PSC - Annual Report 2019 | FinancialReports.eu

Stock Code: 2855 www.pscnet.com.tw

2019 ANNUAL REPORT

Notice to readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

2019 Annual Report is available at: Taiwan Stock Exchange Market Observation Post System http://mops.twse.com.tw/

Table of Content
I. A Letter to Shareholders	1
II. Company Profile	3
III. Corporate Governance	5
Business Organization	5
Directors’, Supervisors’ and Managers’ Information	7
Implementation of Corporate Governance	30
Information Regarding the Company’s Audit Fee and Independent Auditor	71
Replacement of CPA	72
Information Regarding the Company’s Chairman, President, or managers responsible for financial and
accounting affairs who have held any position in the accounting firm or its affiliates	73
Net Change in shareholdings and in shares pledged by directors, supervisors, management, and shareholders
holding more than a 10% share in the Company	73
Information Disclosing the Relationship between any of the Company’s Top Ten Shareholders	76
Ownership of Shares in Affiliated Enterprises	77
Name and position of the employees with the top ten amounts of bonuses as well as the total amounts
of the top ten bonuses	77
Directors and Corporate Auditors Training	78
Manager Learning	81
IV. Capital Structure	83
Shareholders’ equity	83
Long-Term Borrowings	87
Issuance of Preferred Stocks	87
Issuance of Global Depositary Receipts	87
Issuance of Employee’s Stock Options	87
Merge and Acquisition	87
Working Capital Plans	87
V. Business Environment	89
Description of Business Activities	89
Market Conditions	104
Employee Data	110
Environmental Protection and Corporate Citizenship	111
Labor Relations & Employee Benefit	112
Material Contracts and Agreements	119

VI. Financial Information	121
Five-Year Financial Summary	121
Financial Analysis for the Past Five Years	125
Audit Committee’s Review Report on the Company’s 2019 Financial Statement	129
Financial Difficulties that will Affect the Company’s Financial Situation	130
Status of the Achievement in Financial Forecasts for the Latest Two Years	130
Provisioning Methods of the Company’s Assets and Liabilities’ Valuation Accounts	130
Accounting Treatment of Impairment of Assets of the Company	130
Methods and Assumptions used for Evaluating Fair Value of Financial Instruments	131
Hedge Accounting Applied to Financial Instruments	131
VII. Financial Status, Operating Results and Risk Management	133
Financial Status	133
Analysis of Operating Results	133
Analysis of Cash Flow	134
Effects of Major Capital Expenditures in the Most Recent Fiscal Year on Financial Operations	135
Long-term Investment Policy	135
Analysis of Risk Management	135
Other significant events	144
VIII. Other Disclosures	145
Consolidated Business Report of Affiliated Companies, Consolidated Financial Statements of Affiliated
Companies, and Reports of Affiliation	145
Private placement of marketable securities	148
Holding or disposal of the company’s shares by the subsidiaries	148
Other Necessary Supplement	148
IX. Occurrences of items that may give rises to substantial impact on shareholders’
interests and/or stock price	149
X. Financial Statements	150

I. A Letter to Shareholders

Dear Shareholders,

The global economy recovered slowly under the cloud of uncertainty created by the US-China trade war in 2019. The US continued to raise the intensity of the US-China trade war. In addition to raising tariffs on products from China, it imposed sanctions on some companies based in China, including ZTE and Huawei, which caused the a slowdown in global trade activities. However, with increasing consumption and employment in the US, the Fed’s preemptive interest rate cuts also prompted a positive response in financial markets. In Europe, because the US-China trade war affected exports, economic growth declined. The European Central Bank would continue the loosen monetary policy to support the economy. As for China, because the escalation of the US-China trade war led to sanctions imposed on private companies resulting in weak exports, the central government implemented fiscal policies designed to stabilize the economy. Domestically, according to data from the Directorate-General of Budget, Accounting and Statistics (DGBAS), Executive Yuan, the economic growth rate in 2019 decreased from 2.75% in 2018 to 2.71%. However, driven by the Fed’s preemptive interest rate cuts and the government’s policy for investment by overseas Taiwanese business people back to Taiwan and because of the expected psychology, the TAIEX rose from 9,727 points to 11,997 points, an annual increase of 2,268 points at a rate of 23.3%, ranking 1st among Asian stocks.

The Company had outstanding performance in 2019, with annual revenue of NT$6,229,917 thousand, operating costs of NT$916,286 thousand, operating expenses of NT$3,288,684 thousand, non-operating net income of NT$489,434 thousand, profit before tax of NT$2,514,381 thousand, and net income of NT$2,368,536 thousand, while the after tax EPS stood at NT$1.72, ranking 3rd among the top 12 integrated securities firms.

In terms of brokerage business, the market share was 3.25% in 2019; although business increased in 2018, the financing balance fell and the discount rate of traditional brokerage business increased in 2019. In addition, as the investor’s electronic order placement ratio has gradually increased, the demand for physical business has gradually decreased. In response to changes in the general environment, the Company has carefully evaluated its regionality, performance, profit contribution, and market share, and analyzed the performance of each branch; in 2019, five branches were merged into the remaining ones, resulting in a decrease in the number of branches from 36 to 31. In the future, each branch will continue to strive to consolidate the core brokerage business and further develop wealth management business, to create a profitable dual-engine for brokerage and wealth management. The goal is to drive the dual income from trading and deposits, with a view to enhancing the efficiency of brokerage and maximizing the benefits and value of each branch. In addition, in the face of the development of new technologies, such as the Internet, mobile communications, social community, cloud data, and big data, the Company has also actively invested in the development of digital and mobile-related services and platforms. The Company has established a Digital Financial Division under the Brokerage Department; this dedicated unit will gradually realize the development of new technologies and optimize of the quality of the mobile experience of customers.

In terms of the underwriting business, the Company served as lead underwriter for 6 cases and a co-underwriter for 34 cases throughout the year; the total value of underwriting was NT$2.56 billion, ranking 7th in the industry. The company continues to uphold the principles of strict screening of cases, careful selection of sectors, and emphasizes the credit risk of issuing companies; the goal is to assist companies in raising funds to expand business with a competent team. Meanwhile, it provides corporate clients with financial advisors and helps with mergers and acquisitions, project evaluation, and private placement planning services.

As for the trading business, although trading was affected by the US-China trade war and by violent fluctuations in the global financial markets in 2019, our proprietary trading team for stocks has kept abreast of the market trends, adjusted positions flexibly, and controlled risks strictly, which has created excellent trading performance. As for the fixed income trading business, affected by the loose monetary policies adopted by the central banks of various countries and the Fed’s interest rate cuts, the bond market has risen from the initial downturn. With our operation team’s layout of positions and effective management of risks, the annual profit performance in this regard was also quite impressive. In the financial product business, the value of the warrants issued ranked 6th in the industry, and the number of warrants issued ranked 7th. In addition, “President Dividend Appreciate TR 150 ETN” and “President Low Volatility High Dividend TR ETN” were issued on April and December, respectively. In order to create advantages as a pioneer and develop product differentiation,

President Securities Corporation

the Company will continue to issue ETNs. In the quantitative trading business, the Company used the metrics method to seek profit-making opportunities through transactions across time zones and markets; this created a steady stream of profits.

In addition to actively developing its business activities with the goal of creating excellent performance, the Company has spared no effort to implement a corporate governance system and to improve information transparency for a long time; thus, it has maintained a leading role in Corporate Governance Evaluation System. In line with the laws and regulations promulgated by the responsible authorities in 2019, the Board of Directors pass a resolution of engagement of a Corporate Governance Officer in charge of the promotion and implementation of corporate governance-related business. Meanwhile, in response to changes in the laws and regulations of the responsible authority, the Company’s Corporate Governance Best Practice Principles and the Board of Directors Performance Evaluation Measures documents were also amended to improve the effectiveness of the Board’s operation; the integrity of the Company’s corporate governance was further enhanced. In terms of risk management, the Company continued to strive to improve the overall risk management mechanism so that all business activities could develop in a safe and robust environment. The Company’s various outstanding achievements and excellent performance of its business activities have also been recognized by Taiwan Ratings, with “twA” and “twA1” rankings for the Company’s the long-term and short-term credit rating, respectively, in 2019, the same as in the previous year.

In addition, the Company assumed its corporate social responsibilities actively. In terms of environmental protection, the Company has obtained ISO 14064-1:2006 greenhouse gas inventory certification. In the future, it will be devoted to reducing greenhouse gas emissions to help slow the trend of global warming. On the front of the development of talented personnel, the Company attached great importance to the cultivation and development of employees. Its well-planned training system also won the Bronze Medal of the Ministry of Labor’s TTQS evaluation while obtaining iCAP quality certification of the competence-oriented program of the Ministry of Labor. Furthermore, the Company’s spirit of helping employees balance the needs of work and family has also enabled it to be selected as an Enterprise of Happiness by 1111 Job Bank; it was also been selected as Healthy Corporate Citizen in the category of Corporate Health Responsibility by Health Magazine for its development of a healthy work environment for body and mind.

Looking forward to 2020, although the US-China trade conflict came to an end after the first stage of the trade agreement was signed in early January, after the outbreak of the COVID-19 epidemic in Wuhan, China, at the end of January, the virus had started to rage across South Korea, Japan, Iran, and Italy and eventually became a global pandemic. Countries around the world have adopted measures, such as border closures and city lockdowns which have led to the stagnation of economic activities. The market is worried about how the crisis will disrupt the industrial supply chain and even the capital supply chain, causing panic in financial markets. Central banks in various countries have also quickly adopted interest rate cuts, quantitative easing policies, and fiscal policies to respond and to try to reduce the degree of economic impact. DGBAS revised the forecast of Taiwan’s economic growth rate down to 2.37% in February; and it may continue revise the figure downward in the future as the epidemic escalates.

In the face of a challenging future, the Company will continue to make unremitting efforts to seek profit-making opportunities, implement various mechanisms for risk and internal control management, actively strengthen its operating foundation, and enhance the competitiveness of each business activity. In addition to striving to facilitate the establishment of subsidiaries in China, it will further develop local services in the country, with the aim of providing high value-added and comprehensive financial services that exceed customers’ expectations, while creating maximum values for the Company and shareholders.

I hereby extend my most sincere gratitude to our shareholders for your long-term trust and support of President Securities. I wish you all good health and prosperity.

Chairman: Lin, Kuan-Chen President: Tsai, Sen-Bu

2019 Annual Report

II. Company Profile

Incorporated

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1988 1991 1995
President Securi�es Co., Ltd. was incorporated Merged with Tung-Hsin, Tung-Yung, Increased capital to NT$7.03 billion.
through the memorandum of Securi�es and Futures Commission, Ministry of Finance with the le�er No. (77) Taiwan-Finance-Securi�es-(II)- Tung-Wen, Tung-Ku, Tung-Fu, Tung-Yu, Tung-Hsing, Tung-Wang, Tung-Lai securi�es agencies. Became the first Asian securi�es company to acquire the ISO9002 service quality cer�fica�on.
20093 in November 19th. Established new branches in SanMin, Xin Taichung,
Founding capital of NT$1.4 billion increased and Hsinying, bringing the total number of branches
to actual paid-in capital of NT$3.362 billion to 16.
a�er the merger.
Amended business name to President Performed capital infusion; capital stock Established new branches in
Securi�es Corp. on March 4th. a�er infusion amounted to NT$4.02 Yenping, Taoyuan, Sanchung,
Commencement of official opera�ons on billion. Tunghsing, and Fengyuan.
April 3rd.
1996
1989 1994
2009 2007
Executed capital reduc�on through Long-term credit ra�ng was upgraded from twA-
cancella�on of treasury stock, capital to twA, and short-term credit ra�ng was
stock a�er asset reduc�on amounted to upgraded from twA-2 to twA-1.
NT$11.857 billion. Converted retained earnings to paid-in capital,
capital stock a�er infusion amounted to
NT$11.768 billion.
Obtained trust business license issued by FSC. Issued the first unsecured conver�ble corporate bond in Taiwan, and received NT$ 3 billion from the offering in May.Established PSC Xiamen business office in China on August
Converted retained earnings to paid-in 22nd.
capital, capital stock a�er infusion
amounted to NT$12.319 billion. Converted retained earnings to paid-in capital, capital stock
a�er infusion amounted to NT$12.157 billion.
2010 2008
2012 2014
Converted retained earnings to paid-in Established an Offshore Securi�es Unit (OSU) in July .
capital, capital stock a�er infusion Established new branches in Xinzhuang, Zhubei,
amounted to NT$13.231 billion. Zhunan, and Xin Taoyuan, bringing the total number
of branches to 39.
Acquired the brokerage business of Standard
Chartered Bank in Taiwan.
Established remunera�on Commi�ee.
The total branches remain 35 (including head office.) . Established an Audi�ng Commi�ee in
Converted retained earnings to paid-in capital. The June.
capital stock a�er infusion amounted to NT$13.046 Opened a new branch in Pingzhen,
billion. bringing our total number of branches to
Conducted a capital reduc�on by cancelling treasury 40 (Including our headquarters) in
stocks in December. The capital became NT$12.845 October.
billion.
2015
2011 2013
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President Securities Corporation

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1998 2000
Executed capital infusion; capital stock In August, acquired Ta Feng Securi�es Co., Ltd.
a�er infusion amounted to NT$10.18
Converted retained earnings to paid-in capital,
billion in May.
capital stock a�er infusion amounted to
NT$12.255 billion.
Executed capital infusion; capital stock a�er Obtained official approval for OTC lis�ng.
infusion amounted to NT$8.08billion. Converted retained earnings to paid-in Executed capital reduc�on through
Established new branches in Tianmu, Banqiao, Hankou, Tali, and Sanduo. The capital, capital stock a�er infusion amounted to NT$10.91 billion. cancella�on of treasury stock, capital stock a�er asset reduc�on amounted to
business offices were increased to 26 Rated as “twBBB” and “twA-3” for long-term NT$11.279 billion.
(including head office). and short-term credits, respec�vely, by
Taiwan Ra�ng Corp.
1997 1999 2001
2006 2003
Obtained business license for wealth management.
Received the 6th annual Na�onal Charity Award, Obtained business license for structured
and was the only for-profit business en�ty among notes; Fixed Income business unit
twelve recipients. licensed as the main dealer for business
opera�on of government bonds issued by
Executed capital reduc�on through cancella�on of Central Bank of the Republic of China.
treasury stock, capital stock a�er asset reduc�on
amounted to NT$11.37 billion.
Opened East Tainan Branch, Neihu Branch and Renai Branch. The
business offices increased to 35 (including head office). Listed on TWSE in September.
Long term credit ra�ng was upgraded from twBBB to twBBB+ in Executed capital reduc�on through
September, and was again upgraded to twA- in December. cancella�on of treasury stock, capital
Executed capital reduc�on through cancella�on of treasury stock, stock a�er asset reduc�on amounted to
capital stock a�er asset reduc�on amounted to NT$11.4499 billion. NT$11.46 billion.
2004 2002
2016 2019
Conducted a capital reduc�on by canceling treasury
Conducted a capital reduc�on by canceling treasury stocks in
stocks in May. The capital became NT$13.723 billion.
February and May. The capital became NT$13.037 billion and
NT$12.952 billion.
Converted earnings to paid-in capital in August, growing the capital
to NT$13.356 billion.
The branches in Tali, Yenping, and SanMin terminated opera�ons in
October , causing that the total number of branches reduced to
37(including our headquarters).
The branch in Zhubei terminated opera�ons
in May, causing that the total number of
branches reduced to 36(including our 2020
headquarters).
Conducted a capital reduc�on by cancelling
The Company transferred earnings to paid-in treasury stocks in May. A�er the capital
capital in August. The capital a�er capital reduc�on, the total share capital was around
increase was NT$13.904 billion.
NT$13.723 billion; at that �me business was
terminated at Xindian Branch, bringing the
2017 number of branches to 35. Business was terminated at Xinzhuang Branch in July, so
that the number of ac�ve branches declined
to 34. The Fengyuan, Ku�ng, and Xin Taoyuan
branches were closed for business in
November, so that the number of branches
declined to 31, including the Head Office.
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2019 Annual Report

III. Corporate Governance

I. Business Organization

A. Organizational Chart

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Administration Dept.
Shareholders’ Meeting
Finance Dept.
Board of Directors
Information System Dept.
Audit Committee
Risk Management
Committee Settlement & Clearing Dept.
Risk Control Office
Remuneration
Committee Financial Product Dept.
Ethical Corporate
Auditing Office
Management Practice
Team Proprietary Trading Dept.
Chairman of the Board
Fixed Income Dept.
President
Capital Market Dept.
Quantitative Trading Dept.
Assets & Liabilities
Management Committee
Shareholder Services Dept.
President Office
Wealth Management and
Trust Dept.
Compliance Division
Brokerage Dept.
Global Institutional
Service Dept.
Corporate Client Dept.
Offshore Securities Unit
Digital Business Department
E-Trade Department
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President Securities Corporation

B. Function of Each Division

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Division Function
 Accept orders from clients to buy/sell listed securities and forward to TWSE for execution.
 Accept orders from clients to buy/sell listed securities and forward to TPEx for execution.
 Manage custodial services for clients.
 Provide margin financing for securities trading.
 Securities Borrowing and Lending Business.
Brokerage  Borrowing or Lending Money in Connection with Securities Business
 Conduct Borrowing and Lending of Funds for Unrestricted Purposes.
 Accepting orders to trade Foreign Securities.
 Futures Introducing Broker Business.
 Electronic transaction operations.
 Customer service coordination process.
 Issue equity warrants and conduct hedging strategies.
 Launch structured products and conduct hedging strategies.
 Convertible bond asset swap and options business.
Financial
 Trading of equity derivatives.
Products
 Exchange-traded Note (ETN) Issuance and Hedging Operations.
 New financial product design and development.
 Other derivatives financial products approved by the competent authority.
 Trading of publicly listed securities on the TWSE and TPEx, using President Securities’ own funds.
Proprietary  Hedge positions via futures and options markets as a futures trader.
Trading  Expand international investment business involving legally-permitted overseas spot/futures market
research and investments.
 Use own capital to trade domestic and foreign corporate and government bonds in the OTC market.
 Offer tendering services of Taiwan government bonds.
 Repo and Reverse-Repo transactions.
Fixed Income  Trade overseas and domestic convertible bonds.
 Provide debt capital market services for overseas and domestic issuers.
 Provide financial market services and product to financial institutions and corporate clients.
 Provide customized structured products for clients.
 Assist corporations in application for public listing on TWSE or TPEx.
 Assess and advise clients with respect to capital increase plans and applications to convert private
Capital Market equity into publicly traded stocks.
(Underwriting)  Underwrite bonds and foreign financial products.
 Assist in M&A activities; provide consulting services on corporate finance and other specialized areas.
 Other various types of underwriting business.
 Market making and trading of futures and options contracts on the TAIFEX.
 Market making and trading of legally-permitted foreign futures and options contracts.
Quantitative  ETF arbitrage, market making, hedging, and trading.
Trading  Spot and futures arbitrage and trading.
 Structured products issuing and trading.
 Spread and volatility arbitrage of domestic and foreign futures/options products.
 Coordinate shareholder services on behalf of publicly listed companies.
 Assist in the coordination of shareholders’ meetings.
Shareholder
 Coordinate the distribution of cash and/or stock dividends to shareholders.
Services
 Manage the issuance and delivery of tax forms to shareholders.
 Respond to shareholder enquiries and legal issues.
 Provide customers with wealth management consulting.
 Provide a variety of trading services and products for wealth management, including domestic and
Wealth overseas funds, foreign bonds, structured products, and bonds with repurchasing agreements.
Management &
 Conduct asset allocation for customers through trusts.
Trust
 Negotiable securities trust lending business.
 Employee Stock Ownership Trust business.
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2019 Annual Report

II. Directors’, Supervisors’ and Managers’ Information

A. Directors

1. Information Regarding Directors

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April 21, 2020
Executives, Directors or
Shareholding
Shareholding when Spouse & Minor Supervisors Who are Spouses
Title Nationality Name ElectedDate Gender (Until)Term Date (FirstElected) Elected Current Shareholding Shareholding Arrangementby Nominee Experience (Education) Current Position with PSC and Other Company or within Two Degrees of Kinship
Shares % Shares % Shares % Shares % Title Name Relation
Kai Nan
Investment 2018.6.21 2021.6.20 2000.6.8 39,831,460 2.90 39,831,460 2.90 NA NA NA NA NA
Co., Ltd.
1. National Taiwan Sport University 1. PSC: NA
2. Vice Chairman and President of President 2. Other Company:
Securities Corp.
• Chairman:
3. Chairman of President Futures Corp. Richness Cereal Trading Co., Ltd.
Chairman 4. Director of Taiwan Futures Exchange • Director:
Republic of China Lin, Kuan-Delegate: 2018.6.21 M 2021.6.20 2018.6.21 3,000,000 0.22 3,000,000 0.22 1,000,000 0.07 0 0 5. Chairman of Richness Cereal Trading Co., Ltd. President Futures Corp., Taiwan Futures Exchange, Q-WARE Systems NA NA NA
Chen 6. Director and President of Fonmau Cereal & Services Corp., President Securities (HK) Ltd., President Securities (BVI)
Industrial Co., Ltd. Ltd., President Securities (Nominee)
7. Director of Q-WARE Systems & Services Ltd., President Wealth Management
Corp. (HONG KONG) Ltd.
8. Director of President Securities Corp. • Director and President:
Fonmau Cereal Industrial Co., Ltd.
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Executives, Directors or
Shareholding
Shareholding when Spouse & Minor Supervisors Who are Spouses
Title Nationality Name ElectedDate Gender (Until)Term Date (FirstElected) Elected Current Shareholding Shareholding Arrangementby Nominee Experience (Education) Current Position with PSC and Other Company or within Two Degrees of Kinship
Shares % Shares % Shares % Shares % Title Name Relation
Kai Nan
Investment 2018.6.21 2021.6.20 2000.6.8 39,831,460 2.90 39,831,460 2.90 NA NA NA NA NA
Co., Ltd.
1. MBA of National Taiwan University, 1. PSC: NA
R.O.C.
2. Other Company:
2. Manager of President International
Development Corp. • Assistant Vice President:
3. Manager of Uni-President Enterprises Uni-President Enterprises Corp.
Corp., Treasury Division • President:
4. Assistant Vice President of Uni-President Champ Green (Shanghai) Consulting
Enterprises Corp, Business Integration Co., Ltd.
Division
• Director and President:
5. Director of President Securities Corp.
United Advisor Venture Management
6. Director of President International Ltd.
Development Corp.
• Director:
7. Director of Presco Netmarketing, Inc.
President International Development
8. Director of Kuang Chuan Dairy Co., Ltd. Corp., Presco Netmarketing, Inc.,
9. Director of Kuang Chuan Foods Ltd. Kuang Chuan Dairy Co., Ltd., Kuang
Chuan Foods Ltd., Tait Marketing
10. Director of Tait Marketing & Distribution & Distribution Co., Ltd., Changhua
Co., Ltd. County Chang Chun-Ya Private
Director
11. Director of Changhua County Chang Social Welfare Charity Foundation,
Republic of China Liu, Tsung-Delegate: 2018.6.21 M 2021.6.20 2015.6.18 0 0 0 0 0 0 0 0 Chun-Ya Private Social Welfare Charity Foundation Yantai North Andre Juice Co Ltd., Champ Green Capital Limited, SMS NA NA NA
Yi 12. Director of Yantai North Andre Juice Co Capital Management Ltd., SMS
Ltd. Investment Management Co.,Ltd.,
SMS Capital Co.,Ltd., Shanghai
13. Director of Champ Green Capital Shunfeng Restaurant Group Co., Ltd.,
14. Director of SMS Capital Management Ltd. Huasui Tomato Investment Company,
Woongjin Foods Co., Ltd., Daeyoung
15. Director of SMS Investment Management Foods Co., Ltd., Uni-president(Korea)
Co.,Ltd. Co., Ltd.
16. Director of SMS Capital Co.,Ltd.
17. Director of Shanghai Shunfeng Restaurant
Group Co., Ltd.
18. Director of Huasui Tomato Investment
Company
19. Director of Woongjin Foods Co., Ltd.
20. Director of Daeyoung Foods Co., Ltd.
21. Director of Uni-president(Korea) Co., Ltd.
22. President of Champ Green (Shanghai)
Consulting Co., Ltd.
23. Director and President of United Advisor
Venture Management Ltd.
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Executives, Directors or
Shareholding
Shareholding when Spouse & Minor Supervisors Who are Spouses
Title Nationality Name ElectedDate Gender (Until)Term Date (FirstElected) Elected Current Shareholding Shareholding Arrangementby Nominee Experience (Education) Current Position with PSC and Other Company or within Two Degrees of Kinship
Shares % Shares % Shares % Shares % Title Name Relation
1. MBA of University of Strathclyde 1. PSC: NA
2. CFO of Uni-President Enterprises Corp. 2. Other Company:
3. CFO of Uni-President China Holdings Ltd. • Director:
4. Director of President Securities Corp. Uni-President China Holdings
Ltd. , President Enterprises (China)
5. Director of President Enterprises (China) Investment Co., Ltd. , Uni-President
Investment Co., Ltd., Heilongjiang Hong Kong Holdings Limited, Uni-
Wondersun Dairy Co., Ltd. President (Vietnam) Co., Ltd.,
President International Development
Republic of China Chen, Kuo-Delegate: 2018.6.21 M 2021.6.20 2017.11.3 0 0 0 0 0 0 0 0 Corp.Ltd. , Uni-President (Singapore) Pte. NA NA NA
Hui • Chairman:
Kai Yu (BVI) Investment Co., Ltd 、
Tone Ren Enterprise Co., Ltd.
• Supervisor:
Champ Green (Shanghai) Consulting
Co., Ltd., United Advisor Venture
Management Co., Ltd.
• Assistant Vice President:
Uni-President Enterprises Corp.
1. M.S., Dept. of Business Administration, 1. PSC: NA
National Cheng Kung University
2. Other Company:
2. Vice President of ScinoPharm Taiwan Ltd.
(Administraion Center ) • Assistant Vice President of Project
Management:
Director Delegate: 3. Vice President of President International President Chain Store Corp.
Republic of China Hong, Hui-Hsieh 2018.6.21 F 2021.6.20 2001.3.21 54,569 0 54,569 0 17,542 0 0 0 4. Chief Audit Officer of President Chain Development Corp.(F&A Divison) NA NA NA
Tzu Store Corp.
5. Director of President Securities Corp.
1. Master of Business Administration/Institute 1. PSC: NA
of Financial Management, National Sun
Yat-sen University 2. Other Company:
2. Vice President of IBT Securities Co. Ltd. • Vice President of Administration:
ScinoPharm Taiwan Ltd.
3. Assistant Manager of Taiwan International
Securities Corporation • Director:
4. Division Head of Treasury Division, Uni- President Transnet Corp. , President
Republic of Delegate: 2018.6.21 F 2021.6.20 2015.6.18 0 0 0 0 0 0 0 0 President Enterprises Corp. Collect Service Corp NA NA NA
China Lu, Li-An • Supervisor :
5. Director of President Transnet Corp.,
President Collect Service Corp Tong Kuan Enterprise Co., Ltd.
6. Supervisor of Tong Kuan Enterprise Co.,
Ltd.
7. Director of President Securities Corp
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Executives, Directors or
Shareholding
Shareholding when Spouse & Minor Supervisors Who are Spouses
Title Nationality Name ElectedDate Gender (Until)Term Date (FirstElected) Elected Current Shareholding Shareholding Arrangementby Nominee Experience (Education) Current Position with PSC and Other Company or within Two Degrees of Kinship
Shares % Shares % Shares % Shares % Title Name Relation
1. Fu Jen Catholic University bachelor degree 1. PSC: NA
of Economics
2. Other Company:
2. Director of PK Venture Capital Corp.
Delegate: • Director
Republic of China Chen, 2019.6.18 F 2021.6.20 2019.6.18 0 0 0 0 0 0 0 0 3. Director of President Securities Corp. PK Venture Capital Corp. NA NA NA
Ching-Yi 4. Treasury Division Manager of Uni- • Treasury Division Manager:
President Enterprises Corp.
Uni-President Enterprises Corp.
Director
1. University of Dallas Master of Business 1. PSC: NA
Administration
2. Other Company:
2. Director of President Securities Corp.
Delegate: • Financial Planning Division Manager:
Republic of China Chen, 2019.6.18 F 2021.6.20 2019.6.18 0 0 0 0 0 0 0 0 3. Financial Planning Division Manager of Uni-President Enterprises Corp. Uni-President Enterprises Corp. NA NA NA
Yi-Ling
Canking
Investment 2018.6.21 2021.6.20 1988.11.26 16,918,851 1.23 16,918,851 1.23 0 0 0 0 NA NA NA NA NA
Co., Ltd.
1. Ph.D., University of San Francisco 1. PSC: NA
2. Master, Harvard University 2. Other Company:
3. MBA, George Washington University • Chairman
Director 4. Senior Executive Officer Ministry of Canking Investment Co., Ltd.
Delegate: Education
Republic of China Teng, Wen- 2018.6.21 F 2021.6.20 2018.6.21 2,320,671 0.17 2,320,671 0.17 0 0 0 0 5. Assistant professor of National Taipei NA NA NA
Hwi University of Education
6. Chairman of Canking Investment Co., Ltd.
7. Director of President Securities Corp.
Hui Tung
Investment 2018.6.21 2021.6.20 1994.10.29 10,199,544 0.74 10,199,544 0.74 0 0 0 0 NA NA NA NA NA
Co.,Ltd.
1. Department of International Business 1. PSC: NA
Soochow University
2. Other Company:
2. Vice Chairman of Huei Tung Enterprise
Director Corp. • Vice Chairman:
Delegate: Huei Tung Enterprise Corp.
Republic of China Lee, Che- 2018.6.21 M 2021.6.20 2018.6.21 0 0 0 0 0 0 0 0 3. Director of HHB Geriatric Healthcare Corp. • Director: NA NA NA
Ming 4. Director of Hui Tung Investment Co., Ltd. Hui Tung Investment Co.,Ltd. , HHB
5. Director of Japan Asia Specialities Co., Ltd. Geriatric Healthcare Corp. , Japan
Asia Specialities Co., Ltd.
6. Director of President Securities Corp.
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Executives, Directors or
Shareholding
Shareholding when Spouse & Minor Supervisors Who are Spouses
Title Nationality Name ElectedDate Gender (Until)Term Date (FirstElected) Elected Current Shareholding Shareholding Arrangementby Nominee Experience (Education) Current Position with PSC and Other Company or within Two Degrees of Kinship
Shares % Shares % Shares % Shares % Title Name Relation
Leg Horn
Investment 2018.6.21 2021.6.20 1988.11.26 12,408,018 0.90 12,408,018 0.90 0 0 0 0 NA NA NA NA NA
Co.,Ltd.
1. BBA in Business Administration, Soochow 1. PSC: NA
Director University 2. Other Company:
Delegate: 2. Accounting Manager of Leg Horn
Republic of China Chang, Ming- 2018.6.21 F 2021.6.20 1990.3.30 1,185,670 0.09 1,185,670 0.09 0 0 0 0 Investment Co., Ltd. • Director and Accounting Manager:Leg Horn Investment Co., Ltd. NA NA NA
Chen 3. Director of Leg Horn Investment Co., Ltd.
4. Director of President Securities Corp.
Ta Le
Investment
2018.6.21 2021.6.20 2000.6.8 7,172,615 0.52 7,172,615 0.52 0 0 0 0 NA NA NA NA NA
Holding
Co., Ltd.
1. National Tainan Girl’s Senior High School 1. PSC: NA
2. Chairman of Ta Le Investment Holding 2. Other Company:
Director Co., Ltd.
• Chairman:
Republic of China Delegate: Tu, Li- 2018.6.21 F 2021.6.20 2000.6.8 504,024 0 504,024 0 0 0 0 0 3. Supervisor of Litz's Enterprise Ltd.4. Director of Strong Team International Inc. • Director:Ta Le Investment Holding Co., Ltd. NA NA NA
Yang
5. Director of President Securities Corp. Strong Team International Inc.
• Supervisor:
Litz’s Enterprise Ltd.
China
2018.6.21 2021.6.20 1994.10.29 6,957,000 0.51 6,957,000 0.51 0 0 0 0 NA NA NA NA NA
F.R.P Corp.
1. Ming Chuan University 1. PSC: NA
Director
Republic of China Lee, Shu-Delegate: 2018.6.21 F 2021.6.20 2015.6.18 0 0 0 0 0 0 0 0 2. Accounting Deputy Manager, Auditing Manager of Eternal Materials Co., Ltd. 2. Other Company: NA NA NA NA
Fen
3. Director of President Securities Corp.
1. Master of Business Administration, 1. PSC: NA
University of Dallas
2. Other Company:
2. Chairman of Shun Fu Tai Industrial Co.,
Ltd. • Chairman:
Shun Fu Tai Industrial Co., Ltd. , Yao-
3. Chairman of Yao-Jun Technology Inc. Jun Technology Inc. , My-Semi Inc.
Director Republic of China Duh, Bor-Tsang 2018.6.21 M 2021.6.20 2012.6.22 4,189,946 0.31 4,189,946 0.31 2,200,881 0.16 0 0 4. Chairman of My-Semi Inc.5. Director of President Securities Corp. • Director:Midori Inc. , Morioka Investment NA NA NA
Inc. , NANTEX Industry Co., Ltd.
6. Director of Shin Lin Investment Inc.Morioka Investment Inc., Lillian , • Supervisor:
Investment Co., Ltd , Midori Inc. Lillian Investment Co., Ltd.
7. Supervisor of Konten Networks Inc. ,
NANTEX Industry Co., Ltd.
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Executives, Directors or
Shareholding
Shareholding when Spouse & Minor Supervisors Who are Spouses
Title Nationality Name ElectedDate Gender (Until)Term Date (FirstElected) Elected Current Shareholding Shareholding Arrangementby Nominee Experience (Education) Current Position with PSC and Other Company or within Two Degrees of Kinship
Shares % Shares % Shares % Shares % Title Name Relation
1. National Pingtung University of Science 1. PSC: NA
and Technology of Forestry
2. Other Company:
2. Chairman of Teh Long Warehousing &
Director Republic of China Lee, Shy-Lou 2018.6.21 M 2021.6.20 1997.6.23 8,380,640 0.61 8,380,640 0.61 5,241,974 0.38 0 0 Stevedoring Co., Ltd. • Chairman:Teh Long Warehousing & Stevedoring NA NA NA
3. Chairman of Grown Field Co., Ltd. Co., Ltd. , Grown Field Co., Ltd.
4. Director of President Securities Corp.
1. Golden Gate University, MBA in Finance 1. PSC: NA
2. Chairman of United Investment Ptd. Ltd. 2. Other Company:
3. Assistant Vice President of Tainan Spinning • Chairman:
Co., Ltd. United Investment Ptd. Ltd.
4. Director of President Securities Corp. • Director:
Director Republic of China Jing-YauJuang, 2018.6.21 M 2021.6.20 2018.6.21 3,000 0 3,000 0 0 0 0 0 T.S. RETAIL AND DISTRIBUTION NA NA NA
CO., Q-Ware Systems & Services
Corp., eten Technologies Inc.,
NANTEX Industry Co., Ltd., Nan Fan
Housing Development Co., Ltd.
• Assistant Vice President:
Tainan Spinning Co., Ltd.
1. MBA, George Washington University 1. PSC: Member of Audit Committee
/ Remuneration Committee / Risk
2. Department of Finance, Shih Hsin Management Committee , Supervisory
University Associate Professor / Assistant personnel of Trust
Professor
2. Other Company:
3. Independent Director of President Securities
Independent Republic of Liang, 2018.6.21 F 2021.6.20 2015.6.18 0 0 0 0 0 0 0 0 Corp. • Associate Professor: NA NA NA
Director China Yann-Ping 4. Vice President of Hua Nan Investment Shih Hsin University
Trust • Member of Self-disciplinary
5. Vice President of Polaris Securities Committee:
Investment Trust Unique Satellite Television (USTV)
6. Chairman of Department of Finance,
MingDao University
1. Ph.D. in Law, Chinese Culture University 1. PSC: Member of Audit Committee
/ Remuneration Committee / Risk
2. Vice Chariman of China Petrochemical Management Committee
Development Corporation
2. Other Company:
3. Chariman of The First Leasing Corp.
• Chairman:
4. Chairman of Bo-Meng Investment Co., Ltd.
The First Leasing Corp. , Bo-Meng
5. Independent Director of President Securities Investment Co., Ltd.
Independent Republic of Pai, Chun- 2018.6.21 M 2021.6.20 2018.6.21 0 0 0 0 0 0 0 0 Corp. • Vice Chairman: NA NA NA
Director China Nan 6. Independent Director of Megaforce China Petrochemical Development
Company Ltd. Corporation
7. Director of Core Pacific City Co., Ltd. • Independent Director:
8. Director of Taivex Therapeutics Megaforce Company Ltd.
Corporation • Director:
9. Director of Wei Lih Food Industrial Co., Core Pacific City Co., Ltd., Wei Lih
Ltd. Food Industrial Co., Ltd., Taivex
Therapeutics Corporation
12
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Executives, Directors or
Shareholding
Shareholding when Spouse & Minor Supervisors Who are Spouses
Title Nationality Name ElectedDate Gender (Until)Term Date (FirstElected) Elected Current Shareholding Shareholding Arrangementby Nominee Experience (Education) Current Position with PSC and Other Company or within Two Degrees of Kinship
Shares % Shares % Shares % Shares % Title Name Relation
1. The University of Iowa, MBA 1. PSC: Member of Audit Committee
/ Remuneration Committee / Risk
2. Executive Vice President of Chunghwa Management Committee
Telecom Co., Ltd.
2. Other Company:
3. Director of Chunghwa Investment
Company • Advisor:
Independent Director Republic of China Yung-FongSong, 2018.6.21 M 2021.6.20 2018.6.21 0 0 0 0 0 0 0 0 4. President of Chunghwa Investment Ikhlas Capital Singapore Pte. Ltd. NA NA NA
Company
5. Director and President of Deutsche Bank
Taiwan
6. Independent Director of President Securities
Corp.
1. Department of Economics, Soochow 1. PSC: Member of Audit Committee
University / Remuneration Committee / Risk
Management Committee/Offshore
2. Independent Director of Himax Technologies, Inc. Structured Products review teamSupervisory personnel of Trust ,
Independent Republic of Horng, Yuan- 2018.6.21 M 2021.6.20 2018.6.21 0 0 0 0 0 0 0 0 3. Vice President of Finance Division of China Steel Corporation 2. Other Company: NA NA NA
Director China Chuan 4. Chairman of Gains Investment Corp. • Independent Director:
Himax Technologies, Inc.
5. Director of Kaohsiung Rapid Transit
Corporation
6. Independent Director of President Securities
Corp.
Note 1: The shareholding ratio was calculated based on the 1,390,428,028 shares of the share capital of President Securities Corp.
Note 2: The information above is based on April 1, 2020. And the shareholding condition is based on April 21, 2020.
2. Major Shareholders of PSCʹs Institutional Shareholders
March 31, 2020
PSC's Institutional
Major Shareholders of PSC's Institutional Shareholders (Holding Percentage) (Note2)
Shareholders (Note1)
Leg Horn Investment Co.,
Chang, Pin-Tang (45.05%), Chang, Benjamin Pin-Yen (49.25%)
Ltd.
Hui Tung Investment Co.,Ltd. Lee, Tong-Liang (44.88%), Hsu, Jui-Chung (15%), Lee, Pei-Shan (12.44%), Lee, Chi-Hung (12.44%), Lee, Che-Ming (12.44%)
Ta Le Investment Holding Lee Ou Yang, Li-Chen (27.69%), Tu, Li-Yang (3.62%), Lee, Chia-Rong (4.62%), Lee, Yee-Ching(53.84%), Kao, Kuo-Lun(3.08%), Agnes Lee(1%), Litz’s
Co., Ltd. Enterprise Ltd.(6.15%)
Kai Nan Investment Co., Ltd. Uni-President Enterprises Corp. (100%)
Canking Investment Co., Ltd. Teng, Wen-Hwi (26.35%), Teng, Jun-Tse (26.69%), Teng, Wen-Hsuan (26.35%), Yang, Yu-Chiao (10.67%)
Jhang, Li-Sheng (1.25%), Wu Hong, Siao-Gui (2.5%), Lee, Chia-Rong (3.8%), Lee, Shan-Heng (1.05%), Wu, Su-Yun (1.45%), Kao, Ying-Shin (18.43%), Kao
China F.R.P Corp.
Cheng, Li-Hua (4.96%), Kao, Kuo-Lun(15.04%), Jia cheng enterprise Ltd.(20.85%)
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Note 1: The shareholding ratio was calculated based on the 1,390,428,028 shares of the share capital of President Securities Corp. Note 2: The information above is based on April 1, 2020. And the shareholding condition is based on April 21, 2020.

Note 1: As the Company’s Directors and Supervisors belong to institutional shareholder representatives, the name of the institutional shareholders.

Note 2: The name of the major shareholders of the institutional shareholders and their shareholding ratio. If the major shareholders are corporations, their information is listed in the table below.

Institutional Shareholders of the Major Shareholders

August 9, 2019

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Institutional Shareholders Major Shareholders of the Institutional Shareholders (Holding Percentage) (Note)
Kao Chyuan Inv. Co., Ltd. (4.93%), HSBC in custody for BNP Paribas Wealth Management Hong Kong Branch (3.04%), Hou, Po-Ming (2.60%), Hou,
Po-Yu (2.27%), Citi in custody for Government of Singapore-GOS-EFMC (2.06%), Kao, Shiow-Ling (1.64%), JPMorgan Chase Bank N.A. Taipei
Uni-President Enterprises
Branch in custody for Saudi Arabian Monetary Agency (1.54%), HSBC Acting as Custodian for First State Investments ICVC - Stewart Investors Asia
Corp
Pacific Leaders Fund (1.52%), Vanguard Total International Stock Index Fund , a series of Vanguard Star Funds (1.34%), and Vanguard Emerging
Markets Stock Index Fund (1.30%)
Lee, Chia-Rong (7.21%), Lee Ou Yang, Li-Chen (10.96%), Tu, Li-Yang (9.62%), Lee, Yee-Ching (15.39%), Lee, Wen-Fa (2.88%), Wu, Mei-Ying (2.88%),
Litz’s Enterprise Ltd.
Ta Le Investment Holding Co., Ltd.(49.37%)
Jia Cheng Enterprise Ltd. Kao, Ying-Shin (0.78%), Kao Cheng, Li-Hua (2.88%), Kao, Kuo-Lun (7.44%), Lee, Chia-Rong (9%), New Genius Limited (60%)
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Note: Name and holding percentage of the top ten shareholders of the Company’s institutional shareholders.

3. Professional qualifications and independence analysis of directors

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Criteria Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria (Note) Number of Other
Public Companies
An Instructor or Higher Position A Judge, Public Prosecutor, Attorney, Have Work Experience in in Which the
Academic Department Related to the Law, Finance, Accounting, or Other Business Needs of the Company in in a Department of Commerce, Specialist Who has Passed a National Examination and been Awarded a Other Professional or Technical Certified Public Accountant, or Necessary for the Business Accounting, or Otherwise the Areas of Commerce, Law, Finance, or 1 2 3 4 5 6 7 8 9 10 11 12 ConcurrentlyServing as an Independent Individual is
Name a Public or Private Junior College, College or University Certificate in a Profession Necessary for the Business of the Company of the Company Director
Lin, Kuan-Chen Delegate of Kai P P P P P P P P 0
Nan Investment Co., Ltd.
Liu, Tsung-Yi Delegate of Kai P P P P P P P P P P 0
Nan Investment Co., Ltd.
Chen, Kuo-Hui Delegate of Kai P P P P P P P P P P 0
Nan Investment Co., Ltd.
Hsieh Hong, Hui-Tzu Delegate P P P P P P P P P P 0
of Kai Nan Investment Co., Ltd.
Lu, Li-An Delegate of Kai Nan P P P P P P P P P P 0
Investment Co., Ltd.
Chen, Ching-Yi Delegate of Kai P P P P P P P P P P 0
Nan Investment Co., Ltd.
Chen, Yi-Ling Delegate of Kai P P P P P P P P P P P 0
Nan Investment Co., Ltd.
Teng, Wen-Hwi Delegate of P P P P P P P P P P P P 0
Canking Investment Co., Ltd.
Lee, Che-Ming Delegate of Hui P P P P P P P P P P P 0
Tung Investment Co., Ltd.
Chang, Ming-Chen Delegate of P P P P P P P P P P P 0
Leg Horn Investment Co., Ltd.
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Criteria Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria (Note) Number of Other
Public Companies
An Instructor or Higher Position A Judge, Public Prosecutor, Attorney, Have Work Experience in in Which the
Academic Department Related to the Law, Finance, Accounting, or Other Business Needs of the Company in in a Department of Commerce, Specialist Who has Passed a National Examination and been Awarded a Other Professional or Technical Certified Public Accountant, or Necessary for the Business Accounting, or Otherwise the Areas of Commerce, Law, Finance, or 1 2 3 4 5 6 7 8 9 10 11 12 ConcurrentlyServing as an Independent Individual is
Name a Public or Private Junior College, College or University Certificate in a Profession Necessary for the Business of the Company of the Company Director
Tu, Li-Yang Delegate of Ta Le P P P P P P P P P P P 0
Investment Holding Co., Ltd.
Lee, Shu-Fen Delegate of China P P P P P P P P P P P 0
F.R.P Corp
Duh, Bor-Tsang P P P P P P P P P P P 0
Lee, Shy-Lou P P P P P P P P P P P 0
Juang, Jing-Yau P P P P P P P P P P P P 0
Liang, Yann-Ping P P P P P P P P P P P P P P 0
Pai, Chun-Nan P P P P P P P P P P P P P P 1
Song, Yung-Fong P P P P P P P P P P P P P 0
Horng, Yuan-Chuan P P P P P P P P P P P P P 1
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Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. Explanation of independence criteria 1 to 12 are as follows: 1.Not an employee of the Company or any of its affiliates.
2.Not a director or supervisor of the Company or any of its affiliates. (However, if the independent directors engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
3.Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
4.Not a manager of the 1st subparagraph, or a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of the persons 2nd and 3rd subparagraphs above.
5.Not a director, supervisor, or employee of a corporate shareholder who directly holds more than 5% of the Company’s total issued shares, who is among the top five shareholders, or who designates his or her representative to serve as a director or supervisor of the Company in accordance with Paragraph 1 or 2, Article 27 of the Company Act; (however, if the independent directors engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
6.Not a director, supervisor, or employee of another company where a majority of the Company’s director seats or voting shares and those of another company are controlled by the same person; (however, if the independent directors engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply.)
7.Not a director (or a managing director), supervisor, or employee of another company or institution where the Chairman, the President, or person holding an equivalent position of the Company and a person in an equivalent position at another company or institution are the same person or spouses; (however, if the independent directors engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply.)
8.Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution which has a financial or business relationship with the Company.(However, if a specific company or institution holds more than 20% and no more than 50% of the total issued shares of the Company and if the independent directors engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply.)
9.Not a professional individual, or a spouse, who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides auditing services, commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, the cumulative amount of payments obtained in the past two years has not exceeded NT$ 500,000. These restrictions do not apply to people whose duties are performed in accordance with the Securities and Exchange Act and the Business Mergers And Acquisitions Act or members of the Tender Offer Review Committee or the M&A Special Committee.
10.Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
11.Not been a person of any conditions defined in Article 30 of the Company Law.
12.Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

B. Information regarding directors, supervisors, management team and branch manager

April 21, 2020

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Current Spouse & Minor Shareholding Managers who are Spouses or The status
by Nominee of obtaining
Shareholding Shareholding Within Two Degrees of Kinship
Title Nationality/ Name Gender Date Elected Arrangement Experience (Education) Other Position employee
Country of Origin stock option
Shares % Shares % Shares % Title Name Relation certificates by
Managers
1. Director of President Futures Corp.
2. Director of President Securities (HK) Ltd.
1. Vice President of President Securities 3. Director of President Securities (BVI) Ltd.
Republic Of Corp. 4. Director of President Securities (Nominee)
President China Tsai, Sen-Bu M 2018.06.29 313,261 0.02 0 0 0 0 2. Senior Deputy Manager of China Ltd. NA NA NA NA
Bills Finance Corp. 5. Director of President Wealth Management
(HK) Ltd.
6. Director of PSC Venture Capital
Investment Co., Ltd.
Proprietary 1. Vice President of President
Trading Republic Of Securities.
Department Yang , Kai-Chih M 2018.08.29 136,423 0.01 0 0 0 0 N/A NA NA NA NA
Executive Vice China 2. Senior Vice President Manager of
President Securities.
President
1. Director of President Securities (HK) Ltd.
1. Assistant Vice President of 2. Director of President Securities (BVI) Ltd.
MasterLink Securities Corp.
Finance Republic Of 2. SVP of Ta Chong Bank LTD. 3. Director of President Securities (Nominee) Ltd.
Department An, Chi-Li F 2004.06.30 156,240 0.01 0 0 0 0 NA NA NA NA
Vice President China 3. Head of Treasury of Barclays Bank 4. Director of President Wealth Management
PLC (HK) Ltd.
4. Treasurer of Societe Generale 5. Supervisor of President Insurance Agency
Co., Ltd
Quantitative 1. Vice President of Oriental Securities
Trading Republic Of Huang, Jung- M 2009.03.26 107,356 0.01 0 0 0 0 Corp. N/A NA NA NA NA
Department China Jen 2. Assistant Vice President of
Vice President MasterLink Securities Corp.
Financial 1. Project Vice President of President
Product Republic Of Securities
Pu, Chien-Heng M 2019.03.22 0 0 0 0 0 0 N/A NA NA NA NA
Department China 2. Assistant Manager of Capital
Vice President Securities
Capital Market 1. Assistant Manager of President
Department Republic Of Chueh, Chih- Securities
M 2020.01.01 0 0 0 0 0 0 N/A NA NA NA NA
Sales Vice China Chung 2. Senior Vice President of Capital
President Securities
1. Vice President of President Securities
President Office Project Vice Republic Of Lin, Chung- M 2015.11.23 675,512 0.05 0 0 0 0 Corp. N/A NA NA NA NA
President China Heng 2. Special Assistant of Uni-President
Asset Management Corp.
1. Senior Manager of President
Auditing Office Republic Of Huang, Sha-Mei F 2018.03.14 0 0 0 0 0 0 Securities N/A NA NA NA NA
Chief Auditor China 2. Senior Project Manager of President
Securities
16
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Current Spouse & Minor Shareholding Managers who are Spouses or The status
by Nominee of obtaining
Shareholding Shareholding Within Two Degrees of Kinship
Title Nationality/ Name Gender Date Elected Arrangement Experience (Education) Other Position employee
Country of Origin stock option
Shares % Shares % Shares % Title Name Relation certificates by
Managers
Administration 1. Assistant Vice President of President
Department Republic Of Securities Director of President Insurance Agency Co.,
Yu, Hung-Chieh M 2018.07.01 5,725 0 0 0 0 0 NA NA NA NA
Senior Assistant China 2. Special Assistant of President Ltd.
Vice President Securities
Fixed Income
1. Assistant Vice President of President
Department Republic Of Yeh, Ming- M 2019.12.20 0 0 0 0 0 0 Securities N/A NA NA NA NA
Senior Assistant China Chieh
Vice President 2. Manager of President Securities
Settlement
& Clearing 1. Assistant Vice President of President
Department Republic Of Wu, Sheng-Yu M 2019.06.18 16,102 0 0 0 0 0 Futures Corp. N/A NA NA NA NA
China
Assistant Vice 2. Manager of President Futures Corp.
President
Compliance 1. Manager, Deputy Manager of
Division Republic Of President Securities
Hung, Ying-Che M 2008.03.19 54,649 0 0 0 0 0 N/A NA NA NA NA
Assistant Vice China 2. Specialist of Sam Shin Trading Co.
President Ltd.
President Office
Corporate 1. Senior Manager of President
governance Assistant Vice Republic Of China Chen, Nai-Chen F 2019.05.03 382 0 0 0 0 0 2. Manager of President SecuritiesSecurities Director (Representative of President Securities) of HuaVI Venture Capital Co.,Ltd. NA NA NA NA
President
Mainland
1. Project Assistant Vice President of
China Business Division Republic Of Chen, Long- M 2013.06.01 2,060 0 0 0 0 0 President Securities N/A NA NA NA NA
Assistant Vice China Chien 2. Branch Assistant Vice President of
President Securities
President
President Office 1. Senior Manager of President
Assistant Vice Republic Of Lu, Chia-Chen F 2020.03.04 0 0 0 0 0 0 Securities N/A NA NA NA NA
China
President 2. Manager of President Securities
Capital Market
1. Senior Manager of President
Department Republic Of Chang, Chin- M 2013.06.01 0 0 0 0 0 0 Securities N/A NA NA NA NA
Assistant Vice China Yung
President 2. Manager of President Securities
Capital Market
1. Senior Manager of President
Department Republic Of Tsai, Pao-Sheng M 2013.06.01 41,767 0 217 0 0 0 Securities N/A NA NA NA NA
Assistant Vice China
President 2. Manager of President Securities
Finance
1. Senior Manager of President
Department Republic Of Su, Wei-Lun M 2016.06.20 0 0 0 0 0 0 Securities N/A NA NA NA NA
Assistant Vice China
President 2. Manager of President Securities
Financial
Product 1. Senior Manager of President
Department Republic Of China Chang, Chung-Lin M 2016.08.01 0 0 0 0 0 0 Securities Director of Shan Ben Engineering Co., Ltd. NA NA NA NA
Assistant Vice 2. Manager of President Securities
President
17
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Current Spouse & Minor Shareholding Managers who are Spouses or The status
by Nominee of obtaining
Shareholding Shareholding Within Two Degrees of Kinship
Title Nationality/ Name Gender Date Elected Arrangement Experience (Education) Other Position employee
Country of Origin stock option
Shares % Shares % Shares % Title Name Relation certificates by
Managers
Shareholder
Services 1. Senior Manager of President
Department Republic Of Chang,Shao- M 2016.09.01 18,833 0 0 0 0 0 Securities N/A NA NA NA NA
China Ping
Assistant Vice 2. Manager of President Securities
President
Information
System 1. Senior Manager of President
Department Republic Of Lin, Jung-Hui M 2016.09.01 85 0 0 0 0 0 Securities Director of President Futures Corp. NA NA NA NA
China
Assistant Vice 2. Manager of President Securities
President
Quantitative
Trading 1. Senior Manager of President
Department Republic Of Lee, Chien-Hsin M 2019.03.01 0 0 0 0 0 0 Securities N/A NA NA NA NA
China
Assistant Vice 2. Manager of Waterland Futures
President
Quantitative
1. Project Vice President of President
Trading Department Republic Of Chien, Pang- M 2019.05.01 0 0 0 0 0 0 Securities N/A NA NA NA NA
Assistant Vice China Yen 2. Sinor Project Manager of Waterland
Futures
President
Capital Market
1. Senior Manager of President
Department Republic Of Chen, Chia- M 2019.07.01 0 0 0 0 0 0 Securities N/A NA NA NA NA
Assistant Vice China Chang
President 2. Manager of President Securities
Risk Control 1. Senior Manager of President
Office Republic Of Chang, Ping- M 2015.11.09 15,091 0 0 0 0 0 Securities N/A NA NA NA NA
China Chuan
Senior Manager 2. Manager of President Securities
Brokerage 1. Assistant Vice President of Hua Nan
Department Republic Of Chang, Hung- M 2019.06.18 1,405 0 0 0 0 0 Securities N/A NA NA NA NA
Senior Assistant China Shuo 2. Assistant Vice President of Sino-
Vice President Trade Securities
Brokerage 1. Assistant Vice President of President
Department Republic Of Lin, Li-Lin F 2014.04.01 6,110 0 0 0 0 0 Securities N/A NA NA NA NA
District China
2. Manager of Dafeng Securities
Supervisor
Brokerage
1. Assistant Vice President of Mega
Department Republic Of Chien, Chia- M 2020.03.01 0 0 0 0 0 0 Securities N/A NA NA NA NA
District China Nan
2. Manager of KGI Securities
Supervisor
Brokerage 1. Branch Assistant Vice President of
Department Republic Of Liao, Chen-Yin F 2020.04.01 0 0 0 0 0 0 President Securities N/A NA NA NA NA
Vice District China
2. Manager of President Securities
Supervisor
18
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Current Spouse & Minor Shareholding Managers who are Spouses or The status
by Nominee of obtaining
Shareholding Shareholding Within Two Degrees of Kinship
Title Nationality/ Name Gender Date Elected Arrangement Experience (Education) Other Position employee
Country of Origin stock option
Shares % Shares % Shares % Title Name Relation certificates by
Managers
Brokerage 1. District Assistant Vice President of
Department Republic Of Chiu, Shyh- M 2018.10.01 0 0 3,219 0 0 0 President Securities N/A NA NA NA NA
Assistant Vice China Tyng 2. Assistant Vice President of President
President Securities
Wealth
Management 1. Branch Assistant Vice President of
and Trust Republic Of Chu, Po-Lin M 2018.07.01 0 0 0 0 0 0 President Securities N/A NA NA NA NA
Department China
Assistant Vice 2. Manager of President Securities
President
1. Assistant Vice President of Hua Nan
Corporate Client Dept. Republic Of Chang, Hung- M 2019.04.01 1,405 0 0 0 0 0 Securities N/A NA NA NA NA
China Shuo 2. Assistant Vice President of Sino-
Manager
Trade Securities
Corporate 1. Sales Assistant Vice President of
Client Dept. Republic Of President Securities
Chen, Min-Ping F 2020.01.01 0 0 0 0 0 0 N/A NA NA NA NA
Assistant Vice China 2. Sales Assistant Vice President of
President CTBC Securities
Digital 1. Senior Project Manager of President
Business Dept. Republic Of Tsai, Chen-Yuan M 2020.04.01 0 0 0 0 0 0 Securities N/A NA NA NA NA
China
Senior Manager 2. Manager of President Securities
Global
1. Supervisor of Capital Securities
Institutional Service Dept. Republic Of China Chung, Chih-Hung M 2016.05.05 0 0 0 0 0 0 2. Analyst of China Asset Management N/A NA NA NA NA
Limted
Manager
Tunghsing
Equity Republic Of Chen, Chih- M 2018.12.01 0 0 0 0 0 0 1. Manager of President Securities N/A NA NA NA NA
Department China Lung 2. Manager of President Futures Corp.
Manager
Tunghsing
1. Manager of President Securities
Equity Department Republic Of China Tsai, Shu-Mei F 2016.04.01 46,807 0 0 0 0 0 2. Senior Manager of President N/A NA NA NA NA
Securities
Manager
1. Assistant Vice President of KGI
Kaohsiung Republic Of Wu, Huan- Securities
Branch M 2013.04.01 0 0 0 0 0 0 N/A NA NA NA NA
Manager China Chung 2. Manager of Taiwan Securities Co.,
Ltd.
Dunnan Branch Republic Of Chiang, Chia- F 2020.04.01 0 0 0 0 0 0 1. Manager of CTBC Securities N/A NA NA NA NA
Manager China Jung 2. Manager of Ta Chong Securities
1. Assistant Vice President of Waterland
Dunnan Branch Republic Of Securities
Sung, Yu-Chih M 2019.06.10 0 0 0 0 0 0 N/A NA NA NA NA
Manager China 2. Senior Assistant Vice President of
First Securities
19
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----- Start of picture text -----

