comprehensive income - non-current

Debt instruments Government bonds Valuation adjustment Equity instruments Listed stocks Unlisted stocks Valuation adjustment	December 31, 2018 $ 199,948 783 200,731 265,606 4,348 269,954 374,660 644,614 $ 845,345

~36~

A. The Group has elected to classify the listed and unlisted stocks that are considered to be strategic investments and steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $644,614 as at December 31, 2018.
B. Amounts recognized in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

Equity instruments at fair value through other comprehensive income Fair value change recognized in other comprehensive income Debt instruments at fair value through other comprehensive income Fair value change recognized in other comprehensive income Interest income recognized in profit or loss	For the year ended December 31, 2018 ($ 143,849 ) ($ 1,537 ) $ 2,539

C. As at December 31, 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at fair value through other comprehensive income held by the Group was $845,345.
D. No financial assets at fair value through other comprehensive income of the Group were pledged to others.
E. Information relating to credit risk is provided in Note 12(2).
F. Information on December 31, 2017 is provided in Note 12(4).

(6) Investments accounted for using the equity method

Associates PresiCarre Corp. President Fair Development Corp. Uni-President Development Corp. President International Development Corp. Tung Ho Development Corp. Uni-President Organics Corp., etc. Joint ventures Mister Donut Taiwan Corp., Ltd.	December 31, 2018 $ 5,518,380 1,984,125 753,904 461,328 114,755 60,209 8,892,701 $ 107,879 $ 9,000,580	December 31, 2017 $ 5,198,249 1,954,089 750,774 466,885 123,504 64,989 8,558,490 $ 97,232 $ 8,655,722

~37~

A. The investments in associates or joint ventures are not significant to the Group. The details of the Group’s share of the operating results in the aforementioned investments are as follows:
(a) The Group’s share of the operating results in all individually immaterial associates is summarized below:

below:
	For the year ended		For the year ended
	December 31, 2018		December 31, 2017
Profit for the year from continuing
operations	$	401,980	$	405,845
Other comprehensive loss-net of tax	(	3,646)	(	37,310 )
Total comprehensive income	$	398,334	$	368,535
The Group’s share of the operating results in all individually immaterial joint ventures is
summarized below:
	For the year ended		For the year ended
	December 31, 2018		December 31, 2017
Profit for the year from continuing
operations	$	22,118	$	1,387,893
Other comprehensive income (loss)-net of
tax		1,353	(	2,517 )
Total comprehensive income	$	23,471	$	1,385,376

(b)The Group’s share of the operating results in all individually immaterial joint ventures is summarized below:
B. In December 2017, the Group disposed 30% shares of its joint venture – President Coffee (Cayman) Holdings Ltd. for a cash consideration of $25,642,728 to Starbucks EMEA Holdings Ltd. (shown as ‘other receivables’ as at December 31, 2017), which was collected in February, 2018.
－
C. The Group originally held 30% shares of its joint venture using the equity method UniWonder Corp. (formerly “ President Starbucks Coffee Corp. ” ). In December 2017, the Group acquired an additional 30% shares of Uni-Wonder Corp. for a cash consideration of $3,226,806, (shown as ‘other payables’ as at December 31, 2017) and obtained control over Uni-Wonder Corp. Relevant cash consideration was fully paid in February, 2018.
D. Information about the Group’s disposal of investments accounted for using equity method in August, 2018 is provided in Note7(3)e.

~38~

(7) Property, plant and equipment

A. The details of property, plant and equipment are as follows:

At January 1, 2018
Cost
Accumulated depreciation and
impairment
(
2018
Opening net book amount as of
January 1
Additions
Disposals
Reclassifications
Depreciation charge
(Impairment loss) reversal of
impairment loss
Net exchange differences
(
Closing net book amount as of
December 31
At December 31, 2018
Cost
Accumulated depreciation and
impairment
(

Land
Buildings
Transportation
equipment
Office
equipment
Leasehold
improvements
Others
Total
$ 2,273,584
$ 4,296,089
$ 6,343,845
$ 20,180,016
$ 17,259,683
$ 9,456,005
$ 59,809,222
16,366)
(
1,800,537 )
(
4,046,383 )
(
13,384,193 )
(
10,568,380 )
(5,011,021)
(
34,826,880)
$ 2,257,218
$ 2,495,552
$ 2,297,462
$ 6,795,823
$ 6,691,303
$ 4,444,984
$ 24,982,342
$ 2,257,218
$ 2,495,552
$ 2,297,462
$ 6,795,823
$ 6,691,303
$ 4,444,984
$ 24,982,342
-
213,509
419,098
2,054,370
2,081,912
1,745,644
6,514,533
- (
38) (
21,894 ) (
36,914 ) (
42,875) (
12,951) (
114,672)
-
228,361
134,272
242,063
25,430 (
621,446)
8,680
- (
190,100) (
558,428 ) (
2,266,631 ) (
1,746,149) (
1,232,539) (
5,993,847)
-
-
- (
1,359 ) (
10,406)
1,796 (
9,969)

468)
(
4,178)
(
3,093 )
(
14,370)
(
28,442)
(
43,753)
(
94,304)
$ 2,256,750
$ 2,743,106
$ 2,267,417
$ 6,772,982
$ 6,970,773
$ 4,281,735
$ 25,292,763
$ 2,273,117
$ 4,723,111
$ 6,612,678
$ 21,159,733
$ 18,345,784
$ 9,627,520
$ 62,742,143
16,367)
(
1,980,005 )
(
4,345,461 )
(
14,386,751 )
(
11,375,011 )
(5,345,785)
(
37,449,380)
$ 2,256,750
$ 2,743,106
$ 2,267,417
$ 6,772,982
$ 6,970,773
$ 4,281,735
$ 25,292,763

~39~

At January 1, 2017
Cost
Accumulated depreciation and
impairment
(
2017
Opening net book amount as of
January 1
Additions
Acquired through business
combinations
Disposals
Reclassifications
Depreciation charge
(Impairment loss) reversal of
impairment loss
Net exchange differences
(
Closing net book amount as of
December 31
At December 31, 2017
Cost
Accumulated depreciation and
impairment
(

Land
Buildings
Transportation
equipment
Office
equipment
Leasehold
improvements
Others
Total
$ 2,246,915
$ 4,049,783
$ 5,833,407
$ 18,856,770
$ 12,857,463
$ 8,330,108
$ 52,174,446

16,520)
(
1,622,614 )
(
3,721,333 )
(
12,428,793 )
(
7,790,593 )
(4,265,302)
(
29,845,155)
$ 2,230,395
$ 2,427,169
$ 2,112,074
$ 6,427,977
$ 5,066,870
$ 4,064,806
$ 22,329,291
$ 2,230,395
$ 2,427,169
$ 2,112,074
$ 6,427,977
$ 5,066,870
$ 4,064,806
$ 22,329,291
-
117,987
699,970
2,127,853
1,659,439
2,310,334
6,915,583
-
-
-
286,652
1,120,999
88,235
1,495,886
- (
1,741) (
25,417 ) (
79,491 ) (
82,219) (
4,216) (
193,084)
28,822
147,393
94,288
109,184
229,984 (
712,898) (
103,227)
- (
182,513) (
580,141 ) (
2,079,863 ) ( 1,199,519) (
1,093,192) (
5,135,228)
153 (
11,122)
-
6,723 (
6,393) (
1,214) (
11,853)

2,152)
(
1,621)
(
3,312 )
(
3,212)
(
97,858)
(
206,871)
(
315,026)
$ 2,257,218
$ 2,495,552
$ 2,297,462
$ 6,795,823
$ 6,691,303
$ 4,444,984
$ 24,982,342
$ 2,273,584
$ 4,296,089
$ 6,343,845
$ 20,180,016
$ 17,259,683
$ 9,456,005
$ 59,809,222
16,366)
(
1,800,537 )
(
4,046,383 )
(
13,384,193 )
(
10,568,380 )
(5,011,021)
(
34,826,880)
$ 2,257,218
$ 2,495,552
$ 2,297,462
$ 6,795,823
$ 6,691,303
$ 4,444,984
$ 24,982,342

B. Information on the property, plant and equipment acquired from business combinations is provided in Note 6(30).

C. Information on reversal of impairment loss on property, plant and equipment is provided in Note 6(11).

D. Information on property, plant and equipment pledged to others as collateral is provided in Note 8.

~40~

(8) Investment property

Investment property
2018 January 1, 2018 Depreciation charge December 31, 2018 2017 January 1, 2017 Additions Reclassification Depreciation charge Impairment loss December 31, 2017	Land $ 1,059,538 - $ 1,059,538 Land $ 902,270 132,700 28,047 - ( 3,479)	Buildings $ 459,577 ( 16,956)		Total $ 1,519,115 ( 16,956) $ 1,502,159 Total $ 1,359,189 149,305 31,350 ( 16,916) ( 3,813) $ 1,519,115
		$ 442,621 Buildings $ 456,919 16,605 3,303 ( 16,916) ( 334)
	$ 1,059,538		$ 459,577

The fair value of the investment property held by the Group as at December 31, 2018 and 2017 ranged from $4,026,641 to $4,186,928, which was assessed based on recent settlement prices of similar and comparable properties, as well as the reports of independent appraisers.

(9) Intangible assets

Intangible assets
At January 1, 2018 Cost Accumulated amortization and impairment 2018 Opening net book amount as of January 1 Additions Reclassifications Amortization expenses Impairment loss Net exchange differences Closing net book amount as of December 31 At December 31, 2018 Cost Accumulated amortization and impairment	Software $ 1,568,017 ( 975,791 ) $ 592,226 $ 592,226 126,471 ( 303 ) ( 248,620 ) ( 819 ) 15,292 $ 484,247 $ 1,648,652 (1,164,405 ) $ 484,247	Goodwill License agreement and customer list Others Total $ 2,202,519 $ 7,524,890 $ 405,998 $ 11,701,424 - - ( 68,920) ( 1,044,711 ) $ 2,202,519 $ 7,524,890 $ 337,078 $ 10,656,713 $ 2,202,519 $ 7,524,890 $ 337,078 $ 10,656,713 - - 70,513 196,984 - - ( 1,117 ) ( 1,420 ) - ( 194,160 ) ( 31,901 ) ( 474,681 ) - - - ( 819 ) 1,765 - 46 17,103 $ 2,204,284 $ 7,330,730 $ 374,619 $ 10,393,880 $ 2,204,284 $ 7,524,890 $ 469,957 $ 11,847,783 - ( 194,160 ) ( 95,338) ( 1,453,903 ) $ 2,204,284 $ 7,330,730 $ 374,619 $ 10,393,880
	(

~41~

Software At January 1, 2017 Cost $ 1,368,689 Accumulated amortization and impairment ( 774,768 ) $ 593,921 2017 Opening net book amount as of January 1 $ 593,921 Additions 215,774 Additions`－`acquired through business combinations - Disposals ( 4,382 ) Reclassifications 9,222 Amortization expenses ( 221,316 ) Net exchange differences ( 993 ) ( Closing net book amount as of December 31 $ 592,226 At December 31, 2017 Cost $ 1,568,017 Accumulated amortization and impairment ( 975,791 ) $ 592,226	Goodwill $ 378,673 - $ 378,673 $ 378,673 - 1,826,565 - - - 2,719 ) $ 2,202,519 $ 2,202,519 - $ 2,202,519	License agreement and customer list Others Total $ - $ 160,300 $ 1,907,662 - ( 56,718) ( 831,486 ) $ - $ 103,582 $ 1,076,176 $ - $ 103,582 $ 1,076,176 - 97,401 313,175 7,524,890 - 9,351,455 - 3,702 ( 680 ) - 161,486 170,708 - ( 28,355) ( 249,671 ) - ( 738) ( 4,450 ) $ 7,524,890 $ 337,078 $ 10,656,713 $ 7,524,890 $ 405,998 $ 11,701,424 - ( 68,920) ( 1,044,711 ) $ 7,524,890 $ 337,078 $ 10,656,713

A. Information on the intangible assets acquired from business combinations is provided in Note 6(30).

B. Amortization expenses on intangible assets are recognized as operating expenses.

(10) Other non-current assets

Guarantee deposits paid Others	December 31, 2018 $ 2,766,913 437,846 $ 3,204,759	December 31, 2017 $ 2,656,420 521,049 $ 3,177,469

~42~

(11) Impairment of non-financial assets

A. The Group recognized impairment loss for the years ended December 31, 2018 and 2017 amounting to $10,788 and $15,666, respectively. Details of impairment loss are as follows:

Impairment loss Property, plant and equipment Investment property Intangible assets - Software	For the year ended December 31, 2018 Recognized in other Recognized in comprehensive profit or loss income $ 9,969 $ - - - 819 - $ 10,788 $ -	For the year ended December 31, 2018 Recognized in other Recognized in comprehensive profit or loss income $ 9,969 $ - - - 819 - $ 10,788 $ -		For the year ended December 31, 2017	For the year ended December 31, 2017
	Recognized in profit or loss $ 9,969 - 819 $ 10,788			Recognized in profit or loss $ 11,853 3,813 - $ 15,666	Recognized in other comprehensive income $ - - - $ -

B. Goodwill is allocated to the Group’s cash-generating units based on operating segments. The recoverable amount of all cash-generating units has been determined based on value-in-use calculations, which use pre-tax cash flow projections based on five-year financial budgets approved by the management. The Group performs impairment testing annually.

(12) Short-term borrowings

Type of borrowings Bank borrowings Credit loan Type of borrowings Bank borrowings Credit loan	December 31, 2018 $ 7,237,785 December 31, 2017 $ 965,180	Interest rate range 0.65%~7.00% Interest rate range 0.94%~4.35%	Collateral None Collateral None

There was no capitalisation of borrowing costs for the years ended December 31, 2018 and 2017. Relevant interest expense on borrowings is recognized as “finance costs”.