Current Spouse & Minor Shareholding Managers who are Spouses or The status
by Nominee of obtaining
Shareholding Shareholding Within Two Degrees of Kinship
Title Nationality/ Name Gender Date Elected Arrangement Experience (Education) Other Position employee
Country of Origin stock option
Shares % Shares % Shares % Title Name Relation certificates by
Managers
1. Manager of President Securities
Zhongli Branch Manager Republic Of China Chiang, Tsong-Shyan M 2007.12.19 0 0 0 0 0 0 2. Manager of Kurn Bern Machinery N/A NA NA NA NA
Company
1. Assistant Vice President of Hua Nan
Chengzhong Republic Of Securities
Branch Chiu, Hsiao-Chi F 2019.12.20 0 0 2 0 0 0 N/A NA NA NA NA
China 2. Assistant Vice President of KGI
Manager
Securities
1. Deputy Manager of President
Chengzhong Republic Of Securities
Branch Chao, Cheng M 2019.11.06 0 0 0 0 0 0 N/A NA NA NA NA
Manager China 2. Deputy Manager of Concords
Securities
1. Deputy Manager of President
Tainan Branch Republic Of Securities
Hsieh,Chia-Hsi M 2019.01.01 0 0 0 0 0 0 N/A NA NA NA NA
Manager China 2. Sales Assistant Manager of President
Securities
Taichung 1. Branch Assistant Vice President of
Branch Republic Of Liao, Chen-Yin F 2001.11.12 0 0 0 0 0 0 President Securities N/A NA NA NA NA
China
Manager 2. Manager of President Securities
1. Deputy Manager of President
Taichung Republic Of Securities
Branch Fang, Wu-Hsin M 2016.10.01 280 0 0 0 0 0 N/A NA NA NA NA
Manager China 2. Sales Deputy Manager of President
Securities
1. Deputy Manager of President
Hsinchu Branch Republic Of Securities
Lee, Chin-Yi M 2014.09.01 0 0 0 0 0 0 N/A NA NA NA NA
Manager China 2. Sales Assistant Manager of Taiwan
Securities Co., Ltd.
1. Assistant Vice President of China
Chiayi Branch Republic Of Tai, Kuo-Chun M 2005.06.01 0 0 12,968 0 0 0 Securities Co., Ltd. N/A NA NA NA NA
Manager China
2. Manager of Yuanta Securities
1. Sales Manager of President
Pingtung Branch Republic Of Wang, Chien- M 2009.04.01 0 0 0 0 0 0 Securities N/A NA NA NA NA
Manager China Min 2. Deputy Manager of President
Securities
1. Deputy Manager of President
Keelung Branch Republic Of Yu, Ping-Tse M 2019.04.01 0 0 0 0 0 0 Securities N/A NA NA NA NA
Manager China 2. Sales Executive of Hua Nan
Securities
1. Sales Manager of Hua Nan Securities
Yonghe Branch Manager Republic Of China Chang, Chih-Hsiang M 2019.12.20 0 0 0 0 0 0 2. Sales Deputy Manager of Mega N/A NA NA NA NA
Securities
Xin Taichung 1. Manager of President Securities
Branch Republic Of China Yang, Kuo-Chen M 2011.01.01 0 0 0 0 0 0 2. Deputy Manager of SAMPO N/A NA NA NA NA
Manager Securities
20
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Current Spouse & Minor Shareholding Managers who are Spouses or The status
by Nominee of obtaining
Shareholding Shareholding Within Two Degrees of Kinship
Title Nationality/ Name Gender Date Elected Arrangement Experience (Education) Other Position employee
Country of Origin stock option
Shares % Shares % Shares % Title Name Relation certificates by
Managers
Hsinying 1. Deputy Manager of President
Branch Republic Of Hsiao, Po-Ming M 2016.04.01 0 0 0 0 0 0 Securities N/A NA NA NA NA
China
Manager 2. Sales of President Securities
Changhua 1. Manager of Yuanta core pacific
Branch Republic Of Yu, Fu-Tsun M 2018.01.01 0 0 0 0 0 0 Securities N/A NA NA NA NA
China
Manager 2. Sales of Yuanta Securities
1. Senior Deputy Manager of KGI
Taoyuan Republic Of Securities
Branch Hsiao, Ju-un F 2019.04.01 0 0 0 0 0 0 N/A NA NA NA NA
Manager China 2. Deputy Manager of Sino Pac
Securities
1. Sales Manager of President Futures
Yuanlin Branch Republic Of Chen, Hung- M 2019.10.01 0 0 0 0 0 0 Corp. N/A NA NA NA NA
Manager China Tsai 2. Sales Deputy Manager of President
Futures Corp.
Sanchung 1. Manager of Concord securities.
Branch Republic Of China Chang,Shih-Min M 2019.01.01 0 0 0 0 0 0 2. Sales Manager of President N/A NA NA NA NA
Manager Securities
Sanchung Branch Republic Of Kao, Ming- M 2019.09.01 0 0 0 0 0 0 1. Manager of President Securities N/A NA NA NA NA
Manager China Chou 2. Manager of KGI Securities
1. Deputy Manager of Yuanta Securities
Shilin Branch Republic Of Co., Ltd.
Hsu, Fu-Chiang M 2014.10.01 0 0 0 0 0 0 N/A NA NA NA NA
Manager China 2. Senior Deputy Manager of KGI
Securities
Panchiao Republic Of 1. Manager of KGI Securities
Branch Lo, Shih-Hong M 2019.04.01 0 0 0 0 0 0 N/A NA NA NA NA
Manager China 2. Manager of Capital Securities
Sanduo Branch Republic Of 1. Manager of President Securities
Tsai, Yi-Chen F 2006.03.21 0 0 0 0 0 0 N/A NA NA NA NA
Manager China 2. Sales Manager of SinoPac Holding
Szichih Branch Republic Of 1. Manager of President Securities
Huang, Ming-Fa M 2019.04.01 91 0 0 0 0 0 N/A NA NA NA NA
Manager China 2. Deputy Manager of Yuanta Securities
Ilan Branch Republic Of Chiang, Jen- F 2014.12.01 0 0 0 0 0 0 1. Manager of KGI Securities N/A NA NA NA NA
Manager China Chu 2. Manager of Capital Securities
1. Senior Assistant Vice President of
Nanjing Branch Republic Of Chou, Da- M 2019.11.06 0 0 0 0 0 0 Jih Sun Securities N/A NA NA NA NA
Manager China Kuang
2. Vice President of Pacific Securities
1. Sales Manager of President
Kinmen Branch Republic Of Securities
Chung, Hui-Ju F 2016.07.01 0 0 0 0 0 0 N/A NA NA NA NA
Manager China 2. Sales Deputy Manager of President
Securities
21
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Note 1: The persentages of shares are calculated based on PSC's capital: 1,372,390,028 shares

Note 2: The information above is based on April 1, 2020. And the shareholding condition is based on April 21, 2020.

C. Remuneration of Directors, Supervisors, President, and Vice Presidents

1. Remuneration of Directors

1.1 Remuneration of Directors (disclosing the name of each individual )

Unit: NT$ thousands

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Remuneration Relevant Remuneration Received by Directors Who are Also Employees Compensation
Ratio of Total Ratio of Total Paid to
Title Name Compensation Base (A) Severance Pay (B) Directors (C)Bonus to Allowances (D) Net Income (%)(A+B+C+D) to Remuneration Salary, Bonuses, and Allowances (E) Severance Pay (F) Profit Sharing- Employee Bonus (G) Employee Stock Options (H)Exercisable New Restricted Employee Shares (I) (A+B+C+D+E+F+G) to Net Income (%)Compensation Directors from an Invested Company
Other than the
Company’s
PSC PSC Subsidiary
PSC Group PSC Group PSC Group PSC Group PSC Group PSC Group PSC Group PSC Group PSC Group PSC Group and parent
Cash Stock Cash Stock conmpany
Kai Nan
Director Investment Co., 24,217 24,217 - - 26,841 26,841 1,822 1,822 2.2326 2.2326 - - - - - - - - 2.2326 2.2326 - - 2.2326 2.2326 None
Ltd.
Except for the information disclosed above, the remuneration received by the Directors of the Company for providing services for all companies listed in the consolidated statements in the most recent year (such as
serving as a non-employee consultant): 0
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Note 1: The following are delegates of Kai Nan Investment Co., Ltd. : Chairman: Lin, Kuan-Chen; Directors: Liu, Tsung-Yi, Chen, Kuo-Hui, Hsieh Hong, Hui-Tzu, Lu, Li-An, Lin, Chung-Shen(resigned on June 18, 2019), Chen, ChingYi(appointed on June 18, 2019), Chen, Yi-Ling(appointed on June 18, 2019)
Note 2: Compensation was calculated as of December 31, 2019; Compensation distribution proposal is based on said earnings.
Note 3: Total remuneration paid to drivers is NT$1.485 million, which was not included in consideration.

1.2 Remuneration of Directors (Independent Directors Included)

Unit: NT$ thousands

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Remuneration Relevant Remuneration Received by Directors Who are Also Employees
Ratio of Total Ratio of Total Compensation
Remuneration Compensation Paid to Directors
Compensation Base Severance Pay (B) Directors (C)Bonus to Allowances (D) Net Income (%)(A+B+C+D) to Salary, Bonuses, and Allowances Severance Pay (F) Profit Sharing- Employee Bonus (G) Employee Stock Exercisable New Restricted Employee (A+B+C+D+E+F+G) to Net Income (%) from an Invested Company
Title Name (A) (E) Options (H) Shares (I) Other than the
Company’s
PSC PSC Subsidiary
PSC Group PSC Group PSC Group PSC Group PSC Group PSC Group PSC Group PSC Group PSC Group PSC Group and parent
conmpany
Cash Stock Cash Stock
Tu, Li-Yang
Delegate of Ta
Director Le Investment
Holding Co.,
Ltd.
Teng, Wen-Hwi
Delegate
Director of Canking
Investment Co.,
Ltd. same as the last page
Lee, Shu-Fen
Director Delegate of
China F.R.P.
Corp.
Director Lee, Shy-Lou
Director Duh, Bor-Tsang
Director Juang, Jing-Yau
Independent Liang, Yann-
Director Ping
Independent
Pai, Chun-Nan
Director
3,840 3,840 - - - - 1,210 1,210 0.2132 0.2132 - - - - - - - - - - - - 0.2132 0.2132 None
Independent Song, Yung-
Director Fong
Independent Horng, Yuan-
Director Chuan
1. Description of independent directors’ remuneration payment policy, system, standards, and structure, as well as the relationship between the amount of remuneration and their responsibilities, risks, and time invested:
The Company’s policies and standards related to the payment of remuneration for Independent Directors are based on the Company’s Articles of Incorporation and the degree of an Independent Directors’ contribution
to and participation in operations with reference to the standards in the industry.
2. Except for the information disclosed above, the remuneration received by the Directors of the Company for providing services for all companies listed in the consolidated statements in the most recent year (such as
serving as a non-employee consultant): 0
24
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III. Corporate Governance

Range of remuneration for directors

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Name of Directors
Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)
Range of Remuneration
Companies in the Companies in
The company consolidated financial The company the consolidated
statements financial statements
Delegate of Kai Nan Investment Co., Ltd.
: Lin, Chung-Shen, Liu, Tsung-Yi, Hsieh
Hong, Hui-Tzu, Lu, Li-An, Chen, Kuo-
Hui, Chen, Ching-Yi, Chen, Yi-Ling /
Delegate of Canking Investment Co., Ltd.
Under NT$ 1,000,000 : Teng, Wen-Hwi / Delegate of Leg Horn same as left same as left same as left
Investment Co., Ltd. : Chang, Ming-Chen
/ Delegate of Hui Tung Investment Co.,
Ltd. : Lee, Che-Ming / Delegate of Ta Le
Investment Holding Co., Ltd. : Tu, Li-Yang
/ Delegate of China F.R.P Corp : Lee, Shu-
Fen
NT$1,000,000 ~ NT$2,000,000 Liang, Yann-Ping / Pai, Chun-Nan / Song, Yung-Fong / Horng, Yuan-Chuan same as left same as left same as left
Canking Investment Co., Ltd. / China
NT$2,000,000 ~ NT$3,500,000 F.R.P Corp / Ta Le Investment Holding same as left same as left same as left
Co., Ltd.
Leg Horn Investment Co., Ltd. / Hui Tung
NT$3,500,000 ~ NT$5,000,000 Investment Co., Ltd. / Juang, Jing-Yau /
Lee, Shy-Lou / Duh, Bor-Tsang
NT$5,000,000 ~ NT$10,000,000 0 0 0 0
NT$10,000,000~ NT$15,000,000 0 0 0 0
Kai Nan Investment Co., Ltd. / Delegate of Kai
NT$15,000,000 ~ NT$30,000,000 same as left same as left same as left
Nan Investment Co., Ltd. : Lin, Kuan-Chen
NT$30,000,000 ~ NT$50,000,000 0 0 0 0
NT$50,000,000 ~ NT$100,000,000 0 0 0 0
Over NT$100,000,000 0 0 0 0
Total 26 26 26 26
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2. Remuneration of the President and Vice Presidents

Unit: NT$ thousands

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Ratio of total Number of Number of Whether or not
Salary(A) Severance Pay Bonuses and Profit Sharing- Employee compensation employee stock restricted stock any compensation
(B) Allowances (C) Compensation (D) (A+B+C+D) to net option certificates unit is received from
Title Name income (%) other re-invested
businesses than
PSC Group PSC Group PSC Group PSC Group PSC Group PSC Group PSC Group subsidiaries or
Cash Stock Cash Stock parant company
President Tsai, Sen-Bu
Executive
Vice Yang , Kai-
Chih
President
Vice Lee, Wen-
President Sheng
(Note 2)
Vice
President An, Chi-Li
Vice
President Kuo, Li-Yun 17,896 17,896 767 767 63,456 63,456 1,480 0 1,480 0 3.5296 3.5296 0 0 0 0 None
Vice Huang, Jun-
President Jen
Vice Pan, Chun-
Hsien
President
(Note 3)
Vice Pu, Chien-
President Heng
(Note 4)
Chief Auditor [Huang, Sha-]
Mei
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Note 1: Compensation was calculated as of December 31, 2019; Employee remuneration was estamated based on 2019 estamated statements.

Note 2: Former Vice Presiden Lee, Wen-Sheng retireded on June 18, 2019.

Note 3: Former Vice President Pan, Chun-Hsien resigned on February 15, 2019.

Note 4: Vice President Pan, Chun-Hsien was appointed on March 22, 2019.

President Securities Corporation

Range of remuneration for president and vice president

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Name of President and Vice President
Range of Remuneration
Companies in the consolidated
The company
financial statements
Under NT$ 1,000,000(Note1) 1 1
NT$1,000,000 ~ NT$2,000,000 0 0
NT$2,000,000 ~ NT$3,500,000(Note2) 1 1
NT$3,500,000 ~ NT$5,000,000(Note3) 3 3
NT$5,000,000 ~ NT$10,000,000(Note4) 1 1
NT$10,000,000 ~ NT$15,000,000(Note5) 1 1
NT$15,000,000 ~ NT$30,000,000(Note6) 1 1
NT$30,000,000 ~ NT$50,000,000(Note7) 1 1
NT$50,000,000 ~ NT$100,000,000 0 0
Over NT$100,000,000 0 0
Total 9 9
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Note 1: Pan, Chun-Hsien

Note 2: Lee, Wen-Sheng

Note 3: Kuo, Li-Yun, Huang, Sha-Mei, Pu, Chien-Heng

Note 4: An, Chi-Li

Note 5: Huang, Jun-Jen Note 6: Yang, Kai-Chih Note 7: Tsai, Sen-Bu

Note 8: The sequence above is arranged based on the number of strokes.

D. Comparison of Remuneration for Directors, Supervisors, President and Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, President and Vice Presidents

(1) Ratio of total remuneration paid to directors, supervisors, president and vice presidents to net income

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Year To directors(Note1) To presidents and vice presidents (Note1)
2018 4.09% 6.48%
2019 3.67% 3.53%
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Note1: Ratio of total remuneration to net income (%)

(2) The policies, standards, and portfolios for the payment of remuneration, and the procedures for determining remuneration

The policy and standards for the Directors’ and Supervisors’ remuneration are set out in accordance with the Company’s Articles of Incorporation.

The President’s and Vice Presidents’ remuneration are paid in accordance with the remuneration-related regulations of the Company. The principles of the remuneration system are based on the operating performance and contribution of each unit to share the Company’s operating results. The Company also adopts professional institutions to understand the market standards and refers to the remuneration standards in the industry to set remuneration policies by considering the factors of competitiveness, motivation, and reasonableness and bring the Company’s overall annual remuneration at the average level of the industry.

(3) The correlation with risks and business performance

The reasonableness of the remuneration paid to the Directors, Supervisors, President and Vice Presidents shall be reviewed on a regular basis. In addition to considering their contributions to the Company’s operational performance, the Company will also consider the degrees of risk they pose to the Company and adjust the remuneration accordingly.

2019 Annual Report

III. Corporate Governance

E. President’s, senior vice presidents’ and senior managers’ remuneration

Unit: NT$ thousands

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Employee Compensation Employee Ratio of Total
Title Name - in Stock (Fair Market Compensation Total Amount to Net
Value) - in Cash Income(%)
President Tsai, Sen-Bu
Proprietary Trading Department
Yang , Kai-Chih
Executive Vice President
Finance Department Vice President An, Chi-Li
Quantitative Trading Department
Huang, Jung-Jen
Vice President
Financial Product Department Vice
Pu, Chien-Heng
President
Capital Market Department Sales
Chueh, Chih-Chung
Vice President
President Office Project Vice
Lin, Chung-Heng
President
Auditing Office Chief Auditor Huang, Sha-Mei
Administration Department Senior
Yu, Hung-Chieh
Assistant Vice President
Fixed Income Department Senior
Yeh, Ming-Chieh
Assistant Vice President
Compliance Division Assistant Vice
Hung, Ying-Che
President
President Office Corporate
Governance Assistant Vice Chen, Nai-Chen 0 8,685 8,685 0.3666
President
Mainland China Business Division
Chen, Long-Chien
Assistant Vice President
President Office Assistant Vice
Lu, Chia-Chen
President
Capital Market Department
Chang, Chin-Yung
Assistant Vice President
Capital Market Department
Tsai, Pao-Sheng
Assistant Vice President
Finance Department Assistant Vice
Su, Wei-Lun
President
Financial Product Department
Chang, Chung-Lin
Assistant Vice President
Shareholder Services Department
Chang,Shao-Ping
Assistant Vice President
Information System Department
Lin, Jung-Hui
Assistant Vice President
Settlement & Clearing Department
Wu, Sheng-Yu
Assistant Vice President
Quantitative Trading Department
Lee, Chien-Hsin
Assistant Vice President
Quantitative Trading Department
Chien, Pang-Yen
Assistant Vice President
Capital Market Department
Chen, Chia-Chang
Assistant Vice President
Risk Control Office
Chang, Ping-Chuan
Senior Manager
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President Securities Corporation

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Employee Compensation Employee Ratio of Total
Title Name - in Stock (Fair Market Compensation Total Amount to Net
Value) - in Cash Income(%)
Brokerage Department Senior
Chang, Hung-Shuo
Assistant Vice President
Brokerage Department
Lin, Li-Lin
District Supervisor
Brokerage Department
Chien, Chia-Nan
District Supervisor
Brokerage Department
Liao, Chen-Yin
Vice District Supervisor
Brokerage Department Assistant
Chiu, Shyh-Tyng
Vice President
Wealth Management and Trust
Department Assistant Vice Chu, Po-Lin
President
Corporate Client Dept. Manager Chang, Hung-Shuo
Corporate Client Dept. Assistant
Chen, Min-Ping
Vice President
Senior Manager Tsai, Chen-Yuan
Global Institutional Service Dept.
Chung, Chih-Hung
Manager
Tunghsing Equity Department
Chen, Chih-Lung
Manager
Tunghsing Equity Department
Tsai, Shu-Mei (same as the last page)
Manager
Kaohsiung Branch Manager Wu, Huan-Chung
Dunnan Branch Manager Chiang, Chia-Jung
Dunnan Branch Manager Sung, Yu-Chih
Zhongli Branch Manager Chiang, Tsong-Shyan
Chengzhong Branch Manager Chiu, Hsiao-Chi
Chengzhong Branch Manager Chao, Cheng
Tainan Branch Manager Hsieh,Chia-Hsi
Taichung Branch Manager Liao, Chen-Yin
Taichung Branch Manager Fang, Wu-Hsin
Hsinchu Branch Manager Lee, Chin-Yi
Chiayi Branch Manager Tai, Kuo-Chun
Pingtung Branch Manager Wang, Chien-Min
Keelung Branch Manager Yu, Ping-Tse
Yonghe Branch Manager Chang, Chih-Hsiang
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2019 Annual Report

III. Corporate Governance

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Employee Compensation Employee Ratio of Total
Title Name - in Stock (Fair Market Compensation Total Amount to Net
Value) - in Cash Income(%)
Xin Taichung Branch Manager Yang, Kuo-Chen
Hsinying Branch Manager Hsiao, Po-Ming
Changhua Branch Manager Yu, Fu-Tsun
Taoyuan Branch Manager Hsiao, Ju-un
Yuanlin Branch Manager Chen, Hung-Tsai
Sanchung Branch Manager Chang,Shih-Min
Sanchung Branch Manager Kao, Ming-Chou
Shilin Branch Manager Hsu, Fu-Chiang
Panchiao Branch Manager Lo, Shih-Hong
Sanduo Branch Manager Tsai, Yi-Chen (same as the last page)
Szichih Branch Manager Huang, Ming-Fa
Ilan Branch Manager Chiang, Jen-Chu
Nanjing Branch Manager Chou, Da-Kuang
Kinmen Branch Manager Chung, Hui-Ju
Tucheng Branch Manager Chen, Chun-Ming
Songjiang Branch Manager Tai, Hung-Da
Songjiang Branch Manager Wu, Han-Ching
Neihu Branch Manager Hu, Wen-Chieh
Renai Branch Manager Yang, Chun-Chen
Pingzhen Branch Manager Li, Shu-Jung
Zhunan Branch Manager Su,Yung-Sheng
Offshore Securities Unit Branch
Cheng, Yao-Tung
Manager
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Note: Employee remuneration was decided through discussion.

President Securities Corporation

III. Implementation of Corporate Governance

A. Board of Directors Meeting

Total of 6 meetings of the board of directors were held in the year of 2019. Directors’ attendance condition:

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Attendance
Title Name in Person By Proxy Attendance rate (%) Remark
Lin, Kuan-Chen Delegate
Chairman of Kai Nan Investment Co., 6 0 100% None
Ltd.
Resigned on 2019.06.18
Lin, Chung-Shen Delegate due to the juristic person's
Director (former of Kai Nan Investment Co., 2 1 67% designation
chairman) Ltd. 3 board meetings were held
during the term of office.
Liu, Tsung-Yi Delegate of
Director Kai Nan Investment Co., 6 0 100% None
Ltd.
Chen, Kuo-Hui Delegate of
Director Kai Nan Investment Co., 4 2 67% None
Ltd.
Hsieh Hong, Hui-Tzu
Director Delegate of Kai Nan 6 0 100% None
Investment Co., Ltd.
Director Lu, Li-An Delegate of Kai 6 0 100% None
Nan Investment Co., Ltd.
Chen, Ching-Yi Delegate Designatd on 2019.06.18
Director of Kai Nan Investment Co., 3 0 100% 3 board meetings were held
Ltd. during the term of office.
Newly elected on
Chen, Yi-Ling Delegate of 2019.06.18
Director Kai Nan Investment Co., 3 1 75%
Ltd. 4 board meetings were held
during the term of office.
Teng, Wen-Hwi Delegate
Director of Canking Investment Co., 4 2 67% None
Ltd.
Lee, Che-Ming Delegate of
Director Hui Tung Investment Co., 5 1 83% None
Ltd.
Chang, Ming-Chen Delegate
Director of Leg Horn Investment Co., 6 0 100% None
Ltd.
Tu, Li-Yang Delegate of Ta
Director Le Investment Holding Co., 6 0 100% None
Ltd.
Director Lee, Shu-Fen Delegate of 6 0 100% None
China F.R.P Corp.
Director Duh, Bor-Tsang 5 1 83% None
Director Lee, Shy-Lou 4 2 67% None
Director Juang, Jing-Yau 5 1 83% None
Independent Director Liang, Yann-Ping 6 0 100% None
Independent Pai, Chun-Nan 6 0 100% None
Director
Independent Director Song, Yung-Fong 6 0 100% None
Independent Director Horng, Yuan-Chuan 6 0 100% None
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2019 Annual Report

III. Corporate Governance

Other mentionable items:

A. If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified:
Matters referred to in Article 14-3 of the Securities and Exchange Act: PSC held 8 board meetings over the past fiscal year and did not have any matters listed in Article 14-3 of the Securities and Exchange Act or other matters not passed by the independent directors.
Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writing that require a resolution by the board of directors: None.

B. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified:

For the 10th proposal at the 10th meeting of the 11th Board of Directors, regarding the housing allowance for the Chairman of the Board, when Lin, Kuan-Chen served as the President and the Chairman of the Board, he went to northern Taiwan from the south independently to take office, and the Company provided him with accommodations and covered the expenses. The Company now plans to change the housing allowance. It is proposed that the Company provide a monthly housing allowance to subsidize the Chairman’s housing cost. This proposal was made after discussion with the Remuneration Committee. In accordance with the provisions of Article 15 of the Company’s Rules Governing Board Meetings, the Chairman of the Board designated Liu, Tsung-Yi as the acting chairman to preside over the matters related to discussing this proposal. Chairman Lin, Kuan-Chen left the meeting because he was not allowed to participate in the discussion of and voting on this proposal. The proposal has been passed unanimously by the members of the Directors who were present without any objection (the Chairman had recused himself from voting).
For the 15th proposal at the 11th meeting of 11th Board of Directors, in accordance with the provisions of Article 19 of the Company’s Articles of Incorporation, Independent Directors receive a fixed amount of remuneration on a monthly basis and do not participate in the distribution of compensation to Directors as stipulated in Article 23. Based on the standards in the market and adopted by peers in the industry, it is proposed that the remuneration paid to the Company’s Independent Directors shall be adjusted and that the Independent Directors shall not participate in the distribution of compensation to the Directors. As this proposal involved the determination of the amount of remuneration paid to Independent Directors, the four Independent Directors, namely Liang, Yann-Ping, Pai, Chun-Nan, Song, Yung-Fong, and Hong, Yuan-Chuan recused themselves from addressing the proposal accordingly. The proposal was passed unanimously by the Directors present at the meeting without any objections (the four Independent Directors had recused themselves from voting).
For the 9th proposal at the 12th meeting of 11th Board of Directors, regarding overseas development and appoint Chairman Lin, Kuan-Chen as a board member of join capital securities company -- Jin Yuan President Securities Corporation Ltd., the board passed the proposal of relieveing the non-compete limitation for the directors on March 26 meeting. In accordance with the provisions of Article 209 of the Company Act, “A director who does anything for himself or on behalf of another person that is within the scope of the company’s business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.” Therefore, the proposal regarding Chairman Lin will be further discussed at the shareholders’ meeting. In accordance with the provisions of Article 15 of the Company’s Rules Governing Board Meetings, Chairman Lin, Kuan-Chen left the meeting because he was not allowed to participate in the discussion of and voting on this proposal. The proposal has been passed unanimously by the members of the Directors who were present without any objection (the Chairman had recused himself from voting).
C. Companies listed on stock and OTC markets shall disclose information on the evaluation cycle, period, scope, method, and content of the Board’s self (or peer) evaluation, and shall complete Schedule 2 (2) on the implementation of the evaluation of the Board of Directors: See chart B on the next page.
D. Measures taken to strengthen the functionality of the board (e.g. The Board of Directors has established an Audit Committee and a Remuneration Committee to assist the board in carrying out its various duties.) : To strengthen the competencies of the Board of Directors and the overall risk management system, the Board of Directors set up Independent Directors and established the Audit Committee, Remuneration Committee, and Risk Management Committee to meet the governance requirements of listed companies. To enhance the implementation of corporate governance, the Company has established the “Procedures for Handling Material Inside Information”, “Corporate Social Responsibility Best Practice Principles”, “Ethical Corporate Management Best Practice Principles”, “Corporate Governance Best Practice Principles”, and “The Performance Evaluation Measures of the Board of Directors” which are implemented by relevant units on a level-by-level basis. In addition, in order to assist the Directors in performing their duties and improving the effectiveness of the Board of Directors, at the 7th meeting of the 11th Board of Directors on May 3, 2019, the Standard Operating Procedures for Handling the Company’s Directors’ Requests were adopted.

Note: The term of office of the 11th Board of Directors is from June 21, 2018 through June 20, 2021.

Independent director attendance is detailed below:

◎: Attendance in Person; ☆ : Proxy Attendance; ＊ : Absence

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Board meetings 2019.03.22 2019.05.03 2019.06.18 2019.08.28 2019.11.05 2019.12.20
Liang, Yann-Ping ◎ ◎ ◎ ◎ ◎ ◎
Pai, Chun-Nan ◎ ◎ ◎ ◎ ◎ ◎
Song, Yung-Fong ◎ ◎ ◎ ◎ ◎ ◎
Horng, Yuan-Chuan ◎ ◎ ◎ ◎ ◎ ◎
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President Securities Corporation

B. Evaluation of the Board of Directors

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Evaluation
Evaluation period Evaluation scope Evaluation method Content
cycle
1. Control over the Company’s goals and
tasks
2. Understanding of duties and functions of a
Director.
Internal self-evaluation of 3. Involvement in the Company’s operations
Annually 107/11/11~108/6/30 Board of Directors
the Board of Directors 4. Management of internal relations and
communication
5. Professional and continuing education and
training for Directors
6. Internal Control
1. Involvement in the Company’s operations
2. Improving decision-making by the Board
of Directors.
Annually 107/11/11~108/6/30 Individual Directors Self-evaluation of Directors 3. Composition and structure of the Board of Directors.
4. Election of Directors and their continuing
education and training
5. Internal controls
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C. Operations of the Audit Committee: Number of Meetings, Actual Attendance Rate of each Independent Director, and other mentionable items

The Company established its Audit Committee in June of 2015. The main key points of functional authority to be audited are as follows:

Adoption or amendment of internal control systems in accordance with Article 14-1 of the Securities and Exchange Act.
Evaluation of the effectiveness of internal control systems.
Adoption or amendment, pursuant to Article 36-1 of the Act, of handling procedures for financial or operational actions of material significance, such as acquisition or disposal of assets, derivatives trading, extension of monetary loans to others, and endorsements or guarantees for others.
Items involving the interests of Directors.
Major assets or derivative trading.
Major loaning of funds, making of endorsements, or provision of guarantees.
Offering, issuance, or private placement of any equity-type securities.
Appointment, dismissal, and compensation of CPAs.
Appointments and dismissal of finance managers, accounting managers, and internal audit managers.
Annual and semi-annual financial statements.
Other major items required by other companies or the competent authority.

Total of 6 meetings of the Audit Committee were held in the year of 2019. Independent Directors’ attendance condition:

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Actually Number Number of
Actual Attendance
Title Name of Times Times Attended Remark
Rate (%) (B/A)
Attended (B) by Proxy
Independent Director Liang, Yann-Ping 6 0 100% None
Independent Director Pai, Chun-Nan 6 0 100% None
Independent Director Song, Yung-Fong 6 0 100% None
Independent Director Horng, Yuan-Chuan 6 0 100% None
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2019 Annual Report

III. Corporate Governance

Other mentionable items:

I. If any of the following circumstances occur, the dates of meetings, sessions, contents of motion, resolutions of the Audit Committee and the Company’s response to the Audit Committee’s opinion should be specified.
Matters referred to in Article 14-5 of the Securities and Exchange Act: Total of 8 meetings were held in 2019 and 2020 to the publish date of the annual report. The resolutions of the Audit Committee and results are as specified in Note 1. (At the first meeting of the first interim Audit Committee on June 7, 2018, only reports were given, and no proposals were put forward for resolution.) For matters referred to in Article 14-5 of the Securities and Exchange Act, all members present voted in favor of the resolution without any objection.
Other matters which were not approved by the Audit Committee but were approved by two-thirds or more of all directors: None.
II. If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: None.
III. Communications between the independent directors, the Company’s internal audit supervisors and CPAs (e.g. the material items, methods and results of audits of corporate finance or operations, etc.):
A. Communications with the internal audit supervisors:
Communication methods:
(1) The Company shall compile a written report about improvements and follow-up on the deficiencies discovered in the audit in the previous month, and submit it to the Independent Directors for review.
(2) At each workshop on internal control deficiencies, the Company’s auditors and independent directors shall discuss and review the deficiencies and the improvements in the internal control system.
(3) At each Audit Committee meeting, the internal audit supervisor shall report to Independent Directors regarding internal audit execution.
Summary of communication between Independent Directors and the internal auditors:

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Item Communication Execution period
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Item	Communication	Execution period

Monthly written report to independent directors	1. Summary of deficiencies identified in the audit report	2019.01~2019.12 (12 times in total)
Internal control deficiencies workshop	1. Report of deficiencies identified in internal auditing 2. Summary Report on Deficiencies from the Competent Authority	2019.01~2019.12 (6 times in total)
Audit Committee meeting	1. Internal audit report 2. Report of financial inspection deficiencies and improvement tracking	2019.01~2019.12 (6 times in total)

B. Communications with the CPA:

1. Communication methods:

The Company’s Audit Committee comprises all the Independent Directors. The CPA holds a meeting with the Audit Committee at least twice a year. At the meeting, the auditing of the Company’s financial status and audit results shall be reported and updates on important regulations shall also be reported.
Summary of communication between Independent Directors and the certified public accountant (CPA) and results of implementation:

Date of meetings	Communication and results of implementation
2019.03.08 1. Reporting audit findings and key audit items of financial statements of 2018. 2. Reporting audit planning of 2019. 3. The CPAs stated compliance with the amendments to IFRS 16 on regulations governing the acquisition and disposal of assets. 4. The CPA explains recent important changes in laws and regulations (New regulations on additional information disclosure. Amendments to profit distribution in the Company Act. Changes in the contents of the Corporate Governance Evaluation System and its impacts.) 5. Independent Directors’ suggestions: None. 6. Reporting to the Board of Directors after approval.
2019.08.15 1. Reporting audit findings and key audit items of financial statements of 2019 Q2. 2. The CPAs reported matters on governance related to financial reporting that required communication in the first half of 2019. 3. The CPAs explained the recent updates of securities management laws. 4. The CPAs illustrated information related to security governance services. 5. Independent Directors’ suggestions: None. 6. Reporting to the Board of Directors after approval. 2020.03.12 1. Reporting audit findings and key audit items of financial statements of 2019. 2. Reporting audit planning of 2020. 3. The CPA explains recent important regulations changes regarding the production of financial statements, amendments to profit distribution in the Company Act, and changes in the contents of the Corporate Governance Evaluation System and its impacts. 4. The CPA explains overview of "The International Tax Co-operation (Economic Substance) Law” and the liquidation schedule of subsidiary in BVI. 5. Independent Directors’ suggestions: None. 6. Reporting to the Board of Directors after approval.

Date of meetings

Communication and results of implementation

2019.03.08
1. Reporting audit findings and key audit items of financial statements of 2018.
2. Reporting audit planning of 2019.
3. The CPAs stated compliance with the amendments to IFRS 16 on regulations governing the acquisition and disposal of
assets.
4. The CPA explains recent important changes in laws and regulations (New regulations on additional information
disclosure. Amendments to profit distribution in the Company Act. Changes in the contents of the Corporate
Governance Evaluation System and its impacts.)
5. Independent Directors’ suggestions: None.
6. Reporting to the Board of Directors after approval.

2019.08.15
1. Reporting audit findings and key audit items of financial statements of 2019 Q2.
2. The CPAs reported matters on governance related to financial reporting that required communication in the first half of
2019.
3. The CPAs explained the recent updates of securities management laws.
4. The CPAs illustrated information related to security governance services.
5. Independent Directors’ suggestions: None.
6. Reporting to the Board of Directors after approval.
2020.03.12
1. Reporting audit findings and key audit items of financial statements of 2019.
2. Reporting audit planning of 2020.
3. The CPA explains recent important regulations changes regarding the production of financial statements, amendments
to profit distribution in the Company Act, and changes in the contents of the Corporate Governance Evaluation System
and its impacts.
4. The CPA explains overview of "The International Tax Co-operation (Economic Substance) Law” and the liquidation
schedule of subsidiary in BVI.
5. Independent Directors’ suggestions: None.
6. Reporting to the Board of Directors after approval.

President Securities Corporation

Note: Major Resolutions during the Auditing Meetings in 2019 and 2020 to the publish date of the annual report: Executed according to the resolution of the Audit Committee.

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Meeting Item Resolution
1. Review of the 2018 Individual Financial Report and 2018 Consolidated Financial Report.
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Meeting	Item	Resolution
	1. Review of the 2018 Individual Financial Report and 2018 Consolidated Financial Report.
2019.03.08 The 4th Auditing Meeting of the 2nd Audit Committee	2. Accountant independence and competency evaluation. 3. Amended the Regulations Governing the Acquisition and Disposal of Assets. 4. Amended the Regulations Governing Implementation of Endorsement. 5. Submitted the Statement of the 2018 Internal Control System. 6. Formulated the internal control system of conducting the discretionary investment business through trust while operating the securities investment consulting business by the head office. 7. Revised the Internal Control System of Information System Department. 8. Submitted the Overall Information Security Implementation Statement. 9. Amended the joint venture agreement and charter regarding Jin Yuan President Securities Corporation Ltd. 10. Amended the Articles of Incorporation. 11. Revised the Company's money laundering and terrorist financing risk assessment report. 12. Submitted the statement of the Internal Control of anti-money laundering and counter-terrorist financing.	All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion.
2019.04.19 The 5th Auditing Meeting of the 2nd Audit Committee	1. Audited the operating report and profit distribution of year 2018. 2. Applied for conducting the business of creating customer ledgers of securities firms' settlement accounts 3. Formulated a standard operating procedures for handling the Company's Directors' requests	All members of the committee present voted in favor of the resolution without any objection.
2019.05.31 The 6st Auditing Meeting of the 2nd Interim Audit Committee	1. Revised the Internal Control System.	All members of the committee present voted in favor of the resolution without any objection.
2019.08.15 The 7st Auditing Meeting of the 2nd Audit Committee	1. Review of the 2019 semi-annual Individual Financial Report and 2019 second quarter Consolidated Financial Report. 2. Revised the Internal Control System. 3. Formulation of information security policy 4. Renewal of liability insurance for Directors and key personnel. 5. Revised the Company's money laundering and terrorist financing risk assessment report. 6. Revision of the Directions of the Company's money laundering and terrorist financing.	All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion.
2019.10.23 The 8nd Auditing Meeting of the 2nd Audit Committee	1. Amendments to the internal control system for the operation of setting up ledger accounts	All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion.
2019.12.06 The 9rd Auditing Meeting of the 2nd Audit Committee	1. Submitted the Audit Plan of 2019. 2. Revised the Internal Control System for Information System Department.	All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion.
2020.03.12 The 10th Auditing Meeting of the 2nd Audit Committee	1. Review of the 2019 Individual Financial Report and 2019 Consolidated Financial Report. 2. Proposal for acquisition of overseas equity held by PSBVI and liquidation of PSBVI 3. Accountant independence and competency evaluation. 4. Proposal for increasing capital from retained earnings for issuance of new shares 5. Submitted the Statement of the 2019 Internal Control System. 6. Revised the Internal Control System for Information System Department. 7. Submitted the Overall Information Security Implementation Statement. 8. Amendments to the policies and strategies related to the principle of fair hospitality 9. Amended the Articles of Incorporation. 10. Proposal for amendments to the Rules Governing Board Meetings 11. Proposal for amendments to the Audit Committee Charter 12. Proposal for amendments to the procedures for handling the Company’s internal material information 13. Proposal for amendments to the Company’s guidelines for financing anti-money laundering and counter-terrorism activities 14. Revised the Company’s money laundering and terrorist financing risk assessment report. 15. Proposal for amendments to the Company’s compliance and risk evaluation report 16. Submitted the statement of the Internal Control of anti-money laundering and counter-terrorist financing. 17. Abolition of the Company’s procedures related to derivatives transactions	All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion. For the 15th proposal, the Independent Directors suggested that when the proposal was submitted to the Board of Directors, the title shall be revised to the “Proposal for Formulation of the Company’s Procedures for Compliance Risk Evaluation Report.” The tile has been revised according to the suggestion of the Independent Directors and the proposal has been submitted to the Board of Directors for discussion
2020.04.23 The 11th Auditing Meeting of the 2nd Audit Committee	1. Revised the Internal Control System for electronic account opening. 2. Audited the operating report and profit distribution of year 2019. 3. Revised the procedures for acquiring or disposing of assets. 4. Revised the Internal Control System. 5. Relieved the non-compete limitation for the directors.	All members of the committee present voted in favor of the resolution without any objection. For the 4th proposal, the Independent Directors suggested that execution division within the content of the proposal was amended to finance dept, shareholder services dept, and compliance division. The content has been revised according to the suggestion of the Independent Directors and the proposal has been submitted to the Board of Directors fordiscussion

2019 Annual Report

III. Corporate Governance

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

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Implementation Status Deviations from
“the Corporate
Governance Best-
Evaluation Item Practice Principles
Yes No Abstract Illustration for TWSE/TPEx
Listed Companies”
and Reasons
I. Does the company establish and ✓ In an effort to implement prudent corporate governance None
disclose the Corporate Governance measures in line with the "Principles for Corporate
Best-Practice Principles based Governance for Securities Firms" and with relevant laws and
on “Corporate Governance Best- regulations, President Securities adopted such guidelines by
Practice Principles for TWSE/
the 13th meeting of the 9th Board of the company held on
TPEx Listed Companies”?
August 7, 2014, and will abide by said principles.
The Principle was amended on June 14, 2016 for the first
time and March 22, 2019 for the second time.
II. Shareholding structure &
shareholders’ rights
A. Does the company establish an ✓ A. The Company has a spokesperson and shareholder None
internal operating procedure to deal service personnel to process shareholders’ suggestions,
with shareholders' suggestions, questions, and disputes. The Company has established
doubts, disputes and litigations, and an “Investor Section” and “Investor Mailbox” on the
implement based on the procedure? Company website, which are run by the spokesperson and
dedicated personnel of the Administration Department.
Shareholders’ suggestions or disputes are forwarded to
relevant departments for processing.
B. Does the company possess the list of ✓ B. PSC maintains close relationships with key shareholders None
its major shareholders as well as the and assigns dedicated shareholder services personnel to
ultimate owners of those shares? continually monitor any changes in the shareholdings of
these key shareholders.
C. Does the company establish and ✓ C. The finance and business of our company and its None
execute the risk management subsidiaries are in separate operation. In term of
and firewall system within its management right/obligation there is a clear line between
conglomerate structure? our company and its subsidiaries. All the relations and
trades are dealt with in accordance with law. “Surveillance
governing internal-control system for affiliated
companies” has also been set up as a controlling and
governing mechanism for our affiliated companies.
D. Does the company establish internal ✓ D. In an effort to prevent insider trading and to protect the None
rules against insiders trading with interests of investors, we have adopted and implemented
undisclosed information? the “Important Event Internal Handling Procedures”,
which outlines clear division of responsibilities, adequate
firewall and confidentiality procedures, the disclosure of
important events, educational guidance rules, etc.
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President Securities Corporation

						Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Evaluation Item						Yes	No		Abstract Illustration
III. Composition and Responsibilities of the Board of Directors A. Does the Board develop and implement a diversified policy for the composition of its members?						✓			A. Abiding by article 10 of our Principles for Corporate Governance, when selecting directors, President Securities uses a comprehensive approach so as to put together a professional yet independent team that can exercise its duties in an objective manner. Currently, there are 19 Directors in the Company, including 4 Independent Directors. Independent Directors account for 21% of total Directors and are from the financial, business, legal, and industrial backgrounds; of them, there’s 1 with a term of 4-6 years, conforming the target of percentage and terms of years (within 3 terms). The Company also emphasize the gender equality among Directors. The target regarding percentage of female Director is 30% or above. For the current term, there are 9 female Directors, including 1 Independent Director), stand for 47% of total Directors. We expect to reach our goal in later years as well. The Board of Directors is equipped with the abilities as shown in the table below.						None

					Comprehensive Abilities
	Name	Gender	1. Operational Judgement	2. Accoutning & Financial Analysis				3. Operating Management		4. Crisis Management	5. Industrial Knowledge	6. International Points of View	7. Leadership	8. Decision- making Ability		9. Risk Management Konwledge & Ability
	Lin, Kuan-Chen	M	V	V				V		V	V	V	V	V		V
	Liu, Tsung-Yi	M	V	V				V		V	V	V	V	V		V
	Chen, Kuo-Hui	M	V	V				V		V	V	V	V	V		V
	Hsieh Hong, Hui-Tzu	F	V	V				V		V	V	V	V	V		V
	Lu, Li-An	F	V	V				V		V	V	V	V	V		V
	Chen, Ching-Yi	F	V	V				V		V	V	V	V	V		V
	Chen, Yi-Ling	F	V	V				V		V	V	V	V	V		V
	Teng, Wen-Hwi	F	V	V				V		V	V	V	V	V		V
	Lee, Che-Ming	M	V					V		V	V	V	V	V		V
	Chang, Ming-Chen	F	V	V				V		V	V	V	V	V		V
	Tu, Li-Yang	F	V	V				V		V	V	V	V	V		V
	Lee, Shu-Fen	F	V	V				V		V	V	V	V	V		V
	Duh, Bor-Tsang	M	V	V				V		V	V	V	V	V		V
	Lee, Shy-Lou	M	V	V				V		V	V	V	V	V		V
	Juang, Jing-Yau	M	V	V				V		V	V	V	V	V		V
	Liang, Yann-Ping	F	V	V				V		V	V	V	V	V		V
	Pai, Chun-Nan	M	V	V				V		V	V	V	V	V		V
	Song, Yung-Fong	M	V	V				V		V	V	V	V	V		V
	Horng, Yuan-Chuan	M	V	V				V		V	V		V	V		V

2019 Annual Report

III. Corporate Governance

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Implementation Status Deviations from
“the Corporate
Governance Best-
Evaluation Item Practice Principles
Yes No Abstract Illustration for TWSE/TPEx
Listed Companies”
and Reasons
B. Does the company voluntarily ✓ B. President Securities has already added independent None
establish other functional directors to its board, has established a remuneration
committees in addition to the committee, a risk management committee, and an audit
Remuneration Committee and the committee.
Audit Committee?
1. Based on the expertise, consistency, and time-based
effectiveness of the Company’s business, the Board
of Directors has passed the Articles of Organization
developed by the Risk Management Committee on
June 26, 2008 and established the Risk Management
Committee in the Board of Directors to implement
supervision of day-to-day risk management. The
Committee is charged with the following duties:
(1) Establishment of Company risk management policies
and organization and assignment of duties to related
units.
(2) Establishment of the Company’s risk measurement
standards.
(3) Management of limits for the Company’s overall and
departmental risk.
2. The Risk Management Committee consists of three
members. At least half of them are Independent Directors,
and the committee members shall be selected via
resolution of Board of Directors. The Risk Management
Committee shall convene meetings at least once every
quarter to assist the Board of Directors in planning and
supervising the Company’s related risk management
affairs. This committee shall report the implementation of
risk management to the Board of Directors periodically
and propose suggestions for necessary improvements.
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President Securities Corporation

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Implementation Status Deviations from
“the Corporate
Governance Best-
Evaluation Item Practice Principles
Yes No Abstract Illustration for TWSE/TPEx
Listed Companies”
and Reasons
C. Has the company formulated the ✓ C. In accordance with the “Corporate Governance Best- None
board’s performance evaluation Practice Principles for Securities Firms,” the Company
cooperated with the competent authority to promote
measures and evaluation methods?
corporate governance and adopted the “Board of
Does the company conduct annual Directors Performance Evaluation Measures” at the 2nd
and regular performance evaluations board meeting of the 11th Board of Directors on August
29, 2018. The measures has later been revised at the 11th
and report the evaluation results
board meeting of the 8th Board of Directors on June 18,
to the Board of Directors while
2019. According to the Measures, the Company shall
adopting the results as a reference for conduct an internal performance evaluation of the Board
individual directors’ remuneration of Directors every year; evaluation shall be performed by
and nomination for re-election? an external professional independent institution or a team
of external experts once every three years. The Directors’
self-evaluation and the self-evaluation of the board
meeting unit were completed at the end of July 2019.
Results of self-evaluation are as follow:
1.Directors’ self-evaluation: A total of 25 evaluation
items were employed. Ten Directors received a perfect
score (five points). The average scores of the remaining
Directors was four or more points, with an average
score of 4.86. The performance evaluation results of all
Directors was “beyond the standard,” indicating that
the Directors have fully demonstrated their functions
as required in the operation of the Company’s Board of
Directors.
2.Performance evaluation of the Board of Directors:
A total of 40 evaluation items were employed, with
an average score of 4.95 points; the evaluation result
“exceeded the standard.”
The aforementioned results of the performance evaluation
of the Board of Directors were submitted to the 9th
meeting of the 11th Board of Directors on August 28,
2019 for reference.
The remuneration of the Company’s Directors shall be
in accordance with the provisions of Article 23 of the
Articles of Incorporation. The Company shall allocate
no more than 2% of the total profit of the current year
to the Directors as a consideration and give them
reasonable remuneration based on the Company’s
operational performance and their contribution the
Company’s performance.The President and Vice President
remuneration policy was based on the Company’s
remuneration policy, the level of remuneration for such
positions in the industry, the scope of responsibility in
the Company, and their contribution to the Company’s
operational objectives. The procedures for determining
the remuneration were based on their contribution to the
business performance and the performance evaluation
measures to provide reasonable remuneration. Relevant
performance evaluation and the reasonableness of
remuneration were all reviewed by the Remuneration
Committee and the Board of Directors; the remuneration
system was reviewed at any time depending on the actual
operational situations and relevant laws and regulations,
so as to balance the Company’s sustainable operations and
risk control.
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2019 Annual Report

III. Corporate Governance

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Implementation Status Deviations from
“the Corporate
Governance Best-
Evaluation Item Practice Principles
Yes No Abstract Illustration for TWSE/TPEx
Listed Companies”
and Reasons
D. Does the company regularly evaluate ✓ D. Based on regulation of corporate governance of securities None
the independence of CPAs? dealers, the Board evaluates and assigns the appointment
of independent accountants annually. According to article
46 and article 47 of Certified Public Accountant Act,
“honesty, impartiality, objectivity and independence,” the
company sets up the independent items of declaration,
which issued by the certified public detached accountants.
Accountant Lin, Se-Kai, Hsiao, Chin-Mu, and Chen,
Li-Yuan from PricewaterhouseCoopers Taiwan proved
to be qualified as CPA for company’s financial and tax
accountants.
IV. Does the company designate ✓ The Company’s Board of Directors adopted a resolution None
an appropriate number of on May 3, 2019, that Assistant Vice President Chen, Nai-
qualified personnel and appoint Chen at the President Office would be appointed as the
a corporate governance officer Corporate Governance Officer in charge of corporate
in charge of matters related to
governance-related affairs. Assistant Vice President Chen
corporate governance? These
has served as a supervisor in President Office related to
matters include but are not
corporate governance for more than three years, as set out in
limited to providing directors
Article 21 in accordance with Article 23 of the “Operation
and supervisors with information
needed for the execution of Directions for Compliance with the Establishment of Board
business, assisting directors and of Directors by TWSE Listed Companies and the Board’s
supervisors in complying with laws Exercise of Powers”. As a new officer, she will complete 18
and regulations, handling matters hours of professional training courses in accordance with
related to the board of directors Article 24. The Company’s corporate governance-related
and the shareholders’ meetings in affairs are handled and completed by relevant departments
accordance with the related laws, collectively. Corporate governance-related affairs (terms
handling company registration
of reference) shall include matters related to holding of
and registration changes, and
meetings of the Board of Directors and shareholders’
keeping minutes of the board of
meetings, minutes recording for meetings of the Board of
directors and the shareholders’
Directors and shareholders’ meetings, assistance to Directors
meetings.
with taking office and continuous education and training,
provision of information required for the Directors to
conduct business, assistance to Directors with compliance,
and other matters set out in the Company’s Articles of
Incorporation or contracts.
Key points for business execution in 2019:
1. Matters related to meetings of the Board of Directors
and shareholders’ meetings in accordance with the law.
2. Minutes recording for meetings of the Board of
Directors and shareholders’ meetings.
3. Assistance to the Directors with taking office and
continuous education and training.
4. Provision of the information required for the Directors
to conduct business.
5. Other matters set out in the Company’s Articles of
Incorporation or contracts.
Status of continuing education and training: A total of 18
hours of training was provided during the year. Please refer
to the table below.
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President Securities Corporation

		Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Evaluation Item		Yes	No		Abstract Illustration

Date	Organization			Course		Credit(s)	Credit(s) from Individually Traning
2019.05.24	Taiwan Corporate Governance Association			Evaluation of Functions and Performance of the Board of Directors		3	18
2019.05.31	Taiwan Corporate Governance Association			Functions and Tasks of Corporate Governance Personnel under the Corporate Governance Blueprint		3
2019.08.23	Taiwan Corporate Governance Association			Analysis of the Global Top Ten Risks in 2019		3
2019.08.28	Taiwan Institute of Directors			Prevention of Money Laundering and Insider Trading to Stabilize Corporate Governance		3
2019.09.20	Taiwan Corporate Governance Association			The Impact of Economic Substance Act and Global Anti-Tax Avoidance on Corporate Governance from the Perspective of Directors and Supervisors		3
2019.10.18	Taiwan Corporate Governance Association			Nominating Committee Successor Plan		3

2019 Annual Report

III. Corporate Governance

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Implementation Status Deviations from
“the Corporate
Governance Best-
Evaluation Item Practice Principles
Yes No Abstract Illustration for TWSE/TPEx
Listed Companies”
and Reasons
V. Does the company establish a ✓ We have also taken steps to address corporate responsibility None
communication channel and concerns of our interested parties. We have established
build a designated section on its a platform with dedicated staff to handle feedback from
website for stakeholders, as well investors, employees, clients, suppliers, competent authority
and community/NGO so as to maintain strong lines of
as handle all the issues they care
communication. This allows us to stay aware of the issues
for in terms of corporate social
that are of importance to our interested parties. and to
responsibilities?
ensure that all of our actions are responding to the needs of
our stakeholders.
A. Shareholders
Issues concerned: corporate governance, ethical business
operation, compliance, risk control/auditing, transparency
and disclosure of information, and operational
performance
Communication methods:
(1) Company information is provided through investor
emails and announcements on the official website.
The Company established "the investor section" on
our website to provide investors with transparent
and comprehensive information. The Company also
established the investor relations contact channel to
respond to questions raised by shareholders.
(2) Announcements of operations and financial
performance periodically and the issuance of material
information in Chinese and English on the Market
Observation Post System.
(3) Organization of one institutional investor conference
every six months to report business status to
shareholders.
B. Employees
Issues concerned: operational performance, employee
training, assessment, and development, employee
remuneration, working hours, labor-management
relations, communication channels, and occupational
safety and health
Communication methods:
(1) The employee suggestion mailbox and employee
complaint mailbox are used for communication.
(2) The Company organizes employee seminars every
month. The Company also announces internal news
reports and organizes large-scale family day events to
reward employees and facilitate communication and
employee exchanges.
C. Clients
Issues concerned: communication channels, customer
privacy protection and information security, brand image,
operational performance, service quality, and customer
satisfaction
Communication methods:
(1) The Company communicates with customers regularly
through the customer service hot line and email and
monthly statements are delivered every month.
(2) The Company organizes investment and wealth
management seminars periodically and organizes large-
scale investment seminars to communicate and interact
with customers.
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President Securities Corporation

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Implementation Status Deviations from
“the Corporate
Governance Best-
Evaluation Item Practice Principles
Yes No Abstract Illustration for TWSE/TPEx
Listed Companies”
and Reasons
V. Does the company establish a D. Suppliers
communication channel and Issues concerned: ethical business operation, risk
build a designated section on its control/auditing, and brand image
website for stakeholders, as well
Communication methods:
as handle all the issues they care
(1) The Company organizes periodic price negotiation
for in terms of corporate social
meetings, announces information on the public
responsibilities?
tendering information section on the official website,
and organizes public tendering briefings.
(2) The Company has established the ‘Supplier Evaluation
and Management Regulations’ to evaluate suppliers.
The evaluations include preliminary, periodic, and
unscheduled evaluations and classify suppliers into A,
B, C, and D categories in accordance with the results of
the evaluations, which are used as the basis for future
cooperation.
(3) The Company cooperates with suppliers to jointly
commit to fulfilling corporate social responsibilities
and sign the ‘Corporate Social Responsibilities
Commitment Letter.’ The materials used in decoration
construction and equipment procurement must be green
building materials and equipment with environmental
protection labels to increase the Company’s dedication
to environmental protection, energy conservation, and
carbon emissions reduction.
E. Competent authority
Issues concerned: ethical business operation, corporate
governance, transparency and disclosure of information,
financial and capital market functions maintenance, and
financial inclusion
Communication methods:
The Company participates in courses and seminars
organized by the government.
F. Community/NGO
Issues concerned: social welfare, responsible Investment/
sustainable finance, and environmental protection
Communication methods:
The Company organizes charity events every year.
The Company has established a stakeholder section and
corporate social responsibility section on the official website
to explain the Company’s corporate social responsibility
(CSR) ideas and policies and describe the Company’s
accomplishments including the Company’s economic,
social, and environmental achievements. The Company
has formulated the ‘President Securities Corp. Corporate
Social Responsibility Report’ every year for publication on
the Company’s website (URL: www.pscnet.com.tw) and
publication in the Market Observation Post System.
VI. Does the company appoint a ✓ Affairs of shareholders' meetings are handled by the None
professional shareholder service Shareholder Services Department of the Company; the
agency to deal with shareholder Department obtained the certification of the Professional
affairs? Shareholder Services Institution from Taiwan Depository &
Clearing Corporation (TDCC).
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2019 Annual Report

III. Corporate Governance

Implementation Status Deviations from “the Corporate Governance BestEvaluation Item Practice Principles Yes No Abstract Illustration for TWSE/TPEx Listed Companies” and Reasons ✓ A. On President Securities Corporation website, we None have disclosed the Company’s financial and business information, and corporate governance. We also post periodical and non-periodical financial and operational information on the government-operated MOPS website. ✓ B. Our company has assigned a spokesperson to be None responsible for providing information to shareholders and investors. On our website where investors and shareholders can obtain information on the following: (1) Company introduction in English and Chinese. (2) Disclosure of company’s financial and business information, and corporate governance. (3) Investor Suggestion Mailbox, which is manned by Administration Department Personnel who are responsible for replying to all comments received. (4) The Company has disclosed the briefing and video files of institutional investor conference proceedings and other related information on the Company’s website. ✓ C. On President Securities Corporation website, we Based on the evaluation, to have disclosed the Company’s financial and business disclose financial information, and corporate governance. We also post information in the periodical and non-periodical financial and operational financial report fully and correctly, it is information on the government-operated MOPS website. not yet possible to complete its report early with the currently available human and system resources.

VII. Information Disclosure

A. Does the company have a corporate website to disclose both financial standings and the status of corporate governance?
B. Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)?

C. Does the company announce and release its annual financial report within two months after the end of the fiscal year, and announce and release financial reports for the first, second, and third quarters and operating conditions of each month earlier that the required date?

A. Environmental Protection Measures

VIII. Is there any other important ✓ A. Environmental Protection Measures information to facilitate a better President Securities operate financial services and, understanding of the company's therefore, does not produce any environmental pollutants corporate governance practices or waste. (e.g., including but not limited to employee rights, employee wellness, investor relations, ✓ B. Investor relations supplier relations, rights of Our company has assigned a spokesperson to be stakeholders, directors' and responsible for providing information to shareholders supervisors' training records, and investors, and to post periodical and non-periodical the implementation of risk financial and operational information on the government- management policies and operated MOPS website. The Company established “the risk evaluation measures, the investor section” on our website to provide investors with implementation of customer transparent and comprehensive information. The company relations policies, and purchasing will continue to strengthen investor relations and maintain insurance for directors and good communication and interaction with investors. supervisors)?

None

President Securities Corporation

Deviations from “the Corporate Governance BestPractice Principles for TWSE/TPEx Listed Companies” and Reasons

Evaluation Item

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

Yes

✓

Implementation Status No Abstract Illustration

C. Employee rights and wellness

(1) To boost work efficiency and solidarity among our employees, we place particular emphasis on benefits programs and labor relations, and thus ensure employee welfare in a comprehensive manner.
(2) General accident insurance has been purchased for each of our branches and work premises so as to protect customer rights. Employer insurance has also been purchased so as to protect the interests of all employees.
D. Rights of the stakeholders

We have also taken steps to address corporate responsibility concerns of our stakeholders. We have established a platform with dedicated staff to handle feedback from investors, employees, clients, competent authority and community/NGO so as to maintain strong lines of communication. This allows us to stay aware of the issues that are of importance to our interested parties and to ensure that all of our actions are responding to the needs of our stakeholders.

E. Customer policy

None

(1) Policy: "3 Goods and 1 Fair" ─"Good Quality", "Good Credibility", "Good Service", and "Fair Price". This is combined with "Professional Leadership, Kind Service", in providing all customers with comprehensive services.
(2) Implementation: We have established a Customer Services Department—The Customer Service Center, which offers customers an avenue through which to register complaints, which operates a customer service hotline which is manned by customer service specialists who help to solve customer problems, and which ensures that all account correspondence sent to clients includes clear product risk warnings.

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✓

F. Directors training

The Company's Directors shall carry out independent studies and the Company shall also organize related corporate governance courses periodically and invite all Directors to participate in the courses. Take 2019 for example, in addition to the Directors’ individual training courses, the Company cooperated with the Taiwan Institute of Directors to jointly organize classes for all directors and managerial officers of the Company. In May, Si-Peng Lu, Distinguished Professor of the Department of Information Management at the Taiwan University of Science and Technology, was invited to lecture on the topic of “Instant Economy: Transformation and Challenges in Business Management.” In addition, David Tien, Attorney at Lee and Li, Attorneys-at-Law, was invited in August to lecture on the topic of “The Prevention of Money Laundering and Insider Trading for Stable Corporate Governance.”，to enable the Directors to further understand the spirit of corporate governance and practice. For details of the Directors' on-the-job training in 2019, please refer to Chapter 3 XI. Directors and Corporate Auditors Training.

None

2019 Annual Report

III. Corporate Governance

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Implementation Status Deviations from
“the Corporate
Governance Best-
Evaluation Item Practice Principles
Yes No Abstract Illustration for TWSE/TPEx
Listed Companies”
and Reasons
VIII. Is there any other important ✓ G. Implementation status for Risk Management Policy and None
information to facilitate a better Measurement:
understanding of the company's
corporate governance practices (1) Risk Management Policy
(e.g., including but not limited i. Ensure that we can operate various types of business
to employee rights, employee from a position of solid risk management. Using
wellness, investor relations, reasonable risk tolerance levels, continue to enhance
supplier relations, rights of profitability, create shareholder value, and achieve
stakeholders, directors' and return on capital targets.
supervisors' training records,
ii. Set well-defined risk controls for every business area,
the implementation of risk
implement risk management checks and balances, set
management policies and
clear obligations for each department so as to enhance
risk evaluation measures, the
risk management effectiveness by breaking it down
implementation of customer
into manageable pieces.
relations policies, and purchasing
insurance for directors and iii. Our risk management operations take into accounts
all key forms of risk: market risk, credit risk, liquidity
supervisors)?
risk, operational risk, legal risk, model risk.
(2) Risk Measurement
The company has set risk management principles. In order
to ensure that all of our organization’s businesses adhere
to our operating policies, operating goals, and capital
levels, we have set suitability evaluation policies that can
react to changes in our business and in the market:
 Market risk measurement
i. We use RiskMetrics market risk management system
to manage our company’s exposure to market risk.
In addition to producing daily risk value tables, we
perform simulation analysis and historical analysis so
as to supplement missing risk values.
ii. We evaluate the completeness of our evaluation
models on various business mareas, and review the
assumptions, parameters, and data used for various
product models, and then test that the models for the
various products are reasonable.
iii. We evaluate the effectiveness of risk control
models: regularly perform backtesting to ensure the
effectiveness of the models used.
 Credit risk measurement
i. Our company undergoes credit rating evaluations
from Moody’s, Standard & Poor’s, Fitch, and Taiwan
Ratings Corp.
ii. Trading counterparty credit risk: we assess our
company’s maximum exposure in the event that a
trading counterparty defaults, and then use maximum
exposure limits set by the board of directors, in
determining the credit risk of a trading counterparty.
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President Securities Corporation

Deviations from “the Corporate Governance BestPractice Principles for TWSE/TPEx Listed Companies” and Reasons

Implementation Status Evaluation Item Yes No Abstract Illustration

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

iii. Issuer’s Credit Risk: we use KMV model to perform internal evaluations, and combine that with financial data and stock price data, to calculate the probability of a default. Then, based on these measurements, we developed “Z-Score”, an in-depth internal evaluation of the company, and then use this to protect ourselves from potential credit risks and potential capital shortfalls.
Operational risk measurement
i. Operational risk is the risk that occurs when internal processes, employees, or systems, are inappropriate or cause errors; or risk that is caused by external factors. This type of risk is related to legal risks but not strategic risk or credit risk.
ii. We create operations risk policy handbooks that entail every level of operations.
iii. Through our risk report and audit report, we ensure that risk is appropriately evaluated, disclosed, and controlled.

(3) Risk Management

Our risk management takes into account market risk, credit risk, liquidity risk, operational risk, legal risk, etc., for both on-balance sheet business and off-balance sheet businesses. Each day, every level of operations, every manager, and every trader is given fresh figures on position risk and key sensitivity values. Through this, the company’s risk controls and trading strategies can be properly analyzed and necessary alerts can initiated. Setting risk control guidelines for each level of operations allows for comprehensive monitoring of risk.

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(4) Our Risk Management Organization

As part of our risk control measures, we have created an independent risk control department and constructed an integrated risk control architecture that encompasses all facets of the organization, including the Board of Directors, the Risk Management Committee, the President Office, the Assets/Liabilities Management Committee, the Risk Control Office, the Auditing Office, the Compliance Division, the Finance Department, the Business units and Settlement & Clearing Department. Each segment of the company has clearly spelled-out obligations and every level of the company has clearly defined authorities.

i. Board of Directors: Audits the company’s risk management policy, supervises sales business strategies, approves all business proposals and trading permissions, is ultimately responsible for risk management.

2019 Annual Report

III. Corporate Governance

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Implementation Status Deviations from
“the Corporate
Governance Best-
Evaluation Item Practice Principles
Yes No Abstract Illustration for TWSE/TPEx
Listed Companies”
and Reasons
VIII. Is there any other important ii. Risk Management Committee: Is a committee
information to facilitate a better established by the Board of Directors tasked
understanding of the company’s with integrating all risk management operations,
corporate governance practices with supervising and assisting all the various risk
(e.g., including but not limited management and related operations. The committee
to employee rights, employee is also tasked with setting the various risk authorities,
wellness, investor relations, limits, and targets, for a centralized supervision of the
supplier relations, rights of status of all of the company’s risk management efforts.
stakeholders, directors’ and iii. President Office: Supervises the daily implementation
supervisors’ training records, of all of the company’s risk management operations
the implementation of risk and authorizes any exceptions to the risk management
management policies and protocols.
risk evaluation measures, the
iv. Assets/Liabilities Management Committee: Controls
implementation of customer
the company’s overall asset structure, collects and
relations policies, and purchasing
analyzes domestic and international interest rates,
insurance for directors and
exchange rates, and economic changes.
supervisors)?
v. Risk Control Office: Is responsible for the drafting
of risk policies and regulations, for monitoring
market and credit risks, for monitoring liquidity risks,
for compiling data on operational risk control and
management, for constructing and maintaining the
risk management system, for implementation of risk
management systems and for ensuring company-wide
regulatory compliance.
vi. Auditing Office: Sets operations risk controls, sets
the standards for risk control systems, puts in place
internal auditing controls, and implements daily check
routines.
vii. Compliance Division: Implements legal risk controls
and ensures that all businesses and risk management
operations are in compliance with relevant laws and
regulations. Compliance Division concurrently is
responsible for anti-money laundering and counter-
terrorist financing, developing relevant regulations and
systems, monitoring internal control and transactions,
supervising the implementation by business units,
holding training sessions, and reporting cases
suspicious of money laundering.
viii. Finance Department: Monitors capital adequacy rates
and liquidity risks, and analyzes the company’s asset/
liability structure and other key financial ratios.
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President Securities Corporation

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Implementation Status Deviations from
“the Corporate
Governance Best-
Evaluation Item Practice Principles
Yes No Abstract Illustration for TWSE/TPEx
Listed Companies”
and Reasons
VIII. Is there anyother important ix. Business units: Based on the company’s risk
information to facilitate a better management policies and regulations sets risk
understanding of the company's management guidelines for various businesses, and
corporate governance practices produces a report on abnormal risk items for the Risk
(e.g., including but not limited Control Office.
to employee rights, employee x. Settlement & Clearing Department: Implementation of
wellness, investor relations, risk control and management for settlement, clearing,
supplier relations, rights of and short-sale business operations. Implementation
stakeholders, directors' and of risk management and business department risk
supervisors' training records, management for transactions.
the implementation of risk ✓ H. President Securities has already purchased liability
management policies and insurance from ACE insurance and AIG Asia Pacific None
risk evaluation measures, the
Insurance Pte. Ltd. for all of its directors, and key
implementation of customer
employees (Policy Value: US$10 million; Policy Term:
relations policies, and purchasing
insurance for directors and September 1, 2019, to September 1, 2020).
supervisors)?
IX. The improvement status for the ✓ In the Corporate Governance Evaluation of 2019, the None
result of Corporate Governance Company's final evaluation score was 93.55, placing
Evaluation announced by Taiwan the Company between 6% and 20% of the total listed
companies. In the previous evaluation, for any items
Stock Exchange.
where the Company did not gain any points, such as
whether the Company has disclosed the amounts of its
annual greenhouse gas emissions, water consumption, and
the total weight of waste produced in the past two years,
the Company commissioned SGS Taiwan to conduct
an inspection and review the certification process; as
a result, ISO-14064-1 certification has been obtained.
For other items that required improvement on the part
of the Company, the Company has also actively worked
to strengthen plans to improve its actions and ensure
the quality of information disclosed, so as to improve
corporate governance performance and achieve the goal
of maintaining sustainable business operations.
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E. Composition, responsibilities, and operation of the Remuneration Committee

In accordance with the “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter” published by the competent authority on March 18, 2011, the Company has completed the discussion and resolution of the proposal by September 30, 2011, as required. Please refer to the description of the Remuneration Committee on page 49 of the Annual Report for the information on the operations.

1. Information Regarding Remuneration Committee

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Criteria Meets One of the Following Professional Qualification Requirements,
Independence Criteria (Note)
Together with at Least Five Years’ Work Experience
Number of Other
Public Companies
position in a department An instructor or higher A judge, public prosecutor, attorney, Certified Public Has work experience in Which the
Title of commerce, law, finance, Accountant, or other in the areas of Individual is Remark
academic department related accounting, or other specialist who has passed a professional or technical finance, or accounting, commerce, law, 1 2 3 4 5 6 7 8 9 10 Concurrently Serving
to the business needs of the national examination and or otherwise necessary as an Remuneration
Company in a public or been awarded a certificate for the business of the Committee Member
private junior college, college in a profession necessary for Company
or university the business of the Company
Name
Independent Pai, Chun-
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 1
Director Nan
Independent Liang, Yann-
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0
Director Ping
Independent Horng, Yuan-
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 1
Director Chuan
Independent Song, Yung-
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0
Director Fong
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2019 Annual Report

III. Corporate Governance

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

1.Not an employee of the Company or any of its affiliates.
2.Not a director or supervisor of the Company or any of its affiliates. (However, if the independent directors engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
3.Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
4.Not a manager of the 1st subparagraph, or a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of the persons 2nd and 3rd subparagraphs above.
5.Not a director, supervisor, or employee of a corporate shareholder who directly holds more than 5% of the Company’s total issued shares, who is among the top five shareholders, or who designates his or her representative to serve as a director or supervisor of the Company in accordance with Paragraph 1 or 2, Article 27 of the Company Act; (however, if the independent directors engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
6.Not a director, supervisor, or employee of another company where a majority of the Company’s director seats or voting shares and those of another company are controlled by the same person; (however, if the independent directors engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply.)
7.Not a director (or a managing director), supervisor, or employee of another company or institution where the Chairman, the President, or person holding an equivalent position of the Company and a person in an equivalent position at another company or institution are the same person or spouses; (however, if the independent directors engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply.)
8.Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution which has a financial or business relationship with the Company.(However, if a specific company or institution holds more than 20% and no more than 50% of the total issued shares of the Company and if the independent directors engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply.)
9.Not a professional individual, or a spouse, who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides auditing services, commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, the cumulative amount of payments obtained in the past two years has not exceeded NT$ 500,000. These restrictions do not apply to people whose duties are performed in accordance with the Securities and Exchange Act and the Business Mergers And Acquisitions Act or members of the Tender Offer Review Committee or the M&A Special Committee.
10.Not been a person of any conditions defined in Article 30 of the Company Law.

2. Operations of the Remuneration Committee

(1) The committee is composed of four members.
(2) Term of the committee members: From June 21, 2018 through June 20, 2021. The Remuneration Committee met 6

times (A) in the most recent year. The qualifications and attendance of the members are listed below:

Title	Name	Attendance in Person (B)	By Proxy	Attendance rate (%) (B/A) (Note)	Remark (Note)
Convener Pai, Chun- Nan 6 0 100% New appointment on 2018.6.21
Member Liang, Yann- Ping 6 0 100% Reappointment on 2018.6.21
Member Horng, Yuan- Chuan 6 0 100% New appointment on 2018.6.21
Member Song, Yung- Fong 6 0 100% New appointment on 2018.6.21
Other mentionable items: 1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the remuneration committee’s opinion (eg., the remuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): None. 2. Resolutions of the remuneration committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: None.

Note 1: When a member of the Remuneration Committee resigns before the end of the year, the remark column shall be annotated with the date of resignation. Actual attendance rate (%) shall be calculated based on the number of meetings held by the Remuneration Committee and the number of actual attendance during the term of service.
Note 2: When an election is held for the Remuneration Committee before end of the year, members of both the new and old committee shall be listed in separate columns and noted as new, old or re-elected members, along with the elected date, in the “Remark” column. The actual attendance rate (%) shall be calculated based on the number of meetings held during the member’s term in the Remuneration Committee and the number of actual attendance of this member.

President Securities Corporation

(3) 2019 remuneration committee proposal discussion and resolution:

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Remuneration Committee Item Resolution
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Remuneration Committee	Item	Resolution

2019.03.08 The 3rd Meeting of the 4th Remuneration Committee	1. The proposal for 2018 bonus distribution ratio for employees and directors. 2. The proposal for 2018 bonus allocation for employees and directors.	Proposal 1: All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion. Proposal 2: All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion.
2019.04.19 The 4th Meeting of the 4th Remuneration Committee	1. Amendments to the performance bonus for the Proprietary Trading Department 2. Amendments to the performance bonus for the Financial Product Department	Proposal 1: All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion. Proposal 2: All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion.
2019.05.31 The 5th Meeting of the 4th Remuneration Committee	1. The proposal for 2018 bonus distribution to employee and managerial officers 2. Amendments to the Board of Directors Performance Evaluation Measures of the Company	Proposal 1: All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion. Proposal 2: All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion.
2019.08.15 The 6th Meeting of the 4th Remuneration Committee	1. Periodic review and evaluation of the policy and structure of the remuneration provided to the Company’s Directors	All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion.
2019.05.23 The 7th Meeting of the 4th Remuneration Committee	1. The proposal for the Chairman's housing allowance.	All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion.
2019.12.06 The 8th Meeting of the 4th Remuneration Committee	1. The proposal for changes in President Securities’ employee stock ownership trust 2. Periodic review and evaluation of the policies and structure of the remuneration to the Company’s high- ranking executives and managerial officers 3. The proposal for adjustment of the profit-bonus system.	Proposal 1: All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion. Proposal 2: All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion. Proposal 3: All members of the committee present voted in favor of the resolution without any objection and submitted it to the Board of Directors for discussion.

2019 Annual Report

III. Corporate Governance

F. Corporate Social Responsibility (CSR) and Deviations from “ Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies ”

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Implementation Status Deviations from
Corporate Social
Evaluation Item Responsibility(CSR)
Yes No Abstract Explanation Best Practice Principles of TWSE/GTSM Listed
Companies” and Reasons
I. Does the company conduct ✓ The Company’s corporate social responsibility (CSR) is None
risk assessments related implemented by the Management Department, which is responsible
to environmental, social, for the formulation and implementation of corporate social
and corporate governance responsibility policies, systems, or relevant management guidelines
issues that are related to and specific implementation plans. Each year, the department
the company’s operations organizes social responsibility events and activities, including
in accordance with the social contributions, social welfare, and community participation,
materiality principle, and and formulates CSR policies, which are approved by the Board of
formulate relevant risk Directors; the results of the implementation by relevant units are
management policies or reported to the Board of Directors within four months after the end
strategies? of each year.
The Company conducts risk assessments on environmental, social,
and corporate governance issues related to its corporate operations
in accordance with the materiality principle. Relevant policies are
formulated for issues of materiality identified, as detailed in the
CSR report.
Main Topic Assessment Risk Management Policies and Strategy
The company is developing policies and strategies designed to address risk factors related to climate, such as heavy rain events, earthquakes, and high
temperatures with the goal of maintaining the safety and robustness of the Company's operations. For example, the low-carbon transformation policy on
the client side includes the full development of digital financial management. This includes the availability of online signing of a wide variety of consent
Climate documents and risk notices required by the appropriate authorities for opening accounts remotely, conducting various transactions directly on mobile
Environment change and devices, and online inquiry used to confirm whether a transaction has been conducted successfully. The goal is to make sure the Company's services will
environmental not be affected by climate change and other related events or disasters. As for the Company's operations, the Company will comprehensively review
protection business processes and convert administrative forms into electronic documents, purchase environmentally-friendly labeled products, phase out older
energy-consuming equipment year by year to reduce energy consumption, streamline energy expenditures, improve operational efficiency, and hire
an external certification agency to formally introduce and complete the IOS14064-1 standard for greenhouse gas inventory. The goal is to reduce the
generation of a carbon footprint through such interlocked low-carbon operations.
The Company pays attention to the safety of employees' work environment. In addition to minimizing the hazards present in the office environment, the
Head Office and all branches have selected and assigned appropriate employees to obtain Fire Safety Manager Certificates and the become qualified as
Occupational category B labor occupational safety and health supervisors, while formulating fire-fighting plans for the workplace, to maintain a safe office environment.
safety and The Company's Head Office and workplaces have each purchased public accident liability insurance to protect rights and interests of clients and to provide
health employer accident liability insurance to protect employees' rights and interests. A total of four automated extracorporeal defibrillators (AEDs) have been
set up on specific floors of the Company's Head Office building, and a total of 45 employees have obtained first-aid safety and health education along with
training certificates in 2019 to ensure the safety of their peers.
In addition to the independent operation of finance and business, the management rights and responsibilities of the Company and affiliated companies
are clearly divided, and their business dealings or transactions are handled in accordance with the relevant laws and regulations. In addition, an "Internal
Control System for Supervision and Management of Subsidiaries" has been established to control and manage subsidiaries. The Information System
Social issues Department of the Company has formally established an information security section assigned to upgrading the previous task-based team to a normal
organization. This section is staffed with a dedicated information security supervisor and two dedicated information security personnel to strengthen the
Customer maintenance, security, and control of the information systems and the stability of business adjustment The goal is to ensure that the organization carries out
privacy information security management operations effectively and provides clients with the most secure information trading environment.
protection and Since August 2013, the Company has applied for and obtained the British Standards Institution's ISO 27001: 2005 version of the information security
information certification for electronic trading systems. It passed the information security certification renewal and obtained the revised ISO 27001: 2013 version
security of the certification at the end of July 2014. Afterwards, the Company has applied for renewal of the certification annually and applied for review of the
certification every three years (2016 and 2019) to implement the Company's internal matters in a standard and systematic manner to reduce operational
errors. The Company has adopted TWCA as the certificate authority for authentication and verification of orders placed. When clients are conducting
online transactions, in addition to having the account number and password checked by a securities firm or a futures firm, each transaction needs to be
confirmed with a certificate issued by an impartial third party, along with the use of internationally recognized SSL technology for transmission encryption,
to increase the degree of security that is valued during online transactions.
The Company's Board of Directors has established a Risk Management Committee to supervise daily risk management affairs effectively. The risks
involved in the Company's business include risks related to the market, credit, liquidity, operations, legal issues, and model risks, which have been included
in the scope of risk management. In addition, a three-stage defense system for risk management has been implemented.
Corporate governance Risk control/audits The first-stage defense: When each business unit executes its business, it will monitor risks on its own.The second-stage defense: An independent dedicated unit has been established to formulate and execute risk policies, operating guidelines, and risk control
systems as the second-stage of defense in the monitoring of risks.
The third-stage defense: The risk management system is integrated into the internal audit system to provide for independent review.
II. Has the company established a ✓ The Company’s CSR was implemented by the Management None
dedicated unit or appointed a Department where CSR integration teams are formed,
including a corporate governance promotion team, a customer
unit for promoting CSR? Is the
service promotion team, an employee care promotion team,
unit authorized by the Board an environmental protection promotion team, and a social
of Directors to implement CSR participation promotion team. They are responsible for proposal and
activities at upper management implementation of CSR policies, systems, relevant management
levels? Does the unit report the policies, and specific implementation plans. They organize social
responsibility events and activities, including social contribution,
progress of such activities to the
social welfare, and community participation events each year and
Board of Directors? each year regularly hold three integration meetings to set goals,
manage implementation, and review performance for various
areas, while compiling the documentation of implementing the
performance of CSR for the year into a CSR report. They also
formulate CSR policies, which should be approved by the Board of
Directors, and the results of implementation by all relevant units are
reported to the Board of Directors within four months after the end
of each year.
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President Securities Corporation

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Implementation Status Deviations from
Corporate Social
Evaluation Item Responsibility(CSR)
Yes No Abstract Explanation Best Practice Principles of TWSE/GTSM Listed
Companies” and Reasons
III. Environmental Issues
A. Does the company endeavor ✓ A. We care deeply about protecting the environment, about None
to utilize all resources more reducing our impact on the environment, and about our
efficiently and use renewable
responsibility for sustainability. The Company is also committed
materials which have low impact
on the environment? to green energy, environmental protection, and reducing waste
in a sustainable manner. To this end, the Company place waste
sorting receptacles on all floors of its facilities and is strict
about adhering to recycling principles. The Company purchases
products that comply with energy-saving standards, have been
given green marks, and uses green building materials to reduce
the impact of its operations on the environment and society
and thus promote pursuit of environmental protection, energy
conservation, and carbon reduction.
B. Does the company establish ✓ B. President Securities operate financial services and, therefore, None
proper environmental does not produce any environmental pollutants or waste.
management systems based The main source of greenhouse gases that we produce is
on the characteristics of their from our power consumption. In an effort to be increasingly
industries? environmentally friendly and to reduce our carbon footprint,
we have implemented many initiatives aimed at replacing
company equipment with low power consumption equipment.
We have also implemented an electronic management system
of internal document and electronic account statements for our
customers, so as to reduce our consumption of paper products.
We also send out regular emails to all employees that discuss
key environmental concepts.
C. Does the company evaluate the ✓ C. In view of the increasingly serious problems related to global None
current and future potential risks warming, the issue of climate change has attracted a great
and opportunities created by amount of attention from global enterprises. Our commitment
climate change for the company to environmental sustainability includes working toward
and take measures to respond to reducing our environmental impact while serving customers,
climate-related issues? and actively implementing pollution prevention, energy
conservation, carbon reduction, and environmental protection
efforts.
In response to the impact of extreme climate on the earth,
“climate change and environmental protection” is the issue
of materiality identified by the Company that is related to
the environmental dimension. We are thinking about how
to respond and turn risk factors into business opportunities!
Transformation into a low-carbon business has become the
focus of the Company’s environmental sustainability policy.
We are committed to developing a digital financial system to
achieve the goal of transforming the business into a low-carbon
one. We are committed to promoting and continue to promote
the following items:
i. Develop a digital financial system to reduce the generation
of a carbon footprint.
ii. Require the purchase of green-marked products and strictly
request procurement of local products.
iii. Promote environmental protection management policies
regularly and continue to improve our commitment to the
environment and wise energy use.
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2019 Annual Report

III. Corporate Governance

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President Securities Corporation

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2019 Annual Report

III. Corporate Governance

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President Securities Corporation

		Implementation Status	Implementation Status	Implementation Status
Evaluation Item		Yes	No	Abstract Explanation
F. Has the company formulated supplier management policies that requires suppliers to follow relevant regulations on issues, such as environmental protection, occupational safety and health, or labor rights? How are these policies implemented?	✓ F. In order to maintain the quality of suppliers’ services, the Company conducts assessments of its existing partner’s operations in accordance with the Supplier Evaluation and Management Regulations each year. This effort is divided into initial, regular, and irregular evaluations; the results can be divided into four-levels of suppliers, namely levels A, B, C, and D, as the basis for considerations for future cooperation. In addition, the Company has required its main suppliers to sign a “Supplier Social Responsibility Commitment Letter.” The suppliers are clearly committed to complying with international human rights conventions and labor laws, providing employees with a fair, healthy, and safe workplace environment, prohibiting discrimination and unequal differential treatment, and complying with relevant environmental protection regulations. For suppliers who violate this commitment letter, the Company may request termination of the related contract or suspension of the partnership. In 2019, the Company used a total of 216 suppliers, of which 76 of these suppliers had sales and purchase contracts and/or maintenance contracts. The remaining suppliers were involved in one-time or online purchases. The figure is mainly based on the sales and purchase contracts along with maintenance contracts. A total of 78% of the suppliers have signed a commitment letter. None
V. Does the company refer to the international common reporting standards or guidelines to compile reports, such as CSR reports that disclose the company’s non-financial information? Have the quality of the said reports been confirmed a third-party verification entity? In 2011, the Company published its first “President Securities 2010 Securities Corporate Responsibility Report”, and has produced subsequent annual reports ever since. The reports are available online for download at the Company’s corporate website, www.pscnet.com. tw. Our corporate social responsibility report for 2018 was published in August 28th, 2019 and was certified by a third party (PwC Taiwan), using the “Non-Financial Information Auditing and Certification Letter” format suggest the report is in compliance with the GRI Standards and that covers all items required by GRI Standards reporting policies.
VI. If the Company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the Principles and their implementation: For the implementation of the corporate governance, the Company’s Board of Directors approved the "President Securities Corporate Social Responsibility Best practice Principles" on July 2, 2012. Implemental reports of "President Securities Corporate Responsibility Principles" were proposed in board meeting every year, and report of the year 2019 was proposed in the 12th meeting of the 11th Board of the company.
VII. Other important information to facilitate better understanding of the Company’s corporate social responsibility practices: A. Environmental Protection Measures Although the Company is a securities firm that does not produce any environmental pollutants, we still care deeply about protecting the environment, about reducing our impact on the environment, and about our responsibility for sustainability. B. Participation in Public Service President Securities Corp. has been a long-standing supporter of important social charitable activities and, for its efforts, has been recognized with the 7th annual Wenxin Award and the 6th National Civic Service Award, and Top 50 by the Commonwealth magazine in 2013, 2015, 2016, and 2017. Besides, the Company was recognized and reward by the Taiwan Fund for Children abd Families in 2013. The Company has taken concrete actions to cooperate with the Taiwan Fund for Children and Families from 2007 to 2019 to help children from financially challenged families with their studies. The Company also mobilized all employees and customers for joint participation and invested actual funds and various equipment to social welfare activities to fulfill corporate social responsibilities. The Company raised a total of NT$2.3 million from 1,226 participants in 2019.

2019 Annual Report

III. Corporate Governance

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Since 2001, the Company has organized all employees in PSC, PFC, PAMC, PCHC, PIAC, and PSC Venture Capital as well as allowing customers to participate in the “Love Delivery Activities” that provide children from financially challenged families with scholarships. A total of approximately 8,798 elementary school, junior high school, and senior high school students were beneficiaries. The activities have provided school children from poor families with opportunities to explore different academic disciplines for their own development and growth. In 2019, the Company launched President Securities Volunteer Day, with 333 employees from three departments of the headquarters and 15 branches (42% of the branches) who participated enthusiastically. Volunteering services include community street sweeping, mountain cleaning activities, elder care, receipt collection, and library administrative services. At the Double-ninth Festival, the Company donated NT $100,000 to the Eden Social Welfare Foundation to provide meals for the disadvantaged elderly, and the Company’s volunteers went to the Pei-Ta Elderly Care Center in Sanxia to enjoy meals with the disadvantaged elderly. The volunteers participated in the Tainan Diamond Wedding Charity Event and “Hometown x Taiwan Christmas Charity Event” organized by the Uni-President Corporation’s foundation, through which they gave a total of 200 gifts to the elderly and children who had been invited to enable them to feel the festive atmosphere while the Company could put its corporate social responsibility actions into practice. C. Customer Rights We have assigned a spokesperson to be responsible for providing information to shareholders and investors, and for posting periodical and non-periodical financial and operating information on the government-operated MOPS website. We have also setup an "Investor Section" on our website where investors and shareholders can obtain information on the following: (1) President Securities’ design and sale of financial products adheres to all relevant laws and regulations. (2) Company introduction in Chinese and English. (3) Company financial statements. (4) Board of Director meeting Minutes. (5) Investor Suggestion Box, which is manned by Public Affairs personnel who are responsible for replying to all comments received. D. Employee Rights and Hiring Concerns (1) To boost work efficiency and solidarity among our employees, we place particular emphasis on benefits programs and labor relations, and thus ensure employee welfare in a comprehensive manner. (2) General accident insurance has been purchased for each of our branches and work premises so as to protect customer rights. Employer insurance has also been purchased so as to protect the interests of all employees. E. Rights of the stakeholders The Company respects rights of the stakeholders in expressing their opinions and has established a stakeholder section on the official website to build up a communication channel and to explain the Company’s corporate social responsibility (CSR) ideas and policies. For investors, employees, suppliers, customers, competent authority and community/NGO, the Company has established a communication platform, on which there are dedicated personnel to respond to any questions, to maintain good communication with the employees. F. Customer policy (1) Policy: “3 Goods and 1 Fair” ─ “Good Quality”, “Good Credibility”, “Good Service”, and “Fair Price”. This is combined with “Professional Leadership, Kind Service”, in providing all customers with comprehensive services. (2) Implementation: We have established a Customer Services Department—The Customer Service Center, which offers customers an avenue through which to register complaints, which operates a customer service hotline which is manned by customer service specialists who help to solve customer problems, and which ensures that all account correspondence sent to clients includes clear product risk warnings.

G. Ethical business operation at the Company and related implementation and Deviations from “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”

1. Ethical business operation

Our company has always applied the principle of “integrity and sustainable management”, to serve our customers sincerely. We also inherit the spirit of “3 Goods and 1 Fair”. We protect clients’ rights with flawless service. We pursue long-term, steady and balanced growth in the spirit of integrity management.

President Securities Corporation

(1) The company has established “Ethical Corporate Management Best Practices Principles” and “Fair Client Treatment Principles”, and strives to adhere to these concepts.
(2) The Company makes its corporate management and financial data publically available in a transparent manner as is required by the competent authority and underwent the authority’s 3rd annual corporate governance evaluation in 2016, scoring in the top-5 percent among listed company in Taiwan.
(3) Insure company directors, supervisors, and managers’ liability insurance, also employees’ credit insurance.
(4) The Company is active in participating in community activities, and in fostering sustainable development sustainable development.

2. Ethical Corporate Management:

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Implementation Status Deviations from the
Ethical Corporate
Evaluation Item Management Best
Yes No Abstract Illustration Practices Principles
for TWSE listed
companies and reasons
I. Establishment of ethical corporate
management policies and programs
None
A. Does the company declare its ethical ✓ A. On August 23, 2012, the Board of Directors issued "Ethical
corporate management policies and Corporate Management Best Practice Principles" and
procedures, formulate the Ethical revealed the principle in 2013 shareholders’ meeting.
Corporate Management Policy This proves the management’s commitment to Integrity
approved by the Board of Directors management. And in March 2020, the Board of Directors
has been formulated, and, in its approved the establishment of an ethical corporate
guidelines and external documents, as management task force which served under the Board of
well as the commitment from its board Directors. In addition, the Company’s 2019 Corporate
and management level to implement Social Responsibility report delivers information regarding
the policies? the Company’s efforts in and contributions to fulfilling
its social responsibilities to stakeholders. The Company’s
senior management and board members are responsible
during supervision in line with the principle of integrity
in the execution of business, in order to create a business
environment in support of sustainable development.
B. Has the company established an ✓ B. The Company has explicitly prohibited any direct or None
assessment mechanism designed to indirect offering, promising, requesting, or receiving
address the risk of unethical conduct, of any improper benefits.To prevent unethical conduct,
regularly analyzed and evaluated in addition to what is set out in the Ethical Corporate
business activities with a high risk of Management Best Practice Principles, the Company has
unethical conduct within the business clearly stipulated measures in the work rules that are
scope, as well as formulated unethical designed to facilitate the adoption of preventive measures
conduct prevention programs and the Company offers education sessions, to implement
accordingly? Such measure should at the ethical corporate management policy.
least covers activities stated in Article
2, Paragraph 7 of the ethical corporate
management best-practice principles
for TWSE listed companies.
C. Does the company establish policies ✓ C. To execute integrity management and prevent dishonesty, None
to prevent unethical conduct with the company adds related rules to corporate governess
clear statements regarding relevant (Chapter 10 article 48) in 2012, which authorized by the
procedures, guidelines of conduct, Ministry of Labor and publicly announced. Later in 2016,
punishment for violation, rules of the Company established Measures for Whistle-blowing
appeal, the commitment to implement related to Illegal and Unethical Conduct and revised these
the policies, and reviewe/ revise the documents related to the Measures for Reporting of Illegal
policies regularly? and Unethical Conduct in 2019. In order to implement the
Company’s work rules and ethical corporate management
principles, the Company has encouraged the reporting of
any illegal and unethical conduct as well as established
internal and external reporting channels and processing
procedures of the Company to ensure integrity and ethical
conduct within the Company.
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2019 Annual Report

III. Corporate Governance

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Implementation Status Deviations from the
Ethical Corporate
Evaluation Item Management Best
Yes No Abstract Illustration Practices Principles
for TWSE listed
companies and reasons
II. Fufill ethical management
A. Does the company evaluate business ✓ A. Before engaging in any business relationship with None
partners’ ethical records and include any agent, supplier, customer, or any other enterprise,
ethics-related clauses in business we conduct a thorough examination of that party’s
contracts? creditworthiness, so as to avoid entering into any
transactions with non-creditworthy parties. Included in all
agreements with third parties are provisions which allow
for the early termination of such agreement in the event of
any deceitful acts by that party.
B. Does the company establish an ✓ B. The Company has established the “Ethical Corporate None
exclusively dedicated unit supervised Management Practice Team” under the Board of Directors
and appointed the supervisor of Administration Department
by the Board to be in charge of
as the convener, who is responsible for assisting the Board
corporate ethical management, and on
and the management level to establish and supervise the
a regular basis (at least once a year), implementation of ethical corporate management policies
report the status of unethical conduct and protective measures and to ensure the execution of
prevention programs, and the status of Ethical Corporate Management Best Practice Principles.
The team reports to the Board of Directors annually
the supervision of implementation of
related ethics policies to the Board of  The implementation of ethical corporate management
Directors. policies in 2019:
A. Policy announcement:
The Company announce and promote the policies to the
employees. The Administration Department announced
“Developing the corporate culture under ethical corporate
management” policy to prevent unethical behavior to
17,376 people in 2019.
B. Training:
(1) 2019 Corporate Governance courses: Following Economic
trends – the changes and challenges of corporate operation:
70 people and 210 hours in total; prevention of money
laundering and insider trading to stabilize corporate
governance: 51 people and 153 hours in total.
(2) 2019 Insider Trading Examples: 1,462 people and 365.5
hours in total.
(3) 2019 Anti-money Laundering and Counter-terrorism
Training: 1,438 people and 891.5 hours in total
C. Examination: Online exam for 2019 Anti-money
Laundering and Counter-terrorism Training: scoring 95 in
average.
D. The Company has established clear reporting channels,
procedures, and confidentiality measures:
(1) Reporting line: (02) 2748-8173
(2) Reporting email: [email protected]
(3) In written form: delivery to auditing office chief auditor
(4) address: 13F., No. 8, Dongxing Rd., Songshan Dist., Taipei
City 105
C. Does the Company establish policies ✓ C. President Securities’ board is subject to a high degree None
to prevent conflicts of interest and of self-regulation, whereby any board motion that is
provide appropriate communication suspected of having the potential to create any conflict of
channels for complaints and interest with the board or with any of its representatives or
implement it? proxies must undergo evaluation and may not be included
in the board agenda or voted upon by such party, and also
may not be voted on by any representative or proxy of
such party. Board members should exercise self-regulation
and should not conspire to support one another’s improper
actions.
In addition, in order to enable the Directors’ and managers’
conduct to be in line with the ethical standards and
stakeholders to better understand the Company’s ethical
standards, the Company has established the “Codes of
Ethical Conduct for Directors and Managers of President
Securities Corp.” in August 2018.
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Implementation Status Deviations from the
Ethical Corporate
Evaluation Item Management Best
Yes No Abstract Illustration Practices Principles
for TWSE listed
companies and reasons
D. Has the company established effective ✓ D. In order to ensure healthy and honest operations, the None
systems for both accounting and auditing office is required to submit a report on the
internal control to facilitate ethical adoption of the company’s principles for honest operation
corporate management, has the in its annual audit report, and should ensure that such
internal audit unit developed relevant principles are included in the company’s Work Rules. The
audit plans based on the assessment Committee should also publish on the company website
results of the analysis of the risk of procedures for reporting problems and the corresponding
unethical conduct, and inspect for punishments for such offenses.
compliance with the unethical conduct
prevention programs accordingly, or
has the company appointed CPAs to
perform audits.?
E. Does the company regularly hold ✓ E. The company regularly publishes honest operation None
internal and external educational standards, and implements training courses on these
trainings on ethical management? standards for all new employees.
III. Whistle-blowing system The Company has established “Guidelines for Handling
Reports of Unlawful or Unethical Behavior”.
A. Does the company establish a clear ✓ A. We have established a clear channel for receiving None
whistleblowing and reward system complaints:
and set up a convenient channel for
(1) Complaint Hotline: (02) 2748-8173
reporting unethical activities and
(2) Complaint Email: [email protected]
reward system? Can the accused be
reached by an appropriate person for (3) Written Complaints: Complaints can be mailed or faxed
to our auditing office.
follow-up?
None
B. Has the company established standard ✓ B. Clear protocols for handling complaints have been
operating procedures for investigating established as have confidentiality measures.
any reported misconduct, follow-
up measures to be adopted after
investigations, and relevant
confidentiality mechanisms?
None
C. Does the company provide proper ✓ C. Clear measures have been put in place to protect those who
whistleblower protection? register complaints.
IV. Strengthening information
disclosure
Does the company disclose its ethical ✓ In keeping with the company’s honest operation principles, None
corporate management policies and we endeavor to disclose procedures for ethical corporate
results of its implementation on the management both via intranet and via our offical website
company's website and MOPS? (www.pscnet.com.tw).
V. If the company has established the ethical corporate management policies based on the Ethical Corporate Management
Best-Practice Principles for TWSE/TPExListed Companies, please describe any discrepancy between the policies and their
implementation: There have been no differences.
VI. Other important information to facilitate a better understanding of the company's ethical corporate management practices (e.g.,
review and amend its policies): None.
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H. Corporate Governance Guidelines and Regulations

Except for the Corporate Governance Best Practice Principles, the Company has disclosed relevant rules and regulations that shall be established by law on the Company’s website (Investor Section/Corporate Governance) and the Market Observation Post System (MOPS).

2019 Annual Report

III. Corporate Governance

I. Other Important Information Regarding Corporate Governance

The Company has disclosed relevant important information regarding corporate governance on the Company’s website (Investor Section/Corporate Governance) and the Market Observation Post System (MOPS).

J. Internal Control Systems:

1. Internal Control Declaration:

Internal control declaration

Implementation of the internal control system of President Securities Corp.

Date: March 26, 2020.

The Company hereby declares the following based on its self -assessment result on the internal control system of 2019: I. The Company is fully aware that the Board of Directors and the management are responsible for the establishment, implementation, and maintenance of the internal control system and it is established accordingly. The purpose of establishing the internal control system is to reasonably ensure the fulfillment of operational effectiveness and efficiency (including profit, performance, and protection of assets safety), financial report reliability, timeliness, transparency and compliance with applicable rules, laws and regulations. II. The internal control system is designed with inherent limitations. No matter how perfect the internal control system is, it can only provide a reasonable assurance to the fulfillment of the three objectives referred to above. Moreover, the effectiveness of the internal control system could be affected by the changes of environment and circumstances. The Company’s internal control system is designed with a self-monitoring mechanism; therefore, the Company will take corrective actions upon identifying any nonconformity. III. The Company has assessed the design and operating effectiveness of the internal control system in accordance with the criteria provided in the “Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets” (referred to as “the Regulations” hereinafter). The criteria defined in “the Regulations” include five elements depending on the management control process: 1. environment control, 2. risk assessment, 3. control process, 4. information and communication, and 5. supervision. Each of the five elements is then divided into a sub-category. Please refer to “the Regulations” for details. IV. The Company has implemented the criteria of the internal control system referred to above to inspect the design and operating effectiveness of internal control system. V. The Company, based on the inspection approach referred to above, has concluded that the internal control system (including the supervision and management over the subsidiaries) on December 31, 2019 is reasonably effective in achieving the objectives of operational effectiveness and efficiency, financial report reliability, timeliness, transparency and compliance with applicable rules, laws and regulations. Except for the attachment all above mentioned are valid. VI. The Statement is the main contents of the Company’s annual report and prospectus and will be made public. Any illegalities such as misrepresentations or concealments in the published contents mentioned above will be considered a breach of Articles 20, 32, 171, and 174 of the Securities and Exchange Act and Article 115 of Futures and Exchange Act, and entail legal responsibilities. VII. The Statement was resolved in the directors’ meeting with the 0 objection from the 18 attending board directors on March 26, 2020. The contents of the Statement have been accepted without any objection. President Securities Corp. Chairman: Lin, Kuan-Chen President: Tsai, Sen-Bu CFO: An, Chi-Li Chief Auditor: Huang, Sha-Mei

2. If the company has commissioned external auditors to review the company’s internal control system, the external auditor’s report should be disclosed: Not applicable.

President Securities Corporation

K. Conviction of corporate or employees’ wrongdoings, Company’s punishment on employee for violation of internal control, major faults and improvements during recent fiscal period and to the publish date of the annual report. (If the result of any disciplinary action may have a significant impact on shareholders’ rights and interests or the price of securities, the content of the said action shall be specified.)

1. Punishments imposed on the Company and its internal personnel in accordance with laws

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Major faults Improvements
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Major faults	Improvements

According to the Taiwan Stock Exchange Official Letter No. Fu—1080502457 issued on September 10, 2019 The Taiwan Stock Exchange went to the Sanchung Branch on August 5, 2019 to inspect deficiencies and items requiring improvement; the deficiencies in the operations that were discovered are as follows: 1. Salesperson Lu, ○-Chen was involved in advertising on the community app known as LINE without the Company’s consent; the advertisement content was not part of the advertisements that were approved to take effect by the Taiwan Securities Association through the Company’s application and that are still valid. 2. This was in violation of Paragraph 2, Article 18 of the Operating Rules of the Taiwan Stock Exchange Corporation, the CA-18800 Advertising for Business Solicitation and Business Promotion Management Activities 6 of the Standard Regulations on the Internal Control System of Securities Firms, stipulating that, “the members of this association agree that the advertisements posted by their employees on relevant personal blogs or in online chat rooms (including but not limited to personal blogs or online chat rooms) and other relevant social networking websites shall only be limited to the sharing of any advertisements that were previously approved to take effect by the Taiwan Securities Association through an application filed by the members’ headquarters and that are still valid; personnel must not alter the content shared and shall not add advertising text related to securities business to the content of an advertisement,” as well as the internal control system established by the Company in accordance with the aforementioned regulations.	1. Salesperson Lu, ○-Chen received two admonitions, and the manager ○-Min Chang received one admonition. 2. The deficiency was reviewed, addressed, and announced to raise the awareness of other personnel; relevant regulations will be implemented and disciplinary measures will be intensified in the future.
According to Official Letter No. Fu—1080503017 issued on November 1, 2019 by the Taiwan Stock Exchange: The Taiwan Stock Exchange conducted a review of the written documents submitted by the Company on September 26, 2019, and a deficiency in operations discovered is as follows: 1. Salesperson Li, ○-Mei failed to conduct a customer due diligence visit, allowing an insider of the securities issuing company, who received a loan, to engage in a securities lending transaction. 2. This was in violation of Paragraph 2, Article 18 of the Company’s operating rules, Paragraph 1, Article 37-1 of the Operating Rules for Securities Lending by Securities Firms, and the Standards and Regulations of the Internal Control System of the Securities Dealer, CA-18100 Anti-Money Laundering Operation (including international securities business) (4)-1 of the Standard Regulations on Internal Control Systems of Securities Firms, stipulating, “for existing customers with the risk level determined, the identity information of existing customers shall be reviewed according to the importance and risk level of the customers, and the existing business relationship shall be reviewed to adjust the level of risk promptly,” as well as the internal control system established by the Company in accordance with the aforementioned regulations.	1. Salesperson Li, ○-Mei received an admonition. 2. The deficiency was reviewed, addressed, and announced to raise the awareness of other personnel; relevant regulations will be implemented in the future.

2019 Annual Report

III. Corporate Governance

Major faults Improvements
According to Official Letter No. Fu—10905000469 issued by the Taiwan Stock Exchange on 1. The violator Huang, ○-Jen , VP of the February 27, 2020: Quantitative Trading Department, received The Taiwan Stock Exchange went to the Company on January 15, 2020 for inspection; the an admonition. deficiencies in operations that were discovered are as follows: 2. The deficiency was reviewed, addressed,
1. Huang, ○-Jen, VP of the Quantitative Trading Department, was buying or selling securities and announced to raise the awareness of through the securities account with the Xindian Branch of Masterlink Securities on behalf other personnel; relevant regulations will of her sister. be implemented in the future.
This was a violation of Paragraph 2, Article 18, Subparagraph 4, Article 75 of the Operating Rules of the Taiwan Stock Exchange Corporation and Paragraph 5, Article of the Regulations Governing Insiders of Securities Firms Opening Accounts at Their Securities Firms for Securities Brokerage Trading.

L. Major Resolutions of Shareholders Meeting and Board of Directors Meeting

1. Major resolutions of 2019 General Shareholders Meeting: Executed according to the resolution of the General Shareholders Meeting.