~43~

(13) Other payables

(14)
(15)

December 31, 2018
December 31, 2017
Store collections
$ 12,750,758 $ 11,947,975
Wages, salaries and bonus payable
5,033,232
4,399,047
Sales receipt on behalf of others
1,176,154
1,134,831
Incentive bonus payable to franchisees
1,047,674
930,996
Payables for acquisition of property, plant and
equipment
914,557
1,071,524
Employees’ compensation and remuneration for
directors and supervisors
879,671
1,612,325
Rent payable
848,049
803,066
Payables for labor and health insurance
238,255
240,769
Payables for equity investments (See Note 6(6)C)
-
3,226,806
Others
5,065,831
5,612,912
$ 27,954,181
$ 30,980,251
Other current liabilities
December 31, 2018
December 31, 2017
Advance receipts for gift certificates
$ 1,338,984 $ 1,240,616
Advance receipts of deposits in icash cards
1,199,455
1,064,779
Current portion of long-term liabilities
335,860
273,754
Advance receipts of members’ deposits
-
1,059,753
Advance receipts for gift cards
-
737,431
Advance receipts for franchise fee
-
231,312
Others
386,239
745,006
$ 3,260,538
$ 5,352,651
Advance receipts of members’ deposits, gift cards, and franchise fee are recognized as contract
liabilities in accordance with IFRS 15 from January 1, 2018. Please refer to Notes 3(1) C and 6(22).
Long-term borrowings
Type of borrowings
Interest rate range
Collateral
December 31, 2018
Long-term bank borrowings
Credit loan
0.80%~6.298%
None
$ 741,157
Secured borrowings
1.79%~1.96%
Transportation
equipment
441,743
1,182,900
Less: Current portion
(
335,860)
$ 847,040

~44~

Type of borrowings Long-term bank borrowings Credit loan Secured borrowings Less: Current portion	Interest rate range 0.85%~3.643% 1.77%~1.98%	Collateral None Property, plant and equipment (	December 31, 2017 $ 1,018,506 360,699 1,379,205 273,754) $ 1,105,451

There was no capitalization of borrowing costs for the years ended December 31, 2018 and 2017. Relevant interest expense on borrowings is recognized as “finance costs”.

(16) Pensions
A. The Company and its domestic subsidiaries operate a defined benefit pension plan, in accordance with the Labor Standards Law, which covers all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Labor Standards Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last six months prior to retirement. The Company and its domestic subsidiaries contributes monthly an amount equal to 2%-8% of employees’ monthly salaries and wages to a retirement fund at the Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March. Furthermore, the subsidiary, Philippine Seven Corporation, operates an employer matching pension plan, under which the employer contributes the same amount as employees’ to the employee’s individual pension accounts.
- (a) The amounts recognized in the balance sheet are as follows

	December 31, 2018	December 31, 2018	December 31, 2017	December 31, 2017
Present value of defined benefit obligations	($	7,616,936 )	($	7,319,158 )
Fair value of plan assets		2,884,387		2,744,358
Net defined benefit liability	($	4,732,549)	($	4,574,800 )

~45~

(b) Movements in net defined benefit liabilities are as follows:

Present value of
defined benefit		Fair value of	Net defined
obligations		plan assets	benefit liability

	$ 2,744,358 ($ 4,574,800 ) - ( 91,136 ) 36,958 ( 60,670 ) - ( 70 ) 2,781,316 ( 4,726,676 ) 69,722 69,722 - ( 6,614 ) - ( 181,662 ) - ( 37,866 ) 69,722 ( 156,420 ) 148,001 148,001 ( 114,652 ) 2,546 33,349 150,547 $ 2,884,387 ($ 4,732,549 )	$ 2,744,358 - 36,958 -
		2,781,316
		69,722 - - -
		69,722
		33,349 $ 2,884,387

~46~

	Present value of	Present value of
	defined benefit			Fair value of		Net	defined
		obligations			plan assets	benefit liability
For the year ended December 31, 2017
Balance at January 1	($	6,851,392 )		$	2,585,420	($	4,265,972 )
Current service cost	(	92,250 )			-	(	92,250 )
Interest (expense) income	(	104,593 )			40,040	(	64,553 )
Past service cost		4,944			-		4,944
	(	7,043,291 )			2,625,460	(	4,417,831 )
Remeasurements:
Return on plan assets (not including the
amount included in interest income or
expense)		-	(		13,939 )	(	13,939 )
Change in demographic assumptions	(	8,122 )			-	(	8,122 )
Change in financial assumptions	(	175,119 )			-	(	175,119 )
Experience adjustments		21,185			-		21,185
	(	162,056 )	(		13,939)	(	175,995 )
Pension fund contribution		-			159,256		159,256
Paid pension		135,711		(	111,246 )		24,465
Effect of business combination	(	249,522 )			84,827	(	164,695 )
	(	113,811 )			132,837		19,026
Balance at December 31	($	7,319,158 )		$	2,744,358	($	4,574,800 )

(c) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2018 and 2017 is given in the Annual Labor Retirement Fund Utilization Report announced by the government.

~47~

(d)The principal actuarial assumptions used were as follows:

The principal actuarial assumptions used were as	follows:
	For the year ended	For the year ended
	December 31, 2018	December 31, 2017
Discount rate	1.00%~7.53 %	1.00%~5.05%
Future salary increases	2.00%~5.50 %	2.00%~5.50%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

	Discount	Discount	rate		Future salary	Future salary	increases
	Increase		Decrease		Increase		Decrease
	0.25%		0.25%		0.25%		0.25%
December 31, 2018
Effect on present value of
defined benefit obligation($	234,734 )	$	245,789	$	240,476	($	230,362 )
December 31, 2017
Effect on present value of
defined benefit obligation($	234,327 )	$	245,304	$	240,403	($	230,421 )
The sensitivity analysis above	is based on	one	assumption	which changed while the other
conditions remain unchanged. In practice, more			than one assumption may change				all at once.
The method of analysing sensitivity and the		method of calculating net pension liability in the
balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

(e)Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2019 amounts to $165,526.
(f)As of December 31, 2018, the weighted average duration of the retirement plan is 9 to 24 years. The analysis of timing of the future pension payment was as follows:

Within 1 year 1-2 year(s) 2-5 years Over 5 years	$ 149,536 207,355 693,565 12,174,736 $ 13,225,192

B. Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

~48~

(a) The Company’s mainland China subsidiaries have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC.) are based on certain percentage of employees’ monthly salaries and wages. The contribution percentage for the years ended December 31, 2018 and 2017 was 14%~22% and 14%~25%, respectively. Other than the monthly contributions, the Group has no further obligations.
(b)The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2018 and 2017 were $929,308 and $828,204, respectively.

(17) Other non-current liabilities

Guarantee deposit received Provision for decommissioning liability Deferred income Others	December 31, 2018 $ 3,413,265 421,966 71,060 450,698 $ 4,356,989	December 31, 2017 $ 3,355,171 392,807 365,868 307,885 $ 4,421,731

(18) Share capital

As of December 31, 2018, the Company’s authorized capital was $10,500,000, consisting of 1,050,000,000 shares of ordinary stock, and the paid-in capital was $10,396,223 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected. The number of the Company’s outstanding ordinary shares was both 1,039,622,255 shares as of December 31, 2018 and 2017.

(19) Capital surplus

In accordance with the Company Act of the Republic of China, any capital surplus arising from paidin capital in excess of the par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the Securities and Exchange Law of the Republic of China requires that the amount of capital surplus to be capitalized, as above, should not exceed 10% of paid-in capital each year. Capital surpluses should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(20) Retained earnings

A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, must first be used to pay all taxes and offset prior years’ operating losses, then 10% of the remaining amount is to be set aside as a legal reserve. After setting aside or reversing a special reserve, in accordance with related laws, the remaining amount is distributable for the given period. The appropriation of the total distributable amount (that is, the distributable amount for the period along with accumulated unappropriated earnings from prior years) should be proposed by the Board of Directors and voted on by the shareholders at the shareholders’ meeting. The dividends and bonus to be distributed to shareholders may be 50%-100% of the total distributable amount, and 50%100% of dividends are to be distributed as cash dividends, and the remaining undistributed amount to set aside as unappropriated retained earnings.
B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of the legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

~49~

C. In accordance with the regulations, the Company shall set aside a special reserve for the debit balance on other equity items at the balance sheet date before distributing earnings. When the debit balance on other equity items is reversed subsequently, the reversed amount should be included in the distributable earnings.
D. The appropriations for 2017 and 2016 as resolved by the shareholders on June 12, 2018 and June 13, 2017, respectively, are as follows:

Legal reserve Special reserve Cash dividends	2017 Dividends per share Amount (in dollars) $ 3,101,709 398,859 25,990,556 $ 25.00	2016 Dividends per share Amount (in dollars) $ 983,669 - 8,316,978 $ 8.00
	Amount $ 3,101,709 398,859 25,990,556	Amount $ 983,669 - 8,316,978

E. The appropriations for 2018 as resolved by the Board of Directors on February 27, 2019 are as follows:

follows:
Legal reserve Cash dividends	2018 Dividends per share Amount (in dollars) $ 1,020,639 9,148,676 $ 8.80
	Amount $ 1,020,639 9,148,676

F. See Note 6(24) for information on employees’ compensation and directors’ and supervisors’ remuneration.
(21) Other equity items

Cash dividends 9,148,676 $ F. See Note 6(24) for information on employees’ compensation and directors’ and remuneration. Other equity items	9,148,676 $ tion on employees’ compensation and directors’ and	9,148,676 $ tion on employees’ compensation and directors’ and	9,148,676 $ tion on employees’ compensation and directors’ and	9,148,676 $ tion on employees’ compensation and directors’ and	8.80 supervisors’
For the year ended December 31, 2018 Exchange differences from translation of foreign operations Unrealized gains/(losses) on valuation of financial assets at fair value through other comprehensive income Unrealized gains/(losses) on available- for-sale financial assets At January 1, 2018 ($ 906,308) $ - $ 507,449 Adjustments under new standards - 477,996 ( 507,449) Adjusted beginning balance ( 906,308) 477,996 - Revaluation: –Group - ( 145,386 ) - –Associates - ( 2,842 ) - Revaluation-tax - 3,666 - Currency translation differences: –Group 620,123 - –Associates 6,356 - - At December 31, 2018 ($ 279,829) $ 333,434 $ -	For the year ended December 31, 2018				Total ($ 398,859 ) ( 29,453 ) ( 428,312 ) ( 145,386 ) ( 2,842 ) 3,666 620,123 6,356 $ 53,605
			Unrealized gains/(losses) on valuation of financial assets at fair value through other comprehensive income $ - 477,996 477,996 145,386 ) 2,842 ) 3,666 - - $ 333,434	Unrealized gains/(losses) on available- for-sale financial assets $ 507,449 ( 507,449) - - - - - $ -

~50~

			For the year	For the year	ended December 31, 2017	ended December 31, 2017
					Unrealized
		Exchange differences			gains/(losses) on
			from translation of		available-for-sale
			foreign operations		financial assets		Total
At January 1, 2017	($		186,228 )	$	357,817	$	171,589
Revaluation:
–Group			-		151,253		151,253
–Associates			-		4,662		4,662
Revaluation-tax			-	(	6,283 ) (		6,283 )
Currency translation differences:
–Group	(		699,698 )		-	(	699,698 )
–Associates	(		20,382 )		-	(	20,382 )
At December 31, 2017	($		906,308 )	$	507,449	($	398,859 )

(22) Operating revenue

Revenue from contracts with customers

For the year ended December 31, 2018 $ 244,887,853

A. Disaggregation of revenue from contracts with customers

The Group operates a chain of retail stores and derives revenue from the transfer of goods and services over time and at a point in time. The operating revenue is categorized based on operating departments and goods or services recognition timing as follows:

For the year ended December 31, 2018 Total segment revenue Inter-segment revenue ( Revenue from external customer contracts Timing of revenue recognition –At a point in time –Over time	Convenience stores $154,074,731 661,980) $153,412,751 $152,882,351 530,400 $153,412,751	Retail business group $ 71,688,324 ( 2,229,011) $ 69,459,313 $58,123,140 11,335,903 $ 69,459,313	Logistics business group $ 15,113,788 (13,091,717) $ 2,022,071 $ 1,791,172 230,899 $ 2,022,071	Others $ 26,673,796 (6,680,078) $ 19,993,718 $19,146,737 846,981 $ 19,993,718	Total $ 267,550,639 ( 22,662,786 ) $ 244,887,853 $ 231,943,670 12,944,183 $ 244,887,853

B. Contract liabilities

(a) The Group has recognized the following revenue-related contract liabilities:

The Group has recognized the following revenue-related contract liabilities:
Contract liabilities – advance receipts of gift certificates and gift cards Contract liabilities – members’ deposits Contract liabilities – franchise fee Contract liabilities – customer loyalty programs Contract liabilities – others	December 31, 2018
	$ 1,392,390 764,782 230,812 344,970 344,656 $ 3,077,610

~51~

Contract liabilities- current Contract liabilities- non-current	December 31, 2018 $ 2,843,189 234,421 $ 3,077,610

(b) Revenues recognized that were included in the contract liabilities balance at the beginning was $1,969,390 for the year ended December 31, 2018.
C. Related disclosures on operating revenue for the year ended December 31, 2017 are provided in Note 12(5) B.

(23) Expenses by nature

Cost of goods sold Employee benefit expense Incentive bonuses for franchisees Operating lease payments Depreciation and amortization Utilities expense Other costs and expenses Total operating costs and operating expenses	For the year ended December 31, 2018 $ 143,437,684 25,533,260 20,904,939 12,433,194 6,577,856 4,230,128 18,935,968 $ 232,053,029	For the year ended December 31, 2017 $ 130,527,303 23,348,191 19,604,749 10,697,568 5,491,735 3,847,338 17,193,038 $ 210,709,922

(24) Employee benefit expense

Employee benefit expense
Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses	For the year ended December 31, 2018 $ 21,058,795 1,952,864 1,081,184 1,440,417 $ 25,533,260	For the year ended December 31, 2017 $ 19,408,418 1,692,115 980,063 1,267,595
		$ 23,348,191

A. According to the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ and supervisors’ remuneration. The ratio shall not be lower than 2% for employees’ compensation and shall not be higher than 2% for directors’ and supervisors’ remuneration.
B. For the years ended December 31, 2018 and 2017, employees’ compensation was accrued at $576,995 and $985,057, respectively; while directors’ and supervisors’ remuneration was accrued at $192,772 and $549,159, respectively.