2019 Annual General Shareholders Meeting
(1) Matters to be ratified

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Proposal 1 Proposed for approval of 2018 Business Report and Consolidated and Individual Financial Statements
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Proposal 1 Proposed for approval of 2018 Business Report and Consolidated and Individual Financial Statements	Proposal 1 Proposed for approval of 2018 Business Report and Consolidated and Individual Financial Statements

Explanation	1. 2018 Consolidated and Individual Financial Statements of the Company was audited and certified by accountant Lin, Se-Kai, Hsiao, Chin-Mu from PwC. 2. Business Report as well as Consolidated and Individual Financial Statements were approved by the 6th Meeting of the 11th Board of Directors on March 22, 2019, and reviewed by the Audit Committee. 3. Business Report as well as Consolidated and Individual Financial Statements please refer to the appendix.
Resolution	The Company's shareholders present have total votes of 1,001,746,135, of which approval votes 975,000,148 (including electronic votes of 721,205,092), disapproval votes 391,869 (including electronic votes of 391,869), abstention votes/no votes 26,354,118 (including electronic votes of 20,576,547), and invalid votes 0; the approval votes account for 97.33%, over half of the total votes of the shareholders present. The proposal made by the Board of Directors was approved as it was.

President Securities Corporation

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Proposal 2 Proposed for approval of 2018 profit distribution
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Proposal 2 Proposed for approval of 2018 profit distribution	Proposal 2 Proposed for approval of 2018 profit distribution

Explanation	1. The Company's 2018 earnings distribution was conducted in accordance with laws and the Company's Articles of Incorporation. (see the appendix) For the calculation of the 2018 profit to be distributed, an adjustment of NT$17,538,290 ( due to the impact of the adaption of IFRS 9 ) and NT$23,270,549 in the remeasurement of defined benefit plan shall be made in advance; in addition, legal reserve (10%) and special reserve (20%) shall be listed by law. In accordance with Jin-Guan-Zheng-Tou No. 10500278285 and Zheng-Qi-Tou No. 1060005703, special reserve (0.5%) shall be allocated for the transformation of employees in response to the development of financial technology. With the special reserve reversed in accordance with the provisions of the official letters, for the year of 2018, distributable earnings amounted to NT$972,063,563, and the cash dividends to be paid was NT$959,395,340; a cash dividend of NT$0.69 would be paid per share. After approved at the shareholders' meeting, it is planned to invite the shareholders' meeting to authorize the Board of Directors to set the base date for ex-dividends. 2. In the future, if there is a change in the number of outstanding shares, it is planned to authorize the Board of Directors to adjust the allocation ratio according to the total number approved by the the shareholders' meeting via resolution and the number of the Company's ordinary shares actually in circulation on the record date for ex-dividends; if the dividend allocated to shareholders is less than NT$1, the amount will be transferred to the Company's Employee Welfare Committee.
Resolution	The Company's shareholders present have total votes of 1,001,746,135, of which approval votes 976,971,614 (including electronic votes of 723,176,558), disapproval votes 451,225 (including electronic votes of 451,225), abstention votes/no votes 24,323,296 (including electronic votes of 18,545,725), and invalid votes 0; the approval votes account for 97.52%, over half of the total votes of the shareholders present. The proposal made by the Board of Directors was approved as it was.
Execution	On June 18, 2019, the Company announced that the ex-dividend date was July 22, 2019, and the payout of cash dividends was completed on August 15, 2019.

(2) Matters to be discussed

Proposal 1 Amendments to the Articles of Incorporation are proposed for discussion.	Proposal 1 Amendments to the Articles of Incorporation are proposed for discussion.
Explanation	1. In accordance with the latest amendment to the first paragraph of Article 392-1 of the Company Act, the Company may apply to the competent authorities for registration of the Company’s name in other languages. 2. Summary of amendments: A change from “President Securities Corp.” to “President Securities Corporation” has been proposed. 3. Please see appendicx for related information.
Resolution	The Company’s shareholders present have total votes of 1,001,746,135, of which approval votes 977,006,228 (including electronic votes of 723,211,172), disapproval votes 394,877 (including electronic votes of 394,877), abstention votes/no votes 24,345,030 (including electronic votes of 18,567,459), and invalid votes 0; the approval votes account for 97.53%, over half of the total votes of the shareholders present. The proposal made by the Board of Directors was approved as it was.
Proposal 2 In response to the official letter from the competent authorities, the procedures for acquiring or disposing of assets should be amended, which is put forward for discussion.
Explanation	1. Amended in accordance with the Financial Supervisory Commission Official Letter No. Zheng- Fa—1070341072. 2. The FSC issued an official letter on November 26, 2017 regarding amendments to the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies.” The Company has amended the relevant provisions of its procedures for acquiring or disposing of assets accordingly. 3. Please see appendicx for related information.
Resolution	The Company’s shareholders present have total votes of 1,001,746,135, of which approval votes 977,013,695 (including electronic votes of 723,218,639), disapproval votes 393,166 (including electronic votes of 393,166), abstention votes/no votes 24,339,274 (including electronic votes of 18,561,703), and invalid votes 0; the approval votes account for 97.53%, over half of the total votes of the shareholders present. The proposal made by the Board of Directors was approved as it was.

2019 Annual Report

III. Corporate Governance

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In order to comply with the standard regulations of the securities firm’s internal control system, amendments
Proposal 3
to the Regulations Governing Implementation of Endorsement are proposed for discussion.
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Proposal 3 In order to comply with the standard regulations of the securities firm’s internal control system, amendments to the Regulations Governing Implementation of Endorsement are proposed for discussion.	Proposal 3 In order to comply with the standard regulations of the securities firm’s internal control system, amendments to the Regulations Governing Implementation of Endorsement are proposed for discussion.

Explanation	1. In order to comply with the standard regulations of the securities firm’s internal control system and strengthen the supervision of subsidiaries, an amendment to the Company’s Regulations Governing Implementation of Endorsement has been proposed. 2. Please see appendicx for related information.
Resolution	The Company’s shareholders present have total votes of 1,001,746,135, of which approval votes 977,037,556 (including electronic votes of 723,242,500), disapproval votes 393,166 (including electronic votes of 393,166), abstention votes/no votes 24,315,413 (including electronic votes of 18,537,842), and invalid votes 0; the approval votes account for 97.53%, over half of the total votes of the shareholders present. The proposal made by the Board of Directors was approved as it was.

(3) Election matters

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Proposal An election of a director to full a vacancy on the 11th Board of Directors.
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Proposal An election of a director to full a vacancy on the 11th Board of Directors.	Proposal An election of a director to full a vacancy on the 11th Board of Directors.

Explanation	1. Director Kao, Shiow-ling resigned as a director of the Company on July 6, 2018, creating a vacancy on the Board of Director. An election is planned to fill the vacancy at the 2019 shareholders’ meeting. 2. An election for one director will be held. The term of office of the director will be from June 18, 2019 through June 20, 2021 when the term of the 11th Board of Directors expires. The election of the Company’s director will be based on a candidate nomination system; shareholders will be able to vote for one from the listed candidates. 3. The list of candidates for Directors and Independent Directors and their basic information approved by the Board of Directors. 4. The election procedure will follow the company’s rule. See appendix for reference. 5. Please vote accordingly.
Resolution	The director elected is account number: 42740; account name: Kai Nan Investment Co., Ltd.; Representative: Chen, Yi-Ling.

Note: Please refer to the Market Observatory Post System—Annual Reports and Shareholders Meetings (including depositary receipt information) for relevant appendices of the meeting.

President Securities Corporation

2. Major Resolutions during the Board of Directors Meetings in 2019 and to the Publish Date of the Annual Report: Executed according to the resolution of the Board of Directors Meeting.

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Meeting Item Resolution
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Meeting	Item	Resolution

2019.03.22 The 6th Board meeting of the 11th Board of Directors	1. Review of 2018 Business Report and Consolidated and Individual Financial Reports. 2. Proposal regarding 2018 Employees and Directors Bonus Distribution Ratio. 3. Proposal regarding 2018 Employees and Directors Bonus Allocation. 4. The proposal regarding appropriation of 0.5% profit after taxes for 2018 as special capital reserve. 5. Profit distribution of year 2018. 6. Submitted the Statement of the 2018 Internal Control System. 7. Disclosed qualitative information about risk management. 8. Application for signing GMRA of foreign bond with financial institutions. 9. Revised the Internal Control System of Information System Department. 10. Submitted the Overall Information Security Implementation Statement. 11. Amended the joint venture agreement and charter regarding the Jin Yuan President Securities Corporation Ltd.. 12. Periodic review and evaluation of the policy and structure for the remuneration of the senior executives and managers. 13. Changes in department supervisors. 14. Changes in managers. 15. Formulated the internal control system of conducting the discretionary investment business through trust while operating the securities investment consulting business by the head office. 16. Reduced the business area of Xin Taichung Branch. 17. The Xindian Branch terminated its business. 18. Amended the Articles of Incorporation. 19. Revised the Company’s money laundering and terrorist financing risk assessment report. 20. Submitted the statement of the Internal Control of anti-money laundering and counter-terrorist financing. 21. Amended Corporate Governance Best Practice Principles. 22. Accountant independence and competency evaluation. 23. Amended the Regulations Governing the Acquisition and Disposal of Assets. 24. Amended the Regulations Governing Implementation of Endorsement. 25. Applied for credit line for short-term loans from financial institutions. 26. Applied for credit line for short-term loans in foreign currencies from financial institutions for OSU. 27. Applied for foreign currencies interbank call loan limits from financial institutions. 28. Applied for credit line for short-term loans from financial institutions for overseas subsidiaries. 29. Adjusted the Company’s foreign currency risk limits upward. 30. Proposal regarding holding the General Shareholders Meeting of 2019. 31. Director by-election for the 11th Board of Directors. 32. Shareholders’ proposals and nominations for Director by-election in 2019. 33. Proposal regarding candidates nominated by the Board of Directors.	All Directors present voted in favor of the resolution without any objection.
2019.05.03 The 7th Board meeting of the 11th Board of Directors	1. Applied for conducting the business of creating customer ledgers of securities firms’ settlement accounts. 2. Amendments to the performance bonus for the Proprietary Trading Department. 3. Amendments to the performance bonus for the Financial Product Department. 4. The proposal regarding re-appointment and remuneration of consultants. 5. Establishment of a corporate governance officer position. 6. Changes in managers. 7. Applied for credit line for short-term loans from financial institutions. 8. Applied for credit line for short-term loans in foreign currencies from financial institutions for OSU. 9. Applied for credit line for short-term loans from financial institutions for overseas subsidiaries. 10. Retirement of the 12th redemption of treasury stocks. 11. Formulated a standard operating procedures for handling the Company’s Directors’ requests.	For proposal 1 to 4 and 6 to 11, all Directors present voted in favor of the resolution without any objection. For proposal 5, all Directors present (Assistant Vice President Chen, Nai-Chen avoided) voted in favor of the resolution without any objection.

2019 Annual Report

III. Corporate Governance

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Meeting Item Resolution
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Meeting	Item	Resolution

2019.06.18 The 8th Board meeting of the 11th Board of Directors	1. Revised the Internal Control System. 2. Application for launching structured products (capital guaranteed) with foreign- currency principal linked to foreign currency interest rate options 3. Applied for credit risk limit for carrying out derivative financial product transactions with financial institutions. 4. Amended the joint venture agreement and charter regarding the Jin Yuan President Securities Corporation Ltd.. 5. Increased the number of upstream securities firms in placing order on foreign securities on behalf of clients. 6. The Xinzhuang Branch terminated its business. 7. Changes in managers. 8. Amended the Directors Performance Evaluation Measures. 9. Proposal regarding the amount of bonuses distributed to managers and employees of 2018. 10. Changes in department supervisors. 11. The proposal regarding the Company’s representatives (managers) serving as Directors of investee enterprises. 12. Proposal for setting a base date for ex-dividends and adjusting the rate of shareholder dividends 13. Applied for foreign currencies interbank call loan limits from financial institutions.	All Directors present voted in favor of the resolution without any objection.

President Securities Corporation

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Meeting Item Resolution
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Meeting	Item	Resolution

2019.08.28 The 9th Board meeting of the 11th Board of Directors	1. Review of the 2019 semi-annual Individual Financial Statements and 2019 second quarter Consolidated Financial Statements. 2. Revised the Internal Control System. 3. Formulation of information security policy 4. Revision of the type and scope of business of the subsidiary PSC Venture Capital Corp. 5. Amendments to the business risk management rules of the Quantitative Trading Department 6. Amendments to the operating standards for OTC trading of derivative financial products 7. Application for the issuance of an ETN linked to the “TIP Enhanced Low Volatility High Dividend Total Return Index” 8. Application for the issuance of an ETN linked to the “STOXX CHINA A50 Return Index” 9. Application for the issuance of an ETN linked to the “MSCI USA Minimum Volatility Net Total Return Index” 10. Application for the issuance of an ETN linked to the “MSCI USA IMI Information Technology Net Total Return Index” 11. Applied for credit risk limit for carrying out derivative financial product transactions with financial institutions.\ 12. Proposal for the amount of a loan in the application for securities lending to KGI Securities 13. The Kuting Branch terminated its business. 14. The Xin Taoyuan Branch terminated its business. 15. The Fengyuan Branch terminated its business. 16. The Dunnan Branch expand its operation space. 17. Changes in managers. 18. Periodic review and evaluation of the policy and structure for the remuneration of the Directors. 19. Proposal for OSU organizational adjustment and changes of managerial officers 20. Proposal for managerial officers to serve concurrently as the directors of subsidiaries in which the Company has invested 21. Renewal of liability insurance for Directors and key personnel. 22. Revision of the Directions of the Company’s money laundering and terrorist financing. 23. Revision of the Procedure and Plans Regarding money laundering and terrorist financing. 24. Applied for credit line for short-term loans from financial institutions. 25. Applied for credit line for short-term loans in foreign currencies from financial institutions for OSU. 26. Applied for foreign currencies interbank call loan limits from financial institutions. 27. Applied for credit line for short-term loans from financial institutions for overseas subsidiaries.	All Directors present voted in favor of the resolution without any objection.
2019.11.05 The 10th Board meeting of the 11th Board of Directors	1. Application for the issuance of an ETN linked to the”iSTOXX China A 50 Daily Leverage Index’ 2. Application for the issuance of an ETN linked to the”iSTOXX China A 50 Daily Short Index” 3. Amendments to the internal control system for the operation of establishing ledger accounts 4. Changes in managers. 5. Proposal for the write-off of bad debt for 2019 6. Proposal for an increase in capital for President Capital Management Corp. 7. Applied for credit line for short-term loans from financial institutions. 8. Applied for credit line for short-term loans in foreign currencies from financial institutions for OSU. 9. Applied for credit line for short-term loans from financial institutions for overseas subsidiaries. 10. Proposal for the Chairman’s housing allowance	For proposal 1 to 9, all Directors present voted in favor of the resolution without any objection. For proposal 10, all Directors present (Chairman excluded) voted in favor of the resolution without any objection.

2019 Annual Report

III. Corporate Governance

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Meeting Item Resolution
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Meeting	Item	Resolution

2019.12.20 The 11th Board meeting of the 11th Board of Directors	1. Submitted the Audit Plan of 2019. 2. Revised the Internal Control System of Information System Department. 3. Set the 2020 risk limit for the Company as a whole and each department. 4. Application for the issuance of an ETN linked to the “TIP Customized Value Growth Total Return Index”. 5. Amendments to the OSU procedures for trading in foreign currency securities and other approved foreign-currency financial products. 6. Amended the operating procedures for the wealth management business. 7. Increased the number of upstream securities firms in placing order on foreign securities on behalf of clients. 8. Proposal for authorized personnel regarding cooperation and changes to overseas bond transactions. 9. Changes in managers. 10. Budget and operating plan of 2020. 11. Periodic review and evaluation of the policy and structure for the remuneration of the senior executives and managers. 12. Proposal for changes in the PSC employee shareholding trust. 13. Proposal for adjusting the profit bonus system. 14. Changes in department supervisors. 15. The proposal regarding the adjustments of Independent Directors’ remuneration. extempore motion: 1. Revision of the Chinese name of the indexes to which ETNs are linked.	For proposal 1 to 14, all Directors present voted in favor of the resolution without any objection. For proposal 15, all Directors present (Independent Directors excluded) voted in favor of the resolution without any objection.
2020.03.26 The 12th Board meeting of the 11th Board of Directors	1. Review of 2019 Business Report and Consolidated and Individual Financial Reports. 2. Proposal for acquisition of overseas equity held by PSBVI and liquidation of PSBVI. 3. Proposal for reversal of the special capital reserve balance. 4. Proposal regarding 2019 Employees and Directors Bonus Distribution Ratio. 5. Proposal regarding 2019 Employees and Directors Bonus Allocation. 6. Profit distribution of year 2019. 7. Convert retained earnings to capital. 8. Proposal regarding holding the General Shareholders Meeting of 2020. 9. Submitted the Statement of the 2019 Internal Control System. 10. Amendments to the policies and strategies of the principle of fair hospitality. 11. Application for the issuance of an ETN linked to the “TIP FactSet Taiwan 5G Total Return Index”. 12. Revised the Internal Control System of Information System Department. 13. Submitted the Overall Information Security Implementation Statement. 14. Revised the Risk Management Measures.	All Directors present voted in favor of the resolution without any objection.

President Securities Corporation

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Meeting Item Resolution
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Meeting	Item	Resolution

2020.03.26 The 12th Board meeting of the 11th Board of Directors	15. Disclosed qualitative information about risk management. 16. Amendments to the Management Crisis Response Policy. 17. Abolition of the Company’s procedures for derivative transactions. 18. Applied for credit risk limit for carrying out derivative financial product transactions with financial institutions. 19. Amendments to matters to be followed by OSU in advertising and solicitation activities. 20. Amendments to the OSU customer acceptance standards and the Know-Your Customer (KYC) review procedures. 21. Amended the operating procedures for the wealth management business. 22. Increased the number of upstream securities firms in placing order on foreign securities on behalf of clients. 23. Proposal for the loan amount in the application for securities lending to Cathay Securities Corporation. 24. Changes in managers. 25. Establish a Ethical Corporate Management promotion team. 26. Proposal for people in authority (managerial officers) to serve as the directors and supervisors concurrently at subsidiaries in which the Company has invested. 27. Proposal for people in authority (managerial officers) to serve as the directors and supervisors concurrently at joint ventures as well as for authorizing the appointment of independent directors. 28. Amended the Articles of Incorporation. 29. Proposal for amendments to the rules governing Board Meetings. 30. Proposal for amendments to the Audit Committee Charter. 31. Proposal for amendments to the procedures for handling the Company’s internal material information. 32. Revision of the Directions of the Company’s money laundering and terrorist financing. 33. Proposal for updating of the report on the Company’s anti-money laundering and anti-terrorist-financing risk assessment. 34. Proposal for formulation of the Company’s compliance risk evaluation report. 35. Submitted the statement of the Internal Control of anti-money laundering and counter-terrorist financing. 36. Accountant independence and competency evaluation. 37. Applied for credit line for short-term loans from financial institutions. 38. Applied for credit line for short-term loans in foreign currencies from financial institutions for OSU. 39. Applied for foreign currencies interbank call loan limits from financial institutions. 40. Applied for credit line for short-term loans from financial institutions for overseas subsidiaries. 41. Status of the implementation of the principle of fair hospitality in 2019.	All Directors present voted in favor of the resolution without any objection.

2019 Annual Report

III. Corporate Governance

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Meeting Item Resolution
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Meeting	Item	Resolution

2020.05.07 The 13th Board meeting of the 11th Board of Directors	1. Revised the Internal Control System. 2. Revised the procedures for acquiring or disposing of assets. 3. Revised the Internal Control System for electronic account opening. 4. Changes in managers. 5. Search of backup office site for futures proprietary merchants. 6. Proposal regarding 2019 Manager and Employees Bonus Allocation. 7. Proposal regarding the discharge of the Company’s representatives (managers) serving as Directors of investee enterprises. 8. The nomination of the independent directors of Jin Yuan President Securities Corporation Ltd. 9. Relieve the non-compete limitation for the directors. 10. Reviced the minute of 2020 shareholder meeting. 11. Dismiss of Xiamen office. 12. Applied for foreign currencies interbank call loan limits from financial institutions. 13. Applied for credit line for short-term loans in foreign currencies from financial institutions for OSU. 14. Applied for credit line for short-term loans from financial institutions for overseas subsidiaries.	For proposal 1 to 8 and 10 to 14, all Directors present voted in favor of the resolution without any objection. For proposal 9, all Directors present (Chairman excluded) voted in favor of the resolution without any objection.

M. Document or written statement that states different opinions by board members or supervisors against the approved major resolutions by the board meeting in recent fiscal period and to the publish date of the annual report: None.
N. Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit, Corporate Governance Officer and R&D: None.

IV. Information Regarding the Company’s Audit Fee and Independent Auditor

A. Range of Auditing Fee

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Period Covered by
Accounting Firm Name of CPA Remarks
CPA’s Audit
Lin, Se-Kai
Attestation of Financial Statements
Hsiao, Chin-Mu
PwC Taiwan 2019.01.01- 2019.12.31
Chen, Li-Yuan Attestation of Tax Returns
Unit: NT$ thousands
Fee Items Non-audit
Audit Fee Total
Fee Range Fee
Under NT$ 2,000 0 1,400 1,400
NT$2,000 ~ NT$4,000 0 0 0
NT$4,000 ~ NT$6,000 0 0 0
NT$6,000 ~ NT$8,000 6,230 0 6,230
NT$8,000 ~ NT$10,000 0 0 0
Over NT$10,000 0 0 0
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President Securities Corporation

B. Disclosure of Auditing Fee

Unit: NT$ thousands

Accounting Firm	Name of CPA	Audit Fee	Non-audit Fee	Non-audit Fee	Non-audit Fee	Non-audit Fee	Non-audit Fee	Period Covered by CPA’s Audit	Remarks
			System of Design	Company Registration	Human Resource	Other	Subtotal
PwC Taiwan	Lin, Se-Kai Hsiao, Chin-Mu	5,250	0	20	0	1,380 (Note)	1,400	2019	Attestation of Financial Statements
	Chen, Li-Yuan	980							Attestation of Tax Returns

Note: Non-audit expenses include CSR report verification and counselling, certification service for salary information checklist for non-executive full-time employees, financial indicator description, and transfer pricing profit indicator analysis.

C. The amount of non-auditing relevant fees charged by the appointed independent auditors and the related parties reach 25 % of the Company’s annual auditing expenses: Not Applicable.

D. If there is any change in the appointed in dependent auditors and the Company’s annual auditing expenses decreased simultaneously, information regarding the amount, percentage and reasons for the decrease in auditing expenses shall be disclosed: Not Applicable.

E. Auditing expenses decreased by 15% in comparison to the previous year, information regarding the amount, percentage and reason for the decrease in auditing expenses shall be disclosed: Not Applicable.

V. Replacement of CPA:

According to the Statements on Auditing Standards No.46, the CPA shall be replaced on a regular basis. Starting from the beginning of 2020, the financial report CPA Hsiao, Chin-Mu was replaced with Lo, Chiao-Sen.

A. Regarding the Former CPA

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Replacement Year 2020
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Replacement Year	2020	2020	2020	2020

Replacement reasons and explanations	PricewaterhouseCoopers (PwC) Taiwan job rotation.
Describe whether the Company terminated or the CPA did not accept the appointment	Parties		CPA	The Company
	PricewaterhouseCoopers (PwC) Taiwan job rotation		Attestation of Financial Statements: Lin, Se-Kai Hsiao, Chin-Mu	PSC
Other issues (except for unqualified issues) in the audit reports within the last two years		None
Differences with the company	Yes	-	Accounting principles or practices
		-	Disclosure of Financial Statements
		-	Audit scope or steps
		-	Others
	None	V
		Remarks/specify details: None
Other Revealed Matters (The provisions of Item 1-4 of Subsection 6 of Article 10 of the Guidelines shall be disclosed.)		None

2019 Annual Report

III. Corporate Governance

B. Regarding the Successor CPA

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Name of accounting firm PricewaterhouseCoopers (PwC) Taiwan
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Name of accounting firm	PricewaterhouseCoopers (PwC) Taiwan
Name of CPA	Attestation of Financial Statements: Lin, Se-Kai andLo, Chiao-Sen.
Year of appointment	2020
Consultation results and opinions on accounting treatments or principles with respect to specified transactions and the company's financial reports that the CPA might issue prior to the engagement.	None
Succeeding CPA’s written opinion of disagreement toward the former CPA	None

C. The official letter from former CPA in response to the provisions of Item 1 and 2-3 of Subsection 5 of Article 10 of the Guidelines: None.

VI. If the Company’s Chairman, President, or managers responsible for financial and accounting affairs have held any position in the accounting firm or its affiliates during the past year, all relevant information should be disclosed: None.

VII. Net Change in shareholdings and in shares pledged by directors, supervisors, management, and shareholders holding more than a 10% share in the Company.

Unit: Share

			2019	2019	As of Mar. 31, 2020	As of Mar. 31, 2020
Title	Name		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Director Kai Nan Investment Co., Ltd.		0 0 0 0
Director Canking Investment Co., Ltd.		0 0 0 0
Director Leg Horn Investment Co., Ltd.		0 0 0 0
Director Hui Tung Investment Co., Ltd.		0 0 0 0
Director Ta Le Investment Holding Co., Ltd.		0 0 0 0
Director Lee, Shy-Lou		0 0 0 0
Director Duh, Bor-Tsang		0 0 0 0
Director Juang, Jing-Yau		0 0 0 0
Director China F.R.P. Corp.		0 0 267,585 0
Independent Director Pai, Chun-Nan		0 0 0 0
Independent Director Song, Yung-Fong		0 0 0 0
Independent Director Horng, Yuan-Chuan		0 0 0 0
Independent Director Liang, Yann-Ping		0 0 0 0
President Tsai, Sen-Bu		0 0 0 0
Proprietary Trading Department Executive Vice President Yang , Kai-Chih		0 0 0 0
Finance Department Vice President An, Chi-Li		0 0 0 0
Quantitative Trading Department Vice President Huang, Jung-Jen		0 0 0 0
Financial Product Department Vice President Pu, Chien-Heng		0 0 0 0
Capital Market Department Sales Vice President Chueh, Chih-Chung		0 0 0 0
President Office Project Vice President Lin, Chung-Heng		0 0 0 0

President Securities Corporation

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2019 As of Mar. 31, 2020
Title Name Holding Pledged Holding Holding Pledged Holding
Increase Increase Increase Increase
(Decrease) (Decrease) (Decrease) (Decrease)
Auditing Office Chief
Huang, Sha-Mei 0 0 0 0
Auditor
Administration Department
Senior Assistant Vice Yu, Hung-Chieh 0 0 0 0
President
Fixed Income Department
Senior Assistant Vice Yeh, Ming-Chieh 0 0 0 0
President
Settlement & Clearing
Department Assistant Vice Wu, Sheng-Yu 0 0 0 0
President
Compliance Division
Hung, Ying-Che 0 0 0 0
Assistant Vice President
President Office Corporate
Governance Assistant Vice Chen, Nai-Chen 0 0 0 0
President
Mainland China Business
Division Assistant Vice Chen, Long-Chien 0 0 0 0
President
Finance Department
Lu, Chia-Chen 0 0 -2,343 0
Assistant Vice President
Capital Market Department
Chang, Chin-Yung 0 0 0 0
Assistant Vice President
Capital Market Department
Tsai, Pao-Sheng 0 0 0 0
Assistant Vice President
Finance Department
Su, Wei-Lun 0 0 0 0
Assistant Vice President
Financial Product
Department Assistant Vice Chang, Chung-Lin 0 0 0 0
President
Shareholder Services
Department Assistant Vice Chang,Shao-Ping 0 0 0 0
President
Information System
Department Assistant Vice Lin, Jung-Hui 0 0 0 0
President
Quantitative Trading
Department Assistant Vice Lee, Chien-Hsin 0 0 0 0
President
Quantitative Trading
Department Assistant Vice Chien, Pang-Yen 0 0 0 0
President
Capital Market Department
Chen, Chia-Chang 0 0 0 0
Assistant Vice President
Risk Control Office
Chang, Ping-Chuan 0 0 0 0
Senior Manager
Brokerage Department
Senior Assistant Vice Chang, Hung-Shuo 0 0 0 0
President
Brokerage Department
Lin, Li-Lin 0 0 0 0
District Supervisor
Brokerage Department
Chien, Chia-Nan 0 0 0 0
District Supervisor
Brokerage Department
Liao, Chen-Yin 0 0 0 0
Vice District Supervisor
Brokerage Department
Chiu, Shyh-Tyng -6,000 0 0 0
Assistant Vice President
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2019 Annual Report

III. Corporate Governance

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----- Start of picture text -----

2019 As of Mar. 31, 2020
Title Name Holding Pledged Holding Holding Pledged Holding
Increase Increase Increase Increase
(Decrease) (Decrease) (Decrease) (Decrease)
Wealth Management and
Trust Department Assistant Chu, Po-Lin 0 0 0 0
Vice President
Corporate Client Dept.
Chang, Hung-Shuo 0 0 0 0
Manager
Corporate Client Dept.
Chen, Min-Ping 0 0 0 0
Assistant Vice President
Senior Manager Tsai, Chen-Yuan 0 0 0 0
Global Institutional Service
Chung, Chih-Hung 0 0 0 0
Dept. Manager
Tunghsing Equity
Chen, Chih-Lung 0 0 0 0
Department Manager
Tunghsing Equity
Tsai, Shu-Mei 0 0 0 0
Department Manager
Kaohsiung Branch
Wu, Huan-Chung 0 0 0 0
Manager
Dunnan Branch Manager Chiang, Chia-Jung 0 0 0 0
Dunnan Branch Manager Sung, Yu-Chih 0 0 0 0
Zhongli Branch Manager Chiang, Tsong-Shyan 0 0 0 0
Chengzhong Branch
Chiu, Hsiao-Chi 0 0 0 0
Manager
Chengzhong Branch
Chao, Cheng 0 0 0 0
Manager
Tainan Branch Manager Hsieh,Chia-Hsi 0 0 0 0
Taichung Branch Manager Liao, Chen-Yin 0 0 0 0
Taichung Branch Manager Fang, Wu-Hsin 0 0 0 0
Hsinchu Branch Manager Lee, Chin-Yi 0 0 0 0
Chiayi Branch Manager Tai, Kuo-Chun 0 0 0 0
Pingtung Branch Manager Wang, Chien-Min 0 0 0 0
Keelung Branch Manager Yu, Ping-Tse 0 0 0 0
Yonghe Branch Manager Chang, Chih-Hsiang 0 0 0 0
Xin Taichung Branch
Yang, Kuo-Chen 0 0 0 0
Manager
Hsinying Branch Manager Hsiao, Po-Ming 0 0 0 0
Changhua Branch Manager Yu, Fu-Tsun 0 0 0 0
Taoyuan Branch Manager Hsiao, Ju-un 0 0 0 0
Yuanlin Branch Manager Chen, Hung-Tsai 0 0 0 0
Sanchung Branch Manager Chang,Shih-Min 0 0 0 0
Sanchung Branch Manager Kao, Ming-Chou 0 0 0 0
Shilin Branch Manager Hsu, Fu-Chiang 0 0 0 0
Panchiao Branch Manager Lo, Shih-Hong 0 0 0 0
Sanduo Branch Manager Tsai, Yi-Chen 0 0 0 0
Szichih Branch Manager Huang, Ming-Fa 0 0 0 0
Ilan Branch Manager Chiang, Jen-Chu 0 0 0 0
Nanjing Branch Manager Chou, Da-Kuang 0 0 0 0
Kinmen Branch Manager Chung, Hui-Ju 0 0 0 0
Tucheng Branch Manager Chen, Chun-Ming 0 0 0 0
Songjiang Branch Manager Tai, Hung-Da 0 0 0 0
Songjiang Branch Manager Wu, Han-Ching 0 0 0 0
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President Securities Corporation

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2019 As of Mar. 31, 2020
Title Name Holding Pledged Holding Holding Pledged Holding
Increase Increase Increase Increase
(Decrease) (Decrease) (Decrease) (Decrease)
Neihu Branch Manager Hu, Wen-Chieh 0 0 0 0
Renai Branch Manager Yang, Chun-Chen 0 0 0 0
Pingzhen Branch Manager Li, Shu-Jung 0 0 0 0
Zhunan Branch Manager Su,Yung-Sheng 0 0 0 0
Offshore Securities Unit
Cheng, Yao-Tung 0 0 0 0
Branch Manager
10% Shareholder Uni-President Enterprises Corp 0 0 0 0
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VIII. Information Disclosing the Relationship between any of the Company’s Top Ten Shareholders

2020.4.21

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Shareholding
The relationship between any of the
Shareholding Spouse & Minor by Nominee
Name Arrangement Company’s Top Ten Share holders Remarks
Shares % Shares % Shares % Name Relation
1. President Chain
Store Corp. Investees for whom
Uni-President valuation is conducted
Enterprises Corp. 393,586,559 28.68 0 0 0 0 2. Kai Nan under the equity NA
Investment Co., method
Ltd.
Lo, Chih-Hsien
Kao, Shiow- Ling
Delegate of
0 0 3,788,631 0.28 0 0 Delegate of Kao Spouse NA
Uni-President
Chyuan Inv. Co., Ltd.
Enterprises Corp.
President Securities
Corporation - Trust 45,766,703 3.33 0 0 0 0 NA NA NA
Account
Kai Nan Investment Uni-President
39,831,460 2.90 0 0 0 0 Note 2 NA
Co., Ltd. Enterprises Corp.
Lo, Chih-Hsien
Kao, Shiow- Ling
Delegate of Kai
0 0 3,788,631 0.28 0 0 Delegate of Kao Spouse NA
Nan Investment
Chyuan Inv. Co., Ltd.
Co., Ltd.
President Chain Uni-President
38,221,259 2.79 0 0 0 0 Note 2 NA
Store Corp. Enterprises Corp
Lo, Chih-Hsien
Kao, Shiow- Ling
Delegate of
0 0 3,788,631 0.28 0 0 Delegate of Kao Spouse NA
President Chain
Chyuan Inv. Co., Ltd.
Store Corp.
Eternal Materials
34,252,383 2.50 0 0 0 0 NA NA NA
Co., Ltd.
Tainan Spinning Hsin Yung Hsing
32,141,877 2.34 0 0 0 0 Note 3 NA
Co., Ltd. Investment Co., Ltd.
Kao Chyuan Inv.
31,098,066 2.27 0 0 0 0 NA NA NA
Co., Ltd.
Kao, Shiow- Ling Lo, Chih-Hsien
Delegate of Kao Delegate of Uni-
3,788,631 0.28 0 0 0 0 Spouse NA
Chyuan Inv. Co., President Enterprises
Ltd. Corp.
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2019 Annual Report

III. Corporate Governance

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Shareholding
The relationship between any of the
Shareholding Spouse & Minor by Nominee
Name Arrangement Company’s Top Ten Share holders Remarks
Shares % Shares % Shares % Name Relation
Dr. C. Y. Kao’s
Non-Profit
Foundation
of Culture & 17,887,785 1.30 0 0 0 0 NA NA NA
Education (In
Memory of His
Mother)
Canking
Investment Co., 16,918,851 1.23 0 0 0 0 NA NA NA
Ltd.
Hsin Yung Hsing
Tainan Spinning Co.,
Investment Co., 14,811,318 1.08 0 0 0 0 Note 3 NA
Ltd.
Ltd.
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Note 1: The shareholding ratio was calculated based on the 1,390,428,028 shares of the share capital of President Securities Corp.

Note 2: Affiliates of Uni-President Enterprises Corp.

Note 3: Hsin Yung Hsing Investment Co., Ltd. is director of Tainan Spinning Co., Ltd.

IX. Ownership of Shares in Affiliated Enterprises

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As of March 31, 2020
Ownership by the Direct or Indirect Ownership by
Total Ownership
Affiliated Enterprises Company Directors, Supervisors, Managers
Shares % Shares % Shares %
President Futures Co., LTD 63,817,303 96.69 0 0 63,817,303 96.69
President Capital Management Corp. 30,000,000 100.00 0 0 30,000,000 100.00
President Securities (Hong Kong) Limited 10,000,000 5.19 182,600,000 94.81 192,600,000 100.00
President Securities (BVI) Limited 67,746,000 100.00 0 0 67,746,000 100.00
Uni-President Asset Management Corporation 14,904,630 42.46 12,000 0.03 14,916,630 42.49
President Insurance Agency Co., Ltd. 1,000,000 100.00 0 0 1,000,000 100.00
PSC Venture Capital Investment Company Limited 30,000,000 100.00 0 0 30,000,000 100.00
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X. Name and position of the employees with the top ten amounts of bonuses as well as the total amounts of the top ten bonuses

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Unit: NT$ thousands
Name Title Bonuses (Note)
Tsai, Sen-Bu President
An, Chi-Li Vice President
Lee, Wen-Sheng Vice President
Lin, Chung-Heng Project Vice President
Lin, Li-Lin District Assistant Vice President
1,147
Chung, Chih-Hung District Assistant Vice President
Kuo, Li-Yun Vice President
Chang, Hung-Shuo Senior Assistant Vice President
Huang, Jun-Jen Vice President
Yang, Kai-Chih Executive Vice President
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Note 1: Receive employee bonuses for 2018 in 2019.

Note 2: The sequence above is arranged based on the number of strokes of the last name in Chinese.

President Securities Corporation

XI. Directors and Corporate Auditors Training

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Date of
Title Name Date Organization Course Credit
Inauguration
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Governance
”The Rise of the Innovative
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Lin, Kuan-Chen
Management”
Delegate of Kai
Chairman 2018.06.21
Nan Investment
“The New Version of the
Co., Ltd
Blueprint of Corporate
Taiwan Institute of
2019.04.26 Governance and Analysis of 3
Directors
Latest Amendments to the
Company Act”
“2019 Economic Outlook and
Taiwan Institute of
2019.01.25 Major Decisions of the Board 3
Directors
of Directors”
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Liu, Tsung-Yi
Governance
Delegate of Kai
Director 2018.06.21
Nan Investment
”The Rise of the Innovative
Co., Ltd.
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Management”
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Governance
”The Rise of the Innovative
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Chen, Kuo-Hui
Management”
Delegate of Kai
Director 2018.06.21
Nan Investment
“The New Version of the
Co., Ltd.
Blueprint of Corporate
Taiwan Institute of
2019.04.26 Governance and Analysis of 3
Directors
Latest Amendments to the
Company Act”
“2019 Economic Outlook and
Taiwan Institute of
2019.01.25 Major Decisions of the Board 3
Directors
of Directors”
”The Rise of the Innovative
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Management”
Hsieh Hong, Hui-
“The New Version of the
Tzu
Blueprint of Corporate
Director Delegate of Kai 2018.06.21 Taiwan Institute of
2019.04.26 Governance and Analysis of 3
Nan Investment Directors
Latest Amendments to the
Co., Ltd.
Company Act”
“2019 Economic Outlook and
Taiwan Institute of
2019.01.25 Major Decisions of the Board 3
Directors
of Directors”
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2019 Annual Report

III. Corporate Governance

==> picture [542 x 728] intentionally omitted <==

----- Start of picture text -----

Date of
Title Name Date Organization Course Credit
Inauguration
”The Rise of the Innovative
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Lu, Li-An Management”
Delegate of Kai
Director 2018.06.21
Nan Investment “The New Version of the
Co., Ltd. Blueprint of Corporate
Taiwan Institute of
2019.04.26 Governance and Analysis of 3
Directors
Latest Amendments to the
Company Act”
The Legal Matters that the
Board Should Understand in
Taiwan Corporate
the Supervision of Business
2019.09.24 Governance 3
Activities: Be Careful not to
Association
Commit Concerted Action by
Accident
Prevention of Money
Chen, Ching-Yi 2019.08.28 Taiwan Institute of Laundering and Insider 3
Delegate of Kai Directors Trading for Stable Corporate
Director 2019.06.18
Nan Investment Governance
Co., Ltd.
Taiwan Corporate The Roles and Responsibilities
2019.07.26 Governance of Directors, Supervisors, and 3
Association Managerial Officers
“2019 Annual Meeting
Taiwan Institute of of the Taiwan Institute of
209.06.26 3
Directors Directors—A+ Companies X
Shareholder Value”
Taiwan Corporate Legal Due Diligence of
2019.09.27 Governance Business M&A and Business 3
Association Contract Introduction
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Chen, Yi-Ling
Governance
Delegate of Kai
Director 2019.06.18
Nan Investment
Corporate Governance and
Co., Ltd. Taiwan Corporate
Practical Operations of
2019.06.21 Governance 3
the Board of Directors and
Association
Functional Committees
Taiwan Corporate
How Directors Maintain Due
2019.06.21 Governance 3
Diligence and Remain Loyal
Association
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Teng, Wen-Hwi
Governance
Delegate of Kai
Director 2018.06.21
Nan Investment
”The Rise of the Innovative
Co., Ltd.
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Management”
“How to Apply Big Data
Taiwan Securities
2019.11.20 Analysis to the Management 3
Association
Lee, Che-Ming of Corporate Operations”
Delegate of Hui
Director 2018.06.21
Tung Investment Prevention of Money
Taiwan Corporate
Co., Ltd. Laundering and Insider
2019.08.28 Governance 3
Trading for Stable Corporate
Association
Governance
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President Securities Corporation

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----- Start of picture text -----

Date of
Title Name Date Organization Course Credit
Inauguration
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Chang, Ming-Chen
Governance
Delegate of Leg
Director 2018.06.21
Horn Investment
”The Rise of the Innovative
Co., Ltd.
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Management”
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Tu, Li-Yang
Governance
Delegate of Ta
Director 2018.06.21
Le Investment
”The Rise of the Innovative
Holding Co., Ltd.
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Management”
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Lee, Shu-Fen Governance
Director Delegate of China 2018.06.21
F.R.P. Corp. ”The Rise of the Innovative
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Management”
“Taiwan Information
Taiwan Securities Disclosure System and Legal
2019.11.07 3
Association Liability for False Financial
Reports”
Director Duh, Bor-Tsang 2018.06.21
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Governance
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Governance
Director Lee, Shy-Lou 2018.06.21
”The Rise of the Innovative
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Management”
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Governance
Director Juang, Jing-Yau 2018.06.21
”The Rise of the Innovative
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Management”
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Governance
Independent
Liang, Yann-Ping 2018.06.21
Director
”The Rise of the Innovative
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Management”
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2019 Annual Report

==> picture [542 x 335] intentionally omitted <==

----- Start of picture text -----

Date of
Title Name Date Organization Course Credit
Inauguration
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Governance
Independent
Pai, Chun-Nan 2018.06.21
Director
”The Rise of the Innovative
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Management”
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Governance
Independent
Song, Yung-Fong 2018.06.21
Director
”The Rise of the Innovative
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Management”
Prevention of Money
Taiwan Institute of Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate
Governance
Independent Horng, Yuan-
2018.06.21
Director Chuan
”The Rise of the Innovative
Taiwan Institute of Economy—Transformation
2019.05.03 3
Directors and Challenges in Business
Management”
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XII. Manager Learning

==> picture [541 x 320] intentionally omitted <==

----- Start of picture text -----

Title Name Date Organization Credit Course
Taiwan Institute of Prevention of Money Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate Governance
”The Rise of the Innovative Economy—
Taiwan Institute of
2019.05.03 3 Transformation and Challenges in Business
Directors
Management”
Chairman Lin, Kuan-Chen
“The New Version of the Blueprint of Corporate
Taiwan Institute of
2019.04.26 3 Governance and Analysis of Latest Amendments
Directors
to the Company Act”
Taiwan Institute of “2019 Economic Outlook and Major Decisions
2019.01.25 3
Directors of the Board of Directors”
Taiwan Institute of Prevention of Money Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate Governance
President Tsai, Sen-Bu
”The Rise of the Innovative Economy—
Taiwan Institute of
2019.05.03 3 Transformation and Challenges in Business
Directors
Management”
Taiwan Institute of Prevention of Money Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate Governance
Executive
Vice Yang, Kai-Chih
President Taiwan Institute of ”The Rise of the Innovative Economy—
2019.05.03 3 Transformation and Challenges in Business
Directors
Management”
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2019 Annual Report

==> picture [541 x 359] intentionally omitted <==

----- Start of picture text -----

Title Name Date Organization Credit Course
”The Rise of the Innovative Economy—
Vice Taiwan Institute of
Lee, Wen-Sheng 2019.05.03 3 Transformation and Challenges in Business
President Directors
Management”
Taiwan Institute of Prevention of Money Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate Governance
Vice
An, Chi-Li
President ”The Rise of the Innovative Economy—
Taiwan Institute of
2019.05.03 3 Transformation and Challenges in Business
Directors
Management”
Vice Taiwan Institute of Prevention of Money Laundering and Insider
Huang, Jun-Jen 2019.08.28 3
President Directors Trading for Stable Corporate Governance
Vice Taiwan Institute of Prevention of Money Laundering and Insider
Kuo, Li-Yun 2019.08.28 3
President Directors Trading for Stable Corporate Governance
Taiwan Institute of Prevention of Money Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate Governance
Vice
Pan, Chun-Hsien
President ”The Rise of the Innovative Economy—
Taiwan Institute of
2019.05.03 3 Transformation and Challenges in Business
Directors
Management”
Taiwan Institute of Prevention of Money Laundering and Insider
2019.08.28 3
Directors Trading for Stable Corporate Governance
Chief
Huang, Sha-Mei
Auditor ”The Rise of the Innovative Economy—
Taiwan Institute of
2019.05.03 3 Transformation and Challenges in Business
Directors
Management”
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2019 Annual Report

IV. Capital Structure

I. Shareholders’ equity

A. Source of Capital

Types of shares issued in the most recent year prior to the publication date of this annual report

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Authorized Share Capital Capital Stock Remark
Month/ Issue Price
Capital Increase
Year (Per Share) 1,000 Amount (NT$ 1,000 Amount (NT$ Sources of
by Assets Other Other
shares thousands) shares thousands) Capital
than Cash
Apr- Treasury Stock
10 1,500,000 15,000,000 1,185,706 11,857,062 None Note 1
2009 Retired
Aug- Capital Increase
10 1,500,000 15,000,000 1,231,933 12,319,334 None Note 2
2010 by Earning
Aug- Capital Increase
10 1,500,000 15,000,000 1,304,646 13,046,456 None Note 3
2011 by Earning
Dec- Treasury Stock
10 1,500,000 15,000,000 1,284,582 12,845,816 None Note 4
2011 Retired
Aug- Capital Increase
10 1,500,000 15,000,000 1,323,119 13,231,191 None Note 5
2012 by Earning
Mar- Treasury Stock
10 1,500,000 15,000,000 1,303,796 13,037,961 None Note 6
2016 Retired
May- Treasury Stock
10 1,500,000 15,000,000 1,295,248 12,952,481 None Note 7
2016 Retired
July- Capital Increase
10 1,500,000 15,000,000 1,335,666 13,356,657 None Note 8
2016 by Earning
Aug- Capital Increase
10 1,500,000 15,000,000 1,390,428 13,904,280 None Note 9
2017 by Earning
May- Treasury Stock
10 1,500,000 15,000,000 1,372,390 13,723,900 None Note 10
2019 Retired
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Note 1: Approved by the Financial Supervisory Commission Jin Kuan Cheng3 Tzu No.0980003793 on January 23, 2009.

Note 2: Approved by the Financial Supervisory Commission Jin Kuan Cheng1 Tzu No.0990037293 on July 19, 2010.
Note 3: Approved by the Financial Supervisory Commission Jin Kuan Cheng1 Tzu No.1000033006 on July 15, 2011.
Note 4: Approved by the Financial Supervisory Commission Jin Kuan Cheng1 Tzu No.0970064519 on November 24, 2008 and approved by the Financial Supervisory Commission Jin Kuan Cheng1 Tzu No.1010002095 on January 18, 2012 for the capital change.
Note 5: Approved by the Financial Supervisory Commission Jin Kuan Cheng1 Tzu No.1010030875 on July 12, 2012.
Note 6: Approved by the Financial Supervisory Commission Jin Kuan Cheng Jiao Tzu No.1040048944 on November 23, 2015.
Note 7: Approved by the Financial Supervisory Commission Jin Kuan Cheng Jiao Tzu No.1050010487 on March 31, 2016.
Note 8: Effective after reporting to the Financial Supervisory Commission on July 5, 2016 and approved by Ministry of Economic Affairs Jin So Sun Tzu No.10501197070 on August 10, 2016.
Note 9: Effective after reporting to the Financial Supervisory Commission on July 3, 2017 and approved by Ministry of Economic Affairs Jin So Sun Tzu No.10601121960 on August 28, 2017.
Note 10: Approved by the Financial Supervisory Commission Jin Kuan Cheng Jiao Tzu No.1080305980 on March 5, 2019.
Note 11: As of May 31, 2020, there are no cases where the shares are issued below the par value, and nothing other than cash is used as payments and private placement.

1. Type of Stock

Unit: Share

Type of Stock		Authorized Share Capital	Authorized Share Capital	Authorized Share Capital	Remark
		Issued Shares (Note)	Unissued Shares	Total
Common Stock	1,372,390,028 127,609,972 1,500,000,000 Listed on TWSE

President Securities Corporation

Shelf Registration: None.

B. Structure of Shareholders

As of April 21, 2020

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Structure of Foreign
Shareholders Government Financial Other Personal Institutions
Institutional Total
Agencies Institutions Shareholders and Personal
Quantity Shareholders Shareholders
Number of Holders 0 0 164 39,946 206 40,316
Shares 0 0 749,368,911 480,474,434 142,546,683 1,372,390,028
% 0 0 54.6% 35.1% 10.3% 100%
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C. Distribution Profile of Share Ownership

1. Common Shares

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As of April 21, 2020
Shareholders Ownership Number of
Ownership Ownership (%)
(Unit:Share) Shareholders
1 ~ 999 22,370 2,044,467 0.149
1,000 ~ 5,000 9,275 21,370,726 1.557
5,001 ~ 10,000 2,895 21,792,558 1.558
10,001 ~ 15,000 1,514 18,681,789 1.361
15,001 ~ 20,000 831 14,742,936 1.074
20,001 ~ 30,000 877 21,896,324 1.595
30,001 ~ 40,000 454 15,855,592 1.155
40,001 ~ 50,000 356 16,319,241 1.189
50,001 ~ 100,000 771 55,095,361 4.015
100,001 ~ 200,000 443 62,358,573 4.544
200,001 ~ 400,000 279 76,774,052 5.594
400,001 ~ 600,000 85 41,261,919 3.007
600,001 ~ 800,000 38 25,450,371 1.854
800,001 ~ 1,000,000 38 34,302,327 2.499
Over 1,000,001 90 944,443,792 68.817
Total 40,316 1,372,390,028 100.000
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2. Preferred Shares: None.

D. Major Shareholders

As of April 21, 2020

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Shareholding Shareholders Number of Shares Ownership (%)
Uni-President Enterprises Corp. 393,586,559 28.678
President Securities Corporation - Trust Account 45,766,703 3.334
Kai Nan Investment Co., Ltd. 39,831,460 2.902
President Chain Store Corp. 38,221,259 2.785
Eternal Chemical Co., Ltd. 34,252,383 2.495
Tainan Spinning Co., Ltd. 32,141,877 2.342
Kao Chyuan Investment Co., Ltd. 31,098,066 2.265
Dr. C. Y. Kao’s Non-Profit Foundation of Culture &
17,887,785 1.303
Education (In Memory of His Mother)
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2019 Annual Report

IV. Capital Structure

Shareholding Shareholders	Number of Shares	Ownership (%)
Canking Investment Co., Ltd. 16,918,851 1.232
Hsin Yung Hsing Investment Co., Ltd. 14,811,318 1.079

Note: The shareholding ratio was calculated based on the 1,390,428,028 shares of the share capital of President Securities Corp.

E. Market Price Per Share, Net Value, Earnings & Dividends for Latest Two Years

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Years
2018 2019 2020Q1
Item
Highest 14.5 14.6 14.95
Market Price
Per Share Lowest 10.85 11.8 10.65
(Note 1)
Average 12.97 13.38 13.65
Before Distribution 18.44 19.455 18.784
Net Worth
Per Share
- - -
After Distribution (Note 2)
Weighted Average Shares
1,390,428 1,373,457 1,372,390
(thousand shares)
Earnings Per
Share Before Adjustment 0.87 1.72 -0.673
Earnings
Per Share
- - -
After Adjustment
Cash Dividends (NT$) 0.69 1.0 -
Retained Earnings - 0.2 -
Stock
Dividends
Dividends Additional Paid-in
Per Share - - -
Capital
Accumulated Undistributed
Dividend - - -
Price/Earnings Ratio (Note 3) 14.90 7.77 -
Return on
Price/Dividend Ratio (Note 4) 18.79 13.38 -
Investment
Cash Dividend Yield (Note 5) 5.32% 7.47% -
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Note 1: The market price per share is adjusted retrospectively based on earnings distribution.

Note 2: The net worth per share after distribution is filled in based on the distribution determined via resolution at the shareholders’ meeting in the next year.

Note 3: Price / Earning Ratio = Average Market Price / Earnings per Share

Note 4: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share

Note 5: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price

F. Dividend Policy and Implementation Status

1. Dividend Policy

We take a policy of dividend payment to maintain sound long-term financial structure and stabilize continual growth to maximize benefits to shareholders, in the following manners:

(1) With regard to the surplus for the year (net of taxes payable and losses from previous years), after portions have been set aside in surplus reserves in accordance with the law and set aside or transferred to the special reserve in accordance with regulations, the balance and undistributed earnings (beginning of the year) may not be distributed if they do not make up at least five percent of paid-in capital.
(2) The total amount of dividend shall not be below 70% of the allocable profit as per the preceding paragraph.

President Securities Corporation

(3) Out of the dividend which can be allocated according to the preceding paragraph, stock dividend shall not be below 50% and cash dividend shall not exceed 50%.
(4) Taking the operation situation of the year and the fiscal plan of next year into consideration, the company may decide the best stock and cash dividend on its discretion.

2. Proposed Distribution of Dividend

The Board adopted a proposal for 2019 profit distribution at its Meeting on March 26, 2020, and the proposal to distribute 2019 profits is a cash dividend of NT$1 per share and stock dividend of NT$0.2 per share.

G. Impacts of Stock Dividends on Operation Results and EPS: Not Applicable.

H. Compensation of Employees, Directors and Supervisors

1. Information Relating to Compensation of Employees, Directors and Supervisors in the Articles of Incorporation

The Board of Directors passed a motion on January 27, 2016 amending the Company’s Articles of Incorporation, which stated the company will distribute compensation to employees and the Directors from pre-tax profits. Where the company has pre-tax profits, the total value of funds to be distributed among employees shall not be less than 1.6% of pre-tax profits; while the total value of funds to be distributed among the Directors shall not be more than 2% of pre-tax profits. If the company has losses carried forward, compensation should only be paid to employees and Directors after funds have been set aside as reserve for such losses. This amendment was approved in the 2016 shareholders’ meeting.

2. Estimate Foundation of Employee Compensation and Directors’ Remuneration

The Company’s profit in 2019 was based on the income before taxes after deducting the bonuses to the employees and Directors; it was estimated that the bonuses for the employees and Directors accounted for 2% of the income before taxes, respectively. If there were differences between the actual amount and the estimated figures, the profit and loss of 2020 would be adjusted accordingly.

3. Profit Distribution of Year 2019 Approved in Board of Directors Meeting for Compensation of Employees and Directors

(1) The amount of bonuses to the employees, Directors, and Supervisors in the forms of cash or shares. If differences are found in the estimated expenses of the year, the differences, cause, and handling of the differences shall be disclosed.

On March 26, 2020, our Board of Directors passed the proposed allocation of 2% employees’ compensation and 2% remuneration for directors and supervisor in 2019 as follows:

Total employees’ compensation of NT$52,103,124 and total directors’ remuneration of NT$52,103,124.