The employees’ compensation and directors’ and supervisors’ remuneration were estimated and accrued based on 4.37% and 1.46% of profit of the current year distributable for the year ended December 31, 2018. The employees’ compensation and directors’ and supervisors’ remuneration resolved by the Board of Directors were $576,995 and $192,772 and the employees’

~52~

compensation will be distributed in the form of cash.

Employees’ compensation and directors’ and supervisors’ remuneration for 2017 as resolved at the meeting of Board of Directors were in agreement with those amounts recognized in the 2017 financial statements.

Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved by the Board of Directors and shareholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(25) Other income

Grants income Interest income Rental revenue Dividend income Others	For the year ended December 31, 2018 $ 606,034 699,385 136,430 65,124 918,300 $ 2,425,273	For the year ended December 31, 2017 $ 582,706 172,023 168,858 1,135,332 887,816 $ 2,946,735

(26) Other gains and losses

Other gains and losses
		For the year ended			For the year ended
		December 31, 2018			December 31, 2017
Gain on disposal of investments (See Note 6(6))		$	59		$	26,641,776
Loss on disposal of property, plant and equipment	(		33,275)	(		53,095 )
Impairment loss	(		10,788 )	(		15,666 )
Other expenses	(		93,182)	(		259,449 )
	($		137,186)		$	26,313,566
Finance cost
		For the year ended			For the year ended
		December 31, 2018		December 31, 2017
Interest expense	$		144,662	$		94,511

(27) Finance cost

Interest expense

~53~

(28) Income tax

A. Income tax expense

(a)Components of income tax expense:

ome tax ncome tax expense (a)Components of income tax expense:
		For the year ended			For the year ended
		December 31, 2018			December 31, 2017
Current tax:
Current tax on profits for the year		$	3,013,928		$	5,757,845
Tax on undistributed surplus earnings			135,159			36,045
Over provision of prior year's income tax			13,108	(		3,993 )
Total current tax			3,162,195			5,789,897
Deferred tax:
Origination and reversal of temporary
differences	(		144,430 )			3,273,719
Impact of change in tax rate			640,304			-
Total deferred tax			495,874			3,273,719
Income tax expense		$	3,658,069		$	9,063,616
(b)The income tax (charge)/credit relating to the components of other comprehensive income is
as follows:
		For the year ended			For the year ended
		December 31, 2018			December 31, 2017
Fair value gains/losses on available-for-sale
financial assets		$	-		$	6,283
Remeasurement of defined benefit obligations	(		25,881 )	(		30,087 )
Changes in fair value of financial assets at fair
value through other comprehensive income	(		6,984 )			-
Impact of change in tax rate	(		46,977)			-
	($		79,842)	($		23,804 )

~54~

B. Reconciliation between income tax expense and accounting profit

		For the year ended	For the year ended	For the year ended	For the year ended
		December 31, 2018		December 31, 2017
Tax calculated based on profit before tax and
statutory tax rate		$	3,727,941	$	10,019,101
Expenses disallowed by tax regulation	(		800,533 ) (		783,607 )
Capital reduction plan to offset accumulated deficit	(		8,302 ) (		151,165 )
Additional 10% tax on undistributed earnings			135,159		36,045
Over provision of prior year’s income tax			13,108 (		3,993 )
Effect from loss carryforwards	(		49,608 ) (		52,765 )
Effect from changes in tax regulation			640,304		-
Income tax expense		$	3,658,069	$	9,063,616

The difference between the Group’s accounting income and taxable income in 2018 and 2017 was mainly due to the dividend income, investment tax credits and the operating profit of subsidiaries.

C. Amounts of deferred tax assets or liabilities as a result of temporary differences, tax losses and investment tax credits are as follows:

investment tax credits are	as	follows:
				For the	year	ended December 31, 2018
					Recognized in
			Recognized			other		Effect from
				in profit	comprehensive				changes in
	January 1			or loss		income		tax regulation			December 31
Deferred tax assets
Allowance for doubtful
accounts	$	13,261 ($		975 )	$	-		$	2,453		$	14,739
Unrealized sales allowance		14,828 (		7,382 )		-			2,783			10,229
Loss on inventory market
value decline		27,106 (		4,454 )		-			2,796			25,448
Unrealized expenses		403,819		62,319		-			45,138			511,276
Book-tax difference of pension		82,532 (		238 )		-			72,426			154,720
Remeasurements of the
defined benefit plan		718,129		-		25,881			50,391			794,401
Tax losses		86,867 (		8,515 )		-			15,329			93,681
Others		62,642		23,461		-			36,446			122,549
		1,409,184		64,216		25,881			227,762			1,727,043
Deferred tax liabilities
Unrealized gain	(	1,308,068)		35,835		6,984	(		230,816)	(		1,496,065)
Foreign investment income	(	3,344,880)		44,379		-	(		590,273)	(		3,890,774)
	(	4,652,948)		80,214		6,984	(		821,089)	(		5,386,839)
	($	3,243,764 )	$	144,430	$	32,865	($		593,327)	($		3,659,796)

~55~

January 1 Deferred tax assets Allowance for doubtful accounts $ 24,586 Unrealized sales allowance 16,240 Loss on inventory market value decline 43,193 Unrealized expenses 267,811 Book-tax difference of pension 71,442 Remeasurements of the defined benefit plan 665,790 Tax losses 82,300 Others 36,670 1,208,032 Deferred tax liabilities Unrealized gain ( 10,219) Foreign investment income - ( 10,219) $ 1,197,813			For the	year ended December 31, 2017	year ended December 31, 2017	year ended December 31, 2017		December 31 $ 13,261 14,828 27,106 403,819 82,532 718,129 86,867 62,642
	January 1	Recognized in profit or loss ($ 11,325) ( 1,412) ( 16,087) 83,812 ( 2,031) - 4,567 13,458 70,982 179 ( 3,344,880) ( 3,344,701) ($ 3,273,719)	Recognized in profit or loss			Business combinations $ - - - 52,196 13,121 22,252 - - 87,569 1,279,231) - 1,279,231)
								1,409,184
							( 1,308,068) ( 3,344,880) ( 4,652,948) ($ 3,243,764)
				18,797)
$ 1,197,813				$ 23,804	($ 1,191,662)

D. Expiration dates of unused taxable loss and amounts of unrecognized deferred tax assets are as follows:

December 31, 2018 Unrecognized Year incurred Amount filed/assessed Unused amount deferred tax assets Usable until 2009~2018 $ 2,620,037 $ 2,620,037 $ 2,151,633 2019~2028 December 31, 2017 Unrecognized Year incurred Amount filed/assessed Unused amount deferred tax assets Usable until 2008~2017 $ 4,383,344 $ 4,383,344 $ 3,872,364 2018~2027

~56~

E. The amounts of deductible temporary differences that were not recognized as deferred tax assets are as follows:

are as follows:
	For the year ended	For the year ended
	December 31, 2018	December 31, 2017
Deductible temporary differences	$ 116,691	$ 150,516

F. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.
G. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China on February 7, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has assessed the impact of the change in income tax rate.

(29) Earnings per share

change in income tax rate. Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ bonus Shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	For the year ended December 31, 2018 Amount Weighted average number of ordinary shares outstanding Earnings per share after tax (shares in thousands) (in dollars) $ 10,206,388 1,039,622 $ 9.82 $ 10,206,388 1,039,622 - 2,437 $ 10,206,388 1,042,059 $ 9.79
	Amount after tax $ 10,206,388 $ 10,206,388 - $ 10,206,388	Weighted average number of ordinary shares outstanding (shares in thousands) 1,039,622 1,039,622 2,437 1,042,059

~57~

Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ bonus Shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	For the year ended December 31, 2017 Amount Weighted average number of ordinary shares outstanding Earnings per share after tax (shares in thousands) (in dollars) $ 31,017,094 1,039,622 $ 29.83 $ 31,017,094 1,039,622 - 3,848 $ 31,017,094 1,043,470 $ 29.72	For the year ended December 31, 2017 Amount Weighted average number of ordinary shares outstanding Earnings per share after tax (shares in thousands) (in dollars) $ 31,017,094 1,039,622 $ 29.83 $ 31,017,094 1,039,622 - 3,848 $ 31,017,094 1,043,470 $ 29.72
	Amount after tax $ 31,017,094 $ 31,017,094 - $ 31,017,094	Weighted average number of ordinary shares outstanding (shares in thousands) 1,039,622 1,039,622 3,848 1,043,470

(30) Business combinations

(1) The Group acquired additional an 30% shares of President Starbucks Coffee Corp. for cash consideration of $3,226,806 in December 2017and obtained the control over President Starbucks Coffee Corp., primarily engaged in the variety of foods, sales of coffee beans, and the operation of coffee shops.

(1)	The Group acquired additional an 30% shares of President Starbucks Coffee Corp. for cash consideration of $3,226,806 in December 2017and obtained the control over President Starbucks Coffee Corp., primarily engaged in the variety of foods, sales of coffee beans, and the operation of coffee shops.	The Group acquired additional an 30% shares of President Starbucks Coffee Corp. for cash consideration of $3,226,806 in December 2017and obtained the control over President Starbucks Coffee Corp., primarily engaged in the variety of foods, sales of coffee beans, and the operation of coffee shops.	The Group acquired additional an 30% shares of President Starbucks Coffee Corp. for cash consideration of $3,226,806 in December 2017and obtained the control over President Starbucks Coffee Corp., primarily engaged in the variety of foods, sales of coffee beans, and the operation of coffee shops.
(2)	The following table summarizes the consideration paid for President Starbucks Coffee Corp. and
	the fair values of the assets acquired and liabilities assumed at the acquisition date, as well as the
	fair value of the non-controlling interest at the acquisition date:
		December 31, 2017
	Cash-paid	$	3,226,806
	Fair value of equity previously held on the acquisition date		2,582,478
	Fair value of non-controlling interests		3,872,856
			9,682,140
	Fair value of identifiable assets and liabilities
	Cash and cash equivalents		700,961
	Other current assets		1,462,227
	Other non-current assets		1,838,829
	Other identifiable intangible assets		7,524,890
	Other current liabilities	(	2,088,442 )
	Other non-current liabilities	(	1,582,890 )
	Total identifiable net assets		7,855,575
	Goodwill	$	1,826,565

(3) The Group recognized a gain of $2,099,503 (shown as gain on disposal of investments) as a result

~58~

of measuring at fair value its 30% equity interest in President Starbucks Coffee Corp. held before the business combination. Please refer to Note 6(26).

(4) The fair value of the non-controlling interest in President Starbucks Coffee Corp. was estimated by considering the implied control premium deducted from the purchase price paid for the acquisition.

(31) Operating leases

Lessor

A. The Group leases its investment property and shopping centres to others under operating lease agreements on terms between two and ten years. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:

Less than one year Over one year but less than five years Over five years	December 31, 2018 $ 90,898 224,263 6,195 $ 321,356	December 31, 2017 $ 94,376 292,261 51,674 $ 438,311

Lessee

A. The Group leases business premises for its stores. The lease terms are between one and twenty years, and certain lease agreements are renewable at the end of the lease period. Rents are paid in accordance with the agreements. Partial leases incur extra rent based on the operating revenue of stores or changes in local price indices. Rental expenses recognized in profit and loss for the years ended December 31, 2018 and 2017 are as follows:

Rental expenses Contingent rents	For the year ended December 31, 2018 $ 11,594,263 $ 838,931	For the year ended December 31, 2017 $ 10,206,762 $ 490,806

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

Less than one year Over one year but less than five years Over five years	December 31, 2018 $ 10,955,633 36,200,668 22,658,778 $ 69,815,079	December 31, 2017 $ 9,765,924 30,324,865 15,732,948 $ 55,823,737

~59~

B. The Group has sub-leased certain business premises to others. Sublease revenues recognized in profit and loss for the years ended December 31, 2018 and 2017 are as follows:

	For the year ended	For the year ended
	December 31, 2018	December 31, 2017
Sublease revenues	$ 272,051	$ 257,336
Contingent rents	$ 1,212,481	$ 1,199,375

In accordance with non-cancellable sub-lease agreements as of December 31, 2018, sub-lease payments totalling $387,765 are expected to be collected between 2019 and 2028.

(32) Supplemental cash flow information

Investing activities with partial cash payments

Purchase of property, plant and equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment ( Cash paid during the year	December 31, 2018 $ 6,514,533 1,071,524 914,557) ( $ 6,671,500	December 31, 2017 $ 6,915,583 883,723 1,071,524 ) $ 6,727,782

(33) Changes in liabilities from financing activities

January 1, 2018 Changes in cash flow from financing activities Impact of changes in foreign exchange rate Changes in other non-cash items December 31, 2018	Short-term borrowings $ 965,180 6,272,605 ( - - $ 7,237,785	Short-term notes and bills payable Long-term borrowings $ 250,000 $ 1,105,451 250,000) ( 184,135) - ( 12,170) - ( 62,106) $ - $ 847,040	Other non- current liabilities- guarantee deposits received $ 3,355,172 58,093 - - ( $ 3,413,265	Other non- current liabilities- other $ 1,066,559 223,176 - ( 346,011) ( $ 943,724	Liabilities from financing activities- gross $ 6,742,362 6,119,739 12,170) 408,117) $ 12,441,814

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

The Company’s parent company and the Group’s ultimate parent company is Uni-President Enterprises Corp. which holds a 45.4% equity interest in the Company as of December 31, 2018.

~60~

(2) Names of related parties and relationship

Names of related parties Relationship with the Group Uni-President Enterprises Corp. Ultimate parent company Uni-President Organics Corp. Investee of the Group accounted for using the equity method Presicarre Corp. 〃 President Technology Corp. 〃 President Fair Development Corp. 〃 Mister Donut Taiwan Co., Ltd. 〃 Presco Netmarketing Inc. Subsidiary of ultimate parent company Uni-President (Kunshan) Trading Co., Ltd. 〃 Tait Marketing & Distribution Co., Ltd. 〃 Tung Ang Enterprises Corp. 〃 Lien-Bo Enterprises Corp 〃 President Packaging Corp. 〃 President Tokyo Corp. 〃 Shanghai Songjiang President Enterprises Co., 〃 Ltd. Kuang Chuan Dairy Corp. Investees of ultimate parent company accounted for using the equity method Weilih Food Industrial Co., Ltd. 〃 Kang Na Hsiung Enterprises Co., Ltd. Investees of subsidiaries of ultimate parent company accounted for using the equity method Tung Chan Enterprises Corp. 〃 Koasa Yamako Corp. The Company is a director of Koasa Yamako Corp. Zhenzhou President Enterprises Co., Ltd. Subsidiary of parent company’s sub-subsidiary Wei Kuon Co., Ltd. Subsidiaries of investee of ultimate parent company accounted for using the equity method

(3) Significant related party transactions and balances

A. Operating revenue

Sales of goods Ultimate parent Associates Sister companies Other related parties Sales of services Ultimate parent Associates Sister companies Other related parties	For the year ended December 31, 2018 $ 578,394 146,634 302,624 71,926 11,421 39,491 12,048 4,909 $ 1,167,447	For the year ended December 31, 2017 $ 558,127 1,165,505 247,093 83,659 8,014 153,513 11,334 2,924 $ 2,230,169

Goods are sold based on the price lists in force and terms that would be available to third parties.

~61~

B. Purchases

Ultimate parent Associates Sister companies Other related parties	For the year ended December 31, 2018 $ 15,352,392 286,086 3,927,299 2,139,641 $ 21,705,418	For the year ended December 31, 2017 $ 14,869,457 456,768 3,959,122 950,419 $ 20,235,766

Goods are purchased from related parties on normal commercial terms and conditions.

C. Receivables from related parties

Ultimate parent Associates Sister companies Other related parties	December 31, 2018 $ 201,321 73,101 85,384 4,722 $ 364,528	December 31, 2017 $ 190,171 68,686 72,400 8,725 $ 339,982

Receivables from related parties mainly arise from sales transactions. Receivables are unsecured in nature and bear no interest. There are no provisions for receivables from related parties.

D. Payables to related parties

Ultimate parent Associates Sister companies Other related parties	December 31, 2018 $ 1,631,289 63,739 442,907 370,822 $ 2,508,757	December 31, 2017 $ 1,558,451 68,577 406,713 327,697 $ 2,361,438

Payables to related parties mainly arise from purchase transactions. Payables bear no interest.

E. Property transactions

(a) Acquisition of property, plant and equipment and investment property:

Associates	Accounts Property, plant and equipment	For the year ended December 31, 2018 $ 38,384

~62~

Sister companies	Accounts Property, plant and equipment Investment property	For the year ended December 31, 2017 $ 32,215 179,669 $ 211,884

(b) Disposal of financial assets:

(b) Disposal of f	inancial assets:
Sister companies	Accounts Investments accounted for using equity method	No. of shares 108160	Objects Grand Bills Finance Corp.		For the year ended December 31, 2018
				Proceeds $ 1,828		Gain
						$ 59

(4) Key management compensation

Salaries and other short-term employee benefits

For the year ended For the year ended December 31, 2018 December 31, 2017 $ 675,400 $ 1,041,158

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Pledged asset Accounts receivable Land Buildings Transportation equipment Pledged time deposits (Recognized as “Other non-current assets - guarantee deposits paid ”)	Book value December 31, 2018 December 31, 2017 $ 20,000 $ - 128,643 368,869 50,230 187,884 586,353 493,134 56,495 49,665 $ 841,721 $ 1,099,552	Purpose
	December 31, 2018 $ 20,000 128,643 50,230 586,353 56,495 $ 841,721
		Performance guarantee Long-term and short-term borrowings and guarantee facilities Long-term and short-term borrowings and guarantee facilities Long-term borrowings and long-term installment payable Performance guarantee

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

None.

10. SIGNIFICANT DISASTER LOSS

None.

~63~

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

The Group’s objectives in this area are to retain the confidence of investors and the market, to fund future capital expenditures and stable dividend flows for ordinary shares, and to maintain the most appropriate capital structure to maximize the equity interest of shareholders.

(2) Financial instruments

A. Financial instruments by category

Financial assets Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets held for trading Financial assets at fair value through other comprehensive income Designation of equity instrument Qualifying equity instrument Available-for-sale financial assets Financial assets measured at cost Financial assets at amortized cost/Loans and receivables Cash and cash equivalents Accounts receivable Other receivables Guarantee deposits paid Financial liabilities Financial liabilities at amortized cost Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other payables Long-term borrowings (including current portion) Guarantee deposits received	December 31, 2018 $ 929,908 - 644,614 200,731 - - 48,530,648 5,264,573 1,535,507 2,766,913 $ 59,872,894 $ 7,237,785 - 1,866,610 23,148,683 27,954,181 1,182,900 3,413,265 $ 64,803,424	December 31, 2017 $ - 1,560,025 - - 1,050,734 25,721 35,783,291 4,868,902 28,412,101 2,656,420 $ 74,357,194 $ 965,180 250,000 2,066,511 21,170,963 30,980,251 1,379,205 3,355,171 $ 60,167,281

~64~

B. Risk management policies

(a) The Group’s risk management and hedging policies mainly focus on hedging business risk. The Group also establishes hedge positions when trading derivative financial instruments. The choice of instruments should hedge risks relating to interest expense, assets or liabilities arising from business operations.
(b) For managing derivative instruments, the treasury department is responsible for managing trading positions of derivative instruments and assesses market values periodically. If transactions and gains (losses) are abnormal, the treasury will respond accordingly and report to the Board of Directors immediately.
(c) There is no related transaction about derivative financial instruments that are used to hedge certain exchange rate risk.

C. Significant financial risks and degrees of financial risks

(a) Market risk

Foreign exchange risk

I. The Group operates internationally and is exposed to foreign exchange risk arising from of the Company and its subsidiaries used in various functional currency, the transactions primarily with respect to the USD and RMB. Exchange risk arises from future commercial transactions and recognized assets and liabilities.
II. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currencies.
III. The Company’s and certain subsidiaries’ functional currency is the New Taiwan dollar (NTD), and for other certain subsidiaries, the functional currency is the Renminbi (RMB). The details of assets and liabilities denominated in foreign currencies whose values would be materially affected by exchange rate fluctuations are as follows:

December 31, 2018 Foreign currency amount Exchange Book value (In thousands) rate (NTD) $ 739 30.7150 $ 22,698 1,742 4.4654 7,779 8,522 0.2782 2,371 - - - $ 721,500 0.2782 $ 200,721 $ 3,745 30.7150 $ 115,028 80,786 0.2782 22,475 1,152 4.4654 5,144	December 31, 2018 Foreign currency amount Exchange Book value (In thousands) rate (NTD) $ 739 30.7150 $ 22,698 1,742 4.4654 7,779 8,522 0.2782 2,371 - - - $ 721,500 0.2782 $ 200,721 $ 3,745 30.7150 $ 115,028 80,786 0.2782 22,475 1,152 4.4654 5,144	December 31, 2017 Foreign currency amount Exchange Book value (In thousands) rate (NTD) $ 3,610 29.7600 $ 107,434 507,009 4.5737 2,318,907 104,720 0.2642 27,667 4,410 3.8085 16,795 $ 891,900 0.2642 $ 235,640 $ 99,814 29.7600 $ 2,970,465 63,542 0.2642 16,788 - - -	December 31, 2017 Foreign currency amount Exchange Book value (In thousands) rate (NTD) $ 3,610 29.7600 $ 107,434 507,009 4.5737 2,318,907 104,720 0.2642 27,667 4,410 3.8085 16,795 $ 891,900 0.2642 $ 235,640 $ 99,814 29.7600 $ 2,970,465 63,542 0.2642 16,788 - - -	December 31, 2017 Foreign currency amount Exchange Book value (In thousands) rate (NTD) $ 3,610 29.7600 $ 107,434 507,009 4.5737 2,318,907 104,720 0.2642 27,667 4,410 3.8085 16,795 $ 891,900 0.2642 $ 235,640 $ 99,814 29.7600 $ 2,970,465 63,542 0.2642 16,788 - - -
Foreign currency amount (In thousands) $ 739 1,742 8,522 - $ 721,500 $ 3,745 80,786 1,152	Exchange rate 30.7150 4.4654 0.2782 - 0.2782 30.7150 0.2782 4.4654	Foreign currency amount (In thousands) $ 3,610 507,009 104,720 4,410 $ 891,900 $ 99,814 63,542 -	Exchange rate 29.7600 4.5737 0.2642 3.8085 0.2642 29.7600 0.2642 -
				$ 107,434 2,318,907 27,667 16,795 $ 235,640 $ 2,970,465 16,788 -

IV. Total exchange gain, including realized and unrealized gains from significant foreign exchange variations on monetary items held by the Group amounted to $57,437 and

~65~

$3,037 for the years ended December 31, 2018 and 2017, respectively.
V. Analysis of foreign currency market risk arising from significant foreign exchange variation. Foreign exchange risk with respect to USD primarily arises from the exchange gain or loss resulting from foreign currency translation of cash and cash equivalents, accounts receivable and accounts payable denominated in USD. As of December 31, 2018 and 2017, if the NTD:USD exchange rate appreciates/depreciates by 5% with all other factors remaining constant, the Group’s profit for the years ended December 31, 2018 and 2017 would increase/decrease by $4,616 and $143,151, respectively. Foreign exchange risk with respect to JPY primarily arises from the exchange gain or loss resulting from foreign currency translation of cash and cash equivalents, financial assets at fair value through other comprehensive income - non-current and accounts payable denominated in JPY. If the NTD:JPY exchange rate appreciates/depreciates by 5%, with all other factors remaining constant, the Group’s profit for the years ended December 31, 2018 and 2017 would increase/decrease by $9,031 and $12,326, respectively.

Price risk

I. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
II. The Group’s investments in equity securities comprise shares and open-ended funds issued by the domestic companies. The prices of equity securities would change due to change of the future value of investee companies. If the prices of these equity securities increase / decrease by 5%, and open-ended funds increase / decrease by 0.25%, with all other variables held constant, the post-tax profit for the years ended December 31, 2018 and 2017 would have increased/decreased by $6,395 and $3,900, respectively, as a result of gains/losses on equity securities and open-ended funds classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $32,231 and $39,206, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income and available-forsale equity investment.

Cash flow and fair value interest rate risk

I. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk, which are partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. For the years ended December 31, 2018 and 2017, the Group’s borrowings at variable rate were mainly denominated in New Taiwan dollars and Philippine Peso.
II. If the borrowing interest rate had increased/decreased by 0.25% with all other variables held constant, profit, net of tax for the years ended December 31, 2018 and 2017 would have increased/decreased by $2,332 and $2,698, respectively. The main factor is that changes in interest expense result in floating-rate borrowings.
III. If the government bond yield rate had increased/decreased by 0.25% with all other variables held constant, other comprehensive income for the years ended December 31, 2018 and 2017 would have decreased by $254 and $754 or increased by $245 and $747,

~66~

respectively. The main factor is that changes in market interest rates would affect the fair value of fixed interest rate bond investments held by the Group classified as financial assets at fair value through other comprehensive income.

(b) Credit risk

I. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortized cost, at fair value through profit or loss and at fair value through other comprehensive income.
II. The Group manages their credit risk taking into consideration the entire group’s concern. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted.
III. The Group operates a chain of retail stores, thus the ratio of accounts receivable to total asset is low. The Group classifies customers’ accounts receivable in accordance with credit rating of customer. The Group applies the simplified approach using provision matrix to estimate expected credit loss under the provision matrix basis and using the forecast ability to adjust historical and timely information to assess the default possibility of accounts receivable. Movements in relation to the group applying the simplified approach to provide loss allowance for accounts receivable are as follows:

	For the	year ended
	December 31, 2018
	Accounts receivable
At January 1_IAS 39	$	48,471
Adjustments under new standards		10,889
At January 1_IFRS 9		59,360
Provision for impairment		17,080
Reversal of impairment		3,873
Write-offs	(	21,509)
Effect of foreign exchange	(	3,340)
At December 31	$	55,464

IV. The Group’s investment in debt instrument is the government bond, which was issued by R.O.C, the risk of expected credit loss is low. The Group has no unrecognized allowance for investment in debt instrument at fair value through other comprehensive income for the year ended December 31, 2018.
V. The Group has no written-off financial assets that are still under recourse procedures on December 31, 2018.
VI. Credit risk information for the year ended December 31, 2017 is provided in Note 12(4).

(c) Liquidity risk

I. Cash flow forecasting is performed by the operating entities of the Group and aggregated by the Group’s finance department. It monitors rolling forecasts of liquidity requirements to ensure the Group has sufficient cash to meet operational needs, while maintaining sufficient headroom on its undrawn committed borrowing facilities, at all times, so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, and compliance with internal balance sheet ratio targets.