There was no difference between the estimates and the actual distributions approved at the Board Meeting for Employee bonus and Director/Supervisor compensation.

(2) Ratio of employee bonuses in shares on net profit and total employee bonuses for the period:

There were no employee bonuses in shares for the current period.

4. Information of 2018 Distribution of Compensation of Employees, Directors and Supervisors

On March 22, 2019, the Board of Directors passed the proposed allocation of employees’ compensation and remuneration for directors and supervisor in 2018 as follows: Employees and directors bonus appropriation ratio was 2%, respectively, and distributed in cash.

Employees’ compensation amounted to NT$28,867,634 while remuneration for directors and supervisors amounted to NT$28,867,634. There was no difference between the estimates and the actual distributions approved at the Board Meeting.

2019 Annual Report

IV. Capital Structure

I. Buyback of Treasury Stock:

On December 28, 2018, at the 5th meeting of the 11th Board of Directors, it was decided to repurchase treasury stocks via resolution. It was planned to repurchase 30,000,000 shares and actually repurchased 18,038,000 shares from January 2, 2019 to February 27, 2019.

Repurchase of shares by the Company

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Number of Repurchases No. 12
To maintain the Company’s creditability and
Purpose of Repurchasing
shareholders’ interests
Date of Repurchase January 2, 2019 - February 27, 2019
Price Range of Shares to be Repurchased 8.05~18.36
Type and Amount of Shares Repurchased 18,038,000 shares
The Ratio of the Quantity Repurchased to the Quantity
60.13%
Scheduled to be Repurchased (%)
Number of Retired and Transferred Shares 18,038,000 shares
Cumulative Number of Shares of the Company 0
Ratio of the Cumulative Number of Shares Held to Total
0
Shares Issued (%)
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II. Long-Term Borrowings: None.

A. Unpaid corporate bonds: None.
B. Corporate bonds due within one year: None.

III. Issuance of Preferred Stocks: None.

IV. Issuance of Global Depositary Receipts: None.

V. Issuance of Employee’s Stock Options: None.

VI. Merge and Acquisition: None.

VII. Working Capital Plans:

Any incomplete share issuance or private placement or any completed share issuance or private placement over the past three years from which benefits have not yet been reported as of March 31, 2020: None.

President Securities Corporation

2019 Annual Report

V. Business Environment

I. Description of Business Activities

A. Business Scope

1. Main areas of Business Operations

Underwriting business
Proprietary trading of listed securities
Brokerage for listed securities
Proprietary trading of listed securities through retail locations
Brokerage for listed securities through retail locations
Consignment trading of foreign securities
Securities margin purchase and short sale
Money borrowing or lending in connection with securities business
Securities borrowing and lending
Non-restricted purpose loan business
Shareholder services coordination
Support for futures trading through equity-related business
Concurrent operation of futures proprietary trading
Wealth Management business
Trust business
Financial derivatives products approved by the SFC
Offshore Securities business
Other relevant operations approved by the competent authority

2. Breakdown of Revenues for Latest Three Years

Unit: NT$ thousands

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2017 2018 2019
Item Operating Operating Operating
% % %
Revenue Revenue Revenue
Brokerage 2,338,014 36.76 2,483,267 52.97 2,221,924 35.67
Proprietary
3,771,989 59.31 2,006,020 42.79 3,726,001 59.81
Trading
Underwriting 249,982 3.93 198,603 4.24 281,992 4.53
Total 6,359,985 100.00 4,687,890 100.00 6,229,917 100.00
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3. Products and Services

We offer a comprehensive range of financial services-brokerage, underwriting, proprietary trading, fixed income dealing, financial product development, wealth management, and shareholder services. The following is a brief description of our primary business units.

President Securities Corporation

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Business Area Products and Services Description
1. Accept orders from clients to buy/sell 1. The market share of brokerage business was 3.25% in 2019,
listed securities and forward to TWSE ranked 10th among the top ten Taiwanese securities firms.
for execution.
2. The Company has 31 branches in total. The market share in
2. Accept orders from clients to buy/sell a single location is 0.1% and ranked 3rd among the top ten
listed securities and forward to TPEx Taiwanese securities firms, indicating that the Company’s
for execution. operational efficiency was better than other firms.
3. Manage custodial services for clients. 3. The Company has been active in promoting electronic
trading, where proportion of transactions through electronic
4. Provide margin financing for securities
trading in the entire Company was 43.43% in 2014, 45.05%
trading.
in 2015, 49.71% in 2016, 54.44% in 2017, 64.79% in
5. Securities Borrowing and Lending average in 2018 and 68.29% in 2019. The proportion of
Brokerage Business. transactions through electronic trading has demonstrated
significant growth every year.
6. Non-restricted purpose loan business
4. The trading system has integrated the trading functions of all
7. Accepting orders to trade Foreign
products, and customers can use the same electronic trading
Securities.
platform for trading securities, futures, options, OTC stocks,
8. Futures Introducing Broker Business. sub-brokerage, fund, and overseas futures products.
5. By offering a more all-inclusive market monitoring and order
entry environment, we can provide services to a larger client
base.
6. We integrate our sales of all types of products available in the
market and thereby offer more value to our existing clients.
1. Trading of publicly listed securities on 1. Market Position
the TWSE and TPEx, using President Over the past 10 years, our proprietary trading department
Securities’ own funds. has been among the top every year. Regardless of the market
2. Hedge positions via futures and options trend, our proprietary trading department is able to accurately
markets. read the market and adjust its strategy accordingly and pick
out the key trends and sectors. And, they are able to match
Proprietary 3. Legally-permitted foreign marketable this with effective futures hedging, risk management, and a
securities trading; international diverse range of product trading strategies, resulting in big
Trading investment expanding, such as gains, and small losses. This has allowed us to retain a core
American stocks, Hong Kong stocks, proprietary trading team with considerable experience, which
A-shares in Shanghai-Hong Kong Stock has become the envy of the industry.
Connect and Shenzhen-Hong Kong
Stock Connect, Japan stocks, global 2. Specialty Product
ETFs. System application is supported by quantitative analysis and
technical indicator modules.
1. Use own capital to trade domestic and The Fixed Income Department mainly focuses on fixed
foreign corporate and government income proprietary trading business, sales, and DCM business,
bonds in the OTC market. supplemented with the issuance of structured products. The
proprietary trading business is mainly based on foreign
2. Offer tendering services of Taiwan
currency-denominated notes, supplemented by New Taiwan
government bonds.
dollar-denominated notes. The main products are US dollar-
3. Repo and Reverse-Repo transactions. denominated and euro-denominated notes. The fixed income
Fixed Income 4. Trade overseas and domestic convertible sales, underwriting and issuance of structured products are
being developed continuously. To expand fee businesses via
Business bonds.
proprietary trading business support.
5. Provide debt capital market services for
overseas and domestic issuers.
6. To trade government and corporate
bonds with customers.
7. Interest rate structured products trading,
design and sales.
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2019 Annual Report

V. Business Environment

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Business Area Products and Services Description
1. Futures Proprietary Trading Division: 1. Operating Performance
Market making and trading of legally- In 2019, profitability of our futures proprietary trading
permitted foreign futures and options division was among the top in the industry.
Quantitative contracts.
2. New Products/Services in Development
Trading 2. Strategic Trading Division: As regulators continue to liberalize the industry and allow
ETF arbitrage, market making, new financial products, we stand ready to add these new
structured products issuing and trading. products to our trading and, in turn, to add to our revenue
streams.
1. Equity Warrants (including OTC In 2019, our Financial Products Division was primarily
contract-based warrants) and issuance engaged in issuing new warrants, structured note products, and
of callable bull/bear contracts. other derivative products authorized by the Taiwan’s regulators.
2. Structured products trading. 1. Market Position
3. Convertible bond asset swap business. (1) Equity Warrants: A total of 1,705 warrants were issued in
2019, for a total dollar value of NT$26,296,705 thousand,
4. Trading of equity derivatives. ranked 6th in the market. Up to March of 2020, 345
warrants were issued by PSC, for a total dollar value of
5. Exchange Traded Note, ETN
NT$3,577,225 thousand, making PSC ranked 7th among
6. Other derivatives financial products the market .
approved by the competent authority.
(2) Structured note products: For the year of 2019, the
Company undertook contracts amounting to a principal
of NT$23,576,202 thousand and was ranked 6th in the
market. A total of NT$2,765,935 thousand in structure
note products were outstanding at the end of 2019,
ranked 7th in the market. Up to March of 2020, the
Company undertook contracts amounting to a principal
of NT$4,906,800 thousand and was ranked 5th, and
NT$2,199,632 outstanding, ranked 7th.
2. New Products/Services in Development
In the fourth quarter of 2019, the Company’s call warrants
Financial
were rated Grade A in the market making evaluation by the
Products responsible authorities. In the future, the Company will still
maintain an excellent quality in market making, provide
better warrant services to investors, and look forward to
building consumer trust in the brand so as to elevate the
status of President Securities’ warrants in the market.
In addition, Exchange-traded notes (ETNs) are new products
released by the responsible authorities in 2019. PSC also
issued two ETN products in April and December 2019, which
were President Increased Dividend 150N and President Low-
Volatility High-Interest-Rate Selection 20N, respectively.
Two ETNs linked to overseas investment targets have been
launched since March 2020, namely the MSCI USA IMI
Information Technology Net Total Return Index and the
MSCI USA Minimum Volatility Net Total Return Index.
Investors can thus participate in investing in classic American
high-quality companies in small amounts to allocate assets
easily. By carefully selecting stock targets, a basket of targets
were combined into an ETN to provide investors with a
good choice of asset allocation. President Securities plans to
develop detailed media-based self-teaching lessons, to make
it easier for novice investors to understand the ETN business,
so as to continue to differentiate itself from competitors in
the sector and to expand its market share of new products.
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President Securities Corporation

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Business Area Products and Services Description
1. Assist corporations in application for 1. Market Position
public listing on TWSE or TPEx. In 2019, PSC had 42 lead and co-lead underwriting deals, for
a total dollar value of NT$2.558 billion.
2. Assess and advise clients with respect to
capital increase plans. 2. New Products/Services in Development
3. Underwrite domestic and foreign bonds. Our goal is to provide professional corporate financial
services, to simultaneously act as both an effective market
Underwriting 4. Assist in M&A activities. maker and also as a top-notch service provider, all with the
(Capital Market) 5. Assess and advise clients with respect aim of increasing the company’s overall added value. Going
to applications to convert private equity forward we will continue to focus our energy on landing
into publicly traded stocks, treasury mid- and large-sized deals, and will continue to bolster our
stocks, capital increase plans and presence within the Greater China Region (i.e., TDRs, IPOs
employee’s stock options. (including primary listings on the TWSE/TPEx Market,
M&A, Private Equity, and consulting, etc.), so as to become
6. Other businesses relate to underwriting
a more competitive securities firm.
and consulting.
1. Coordinate shareholder services on 1. The scale of the Company’s agency
behalf of publicly listed companies. (1) The number of serviced companies in 2019 was 158,
2. Assist in the coordination of where 89 were listed companies, amounted to 56.32 %.
shareholders’ meetings. (2) The scale of the Company’s agency is larger. The average
number of shareholders we serviced in 2019 was 1.82
3. Coordinate the distribution of cash and/
million.
or stock dividends to shareholders.
2. Operating Performance
4. Manage the issuance and delivery of tax
forms to shareholders. (1) The number of serviced companies in 2019 had a 7.48%
Shareholder growth compared to the number of service companies in
5. Respond to shareholder enquiries and 2018.
Services
legal issues.
(2) The number of shareholders’ agents in 2019 was
comparable to that in 2018, thus allowing us to
continuously achieve a high economy of scale and
efficient operations.
3. Long-term Objectives
Actively expand the number of serviced companies to
increase revenues.
1. Provide customers with the most 1. Market Position
complete asset arrangement and finance At the end of 2019, the number of customers in the wealth
service planning service. management trust account reached 12,620; the client trust
2. Conduct asset allocation for customers assets reached NT$4.576 billion, including NT$4.367 billion
Wealth through trust. for non-discretionary money trust assets and NT$209 million
Management & for marketable securities trust assets. The asset size ranked
Trust 3. Coordinate the funds of domestic and 9th among securities firms.
foreign commodities, marketable
securities, and structured products on 2. Long-term Objectives
the Trust Platform. Establish "wealth management platform" for Taiwan
customers through wealth management and trust.
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4. New Products/Services in Development

The Company will continue to promote digitalization and adopt information technology to transform internal processes, strengthen digital management capabilities, as well as increase business momentum and decision-making efficiency. In addition, in the financial product business, the Company will continue to issue ETNs, strive to take advantage as a pioneer in the ETN market, and create product differentiation to establish a brand image.

2019 Annual Report

V. Business Environment

B. Industry Overview

1. Overall Economic Environment

Over the past year, the global economy recovered slowly under the haze of the US-China trade war. In order to reduce the US-China trade deficit, the US continued to increase the import tariffs on products from China. Meanwhile, sanctions were imposed on companies, including ZTE and Huawei, which created many uncertainties related to global trade activities. However, with increasing consumption and employment in the US, the Fed’s preventive interest rate cuts also created and continued an optimistic outlook for financial markets. In Europe, under the influence of global trade tensions and rising policy uncertainties, economic growth continued to slow. Under the continued economic downturn, the European Central Bank was expected to continue the loosen monetary policy. As for China, because the escalation of the US-China trade war led to sanctions imposed on private companies that resulted in weak exports, the central government implemented fiscal policies designed to stabilize the Chinese economy.

In Taiwan, the domestic economic growth rate decreased from 2.75% in 2018 to 2.71% in 2019, mainly because of the expansion of the U.S.-China trade conflict and the conservative wait-and-see approach adopted by businesses and manufacturers, which weakened global economic demand. In the domestic stock market, driven by the US’s preemptive interest rate cuts and the government’s policy of attracting investments made by overseas Taiwanese business people to return to Taiwan, the annual TAIEX rose from 9,727 to 11,997 points, an increase of 23.3%. The average daily volume of the stock exchange market decreased to NT$120.1 billion from NT$130.2 billion.

Looking forward to 2020, the IMF increased its forecast for the rate of global economic growth from 2.9% to 3.3% in January, mainly because the US and China reached a first-stage trade agreement. In Taiwan, the production capacity of high-end semiconductor manufacturing has been gradually expanded operations, and the positive effects of the returning of investments from overseas Taiwanese business people to Taiwan to expand their factories have continued to ferment. When these are coupled with the continuous development of global 5G mobile communications, artificial intelligence, and other emerging applications, as well as the end of the US-China trade conflict, the Directorate-General of Budget, Accounting, and Statistics has estimated that the economy will grow by 2.37% this year. However, with the outbreak of the novel coronavirus that occurred in China at the end of January, China implemented various measures, including lockdowns and a postponement of the start of production. Others have also witnessed outbreaks in their countries and various nations have adopted a number of epidemic prevention and control measures accordingly. It is expected that the epidemic will affect normal economic activity, such as production, consumption, and trading, which will drag down the global economic performance and affect trade activities. The economic growth rate may be further revised downward.

2. Current Status and Future Development

(1) Primary Market

Unit: NT$ 100 Million

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Corporate Bond
Over-The-Counter
Listed Company Government Bond
Year (OTC) Company Ordinary Corporate Convertible Bond
Bond
Total
Number Capital Number Capital Number Net total Number Net total Number Net total
1993 669 47,252.8 423 6,394.7 80 25,870.7 2,666 7,998.5 235 1,218.1 9,216.6
1994 697 50,580.8 466 6,261.0 86 28,506.7 2,882 8,993.8 349 1,522.1 10,515.9
1995 691 54,159.6 503 6,431.8 88 31,417.2 2,784 9,355.2 322 1,549.0 10,904.2
1996 688 55,226.7 531 7,262.0 90 33,823.2 2,397 9,710.2 292 1,830.1 11,540.3
1997 698 56,016.2 547 7,148.1 88 35,184.7 1,744 8,773.4 276 2,108.0 10,881.4
1998 718 57,354.4 539 7,030.7 91 37,351.7 1,142 9,476.1 269 1,857.7 11,333.8
1999 741 58,695.9 546 7,727.3 93 39,708.5 783 9,413.9 208 1,405.2 10,819.1
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President Securities Corporation

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Corporate Bond
Over-The-Counter
Listed Company Government Bond
Year (OTC) Company Ordinary Corporate Convertible Bond
Bond
Total
Number Capital Number Capital Number Net total Number Net total Number Net total
2000 758 59,279.5 564 7,059.9 94 43,341.5 512 10,002.1 246 1,373.7 11,375.8
2011 790 61,523.8 607 7,319.2 97 46,441.5 425 11,242.6 299 1,660.3 12,902.9
2012 809 63,849.5 638 6,674.5 100 49,343.0 433 13,641.2 314 1,594.5 15,235.7
2013 838 66,100.3 658 6,618.5 103 52,209.5 468 15,776.1 294 1,542.4 17,318.5
2014 854 67,834.0 685 6,795.6 108 54,401.7 519 17,197.8 277 1,507.7 18,705.5
2015 874 69,509.0 712 7,061.9 113 55,693.7 500 17,081.5 297 1,554.1 18,635.6
2016 892 70,217.0 732 7,152.6 116 56,053.3 500 16,776.4 270 1,483.1 18,259.5
2017 907 71,361.9 744 7,223.6 119 56,363.3 512 17,436.6 193 1,172.6 18,609.1
2018 928 71,588.9 766 7,385.0 124 56,024.7 535 18,120.0 157 1,173.5 19,293.4
2019 942 71,556.4 775 7,466.6 129 55,509.6 569 19,012.0 166 1,186.1 20,198.1
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Reference: Securities and Futures Bureau, FSC

(2) Overview of total market value of the securities market in the past three years

Unit: NT$ billions

Item	2017	2018	2019
Taiwan Stock Exchange
Stocks	23,972.2	29,608.9	26,464.6
ETF	1,231.7	1,834.1	2,080.5
Beneficiary Securities	4.3	4.2	10.0
Equity Warrants	584.5	712.6	497.1
TDR	6.2	2.7	2.4
Subtotal	25,798.9	32,162.4	29,056.6
Taipei Exchange
Stocks	7,683.5	8,145.5	7,607.5
Equity Warrants	226.5	211.7	145.4
ETF	68.1	316.8	854.0
Bonds	45,815.3	48,217.5	44,677.1
Subtotal	53,793.4	56,891.4	53,284.7
Total	79,592.2	89,053.8	82,341.3
TAIEX	10,642.86	9,727.41	11,997.14

Reference: Securities and Futures Bureau, FSC

The three-year extension of the reduction of the stock transaction tax for day trading by half and the inclusion of proprietary traders have motivated investors to trade, making the total trading volume of Taiwan Stock Exchange and Taipei Exchange in 2018 increase by 11.9% compared with the previous year.

3. Relationship with Up-, Middle- and Downstream Companies

The securities market is a part of the financial market as a direct transaction channel between fund seekers and fund providers; industrial and commercial enterprises usually raise funds through the issuance of marketable securities, and investing in marketable securities has become an important way for people to manage their savings and personal wealth. The mission of the securities market is to pool savings and turn them into investment, and thus facilitate economic growth.

2019 Annual Report

V. Business Environment

Upstream Funds Suppliers Individual Investors Institutional Investors	Midstream Mediator Securities Firms	Downstream

Funds Suppliers	Mediator	Funds Demanders
Individual Investors Institutional Investors	Securities Firms	Listed Companies Financial Institutions Government

4. Product Trends and Relevant Competition

Proprietary Trading

(1) Equities Markets

The global stock markets witnessed an abundant harvest in 2019 and a total of ten stock markets hit new highs, including New Zealand, Brazil, S&P 500, Nasdaq, Switzerland, PHLX Semiconductor Sector (SOX), Dow Jones, Canada, India, and Australia Indices; the performance of the Taiwan Stock Exchange’ was also excellent in 2019, with an annual increase of 23.3%, which was also the best performance over the past 10 years. Benefiting from the anticipation of interest rate cuts in the U.S. in the first half of last year, the Taiwan Stock Exchange rose from 9729 in the beginning of the year to 11096 in May, with an increase of 14%. From May through September, due to Trump’s ban on Huawei, the Taiwan Stock Exchange fluctuated inside the box with a low of 10300 and a high of 11000. After the first phase of the US-China trade agreement was completed in September, trade negotiations between the US and China was resumed, major central banks around the world adopted a loose monetary policy, and the effect of orders transferred to other supply chains increased, The Taiwan Stock Exchange increased in value by another 1100 points in the fourth quarter. In 2019, the Taiwan Stock Exchange increased by 2268 points, an increase of 23.3%, ranking first among Asian stocks. Because of the inclusion of MSCI and a gradually increasing the weighting ratio, China’s stock market still witnessed a surge of 22.3% despite an economic growth rate of 6%. The Taiwan Stock Exchange rose 23.3% compared to 5-10% in emerging markets, so the performance was relatively strong. The performance was better than expected because of the influx of funds caused by the appreciation of the Taiwan dollar. In addition, the Taiwan stock yield rate of 4.5% was much better than in developed countries where it yielded 2 to 2.5%. Coupled with the transfer of supply chains due to the trade war and the introduction of 5G networks, the business sectors of mobile phones and semiconductors were picking up, driving the Taiwanese stocks to remain high, from the liquidity-driven rally in the first half of the year through the performance-driven rally in the fourth quarter; for example, the TAIEX rose 2268 points and the OTC index grew 20.9% in 2019.

The Proprietary Trading Department has kept abreast of the status of the progress of 5G, AI, and IoT in 2019, the ending of semiconductor inventory correction, as well as the acceleration of the trend of enterprises’ development and use of the cloud. And took long-term investment and quick short-term investment positions to make flexible adjustments to the stock inventory positions in accordance with changes in the stock market to minimize systemic risks in 2018. It also remained vigilant of the changes in the fundamentals of listed companies to conduct real-time adjustments of positions to exchange weak positions for strong positions. Coupled with hedging positions in futures to lower risks and losses, its performance in the TWSE led the industry. Overseas stock market operations also performed well overall with the Department’s investment of vast numbers of personnel for research to fully grasp emerging international trends. Overall performance was better than index fluctuations. In the future, the Department will continue to intensify global macroeconomic research and flexibly adjust domestic and foreign positions and strategies as the foundation of its operations. It will grasp opportunities for profits in bull markets and diversify investments to expand sources for Department revenue. The Department plans to be among the leaders of profitability in the industry while maintaining its past competitive advantages.

(2) Risk Management

In addition to using VaR figures provided by the proprietary trading department’s risk control office,

President Securities Corporation

stop losses and limit alerts are set for the stocks that each trader trades. Each trader is given trading limits and trading performances are updated in real time and, when necessary, trading authorizations can be immediately revoked. The effect of all of these measures is to ensure maximum protections for our shareholders.

(3) Hedging Operations

Futures and options are our primary hedging tools. Going forward, we will continue to use these financial products to adequately hedge our proprietary trading department’s exposure.

 Fixed Income Dealing

(1) Outright Purchases and Sales of Government Bonds

Due to the different time zones for trading of the US Treasury, it is difficult to grasp the short-term risk of price increases, and this year the Fed’s interest rate cut is expected to be smaller. Therefore, the trading operation is mainly based on buying during rallies and range trading. In terms of the domestic government bond market, the overall economic and bond aspects are conducive for long position holding. However, the government bond interest rate is very close to the re-purchase (RP) cost, and there is limited space for it to decrease. Therefore, the trading of domestic government bonds this year will be conducted discreetly, and attention will be paid to liquidity risks.

(2) Convertible Bonds, Futures and Options

For convertible bonds, two strategies will be carried out. The first is to invest in bonds with large issuance size and limited downside risk, because better liquidity, capital structure, and limited risk are good for long term strategy to capture the trend. The second is to invest in notes with rally potential for short term trading. Because of high volatility, traders will control total positions for risk managing. Keep following equity market performance to make investment decision, CB issuers with large market capital will be influenced by macro economy significantly.

(3) Foreign Bonds

Last year, with the turmoil created by the global trade war, central banks around the world adopted monetary easing policies, driving credit spreads and public debt rates down sharply. Based on the situation this year, either the intensification of the risk of geopolitical conflicts or the decline of the global economy caused by the novel coronavirus pneumonia will be more unfavorable to the credit market. Therefore, this year the Fixed Income Department will adopt a more conservative approach to trade targets with better fundamentals within a certain range based on the value of the US Treasury.

 Financial Products Business

(1) Equity Warrants

In 2019, there was a strong expansion in Taiwan’s equity warrant market, with all securities firms aggressively issuing warrant products. A total of 32,362 equity warrants were issued in 2019, for a total dollar value of NT$383.3 billion. Up to March of 2020, a total of 9,846 equity warrants were issued for a total dollar value of NT$112.4 billion.

The total dollar value of all equity warrants issued by the company in 2019 was NT$26.2 billion and the market share was 6.86%, ranked 6th in the market.In addition, due to the increased volatility of the overall securities market in the first quarter in 2020, the pace of issuance in the warrant business has been slowed. The total dollar value of all equity warrants issued by the company up to March, 2019 was NT$3.577 billion and the market share was 3.18%, ranked 7th in the market. Issue focuses mainly on the selection of stock performance with good Return on Equity (ROE) to create a win-win situation with investors and stable profits through different derivatives, futures, and options, etc., with hope to effectively lower hedging costs.

2019 Annual Report

V. Business Environment

(2) Structured Note Products

The amount of contracts oustanding by the end of 2019 was NT$60.691 billion, for a trading volumn of NT$270.26 billion. The Company undertook contracts amounting to a principal of NT$23.57 billion and was ranked 6th in the market. Up to March of 2020, the amount of contracts oustanding was NT$55.402 billion, for a trading volumn of NT$79.274 billion. The Company undertook contracts amounting to a principal of NT$4.906 billion and was ranked 4th in the market.

(3) Exchange Traded Note (ETNs)

ETNs provide a new product released by the responsible authorities in 2019. As of December 2019, a total of 15 ETNs had been issued on the market, and the Company has also launched two main ENTs, namely the President Increased Dividend 150N on April 30, 2019 (020003) and President Low-Volatility High-Interest-Rate Selection 20N (020011) on December 31, 2019. One involves a selection of stocks that issue cash dividends; the other is a selection based on low volatility and the dividend rate so as to form a basket of high-quality indices with a high yield rate or low volatility. The President Increased Dividend 150N (020003) also set a new high listing price at the end of 2019; from the original listing date to December 28 it had the highest return rate (14%), and the return on investment is among the top three in the market. Two ETNs linked to overseas investment targets have been launched since March 2020, namely the MSCI USA IMI Information Technology Net Total Return Index and the MSCI USA Minimum Volatility Net Total Return Index. Investors can thus participate in investing in classic American high-quality companies in small amounts to allocate assets easily.

 Underwriting Business (Capital Markets)

(1) Domestic Bond and Equity Underwriting

As of the end of 2019, there were a total of 941 companies listed on the TWSE and a total of 775 companies listed on the Taipei Exchange Market, representing a growth of 1.4% and 1.3% in comparison to 928 and 766 companies in 2018. The Department has actively fought for cases while maintaining risk management. The President Securities’ underwriting cases, which were listed in 2019, included OK Biotech Co., Ltd. with NT $250 million of secured convertible bonds, ACON Holding Inc. with NT $300 million of secured convertible bonds, Luxe Co., Ltd., which raised NT $300 million in cash capital, Arlitech Electronic Corp. with NT $200 million of secured convertible bonds, Gudeng Precision with NT $300 million of secured convertible bonds, and Tatung System Technologies Inc., which raised NT $180 million in cash capital. The Company shall continue to attentively screen cases, carefully select industries, and focus on company credit risks to provide public listing/OTC listing and fundraising services for companies with healthy finances or those in industries with an excellent outlook.

(2) Financial Advisory

We take great pride in providing professional corporate finance services. In recent years, our financial advisory business has also made great progress and expanded into advisory services dealing with employee stock option exercise prices, offering price for preferred stocks and stock repurchase by listed companies. We will no doubt continue to develop our financial advisory services business with a particular emphasis securities related consulting (i.e., IPOs, mergers, private placements, and other consulting services) around the Greater China Region.

(3) Offshore Underwriting

The Company is actively pursuing public listing and OTC listing operations of Taiwanese companies returning from China, Hong Kong, and Southeast Asia in accordance with market conditions.

(4) Emerging Market Exchange

The domestic economy faced a moderate growth in 2019. There were 248 companies listed on the Emerging Stock Board, a 3.13% decrease from 2018 with 256 companies listed. To capture more IPOs, the department has also been actively positioning itself with respect to emerging board targets. However, the IFRS’s launch in 2013 has changed the way emerging board stocks will be assessed, and to take risk

President Securities Corporation

control into account, the number of officially recommended emerging board companies is 22 at the end of 2019. This year, the division will continue to compete for quality clients while maintaining risk control, and issue recommendations for emerging stocks based on the progress of its client counseling.

 Wealth Management & Trust

The total assets under overall securities firms’ non-discretionary individual management in 2019 was NT$123.29 billion(YoY +18.2%). The total assets in securities trust management was NT$27.05 billion(YoY -18.6%). The total assets under management was NT$150.4 billion, which was a 9.3% increase of NT$12.84 billion from the NT$137.5 billion at the end of 2018. Among them, the money trust business continued to grow, while the negotiable securities trust lending business was replaced by the “new two-way securities lending of Taiwanese stocks for natural persons” which continued to shrink.

The assets under the Company’s non-discretionary money trusts by the end of 2019 amounted to NT$4.367 billion. The total assets in securities trust management were NT$209 million. The total assets under management were NT$4.576 billion. This ranked the Company 9th among securities firms.The tradable products in wealth management included domestic and overseas funds, domestic and overseas structured products, bonds with repurchasing agreements, and foreign bonds.

In 2019, the Wealth Management and Trust Department continued to expand its product lines; the newly released domestic and overseas funds included Allianz, Fidelity, BNP Paribas, Union Securities Investment Trust, and Huan Nan China Investment Trust, to make the coverage of fund product lines more complete as funds are available with excellent performance in all major investment sections for customers to choose from. In addition, the overseas structured products issued by BNP Paribas were introduced and the “Employee Stock Ownership Trust” business has been launched to diversify the revenue sources.

C. Research and Development Overview

In line with the competent authority’s requirements for the professionalism of underwriting personnel, this year, based on the courses offered by the Taiwan Securities Association, on-the-job training and further training are arranged; personnel are sent to participate in the professional courses offered by the Taiwan Stock Exchange Corporation (TWSE) and Taipei Exchange on a quarterly basis for intermediaries to be equipped with the knowledge of relevant laws and professionalism as the country is increasingly open to overseas business.

 R&D for Derivative Product

Various Technical Expertise and R&D

We have a complete financial engineering team that brings together talented individuals from finance and statistics with access to top-notch trading and valuation software, so that they can develop innovative product and trading strategies. With cutting-edge financial engineering at the forefront, we bring together comprehensive product development and advanced trading experience in designing new products, and in providing sophisticated derivatives products and consulting services for our customers. Plus, every year, we invest heavily in modernizing our warrant software so as to make our systems faster and more stable, and so as to offer a broader range of services to our customers.

Our Research Analysts, Their Training, and Our R&D Costs for the Most Recent 5 years

The company has been aggressively developing new products and working diligently to secure regulatory approvals for new products. Over the past 5-year period, we have spent an average of NT$4.5 million per year on R&D efforts.

2019 Annual Report

V. Business Environment

Unit: Person

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----- Start of picture text -----

Year 2017 2018 2019 Mar. 31, 2020
Number Number Number Number
Education level % % % %
of people of people of people of people
Master&PhD 38 84.45 39 81.25 38 79.17 41 80.39
Bachelor 5 11.11 6 12.50 7 14.58 7 13.73
Others 2 4.44 3 6.25 3 6.25 3 5.88
Total 45 100.00 48 100.00 48 100.00 51 100.00
Average
years of 3.94 4.53 4.61 4.56
service
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New products or Techniques Successfully Developed Within the Last 5 years
(1) The company has been successful in the design and pricing of many structured note products, equity swaps, credit derivative products, as well as equity-linked derivative products, bonds and interest rates, and we stand ready to issue these products whenever appropriate market timing emerges.
(2) We have successfully developed several market operating strategies, as well as option market making models and strategies.
Strengthened the electronic trading and relevant information systems

The electronic trading market continues to grow and the company is able to raise customer service quality through an e-trading platform that is stable, convenient and diversified.

(1) President Securities 2019 Electronic Trading and Information System Relevant R&D Plan

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System R&D Capabilities
1. Provide the “securities lending service” function with which customers could open
an account for securities lending, signing lending agreements, and make changes in
securities lending online
2. Add a query function for securities collateral information
3. Online inquiry related to a balance in a settlement bank
Enhanced electronic 4. Add an online “credit user contract renewal” service
customer services 5. Provide information on securities lending products and market interest rates of the day
6. Enhance digital services so customers do not have to visit a branch office
7. Provide a demo trading platform in response to the promotion of the new system of
continuous trading
8. Launch a new official website, to provide more extensive information and an improved
browsing flow to provide investors with a better use experience
1. FIX is converted the Continuous trading format; the user interface is adjusted to be in line
with the Continuous trading format.
2. Network equipment in regional centers and branches is updated, and the network
bandwidth has increased.
Continuous trading
3. The interface and structure of each electronic trading platform are adjusted to be in line
with Continuous trading
4. Relevant programs and files in the front and back ends are adjusted and developed to be
in line with Continuous trading
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President Securities Corporation

Information security	1. Wireless systems have been updated. 2. Network management as well as monitoring equipment and systems have been updated. 3. Source codes have been inspected and tested. 4. Information security has been inspected. 5. Information Security Monitoring Center 6. Hardware and software equipment has been updated in accordance with information security regulations.
Computer room adjustment	1. The computer room in the North 1 Center has been modified. 2. The computer center equipment (host and network) has been modified. 3. All electronic trading systems have been moved to IDC. 4. Account inquiry hosts and services have been moved to IDC.
Core system (AS/400) transformation	1. Front and back ends of systems have been separated. 2. Heterogeneous databases are now synchronized. 3. CRMS system has been optimized. 4. Trading hosts in the northern region have been merged. 5. Centralized order processing center 6. Front end of the ETN marketing
Digitalization of process flow	1. Template sheet for derivative financial products of ETN 2. Online verification of subpoenas 3. Digitalization of services 4. Revision of the performance evaluation system 5. Digitalization of relevant application forms 6. Statistics documenting accounts with a high risk of money laundering 7. Annual review of the money laundering prevention system
Optimization of the wealth management trading functions	1. Integrate FISC’s real-time “Nationwide bill/tax payment system” for purchasing mutual funds 2. Wealth management website revision is in progress

(2) 2019 R&D investment plan and progress

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Expected Critical
Current Expected
Project Name Details of Plan and Benefits Project Plan Cost Success
Progress Completion
Outlay Factors
The first two
points are Completed
1. Continuous trading
Modify the expected to project and
System reforms 2. The securities trading price field is
schedule in line provide services all testing
of the Taiwan enlarged. 25 million Ongoing
with the security in first-quarter, process
Stock Exchange 3. New bidding system for odd lot
exchange 2020; the third finished step
trading point will be in by step
forth-quarter.
1. The host connection is changed to
FIX to speed up the efficiency of
commissioned securities trading Respond to the
services. roll out of new Completed
business areas
2. Payments have been digitalized at Expected to design
Core system and improve
(AS / 400) the settlement end to optimize the service quality 10 million Ongoing provide services process;
tansformation accounting mechanism. while optimizing in third-quarter, business
3. Customer account opening has 2020 process
processes and
been digitalized and integrated to intergrading planning
streamline the process, shorten the systems
time needed to open an account, and
improve the quality of service.
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2019 Annual Report

V. Business Environment

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Expected Critical
Current Expected
Project Name Details of Plan and Benefits Project Plan Cost Success
Progress Completion
Outlay Factors
1. CRS tax declaration
2. Direct data exchange with the Taiwan
Depository and Clearing Corporation Respond to the
3. Accounting information of roll out of new Completed
business areas
transactions fully commissioned is design
and improve Expected to
Digitalization of compiled and integrated. process;
service quality 10 million Ongoing provide services
process flow 4. Human resources system has been business
while optimizing during 2020
digitalized. process
processes and
5. Foreign exchange declaration intergrading planning
platform has been digitalized. systems
6. Verification of relevant forms has
been digitalized.
1. Credit release penalty has been
optimized.
2. Lending without restricted purpose
has been optimized.
3. Management of ledger accounts for Respond to the
settlement payments roll out of new Completed
business areas
4. Transaction settlement system for design
and improve Expected to
System foreign currency ETFs process;
service quality 15 million Ongoing provide services
optimization 5. Customer online signing on website business
while optimizing during 2020
6. Online smart text customer service processes and process
has been established to provide intergrading planning
investors with uninterrupted 24-hour systems
services.
7. An “mobile salesperson” app has been
developed to improve the mobility of
salespeople.
1. A backup trading server room in a
center with a different location has
been established as a backup for the Respond to
Completed
main IDC server room in Banqiao. the authorities’
Establishment Expected to design
2. A complete off-site backup requirement
of an off-site provide services process;
mechanism has been established to ,and the risk 25 million Ongoing
backup server in fourth- business
room ensure uninterrupted trading. and security quarter, 2020 process
3. An offsite backup structure for issues regarding planning
electronic transactions has been e-trading
established to increase transaction
security.
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D. Future Business Development

In an effort to establish our core competiveness, it is essential that we have a clear understanding of future trends in the securities industry and then establish a corresponding business development plan. We must also develop strategies that will allow us to accommodate business areas newly approved by regulators so that we are in a position to move quickly in these new markets. Accordingly, we see our business developing in the following ways:

Continue to recruit exceptional talent, and thereby improve our competiveness and, in doing so, increase our market share.
Implement risk management practices and technologies, thereby improving profitability and stabilizing overall business operations.
Improve IT and enhance e-business infrastructure.
Offer professional asset management and provide personalized financial planning services.
Develop foreign market to maximize proprietary trading profit.
Be ready to move on market liberalizations and, in particular, business opportunities across the Hong Kong-PRCTaiwan market.
Cultivate talented researchers and thus raise our abilities in designing new products.
Synergize our business units and enhance our wealth management services.
Build and maintain alliances with financial institutions and corporations outside of the finance industry, relationships that allow for mutual cooperation and mutual benefit.

101

President Securities Corporation

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Business Short-term Development Long-term Development
1. Promote marketing activities to increase customer transaction 1. Provide professional research and service quality
frequency and increase revenue. to acquire institutional and foreign investor
2. Enhance the construction of various transaction platforms to provide customers.
customers with a more convenient and real-time transaction system. 2. Promote cross (and regional) marketing.
3. Enhance risk management to lower rates of errors. 3. Integrate electronic transaction platforms for
4. Enhance operators' ordering system. diversified products.
5. Optimize the customer relationship management system. 4. Increase smart self-help services.
6. Construct a self-help service framework. 5. Conduct periodic personnel training and replace
Brokerage
7. Communicate with customers and revitalize static accounts. ineffective employees.
8. Implement operators' education and training to cultivate versatile 6. Promotion and integration of wealth management
operators. services.
9. Promote the wealth management business and provide customers
with professional and diversified financial wealth management
services.
10. Promotion of two-way natural person bond loan businesses.
11. Promotion of non-restricted purpose loan business
1. Intensify operations in international stock markets: in addition to 1. Enhance internal division of labor and use the
authorization of transactions in the existing US and Hong Kong risk management system to increase performance
stock markets, A shares, and overseas funds, transaction targets in of operations and aid supervisors in adjusting
A shares of Shenzhen-Hong Kong Stock Connect were added in strategies and positions at appropriate times.
December 2016. 2. Conduct more extensive company visits and
2. Implementation of various instruments: Use foreign options to maintain information exchanges with other
Proprietary
conduct hedging and non-hedging transactions. companies in the industry to increase the
Trading
3. Usage of bear-side channels: Use the sales of borrowed bonds to Company's knowledge of individual listed
increase resistance to bear markets. companies and thereby increase profits.
3. Expand international investment businesses in
foreign spot transactions as well as research and
investment in futures market that are permitted by
laws.
1. Diversify the scope of transactions by developing different types of 1. Construct a complete global financial product
foreign currencies note trading. database and a comprehensive foreign bond
2. Increase domestic and foreign trade counterparties to acquire better transaction platform.
opportunities. 2. Strengthen the judgment of global trends and risk
3. Increase Ropo counterparties to enhance foreign currencies funding. awareness and strengthen sovereign debt trading to
4. Enhance control over the supply end in international bonds to diversify the risks of trading corporate bonds.
increase opportunities for profits. 3. Expand customers for bonds denominated
Fixed Income
5. Increase the proportion of foreign currencies bond trading to achieve in foreign currencies and provide them with
Business
better performance than trading in domestic market. diversified bond products.
6. Increase the proportion of secured convertible bonds with strictly 4. Develop a product line for structured products and
risk management to keep high profits. strengthen the ability to develop products to satisfy
7. Enhance the sales and underwriting capabilities in fixed income risk preferences and requirements of different
products to expand fee profits other than proprietary trading. customers.
8. Expand corporate-related business and strengthen the connection. 5. Increase relevant commission revenue to balance
the risk-related revenue from proprietary trading.
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2019 Annual Report

V. Business Environment

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Business Short-term Development Long-term Development
1. Warrants business 1. Provide diversified customized financial products
(1) Increase the efficiency in the issuance and sales of warrants and based on customer requirements.
carefully formulate issuance strategies based on main investment 2. Strictly execute risk-monitoring system for
targets in stocks with good historical performance in shareholders' derivatives.
return on equity. Provide diversified product lines with different 3. Diversify hedging products and flexibly implement
strike prices and different maturity dates. options in stocks with the same targets, convertible
(2) Enhance hedging transaction skills and increase the performance bonds, equity options etc. to effectively lower
of transaction systems to increase profits in warrant hedging. various Greeks risks of derivatives.
(3) Diversify hedging products and flexibly implement options in 4. Comply with the openness of the competent
stocks with the same targets, convertible bonds, equity options authority in the future and continue to issue or
etc. in addition to warrant subjects in current stocks to effectively sell domestic and foreign derivative financial
lower various Greeks risks. products as an agent. Continue to demonstrate
2. Structured products the performance of the Company's financial
(1) Design products that are suited for various market situations, engineering team and integrate expertise in
Financial demand-oriented, and profitable, with the aim of allowing financial, information, mathematical disciplines to
Products customers to achieve stable profitability through carrying out enrich the product line of financial products and
transactions of quality target products. disperse revenue sources.
(2) Provide customized products for individuals and institutions.
(3) Establish stable transaction strategies for hedging.
3. ETNs
(1) ETNs are guaranteed by the issuer’s credit to provide
compensation for the indices tracked. Compared with ETFs, there
is no tracking error, which can be a good choice for investors in
asset allocation.
(2) In the future, various types of constituent stocks will be issued.
In addition to the existing filtering indicators, including cash
dividends, low volatility, and dividend yields, future-oriented
technology indices, such as 5G, will also be planned to be
included to aim to issue domestic and foreign target indices with
great potential.
1. Continue to develop transaction strategies and modules to create 1. Enhance strategic real-time measurement and
profits for the department. analysis capabilities and build a comprehensive
2. Strengthen the automated risk control ability for each strategic foreign remuneration risk decision-making and
module. analytical system module.
Quantitative 3. Expand cross-market arbitrage and price difference transactions for 2. Completely systemize and automate the order-
Trading foreign products. placing module and the risk control mechanism.
4. Actively seek market maker qualifications for domestic and foreign
futures and options.
5. Increase the ratio of automated ordering in the department program.
6. Design and issue structured products to increase the source of profit.
1. Respond to changes in the underwriting market, actively seek lead 1. Seek private equity businesses and actively operate
underwriting cases for IPOs, enhance fixed profits; carefully select related investment banking businesses in the
SPO (including CB and ECB) industries and focus on lowering the Greater China Region.
Company's credit risks while targeting medium to large projects. 2. Collaborate across industries for the group to
Underwriting
2. Seek public listing (OTC listing) operations of returning Taiwanese expand customer base in the Greater China Region.
(Capital
companies.
Market)
3. Coordinate with OSU operations in expansion of related investment
banking operations. Cooperate with the Fixed Income Department
to invite foreign financial institutions to issue international bonds in
Taiwan.
1. Assisting companies with handling stock-related affairs as an agent. 1. Actively expand the number of serviced companies.
Shareholder 2. Update operating models in accordance with laws at any time.
Services
1. Continue to increase the product lines for the non-discretionary 1. Develop a wealth management platform for the
money trust and marketable securities trust. development of the whole asset allocation through
Wealth 2. Actively promote FinTech to provide more real-time and convenient financial management trusts.
Management cross-device service models and diversified electronic transaction 2. Expand the international financial business and
& Trust platforms. increase the competitiveness through offshore
3. Actively explore corporate business and strive for stable sources of securities units.
profit in response to the launch of employee welfare trusts.
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103

President Securities Corporation

II. Market Conditions

A. Analysis of the Securities Industry

1. Sales and Services Area

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Unit: NT$ thousands
2017 2018 2019
Area
Amount % Amount % Amount %
North 1,732,693 71.47% 2,413,724 73.48% 2,124,885 73.13
Central 438,569 18.09% 498,522 15.18% 317,315 10.92
South 253,006 10.44% 372,741 11.34% 463,492 15.95
Total 2,424,268 100% 3,284,987 100% 2,905,689 100
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Note 1: The amounts in the table above are brokerage fee revenue.
Note 2: The distribution area of the headquarters and branches is as follows: Northern area: Taipei Headquarters and branches in Hsinchu and north of Hsinchu. Central area: Branches extending from south of Miaoli to north of Chiayi. Southern area: Branches south of Tainan and in Kinmen.

2. Breakdown of Market Share According to Business Area

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Business Area Component Market Share Rank
Equity Brokerage Trading
3.25% 10
Volume
Brokerage
Individual Branch 0.10% 3
Warrants Issued (Volume) 6.86% 6
Financial Products
Structure Commodity
8.72% 6
Business Volume
Domestic Bonds 0.99% 13
Fixed Income Business
International Bond 13.97% 1
Lead Underwriting Deals 6 (3.26%)/
9/12
(No./ Volume) 1.005 billion (1.43%)
Underwriting
(Note)
Co-Lead Underwriting Deals 42 (5.12%)/
6/8
(No./ Volume) 2.559 billion (3.04%)
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Note: Due to the difference of calculation base date, the number or volumn of deals may be different from the content of other chapters.

3. A Look at Future Growth as well as Supply and Demand in the Market

The Financial Supervisory Commission (FSC) continues to expand the business scope and the types of business activity securities firms are allowed to engage in. The FSC promulgated the Directions Governing the Application for Pilot Programs of Business for Securities and Futures Industry last October, allowing securities firms to apply for pilot business programs of the business to FSC, so that securities firms may have basis to follow and launch their innovative business activities. In addition, securities proprietary traders are permitted to operate the business of trading virtual currencies with the nature of securities on their own starting in January of this year, with the goal of driving the application of blockchain technology in the country and promoting the development of FinTech. The Company will evaluate business opportunities and cost-effectiveness as well as submit applications in accordance with related regulations.

In the brokerage business, the Financial Supervisory Commission has been studying diversified financial products, such as “permitting securities dealers to launch ETNs” and “Promotion of the return of overseas funds to Taiwan”, so as to continue to expand the size of the capital market, build a well-

104

2019 Annual Report

V. Business Environment

developed securities market, and enhance the competitiveness of the securities and futures industry in 2018. The opening of new business means new opportunities that could stimulate increased market transactions. The Company has also remained active in planning related business in hopes of providing customers with more comprehensive product services.

Furthermore, the competent authority cut the stock transaction tax for day trading by half and implemented the policy for one year; extension of the implementation period to the end of 2021 was passed through the third reading in the Legislative Yuan Sittings on April 13, 2018. The overall trading volume has increased significantly since the implementation of the reduction of the stock transaction tax for day trading, helping to improve market liquidity. Therefore, the daily average turnover of Taiwan stocks in 2019 has increased to NT$151.44 billion. This measure breathed life into the securities brokerage business. The authority also enabled Odd-lot trading during the intraday session on October 26, 2019. Such a measure would make people with mediocre incomes easier to invest with a small amount. Thus would attract young people to join the market, slow down the aging trend of Taiwanese stock market, and bring new/young customers for the Company.

In response to Finance 3.0 trends, the Company shall continue to enhance electronic ordering businesses and integrate functions on the transaction platform. The ratio of electronic transaction operations has reached 64.79% in 2018 and 68.29% in 2019. The Company will provide customers with safer information transactions to ensure the promptness and accuracy of orders and create advantages for the Company’s electronic orders. In addition, the Company shall continue to develop a global transaction platform and provide customers with more international and diversified options once business development matures. It shall also provide quality services to increase customer satisfaction and build company reputation to achieve better performance.

As for our underwriting business, with competition for corporate funds raising deals increasingly intense, many corporations are learning that they have many options available to meet their financing needs, and that equity issues are not always their best opinion. As a result, companies that are properly screened and that demonstrate sufficient creditworthiness, as well as the preferred stock that issued by financial holdings companies and commercial banks, can often be better off turning to convertible bonds. Plus, with the number of large companies that have not already publicly listed shrinking and the demand for integration due to competition within industries increasing, financial advisory business and corporate funding such as private equity, mergers and acquisitions, capital reductions are growing.

The Taiwan government has also recently been actively encouraging foreign companies to consider Taiwan for primary and secondary listings, forcing most domestic underwriting departments to think more broadly and internationally. Add to this the regulators opening up of Offshore Securities Units (OSU), which allow domestic brokerage houses to become more international in scope. Going forward, the Company intends to pursue more international integrated investment banking business in the Greater China Region, and to pursue more foreign companies to list in Taiwan, thereby breathing new energy into Taiwan’s equity markets.

In terms of the President Securities’ proprietary trading business, the biggest variables in 2020 are the subsequent development of the novel coronavirus pneumonia, the pace of work resumption and the slowdown in demand related to this virus, the progress of the second round of negotiations in the US-China trade war and whether the restrictions on Huawei will increase. Additional variables include whether US President Trump’s fiscal policy before the election will continue to increase and overweight as well as changes in the situation after the US November election, the speed and extent of global interest rate cuts, as well as whether China can bottom out smoothly in terms of the policy and the economy, which will all affect the future development of global stock markets. At this stage, US economic growth has been gradually declining from the plateau period, and the relative growing space is limited. Therefore, in the face of the systemic risks of a downward revision of economic growth, a 10-year government bond yield hitting a record low and a 20% drop in oil prices, the stock market may bottom out during three to six months, and the time suitable for investment will fall in the second half of the year, when there are fewer variables and the fundamentals rebound. Looking at various variables

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and risks, uncertain remains related to whether this year’s market situation will improve and the growth of momentum to return to normal after the epidemic slows down. In the second half of the year, there will be a greater opportunity for the stock market to have more room for operations when the epidemic slows down, so long-range strategies have been adopted, and the fundamentals rebound. The Proprietary Trading Department will still adopt a steady approach to investing and defend carefully to maintain the department’s maximum profit.

As for our financial products business, we will continue to pursue increasingly tailored products to meet the needs of our clients as the regulators open up new areas of business. This will require enhancing our hedging activities a risk management models, so as to lower risk and ensure stable returns. Going forward, as the regulators allow greater access to Offshore Securities Units business, we will pursue global equity business and develop foreign derivatives services so as to better diversify our revenue streams.

In the wealth management business, the Compnay actively motivates salespeople to provide wealth management services to customers and expand the breadth of business penetration. Meanwhile, the Company has expanded product lines, including domestic and overseas funds and new structured products on the wealth management platform to provide customers with more choices in asset allocation. The employee benefit trust business has been launched to increase new revenue sources.

In terms of the business in China, Jin Yuan President Securities Corporation Limited in which the Company invests equity was approved to be established by the China Securities Regulatory Commission (CSRC) on February 17, 2020 as the first joint venture securities company that has been approved to be set up in China in Taiwan’s securities industry, which is also a landmark event in the history of crossstrait securities and financial cooperation.

According to the establishment approval letter issued by the CSRC, Jin Yuan President Securities Corporation Limited is now registered in Xiamen City, Fujian Province, with a registered capital of CNY$1.2 billion, and its business activities include securities brokerage, securities proprietary trading, as well as securities underwriting and sponsorship. Shareholder Xiamen Jinyuan Investment Group Co., Ltd. contributed CNY $612 million, or 51% of the capital investment; shareholder President Securities Corporation invested CNY $588 million, or 49% of the capital investment. Both shareholders made capital contributions in currency, while the President Securities Corporation invested in equivalent and freely convertible currencies.

The Jinyuan Group and President Securities are currently actively making relevant preparations for the joint venture. There will be six months for preparation. They expect to launch and operate the joint venture in the second half of 2020.

4. Market Supply forecast, growth opportunity, and business competitiveness

(1) Our Competitive Strengths
Our corporate image is solid.
We respect professional management and leadership.
Our horizontal organization and human resource costs are well-controlled.
Our brokerage business market share is steady.
Our position management performance is outstanding in winning percentage.
Our operating costs and risk management are both well-controlled.
(2) Positive Factors
The global economy is in recovery; consumption and investment are picking up, which will drive domestic economic growth.
Capital is readily available and the cost of capital is quite low.
FSC permits day trading to boost volume of market, and increase company profit.
With competent authorities gradually widening the business scope of securities firms, the breadth of the company’s operations will also be increased as well.

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V. Business Environment

Flexibility in proprietary trading business with industry-leading performance.
Free from the shackles of a financial holding company and from restructuring and consolidation activities that would result from such M&A activities, employees can focus more on tasks at hand and the organization can enjoy smooth and unfettered development.
Growth in online trading shows no signs of slowing down. The company’s fast and reliable online trading technology is well-positioned to attract a new, young client base.
The level of computerization and automation of information and processes is one of the highest in the industry leading to management practices with high efficiency.
Through President Group, the firm and our employees have access to superb sales channels and myriad resources.
With structured note products now available, products can be custom designed for either retail clients or institutional clients, thereby retaining clients who would have otherwise been drawn to banks and financial holding companies.
The government is planning to establish tax policies on financial products in line with international standards and this will encourage financial product innovation and drive new business.
The company encourages a corporate culture that emphasizes innovation and rising to challenges.
As financial markets continue to mature and the numbers of participants continue to increase, market liquidity and efficiency keep rising.
(3) Weakness
Financial holding companies have the advantage of capital employment and crisscross integration.
It is hard to mark up brokerage handling charge due to fierce competition.
The Fed is gradually normalizing interest rates.
Foreign investors are an increasing proportion of the market; domestic firms are at a disadvantage in terms of developing overseas clients.
The aging of domestic population lowers demand for investments.
The salary growth rate of the youth population grows slowly and the low amount of savings makes it difficult to begin investments.
(4) Strategies for Dealing with the Weakness Identified

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Business Unit Strategy
1. Encourage various departments and subsidiaries to work together to develop new business.
2. Transformation into a multi-functional branch to expand the market share and profit.
3. Develop our institutional client business, using asset management business to pursue corporate clients and
combine that with our OSU business, and provide added-value services beyond our conventional securities
services.
4. Expand our spread trading business, increase mid-level customer trading volumes and position turnovers
rates.
5. Enhance internal auditing procedures, reduce client complaints.
6. Customized online brokerage system for institutional and mid-level investors.
7. Increase revenues from securities lending service to investors.
8. Identify under-performing brokers and refocus them towards “Marketing” efforts as a means of making a
breakthrough, or refocusing their efforts on cross-selling of non-traditional products.
9. Cultivate all employees’ abilities to cross-sell a range of financial products, particularly personal financial
planning products and wealth management services.
10. Focus on tiered, wealth management sales efforts that take into consideration client preferences, trading
Brokerage habits, and that provide appropriate product information and that increase trading frequency.
11. Push forward with online brokerage business; implement comprehensive platform that integrates both
information and trading systems. Upgrade online trading system stability and order entry quality.
12. Improve our employee training, assistance in preparation for related licenses, performance management,
and information system knowledge, to upgrade our brokers’ professionalism and productivity.
13. Continue to recruit new employees, cultivate strong management trainees and financial planning
professionals who are familiar with a wide range of products. Train back-office staff to take on sales roles
thereby streamlining HR costs.
14. Evaluate the feasibility of digitizing all back-office operations so as to increase efficiency and to control
costs at individual branches.
15. Implement succession mechanisms for each level of the organization, strengthen our incubation center
functions, retain good talent, solid management training programs, set incentive programs, encourage
successors, smooth generational gaps.
16. Set break-even point for each branch, consider the linkage between target customers and brokers’
performance and branches’ operation outcome, evaluate potential for future profitability, and adjust business
direction.
1. Recognize and adjust to different market conditions, switching between “Range Trading” and “Trend
Trading” strategies, thereby maintaining an optimal market position.
Proprietary 2. Strictly implement risk control regulations to effectively reduce the impact of systemic risk.
Trading 3. Improve our research and trading of Emerging Market Exchange equities, foreign-listed equities, and futures
markets, to create more diverse sources of revenue.
4. Add quantitative analysis and technical indicator model analysis to our operating systems.
1. Make good use of macroeconomic databases and develop systematic tools to enhance profitability.
2. Appropriately adjust traders’ mandate and increase traders’ mandates gradually.
3. Enhance traders’ decision making and trading ability.
Fixed Income
4. Strengthen foreign bond research and trading team to meet the growing needs of expanding businesses.
Business
5. Recruit experts for sales and debt capital market to expand the business scope in fixed income market.
6. Develop structured products in different themes with the advantages in the proprietary trading business.
7. Strengthen corporate-related business and diversify the risk of proprietary trading business.
1. In terms of future opening to daily trade of stocks and warrants, we have already increased tools of futures
and options, enhance transaction system effectiveness, lower transaction cost, and maximize profit.
Financial
2. Be more consumer-oriented and develop new products to meet these demands.
Products
3. Strengthen market research and investment analysis of foreign market objectives and issue a variety of
derivative products to provide customers with diverse options for asset allocation.
1. Diversify our trading strategies to better react to market changes.
2. Aggressively pursue market-maker roles in foreign futures and options markets.
Quantitative
3. Expand our range of foreign products traded and increase profitability in foreign products.
Trading
4. Increase the proportion of order placements via automatic trading programs.
5. Increased the integration of resources across multiple departments, thereby creating better synergies.
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Business Unit Strategy
1. Prior to taking initial steps on a given underwriting deal, consultations should be conducted with colleagues
throughout the company’s various departments and divisions so as to accurately access to the realistic profit
opportunities and risks of the deal. Once a deal is ongoing, regular reassessments and revisions should be
made in order to ensure the quality of the overall project.
2. When acting as exclusive sales agent for an issue, a risk assessment report must be generated to determine
if risks fall within the firm’s accepted parameters. Afterwards, daily risk values should be generated and
Underwriting
market simulations should be conducted to as so have a clear and timely picture of risk exposure and thus
(Capital
determine when to initiate stop losses or when to take profits. The net effect of all of these efforts will be to
Markets)
lower overall risk while pursuing the largest possible profit.
3. As for the domestic business, customers of several departments, including Brokerage, Corporate Client,
Wealth Management, Financial Product, and Shareholder Services have been integrated; platforms for
corporate and personal financial services have been established and activated.
4. Actively work with foreign business entities to seek IPOs or fundraising operations for foreign companies in
Taiwan.
1. Improve quality of service:
(1) Respond quickly to legal changes which affect procedures and materials. Improve efficiency of training
cycles. Develop employee knowledge on various regulations and procedures. Enhance mutual support and
Shareholder flexibility among employees. Increase efficiency of human resource utilization.
Services (2) Enhance inter-department cooperation and verifications, thereby ensuring accuracy and security of
Coordination
processes.
2. Enhance efficiency of operations:
Follow the internal objective of “Customer satisfaction, unceasing improvement and innovation”, we will
keep increasing the satisfaction rate of agency business.
1. Help business personnel to obtain the relevant professional licenses and raise their wealth management
Wealth competence.
Management & 2. Aside from providing multiple products, we focus more on the depth of product service.
Trust 3. Construct cross-device platforms that allow orders to be placed for all types of products, thereby offering
clients added convenience and achieving Bank 3.0 objectives.
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B. Productions Procedures of Main Products

The Company is a securities service provider. The business and services provided by the Company do not involve the production processes for physical products, so it is not applicable.

C. Supply Status of Main Materials

The securities business and services conducted by the Company are in accordance with the laws and regulations of the competent authority. There is no supply of physical materials, so it is not applicable.

D. Major Suppliers and Clients

The Company’s main customers include individuals, legal entities, approved foreign professional investment institutions and natural persons. In the past two years, each customer’s purchase (sales) of products failed to reach 10% of the purchase (sales) of products of the Company per year.

E. Production in the Last Two Years

The value of the securities business and services conducted by the Company cannot be provided as in the general manufacturing industry.

F. Shipments and Sales in the Last Two Years

The value of the securities business and services conducted by the Company cannot be provided as in the general manufacturing industry. The revenue and its ratio of the Company’s main businesses in the past two years are as follow:

Unit: NT$ thousands

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Item 2018 % 2019 %
Brokerage 2,483,267 52.97% 2,221,924 35.67%
Proprietary Trading 2,006,020 42.79% 3,726,001 59.81%
Underwriting 198,603 4.24% 281,992 4.53%
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III. Employee Data

Analysis of Average Tenure, Age and Education, for Sales Force in 2018, 2019, and the first quarter of 2020

Unit: Person

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Year 2018 2019 2020Q1
Management 111 111 114
Number of
Regular Staff 1353 1313 1297
Employees
Total 1464 1424 1411
Average Age 45.05 45.49 46.11
Average Tenure 13.09 13.49 13.76
Doctorate Degree 0.20 0.21 0.21
Master’s Degree 13.46 14.4 14.81
Bachelor Degree / Junior
Education (%) 71.86 71.98 71.94
College Graduate
Senior High School 14.48 13.41 13.04
-- -- --
High School or Less
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Note: Directors and part-time employees are excluded.

Revenue Per Employee

Note: Directors and part-time employees are excluded. Revenue Per Employee	Note: Directors and part-time employees are excluded. Revenue Per Employee	Note: Directors and part-time employees are excluded. Revenue Per Employee
Unit: NT$ thousands
Item	2018	2019
Revenue Per Employee	3,202	4,375

Note: Revenue per employee = total revenue /number of employees

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V. Business Environment

IV. Environmental Protection and Corporate Citizenship

A. Environmental Protection

Based on governmental order #0950007006, each company is required to disclose in its annual report its compliance with the European Union’s Restriction of hazardous Substances Directive (RoHS). The Company is in the securities service industry, so there is no signification environmental pollution nor losses incurred because of environmental pollution (including no compensation and environmental protection audit results documenting any violation of environmental regulations).

B. Corporate Citizenship

President Securities Corporation has been a long-standing supporter of important social charitable activities and, for its efforts, has been recognized with the 7th annual Wenxin Award and the 6th National Civic Service Award, and Top 50 by the Commonwealth magazine in 2013, 2015, 2016 and 2017. The Company has taken concrete actions to cooperate with the Taiwan Fund for Children and Families from 2007 to 2019 to help children from financially challenged families with their studies, and has received a certificate of Appreciation in 2013. The Company also mobilized all employees and customers for joint participation and invested actual funds and various equipment to social welfare activities to fulfill corporate social responsibilities. The Company raised a total of NT$2.3 million from 1,226 participants in 2019. Since 2001, the Company has organized all employees in PSC, PFC, PAMC, PCMC, PIAC, and President Securities Venture Capital as well as allowing customers to participate in the “Love Delivery Activities” that provide children from financially challenged families with scholarships. A total of approximately 8,798 elementary school, junior high school, and senior high school students were beneficiaries. The activities have provided school children from poor families with opportunities to explore different academic disciplines for their own development and growth.

The Company organized the first employee blood donation event in 2006 and received a passionate response. Starting in 2007, the Company has organized two employee blood donation events every year and expanded the event to include community residents who have provided strong support. Starting in 2010, the Company organized three blood donation activities every year and a total of 244 bags of blood were donated in 2019. A total of 3,517 bags of blood have been donated from 2006 to 2019 and the Company has become a permanent partner of the Blood Center. The Company receives a letter of gratitude and commendation from the Blood Center every year.

In 2019, the Company launched President Securities Volunteer Day, with 333 employees from three departments of the headquarters and 15 branches (42% of the branches) who participated enthusiastically. Volunteering services include community street sweeping, mountain cleaning activities, elder care, receipt collection, and library administrative services. At the Double-ninth Festival, the Company donated NT $100,000 to the Eden Social Welfare Foundation to provide meals for the disadvantaged elderly, and the Company’s volunteers went to the Pei-Ta Elderly Care Center in Sanxia to enjoy meals with the disadvantaged elderly. The volunteers participated in the Tainan Diamond Wedding Charity Event and “Hometown x Taiwan Christmas Charity Event” organized by the Uni-President Corporation’s foundation, through which they gave a total of 200 gifts to the elderly and children who had been invited to enable them to feel the festive atmosphere while the Company could put its corporate social responsibility actions into practice.

President Securities Corp. upholds the spirit of “giving back to the community what we take”, and we continue to dedicate ourselves to helping disadvantaged groups and to promote social welfare activities.

C. Work Environment Safety and Precautions

The Headquarters has formulated relevant preventive plans in accordance with the “Regulations Governing the Occupational Safety and Health Management” promulgated by the Ministry of Labor to protect the employees’ work environment. We set up AED devices in the public space for emergency use for our employees and clients.

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V. Labor Relations & Employee Benefit

A. Employee Benefits, Education and Training

1. Employee Benefits

The company has always maintained a harmonious relationship with its employees. We have spared no expense in providing attractive employee benefits, in providing opportunities for personal growth, in providing a pleasant work environment, and in providing clear and accessible communication channels to all levels of management.

In addition, we go beyond simply offering benefits prescribed by Labor Standard Act, such as annual leave time and number of working hours. Employees also enjoy additional benefits such as group insurance for worker’s compensation, accident medical care, and department dining subsidy. As well, we offer employees funds for weddings and in time of bereavement, and organizes and subsidized employee outings aimed at strengthening relationships between the firm and our employees, and among employees themselves.

The company is committed to creating a reasonable, friendly, and efficient work environment for its employees, an environment that includes strong lines of communication for employees to express opinions and suggestions about the firm. With this in mind, the firm has established an “Employee Suggestion Center” and also organizes regular employee workshops to actively solicit, discuss, and then respond to employee concerns and suggestions. The Company has also dedicated itself to building a safe and equal work place with a proper complaint channel.

In January of 2004, the company expanded its employee benefits to include an “Employee Stock Ownership Trust, (ESOT)”, allowing those employees who participate to have a set portion of their monthly pay automatically deducted and placed in a special trust account, where matching funds will be provided by the company. The aim of this program is to promote long-term commitments from employees as well as encourage healthy savings habits and encourage responsible retirement planning.

To encourage employees to live healthier lives, the Company provides all employees with a smoke-free work environment and arranges annual health checks for employees to improve their physical health. The arrangements are superior to legal requirements. In addition, the Company also conducts periodic blood donation activities and physical and spiritual health seminars from time to time to improve employees’ overall health. The activities include sanitation education, policy, and the environment.

The Company also provides a spacious 200-ping sports center which is equipped with comprehensive sports facilities. It also actively promotes various club activities to promote healthier lifestyles for employees. Essentially, all such benefits and programs are designed to foster a harmonious relationship between employees and the company. In addition, the Company was awarded two stars as Best Companies to work for by Department of Labor, Taipei City Government in 2012. The Company was also selected as an Enterprise of Happiness by 1111 Job Bank. Going forward, we are optimistic to continue to improve upon these relationships, always with the ultimate aim of allowing both the company and our employees to enjoy mutual benefit and growth.

2. Education and training courses, expenditures, and number of hours

The Company values education, training, and talent development. The effects of training in 2019 are described as follows:

 Assisting the brokerage system with training and project execution

(1) Wealth management consulting program

In order to consider the direction of transformation of the brokerage business and expand the development of the wealth management business, the Company will commission professional consultants to execute a wealth management consulting program. This program will assist in the planning and development of transformation of the wealth management business so as to accelerate the development of wealth management business.

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V. Business Environment

(2) Financial advisor training course

This course aims to strengthen the expertise of salespeople and develop their skills in financial planning and the ability to guide high-net-worth customers to invest in a variety of products and business activities. The course will also assist salespeople in transforming themselves from the current salesoriented salespeople into becoming demand-oriented financial consultants. In addition, a performance management mechanism will be adopted, along with the continuous incentives provided by supervisors, so as to strengthen management measures and to achieve performance targets of other products in cooperation with the Brokerage Department.

(3) Professional training for business activities dedicated to institutional clients

To assist in the promotion of this type of business activity, professional training related to helping institutional clients manage their business activities is offered to improve the quality of service and increase the sources of profit from corresponding diversified business activities.

(4) Talent training:

Continue to advance industry-academia collaboration with finance departments of major universities to reduce the gap between students’ studies and their careers and fulfill our corporate social responsibilities.

(5) Industry trends:

The monthly President Class focuses on analyses of trending industries to provide colleagues with a greater understanding of industry trends to provide better service to our customers.

Finance 3.0 Digital Transformation Training Program
(1) FinTech lectures:

In response to the advent of the era of financial technology, the Company strives to inspire employees through the dangers, customer type, behavior patterns, and service methods in the future development in the securities industry and will continue to promote personnel transformation and grasp the future development trends of FinTech.

(2) Digital marketing application courses:

These courses help departments plan effective content marketing strategies and uses content marketing to increase the “stickiness” of customers. It effectively uses content marketing to reduce marketing costs and improves marketing impacts and improves sales performance.

Program for improving management by supervisors
(1) In order to continuously improve the ability of supervisors to management personnel, classroom teaching using a case-study approach has been adopted. The goal is to stimulate discussion, sharing, and reflection in class so as to strengthen the ability of supervisors to understand management concepts and to provide them with the skills needed to lead their teams in making changes and to reach a consensus on management.
(2) In order to reach a consensus on management methods among senior supervisors, a supervisor consensus camp is held. This camp is based on organizational transformation and business development, to help supervisors think about new concepts and practices collectively so as to meet future business challenges.

 E-training

(1) The training system has been upgraded to version LMS6.4 and its functions are upgraded to improve the Company’s management and implementation of training programs.
(2) The Company purchases and produces training materials based on job requirements, integrates free resources, and selects various online materials suitable for various roles to encourage employees to learn on their own at any time. This allows learning to be more diverse and spontaneous.
(3) Marketing activities are used to encourage employees to make use of online resources and cultivate habits for continuous learning. The goal is to strengthen motivation for learning and improve their ambitions for improving digital transition.

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 Cross-department communication

(1) The Company organized wealth management project discussion meetings in 2019 to learn about business departments’ strategies and key business goals of the current year to plan suitable courses and options to ensure the efficacy of studies and performance output. It also allowed employees to learn about the departments’ ideas on training and establishes good communication channels.
(2) High-efficiency cooperation workshops for information system development are held. The goals include helping participants to establish correct concepts and attitudes by helping them break the habit of mutual blaming. Additional goals include deepening their understanding of system development operating procedures, shortening development exploration time, increasing the probability of successful system development, and establishing efficient cooperation models of system development
Application for government subsidies to reduce training expenditures

Human resources improvement program: NT$251,560

The Company participates in a TTQS evaluation held by the Ministry of Labor. This has ensured the consistency and stability of training quality according to the TTQS talent development quality management system for 10 consecutive years as the only company in the securities industry that has won the Silver Medal for the six consecutive years in the category of business enterprises.

B. Retirement System and Implementation Status

To encourage employees’ long-term services and professional development, protect employee rights, and improve work efficiency, the Company has established the Employee Retirement Regulations in accordance with the approval granted in the National Taxation Bureau’s (1989) Cai-Bei-Guo-ShiuShen-1 No. 112955 Letter dated November 12, 1989.
The Company established the Employee Pension Fund Management Committee on October 11, 1994 with the approval of the Department of Labor of the Taipei City Government. After the implementation of the Labor Standards Act in March 1998, the Company established the Supervisory Committee of Labor Retirement Reserve in accordance with the laws. Related organization charters and retirement regulations have been approved by the Department of Labor of the Taipei City Government. The Company appropriates funds to the Trust Department of the Bank of Taiwan according to the appropriation ratio calculated by the actuary.
The government implemented the new retirement system in the “Labor Pension Act” in July 2005 to handle employees’ retirement. As of today, the Company has close to 1,400 employees enrolled in the new labor pension system. The Company complies with government policies and appropriates 6% of employees’ salaries to the pension account in the Bureau of Labor Insurance each month.

C. Employee Disputes and Protection of Employee Rights

In accordance with the Labor Standards Act, the company has instituted its own set of work rules and has submitted a copy of these work rules to the Taipei City Government Department of Labor for approval. In addition to notifying all employees via internet of the content of these work rules, we also have posted a copy of these work rules on rules, we also have posted a copy of these work rules on the company’s internal corporate website where employees may view a copy of these rules at any time.
To date, the company has made every effort to maintain a harmonious and fulfilling work environment for all of its employees and, as such, has not suffered any loss or damage resulting from any employee disputes, in the firm’s entire history. And, the company has every reason to believe that this harmonious dynamic will continue.
D. Loss caused by labor dispute in the most recent three years: None.

E. An estimate of losses incurred to date or likely to be incurred in the future, and mitigation measures being or to be taken: None.

F. Certification Details of Employees Whose Jobs are Related to the Release of the Company’s Financial Information

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V. Business Environment

Certification details of employees whose jobs are related to the release of the Company’s financial information are disclosed in the table below. In response to the competent authorities’ requirements for risk management implemented by the risk management unit and the qualifications for operators and internal auditors, the Company’s relevant personnel have also completed the training and obtained relevant qualifications in accordance with the regulations. Currently, three employees in charge of risk verification have obtained the Financial Risk Manager (FRM) Certificate and two employees in charge of auditing have also obtained Certified Financial Service Auditor (CFSA) Certificate.

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Risk Controls Office/4 employees
Certifications and Qualifications Received by Employees
Qualified Ratio (%)
Qualification Exam for Senior Securities Specialist 4 100.0
Qualification Exam for Futures 4 100.0
Certificate of Margin Trading and Short Selling 1 25.0
Qualification Exam for Securities Investment Trust and
3 75.0
Consulting Professional
Qualification Exam for Personal Insurance Representative 1 25.0
Qualification Exam for Non-Life Insurance Representative 1 25.0
Bill Finance Specialist exam 2 50.0
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Finance Department/37 employees
Certifications and Qualifications Received by Employees
Qualified Ratio (%)
Qualification Exam for Senior Securities Specialist 29 78.4
Qualification Exam for Securities Specialist 1 2.7
Qualification Exam for Futures 10 27.0
Certificate of Margin Trading and Short Selling 4 10.8
Qualification Exam for Securities Investment Trust and
7 18.9
Consulting Professional
Proficiency Test for Trust Operations Personnel 6 16.2
Qualification Exam for Personal Insurance Representative 5 13.5
Basic Proficiency Test for Bank Lending Personnel 1 2.7
Proficiency Test for Financial Planning Personnel 1 2.7
Basic Proficiency Test for Bank Internal Controls 5 13.5
Qualification Exam for Non-Life Insurance Representative 4 10.8
Professional Capacity of Bonds Specialist 2 5.4
Bill Finance Specialist exam 3 8.1
Proficiency test for corporate basic internal control 2 5.4
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Auditing Office/42 employees
Certifications and Qualifications Received by Employees
Qualified Ratio(%)
Qualification Exam for Senior Securities Specialist 35 83.3
Qualification Exam for Securities Specialist 7 16.7
Qualification Exam for Futures 42 100.0
Certificate of Margin Trading and Short Selling 35 83.3
Qualification Exam for Securities Investment Trust and
27 64.3
Consulting Professional
Proficiency Test for Trust Operations Personnel 40 95.2
Qualification Exam for Personal Insurance Representative 35 83.3
Qualification Test for Sales Personnel of Structured Products 1 2.4
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Auditing Office/42 employees
Certifications and Qualifications Received by Employees
Qualified Ratio(%)
Basic Proficiency Test for Bank Lending Personnel 3 7.1
Proficiency Test for Financial Planning Personnel 12 28.6
Basic Proficiency Test for Bank Internal Controls 25 59.5
Qualification Exam for Non-Life Insurance Representative 36 85.7
Qualification Exam for Stock Affair Specialist 4 9.52
Professional Capacity of Bonds Specialist 1 2.4
Bill Finance Specialist exam 1 2.4
Qualification Exam for Investment-orientated Insurance
17 40.5
Product Representative
Proficiency test for corporate basic internal control 7 16.7
Wealth management salespersons 38 90.5
Qualification Exam for Securities Investment Trust and
5 11.9
Consulting Regulations
Trust laws exam 1 2.4
----- End of picture text -----

G. Conduct and Ethics of Employees

The Company has formulated the “Work Rules” and “The Regulations and Declaration” signed with employees for their conduct and ethics. The content is summarized below:

All the Company’s employees shall comply with the following standards and rules in the daily life for the Company’s development and all employees’ welfare:
(1) Environmental sanitation: Maintain sanitation in the surrounding environment and keep documents and supplies tidy.
(2) Clothing and appearance: Dress in a simple and tidy manner; have a haircut and shave from time to time; barefoot, slippers, flip-flops, and jeans are prohibited; wear in uniform from Monday through Thursday.
(3) Interaction with people: Focus on manners, punctuality, and promise-keeping, respect others, cherish public property, work hard, and be efficient.
(4) Commitment: Be active and responsible at work; do not shirk responsibilities; do not be perfunctory; never put off till tomorrow what may be done today.
(5) Customer first: Receive customers in a cordial and attentive manner; put services first; place emphasis on customers’ rights and interests.
(6) Public property: Ensure proper safekeeping and strengthened management of supplies and equipment.
(7) Profit boosting and cost cutting: Assist in the expansion of business, actively strive for the Company’s interests, reduce and save expenses, as well as eliminate waste.
(8) The Company strictly prohibits gambling, noise, and physical fights.
All of the Company’s employees shall comply with the following service standards and rules for maintaining the Company’s interest.
(1) During employment, employees shall not take on part-time (concurrent) duties other than the work designated by the Company. If it is not in conflict with the Company’s operating interests and will not interfere with the full-time work, employees shall report to their supervisors beforehand. Except for the purpose of business, employees shall not use the Company’s name without permission.
(2) Employees shall not look through documents, correspondence, and books of accounts that are not part of their business and present their business documents to irrelevant parties.
(3) Never leak, transfer, or otherwise the Company’s business or technological secretes, including but not limited to all documents, information, products, or objects or rights with property value, to people.
(4) Employees guarantee that when leaving the Company, all the Company’s information kept related to the

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V. Business Environment

work shall be handed over to the unit supervisor, and that Company’s property and relevant documents shall not be taken away.

(5) Employees shall not bring prohibited items and flammable materials into the company; they shall not bring people who do not work at the Company to the Company without permission.
(6) Employees are not allowed to absent the Company’s major meetings without any reason.
(7) The Company’s employees shall report their duties and business to supervisors from the first level all the way up and shall not bypass supervisors in the middle and report to those at higher levels directly, unless it is an emergency or special circumstance.
(8) The Company’s employees shall not take the Company’s property or documents out of the Company without permission, unless with the responsible supervisor’s approval.
(9) The Company’s employees shall not have a loan relationship or guarantee relationship with the Company’s customers.
(10) The Company has prohibited inappropriate lending or loan brokerage among employees.
(11) During employment, employees shall comply with the Company’s assignment of work as well as management and supervision; the Company may adjust the employees’ job duties and workplace location based on business needs in accordance with labor laws.
(12) To protect the Company’s reputation, the Company strictly prohibits employees’ comments that are not verified or may damage the Company’s reputation on any social websites.
To maintain the Company’s corporate culture, the Company’s employees shall comply with the following ethical standards and rules.
(1) When conducting business, employees shall not directly or indirectly offer, promise to offer, request, or accept any improper benefits, including kickbacks, commissions, facilitation fees, or otherwise offer or accept improper benefits to or from customers, agents, contractors, suppliers, public servants, or other stakeholders.
(2) When directly or indirectly offering a donation to political parties or organizations or individuals participating in political activities, employees shall comply with the Political Donations Act and its own relevant internal operational procedures, and shall not make such donations in exchange for commercial gains or business advantages.
(3) For charitable donations or sponsorships, employees shall comply with relevant laws and regulations and shall commit bribery in disguise.
(4) Employees shall not directly or indirectly offer or accept any unreasonable presents, hospitality or other improper benefits to establish business relationship or influence commercial transactions.
(5) Managers shall not take advantage of their positions in the Company to obtain improper benefits for themselves, their spouses, parents, children or any other person.
I will comply with relevant securities laws; in the case of any violations, I am willing to accept the Company’s punishment.
If personal behavior is detrimental to the social public order, good social customs, or personal misconduct has constituted sexual harassment of other colleagues, with specific evidence proving that it has damaged a business unit’s or colleague’s image or reputation, the Company may terminate the employment relationship without notice.
I will strictly abide by the Company’s regulations on copyright protection, do not use computer programs that are not legally authorized on the Company’s personal computers, and will never reproduce or infringe any programs that are legally authorized on the Company’s personal computers. If violating the above-mentioned regulations, I am willing to accept the Company’s severe punishment and accept all the criminal and civil liability.
Corporate information confidentiality
(1) The ownership, patent rights, and other rights of the business information, research results, or inventions

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and technologies, which are obtained because of or through my duties, belong to the Company, and I agree to assist the Company in conducting the necessary procedures for obtaining or protecting the rights, whether I am employed.

(2) I agree that the author of the work, which I plan with the fund from the Company or I accomplish through the equipment or information provided by the Company, is the Company, and that the Company owns the copyright.
(3) Never help the Company’s competitors or provide them with relevant materials or information without approval.
(4) Never use Company’s confidential information to threaten the Company as a means of promotion or getting a pay raise.
(5) Never investigate (snoop about) the Company’s confidential information that is not related to the work; never discuss the Company’s confidential information with colleagues.
(6) The salary and bonuses of the Company’s employees are regarded as confidential; I shall not tell other people about my own salary and bonuses and must not inquire about other colleagues’ salaries and bonuses.
(7) If violating the above-mentioned regulations, I am willing to accept the Company’s punishment and take the responsibility for compensation for the resulting damage or losses to the Company.
Regulations on e-mail

Comply with the Company’s relevant regulations on intranet connected to the Internet and e-mail accounts; any violator is willing to accept the Company’s punishment.

H. Internal Legal Compliance and Material Information Management

We have set an “internal material information handling procedures” and assigned the Compliance Office to be in charge of internal major information in order to do coordination and prevent internal trading. In addition, our HR promotes education advocacy toward board members, managerial officers, and employees each year. In accordance with the “Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Listed Companies” and with the “Taiwan Stock Exchange Corporation Procedures for Press Conferences Concerning Material Information of Listed Companies”, we have posted all such information on the company’s internal corporate website where employees and managers may view it.
Within the Office of the CEO, we have established a Legal Compliance Department, which is tasked with ensuring that all of the company’s processes and administrative procedures are in compliance with the most recent laws and regulations, that all activities are conducted in accordance with relevant laws and regulations. And in accordance with “Standard Directions for the Content and Procedures of Assessment of Legal Compliance of Securities Firms”, this department is also tasked with conducting regular legal compliance evaluations of each department and each branch office and then conducting legal compliance training specific to their needs.
We have created a legal compliance section on our internal corporate website where we routinely post information on any recent amendments made to relevant laws and regulations. We have also set up a hotline where employees can call to learn more about insider trading, its key principles, definitions, and the potential civil and criminal exposures involved. All of these measures, taken together, provide our employees with appropriate and adequate legal guidance.To strengthen the awareness of brokerage employee of the need for compliance, the Company held a “Month of Compliance” event in the first quarter of 2020. In addition to daily sharing of cases of violations in the industry through “sharing reports,” the Company offered online classes and gave tests based on four major themes to brokerage employees.
To comply with Personal Information Protection Act, we established personal data protection system in 2013. We also gained “BS 10012” certification of England Standard Association in November 22, 2013. And we continue to undergo certification consulting toward our Shareholder Services department from 2017.

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V. Business Environment

VI. Material Contracts and Agreements

A. Operating lease contract: For each leased asset with more than NT$5 million of rent per annum as of April 30, 2020

Unit: NT$

Type	Asset	Area (Ping)	Lease Term	Rental	Lessee	Payment Method	Restrictive Covenant
Assets leased by the Company	Nanjing Branch Office	218	2017.01-2021.12	458,000/month	Chen, Ting- Yuan	Half a year	NA

B. Non-operating lease contract: For each leased asset with more than NT$5 million of rent per annum as of April 30, 2020

Unit: NT$

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----- Start of picture text -----

Area Payment Restrictive
Type Asset Lease Term Rental Lessee
(Ping) Method Covenant
Assets Uni-President
President
leased Asset
Securities 307.06 2019.04-2024.03 522,000/month Monthly NA
to other Management
Building
entities Corporation
Assets
President
leased President Tokyo
Securities 417.14 2019.04-2024.03 709,000/month Monthly NA
to other Corp.
Building
entities
----- End of picture text -----

119

President Securities Corporation

120

2019 Annual Report

VI. Financial Information

I. Five-Year Financial Summary

A. Condensed Balance Sheet

1. Consolidated Condensed Balance Sheet – Based on IFRS

Unit: NT$ thousands

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Year Financial Summary for the last five years (Note1)
2020Q1
(Note1)
Item 2015 2016 2017 2018 2019
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Current Assets		65,185,471	81,275,723	81,561,564	64,915,856	90,081,974	76,084,164
Property and Equipment (Note2)		2,520,596	2,467,163	2,434,389	2,442,370	2,443,964	2,450,856
Intangible Assets		144,659	129,771	112,096	124,210	129,160	128,757
Other Assets		2,238,807	2,183,539	2,203,645	2,898,837	3,099,302	3,287,276
Total Assets		70,089,533	86,056,196	86,311,694	70,381,273	95,754,400	81,951,053
Current	Before distribution	47,265,147	62,877,634	60,800,920	44,636,888	68,821,260	55,942,193
Liabilities	After distribution	47,525,906	62,877,634	62,469,434	45,596,283	Note3	-
Non-Current Liabilities		60,335	48,933	75,812	31,938	167,368	160,033
Total	Before distribution	47,325,482	62,926,567	60,876,732	44,668,826	68,988,628	56,102,226
Liabilities	After distribution	47,586,241	62,926,567	62,545,246	45,628,221	Note3	-
Equity Attributable to Shareholders of the Parent		22,718,012	23,080,930	25,385,654	25,645,985	26,699,680	25,779,093
Capital Common	Stock	13,231,191	13,356,658	13,904,281	13,904,281	13,723,900	13,723,900
Capital Reserve		256,116	142,702	142,702	142,702	91,261	91,261
Retained	Before distribution	9,307,717	9,432,286	11,397,045	10,979,662	12,362,704	11,439,189
Earnings	After distribution	8,642,781	8,884,663	9,728,531	10,020,267	Note3	-
Other Equity Interest		201,014	149,284	-58,374	619,340	521,815	524,743
Treasury Stocks		-278,026	-	-	-	-	-
Non-controlling Interests		46,039	48,699	49,308	66,462	66,092	69,734
	Before distribution	22,764,051	23,129,629	25,434,962	25,712,447	26,765,772	25,848,827
Total Equity
	After distribution	22,503,292	23,129,629	23,766,448	24,753,052	Note3	-

Note 1: Financial information for the years of above-mentioned was audited and certified by CPAs. The financial information for the first quarter of 2020 has been reviewed by CPAs.

Note 2: No asset revaluation has been conducted.
Note 3: Distributed earnings from 2019 have yet to be approved by shareholders.

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2. Individual Balance Sheet

Unit: NT$ thousands

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Year Financial Summary for the last five years (Note1)
2020Q1
(Note1)
Item 2015 2016 2017 2018 2019
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Current Assets		52,172,205	63,516,085	66,854,475	48,293,715	71,080,620	52,255,490
Property and Equipment (Note2)		2,354,427	2,295,097	2,260,981	2,269,210	2,270,391	2,272,963
Intangible Assets		103,000	85,761	62,317	67,004	70,726	71,658
Other Assets		6,121,445	6,094,357	6,082,755	6,965,559	7,263,678	7,517,323
Total Assets		60,751,077	71,991,300	75,260,528	57,595,488	80,685,415	62,117,434
Current	Before distribution	37,963,799	48,852,745	49,788,572	31,913,301	53,837,030	36,192,724
Liabilities	After distribution	38,224,558	48,852,745	51,457,086	32,872,696	Note3	-
Non-Current Liabilities		69,266	57,625	86,302	36,202	148,705	145,617
Total	Before distribution	38,033,065	48,910,370	49,874,874	31,949,503	53,985,735	36,338,341
Liabilities	After distribution	38,293,824	48,910,370	51,543,388	32,908,898	Note3	-
Capital Common	Stock	13,231,191	13,356,658	13,904,281	13,904,281	13,723,900	13,723,900
Capital Reserve		256,116	142,702	142,702	142,702	91,261	91,261
Retained	Before distribution	9,307,717	9,432,286	11,397,045	10,979,662	12,362,704	11,439,189
Earnings	After distribution	8,642,781	8,884,663	9,728,531	10,020,267	Note3	-
Other Equity Interest		201,014	149,284	-58,374	619,340	521,815	524,743
Treasury Stocks		-278,026	-	-	-	-	-
Non-controlling Interests		-	-	-	-	-	-
	Before distribution	22,718,012	23,080,930	25,385,654	25,645,985	26,699,680	25,779,093
Total Equity
	After distribution	22,457,253	23,080,930	23,717,140	24,686,590	Note3	-

Note 1: Financial information for the years of above-mentioned was audited and certified by CPAs. The financial information for the first quarter of 2020 has been reviewed by CPAs.

Note 2: No asset revaluation has been conducted.

Note 3: Distributed earnings from 2019 have yet to be approved by shareholders.

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VI. Financial Information

B. Condensed Income Statements

1. Consolidated Condensed Income Statements

Unit: NT$ thousands

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Year Financial Summary for the last five years (Note1)
2020Q1
(Note1)
Item
2015 2016 2017 2018 2019
----- End of picture text -----

Operating Revenue	4,580,843	4,497,543	7,270,066	5,774,276	7,142,397	404,349
Gross Profit	3,709,350	3,730,502	6,284,995	4,644,268	5,896,915	61,343
Operating Income	252,740	518,530	2,393,918	1,021,143	2,061,802	-972,305
Non-Operating Income	855,964	418,981	450,055	415,744	496,006	41,036
Income Before Tax	1,108,704	937,511	2,843,973	1,436,887	2,557,808	-931,269
Net Income (Loss) from
Operations of Continued	962,535	833,042	2,624,657	1,217,633	2,373,835	-920,204
Segments
Net Income (Loss) from	-	-	-	-	-	-
Discontinued Operations
Net Income (Loss)	962,535	833,042	2,624,657	1,217,633	2,373,835	-920,204
Other Comprehensive Income (Income after Tax)	78,630	-88,465	-314,958	145,968	-124,296	3,259
Total Comprehensive Income	1,041,165	744,577	2,309,699	1,363,601	2,249,539	-916,945
Net Income Attributable to Shareholders of the Parent	956,613	826,690	2,618,769	1,210,323	2,368,536	-923,515
Net Income Attributable to non-controlling Interests	5,922	6,352	5,888	7,310	5,299	3,311
Comprehensive Income
Attributable to Shareholders of	1,035,140	737,775	2,304,724	1,355,594	2,244,912	-920,587
the Parent
Comprehensive income
attributable to non-controlling	6,025	6,802	4,975	8,007	4,627	3,642
interests
Earnings Per Share (Note2)	0.68	0.59	1.88	0.87	1.72	-0.67

Note 1: Financial information for the years of above-mentioned was audited and certified by CPAs. The financial information for the first quarter of 2020 has been reviewed by CPAs.

Note 2: Earnings per share is calculated based on the number of shares that were adjusted retrospectively. The unit is NTD.

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2. Individual Condensed Income Statements

Unit: NT$ thousands

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----- Start of picture text -----

Year Financial Summary for the last five years (Note1)
2020Q1
(Note1)
Item
2015 2016 2017 2018 2019
----- End of picture text -----

Operating Revenue	3,510,819	3,493,434	6,359,985	4,687,890	6,229,917	68,484
Gross Profit	2,976,415	3,086,106	5,715,963	3,931,716	5,313,631	-161,289
Operating Income	65,588	384,592	2,333,898	880,341	2,024,947	-1,014,103
Non-Operating Income	1,004,456	511,418	474,303	505,305	489,434	70,698
Income Before Tax	1,070,044	896,010	2,808,201	1,385,646	2,514,381	-943,405
Net Income (Loss) from
Operations of Continued	956,613	826,690	2,618,769	1,210,323	2,368,536	-923,515
Segments
Net Income (Loss) from	-	-	-	-	-	-
Discontinued Operations
Net Income (Loss)	956,613	826,690	2,618,769	1,210,323	2,368,536	-923,515
Other Comprehensive Income (Income after Tax)	78,527	-88.915	-314,045	145,271	-123,624	2,928
Total Comprehensive Income	1,035,140	737,775	2,304,724	1,355,594	2,244,912	-920,587
Earnings Per Share (Note2)	0.68	0.59	1.88	0.87	1.72	-0.67

Note 1: Financial information for the years of above-mentioned was audited and certified by CPAs. The financial information for the first quarter of 2020 has been reviewed by CPAs.

Note 2: Earnings per share is calculated based on the number of shares that were adjusted retrospectively. The unit is NTD.

C. Auditors’ Opinions from 2015 to 2019

Year	CPA	Audit Opinion
2015	Lin, Se-Kai / Huang, James	Unqualified Opinion
2016	Hsiao, Chin-Mu / Chang, Ming-Hui
2017	Hsiao, Chin-Mu / Chang, Ming-Hui
2018	Lin, Se-Kai / Hsiao, Chin-Mu
2019	Lin, Se-Kai / Hsiao, Chin-Mu

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2019 Annual Report

VI. Financial Information

II. Financial Analysis for the Past Five Years

1. Consolidated Financial Analysis for the Past Five Years

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----- Start of picture text -----

Year Financial Summary for the last five years (Note1)
2020Q1
(Note1)
Item
2015 2016 2017 2018 2019
Debt Ratio 67.52 73.12 70.53 63.42 72.05 68.46
Financial
Structure
Ratio of Long-term Capital to
(%) 903.12 937.5 1044.82 1052.77 1095.18 1054.69
property and equipment
Current Ratio 137.91 129.26 134.15 145.43 130.89 136.00
Solvency
(%)
Quick Ratio 137.83 129.19 134.09 145.39 130.86 135.95
Return on Total Assets (%) 1.87 1.31 3.43 1.98 3.37 -0.92
Return on Stockholders’ Equity
4.20 3.63 10.81 4.76 9.05 -3.50
(%)
Profitability Pre-tax Income to Paid-in
8.38 7.02 20.45 10.33 18.64 -6.79
Analysis Capital (%)
Profit Ratio (%) 21.01 18.52 36.10 21.09 33.24 -227.58
Earnings Per Share (NT$)
0.68 0.59 1.88 0.87 1.72 -0.67
(Note2)
Cash Flow Ratio 7.59 - 5.92 24.26 - 13.37
Cash Flow
Cash Flow Adequacy Ratio 452.90 123.28 214.36 404.72 409.63 665.92
(%)
Cash Reinvestment Ratio 10.82 - 13.84 35.71 - 29.09
Debit to Equity Ratio 207.90 272.06 239.34 173.72 257.75 217.04
Ratio of Property and Equipment
4.46 3.55 3.48 4.3 3.18 3.75
to Total Asset
Total Underwriting to Quick
Other Ratio 0.35 0.75 0.61 1.32 0.88 0.07
Assets Ratio
(%)
Total Margin Loan Balance to
45.84 37.58 44.88 31.19 37.45 23.99
Equity Ratio
Total Short Sales Amount to
7.66 6.56 8.64 7.81 7.06 3.64
Equity Ratio
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125

President Securities Corporation

Analysis of financial ratio differences for the last two years (for variations above 20%)

(1) Profitability: Because of a reduction in the Fed’s ending of balance sheet, the Fed’s announcement of interest rate cuts in August, and Europe’s continuous implementation of a generous monetary policy, financial markets continued to see an increase in value. However, the global economy was also influenced by progress on the China-US trade negotiations and by the the uncertainty of the Brexit agreement, which resulted in fluctuations in the global stock market. The Company’s overall net after tax profit for 2019 increased when compared with the previous period, leading to an increase in the return on assets and equity along with increases in the ratio of pretax net profit to paid-in capital, and the net profit margin compared with 2018.
(2) Cash flow ratio: Net cash flow from operating activities turned from net cash inflow in 2018 to net cash outflow in 2019, causing the cash flow ratio to increase compared with 2018. Cash flow reinvestment ratio: Net cash flow from operating activities turned from net cash inflow in 2018 to net cash outflow in 2019, causing the cash flow reinvestment ratio to decrease compared with 2018.
(3) Debt to equity ratio: Commercial papers and bonds sold under repurchase agreement in 2019 increased, causing the debt to equity ratio to increase compared to 2018.
(4) Property and equipment to total assets ratio: The amount of total assets in 2019 increased, causing property and equipment to total assets ratio to decrease compared to 2018.
(5) Total underwriting to quick assets ratio: The amount of underwriting undertaken in 2019 decreased, causing the total underwriting to quick assets ratio to decrease compared to 2018.
(6) Total margin loan balance to equity ratio: Margin loan receivables in 2019 decreased, causing the total margin loan balance to equity ratio to decrease compared to 2018.

Note 1: Financial information for the years of above-mentioned was audited and certified by CPAs. The financial information for the first quarter of 2020 has been reviewed by CPAs.

Note 2: Earnings per share is calculated based on the number of shares that were adjusted retrospectively. The unit is NTD. Note 3: Equations for analysis items:
(1) Financial structure
i. Liability to total assets ratio = Total liabilities/total assets
ii. Ratio of long-term capital to property, plant and equipment = (total equity + non-current liabilities) /net worth of property, plant and equipment
(2) Solvency
i. Current ratio = Current assets / Current liabilities
ii. Quick ratio = (Current assets - inventory - prepaid expenses) / Current liabilities
(3) Profitability
i. Return on assets = [after-tax income (loss) + interest expense × (1- tax rate)]/average total assets
ii. Return on equity = net income / average total equity
iii. Profit margin before tax = net income / net sales
iv. Earnings per share = (profit and loss attributable to owners of the parent – dividends on preferred shares) / weighted average number of issued shares
(4) Cash flow
i. Cash flow ratio = Net cash flow from operating activities / current liabilities
ii. Net cash flow adequacy ratio = Net cash flow from operating activities for the most recent five years / (capital expenditures + inventory increase + cash dividend) for the most recent five years
iii. Cash flow reinvestment ratio = (Net cash flow from operating activities – cash dividend) / (gross property, plant and equipment value + long-term investment + other non-current assets + working capital)
(5) Other ratio
i. Debt to equity ratio = total liabilities/ shareholders’ equity
ii. Property and equipment to total assets ratio = net fixed assets / total assets
iii. Total underwriting to quick asset ratio = total underwriting / (current assets - prepayments)
iv. Total margin loan balance to equity ratio = total margin loan balance / shareholders’ equity
v. Total short sales amount to equity ratio = total short sales amount / shareholders’ equity

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VI. Financial Information

2. Individual Financial Analysis for the Past Five Years

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----- Start of picture text -----

Year Financial Summary for the last five years (Note1)
2020Q1
(Note 1)
Item 2015 2016 2017 2018 2019
Debt Ratio 62.60 67.94 66.27 55.47 66.91 58.50
Financial
Structure
Ratio of Long-term Capital to
(%) 964.91 1005.66 1122.77 1130.17 1175.99 1134.16
property and equipment
Current Ratio 137.43 130.02 134.28 151.33 132.03 144.38
Solvency (%)
Quick Ratio 137.34 129.93 134.23 151.28 131.99 144.31
Return on Total Assets (%) 2.11 1.51 3.99 2.3 4.01 -1.15
Return on Stockholders’ Equity
4.18 3.61 10.81 4.74 9.05 -3.52
(%)
Profitability
Pre-tax Income to Paid-in Capital
Analysis 8.09 6.71 20.20 9.97 18.32 -6.87
(%)
Profit Ratio (%) 27.25 23.66 41.18 25.82 38.02 -1348.51
Earnings Per Share (NT$) (Note2) 0.68 0.59 1.88 0.87 1.72 -0.67
Cash Flow Ratio 8.51 - 6.27 33.44 - 19.45
Cash Flow
Cash Flow Adequacy Ratio 432.31 118.15 183.46 398.65 398.27 658.33
(%)
Cash Reinvestment Ratio 9.33 - 12.08 34.72 - 27.10
Debit to Equity Ratio 167.41 211.91 196.47 124.58 202.2 140.96
Ratio of Property and Equipment
4.70 3.86 3.61 4.74 3.40 4.44
to Total Asset
Total Underwriting to Quick
Other Ratio 0.44 0.95 0.74 1.77 1.12 0.10
Assets Ratio
(%)
Total Margin Loan Balance to
45.93 37.66 44.97 31.27 37.54 24.06
Equity Ratio
Total Short Sales Amount to
7.68 6.57 8.66 7.83 7.07 3.65
Equity Ratio
----- End of picture text -----

127

President Securities Corporation

Analysis of financial ratio differences for the last two years (for variations above 20%)

(1) Profitability: Because of a reduction in the Fed’s ending of balance sheet, the Fed’s announcement of interest rate cuts in August, and Europe’s continuous implementation of a generous monetary policy, financial markets continued to see an increase in value. However, the global economy was also influenced by progress on the China-US trade negotiations and by the the uncertainty of the Brexit agreement, which resulted in fluctuations in the global stock market. The Company’s overall net after tax profit for 2019 increased when compared with the previous period, leading to an increase in the return on assets and equity along with increases in the ratio of pre-tax net profit to paid-in capital, and the net profit margin compared with 2018.
(2) Cash flow ratio: Net cash flow from operating activities turned from net cash inflow in 2018 to net cash outflow in 2019, causing the cash flow ratio to increase compared with 2018.

Cash flow reinvestment ratio: Net cash flow from operating activities turned from net cash inflow in 2018 to net cash outflow in 2019, causing the cash flow reinvestment ratio to decrease compared with 2018.

(3) Debt to equity ratio: Commercial papers and bonds sold under repurchase agreement in 2019 increased, causing the debt to equity ratio to increase compared to 2018.
(4) Property and equipment to total assets ratio: The amount of total assets in 2019 increased, causing property and equipment to total assets ratio to decrease compared to 2018.
(5) Total underwriting to quick assets ratio: The amount of quick assets increased in a larger percentage than underwriting undertaken in 2019, causing the total underwriting to quick assets ratio to decrease compared to 2018.
(6) Total margin loan balance to equity ratio: Margin loan receivables in 2019 decreased, causing the total margin loan balance to equity ratio to decrease compared to 2018.

Note 1: Financial information for the years of above-mentioned was audited and certified by CPAs. The financial information for the first quarter of 2020 has been reviewed by CPAs.

Note 2: Earnings per share is calculated based on the number of shares that were adjusted retrospectively. The unit is NTD.

Note 3: Equations for analysis items:

(1) Financial structure
i. Liability to total assets ratio = Total liabilities/total assets
ii. Ratio of long-term capital to property, plant and equipment = (total equity + non-current liabilities) /net worth of property, plant and equipment
(2) Solvency
i. Current ratio = Current assets / Current liabilities
ii. Quick ratio = (Current assets - inventory - prepaid expenses) / Current liabilities
(3) Profitability
i. Return on assets = [after-tax income (loss) + interest expense × (1- tax rate)]/average total assets
ii. Return on equity = net income / average total equity
iii. Profit margin before tax = net income / net sales
iv. Earnings per share = (profit and loss attributable to owners of the parent – dividends on preferred shares) / weighted average number of issued shares
(4) Cash flow
i. Cash flow ratio = Net cash flow from operating activities / current liabilities
ii. Net cash flow adequacy ratio = Net cash flow from operating activities for the most recent five years / (capital expenditures + inventory increase + cash dividend) for the most recent five years
iii. Cash flow reinvestment ratio = (Net cash flow from operating activities – cash dividend) / (gross property, plant and equipment value + long-term investment + other non-current assets + working capital)

(5) Other ratio

i. Debt to equity ratio = total liabilities/ shareholders’ equity
ii. Property and equipment to total assets ratio = net fixed assets / total assets
iii. Total underwriting to quick asset ratio = total underwriting / (current assets - prepayments)
iv. Total margin loan balance to equity ratio = total margin loan balance / shareholders’ equity
v. Total short sales amount to equity ratio = total short sales amount / shareholders’ equity

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VI. Financial Information

III. Audit Committee’s Review Report on the Company’s 2019 Financial Statement

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IV. Financial Difficulties Experienced by the Company or Its Affiliates in the Most Recent Year or up to the Date of Publication of the Report that will Affect the Company’s Financial Situation: None.

V. Status of the Achievement in Financial Forecasts for the Latest Two Years: Not Applicable.

VI. Provisioning Methods of the Company’s Assets and Liabilities’ Valuation Accounts

The methodology and assumptions applied by the Company in evaluating fair value of financial instruments are based on the requirements of IFRS 9 as well as the “Measures for Financial Asset Impairment Assessment and Write-off” and “Measures for the Classification and Evaluation of Debt Instruments.” to appropriately categorize and evaluate financial assets and liabilities.

Except that impairment loss of bond interest receivables are evaluated along with investments in bonds, that of receivables and overdue receivables are evaluated based on the lifetime expected credit loss.

In the assessment of impairment and calculation of expected credit losses in bond interest receivables, the Company considers reasonable and supporting information about past events, current conditions and future economic conditions. The Company determines at the balance sheet date whether there has been a significant increase in credit risk since initial recognition or whether credit impairment has occurred, and recognizes expected credit loss according to which stage the asset belongs: no significant increase in credit risk or low credit risk at balance sheet date (Stage 1), significant increase in credit risk (Stage 2), and credit impaired (Stage 3). 12-month expected credit losses are recognized for assets in Stage 1, and lifetime expected credit losses are recognized for assets in Stage 2 and Stage 3.

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Accounts to be evaluated Description of evaluating methodology
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Accounts to be evaluated	Accounts to be evaluated	Description of evaluating methodology

1. Notes receivables 2. Accounts receivables 3. Other receivables 4. Margin loans receivables 5. Delinquent accounts		1. Impairment losses and recoverable amounts are individually assessed. Impairment assessment is conducted based on the situation (1) Claims from default of brokerage trades are reclassified as other receivables and reviewed when necessary. Impairment loss is assessed individually and the receivables shall be reclassified as delinquent accounts for those with no progress being made. (2) If margin ratio of the margin account is lower than required even after disposal, and the margin account has not been replenished within required period, the margin loans are evaluated and reclassified as delinquent accounts. Impairment loss shall be provided at 100% if no progress is made. If securities within margin accounts of brokerage segments cannot be disposed, the margin loans are transferred to other receivables. Impairment loss is provided at 100% and recourse. It shall be transferred to delinquent accounts if no progress can be made. Impairment loss is not recognized if agreements with borrowers are reached and proceeded, but it should be listed on a case-by-case basis (3) Impairment loss is assessed based on the recoverable amount of the receivables of claims.
		2. Impairment loss is evaluated based on simplified method and historical data of its lifetime expected credit loss.

VII. Accounting Treatment of Impairment of Assets of the Company

In line with the accounting treatment of IAS 36, The Company recognizes impairment loss when the recoverable amount of the asset is lower than its carrying amount. Recoverable amount is the higher of the asset’s fair value less costs to sell and value in use. Fair value less cost to sell is the amount received from fair trade less cost for disposal, and value in use is the discounted amount of expected cash flow in the asset’s usable years.

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VI. Financial Information

When the circumstances for recognizing impairment loss in prior years no longer exist, it is reversed in within the amount of impairment loss recognized in prior years, except that impairment loss of goodwill shall not be reversed.

VIII. Methods and Assumptions used for Evaluating Fair Value of Financial Instruments

A. The fair value of short-term financial instruments is evaluated at their book value since the effect of discounting is not significant. This method is applied to cash and cash equivalents, bonds purchased under resale agreements, margin loans receivable, refinancing guaranty deposits, receivable from refinance guaranty, receivables from security lending, security lending deposits, restricted assets, operation deposits, clearing and settlement fund, short-term loans, commercial paper payable, bonds sold under repurchase agreements, deposits on short sales, guarantee deposit received on borrowed securities, short sale proceeds payable, notes and accounts payable, collection for others, other payables (excluding income tax payable) and deposits received.
B. Financial instruments at fair value through profit and loss, when they are traded in active markets, their fair value are based on their quoted prices. If there are no quoted market prices which can be used as benchmarks, evaluating methods will be adopted to measure the fair value. Estimates and assumptions used in evaluating methods adopted by the Group are consistent with those adopted by market participants for financial instrument pricing.

Methods of evaluating fair value of financial instruments are as follows:

Equity Securities: Fair value refers to the closing prices as at the balance sheet. For open-ended funds, fair value refers to the net asset value of the fund as at the balance sheet.
Bonds: Government bonds and corporate bonds are based on the market prices derived from average bond yields published by the Taipei Exchange; foreign bonds are based on the transaction prices from Bloomberg.
Interest rate instruments: For IRS, interest rate quotations of CP with same durations in the same markets in the representative quotation system (e.g. Reuters) are used as reference interest rates. In addition, average bid/offer interest rates at certain point of time daily are used as interest rate parameters. Along with other parameters, they are then used in the valuation models to calculate fair value.
Futures: Closing prices of respective futures exchanges on that day.
Options: Closing prices of the exchanges of the options on that day.
Warrants: Closing prices of the instruments in the listed market.
Convertible Bond Asset Swap: Closing prices of the CB and of underlying shares in the listed exchanges are used as parameters along with others in the valuation model to calculate the fair value.
Structured instruments: Closing prices of underlying instruments or bond yields published by the Taipei Exchange are used as parameters along with others in the valuation models to calculate the fair value.
Other derivatives: For listed derivatives, fair value is based on the quoted prices. For unlisted ones, fair value is based on average bid or offer prices from quotation platforms or other quoted prices.
C. For financial assets at fair value through other comprehensive income, if there are quoted prices in active markets, they are used as their fair value. If there are no quoted prices, a valuation methods are adopted to measure the fair value.