~67~

II. The Group invests surplus cash in interest bearing current accounts, time deposits, money market fund and marketable securities, and chooses instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the aforementioned forecasting. The Group held money market funds of $844,225 and $1,560,025 as at December 31, 2018 and 2017, respectively, which are expected to readily generate cash inflows for the purpose of managing liquidity risk.
III. The Group has undrawn borrowing facilities of $14,006,462 and $11,302,389 as of December 31, 2018 and 2017, respectively.
IV. The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

December 31, 2018 Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other payables Long-term borrowings (including current portion)	Less than Between Between 1 year 1 and 2 years 2 and 3 years Over 3 years $ 7,286,725 $ - $ - $ - - - - - 1,866,610 - - - 23,148,683 - - - 27,954,181 - - - 372,094 264,270 189,983 407,867

Non-derivative financial liabilities:

December 31, 2017 Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other payables Long-term borrowings (including current portion)	Less than Between Between 1 year 1 and 2 years 2 and 3 years Over 3 years $ 986,476 $ - $ - $ - 250,000 - - - 2,066,511 - - - 21,170,963 - - - 30,980,251 - - - 304,830 510,498 95,568 554,210

~68~

(3) Fair value information

A. The different levels of the inputs used in valuation techniques to measure the fair value of financial and non-financial instruments are defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks, beneficiary certificates and on-the-run Taiwan central government bonds is included in Level 1.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investments without an active market is included in Level 3.
B. Fair value information of the Group’s investment property at cost is provided in Note 6(8). C. Financial instruments not measured at fair value
(a) Except for those listed in the table below, the carrying amounts of cash and cash equivalents, accounts receivable, other receivables, short-term borrowings, notes payable, accounts payable and other payables are approximate to their fair values.

	December 31, 2018	December 31, 2018
Book value $ 2,766,913 $ 3,413,265		Fair value
	Level 1 Level 2 $ - $ - $ - $ - December 31, 2017		Level 3 $ 2,748,262 $ 3,384,951
Book value $ 2,656,420 $ 3,355,171		Fair value
	Level 1 $ - $ -	Level 2 $ - $ -	Level 3 $ 2,639,566 $ 3,327,231

(b) Guarantee deposits paid/received are measured at fair value, which is calculated based on the discounted future cash flow.
D. The related information for financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:
(a) Classification according to the nature of assets and liabilities, relevant information is as follows:

~69~

December 31, 2018			Level 1			Level 2			Level 3		Total
Assets
Recurring fair value
measurements
Financial assets at fair value
through profit or loss
Open-ended funds		$	844,225		$		-	$	-	$	844,225
Equity securities			-				-		85,683		85,683
			844,225				-		85,683		929,908
Financial assets at fair value
through other comprehensive
income
Equity securities			640,266				-		4,348		644,614
Debt securities			200,731				-		-		200,731
			840,997				-		4,348		845,345
		$	1,685,222		$		-	$	90,031	$	1,775,253
December 31, 2017			Level 1			Level 2			Level 3		Total
Assets
Recurring fair value
measurements
Financial assets at fair value
through profit or loss
Open-ended funds	$		1,560,025	$			-	$	-	$	1,560,025
Available-for-sale financial
assets
Equity securities			784,115				-		64,460		848,575
Government bond			202,159				-		-		202,159
			986,274				-		64,460		1,050,734
	$		2,546,299	$			-	$	64,460	$	2,610,759

(b) The methods and assumptions the Group used to measure fair value are as follows:
I. The instruments the Group uses market quoted prices as their fair values (that is, Level 1) are listed below:

Listed shares Open-ended fund Government bond Market quoted price Closing price Net asset value Closing price

II. Except for financial instruments with active markets, the fair value of other financial instruments is measured using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, by discounted cash flow method or other valuation methods, including calculations by applying models using market information available at the consolidated balance sheet date.

~70~

E. For the years ended December 31, 2018 and 2017, there was no transfer between Level 1 and Level 2.
F. For the years ended December 31, 2018 and 2017, there was no significant transfer in or out of Level 3.
G. The Group is in charge of valuation procedures for fair value measurements being categorized within Level 3, which to verify the independent fair value of financial instruments. Such assessments are to ensure the valuation results are reasonable by applying independent information to compare the results to current market conditions, confirming the information resources are independent, reliable and in line with other resources, and represented as the exercisable price, and frequently making any other necessary adjustments to the fair value. Investment property is assessed by independent appraisers or based on recent closing prices of similar property in the neighbouring area.
H. The qualitative information on significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement are provided below:

Non-derivative equity instrument: Unlisted shares Non-derivative Equity instrument: Unlisted shares	Fair value at December 31, 2018 $ 90,031 Fair value at December 31, 2017 $ 64,460	Valuation technique Market comparable companies Net asset value Valuation technique Net asset value	Significant unobservable input Price to book ratio multiplier Net asset value Significant unobservable input Net asset value	Range (weighted average) 2.61 - Range (weighted average) -	Relationship of inputs to fair value
					The higher the multiplier, the higher the fair value The higher the net asset value, the higher the fair value Relationship of inputs to fair value
					The higher the net asset value, the higher the fair value

I. The Group has carefully assessed the valuation models and assumptions used to measure fair value. However, the use of different valuation models or assumptions may result in different measurements. If net assets from financial assets and liabilities categorized within Level 3 had increased or decreased by 1%, other comprehensive income would not have been significantly impacted as of December 31, 2018, and 2017.

~71~

(4) Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017

A. Summary of significant accounting policies adopted in the third quarter of 2017:
(a) Financial assets at fair value through profit or loss
- I. They are financial assets held for trading. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term.
- II. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using settlement date accounting.
- III. Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss.
(b) Available for sale financial assets
- I. They are non-derivatives that are either designated in this category or not classified in any of the other categories.
- II. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.
- III. They are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are presented in ‘financial assets measured at cost’.
(c) Loans and receivables
- Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. They are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
(d) Impairment of financial assets
- I. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
- II. The criteria that the Group uses to determine whether there is objective evidence of an impairment loss is as follows:
  - (i) Significant financial difficulty of the issuer or debtor;
  - (ii) A breach of contract, such as a default or delinquency in interest or principal payments;
  - (iii) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
- III. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
  - (i) Financial assets at amortized cost

The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss

~72~

decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(ii) Financial assets at cost
The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at current market return rate of similar financial asset, and is recognized in profit or loss. Impairment loss recognized for this category shall not be reversed subsequently. Impairment loss is recognized by adjusting the carrying amount of the asset through the use of an impairment allowance account.
(iii) Available-for-sale financial assets

The amount of the impairment loss is measured as the difference between the asset’s acquisition cost and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

B. The reconciliations of carrying amount of financial assets transferred from December 31, 2017, IAS 39, to January 1, 2018, IFRS 9, were as follows:

						Available-for		Available-for
						sale-equity		sale-liability											Effects
				Measured at		Measured at		Measured at
		Accounts receivable,			fair value through profit or loss –	fair value through other comprehensive		fair value through other comprehensive		Measured at amortized					Retained				Other		Non- controlling
		net		non current		income-equity	income-liability				cost		Total		earnings				equity			interest
IAS 39		$ 4,868,902		$	-	$ 848,575	$	202,159	$		25,721		$5,945,357		$	-		$		-	$			-
Transferred into and
measured at fair value
through profit or loss			-		85,833 (	60,112)		-	(		25,721)			-		22,498	(		22,498)					-
Recognized the IFRS 9
effects through
investment accounted
for using equity
method			-		-	-		-			-			-		8,651	(		6,955)					-
Impairment loss
adjustment	(	10,889)			-	-		-			-	(	10,889)		(	5,686)				-	(		5,203)
IFRS 9		$ 4,858,013		$	85,833	$ 788,463	$	202,159	$		-		$5,934,468		$	25,463	($		29,453 )		($		5,203)

(a) Under IAS 39, because the cash flows of debt instruments, which were classified as availablefor-sale financial assets, amounting to $202,159, met the condition that it is intended to settle the principal and interest on the outstanding principal balance, and the Group held these assets for the purpose of receiving cash inflow and sale, thus were reclassified as “financial assets at fair value through other comprehensive income (debt instruments)” on initial application of IFRS 9.
(b) Under IAS 39, the equity instruments, which were classified as available-or-sale financial assets and financial assets at cost, amounting to $60,112 and $25,721, respectively, were reclassified as “financial assets at fair value through profit or loss (equity instruments)”, increased retained earnings and decreased other equity interest in the amounts of $22,498 and $22,498, respectively, under IFRS 9.

~73~

(c) The Group’s investee accounted for using the equity method made certain reclassifications in accordance with IFRS 9. Accordingly, the Group increased investments accounted for using the equity method and retained earnings in the amounts of $1,696 and $8,651, respectively, and decreased other equity interest in the amount of $6,955.
(d) The Group’s accounts receivable for impairment and provision which were impaired under IAS 39, is converted to expected credit losses under IFRS 9. In line with the regulation of IFRS 9 on provision for impairment, accounts receivable were reduced by $10,889, decreased retained earnings and non-controlling interests in the amounts of $5,686 and $5,203, respectively.
C. The significant accounts as of December 31, 2017 are as follows:
(a) Financial assets at fair value through profit or loss

Financial assets held for trading Open-ended fund Valuation adjustment of financial assets held for trading	December 31, 2017 $ 1,554,463 5,562 $ 1,560,025

The Group recognized net gain of $5,816 on financial assets held for trading for the year ended December 31, 2017.

(b) Available-for-sale financial assets - non-current

Listed stocks Unlisted stocks Government bonds Valuation adjustment	December 31, 2017 $ 265,606 41,963 199,840 507,409 543,325 $ 1,050,734

  - I. The Group recognized $151,253 in other comprehensive gain in relation to fair value changes for the year ended December 31, 2017.

  - II. The counterparties of the Group’s investments in debt instruments have good credit quality.

(c) Financial assets at cost
- I. According to the Group’s intention, its investment objectives should be classified as ‘available-for-sale financial assets’. However, as the investment objectives are not traded in active market, and no sufficient industry information of companies similar to their financial information cannot be obtained, the fair value of the investment objectives cannot be measured reliably. The Group classified those stocks as ‘financial assets measured at cost’.
- II. As of December 31, 2017, no financial assets measured at cost held by the Group were pledged to others.
D. Credit risk information as of December 31, 2017 and for the yaer ended December 31, 2017 are as follows:
(a) Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. Credit risk arises from cash and cash equivalents, and deposits with banks and financial institutions, as well as credit outstanding receivables. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted.
(b) For the year ended December 31, 2017, no credit limits were exceeded during the reporting

~74~

periods, and management does not expect any significant losses from non-performance by these counterparties.

(c) The Group’s accounts receivable that are neither past due nor impaired are fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scale of business and profitability.
(d) The ageing analysis of financial assets that were past due but not impaired is as follows:

(5)

December 31, 2017
Up to 90 days
$ 119,587
91 to 180 days
11,421
181 to 365 days
2,062
Over 365 days
11

$ 133,081
(e) Movements in the provision for impairment of accounts receivable for year ended
December 31, 2017 are as follows:
For the year ended
December 31, 2017
At January 1
$ 112,649
Provision for impairment
18,141
Write-offs
(
76,881)
Reversal of impairment
(
5,438)
At December 31
$ 48,471
Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in

2017

A. The significant accounting policies applied on revenue recognition for the year ended December 31, 2017 are set out below:
(a) Sales of goods
- I. The Group’s revenue is measured at the fair value of the consideration received or receivable taking into account of business tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognized when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity.
- II. The Group offers customers volume discounts and right of return for defective products. The Group estimates such discounts and returns based on historical experience. Allowance for such liabilities are recorded when the sales are recognized.
- III. The Group has customer loyalty programs where the Group grants loyalty award credits (such as ‘points’; the award credits can be used to exchange for free or discounted goods) to customers as part of a sales transaction. The fair value of the consideration received or receivable in respect of the initial sale shall be allocated between the initial sale of goods and the award credits. The amount of proceeds allocated to the award credits is measured by reference to the fair value of goods that can be redeemed by using the award credits and the proportion of award credits that are expected to be redeemed by customers. The Group recognizes the deferred portion of the proceeds allocated to the award credits as revenue only when it has fulfilled its obligations in respect of the award credits.

~75~

(b) Sales of services

The Group provides delivering services. Revenue from delivering services is recognized when the services is completed and the outcome of services provided can be estimated reliably. If the outcome of a service contract cannot be estimated reliably, contract revenue should be recognized only to the extent that contract costs incurred are likely to be recoverable.

B. The revenue recognized by using above accounting policies for the 2017 are as follows:

Sales revenue Service revenue Other operating revenue Total	For the year ended December 31, 2017 $ 196,057,358 12,566,609 12,508,115 $ 221,132,082

C. The effects and description of current balance sheet items if the Group continues adopting above accounting policies are as follows and no significant effects on current comprehensive income statement.

income statement.
Balance sheet items Accounts receivable, net Other current assets Other current liabilities Contract liabilities-current Contract liabilities-non- current Other non-current liabilities	Description (a) (a) (a)(b) (b) (b) (b)		December31,2018
		Balance by using IFRS 15 $ 5,264,573 3,004,894 3,260,538 2,843,189 234,421 4,356,989		Balance by using previous accounting policies Effects from changes in accounting policy $ 5,196,657 $ 67,916 2,970,264 34,630 6,001,181 ( 2,740,643 ) - 2,843,189 - 234,421 4,591,410 ( 234,421 )

(a) Under IFRS 15, liability in relation to expected discounts and refunds to customers is recognized as refund liability in the amount of $102,546. At the same time, the Group has a right to recover the product from the customer where the customer exercises his right of return and recognizes as current asset (shown as ‘other current assets’) in the amount of $34,630. But were previously presented as accounts receivable - allowance for sales discounts in the balance sheet.
(b) Under IFRS 15, liabilities in relation to sales of gift cards, and franchise agreements are recognized as contract liabilities, but were previously presented as advance sales receipts in the balance sheet. As of December 31, 2018, the balance amounted to $2,843,189. Liabilities in relation to the customer loyalty program are recognized as contract liabilities, but were previously presented as deferred revenue in the balance sheet. As of December 31, 2018, the balance amounted to $234,421 and was presented as non-current liability.

~76~

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: None.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to Table 1.
D. Acquisition or sale of the same security with the accumulated cost reaching $300 million or 20% of the Company’s paid-in capital: Please refer to Table 2.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to Table 3.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to Table 4.
I. Trading in derivative instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to Table 5.

(2) Information on investments in Mainland Chin

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to Table 6.

(3) Information on investments in Mainland China

A. Basic information: Please refer to Table 7.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

~77~

14. SEGMENT INFORMATION

(1) General information

Management has determined the reportable operating segments based on reports reviewed by the chief operating decision-maker and used to make strategic decisions.

There was no material change in the basis for formation of entities and division of segments in the Group or in the measurement basis for segment information during the year.

The Chief Operating Decision-Maker considers the business from industry and geographic perspectives. By industry, the Group focuses on convenience stores, retail business groups, logistics business groups and others. Geographically, the Group focuses on Taiwan and mainland China where most of its business premises are located. As the operation of convenience stores in Taiwan is the focus of the Group, it is classified as a single operating segment. The whole of mainland China is considered the same operating segment.

The revenue of the Group’s reportable segments is derived from the operations of convenience stores, retail business group and logistics business group. Other operating segments include a restaurant-related business group, supporting business group and China business. The supporting business group mainly provides services relating to the Group’s business, such as system maintenance and development and food manufacturing and supply.

(2) Measurement of segment information

The Chief Operating Decision-Maker evaluates the performance of the operating segments based on operating revenue and profit before income tax, which are the basis for measuring performance.

~78~

(3) Segment information

The segment information provided to the Chief Operating Decision-Maker for the reportable segments is as follows:

	For the year ended December 31, 2018	For the year ended December 31, 2018	For the year ended December 31, 2018	For the year ended December 31, 2018
Convenience stores $ 153,412,751 661,980 $ 154,074,731 $ 12,433,791 $ 1,994,987 ) ( $ 3,473,458 ( $ 2,227,402 ) ( $ 83,534 $ 42,971 ) (	Retail Logistics Other operating Adjustment and business group business group segments elimination $ 69,459,313 $ 2,022,071 $ 19,993,718 $ - 2,229,011 13,091,717 6,680,078 ( 22,662,786) $ 71,688,324 $ 15,113,788 $ 26,673,796 ($ 22,662,786) $ 3,718,428 $ 1,164,775 $ 2,159,858 ($ 4,074,505) $ 2,241,246 ) ($ 781,950 ) ($ 1,365,513 ) ($ 194,160) $ 47,676) $ 113,275 $ 706,423 ($ 3,821,382) $ 771,310 ) ($ 199,521 ) ($ 272,922 ) ($ 186,914) $ 29,573 $ 8,896 $ 577,382 $ - $ 44,110 ) ($ 10,158 ) ($ 47,423 ) $ - For the year ended December 31, 2017			Adjustment and elimination	( ( (
Convenience stores $ 143,873,316 606,564 $ 144,479,880 $ 36,501,051 $ 2,036,658 ) ( $ 26,930,861 ( $ 5,483,957 ) ( $ 104,826 $ 30,491 ) (	Retail business group $ 65,295,956 2,171,020 $ 67,466,976 $ 3,369,954 $ 2,088,475 ) ( $ 114,447) $ 693,780 ) ( $ 30,152 $ 42,052 )	Logistics business group $ 2,633,747 12,885,352 $ 15,519,099 $ 1,082,975 $ 728,676 ) ( $ 127,707 $ 168,649 ) ( $ 7,595 $ 9,396 )	Other operating Adjustment and segments elimination $ 9,329,063 $ - 6,133,809 ( 21,796,745) $ 15,462,872 ($ 21,796,745) $ 50,901,952 ($ 50,474,244) $ 637,926 ) $ - $ 25,531,756 ($ 50,682,139) $ 2,717,230 ) $ - $ 30,547 ($ 1,097) $ 14,402 ) $ 1,830	Adjustment and elimination
			$ 30,547 $ 14,402 )

~79~

(4) Reconciliation of segment income (loss)

Revenue from external customers and segment income (loss) reported to the Chief Operating Decision-Maker are measured using the same method as for revenue and profit before tax in the financial statements. Thus, no reconciliation is needed.

(5) Information on products and services

Revenue from external customers is mainly from retail services and services provided. Details of revenue is as follows:

Convenience stores Sales of daily items Gas station Delivery service Logistics service Restaurants Others	For the year ended December 31, 2018 $ 181,384,121 24,200,568 10,801,643 10,640,153 2,022,071 12,040,722 3,798,575 $ 244,887,853	For the year ended December 31, 2017 $ 167,813,140 24,562,300 9,870,474 10,948,622 2,633,747 1,569,884 3,733,915 $ 221,132,082

(6) Geographical information

As of and for the years ended December 31, 2018 and 2017, the information on geographic area is as follows:

s follows:
Taiwan Others	2018 Non-current Revenue assets $ 211,270,304 $ 34,681,923 33,617,549 5,.711,638 $ 244,887,853 $ 40,393,561	2017 Non-current Revenue assets $ 191,271,714 $ 36,004,968 29,860,368 5,739,855 $ 221,132,082 $ 41,744,823
	Revenue $ 211,270,304 33,617,549 $ 244,887,853	Revenue $ 191,271,714 29,860,368 $ 221,132,082

(7) Major customer information

No customers constituted more than 10% of the Group’s total revenue for the years ended December 31, 2018 and 2017.

~80~

Table 1

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Securities held by	Type and name of securities	Relationship with the securities issuer	General ledger account		As of December 31,2018	As of December 31,2018		Footnote
				Number of shares	Book value	Ownership (%)	Fair value
President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. Mech-President Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. Books.com. Co., Ltd. Chieh-Shuen Logistics International Corp. Chieh-Shuen Logistics International Corp. Uni-Wonder Corp. Uni-Wonder Corp. Uni-Wonder Corp. President Information Corp. President Logistics International Corp. President Logistics International Corp. President Pharmaceutical Corp. President Pharmaceutical Corp. Retail Support Taiwan Corp. Q-ware Systems & Services Corp. ICASH Corp.	Stock: President Investment Trust Corp. Career Consulting Co. Ltd Kaohsiung Rapid Transit Corp. PK Venture Capital Corp. Yamay International Development Corp. President Securities Corp. Duskin Co., Ltd. Koasa Yamako Corp. Open ended funds: Yuanta De-Li Money Market Fund UPAMC James Bond Money Market Fund Eastspring Investments Well Pool Money Market Fund Union Money Market Fund Allianz Global Investors Taiwan Money Market Fund Taishin 1699 Money Market Fund Prudential Financial Money Market Fund UPAMC James Bond Money Market Fund Eastspring Investments Well Pool Money Market Fund Jih Sun Money Market Fund Taishin 1699 Money Market Fund FSITC Money Market Fund Eastspring Investments Well Pool Money Market Fund Bond: Government bond	Director of President Investment Trust Corp. None `〃` Director of PK Venture Capital Corp. None Investees of Uni-President Enterprises Corp. under the equity method None Director of Koasa Yamako Corp. None `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` None	Financial assets at fair value through profit or loss - non-current `〃` `〃` `〃` `〃` Financial assets at fair value through other comprehensive income - non - current `〃` `〃` Financial assets at fair value through profit or loss - current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Financial assets at fair value through other comprehensive income - non-current	2,667,600 837,753 2,572,127 321,300 9 38,221,259 300,000 650,000 1,843,148 2,037,832 1,730,169 15,170,478 3,996,323 2,220,988 7,643,267 3,266,653 2,429,553 112,825 3,036,177 38,207 16,121,671 -	45,298 $ 14,663 25,722 - - 439,544 200,722 4,348 30,008 $ 34,002 23,503 200,000 50,000 30,000 120,716 54,506 33,004 1,669 41,011 6,806 219,000 200,731 $	7.60 5.37 0.92 6.67 - 2.75 0.56 10.00 - - - - - - - - - - - - - -	45,298 $ 14,663 25,722 - - 439,544 200,722 4,348 30,008 $ 34,002 23,503 200,000 50,000 30,000 120,716 54,506 33,004 1,669 41,011 6,806 219,000 200,731 $

Table 1  Page 1

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Acquisition or sale of the same security with the accumulated cost reaching $300 million or 20% of the Company's paid-in capital For the year ended December 31, 2018

Table 2 Investor	Type and name of securities	General ledger account	Counterparty	Relationship with the investor	Balance as at January1,2018	Balance as at January1,2018	Addition	Addition		Disposal	Disposal		Other increase(decrease)	Other increase(decrease)	Expressed in thousands of NTD (Except as otherwise indicated) Balance as at December 31,2018	Expressed in thousands of NTD (Except as otherwise indicated) Balance as at December 31,2018
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Book value	Gain (loss) on disposal	Number of shares	Amount	Number of shares	Amount
Books.com. Co., Ltd. Books.com. Co., Ltd. Chieh-Shuen Logistics International Corp. Uni-Wonder Corp. Uni-Wonder Corp. Uni-Wonder Corp. Uni-Wonder Corp. Uni-Wonder Corp. President Drugstore Business Corp. President Drugstore Business Corp. President Information Corp. President Information Corp. President Logistics International Corp. President Logistics International Corp. President Pharmaceutical Corp. Q-ware Systems & Services Corp. President Chain Store (Hong Kong) Holdings Limited	Open ended funds: Jih Sun Money Market Fund Yuanta De-Li Money Market Fund Eastspring Investments Well Pool Money Market Fund Union Money Market Fund FSITC Taiwan Money Market Fund Taishin 1699 Money Market Fund Nomura Taiwan Money Market Fund Allianz Global Investors Taiwan Money Market Fund Jih Sun Money Market Fund FSITC Taiwan Money Market Fund Jih Sun Money Market Fund Prudential Financial Money Market Fund UPAMC James Bond Money Market Fund Eastspring Investments Well Pool Money Market Fund Jih Sun Money Market Fund Eastspring Investments Well Pool Money Market Fund Stock: President Chain Store (Zhejiang) Ltd.	Note 1 `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Note 2	Not applicable `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Issuance of common stock for cash	Not applicable `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Parent company to subsidiary	1,358,373 - 5,250,222 6,855,158 13,151,752 3,718,301 12,328,480 2,408,497 - - 9,323,901 5,474,517 - 2,810,047 5,968,302 17,449,813 -	20,005 $ - 71,007 90,000 200,000 50,000 200,000 30,000 - - 137,318 86,074 - 38,004 87,898 236,000 187,329 $	88,163,118 49,194,595 55,345,735 56,210,346 42,667,230 48,240,853 46,138,977 35,233,545 65,155,152 91,027,726 40,572,270 27,857,708 21,726,534 51,773,619 57,797,690 225,576,138 -	1,300,000 $ 800,000 750,000 740,000 650,000 650,000 750,000 440,000 961,000 1,388,000 598,800 439,216 362,000 702,000 853,000 3,059,000 357,228 $	89,521,491 47,351,447 58,865,788 47,895,026 55,818,982 49,738,166 58,467,457 33,645,719 65,155,152 91,027,726 49,896,170 25,688,958 18,459,881 52,154,113 63,653,167 226,904,280 -	1,320,528 $ 770,193 797,675 630,569 850,603 670,296 950,406 420,182 961,135 1,388,223 736,582 405,166 307,563 707,132 939,519 3,077,260 - $	1,320,000 $ 770,000 797,500 630,000 850,000 670,000 950,000 420,000 961,000 1,388,000 736,118 404,574 307,500 706,999 939,203 3,076,000 - $	528 $ 193 175 569 603 296 406 182 135 223 464 592 63 133 316 1,260 - $	- - - - - - - - - - - - - - - - -	5) ($ 8 4) ( - - - - - - - - - 6 1) ( 26) ( - 131,610) ($	- 1,843,148 1,730,169 15,170,478 - 2,220,988 - 3,996,323 - - - 7,643,267 3,266,653 2,429,553 112,825 16,121,671 -	- $ 30,008 23,503 200,000 - 30,000 - 50,000 - - - 120,716 54,506 33,004 1,669 219,000 412,947 $

Note 1: The security was recognized as "Financial assets at fair value through profit or loss–current".

Note 2: The security was recognized as "Investments accounted for using equity method ".