IX. Hedge Accounting Applied to Financial Instruments: Not applicable.

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VII. Financial Status, Operating Results and Risk Management

VII. Financial Status, Operating Results and Risk Management

I. Financial Status

Unit: NT$ thousands

Year Item	Fluctuation	Fluctuation
	Amount	Variance (%)
Current Assets 90,081,974 64,915,856 25,166,118 38.77% Non-Current Assets 5,672,426 5,465,417 207,009 3.79%
Total Assets 95,754,400 70,381,273 25,373,127 36.05%
Current Liabilities 68,821,260 44,636,888 24,184,372 54.18% Non-Current Liabilities 167,368 31,938 135,430 424.04%
Total Liabilities 68,988,628 44,668,826 24,319,802 54.44% Capital Stock 13,723,900 13,904,281 (180,381) (1.3%) Capital Surplus 91,261 142,702 (51,441) (36.05%) Retained Earnings 12,362,704 10,979,662 1,383,042 12.60% Other Equity 521,815 619,340 (97,525) (15.75%) Attributable to Parent’s Ownership Interest 26,699,680 25,645,985 1,053,695 4.11% Non-Controlling Interests 66,092 66,462 (370) (0.56%)
Total Equity 26,765,772 25,712,447 1,053,325 4.1%
Note: Financial information for the years of above-mentioned (based on IFRS) was audited and certifed by CPAs. (1) Main reasons for material changes in assets, liabilities and shareholders' equity items within the last two years (changes over 20% between the frst and second periods, and the change amount reaches NT$ 10 million), its efects, and future response plans: Current assets increased mainly due to the increase of fnancial assets at fair value through proft or loss – current in 2019. Current liabilities increased mainly due to the increase of commercial papers payable in 2019. Non-current liabilities increased mainly due to the implementation of IFRS 16 in 2019. Capital Reserve decreased mainly due to the treasury stock trading. Other equity items decreased due to the decrease of trasnlation loss on the fnancial statements of foreign operating entities in 2019. (2) Main reasons for the changes in the Company's current liabilities over the last two years and in long-term liabilities that mature within a year, its efects, and future response plans: The increase in current liabilities is mainly caused by a increase in the demand for capital that caused short-term loans, commercialpaperpayable andrepurchase agreement bonds toincreasefromthelevelsin 2018.

II. Analysis of Operating Results

Unit: NT$ thousands

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Year 2019 2018
Item (Note) (Note) Amount Variance (%)
Operating Revenue 7,142,397 5,774,276 1,368,121 23.69%
Operating Expenses 5,080,595 4,753,133 327,462 6.89%
Operating Income 2,061,802 1,021,143 1,040,659 101.91%
Non-Operating Income 496,006 415,744 80,262 19.31%
Income before Tax 2,557,808 1,436,887 1,120,921 78.01%
Income Tax Expense 183,973 219,254 (35,282) (16.09%)
Net Income 2,373,835 1,217,633 1,156,202 94.95%
Other Comprehensive Income
-124,296 145,968 (270,264) (185.15%)
(after Tax)
Total Comprehensive Income 2,249,539 1,363,601 885,938 64.97%
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Year Item	2019 (Note)	2018 (Note)	Amount	Variance (%)
Net Income Attributable to Shareholders of the Parent 2,368,536 1,210,323 1,158,213 95.69% Non-controlling Interests 5,299 7,310 (2,011) (27.51%) Comprehensive Income Attributable to Shareholders of the Parent 2,244,912 1,355,594 889,318 65.60% Non-controlling Interests 4,627 8,007 (3,380) (42.21%)
Note: Financial information for the years of above-mentioned (based on IFRS) was audited and certifed by CPAs. Explanation to major variations in the last two years (changes over 20%):  Operating income: Due to the increase in net proft from operating securities in 2019.  Operating proft: Due to the increase in net proft from operating securities in 2019.  Proft before tax: Due to the increase in net proft from operating securities in 2019.  Net income: Due to the increase in net proft from operating securities in 2019.  Totalcomprehensiveincome:Due to theincreasein net proftfromoperating securitiesin 2019.

Explanation to major variations in the last two years (changes over 20%):  Operating income: Due to the increase in net profit from operating securities in 2019.  Operating profit: Due to the increase in net profit from operating securities in 2019.  Profit before tax: Due to the increase in net profit from operating securities in 2019.  Net income: Due to the increase in net profit from operating securities in 2019.  Total comprehensive income: Due to the increase in net profit from operating securities in 2019.

III. Analysis of Cash Flow

A. Cash Flow Analysis for the Current Year

(1) Operating activities: Net cash outflow from operating activities was NT$9,024,667 thousand, which was mainly because of an increase in FVPL financial assets-current in the same period last year.
(2) Investing activities: Net cash outflow from investing activities was NT$108,353 thousand, which was mainly because of an increase in the investments under equity method to acquire the equity of subsidiaries and affiliated companies in the same period last year, leading to the net cash outflow in investing activities increased.
(3) Financing activities: Net cash inflow from financing activities was NT$9,799,866 thousand, which was mainly because of a increase in commercial papers payable and short-term loans in the current period.

B. Remedy for Cash Deficit and Liquidity Analysis

The Company has maintained a good credit relationship with banks for a long time and maintained mid-and short-term credit lines sufficient to meet the Company’s funding needs.

Year Item	2018	2019	Variance (%)
Cash Flow Ratio (%)	24.26	-	-
Cash Flow Adequacy Ratio (%)	404.72	409.63	1.21%
Cash Reinvestment Ratio (%)	35.71	-	-
Explanation to major variations: Cash Flow Ratio decreased mainly dur to the net cash outfow from operating activities. Cash Flow Adequacy Ratio decreased mainly due to the increase of net cash outfow from operating activities.

C. Cash Flow Analysis for the Coming Year (2019)

C. Cash Flow Analysis for the Coming Year (2019)	C. Cash Flow Analysis for the Coming Year (2019)	C. Cash Flow Analysis for the Coming Year (2019)	C. Cash Flow Analysis for the Coming Year (2019)	C. Cash Flow Analysis for the Coming Year (2019)	C. Cash Flow Analysis for the Coming Year (2019)
Unit: NT$ thousands
Estimated Cash and Cash Equivalents	Estimated Net Cash Flow from Operating	Estimated Cash	Cash Surplus (Defcit)	Leverage of Cash Surplus (Defcit)
, Beginning of Year (1)	Activities (2)	Outfow (Infow) (3)	(1)+(2)-(3)	Investment Plans	Financing Plans
6,520,146	1,487,207	867,485	7,139,868	-	-

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VII. Financial Status, Operating Results and Risk Management

IV. Effects of Major Capital Expenditures in the Most Recent Fiscal Year on Financial Operations: Not Applicable.

V. Long-term Investment Policy

In 2019, the company’s domestic reinvestment operations generated healthy profits. Each subsidiary’s operations will still be subject to strict risk control with timely stop-loss and stop-gain orders, so as to reduce risk and maintain steady development.

As for our present direct investment policy, we consider all areas of business currently permitted by Taiwan’s regulators and look for effective cross-selling strategies and other possible synergies, with the overall aim of best leveraging all of the company’s resources. Looking to the coming year, we expect regulators to again open up many new areas of business. We will expand into these new business areas, develop and promote new financial products. In particular, we are looking to Hong Kong and the PRC as key areas of expansion to bolster our presence in international financial services and our cross-strait business, including the joint venture securities company that was approved by the China Securities Regulatory Commission (CSRC) on February 17, 2020.

The profitability of each investment in 2019 is detailed in VIII. Other Disclosures-Operational Highlights of Affiliated Companies.

VI. Analysis of Risk Management

A. The Company’s risk management policies, organizational structure, measurement standards, as well as the impact of various risks and response measures

1. Risk Management Policies

(1) In order to ensure that we have a solid an effective risk management system in place, our system has been developed so as to encompass all of our business areas. Then, with appropriate risk tolerance levels in place, create value for the company, and achieve our return on asset targets.
(2) By constructing risk controls for each individual business area, we are able to achieve a measured approach to risk management. Accordingly, each department is assigned risk parameters based on its respective responsibilities, thereby achieving layered yet comprehensive risk management.
(3) The company’s risk management measures take into account the following forms of risk, market risk, credit risk, liquidity risk, operational risk, legal risk, and model risk.

2. Related Risk Management System Architecture

(1) Board of Directors: Audits the company’s risk management policy, supervises sales business strategies, approves all business proposals and trading permissions, and is ultimately responsible for risk management.
(2) Risk Management Committee: Established by the Board of Directors tasked with integrating all risk management operations, with supervising and assisting all the various risk management and related operations. The committee is also tasked with setting the various risk authorities, limits, and targets, for a centralized supervision of the status of all of the company’s risk management efforts.
(3) President Office: Supervises the daily implementation of all of the company’s risk management operations and authorizes any exceptions to the risk management protocols.
(4) Assets & Liabilities Management Committee: Controls the company’s overall asset structure, sets limits for different businesses, collects and analyzes domestic and international interest rates, exchange rates, and economic changes.
(5) Risk Control Office: Is responsible for the drafting of risk policies and regulations, for monitoring market and credit risks, for monitoring liquidity risks, for compiling data on operational risk control and management, for constructing and maintaining the risk management system, for implementation of risk

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management systems and for ensuring company-wide regulatory compliance.

(6) Auditing Office: Audits operations risk controls, audits the standards for risk controls systems, puts in place internal auditing controls, and implements daily check routines.
(7) Compliance Division: Implements legal risk controls and ensures that all businesses and risk management operations are in compliance with relevant laws and regulations. Compliance Division concurrently is responsible for anti-money laundering and counter-terrorist financing, developing relevant regulations and systems, monitoring internal control and transactions, supervising the implementation by business units, holding training sessions, and reporting cases suspicious of money laundering.
(8) Finance Department: Monitors capital adequacy rates and liquidity risk, and analyzes the company’s asset/liability structure and other key financial ratios.
(9) Business units: Based on the company’s risk management policies and regulations sets risk management guidelines for various businesses, and produces a report on abnormal risk items for the Risk Control Office.
(10) Settlement & Clearing Department: Implementation of risk control and management for settlement, clearing, and short-sale business operations. Implementation of risk management and business department risk management for transactions.

3. Risk Evaluation Standards

The company has set risk management principles. In order to ensure that all of our organizations businesses adhere to our operating policies, operating goals, and capital levels, we must set suitability evaluation policies that can react to changes in our business and in the market:

Market Risk Evaluation
(1) We use RiskMetrics market risk management system to manage our company’s exposure to market risk. In addition to producing daily risk value tables, we perform simulation analysis and historical analysis to supplement missing risk values.
(2) We evaluate the completeness of the evaluation models on different business areas, and evaluate the assumptions, parameters, and data for various product models, and then test if the models for the various products are reasonable.
(3) We evaluate the effectiveness of risk control models, and regularly perform Back Testing to ensure the reasonableness of the models used.
Credit Risk Evaluation
(1) Our company undergoes credit rating evaluations from Moody’s, Standard & Poor’s, Fitch, Taiwan Ratings Corp., and Taiwan Corporate Credit Risk Index, TCRI)
(2) Trading counter-partner credit risk: We assess our company’s maximum exposure in the event that the counterparty defaults, and use maximum exposure limits set by the board of directors in determining the credit risk of a trading counterparty.
(3) Issuer’s Credit Risk: We use KMV models to perform an internal evaluation, and combine that with financial data and stock price data, to calculate a probability of default. Based on these measurements, we then develop an internal evaluation, Z-Score model, to control the external credit risk gaps from issuers and augment.
Operational Risk Evaluation
(1) Operational risks refer to risks of damage caused by internal operations, inappropriate actions or errors of personnel or systems, or external incidents. The definition includes legal risks but does not include risks in strategies and reputation.
(2) We create operations risk policies handbooks that encompass each level of operations.

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VII. Financial Status, Operating Results and Risk Management

(3) Ensure the appropriate measurement, disclosure, and control of the operating quality based on risk assessment reports and auditing reports.

4. Risk Factors and Corresponding Responses

(1) Management Crisis Risk refers to significant market changes, a lack of access to capital, or significant losses from direct investments, which affect a company’s operations and cause losses.

Response: We have implemented a “Management Crisis Response Policy” that clearly lays out what steps should be followed in the event of a serious crisis so as to ensure normal operation of the company.

(2) Market risk refers to dramatic changes in pricing or volatility in interest rates, equities, or foreign exchange rate that can result in serious losses to open positions.

Response: We will attempt to lessen the impact of such market risks through prudent business analysis, product analysis, and process analysis, so as to clearly identify sources of market risk. Based on this, we then set effective management controls; we monitor investment position risk levels, risk structure, and risk changes to ensure that they are all in line with our forecasts.

(3) Credit risk refers to the exposure for underwriters for the terms and conditions of the securities that underwrite and for losses that may result from a counterparty being unable to fulfill its obligations to the security.

Response: In an effort to shield ourselves from potential credit risk, we conduct extensive credit risk evaluations prior to a deal being executed and then conduct repeated evaluations after the deal has been executed. Based on these evaluations and a maximum credit exposure scenario for the counterparty in question, we set credit risk limits for that counterparty. In evaluating the risk to the underwriter for debtrelated securities, we look not only at the TCRI rating, but also at default rates based on KMV models.

(4) Operational risk refers to the risk created when internal processes, employees, or systems are inappropriate or cause errors, or the risks caused by external factors. This type of risk is related to legal risks but not strategic risk or credit risk.

Response: In order to reduce the probability of such operation risk occurring, we have created an operating manual that addresses every level of our operations, we perform regular audits of every business segment, as well as every work flow, every legal risk point, and every risk control point. Finally, we compile an audited risk report that helps us to ensure that our operating quality is properly balanced, controlled, and disclosed.

(5) Legal/Regulatory risk refers risk related to non-compliance with laws and regulations governing our investment strategies and our business operations, and any resulting corrective orders or penalties from relevant authorities, or any civil or criminal actions taken against us. It also refers to risk related to our inability to perform our obligations under agreements that we have entered into with other parties.

Response: In order to reduce our exposure to legal/regulatory risks, we have created a Compliance Division and Legal Matters Department.

Compliance Division ensures that all businesses and risk management operations are in compliance with relevant laws and regulations.
Legal Matters Department implements legal risk controls.
(6) Liquidity risk refers to position liquidity risks and capital liquidity risks. Sometimes losses can be suffered as a result of illiquid markets that make it difficult to open or close a position at normal market prices requiring that a position be either bought at a premium or sold at a discount. Capital liquidity risks result when positions are increased beyond planned levels, leaving the company with insufficient funds to meet settlement requirements for a position.

Response: In an effort to better manage liquidity risks, we have created centralized risk management standards that take into consideration all departments and that set position limits for each department. We also have a team that performs daily forecasts of capital requirements based on the needs of all company

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guarantees and service loans, and then monitors daily capital adjustments accordingly. We also produce a monthly “Capital Liquidity Risk Simulation Analysis Table” that analyzes multiple scenarios, forecasts the potential liquidity risks for those scenarios, and estimates the capital levels that each such scenario would require.

(7) Model risk refers to potential situations where market values and other variables are beyond normal and predictable conditions and therefore exceed the ability of the model to handle.

Response: We effectively maintain and manage our models with particular emphasis on financial product risk management. We have created a set of “Model Us Management Procedures” that clearly spell out procedures for developing models, for validating models, for managing variables, and for discontinuing the use of problem models.

B. An Evaluation of Key Risks

1. Effects of recent interest rates, foreign exchange rate fluctuations, and inflation concerns on our company and our strategies for dealing with these concerns.

(1) Interest rate: Changes in interest rates have a direct impact on the income we derive from our fixed income-related businesses. In addition to conducting our own thorough research on domestic and foreign interest rate trends, we utilize various interest rate derivative tools as well a risk control system that manages our interest rate-related risks, that creates an effective interest rate hedging system for our fixed income-related businesses. Changes in interest rates also affect our company’s financing costs. Going forward, we intend to utilize interest rate hedging and other capital raising avenues as ways to control our company’s financing costs.
i. Bond and Interest Derivative Product Business: The amount of our company’s major interest products At March 31, 2020, and the likely loss of NT$170,755 thousand due to the 1% interest rate change (as show in the following table).

Unit: NT$ thousands

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Item Amount Profit/loss based on 1%
Interest rate change
Government bond 4,101,482 -15,072
Corporate bond 920,429 -4,496
Bank debentures 201,789 -1,635
International bond 4,749,451 -7,142
Foreign bond 8,083,681 -142,410
Sum 18,056,832 -170,755
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Countermeasures: Our Company has risk management rules and operational procedures on government bond, corporate bond, bank debentures, foreign/international bond. Our company has put the interest risk under good control by pre-purchase assessment and risk control afterward.

ii. Borrowing: The main risk of borrowing is the fluctuation of interest rate. Our company can adjust methods, conditions and terms of borrowing according to the likely interest changing trend. We can also avert risks through the product of interest exchange etc. Our total debt amount of short-term borrowing and payable short-term bill totals NT$5.258 billion on the end of 2020 Q1. They are both borrowing with interest rate risks. With every 1bp change in market interest rate, our company has to pay NT$525.8 thousand more interest every year.
Countermeasures: Looking at a potential rise in interest rates, we will keep a close watch on the markets and on business demands and will make adjustments to our positions accordingly. In March 2020, in view of the spread of the Covid-19 pneumonia epidemic the Central Bank’s joint meeting of directors and supervisors noted that the global economic outlook has deteriorated sharply and the international financial markets have fluctuated violently. The domestic industry is being affected by the epidemic, and the manufacturing industry may face disruptions of its production and supply chains.

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VII. Financial Status, Operating Results and Risk Management

In addition, the service industry will have operational difficulties caused by decreasing consumption. Meanwhile, small and medium enterprises in particular may face financing constraints, which will aggravate their operating difficulties, impacting the job market. In addition, the currencies of major countries have depreciated significantly recently, although the New Taiwan Dollar has remained relatively strong. In order to assist with the normal operation of enterprises and considering that the movement of a large amount of capital affects the country’s financial stability, the Central Bank’ Board of Directors believes that it is necessary to adjust the policy by lowering interest rates to stabilize consumer confidence in the household sector and for enterprises. Three rates, the Central Bank’s rediscount rate, the rate on facilities with collateral, and rate on facilities without collateral, were cut and reduced by 0.25% to 1.125%, 1.5%, and 3.375% per annum, respectively.

It is expected that interest rates will remain stable over the coming year and that our Company’s risks related to the changes of the rates will remain low.

(2) Exchange rate: The Company’s principal business targets and place of business are domestic; hence the impact of currency fluctuations is minimal. Potential foreign exchange risks include not just that arising from the par of exchange for foreign currency assets, but also that from foreign currency investment with respect to foreign reinvested or reinvested companies (when future earnings are repatriated or disposed). Whenever the company invests in foreign currency assets, FX swaps will always be in place to avoid foreign exchange risk. Since its overseas subsidiaries are running perpetual operations, the impact of exchange rate movements on long-term equity investments is limited to the changes to book value and does not affect profits and losses.

At March 31, 2020, the company’s main exchange rate product positions, and 1% exchange rates fluctuation may result in a loss of NT$123,713 thousand (as show in the following table).

Unit: NT$ thousands

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Loss resulted by 1%
Item Position exchange rates fluctuation
Foreign Stock 11,272 -1,015
International Bond 4,749,451 -42,746
Foreign Bond 8,083,681 -79,952
Total 12,844,404 -123,713
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Countermeasures: Our Company’s transactions of foreign stock, international bond, and foreign bond have risk management and standard operating process. The business above was lower the risk of exchange rate by trading foreign exchange swap.

(3) Inflation: The CPI growth rate in 2020Q1 was 0.55%, which had no meaningful effect on operations or on profits.

2. Recent High-Risk or High-Leverage Investments, Loans to Third Parties, Pledges Given for Third Parties, Derivative Products Trading Policy and Profitability and Losses, Reasons for Losses and Strategies for Correcting Such Losses Going Forward.

(1) In 2020 Q1, we did not engage in any high-risk or highly-leveraged investments, did not provide any loans to third parties, and did not provide any pledge for any third parties.
(2) We only trade those derivative products which have been approved by the relevant authorities and which are permitted by our company’s Articles of Incorporation. We have also created and followed a “Code of Over-the-Counter Trading of Derivative Financial Products” in an effort to further reduce our exposure to related risk.

3. Future Development Plans and Expected R&D Investments.

To assist with our development of ever-better products and trading strategies, we have assembled a professional financial engineering team, which brings together experts from finance, statistics, mathematics, and information technology, to create trading and valuation software and hardware

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resources. Our annual spending on human resources and R&D in this area is in the millions of dollars every year. Please see Chapter 5 for more information on the status of our operations and on our R&D efforts.

4. Effects of Significant Policy and Legal Changes both in Taiwan and Abroad and Measure for Dealing with These Issues.

We are constantly on watch for significant policy and legal changes both inside Taiwan and abroad and, to that end, routinely enlists the help of professional legal and accounting firms to assist in evaluating these changes, to help create effective responses to these changes, and to ensure compliance with these changes, thereby working to reduce the effects of policy and legal changes on our business. In recent years, we have been quite effective in adjusting to policy and legal changes both within and beyond Taiwan and, thus, our overall solid financial health has seen little impact from such changes.

The Financial Supervisory Commission (FSC) issues orders in relation to Paragraph 1 of Article 59 (1) and Paragraph of Article 63 (2) of the “Regulations Governing Securities Firms” (Financial Supervisory Commission Official Letter No. Zheng-Quan—1070345024). Regarding the simplified and advanced calculation methods of the securities firm’s own capital adequacy ratio, the Company has handled the relevant matters accordingly.
The FSC has formulated the “Annual Financial Report Announcement and Declaration Checklist for Public Companies,” “Financial Report Announcement and Declaration Checklist for Publicly Companies in First, Second, and Third Quarters,” and the content of financial statements. (Financial Supervisory Commission Official Letter No. Zheng-Shen—1080302723). The Company has handled the relevant matters accordingly.
The FSC has amended some of the provisions in the Regulations Governing the Loaning of Funds and Making of Endorsements/Guarantees by Public Companies (Financial Supervisory Commission Official Letter No. Zheng-Shen— 1080304826). The company revised its internal regulations accordingly.
The President has amended the provisions of Articles 14-5, 28-2, 39, 43-1, 65, 66 165-1,177-1,178, and 179 of the Securities and Exchange Act and added the provision of Article 178-1 to the said Act. (ROC Presidential Official Letter No. Jing—10800037881). The Company has promoted relevant matters accordingly to improving the employees’ awareness of compliance.
The FSC has amended Format 8-7 of Article 23 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers. (Financial Supervisory Commission Official Letter No. ZhengShen—1080310909). The Company has handled the relevant matters accordingly.
The FSC has formulated the “Annual (Semi-annual) Financial Report Announcement and Declaration Checklist for Securities Firms” and “Quarterly Financial Report Announcement and Declaration Checklist for Securities Firms.” (Financial Supervisory Commission Official Letter No. ZhengQuan—1080313068). The Company has handled the relevant matters accordingly.
The President has announced amendments to the provisions of Articles 14-5 and 36 of the Securities and Exchange Act. (ROC Presidential Official Letter No. Jing—10800063491). The Company has handled the relevant matters accordingly.
The FSC has issued orders regarding Paragraph 2 of Article 3 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, Paragraph 2 of Article 2 of the Regulations Governing the Preparation of Financial Reports by Securities Firms, and Paragraph 2 of Article 2 of the Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants to specify the international financial reporting standards, international accounting standards, as well as standards of interpretations and an announcement of interpretations recognized by the Commission. (Financial Supervisory Commission Official Letter No. Zheng-Shen—1080323028). The Company has handled the relevant matters accordingly.
The FSC has issued orders regarding the provisions of Articles 23, 39, and 41-1 of the Standards

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VII. Financial Status, Operating Results and Risk Management

Governing the Establishment of Securities Firms, as well as Articles 18-1, 51, and 52 of the Regulations Governing Securities Firms. (Financial Supervisory Commission Official Letter No. ZhengQuan—1080360078). The Company has handled the relevant matters accordingly.

Official Letter No. Zheng-Quan—1080305776 of the Financial Supervisory Commission issued on March 15, 2019 stipulates that the integrated securities firms listed on the stock and OTC markets and the integrated securities firms that are subsidiaries of financial holding companies shall engage a corporate governance officer by the end of June 2019. The Company’s Board of Directors passed a resolution engaging a corporate governance officer on May 3 of the same year.
Official Letter No. Zheng-Quan—1080307106 of the Financial Supervisory Commission issued on March 22, 2019 stipulates that qualified securities firms may issue subordinated ordinary corporate bonds. This order will increase the flexibility of the Company’s fund raising efforts.
Official Letter No. Zheng-Quan—1080321644 of the Financial Supervisory Commission issued on July 10, 2019 stipulates that securities firms may stop designating a fund as special capital reserve for the purpose of protecting employees’ rights and interests in response to the development of FinTech starting in the fiscal year of 2019, but they shall still budget a certain amount in their annual budgets to cover the expenses required for employee training and improvement to protect employees’ rights and interests. The Company will handle relevant matters in accordance with the regulations.
Official Letter No. Zheng-Quan—1080318593, Directions Governing Application for Pilot Program of Business for Securities and Futures Industry, was promulgated via the Financial Supervisory Commission and issued on October 3, 2019; it stipulates that securities firms may apply for a pilot program for businesses to the Financial Supervisory Commission (FSC). The Company will handle relevant matters based on business development needs and in accordance with the regulations.
Official Letter No. Zheng-Quan—10803620605 of the Financial Supervisory Commission issued on January 15, 2020 stipulates that securities proprietary traders may operate the business of trading virtual currencies with the nature of securities on their own, and may purchase virtual currencies with the nature of securities during the offering period. Those who wish to apply for the operation of this type of business shall apply for the addition of a business type or service item in accordance with the regulations, and submit the related application documents to the Taipei Exchange for review before being transferred to the FSC for approval. The Company will handle relevant matters based on business development needs and in accordance with the regulations.
Official Letter No. Zheng-Quan—1090360209 of the Financial Supervisory Commission issued on February 3, 2020 announced the amendments to Articles 19 and 31-3 of the Regulations Governing Securities Firms. These articles clearly stipulate that the hedging operations of a securities firm for the index-Investment securities business may not be restricted by the total cost of equity securities issued by related parties. In addition, the securities proprietary traders are permitted to buy and sell or trade foreign bonds and derivative financial products with affiliated overseas companies after a super majority resolution has been adopted by the Board of Directors and relevant conditions and the maximum amounts have been established. The Company will handle relevant matters based on business development needs and in accordance with the regulations.

5. Effects of Industry Changes and Technological Changes and Measures for Dealing with These Changes.

In response to the changing financial and technological environment, the Company shall create a diversified, fast, stable, and secure electronic ordering platform as a top development priority. In the pursuit of this goal, the Company shall continue to promote system upgrades and development to steadily increase the ratio of the Company’s electronic orders in the coming years.

In view of the phenomenal growth in the use of mobile devices in the Internet generation, the role of securities dealers is bound to be transformed from a purely “broker and platform” to a “digital business” supported by FinTech and AI. Therefore, the Company has set up the “Digital Financial Division”

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and transformed the physical branches on a trial basis to integrate the virtual and physical channels, so as to promote the digitalization and paperless operations of business procedures. It is planned to gradually complete the online digital services starting from electronic trading in the directions of diverting customer flows, differentiation, and customized services. In addition, the internal operations will be improved to expand the introduction of electronic procedures to enhance efficiency and provide customers with safe and efficient trading platforms.

In response to the increasing trend of placing orders via mobile devices and customized trading in the overall market, customers are provided with the all-round app of the digital integrated financial investment service platform with the app interface adjusted according to customer feedback. In addition, in response to the FSC’s requirements for strengthening information security in the financial market, the Company will continue to use existing information security management regulations (ISO-27001), internal auditing and periodic reviews by third-party certification institutions to enhance the management system. The Company shall also invest specific amounts in the annual budget on the enhancement of the protection of the information security framework.

In 2019, the Company has arranged third parties to conduct tests on the information security operations center (SOC), dual ISP backup architecture, and periodic joint prevention tests. The Company also seeks to enhance the stability of the operations and maintenance of the computer center, establish ISP information security defense mechanisms, and update information security equipment in accordance with annual project plans. The goal is to increase the stability of the information system and prevent risks in external information security attacks in order to achieve the goal of fair transactions with investors and create wealth with customers.

6. Significant Impairment of Corporate Image and Measures for Dealing with that Damage.

Our company has a core philosophy of “Good Quality, Good Credibility, Good Service and Fair Prices”. This is combined with the concept of “Professional Leadership, Kind Service”. the Company has been a long-standing supporter of important social charitable activities and devoted to fulfill corporate social responsibility. Since the date of the establishment, the Company has no negative corporate image issues to report.

7. Expected effect of acquisition and the possible risk: None.

8. Expected effect and possible risk of expanding business locations and the countermeasures: None.

9. Expected effect and possible risk of excessive concentration of purchasing sources and excessive customer concentration: Not Applicable.

10. Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10%: None.

11. Effects of, Risks Relating to and Response to the Changes in Management Rights: None.

12. Litigation or Non-litigation Matters

(1) Major lawsuits, non-contentious matters or administrative procedures with a determined court ruling or that are still pending, that may significantly affect the shareholders’ equity or the stock price of the Company (over the previous two years and up to the time that this annual report was published):

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VII. Financial Status, Operating Results and Risk Management

==> picture [492 x 190] intentionally omitted <==

----- Start of picture text -----

Parties involved in Amount
The major claims Date The current progress Remark
major lawsuits (Unit:NT$)
The plaintiff Wang, ○-Cheng (did not Plaintiff: Wang, ○-Cheng 2010.7.15 The court ruled in the 9,007,179 The loss had
open an account at a branch and traded trial of 2nd instance already been
stocks) claimed that he borrowed a Defendant: Chu, ○-Jung, of the case that the designated for
PSC
customer account from 2004 through Company was not litigation. The
2008 and entrusted business clerk Chu, liable for paying any conclusion
○-Jung at the Tucheng Branch to buy compensation, and of judgement
and sell stocks. However, Chu, ○-Jung the plaintiff refused to will not cause
sold the stocks in the account secretly accept the ruling and significant
and expropriated the proceeds from the filed an appeal; the case effect on
stocks. In addition, due to Chu, ○-Jung's is currently being tried shareholder
fraud, Wang, ○-Cheng was required to by the Supreme Court. rights and the
pay a guarantee deposit and suffered company’s
loss; thus, he claimed that the Company share price.
shall be jointly liable for the indemnity
and filed this lawsuit.
----- End of picture text -----

(2) Any Company director, supervisor, manager, responsible person, or company shareholder holding more than 10% of the company’s shares that is involved in any judgments already handed down or any ongoing litigation, non-litigation, or administrative action over the previous two years up to the time that this annual report was published, the potential effects on shareholder rights and on the company’s share price, the key facts of the dispute, dollar values involved, the date that the litigation was initiated, the key parties involved, and the current status of said litigation(s): None.
(3) Any company director, supervisor, manager, responsible person, or company shareholder holding more than 10% of the company’s shares that has been found in violation of Article 157 of the Securities and Exchange Act over the previous two-year period and up to the time that this annual report was published, and the current status of any related action taken or being taken against that person:

The Company claimed for the disgorgement (NTD 420 for price spread and 11 for interest, NTD 431 in total) from a manager whose last name is Lee in accordance to article 157 of the Securities and Exchange Act on December 11, 2019. And informed Securities and Futures Investors Protection Center on December 12, 2019.

13. Other Important Risks:

(1) In response to the Personal Information Protection Act, our company will continue to enforce the consciousness of the importance and the legal risk of personal information processing, money laundry preventing, and financial consumer protection.
(2) Impact of information system damage on the Company’s financial operations and response measures:

The increasingly frequent security attacks may cause disruption to business operations and in turn affect business revenue and damage the corporate image. President Securities Corp. has begun to import the Information Security Management System (ISMS) since 2013, and obtained ISO 27001 certification on August 23, 2013 and continued to maintain the validity of the certification. The information security governance has been gradually developed and implemented, with the strict requirements of various information security standards.

In view of the increasing threat of cyberattacks recently, in order to ensure that computer systems have certain security protection capabilities, it is necessary to upgrade the protection capabilities in each aspect from computer facilities, servers and hosts, user equipment, the internet all the way to e-mail, so as to implement control measures in the technical and management aspects and improve and enhance the security protection capabilities of the internet and information systems. In addition to completing the revision and formulation of relevant information security management regulations, the security updates and version upgrades of relevant equipment will be completed gradually. Furthermore, external units are invited to conduct independent inspection, tests, and assessment to identify potential information security risks early.

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This year, the information security response speed of relevant units was also strengthened through exercises. The information security response strengthening exercises are as follows:

Social Engineering Exercises for Prevention of Malicious Email
Application System Recovery Exercises
Distributed Denial-of-Service (DDoS) Attack and Defense Exercises
2019 Financial Supervisory Commission and Its Affiliated Institutions (Organizations) Annual Financial Security Notification Exercises
Information Security and Checkup Assessment
The ultimate goal of hierarchical security protection in the securities and futures industry is to strengthen information security awareness and arrange information security education and training, which includes:
-Information on security incidents and sharing of security concepts
-Personal computer use and daily security operations
-Information security skills training and information security concepts
-Mail security and prevention of social engineering

It aims to improve the security, reliability, availability of information systems and reduce the risks that relevant information security incidents may pose to the Company’s finance.

VII. Other significant events: None.

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VIII. Other Disclosures

I. Consolidated Business Report of Affiliated Companies, Consolidated Financial Statements of Affiliated Companies, and Reports of Affiliation
A. Summary of Affiliated Companies

1. Affiliated Companies Chart

==> picture [447 x 226] intentionally omitted <==

----- Start of picture text -----

PRESIDENT SECURITIES CORPORATION
Shareholding Shareholding Shareholding Shareholding Shareholding
100% 100% 100% 100% 96.69%
President President
PSC Venture President
Insurance Capital President
Capital Investment Securities (BVI)
Agency Company Limited Limited Management Futures Co., Ltd
Co., Ltd. Corp.
Shareholding Shareholding Shareholding Shareholding
5.19% 94.81% 100% 100%
President
President Securities Wealth President Securities
(Hong Kong) Limited Management Nominee Limited
(Hong Kong) Limited
----- End of picture text -----

2. Basic Information of Affiliates

As of April 30, 2020

==> picture [474 x 295] intentionally omitted <==

----- Start of picture text -----

Established Paid-in Capital
Company Address Currency Main Business
Date (in thousands)
President Futures B1.,No.8, Dongxing Rd., Taipei
1994.03.01 NTD 660,000 Futures and brokerage
Co., Ltd City
President Capital 3F.,No.8, Dongxing Rd., Taipei Securities investment
Management Corp. 1997.04.15 City NTD 300,000 and consulting
Securities proprietary,
President Securities Unit 2603-6,26/F., Infinitus Plaza
brokerage,
(Hong Kong) 1994.07.26 ,199 Des Voeux Road, Central , HKD 192,600
underwriting ,and
Limited Hong Kong
consulting
President Securities Unit 2603-6,26/F., Infinitus Plaza Securities investment
1998.02.26 ,199 Des Voeux Road, Central , USD 67,746
(BVI) Limited and holding company
Hong Kong
President Securities Unit 2603-6,26/F., Infinitus Plaza
1999.08.06 ,199 Des Voeux Road, Central , HKD 1,000 Nominee service
Nominee Limited
Hong Kong
President Wealth Unit 2603-6,26/F., Infinitus Plaza
Management (Hong 2002.03.31 ,199 Des Voeux Road, Central , HKD 23,400 Wealth management
Kong) Limited Hong Kong
President Insurance 13F.,No.8, Dongxing Rd., Taipei
2008.04.29 NTD 10,000 Insurance agent
Agency Co., Ltd. City
----- End of picture text -----

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President Securities Corporation

==> picture [474 x 34] intentionally omitted <==

----- Start of picture text -----

Established Paid-in Capital
Company Address Currency Main Business
Date (in thousands)
----- End of picture text -----

Company	Established Date	Address	Currency	Paid-in Capital (in thousands)	Main Business

PSC Venture Capital Investment Company Limited 2013.10.29 2F.,No.8, Dongxing Rd., Taipei City NTD 300,000 Consultation of investment management and venture capital; other unprohibited or unrestricted businesses beyond the permit

3. Rosters of Directors, Supervisors, and Presidents of PSC’s Subsidiaries

			As of April 30, 2020	As of April 30, 2020
Company	Title	Representative	Holding Shares
			Shares	Shareholding Ratio
President Futures Co., Ltd	Chairman Director & President Director Director Director	Han, Li-Chun Huang, Yi-Ming Lin, Kuan-Chen Lin, Jung-Hui Tsai, Sen-Bu	PSC holds 63,817,303 shares	96.69%
	Supervisor	Yang, Ya-Ting	0	0
	Supervisor	Lin, Chiun-Ya	PIDC holds 660,000 shares	1.00%
President Capital Management Corp.	Chairman & President Director Director Supervisor	Li, Fang-Kuo Huang, Tseng-Hui Wu, Fang-Ling Pan, Lung-Ching	PSC holds 30,000,000 shares	100%
President Securities (Hong Kong) Limited	Director Director & President Director Director Director	Lin, Kuan-Chen Ma, Chun-Wah An, Chi-Li Tsai, Sen-Bu Lu, Fang-Jun	PSBVI holds 182,600,000 shares; PSC holds 10,000,000 shares	100%
President Securities (BVI) Limited	Director Director & President Director Director	Lin, Kuan-Chen Ma, Chun-Wah An, Chi-Li Tsai, Sen-Bu	PSC holds 67,746,000 shares	100%
President Securities Nominee Limited	Director Director & President Director Director	Lin, Kuan-Chen Ma, Chun-Wah An, Chi-Li Tsai, Sen-Bu	PSBVI holds 1,000,000 shares	100%
President Wealth Management (Hong Kong) Limited	Director Director & President Director Director	Lin, Kuan-Chen Ma, Chun-Wah An, Chi-Li Tsai, Sen-Bu	PSBVI holds 23,400,000 shares	100%

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VIII. Other Disclosures

==> picture [465 x 184] intentionally omitted <==

----- Start of picture text -----

Holding Shares
Company Title Representative
Shares Shareholding Ratio
Chairman Lee, Wen-Sheng
President Insurance Agency Co., Director Yu, Hung-Chieh PSC holds
100%
Ltd. Director & President Lu, Hsiang-Chung 1,000,000 shares
Supervisor An, Chi-Li
Chairman Kuo, Li-Yun
PSC Venture Capital Investment Director & President Lu, Mu-Sheng PSC holds
100%
Company Limited Director Tsai, Sen-Bu 30,000,000 shares
Supervisor Huang, Ya-Ping
----- End of picture text -----

4. Operational Highlights of Affiliated Companies

As of December 31, 2019 Unit: thousands

==> picture [485 x 430] intentionally omitted <==

----- Start of picture text -----

Net
Total Total Total Operating Operating EPS
Company Currency Capital Income
Assets Liabilities Equity Revenue Income ($)
(Loss)
President
Futures Co., NTD 660,000 17,892,110 15,901,918 1990,192 710,924 17,275 160,258 2.43
Ltd
President
Capital
NTD 300,000 353,306 31,140 322,166 57,196 387 1,392 0.046
Management
Corp.
President
Insurance
NTD 10,000 41,627 13,070 28,557 56,654 7,932 9,294 9.29
Agency Co.,
Ltd.
PSC Venture
Capital
Investment NTD 300,000 250,342 1,796 248,546 6,113 2,108 3,474 0.12
Company
Limited
President
Securities
HKD 192,600 663,208 297,755 365,453 42,417 8,562 7,406 0.04
(Hong Kong)
Limited
President
Securities
HKD 1,000 492 17 474 0 (25) (19) (0.019)
Nominee
Limited
President
Wealth
Management HKD 23,400 15,172 20 15,152 0 (44) 178 0.008
(Hong Kong)
Limited
President
Securities
USD 67,746 76,779 4 76,776 0 (69) 1,686 0.025
(BVI)
Limited
----- End of picture text -----

Note: Foreign exchange rates:

USD/NTD (end of 2019) =29.9800 USD/NTD (2019 average) =30.9116 HKD/NTD (end of 2019) =3.8490 HKD/NTD (2019 average) =3.9451

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B. Consolidated Financial Statements of Affiliated Companies

In 2019, in accordance with Article 33 of Regulations Governing the Preparation of Financial Reports by Securities Firms and Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises, the companies that shall be included in the preparation of the consolidated financial statements of affiliated companies were the same as the companies that shall be included in the consolidated financial statements of the parent company and subsidiaries in accordance with the International Financial Reporting Standards No. 10. Please refer to the Financial Statement of Chapter Six Financial Overview V. The Consolidated Financial Statements of the Parent Company and Subsidiaries Certified by the CPAs for the Year of 2019.

C. Reports of Affiliation

Since the Company is a controlling company, it does not need to prepare such reports.

II. In the most recent year up to the publication date of this annual report, as for the private placement of marketable securities, the quantity approved by the shareholders’ meeting or the Board of Directors and the approval date, the basis for price determination and the reasonableness, the specific person selection method, and necessary reasons for the private placement shall be disclosed: None.

III. Holding or disposal of the company’s shares by the subsidiaries in the most recent year up to the publication date of this annual report: None.

IV. Other Necessary Supplement

A. KPI Performance Indicator

1. Capital Adequacy Ratio

Within the securities industry, a company’s capital adequacy rate is viewed as a key performance indicator. Many BIS regulations require that a securities firm has a minimum capital adequacy rate of 200% in order to be permitted to operate in many key business areas. As such, this level can be seen as an important benchmark in evaluating a securities firm’s business performance and risk management measures. As of March 2020, our capital adequacy rate stood at 538%, well above this key 200% level.

2. Market Share Rate

Market share of various business could be used for performance indicators. It could represent company’s weighted market share and perceptive of future trend, which help to analyze management performance. Our company’s Brokerage market share was 3.25% in 2020, ranked the 10th among top 10 competitors. Average single branch market share was 0.10%, ranked the 3rd among top 10 competitors. Compared with other securities firms, our performance was more efficient and competitive. Currently our company continues to build comprehensive and personalized information platform to improve stability of electronic transactions and orders, train sales with multiple financial ability, hoping to create more profit for customers and company.

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IX. Occurrences of items that may give rises to substantial impact on shareholders’ interests and/or stock price as defined in NO.3-2 Article 36 of Securities and Exchange Law in the latest fiscal year including the days counting to the publication of the annual reports: None.

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X. Financial Statements

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND REPORT OF INDEPENDENT

ACCOUNTANTS

DECEMBER 31, 2019 AND 2018

-----------------------------------------------------------------------------------------------------------------------------------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.

150

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR19003349

To the Board of Directors and Shareholders of President Securities Corporation

Opinion

We have audited the accompanying parent company only balance sheets of President Securities Corporation (the “Company”) as at December 31, 2019 and 2018, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of President Securities Corporation as at December 31, 2019 and 2018, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Firms” and “Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants”.

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the parent company only financial statements as a

151

whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

The key audit matters of the parent company only financial statements for the year ended December 31, 2019 are as follows:

Fair value measurement of unlisted stocks without active market

Description

Please refer to Note 4(7) for the accounting policies on unlisted stocks without active market (shown as “financial assets at fair value through other comprehensive income”) and Note 5 for details of significant judgements, estimates and assumption uncertainty. As at December 31, 2019, the unlisted stocks without active market held by President Securities Corporation totalled $157,656 thousand and were shown as “financial assets at fair value through other comprehensive income” (Level 3 fair value).

Due to the lack of an active market, the fair value of the unlisted stocks held by the President Securities Corporation was determined using valuation method. Management measured its fair value by using comparable listed companies in market approach. The main assumption of market approach is calculating based on the latest published price-to-book ratio of comparable listed companies in similar industries and considering discounts on market liquidity or risk particularity.

Above-mentioned estimation of fair value involves various assumptions and material unobservable inputs, which has high uncertainty and relies on the subjective judgment of management. Any changes in judgements and estimates may affect the ultimate result of accounting estimates and have an impact on the financial statements of President Securities Corporation. Thus, we have included the fair value measurement of unlisted stocks without active market as a key audit matter in our audit.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

Obtained an understanding and assessed policy documents, internal control system, fair value measurement models and approval processes that are related to fair value measurement of unlisted stock;
Ascertained whether the measurement methods used by the management are commonly used by the industry;
Assessed the reasonableness of parameter of similar companies used by management;
Examined inputs and calculation formulas used in valuation methods and agreed such data to their supporting documents.

152

Impairment assessment of investments accounted for under equity method

Description

Please refer to Note 4(13) for accounting policies on investments accounted for under equity method and its impairment, Note 5(2) for the uncertainty of accounting estimates and assumptions applied on asset impairment, and Note 6(11) for details of investments accounted for under equity method.

President Securities Corporation held 42.46% of equity of Uni-President Asset Management Corp. which was accounted for under equity method. As of December 31, 2019, the amount was $578,382 thousand. Impairment assessment is based on the expected future cash flow of the investee, discounted at an appropriate discount rate, to measure the recoverable amount of the cash generating unit.

The recoverable amount of the investee is based on its expected future cash flows which involve multiple estimates and assumptions on discount rate and financial forecast. These are subjective judgements, have a high degree of uncertainties, and are material to the recoverable amount. Thus, we consider the impairment assessment of investments accounted for under equity method as one of the matters of most significance to our audit.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

1.Obtained the impairment assessment report prepared by an external valuation expert who was commissioned by the management;
2.Assessed the reasonableness of expected future cash flows, discount rate and other significant assumptions applied in the cash flow model;
3.Inspected valuation model parameters, formula setting and the accuracy of calculation.

153

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

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

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

Those charged with governance, including audit committee, are responsible for overseeing President Securities Corporation’s financial reporting process.

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

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

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

Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

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The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2.

3.

4.

5.

6.

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

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

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on President Securities Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause President Securities Corporation to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within President Securities Corporation to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

155

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 parent company only financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Lin, Se-Kai

Independent Accountants

Hsiao, Chin-Mu

For and on behalf of PricewaterhouseCoopers, Taiwan March 26, 2020

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

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

156

PRESIDENT SECURITIES CORPORATION PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2019 AMOUNT % `$` `3,829,651` `5` `43,510,101` `54` `-` `-` `-` `-` `10,024,189` `12` `102,545` `-` `88,759` `-` `517,809` `1` `101,043` `-` `543,171` `1` `697` `-` `11,786,358` `14` `2,615` `-` `18,464` `-` `10,294` `-` `544,924` `1` `71,080,620` `88` `71,296` `-` `157,656` `-` `5,476,748` `7` `2,270,391` `3` `167,514` `-` `272,603` `1` `70,726` `-` `132,198` `-` `985,663` `1` `9,604,795` `12` `$` `80,685,415` `100`	December 31, 2018	December 31, 2018
	AMOUNT `$` `3,829,651` `43,510,101` `-` `-` `10,024,189` `102,545` `88,759` `517,809` `101,043` `543,171` `697` `11,786,358` `2,615` `18,464` `10,294` `544,924` `71,080,620` `71,296` `157,656` `5,476,748` `2,270,391` `167,514` `272,603` `70,726` `132,198` `985,663` `9,604,795` `$` `80,685,415`	AMOUNT `$` `3,493,138` `26,802,010` `296,304` `93,193` `8,020,488` `4,402` `8,387` `-` `78,316` `785,431` `735` `8,236,367` `3,895` `16,287` `7,264` `447,498` `48,293,715` `66,354` `146,545` `5,347,315` `2,269,210` `-` `274,703` `67,004` `120,661` `1,009,981` `9,301,773` `$` `57,595,488`	%
110000 Current assets 111100 Cash and cash equivalents 112000 Financial assets at fair value through profit or loss - current 113200 Financial assets at fair value through other comprehensive income - current 114010 Bonds purchased under resale agreements 114030 Margin loans receivable 114040 Refinancing security deposits 114050 Receivables from refinance guaranty 114060 Receivable of securities business money lending 114090 Receivables from security lending 114100 Security lending deposits 114110 Notes receivable 114130 Accounts receivable 114140 Accounts receivable - related parties 114150 Prepayments 114170 Other receivables 119000 Other current assets 110000 Total current assets 120000 Noncurrent assets 122000 Financial assets at fair value through profit or loss - noncurrent 123200 Financial assets at fair value through other comprehensive income - noncurrent 124100 Investments in associates 125000 Property and equipment, net 125800 Right-of-use assets 126000 Investment property, net 127000 Intangible assets 128000 Deferred tax assets 129000 Other assets - noncurrent 120000 Total noncurrent assets 906001 Total Assets			`6` `47` `1` `-` `14` `-` `-` `-` `-` `1` `-` `14` `-` `-` `-` `1`
			`84`
			`-` `-` `9` `4` `-` `1` `-` `-` `2`
			`16`
			`100`

(Continued)

157

PRESIDENT SECURITIES CORPORATION PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	December 31, 2019 AMOUNT % `$` `2,845,502` `4` `9,596,704` `12` `848,265` `1` `20,956,256` `26` `1,558,717` `2` `1,888,832` `2` `56,004` `-` `633` `-` `11,467,219` `14` `310` `-` `375,582` `1` `1,235,306` `2` `2,743,866` `3` `194,272` `-` `56,963` `-` `12,599` `-` `53,837,030` `67` `4,180` `-` `105,452` `-` `12,148` `-` `26,925` `-` `148,705` `-` `53,985,735` `67` `13,723,900` `17` `91,261` `-` `2,876,769` `3` `7,130,830` `9` `2,355,105` `3` `521,815` `1` `26,699,680` `33` `$` `80,685,415` `100`	December 31, 2018	December 31, 2018
	AMOUNT `$` `2,845,502` `9,596,704` `848,265` `20,956,256` `1,558,717` `1,888,832` `56,004` `633` `11,467,219` `310` `375,582` `1,235,306` `2,743,866` `194,272` `56,963` `12,599` `53,837,030` `4,180` `105,452` `12,148` `26,925` `148,705` `53,985,735` `13,723,900` `91,261` `2,876,769` `7,130,830` `2,355,105` `521,815` `26,699,680` `$` `80,685,415`	AMOUNT `$` `939,879` `-` `865,530` `15,066,599` `1,767,269` `2,007,202` `621` `-` `7,292,947` `55` `361,033` `790,369` `2,687,009` `126,192` `-` `8,596` `31,913,301` `-` `-` `14,274` `21,928` `36,202` `31,949,503` `13,904,281` `142,702` `2,755,737` `6,945,453` `1,278,472` `619,340` `25,645,985` `$` `57,595,488`	%
210000 Current liabilities 211100 Short-term loans 211200 Commercial papers payable 212000 Financial liabilities at fair value through profit or loss - current 214010 Bonds sold under repurchase agreements 214040 Deposits on short sales 214050 Short sale proceeds payable 214070 Guarantee deposit received on borrowed securities 214090 Equity for each customer in the account 214130 Accounts payable 214150 Advance receipts 214160 Collections on behalf of third parties 214170 Other payables 214200 Other financial liabilities - current 214600 Current tax liability 216000 Current lease liabilities 219000 Other current liabilities 210000 Total current liabilities 220000 Noncurrent liabilities 225100 Non-current provisions 226000 Non-current lease liabilities 228000 Deferred tax liability 229000 Other liabilities - noncurrent 220000 Total noncurrent liabilities 906003 Total Liabilities 301000 Capital 301010 Common stock 302000 Capital reserve 304000 Retained earnings 304010 Legal reserve 304020 Special reserve 304040 Unappropriated earnings 305000 Other equity interest 906004 Total equity 906002 Total liabilities and equity			`2` `-` `1` `26` `3` `3` `-` `-` `13` `-` `1` `1` `5` `-` `-` `-`
			`55`
			`-` `-` `-` `-`
			`-`
			`55`
			`24` `1` `5` `12` `2` `1`
			`45`
			`100`

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

158

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

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

Items Years ended December 31
2019
2018
Notes
AMOUNT
%
AMOUNT
%
6(29)
$
1,528,416
25
$
1,709,656
36
6(30)
62,811
1
53,228
1
22,192
-
18,665
-
6(31)
2,833,461
45
277,015
6
75,832
1
74,882
2
6(32)
1,163,195
19
1,256,294
27
305,758
5
207,302
4
6(33)
711,103
11 (
366,829) (
8)
6(34)
37,413
1
27,788
1
6(35)
(
21,418 )
-
22,067
-
6(36)
15,309
- (
24,289)
-
(
2,377 )
-
-
-
6(37)
93,864
1
1,060,385
23
35,784
1
59,189
1
6(38)
(
987,583 ) (
16)
200,152
4
6(39)
(
6,498 )
- (
52,082) (
1)
6(40)
362,655
6
164,467
4
6,229,917
100
4,687,890
100
6(41)
(
399,172 ) (
6) (
344,064) (
7)
6(42)
(
506,284 ) (
8) (
397,110) (
9)
(
133 )
- (
148)
-
(
10,658 )
- (
14,806)
-
(
39 )
- (
46)
-
6(43)
(
2,044,099 ) (
33) (
1,787,401) (
38)
6(44)
(
154,827 ) (
3) (
75,875) (
2)
6(45)
(
1,089,758 ) (
18) (
1,188,099) (
25)
(
4,204,970 ) (
68) (
3,807,549) (
81)
2,024,947
32
880,341
19
6(11)
329,744
5
379,275
8
6(46)
159,690
3
126,030
3
2,514,381
40
1,385,646
30
6(47)
(
145,845 ) (
2) (
175,323) (
4)
$
2,368,536
38
$
1,210,323
26

400000Revenues
401000
Brokerage handling fee revenue
404000
Revenues from underwriting
business
406000
Gain on wealth management
410000
Gain on sale of trading securities
421100
Revenue from providing agency
service for stock affairs
421200
Interest revenue
421300
Dividend revenue
421500
Valuation gain (loss) on operating
securities at fair value through profit
or loss
421600
Gain on covering of borrowed
securities and bonds with resale
agreements-short sales
421610
Valuation (loss) gain on borrowed
securities and bonds with resale
agreements-short sales at fair value
through profit or loss
421750
Realised gain (loss) on financial
assets measured at fair value through
other comprehensive income-bonds
422000
Loss on issuance of ETNs
422200
Gain from issuance of call (put)
warrants
424100
Future commission revenue
424400
(Loss) gain from derivatives
425300
Impairment loss and reversal of
impairment loss
428000
Other operating income
Total revenue
500000Total expenditure and expense
501000/
502000/
503000
Handling charges
521200
Finance costs
524200
Securities commission expense
524300
Expense of clearing and settlement
528000
Other operating expenditure
531000
Employee benefits expense
532000
Depreciation and amortization
533000
Other operating expense
Total expenditure and expense
Net operating income
601100
Share of profit of subsidiaries,
associates and joint ventures
accounted for under the using equity
method
602000
Other gains and losses
902001Profit before tax
701000
Income tax expense
902005Net income