Table 2  Page 1

Table 3

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty			Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts	receivable(payable)	Footnote
			Purchases(sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
President Chain Store Corp. Capital Inventory Services Corp. Chieh-Shuen Logistics International Corp. Duskin Serve Taiwan Co. Uni-Wonder Corp. President Information Corp.	Uni-President Enterprises Corp. Uni-President Superior Commissary Corp. Tung Ang Enterprises Corp. Lien-Bo Enterprises Corp. Vision Distribution Service Corp. Tait Marketing & Distribution Co., Ltd. Q-ware Systems & Services Corp. President Packaging Corp. Kuang Chuan Dairy Corp. President Transnet Corp. Weilih Food Industrial Co., Ltd. 21 Century Enterprise Co., Ltd. Mister Donut Taiwan Corp., Ltd. President Pharmaceutical Corp. President Chain Store Corp. President Transnet Corp. President Logistics International Corp. President Chain Store Corp. Uni-President Enterprises Corp. Tung Chan Enterprise Corp. Retail Support International Corp. President Chain Store Corp.	Ultimate parent company Subsidiary Sister company `〃` Subsidiary Sister company Subsidiary Sister company Other related party Subsidiary Other related party Subsidiary Associate Subsidiary Parent company Subsidiary of President Chain Store Corp. Parent company `〃` Ultimate parent company Other related party Subsidiary of President Chain Store Corp. Parent company	Purchases `〃` `〃` `〃` Purchases returns Purchases `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Service revenue Delivery revenue `〃` Service revenue Purchases `〃` `〃` Service revenue	14,923,741 $ 3,566,700 1,908,658 647,614 149,679) ( 381,636 632,058 335,435 398,310 224,880 267,673 277,271 159,797 101,850 170,565) ( 708,839) ( 969,846) ( 282,209) ( 270,060 1,041,904 195,552 772,627) (	15 4 2 1 - - 1 - - - - - - - 68) ( 40) ( 60) ( 23) ( 6 25 5 67) (	Net 30~40 days from the end of the month when invoice is issued Net 45 days from the end of the month when invoice is issued Net 30 days from the end of the month when invoice is issued Net 10~54 days from the end of the month when invoice is issued Net 30~60 days from the end of the month when invoice is issued Net 20~70 days from the end of the month when invoice is issued Net 40 days from the end of the month when invoice is issued Net 15~60 days from the end of the month when invoice is issued Net 30~65 days from the end of the month when invoice is issued Net 60 days from the end of the month when invoice is issued Net 30~60 days from the end of the month when invoice is issued Net 30~60 days from the end of the month when invoice is issued Net 55~60 days from the end of the month when invoice is issued Net 60~70 days from the end of the month when invoice is issued Net 45~60 days from the end of the month when invoice is issued Net 40 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued Net 15~60 days from the end of the month when invoice is issued Net 30 days from the end of the month when invoice is issued Net 25 days from the end of the month when invoice is issued Net 30 days from the end of the month when invoice is issued Net 45 days from the end of the month when invoice is issued	No significant differences `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	No significant differences `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	1,177,885) ($ 622,404) ( 136,637) ( 103,372) ( - 76,213) ( 107,036) ( 67,993) ( 88,129) ( 23,798) ( 57,714) ( 64,673) ( 29,185) ( 124,435) ( 33,902 129,144 85,555 78,425 33,063) ( 112,967) ( 18,200) ( 243,134	8) ( 4) ( 1) ( 1) ( - - 1) ( - 1) ( - - - - 1) ( 57 59 39 37 6) ( 21) ( 3) ( 69

Table 3  Page 1

Table 3

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty			Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts	receivable(payable)	Footnote
			Purchases(sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
President Logistics International Corp. Uni-President Superior Commissary Corp. President Transnet Corp. Retail Support Taiwan Corp. Q-ware Systems & Services Corp. Wisdom Distribution Service Corp. President Drugstore Business Corp. President Pharmaceutical Corp. 21 Century Enterprise Co., Ltd. Vision Distribution Service Corp. Retail Support International Corp. Uni-President Cold-Chain Corp.	Retail Support International Corp. Uni-President Cold-Chain Corp. Wisdom Distribution Service Corp. Chieh-Shuen Logistics International Corp. President Chain Store Corp. President Chain Store Corp. Chieh-Shuen Logistics International Corp. Retail Support International Corp. President Chain Store Corp. Books.com. Co., Ltd. President Logistics International Corp. President Pharmaceutical Corp. President Drugstore Business Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Logistics International Corp. Retail Support Taiwan Corp. Uni-Wonder Corp. President Logistics International Corp.	Parent company Subsidiary of President Chain Store Corp. `〃` Subsidiary Parent company `〃` Subsidiary of President Chain Store Corp. Parent company `〃` Subsidiary of President Chain Store Corp. `〃` `〃` `〃` Parent company `〃` `〃` Subsidiary `〃` Subsidiary of President Chain Store Corp. `〃`	Delivery revenue `〃` `〃` Service cost Sales revenue `〃` Service cost Delivery revenue Service revenue `〃` Service cost Purchases Sales revenue `〃` `〃` Sales returns Service cost `〃` Delivery revenue Service cost	751,640) ($ 1,035,971) ( 1,064,345) ( 969,846 3,566,700) ( 224,880) ( 708,839 305,169) ( 632,058) ( 283,188) ( 1,064,345 668,736 668,736) ( 101,850) ( 277,271) ( 149,679 751,640 305,169 195,552) ( 1,035,971	24) ( 33) ( 33) ( 32 99) ( 44) ( 8 85) ( 69) ( 9) ( 44 7 37) ( 4) ( 33) ( - 42 17 7) ( 37	Net 20 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued Net 45 days from the end of the month when invoice is issued Net 60 days from the end of the month when invoice is issued Net 40 days from the end of the month when invoice is issued Net 15~20 days from the end of the month when invoice is issued Net 40 days from the end of the month when invoice is issued Net 30 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued Net 70 days from the end of the month when invoice is issued Net 70 days from the end of the month when invoice is issued Net 60~70 days from the end of the month when invoice is issued Net 30~60 days from the end of the month when invoice is issued Net 30~60 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued Net 15~20 days from the end of the month when invoice is issued Net 30 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued	No significant differences `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	No significant differences `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	69,244 $ 89,672 103,177 85,555) ( 622,404 23,798 129,144) ( 27,199 107,036 26,449 103,177) ( 26,941) ( 26,941 124,435 64,673 - 69,244) ( 27,199) ( 18,200 89,672) (	24 31 35 31) ( 100 2 8) ( 79 78 28 38) ( 1) ( 7 31 47 - 45) ( 18) ( 6 2) (

Table 3  Page 2

Table 3

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty			Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts	receivable(payable)	Footnote
			Purchases(sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Zhejiang Uni-Champion Logistics Development Co., Ltd. Shanghai President Logistic Co., Ltd. ICASH Corp. President Logistic ShanDong Co., Ltd. Shan Dong President Yinzuo Commercial Limited	Shanghai President Logistic Co., Ltd. Zhejiang Uni-Champion Logistics Development Co., Ltd. President Chain Store Corp. Shan Dong President Yinzuo Commercial Limited President Logistic ShanDong Co., Ltd.	Parent company Subsidiary Parent company Subsidiary of President Chain Store Corp. `〃`	Delivery revenue Service cost Service revenue Delivery revenue Service cost	199,852) ($ 199,852 116,273) ( 120,713) ( 120,713	30) ( 34 32) ( 99) ( 5	Net 60 days from the end of the month when invoice is issued Net 60 days from the end of the month when invoice is issued Net 45 days from the end of the month when invoice is issued Net 30 days from the end of the month when invoice is issued Net 30 days from the end of the month when invoice is issued	No significant differences `〃` `〃` `〃` `〃`	No significant differences `〃` `〃` `〃` `〃`	52,590 $ 52,590) ( 20,326 11,136 11,136) (	47 37) ( 36 99 2) (

Table 3  Page 3

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Receivables from related parties reaching $100 million or 20% of paid-in capital or more December 31, 2018

		December 31, 2018
Table 4 Creditor	Counterparty	Relationship withthe counterparty	Balance as of December31,2018	Turnover rate	Overdue receivables		Expressed in thousands of NTD (Except as otherwise indicated) Amount collected subsequent to the balance sheet date Allowance for doubtfulaccounts
					Amount	Action taken
President Information Corp. Uni-President Superior Commissary Corp. Chieh-Shuen Logistics International Corp. President Logistics International Corp.	President Chain Store Corp. President Chain Store Corp. President Transnet Corp. Wisdom Distribution Service Corp.	Parent company `〃` Subsidiary of President Chain Store Corp. `〃`	243,134 $ 622,404 129,144 103,177	3.52 6.02 5.21 9.69	- $ - - -	`None` `〃` `〃` `〃`	191,194 $ 622,401 78,796 94,415	- $ - - -

Table 4  Page 1

Table 5

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Significant inter-company transactions during the reporting period

For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated) Transaction

						Transaction
Number	Companyname	Counterparty	Relationship	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets
0 0 1 1 2 3 4 5 6 6 6 7 7 7 7 8 9 10 11 11 12 13 14 15 16	President Chain Store Corp. President Chain Store Corp. President Information Corp. President Information Corp. Q-ware Systems & Services Corp. Duskin Serve Taiwan Co. Uni-President Cold-Chain Corp. Capital Inventory Services Corp. Chieh-Shuen Logistics International Corp. Chieh-Shuen Logistics International Corp. Chieh-Shuen Logistics International Corp. President Logistics International Corp. President Logistics International Corp. President Logistics International Corp. President Logistics International Corp. President Logistic ShanDong Co., Ltd. President Pharmaceutical Corp. Zhejiang Uni-Champion Logistics Development Co., Ltd. Uni-President Superior Commissary Corp. Uni-President Superior Commissary Corp. 21 Century Enterprise Co., Ltd. Wisdom Distribution Service Corp. Retail Support Taiwan Corp. Vision Distribution Service Corp. Retail Support International Corp.	Books.com. Co., Ltd. President Transnet Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Logistics International Corp. President Transnet Corp. President Transnet Corp. Retail Support International Corp. Uni-President Cold-Chain Corp. Wisdom Distribution Service Corp. Wisdom Distribution Service Corp. Shan Dong President Yinzuo Commercial Limited President Drugstore Business Corp. Shanghai President Logistic Co., Ltd. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. Books.com. Co., Ltd. Retail Support International Corp. President Chain Store Corp. Uni-Wonder Corp.	Parent company to subsidiary Parent company to subsidiary Subsidiary to parent company Subsidiary to parent company Subsidiary to parent company Subsidiary to parent company Subsidiary to parent company Subsidiary to parent company Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to parent company Subsidiary to parent company Subsidiary to parent company Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to parent company Subsidiary to subsidiary	Other operating income Other operating income Accounts receivable Service revenue Service revenue Service revenue Other operating income Service revenue Delivery revenue Delivery revenue Accounts receivable Delivery revenue Delivery revenue Delivery revenue Accounts receivable Delivery revenue Sales revenue Sales revenue Accounts receivable Sales revenue Sales revenue Service revenue Delivery revenue Sales returns Delivery revenue	170,172) ($ 169,894) ( 243,134 772,627) ( 632,058) ( 282,209) ( 343,690) ( 170,565) ( 969,846) ( 708,839) ( 129,144 751,640) ( 1,035,971) ( 1,064,345) ( 103,177 120,713) ( 668,736) ( 199,852) ( 622,404 3,566,700) ( 277,271) ( 283,188) ( 305,169) ( 149,679 195,552) (	Net 60 days from the end of the month when invoice is issued Net 60 days from the end of the month when invoice is issued Net 45 days from the end of the month when invoice is issued Net 45 days from the end of the month when invoice is issued Net 40 days from the end of the month when invoice is issued Net 15-60 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued Net 45~60 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued Net 40 days from the end of the month when invoice is issued Net 40 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued Net 20 days from the end of the month when invoice is issued Net 30 days from the end of the month when invoice is issued Net 70 days from the end of the month when invoice is issued Net 60 days from the end of the month when invoice is issued Net 45 days from the end of the month when invoice is issued Net 45 days from the end of the month when invoice is issued Net 30-60 days from the end of the month when invoice is issued Net 30 days from the end of the month when invoice is issued Net 15-20 days from the end of the month when invoice is issued Net 30-60 days from the end of the month when invoice is issued Net 30 days from the end of the month when invoice is issued	0.07 0.07 0.19 0.32 0.26 0.12 0.14 0.07 0.40 0.29 0.10 0.31 0.42 0.44 0.08 0.05 0.27 0.08 0.49 1.46 0.11 0.12 0.13 0.06 0.08

Note:Transaction among the company and subsidiaries with amount over NTD$100,000, only one side of the transactions are disclosed.

Table 5  Page 1

Table 6

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Names, locations and other information of investee companies (not including investees in Mainland China) For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December 31,2018	as at December 31,2018	Net profit (loss) of the investee for the year ended December 31, 2018	Investment income (loss) recognized by the Company for the year ended December 31, 2018	Footnote
				Balance as at December 31, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp.	President Chain Store (BVI) Holdings Ltd. President Drugstore Business Corp. President Transnet Corp. Mech-President Corp. President Pharmaceutical Corp. Uni-President Department Store Corp. Uni-President Superior Commissary Corp. Uni-President Cold-Chain Corp. President Information Corp. Q-ware Systems & Services Corp. Wisdom Distribution Service Corp. Books.com. Co., Ltd. President Yilan Art and Culture Corp. Duskin Serve Taiwan Co. ICASH Corp. Uni-President Development Corp. Uni-Wonder Corp. Retail Support International Corp. Presicarre Corp. President Fair Development Corp. President International Development Corp. Tung Ho Development Corp. Ren-Hui Investment Corp. Capital Inventory Services Corp. PCSC (China) Drugstore Limited President Chain Store Corporation Insurance Brokers Co., Ltd. Cold Stone Creamery Taiwan Ltd. President Being Corp.	British Virgin Islands Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan British Virgin Islands Taiwan Taiwan Taiwan	Professional investment Sales of cosmetics, medicines and daily items Delivery service Gas station, installment and maintenance of elevators Sales of various health care products, cosmetics, and pharmaceuticals Department stores Fresh food manufacture Low-temperature logistics and warehousing Enterprise information management and consultancy Information software services Logistics and storage of publication and e-commerce Retail business without shop Art and cultural exhibition Cleaning instruments leasing and selling Electronic ticketing services Construction, development and operation of an MRT station Coffee chain store Room-temperature logistics and warehousing Management of retail department store Operation of shopping mall, department store, international trade, etc. Professional investment Management of entertainment business Professional investment Enterprise management consultancy Professional investment Life and property insurance Sales of ice cream Sports and entertainment business	6,712,138 $ 288,559 711,576 904,475 330,216 840,000 520,141 237,437 320,741 332,482 50,000 100,400 20,000 102,000 500,000 720,000 3,286,206 91,414 7,112,028 3,191,700 500,000 861,696 637,231 9,506 277,805 213,000 170,000 170,000	6,712,138 $ 288,559 711,576 904,475 330,216 840,000 520,141 237,437 320,741 332,482 50,000 100,400 200,000 102,000 500,000 720,000 3,286,206 91,414 7,112,028 3,191,700 500,000 861,696 637,231 9,506 277,805 213,000 170,000 170,000	171,589,586 78,520,000 103,496,399 55,858,815 22,121,962 27,999,999 48,519,890 23,605,042 25,714,475 24,382,921 10,847,421 9,999,999 2,000,000 10,199,999 50,000,000 72,000,000 21,382,674 6,429,999 130,801,027 190,000,000 44,100,000 19,930,000 6,500,000 2,500,000 8,746,008 1,500,000 12,244,390 1,500,000	100.00 100.00 70.00 80.87 73.74 70.00 90.00 60.00 86.00 86.76 100.00 50.03 100.00 51.00 100.00 20.00 60.00 25.00 19.50 19.00 3.33 12.46 100.00 100.00 92.20 100.00 100.00 100.00	25,850,474 $ 1,367,838 1,518,487 694,277 756,001 566,145 467,659 645,440 489,299 372,945 506,392 417,935 51,328 194,788 356,073 753,904 5,289,524 174,830 5,518,380 1,984,125 461,328 114,755 82,833 59,241 64,995 22,808 9,454) ( 42,731) (	611,941 $ 290,300 490,073 99,980 227,432 333,022 17,497 341,444 76,172 80,643 271,711 422,359 676 133,258 5,787 116,093 711,814 216,951 1,677,876 158,079 475,420 68,624) ( 7,452 31,630 1,764 6,651 14,507 18,558	615,496 $ 290,300 343,051 80,855 167,956 233,115 15,747 204,866 65,508 69,965 271,711 211,285 676 67,941 5,787 23,219 198,444 54,238 327,178 30,035 16,591 8,691) ( 7,452 31,630 1,626 6,651 14,507 18,558	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Note 1 Subsidiary Subsidiary Note 1 Note 1 Note 1 Note 1 Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Table 6  Page 1

Table 6

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Names, locations and other information of investee companies (not including investees in Mainland China) For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December 31,2018	as at December 31,2018	Net profit (loss) of the investee for the year ended December 31, 2018	Investment income (loss) recognized by the Company for the year ended December 31, 2018	Footnote
				Balance as at December 31, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. President Chain Store Corp. Books.com. Co., Ltd. Mech-President Corp. President Chain Store (Hong Kong) Holdings Limited President Chain Store (Hong Kong) Holdings Limited President Chain Store (BVI) Holdings Ltd. President Chain Store (BVI) Holdings Ltd. President Chain Store (Labuan) Holdings Ltd. President Logistics International Corp. President Pharmaceutical Corp. Ren-Hui Investment Corp. Ren-Hui Investment Corp. Ren-Hui Investment Corp. Ren-Hui Investment Corp. Ren-Hui Investment Corp. Ren-Hui Investment Corp. Ren-Hui Investment Corp. Ren-Hui Investment Corp.	21 Century Enterprise Co., Ltd. President Chain Store Tokyo Marketing Corp. Uni-President Oven Bakery Corp. President Collect Services Co., Ltd. Afternoon Tea Taiwan Co., Ltd. Mister Donut Taiwan Corp., Ltd. Uni-President Organics Corp. President Technology Corp. Grand Bills Finance Corp. Books.com. (BVI) Ltd. President Jing Corp. PCSC Restaurant (Cayman) Holdings Limited PCSC (China) Drugstore Limited President Chain Store (Hong Kong) Holdings Limited President Chain Store (Labuan) Holdings Ltd. Philippine Seven Corp. Chieh-Shuen Logistics International Corp. President Pharmaceutical (Hong Kong) Holdings Limited Books.com. Co., Ltd. Uni-President Department Store Corp. Mech-President Corp. President Information Corp. President Transnet Corp. Q-ware Systems & Services Corp. Duskin Serve Taiwan Co. President Pharmaceutical Corp.	Taiwan Japan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan British Virgin Islands Taiwan Cayman Islands British Virgin Islands Hong Kong Malaysia Philippines Taiwan Hong Kong Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan	Operation of chain restaurants Enterprise management consultancy Bread and pastry retailer Collection agent Operation of restaurants Bakery retailer Health care products and organic food Software development and call center service Securities trading Professional investment Gas station Professional investment Professional investment Professional investment Professional investment Operation of chain stores Trucking Sales of various health care products, cosmetics, and pharmaceuticals Retail business without shop Department stores Gas station, installment and maintenance of elevators Enterprise information management and consultancy Delivery service Information software services Cleaning instruments leasing and selling Sales of various health care products, cosmetics, and pharmaceuticals	160,680 $ 35,648 391,300 10,500 147,900 200,000 47,190 7,500 - 1,478 9,600 159,966 22,729 4,784,073 895,752 894,891 180,000 178,024 - - - - - - - -	160,680 $ 35,648 391,300 10,500 147,900 200,000 47,190 7,500 1,050 1,478 9,600 159,966 22,729 4,784,073 895,752 894,891 180,000 89,415 - - - - - - - -	10,000,000 9,800 6,511,963 1,049,999 14,789,999 7,500,049 1,833,333 750,000 - 500 960,000 8,880,000 740,000 134,603,354 29,163,337 394,970,516 26,670,000 5,935,900 1 1 1 1 1 1 1 1	100.00 100.00 100.00 70.00 51.00 50.00 36.67 15.00 - 100.00 60.00 100.00 7.80 100.00 100.00 52.22 100.00 100.00 - - - - - - - -	34,523 $ 76,331 29,439) ( 73,621 41,659 107,879 38,862 21,347 - 592 26,003 31,162 5,499 4,160,454 2,211,268 2,210,541 310,438 72,393 - - - - - - - -	24,027 $ 3,114 14,764) ( 85,542 509) ( 41,756 21,446 38,142 568,805 2 16,339 80 1,764 86,522 385,752 887,060 19,473 28,202) ( 422,359 333,022 99,980 76,172 490,073 80,643 133,258 227,432	24,027 $ 3,114 14,764) ( 59,878 260) ( 22,118 7,863 5,718 67 3 9,803 80 138 86,522 385,752 399,934 19,473 28,202) ( - - - - - - - -	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Note 1 Note 1 Note 1 Note 1 Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary

Table 6  Page 2

Table 6

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Names, locations and other information of investee companies (not including investees in Mainland China) For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December 31,2018	as at December 31,2018	Net profit (loss) of the investee for the year ended December 31, 2018	Investment income (loss) recognized by the Company for the year ended December 31, 2018	Footnote
				Balance as at December 31, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
Ren-Hui Investment Corp. Ren-Hui Investment Corp. Ren-Hui Investment Corp. Ren-Hui Investment Corp. Ren-Hui Investment Corp. Ren-Hui Investment Corp. Ren-Hui Investment Corp. Retail Support International Corp. Retail Support International Corp. Retail Support Taiwan Corp. Uni-President Cold-Chain Corp. Uni-President Cold-Chain Corp. Wisdom Distribution Service Corp. Wisdom Distribution Service Corp. Philippine Seven Corp. Philippine Seven Corp.	Mister Donut Taiwan Corp., Ltd. Uni-President Superior Commissary Corp. Uni-President Cold-Chain Corp. Retail Support International Corp. President Collect Services Co., Ltd. Afternoon Tea Taiwan Co., Ltd. Ren Hui Holding Co., Ltd. Retail Support Taiwan Corp. President Logistics International Corp. President Logistics International Corp. President Logistics International Corp. Uni-President Logistics (BVI) Holdings Limited President Logistics International Corp. Vision Distribution Service Corp. Convenience Distribution Inc. Store Sites Holding, Inc.	Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan British Virgin Islands Taiwan Taiwan Taiwan Taiwan British Virgin Islands Taiwan Taiwan Philippines Philippines	Bakery retailer Fresh food manufacture Low-temperature logistics and warehousing Room-temperature logistics and warehousing Collection agent Operation of restaurants Professional investment Room-temperature logistics and warehousing Trucking Trucking Trucking Professional investment Trucking Publishing Industry Logistics and warehousing Professional investment	- $ - - - - - 60,374 15,300 44,975 5,425 23,850 87,994 18,850 - 26,299 28,486	- $ - - - - - 60,374 15,300 44,975 5,425 23,850 87,994 18,850 60,000 26,299 28,486	1 1 1 1 1 1 2,000,000 2,871,300 9,481,500 1,161,000 4,837,500 2,990 3,870,000 - 4,500,000 40,000	- - - - - - 100.00 51.00 49.00 6.00 25.00 100.00 20.00 - 100.00 40.00	- $ - - - - - 70,287 74,413 161,679 19,797 82,489 103,772 65,991 - 26,299 28,486	41,756 $ 17,497 341,444 216,951 85,542 509) ( 4,024 45,403 75,685 75,685 75,685 12,628 75,685 31,023) ( 23,046 1,262	- $ - - - - - 4,024 23,156 37,086 4,413 18,921 12,628 15,137 17,539) ( - -	Note 1 Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary Subsidiary of a subsidiary

Note 1: The investee was recognized using equity method by the company.

Table 6  Page 3

Table 7

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Information on investments in Mainland China

For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Investeein Mainland China	Mainbusiness activities	Paid-incapital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as ofJanuary1,2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December31,2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December31,2018	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2018	Net income of investee for the year ended December 31, 2018	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the year ended December31,2018	Book value of investments in Mainland China as of December31,2018	Accumulated amount of investment income remitted back to Taiwan as of December 31,2018	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Shanghai President Chain Store Corporation Trade Co., Ltd. President Cosmed Chain Store (Shen Zhen) Co., Ltd. President Chain Store (Shanghai) Ltd. Shanghai President Logistic Co., Ltd. Shanghai Cold Stone Ice Cream Corporation PCSC (Chengdu) Hypermarket Limited Shan Dong President Yinzuo Commercial Limited President (Shanghai) Health Product Trading Company Ltd. Zhejiang Uni-Champion Logistics Development Co., Ltd. Bejing Bokelai Customer Co. President Chain Store (Taizhou) Ltd. President Logistic ShanDong Co., Ltd. President Chain Store (Zhejiang) Ltd. Beauty Wonder (Zhejiang) Trading Co.,Ltd.	Trade of food and commodities Wholesale of merchandise Operation of chain stores Logistics and warehousing Sales of ice cream Retail hypermarket Supermarkets Sales of various health care products, cosmetics, and pharmaceuticals Logistics and warehouse Enterprise information consulting, network technology development and services Logistics and warehousing Logistics and warehousing Operation of chain stores Sales of cosmetics and daily items	272,749 $ 446,536 2,232,680 61,430 993,737 589,428 267,922 174,851 178,614 461 267,922 223,268 625,150 133,961	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1	158,815 $ 289,252 2,373,578 61,430 1,005,579 546,000 125,267 85,544 174,654 - 267,922 223,268 267,922 -	- $ - - - - - - 89,307 - - - - 357,228 133,961	- $ - - - - - - - - - - - - -	158,815 $ 289,252 2,373,578 61,430 1,005,579 546,000 125,267 174,851 174,654 - 267,922 223,268 625,150 133,961	266 $ 1,855 155,505) ( 75,487 4,323) ( 21,399) ( 34,356 29,280) ( 25,610 - 25,872 6,904 129,811) ( 20,741) (	100.00 100.00 100.00 100.00 100.00 100.00 55.00 73.74 80.00 50.03 100.00 100.00 100.00 100.00	266 $ 1,855 155,507) ( 76,970 4,323) ( 21,696) ( 17,331 21,591) ( 21,953 - 25,863 6,447 129,813) ( 20,741) (	31,093 $ 69,725 68,214 420,437 47,631 54,972 195,037 28,837 159,862 17 331,098 200,347 412,947 113,642	- $ - - - - - - 56,866 13,946 - - - - -	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2

Note 1: Indirect investment in PRC through the existing company located in the third area. Note 2: The financial statements were reviewed by the CPA of parent company in Taiwan.

Investment amount approved by the Accumulated amount of remittance Investment Commission of the Ceiling on investments in Mainland from Taiwan to Mainland China as Ministry of Economic Affairs China imposed by the Investment Company name of December 31, 2018 (MOEA) Commission of MOEA President Chain Store Corp. $ 4,734,350 $ 8,488,824 $ 26,415,016 President Pharmaceutical Corp. 174,851 174,851 485,926 Uni-President Cold-Chain Corp. 91,144 91,144 633,116 Ren-Hui Investment Corp. 52,931 52,931 80,000

Table 7  Page 1

AI assistant

PCSC — Annual Report 2018

52232_rns_2018-11-27_1878db20-1135-44fa-9dd2-7f3a84994c01.pdf

PRESIDENT CHAIN STORE CORP. AND

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND AUDIT REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2018 AND 2017 CONTENTS

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES

Declaration of Consolidated Financial Statements of Affiliated Enterprises

REPORT OF INDEPENDENT ACCOUNTANTS

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

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 STATEMENTS OF COMPREHENSIVE INCOME

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

PRESIDENT CHAIN STORE CORP. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018 AND 2017

1. HISTORY AND ORGANISATION

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

IFRS 9, “Financial instruments”

the Company

(3) IFRSs issued by IASB but not yet endorsed by the FSC

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

(3) Basis of consolidation

B. The subsidiaries included in the consolidated financial statements are as follows:

(4) Foreign currency translation

(6) Cash equivalents

(8) Financial assets at fair value through other comprehensive income

(9) Accounts and notes receivable

(11) Leases (Lessor)

(12) Inventories

(13) Investments accounted for using equity method - associates

(16) Leases (Lessee)

(17) Investment property

(18) Intangible assets

B. Goodwill

(19) Impairment of non-financial assets

(20) Notes and accounts payable

(21) Provisions

(22) Employee benefits

(a) Defined contribution plans

(23) Income tax

(25) Business Combination

(26) Operating segments

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION

UNCERTAINTY

6. DETAILS OF SIGNIFICANT ACCOUNTS

(3) Accounts receivable

(4) Inventories

(6) Investments accounted for using the equity method

(7) Property, plant and equipment

A. The details of property, plant and equipment are as follows:

(8) Investment property

(9) Intangible assets

(11) Impairment of non-financial assets

(13) Other payables

(b) Movements in net defined benefit liabilities are as follows:

(17) Other non-current liabilities

(18) Share capital

(19) Capital surplus

(20) Retained earnings

(22) Operating revenue

Revenue from contracts with customers

A. Disaggregation of revenue from contracts with customers

B. Contract liabilities

(23) Expenses by nature

(24) Employee benefit expense

PCSC Annual Report 2018