Items	Years ended December 31 2019 2018 Notes AMOUNT % AMOUNT % 6(29) `$` `1,528,416` `25` `$` `1,709,656` `36` 6(30) `62,811` `1` `53,228` `1` `22,192` `-` `18,665` `-` 6(31) `2,833,461` `45` `277,015` `6` `75,832` `1` `74,882` `2` 6(32) `1,163,195` `19` `1,256,294` `27` `305,758` `5` `207,302` `4` 6(33) `711,103` `11 (` `366,829) (` `8)` 6(34) `37,413` `1` `27,788` `1` 6(35) `(` `21,418 )` `-` `22,067` `-` 6(36) `15,309` `- (` `24,289)` `-` `(` `2,377 )` `-` `-` `-` 6(37) `93,864` `1` `1,060,385` `23` `35,784` `1` `59,189` `1` 6(38) `(` `987,583 ) (` `16)` `200,152` `4` 6(39) `(` `6,498 )` `- (` `52,082) (` `1)` 6(40) `362,655` `6` `164,467` `4` `6,229,917` `100` `4,687,890` `100` 6(41) `(` `399,172 ) (` `6) (` `344,064) (` `7)` 6(42) `(` `506,284 ) (` `8) (` `397,110) (` `9)` `(` `133 )` `- (` `148)` `-` `(` `10,658 )` `- (` `14,806)` `-` `(` `39 )` `- (` `46)` `-` 6(43) `(` `2,044,099 ) (` `33) (` `1,787,401) (` `38)` 6(44) `(` `154,827 ) (` `3) (` `75,875) (` `2)` 6(45) `(` `1,089,758 ) (` `18) (` `1,188,099) (` `25)` `(` `4,204,970 ) (` `68) (` `3,807,549) (` `81)` `2,024,947` `32` `880,341` `19` 6(11) `329,744` `5` `379,275` `8` 6(46) `159,690` `3` `126,030` `3` `2,514,381` `40` `1,385,646` `30` 6(47) `(` `145,845 ) (` `2) (` `175,323) (` `4)` `$` `2,368,536` `38` `$` `1,210,323` `26`
400000Revenues 401000 Brokerage handling fee revenue 404000 Revenues from underwriting business 406000 Gain on wealth management 410000 Gain on sale of trading securities 421100 Revenue from providing agency service for stock affairs 421200 Interest revenue 421300 Dividend revenue 421500 Valuation gain (loss) on operating securities at fair value through profit or loss 421600 Gain on covering of borrowed securities and bonds with resale agreements-short sales 421610 Valuation (loss) gain on borrowed securities and bonds with resale agreements-short sales at fair value through profit or loss 421750 Realised gain (loss) on financial assets measured at fair value through other comprehensive income-bonds 422000 Loss on issuance of ETNs 422200 Gain from issuance of call (put) warrants 424100 Future commission revenue 424400 (Loss) gain from derivatives 425300 Impairment loss and reversal of impairment loss 428000 Other operating income Total revenue 500000Total expenditure and expense 501000/ 502000/ 503000 Handling charges 521200 Finance costs 524200 Securities commission expense 524300 Expense of clearing and settlement 528000 Other operating expenditure 531000 Employee benefits expense 532000 Depreciation and amortization 533000 Other operating expense Total expenditure and expense Net operating income 601100 Share of profit of subsidiaries, associates and joint ventures accounted for under the using equity method 602000 Other gains and losses 902001Profit before tax 701000 Income tax expense 902005Net income

(Continued)

159

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME (Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

Items	Years ended December 31	Years ended December 31
	2019	2018
			%
Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 805510 Remeasurements of defined benefit plan 805540 Unrealised gain from investments in equity instruments at fair value through other comprehensive income 805560 Other comprehensive gain of subsidiaries, associates, and joint ventures accounted for under equity method 805599 Income tax benefit relating to components of other comprehensive income Items may be reclassified to profit of loss subsequently 805610 Translation (loss) gain on the financial statements of foreign operating entities 805615 Unrealised loss from investments in debt instruments at fair value through other comprehensive income 805000 Current other comprehensive income (loss) (post-tax) 902006Total current comprehensive income Earnings per share 975000 Basic earnings per share 985000 Diluted earnings per share			`-` `-` `1` `-` `2` `-`
			`3`
			`29`
			`0.87`
		`$`	`0.87`

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

160

PRESIDENT SECURITIES CORPORATION PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

For the year ended December 31, 2018 Balance at January 1, 2018 Effects of retrospective application and retrospective restatement Balance at January 1, 2018 after adjustments Net income for the year ended December 31, 2018 Other comprehensive income for the year ended December 31, 2018 Total comprehensive income Appropriations of 2017 earnings Legal reserve Special reserve Cash dividends Balance at December 31, 2018 For the year ended December 31, 2019 Balance at January 1, 2019 Net income for the year ended December 31, 2019 Other comprehensive loss for the year ended December 31, 2019 Total comprehensive income (loss) Appropriations of 2018 earnings: Legal reserve Special reserve Cash dividends Purchase of treasury shares Retirement of treasury share Balance at December 31, 2019	Notes		Commonstock		Capital reserve				Retained earnings				O	therequityinterest			Treasury shares		Totalequity
							Legal reserve		Special reserve		Unappropriated earnings	Exchange differences on translation of foreign financial statements		Unrealised gains (losses) on financial assets measured at fair value through other comprehensive income	Unrealized gains (losses) on available-for-sale financialassets
	6(27) 6(27) 6(28) 6(27) 6(27)	`$ 13,904,281` `-` `13,904,281` `-` `-` `-` `-` `-` `-` `$ 13,904,281` `$ 13,904,281` `-` `-` `-` `-` `-` `-` `-` `(` `180,381 )` `$ 13,723,900`		`$` `142,702` `-` `142,702` `-` `-` `-` `-` `-` `-` `$` `142,702` `$` `142,702` `-` `-` `-` `-` `-` `-` `-` `(` `51,441 )` `$` `91,261`			`$ 2,503,765` `-` `2,503,765` `-` `-` `-` `251,972` `-` `-` `$ 2,755,737` `$ 2,755,737` `-` `-` `-` `121,032` `-` `-` `-` `-` `$ 2,876,769`		`$ 6,373,559` `-` `6,373,559` `-` `-` `-` `-` `571,894` `-` `$ 6,945,453` `$ 6,945,453` `-` `-` `-` `-` `185,377` `-` `-` `-` `$ 7,130,830`	`$ 2,519,721` `17,538` `2,537,259` `1,210,323` `23,270` `1,233,593` `(` `251,972 )` `(` `571,894 )` `(` `1,668,514 )` `$ 1,278,472` `$ 1,278,472` `2,368,536` `(` `26,099 )` `2,342,437` `(` `121,032 )` `(` `185,377 )` `(` `959,395 )` `-` `-` `$ 2,355,105`		`($` `66,091 )` `-` `(` `66,091 )` `-` `85,342` `85,342` `-` `-` `-` `$` `19,251` `$` `19,251` `-` `(` `77,467 )` `(` `77,467 )` `-` `-` `-` `-` `-` `($` `58,216 )`	`$` `-` `563,430` `563,430` `-` `36,659` `36,659` `-` `-` `-` `$` `600,089` `$` `600,089` `-` `(` `20,058 )` `(` `20,058 )` `-` `-` `-` `-` `-` `$` `580,031`		`$` `7,717` `(` `7,717 )` `-` `-` `-` `-` `-` `-` `-` `$` `-` `$` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-`	`$` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-` `$` `-` `-` `-` `-` `-` `-` `-` `(` `231,822 )` `231,822` `$` `-`		`$ 25,385,654` `573,251` `25,958,905` `1,210,323` `145,271` `1,355,594` `-` `-` `(` `1,668,514 )` `$ 25,645,985` `$ 25,645,985` `2,368,536` `(` `123,624 )` `2,244,912` `-` `-` `(` `959,395 )` `(` `231,822 )` `-` `$ 26,699,680`

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

161

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation

Amortization

Impairment gain and reversal of impairment loss

Valuation (gains) loss on operating securities at fair value
through profit or loss

Valuation loss (gain) on borrowed securities and bonds with
resale agreements-short sales at fair value through profit or
loss

Interest costs

Interest income (include financial income)

Dividend income
Share of profit of subsidiaries, associates and joint ventures
accounted for under the equity method

Loss on disposal of property and equipment

(Gain) loss on valuation of non-operating financial instrument
Loss from lease modification

Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or loss
Financial assets at fair value through other comprehensive
income - current
Bonds purchased under resale agreements
Margin loans receivable
Refinancing security deposits
Receivables from refinance guaranty
Receivable of securities business money lending
Receivables from security lending
Security lending deposits
Notes receivable
Accounts receivable
Accounts receivable - related parties
Prepayments
Other receivables
Other current assets
Changes in operating liabilities
Bonds sold under repurchase agreements
Financial liabilities at fair value through profit or loss -
current
Deposits on short sales
Short sale proceeds payable
Guarantee deposit received on borrowed securities
Equity for each customer in the account
Accounts payable
Advance receipts
Collections on behalf of third parties
Other payable
Other financial liabilities - current
Other current liabilities Notes
2019
2018
$
2,514,381 $
1,385,646
6(44)
143,330
61,944
6(44)
11,497
13,931
6(39)
7,170
52,798
6(2)(33)
(
711,103 )
366,829
6(35)
21,418 (
22,067 )
6(42)
506,284
397,110
6(32)(46)
(
1,182,276 ) (
1,274,766 )
(
312,397 ) (
214,549 )
6(11)
(
329,744 ) (
379,275 )
6(46)
928
11
6(46)
(
7,576 )
4,013
6(46)
15
-
(
16,009,810 )
10,624,601
290,558
741,883
93,193 (
93,193 )
(
2,023,768 )
3,417,807
(
98,143 )
74,948
(
80,372 )
58,773
(
517,809 )
-
(
22,727 )
10,002
242,260 (
39,549 )
38
630
(
3,126,130 )
2,404,487
1,280
1,651
(
4,808 )
8,827
(
2,794 )
1,239
(
97,426 )
336,418
5,889,657 (
5,845,059 )
(
38,683 ) (
318,267 )
(
208,552 ) (
94,678 )
(
118,370 ) (
190,454 )
55,383 (
224,774 )
633
-
3,728,377 (
1,167,642 )
255 (
62 )
14,549 (
75,147 )
449,094 (
285,908 )
56,857 (
512,289 )
4,003
4,336

(Continued)

162

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Cash (outflow) inflow generated from operations
Interest received
Dividends received
Income tax paid
Net cash flows (used in) from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment

Loss on disposal of property and equipment
Acquisition of intangible assets

Investments accounted for under equity method
Decrease (increase) in other non-current liabilities
Increase in prepayment for equipment
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans
Increase (decrease) in commercial papers payable
Repayments of principal portion of lease liabilities
Increase (decrease) in other non-current liabilities
Payments of cash dividends

Payments to acquire treasury shares
Interest paid
Net cash flows from (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year Notes
2019
2018
( $
10,861,328 ) $
9,230,205
1,237,357
1,322,076
551,092
423,184
(
84,456 ) (
304,686 )
(
9,157,335 )
10,670,779
6(12)
(
41,146 ) (
38,643 )
10
-
6(16)
(
7,557 ) (
10,187 )
(
126,000 )
-
11,966 (
42,016 )
(
51,785 ) (
33,171 )
(
214,512 ) (
124,017 )
1,905,623 (
5,342,089 )
9,600,000 (
3,650,000 )
(
77,342 )
-
3,410 (
49,201 )
6(26)
(
959,395 ) (
1,668,514 )
(
231,822 )
-
(
502,822 ) (
395,381 )
9,737,652 (
11,105,185 )
(
29,292 )
15,225
336,513 (
543,198 )
3,493,138
4,036,336
$
3,829,651 $
3,493,138

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

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PRESIDENT SECURITIES CORPORATION

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

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

1. HISTORY AND ORGANIZATION

1) President Securities Corporation (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.) on December 17, 1988, and was renamed as President Securities Corporation on March 4, 1989. The Company started commercial operations on April 3, 1989. As of December 31, 2019, the Company had 31 operating branches (including the Head Office), and established Offshore Securities Unit in July 2014.
2) The Company is primarily engaged in underwriting of securities, dealing or brokerage business of securities at the securities exchange markets and business premises, registration and transfer agency service for securities, margin loans and short sales business of securities, securities lending and borrowing business, futures introducing brokerage services, futures dealing, issuance of call (put) warrants, new financial instrument transactions, wealth management business, and trust business.
3) The Company’s shares are listed on the Taiwan Stock Exchange.
4) The number of employees of the Company were 1,447 and 1,483, as of December 31, 2019 and 2018.
THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These parent company only financial statements were authorised for issuance by the Board of Directors on March 26, 2020.

APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

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

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New Standards,Interpretations andAmendments	Effective Date by International Accounting StandardsBoard
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 Company’s financial condition and financial performance based on the Company’s assessment.

IFRS 16, ‘Leases’

A. IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a ‘right-of-use asset’ and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.
B. The Company has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as endorsed by the FSC. Accordingly, the Company increased ‘rightof-use asset’ by $203,511, increased ‘lease liability’ by $200,880, and decreased prepayments by $2,631 and this had no effect on retained earnings with respect to the lease contracts of lessees on January 1, 2019.
C. The Company has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16:
(A) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4.
(B) The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.
(C) The accounting for operating leases whose period will end before December 31, 2019 as short-term leases and accordingly, rent expense of $3,330 was recognised for the year ended December 31, 2019.
(D) The exclusion of initial direct costs for the measurement of ‘right-of-use asset’.

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(E) The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
D. The Company calculated the present value of lease liabilities by using the weighted average incremental borrowing interest rate of 0.767%.
E. The Company recognised lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognised as of January 1, 2019 is as follows:

ease liabilities recognised as of January 1, 2019 is as follows:
Operating lease commitments disclosed by applying IAS 17 as at December 31, 2018	$	203,770
Less: Short-term leases	(	415)
Total lease contracts amount recognised as lease liabilities by applying IFRS 16 on January 1, 2019		203,355
Incremental borrowing interest rate at the date of initial
application		0.767%
Lease liabilities recognised as at January 1, 2019 by applying IFRS 16	$	200,880

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 FSC effective from 2020 are as follows:

New Standards,Interpretations and Amendments Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative- Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’	Effective Date by International Accounting Standards Board
	January 1, 2020 January 1, 2020 January 1, 2020

The above standards and interpretations have no significant impact to the Company’s

financial condition and financial performance based on the Company’s assessment.

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

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

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Effective Date by International Accounting New Standards, Interpretations and Amendments Standards Board To be determined by Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of International Accounting assets between an investor and its associate or joint venture’ Standards Board IFRS 17, ‘Insurance contracts’ January 1, 2021 Amendments to IAS 1, ‘Classification of liabilities as current or January 1, 2022 non-current’

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies are described below:

1) Compliance statement

The financial statements of the Company have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Firms” and “Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants”.

2) Basis of preparation
A. Except for the following items, these financial statements have been prepared under the historical cost convention:
- (A) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- (B) Financial assets at fair value through other comprehensive income.
- (C) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligations.
B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretation as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5.

3) 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:

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  - (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;
- (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.
4) Translation of foreign currency transactions
A. Foreign currency translation and presentation
- Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the “functional currency”). Functional currency and bookkeeping currency of the Company is New Taiwan Dollars.
B. Foreign currency transactions and balances
- Foreign currency transactions denominated in a foreign currency or required to settle in a foreign currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
- Monetary assets and liabilities denominated in foreign currency are translated by the closing exchange rate at balance sheet date. The closing exchange rate is determined by the market exchange rate. Non-monetary assets and liabilities denominated in foreign currencies which are carried at historical cost are re-translated at the exchange rates prevailing at the original transaction date. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are retranslated 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.

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C. Translation of foreign operations
- The operating results and financial position of all the company entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- (A) Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
- (B) Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
- (C) All resulting exchange differences are recognised in other comprehensive income.
5) Cash and cash equivalents
A. In the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with banks, and other short-term highly liquid investments.
B. 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.
6) Financial assets and financial liabilities at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost 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 recognised and derecognised using trade date accounting.
C. At initial recognition, the Company measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
D. The Company recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.
7) 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 Company has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:
- (a)The objective of the Company’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 trade date accounting.

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C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value:
- (a)The changes in fair value of equity investments that were recognised 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 recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company 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 recognised in profit or loss, the changes in fair value of debt instruments are taken through other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss.
8) Notes and accounts receivable, other receivables and margin loans receivable
A. Accounts and notes receivable and margin loans receivables entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
9) Bonds sold under repurchase agreements and bonds purchased under resale agreements Bond transactions under repurchase or resale agreements are stated at the amount of actual payment or receipt. When transactions of bonds with a condition of resale agreements occur, the actual payment or receipt shall be recognized in ‘bonds purchased under resale agreements’ under current assets. When transactions of bonds with a condition of repurchase agreements occur, the actual payment or receipt shall be recognized in ‘bonds sold under repurchase agreements’ under current liabilities. Any difference between the actual payment/receipt and predetermined redemption (repurchase) price is recognized in interest income or interest expense.
10) Impairment of financial assets
For debt instruments measured at fair value through other comprehensive income, at each reporting date, the Company recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Company recognises the impairment provision for lifetime ECLs.

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11) Derecognition of financial instruments

A. Derecognition of financial assets

The Company derecognizes a financial asset when one of the following conditions is met:

(A) The contractual rights to receive cash flows from the financial asset expire.
(B) The contractual rights to receive cash flows from the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.
(C) The contractual rights to receive cash flows of the financial asset have been transferred; however, the Company has not retained control of the financial asset.
B. Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability specified in the contract is discharged or cancelled or expires.

12) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

13) Investments accounted for under the equity method/Subsidiaries and associates

A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Investments in subsidiaries are accounted for using the equity method and are initially recognised at cost.
B. Unrealised gains on transactions between the Company and its subsidiaries are eliminated to the extent of the Company’s interest in the subsidiaries. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.
C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, including any other unsecured receivables, the Company does not recognise further losses.
D. Associates are all entities over which the Company has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.

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E. The Company’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 Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognise further losses, unless it has incurred statutory/constructive obligations or made payments on behalf of the associate.
F. When changes in an associate’s equity that are not recognized in profit or loss or other comprehensive income of the associate and such changes not affecting the Company’s ownership percentage of the associate, the Company recognizes its share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.
G. Unrealised gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Company.
H. According to "Regulations Governing the Preparation of Financial Reports by Securities Firms", the profit or loss for the period and other comprehensive income presented in parent company only financial reports shall be the same as the allocations of profit or loss for the period and of other comprehensive income attributable to owners of the parent presented in the financial reports prepared on a consolidated basis, and the owners' equity presented in the parent company only financial reports shall be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis.
I. When there are objective evidences of impairment at balance sheet date, the Company considers the whole investment carrying amount as single asset, and compares its recoverable amount (value in use or fair value less costs of disposal) with the carrying amount, to test its impairment. Value in use is determined by the present value of the Company’s share of the expected future cash flow from the associates. If the recoverable amount is less than its carrying amount, an impairment loss should be recognized. The loss will not be allocated to any of the components (including goodwill), which comprise the carrying amount of the investment. An impairment loss recognized in prior periods shall be reversed if circumstances of impairment no longer exist or have decreased.

14) Property and equipment

A. Property and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate

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asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

C. Land is not depreciated. Other property and equipment are subsequently measured using the cost model and depreciated using the straight-line method to allocate their cost over their estimated useful lives.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property and equipment are as follows:

Useful lives Buildings 5~50 years Furniture and fixtures 4~10 years Computer equipment 3~5 years Electrical equipment 3~10 years Leasehold improvements 5 years

E. When an asset is sold or retired, the cost and accumulated depreciation are removed from the respective accounts and the resulting gain or loss is included in current operations.

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

Effective 2019

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

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C. At the commencement date, the right-of-use asset is stated at cost comprising mainly the amount of the initial measurement of lease liability.
- The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.
16) Investment property
A. Investment property of the Company is the property held either to earn long-term rental income or for capital appreciation or for both.
B. Part of the property may be held by the Company for self-use purpose and the remaining are used to generate rental income or capital appreciation. If the property held by the Company can be sold individually, then the accounting treatment should be made respectively. If each part of the property cannot be sold individually and the selfuse proportion is not material, then the property is deemed as investment property in its entirety.
C. When the future economic benefit related to the investment property is highly likely to flow into the Company and the costs can be reliably measured, the investment property shall be recognized as assets. When the future economic benefit generated from subsequent costs is highly likely to flow into the entity and the costs can be reliably measured, the subsequent expenses of the assets shall be capitalized. All maintenance cost are recognized in profit or loss as incurred.
D. Investment property is subsequently measured using the cost model. Depreciated cost is used to calculate amortization expense after initial measurement. The depreciation

method, remaining useful life and residual value should apply the same rules as applicable for property and equipment.

17) Intangible assets

A. The cost of computer software is amortized using the straight-line method over the useful lives based on acquisition cost, with an amortization period of 4 years.
B. In accordance with IFRS 3 ‘Business combinations’ as endorsed by FSC, goodwill arises when the acquisition cost exceeds the fair value of identifiable assets and liabilities of the consolidated subsidiary on the consolidation date. The goodwill arising from the consolidated subsidiary is included in the intangible asset. Goodwill is tested annually for impairment and any impairment loss will be recognized when impairment occurs. Impairment losses on goodwill are not reversed.

18) Impairment of non-financial assets

A. The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is

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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 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, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use 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 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.

19) Financial liabilities at fair value through profit or loss

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

20) Contingent liabilities

Contingent liability is a possible obligation that arises from past event, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Or it could be a present obligation as a result of past event but the payment is not probable or the amount cannot be measured reliably. The Company did not recognize any contingent liabilities but made appropriate disclosure in compliance with relevant regulations.

21) Employee benefits

A. Short-term employee benefits

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

B. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Company’s decision to terminate an

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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 employee. The Company recognized expense as it can no longer withdraw an offer of termination benefit or it recognizes relating 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.

C. Pensions
(A) Defined contribution plans

Effective July 1, 2005, the Company established the defined contribution plan for employees of R.O.C. nationality. The employees have the option to participate in the New Plan. Under the New Plan, the Company contributes monthly an amount equivalent to 6% of employees’ salaries to the employees’ personal pension accounts with the “Bureau of Labor Insurance”. Benefits accrued under the New Plan are portable upon termination of employment. Net defined benefit asset can only be recognized when there is a cash refund or elimination in the future accrued pension liabilities.

(B) Defined benefit plans
- a. In a defined benefit plan, the pension paid is determined based on the amount that an employee shall receive upon retirement, which could vary with age, work seniority and salary compensations. The Company recognizes the accrued pension obligations in the balance sheet based on the net amount of actuarial present value of defined benefit obligation less the fair value of fund, which is adjusted with the net of past service cost recognized as liabilities. Defined benefit obligation is assessed annually using projected unit credit method by the actuary. The present value of the defined benefit obligation is determined using the market yield of government bonds of a currency and term consistent with the currency and term of the employment benefit obligations.
- b. Remeasurement arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.
D. Employees’ remuneration and directors’ remuneration
Employees’ and directors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

22) Revenues and expenses

The Company’s revenues and expenses mainly include:

A. Gains (losses) on sale of securities, securities brokerage fees, and commissions on brokerage and trading are recognized on the transaction date.
B. Underwriting fees and related service charges: application fees are recognized upon

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collection; underwriting fees and service charges are recognized when the contract is completed.

C. Gains (losses) on futures contracts: The margin of futures transaction is recognized as cost. Costs and expenses are recognized as incurred.
D. Operating expenses: operating expenses refer to required expenses invested in the Company’s operations, which primarily include employee benefit expense, depreciation and amortization, and other business and administrative expenses.
23) Income tax
A. Current income tax
- Income tax payable (refundable) is calculated on the basis of the tax laws enacted in the countries where a company operates and generates taxable income. Except for the transactions or other matters directly recognized in other comprehensive income or equity, in which cases the related income taxes in the period are recognized in other comprehensive income or directly derecognized from equity, all the others should be recognized as income or expense for the period.
B. Deferred income tax
- Deferred income tax assets and liabilities are measured based on the tax rate of the anticipated period that the future assets realization or the liabilities settlement requires, which is based on the effective or existing tax rate at the balance sheet date. The carrying amounts and temporary differences of assets and liabilities included in the balance sheet are calculated using the liability method and recognised as deferred income tax. However, the deferred income tax is not accounted for if it arises from initial recognition 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 (loss). Deferred income tax assets are recognized only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. If the future taxable income is probable to provide unused loss carryforwards or deferred income tax credit which can be realized in the future, the proportion of realization is deemed as deferred income tax asset.
C. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions for income tax liabilities where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

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D. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.
24) Share capital
A. Incremental costs directly attributable to the issuance of new shares are shown as a deduction, net of tax, from equity. Dividends from common stocks are recognized as equity in the financial period in which they are approved by the Company’s shareholders. If the date of dividends declared is later than the balance sheet date, common stocks are disclosed in the subsequent events.
B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

25) Earnings per share

A. Earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the year after taking into consideration the retroactive effect of stock dividends and capital reserve capitalized.
B. When the Company calculates earnings per share, basic earnings per share and diluted earnings per share for all potential ordinary shares shall all be disclosed in accordance with IAS 33 “Earnings per share”.

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

1) As the financial statements of the Company may be affected by the adoption of accounting policy, accounting estimate and assumption, the Company’s management shall properly exercise its professional judgement, estimates, and assumptions on the information of the key risks that is obtained from other resources and could affect the carrying amounts of financial assets and liabilities in the next fiscal year while adopting critical accounting policies as stated in Note 4. Estimates and assumptions of the Company are the best estimates made in compliance with IFRSs as endorsed by the FSC. Estimates and assumptions are made based on past experience and other factors deemed relevant;

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however, the actual results may differ from the estimates. The Company evaluates the estimates and assumptions on an ongoing basis and recognizes the adjustment of the estimates only in the period which is affected by the adjustment. If the adjustment simultaneously affects both the current and future periods, it should be recognized in both periods.

2) Relevant information on key assumptions to be made in the future, key sources of assumption uncertainty made at balance sheet date, and assumptions and estimates that may cause key risks that could affect the carrying amounts of financial assets and liabilities are as follows:
A. Fair value of financial instruments
- Financial instruments with no active market or quoted price use valuation technique to determine the fair value. Under such condition, fair value is assessed through the observable information or models of similar financial instruments. If there is no observable input available in a market, the fair value of financial instrument is assessed through appropriate assumptions. When valuation models are adopted to determine the fair value, all the models should be calibrated to ensure that the output can actually reflect actual information and market price. Models should try to take only observable information as much as possible.
B. Expected credit losses

For financial assets, the measurement of expected credit losses uses complex models and multiple assumptions. These models and assumptions take into account future macro-economic conditions and credit behaviors of borrowers (e.g. probability of customer default and loss). Please refer to Note 12(2) for detailed information on parameters, assumptions, and estimation methods used in measuring expected credit losses and disclosure of the sensitivity of credit loss to the aforementioned factors. The measurement of expected credit losses according to applicable accounting rules involves significant judgement in several areas, for example:

(A)The criteria used to judge whether there is significant increase in credit risk.
(B)The selection of appropriate models and assumptions for measuring expected credit losses.

For judgements and estimations of the above expected credit losses, please refer to Note 12(2).

C. Impairment assessment on investment accounted for under equity method When there are impairment indicators that show the investments accounted for under equity method are impaired and the carrying amount can no longer be recovered, the Company will assess the impairment of the investment. The Company assess its share of the recoverable amount which is based on the discounted value of expected cash flow, and assess the reasonableness of relevant assumptions, including revenue growth

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rate, operating profit margin, net profit margin, financial forecast, and discount rate.

D. Impairment assessment of goodwill
Impairment assessment of goodwill includes allocation of assets, liabilities, and goodwill to brokerage segment, and determines the recoverable amount based on brokerage segment’s present value of expected future cash flow. The assessment also analyzes reasonableness of relevant assumptions, including expected future trading volumes, market share, segment’s operating profit margin, and discount rates.

6. DETAILS OF SIGNIFICANT ACCOUNTS

1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Checking deposits Current deposits: Deposits denominated in NTD Deposits denominated in foreign currencies Time deposits Total	December31,2019 486,626 $ 92,681 987,144 2,263,200 3,829,651 $	December31,2018
		372,001 $ 225,347 544,590 2,351,200
		3,493,138 $

As of December 31, 2019 and 2018, the annual interest rates of time deposits, including foreign time deposits were both 0.040% ~ 1.065%.

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2) Financial assets at fair value through profit or loss

Current items:
Financial assets mandatorily measured at fair value through profit or loss:
Open-ended funds, money market instruments
and securities investment by brokers
Open-ended mutual funds beneficiary
certificates
Listed (TSE and OTC) stocks
Subtotal
Adjustment of open-ended funds
and money market instruments
and securities investment by brokers
Total
Trading securities-dealer
Listed (TSE and OTC) stocks
Government bonds
Corporate bonds
Convertible corporate bonds
Emerging stocks
Overseas stocks
Exchange-traded funds
Unlisted stocks
Subtotal
Adjustment of trading securities - dealer
Total
Trading securities-underwriter
Listed (TSE and OTC) stocks
Convertible corporate bonds
Unlisted stocks
Subtotal
Adjustment of trading securities - underwriter
Total
Trading securities-hedging
Listed (TSE and OTC) stocks
Convertible corporate bonds
Warrants
Overseas stocks
Exchange traded funds
Subtotal
Adjustment of trading securities - hedging
Total
Options bought-futures
Futures guarantee deposits receivable
Derivative financial instrument assets-OTC
Total
Non-current items:
Financial assets mandatorily measured at fair value through profit or loss:
Trading securities - dealer - government bonds
Unlisted stocks
Subtotal
Adjustment of trading securities
Total

December 31,2019
December 31,2018
201,298
$ 225,000
$ -
1,384,265
201,298
1,609,265
1,267
781
202,565
1,610,046
6,192,641
203,034
3,364,452
4,700,905
6,992,481
3,265,038
146,703
148,279
54,554
67,424
15,502,816
9,551,592
3,091,765
2,765,819
1,514
1,514
35,346,926
20,703,605
503,131
40,892)
(
35,850,057
20,662,713
807,209
837,441
238,046
479,500
-
14,400
1,045,255
1,331,341
101,417
123,837
1,146,672
1,455,178
3,142,111
584,558
7,647
613
47,966
39,229
64,648
-
165,249
154,782
3,427,621
779,182
83,999
6,164
3,511,620
785,346
15,533
24,463
2,782,685
2,260,964
969
3,300
43,510,101
$ 26,802,010
$ 49,921
$ 49,895
$ 2,609
2,609
52,530
52,504
18,766
13,850
71,296
$ 66,354
$

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a. For the years ended December 31, 2019 and 2018, net realised and unrealised gains on financial assets and liabilities at fair value through profit or loss amounted to $2,664,463 and $1,220,578, respectively.
b. Details of the Company’s financial assets at fair value through profit or loss pledged to others as collateral are provided in Note 8.
c. Information relating to credit risk is provided in Note 12(2).
3) Financial assets at fair value through other comprehensive income

Current items: Debt instruments Trading securities-dealer Overseas bonds Adjustment of trading securities - dealer Total Non-current items: Equity instruments Unlisted stocks Adjustment of trading securities Total	December31,2019 - $ - - $ 6,449 $ 151,207 157,656 $	December31,2018
		290,816 $ 5,488
		296,304 $
		6,449 $ 140,096
		146,545 $

a. The Company has elected to classify unlisted stocks that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounts to $157,656 and $146,545 as at December 31, 2019 and 2018.
b. Amounts recognised 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		Year ended December 31,2019	Year ended December 31,2018
Fair value change recognised in other comprehensive income Dividend income recognised in profit or loss held at end of period Debt instruments at fair value through other comprehensive income	11,111 $ 5,595 $ 20,832) ($ 15,309 $ 784 $		12,307 $ 5,160 $ 22,066 $ 24,289) ($ 8,415 $
Fair value change recognised in other comprehensive income Cumulative other comprehensive income reclassified to profit Due to derecognition Interest income recognised in profit or loss

c. Details of the Company’s financial assets at fair value through other comprehensive income pledged to others as collateral are provided in Note 8.
d. Information relating to credit risk is provided in Note 12(2).

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4) Bonds purchased under resale agreements

Overseas bonds	December31,2019 December31,2018 - $ 93,193 $

The above bonds purchased under resale agreements as of December 31, 2019 and 2018 was due within one year and were contracted to be resold at the agreed-upon price plus interest charge on the specific date after transaction. The total resale amounts were $0 and

$93,705, respectively. The annual interest rates of every currency were as follows:

December 31, 2019 December 31, 2018 Foreign currencies (Note) - 2.20%

(Note) `：` Foreign currencies include USD and EUR.

5) Margin loans receivable

Margin loans receivable were secured by the securities purchased by customers under margin loans. The annual interest rate was 6.4%.

6) Accounts receivable

Accounts receivable
		December 31,2019			December 31,2018
Accounts receivable - related parties	$		2,615	$		3,895
Accounts receivable - non related parties
Settlement price receivable-brokers	$		8,775,893	$		6,289,700
Settlement price receivable-dealer			857,731			668,765
Accounts receivable-foreign bonds			601,111			142,329
Spot exchange receivable, foreign currencies			435,180			-
Interest receivable			301,206			338,710
Settlement price			745,383			722,004
Others			70,510			77,520
Subtotal			11,787,014			8,239,028
Less: Allowance for uncollectible accounts	(		656)	(		2,661)
Total	$		11,786,358	$		8,236,367

(Blank below)

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

		December	31,2019		Total
Upto 30 days	31 to 90 days	91 to 180 days	181 days to 12 months	More than 12 months
2,615 $ 11,493,440 11,496,055 $	- $ 69,155 69,155 $		- $ 75,020 75,020 $ 31,2018	- $ 46,882 46,882 $	2,615 $ 11,787,014 11,789,629 $ Total
Upto 30 days	31 to 90 days	91 to 180 days	181 days to 12 months	More than 12 months
3,895 $ 7,906,191 7,910,086 $	- $ 36,760 36,760 $	- $ 90,459 90,459 $	- $ 138,336 138,336 $	- $ 67,282 67,282 $	3,895 $ 8,239,028 8,242,923 $

The above ageing analysis was base on invoice day.

B. Information related to credit risk is provided in Note 12(2).

184

7) Other receivables

Other receivables
	December	31,2019	December 31,2018
Interest receivable	$	3,746	$	3,745
Others		6,602		3,807
Less: Impairment loss	(	54)	(	288)
Total	$	10,294	$	7,264

Information relating to credit risk is provided in Note 12(2).

8) Other current assets

Other current assets
Pending settlements Pledged time deposits Underwriting share proceeds collected on behalf of customers Temporary payments Others Total	December 31,2019 34,990 $ 400,000 18 108,566 1,350 544,924 $	December 31,2018
		27,379 $ 400,000 18,542 746 831
		447,498 $

9) Transfer of financial assets

A. During the Company’s activities, the transferred financial assets that do not meet derecognition conditions are mainly debt instruments with purchase agreements or debt instruments lent out in accordance with securities borrowing and lending agreement. The cash flow of the contract has been transferred and related liabilities of transferred financial assets that will be repurchased at a fixed price in the future have been reflected. The Company may not use, sell or pledge the transferred financial assets during the valid period of the transaction. The financial assets were not derecognized as the Company is still exposed to interest rate risk and credit risk.
B. Financial assets that do not meet the derecognition conditions and related financial
liabilities are analysed below:

December 31,2019	December 31,2019	Carrying amount of related financial liabilities
Financial assets category Carrying amount of transferred financial assets Financial assets measured at fair value through profit or loss Repurchase agreement 21,964,175 $ December 31,2018	Carrying amount of transferred financial assets
		20,956,256 $ Carrying amount of related financial liabilities
Financial assets category Financial assets measured at fair value through profit or loss Repurchase agreement Available-for-sale financial assets Repurchase agreement	Carrying amount of transferred financial assets
	15,506,358 $ 296,304	14,775,766 $ 290,833

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10) Offsetting financial assets and financial liabilities
A. The Company has transactions that are or are similar to net settled master netting arrangements but do not meet the offsetting criteria, i.e. derivative financial instruments, resale and repurchase agreements. If one party breaches the contract, the counterparty can choose to use net settlement for the above transactions.
- (Blank below)

186

B. The offsetting of financial assets and financial liabilities are set as follows:
(1)Financial assets

December 31, 2019

			December 31,2019	December 31,2019	December 31,2019
Financial	assets that are offset,or ca	n	be settled under agreements of net settled master nettingarrangements or similar arrangements
Derivative financial instruments Description	Gross amounts of recognised financial assets		Gross amounts of recognised financial liabilities set off in the balance sheet	Net amounts of financial assets presented in the balance sheet	Financial instruments Cash collateral received 938 $ - $ Not set off in the balance sheet	Net amount
					Financial instruments
	938 $		- $ 938 $ December 31,2018		938 $	- $

Financial	assets that are offset,or ca	n	be settled under agreements of net settled master nettingarrangements or similar arrangements
Derivative financial instruments Bonds purchased under resale agreements Total Description	Gross amounts of recognised financial assets		Gross amounts of recognised financial liabilities set off in the balance sheet	Net amounts of financial assets presented in the balance sheet	Financial instruments Cash collateral received 3,300 $ - $ 92,663 - 95,963 $ - $ Not set off in the balance sheet	Net amount
					Financial instruments
	3,300 $ 93,193 96,493 $		- $ - - $	3,300 $ 93,193 96,493 $	3,300 $ 92,663 95,963 $	- $ 530
						530 $

187

(2) Financial liabilities

December 31, 2019

		December 31,2019	December 31,2019	December 31,2019	December 31,2019
Financial liabilities that are offset,or c		an be settled under agreements of net settled master nettingarrangements or similar arrangements
Derivative financial instruments Bonds sold and repurchase agreements Total Description	Gross amounts of recognised financial liabilities	Gross amounts of recognised financial assets set off in the balance sheet	Net amounts of financial liabilities presented in the balance sheet	Financial instruments Cash collateral received 938 $ - $ 11,622,022 - 11,622,960 $ - $ Not set off in the balance sheet		Net amount
				Financial instruments
	8,371 $ 11,622,022 11,630,393 $	- $ 8,371 $ - 11,622,022 - $ 11,630,393 $ December 31,2018		938 $ 11,622,022 11,622,960 $		7,433 $ -
						7,433 $

Financial liabilities that are offset,or c		an be settled under agreements of net settled master nettingarrangements or similar			arrangements
Derivative financial instruments Bonds sold and repurchase agreements Total Description	Gross amounts of recognised financial liabilities	Gross amounts of recognised financial assets set off in the balance sheet	Net amounts of financial liabilities presented in the balance sheet	Financial instruments Cash collateral received 3,300 $ - $ 8,713,387 - 8,716,687 $ - $ Not set off in the balance sheet		Net amount
				Financial instruments
	11,112 $ 8,713,387 8,724,499 $	- $ - - $	11,112 $ 8,713,387 8,724,499 $	3,300 $ 8,713,387 8,716,687 $		7,812 $ -
						7,812 $

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11) Investments accounted for under the equity method

Investments accounted for under the equity method
Subsidiaries President Futures Corp. President Securities (HK) Ltd. President Capital Management Corp. President Securities (BVI) Ltd President Insurance Agency Corp. PSC Venture Capital Investment Limited Company Joint ventures Uni-President Asset Management Corp.	December 31,2019 1,924,380 $ 72,935 322,208 2,301,733 28,561 248,549 4,898,366 578,382 5,476,748 $	December 31,2018
		1,935,207 $ 72,792 194,831 2,298,272 31,911 245,072
		4,778,085
		569,230
		5,347,315 $

A. The Company’s share of its associates’ profits or losses recognised in long-term equity investment accounted for under the equity method for the years ended December 31, 2019 and 2018 were $329,744 and $379,275, respectively.
B. Details of information of subsidiaries are provided in Note 4(3) of consolidated financial statements.
C. The financial information of the Company’s principal associates is summarized as follows:
(a)The basic information of the associate that are material to the Company is as follows:

Princial place Companyname of businesss Uni-President Asset Management Corp. Taipei city Uni-President Asset Management Corp. Taipei city	Shareholdingratio December 31,2019 42.46% December 31,2018 42.46%	Nature of relationship Associate Associate	Methods of measurement
			Equity method Equity method

189

(b)The summarized financial information of the associate that are material to the Company is as follows:

Balance sheet

Balance sheet
		Uni-President Asset Management Corp.
		December 31,2019	December 31,2018
Current assets	$	543,681	$	502,419
Non-current assets		627,350		599,619
Current liabilities	(	176,271)	(	156,138)
Non-current liabilities	(	55,102)	(	27,364)
Total net assets	$	939,658	$	918,536
Share in joint venture's
net assets	$	399,010	$	390,041
Goodwill and others		179,372		179,189
Carrying amount of the joint venture	$	578,382	$	569,230

Statement of comprehensive income

Revenue Profit for the period from continuing operations Other comprehensive (loss) income- net of tax Total comprehensive income Dividends received from associates
		Year ended December 31,2019
	831,987 $ 251,386 $ 9,768) ( 241,618 $ 93,631 $			791,291 $ 239,809 $ 11,569 251,378 $ 72,511 $

190

12) Property and equipment

January1,2019	Land	Buildings	Equipment	Leasehold improvements	Total
Cost Accumulated depreciation and impairment Total For the year ended December 31,2019	1,573,570 $ - 1,573,570 $ 1,573,570 $ - - - - 1,573,570 $ Land	978,012 $ 381,262) ( 596,750 $ 596,750 $ 2,475 - 6,430 22,689) ( 582,966 $ Buildings	138,552 $ 56,264) ( 82,288 $ 82,288 $ 36,393 156) ( 10,740 31,728) ( 97,537 $ Equipment	41,252 $ 24,650) ( 16,602 $ 16,602 $ 2,278 782) ( 6,030 7,810) ( 16,318 $ Leasehold improvements	2,731,386 $ 462,176) ( 2,269,210 $ 2,269,210 $ 41,146 938) ( 23,200 62,227) ( 2,270,391 $ Total
January 1, 2019 Additions Disposal Reclassifications Depreciation December 31, 2019 December 31,2019
Cost Accumulated depreciation and impairment Total January1,2018	1,573,570 $ - 1,573,570 $ Land	980,799 $ 397,833) ( 582,966 $ Buildings	158,227 $ 60,690) ( 97,537 $ Equipment	31,424 $ 15,106) ( 16,318 $ Leasehold improvements	2,744,020 $ 473,629) ( 2,270,391 $ Total
Cost Accumulated depreciation and impairment Total For the year ended December 31,2018	1,573,570 $ - 1,573,570 $ 1,573,570 $ - - - - 1,573,570 $ Land	978,310 $ 360,022) ( 618,288 $ 618,288 $ - - 1,390 22,928) ( 596,750 $ Buildings	123,708 $ 72,032) ( 51,676 $ 51,676 $ 37,888 11) ( 20,704 27,969) ( 82,288 $ Equipment	42,008 $ 24,561) ( 17,447 $ 17,447 $ 755 - 7,347 8,947) ( 16,602 $ Leasehold improvements	2,717,596 $ 456,615) ( 2,260,981 $ 2,260,981 $ 38,643 11) ( 29,441 59,844) ( 2,269,210 $ Total
January 1, 2018 Additions Disposal Reclassification Depreciation December 31, 2018 December 31,2018
Cost Accumulated depreciation and impairment Total	1,573,570 $ - 1,573,570 $	978,012 $ 381,262) ( 596,750 $	138,552 $ 56,264) ( 82,288 $	41,252 $ 24,650) ( 16,602 $	2,731,386 $ 462,176) ( 2,269,210 $

A. No interest was capitalized for property and equipment for the years ended December 31, 2019 and 2018.

B. The information on property and equipment pledged or restricted as of December 31, 2019 and 2018 is described in Note 8.

`－` 13) Leasing arrangements lessee

Effective 2019

A. The Company leases various assets including buildings, machinery and equipment, business

191

vehicles and multifunction printers. Rental contracts are typically made for periods of 1 to 10 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Buildings Transportation equipment (Business vehicles) Office equipment (Photocopiers) Total		December 31,2019 CarryingAmount 151,128 $ 15,727 659 167,514 $	Year ended December 31,2019
			Depreciation charge
			71,405 $ 6,331 1,267 79,003 $

C. For the year ended December 31, 2019, the additions to right-of-use assets amounted to $76,212.
D. The information on income and expense accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Expense on variable lease payment	Year ended December 31,2019
	1,265 $ 3,831 317

E. For the year ended December 31, 2019, the Company’s total cash outflow for leases amounted to $82,755.

14) Leasing arrangements – lessor

Effective 2019

A. The Company leases various assets including office and parking space. Rental contracts are typically made for periods of 1 and 5 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.
B. For the year ended December 31, 2019, the Company recognised rent income in the amount of
$25,788, based on the operating lease agreement, which does not include variable lease payments.
C. The maturity analysis of the lease payments under the operating leases is as follows:

2020 2021 2022 2023 2024 Total		December 31,2019
		25,159 $ 22,480 21,883 21,883 5,345 96,750 $

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15) Investment property

January1,2019
Cost
Accumulated depreciation
and impairment
Total
For the year
ended December 31,2019
January 1, 2019
Depreciation
December 31, 2019
December 31,2019
Cost
Accumulated depreciation
and impairment
Total
January1,2018
Cost
Accumulated depreciation
and impairment
Total
For the year
ended December 31,2018
January 1, 2018
Depreciation
December 31, 2018
December 31,2018
Cost
Accumulated depreciation
and impairment
Total

Land
Buildings
Total
198,099
$ 107,076
$ 305,175
$ -
30,472)
(
30,472)
(
198,099
$ 76,604
$ 274,703
$ 198,099
$ 76,604
$ 274,703
$ -
2,100)
(
2,100)
(
198,099
$ 74,504
$ 272,603
$ Land
Buildings
Total
198,099
$ 107,076
$ 305,175
$ -
32,572)
(
32,572)
(
198,099
$ 74,504
$ 272,603
$ Land
Buildings
Total
198,099
$ 107,076
$ 305,175
$ -
28,372)
(
28,372)
(
198,099
$ 78,704
$ 276,803
$ 198,099
$ 78,704
$ 276,803
$ -
2,100)
(
2,100)
(
198,099
$ 76,604
$ 274,703
$ Land
Buildings
Total
198,099
$ 107,076
$ 305,175
$ -
30,472)
(
30,472)
(
198,099
$ 76,604
$ 274,703
$

A. For the years ended December 31, 2019 and 2018, rental income from the lease of the investment property were both $17,652, and direct operating expenses arising from the investment property were $3,609 and $3,611, respectively.
B. Details of fair value of investment property are provided in Note 12(5).

193

16) Intangible assets

January1,2019 Computer software Cost 43,167 $ Accumulated depreciation and impairment 18,167) ( Total 25,000 $ For the year ended December 31,2019 January 1, 2019 25,000 $ Additions 7,457 Reclassifications 7,662 Depreciation 11,494) ( December 31, 2019 28,625 $ December 31,2019 Computer software Cost 44,326 $ Accumulated depreciation and impairment 15,701) ( Total 28,625 $ January1,2018 Computer sofware Cost 41,212 $ Accumulated depreciation and impairment 25,937) ( Total 15,275 $ For the year ended December 31,2018 January 1, 2018 15,275 $ Additions 10,187 Reclassifications 8,431 Depreciation 8,893) ( December 31, 2018 25,000 $ December 31,2018 Computer software Cost 43,167 $ Accumulated depreciation and impairment 18,167) ( Total 25,000 $		Goodwill	Customer relationships and others Total 54,160 $ 139,331 $ 54,160) ( 72,327) ( - $ 67,004 $ - $ 67,004 $ 100 7,557 - 7,662 3) ( 11,497) ( 97 $ 70,726 $ Customer relationships and others Total 54,260 $ 140,590 $ 54,163) ( 69,864) ( 97 $ 70,726 $ Customer relationships and others Total 54,160 $ 137,376 $ 49,122) ( 75,059) ( 5,038 $ 62,317 $ 5,038 $ 62,317 $ - 10,187 - 8,431 5,038) ( 13,931) ( - $ 67,004 $ Customer relationships and others Total 54,160 $ 139,331 $ 54,160) ( 72,327) ( - $ 67,004 $	Total
		42,004 $ - 42,004 $ 42,004 $ - - - 42,004 $ Goodwill
		42,004 $ - 42,004 $ Goodwill
		42,004 $ - 42,004 $ 42,004 $ - - - 42,004 $ Goodwill
		42,004 $ - 42,004 $
				67,004 $

A. No interest was capitalized for intangible assets for the years ended December 31, 2019 and 2018. B. Goodwill and customer relationships were acquired through acceptance of transfer of the securities brokerage business of Standard Chartered (Taiwan) Bank's retail banking business, and

194

were all allocated to the Company’s brokerage segment.

C. The recoverable amount of goodwill was determined based on its value in use. Calculations of value in use after-tax cash flow projections are based on financial budgets approved by the management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below.

The recoverable amount calculated based on the value in use exceeded the carrying amount, thus the goodwill was not impaired. The key assumptions used for calculation of value in use are as follows:

as follows:
Growth rate Discount rate	Brokerage	2018 0.00% 11.96% Segment
	2019 0.00% 11.16%

Management determined the growth rate based on past performance and its expectations of market development. The discount rates were based on the weighted average financing cost rates determined by the Company’s capital asset pricing model. The discount rates also reflect specific risks related to relevant operating segments.

17) Other noncurrent assets

risks related to relevant operating segments. Other noncurrent assets
	December 31,2019			December 31,2018
Operation guaranteed deposits	$	520,000		$	540,000
Clearing and settlement fund		244,803			224,205
Refundable deposits		193,565			239,359
Defined benefit obiligations		-			44
Prepayment for equipment		26,575			5,653
Overdue receivables		240,073			213,075
Others		720			720
Subtotal		1,225,736			1,223,056
Less: Allowance for uncollectible
accounts-overdue receivables	(	240,073)	(		213,075)
Total	$	985,663		$	1,009,981
Short-term loans

	December 31,2019			December 31,2018
Unsecured loans	$	2,845,502		$	939,879
Interest rates		0.880%~2.495%			3.411%~3.500%
Commercial papers payable
	December 31,2019			December 31,2018
Face value	$	9,600,000		$	-
Less: discount on commercial papers payable	(	3,296)			-
Total	$	9,596,704		$	-
Interest rates		0.530%~0.695%			-

18) Short-term loans

19) Commercial papers payable

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20) Financial liabilities at fair value through profit or loss - current

		December 31,2019		December 31,2018
Investments in bonds under resale
agreements - short sales	$	-	$	90,545
Valuation adjustment of financial assets held
for trading		-		3,069
Subtotal		-		93,614
Liabilities on sale of borrowed securities
- hedged		192,174		148,009
Valuation adjustment on liabilities on sale of
borrowed securities - hedged		8,617	(	15,145)
Liabilities on sale of borrowed securities
- non-hedged		208,143		391,436
Valuation adjustment on liabilities on sale of
borrowed securities - non-hedged	(	17,707)	(	19,457)
Subtotal		391,227		504,843
Issuance of call ( put ) warrants		6,639,919		15,115,760
Gain on price fluctuation	(	945,819)	(	7,549,321)
Market value (A)		5,694,100		7,566,439
Warrants redeemed	(	5,473,503)	(	11,955,149)
Loss on price fluctuation		163,564		4,622,139
Market value (B)	(	5,309,939)	(	7,333,010)
Warrants - net (A+B)		384,161		233,429
Options sold - TAIFEX		17,390		8,954
Outstanding Liability for Issuance of ETNs		19,222		-
Valuation adjustment on outstanding Liability for		549		-
Issuance of ETNs
Subtotal		19,771		-
Derivative financial liabilities - OTC		35,716		24,690
Total	$	848,265	$	865,530

Among the warrants issued by the Company, except for contract-based warrants which are Europeanstyle warrants, all other warrants are American-style warrants. Warrants are stated as liabilities for issuance of warrants at issuance price prior to expiration. Upon repurchase of warrants after issuance, the repurchased amounts are recognised as warrants repurchase and charged as a deduction to liabilities for issuance of warrants. The warrants have six to twelve months exercise period from the date of issuance. The issuer has the option to settle either by cash or stock delivery.

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21) Bonds sold under repurchase agreements

Bonds sold under repurchase agreements
Government bonds Corporate bonds Bank debentures International bonds Foreign bonds Total	December 31,2019 3,445,144 $ 1,601,547 400,889 3,886,654 11,622,022 20,956,256 $	December 31,2018
		4,100,351 $ 1,298,032 - 954,829 8,713,387
		15,066,599 $

The above bonds sold under repurchase agreements as of December 31, 2019 and 2018 were due within one year and were contracted to be repurchased at the agreed-upon price plus interest charge on the specific date after the transaction. The total repurchase amounts were $21,035,116 and $15,134,144, respectively, and the annual interest rates in every currency were shown as follows:

22) Accounts payable 23) Other payables Currency December 31,2019 NTD 0.47%~0.62% Foreign currencies (Note) -0.50%~3.40% (Note)`：`Foreign currencies include AUD, USD and RMB. December 31,2019 Settlement accounts payable - brokered trading 8,410,426 $ Settlement proceeds 1,223,127 Settlement accounts payable - operating 616,917 Accounts payable - international bonds 223 Accounts payable - foreign bonds 709,611 Spot exchange payable, foreign currencies 434,980 Others 71,935 Total 11,467,219 $ December 31,2019 Salary and bonus payable 718,595 $ Employees’ and directors’ remuneration payable 104,206 Others 412,505 Total 1,235,306 $	December 31,2018 0.33%~0.62% -0.30%~4.20% December 31,2018
	4,974,010 $ 1,811,674 256,985 78 172,208 - 77,992
	7,292,947 $
	December 31,2018
	415,980 $ 57,735 316,654
	790,369 $

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24) Other financial liabilities - current

Other financial liabilities-current
Equity-linked notes (ELN) - Options Principal guaranteed notes (PGN) - fixed income Total	December31,2019 4,000 $ 2,739,866 2,743,866 $	December31,2018
		- $ 2,687,009
		2,687,009 $

The Company deals in equity-linked products and combines fixed income instruments with call or put options. These products are categorized into ELN (Equity-Linked Notes) and PGN (Principal Guaranteed Notes). On trade date, the contracted amounts are collected in full from the counterparties. The payout amount on maturity will depend on the price fluctuation of the instruments linked to these contracts and be calculated as trading price less option strike price on maturity. All the linked products are financial instruments under the supervision of the SFB (Securities and Futures Bureau).

25) Other liabilities-non-current

Net defined benefit obligation Guarantee deposits received Total	December31,2019 25,338 $ 1,587 26,925 $	December31,2018
		21,928 $ -
		21,928 $

26) Pension plan

A. Defined benefit plans

(A) The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. 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. The Company contributes monthly an amount of 7.2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the supervisory committee of workers' retirement reserve fund, and with Cathay United Bank, under the name of the management committee of employees’ retirement fund. Also, the Company would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method, to the employees expected to be qualified for retirement next year, the Company will make contributions to cover the deficit by next March.

(B) The amounts recognized in the balance sheet are determined as follows:

	December	31,2019	December	31,2018
Present value of defined benefit obligations	$	819,706	$	785,853
Fair value of plan assets	(	818,119)	(	785,897)
Net defined benefit (liabilities) assets	$	1,587	($	44)

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

YearendedDecember31,2019		Fair value ofplanassets	Net defined benefit (liabilities) assets
	785,853 $ 5,006 8,644 799,503 - 28,807 13,302 42,109 - 21,906) ( 21,906) ( 819,706 $ Present value of defined benefit obligations	785,897) ($ - 8,644) ( 794,541) ( 7,249) ( - - 7,249) ( 38,235) ( 21,906 16,329) ( 818,119) ($ Fair value ofplanassets	44) ($ 5,006 - 4,962 7,249) ( 28,807 13,302 34,860 38,235) ( - 38,235) ( 1,587 $ Net defined benefit (liabilities) assets
Balance at January 1 Current service cost Interest expense (income) Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31 YearendedDecember31,2018
	799,549 $ 5,583 9,595 814,727 - 7,429 8,337) ( 908) ( - 27,966) ( 27,966) ( 785,853 $	750,049) ($ - 9,001) ( 759,050) ( 13,865) ( - - 13,865) ( 40,948) ( 27,966 12,982) ( 785,897) ($	49,500 $ 5,583 594 55,677 13,865) ( 7,429 8,337) ( 14,773) ( 40,948) ( - 40,948) ( 44) ($
Balance at January 1 Current service cost Interest expense (income) Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31

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(D) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation 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 utilisation 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, 2019 and 2018 is given in the Annual Labor Retirement Fund Utilisation Report published by the government. In addition, for retirement fund deposits with Cathay United Bank, under the name of the management committee of employees’ retirement fund, the fund invests in time deposit accounts under Cathay United Bank.
(E) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases		For the year ended December 31,2019		For the year ended December 31,2018
		0.70% 2.50%		1.10% 2.50%

Assumptions regarding future mortality rate are set based on the Taiwan Standard Ordinary Experience Mortality Table (2011).

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

Increase 0.25% Decrease 0.25% December 31,2019 Effect on present value of defined benefit obligation 18,175) ($ 18,762 $ December 31,2018 Effect on present value of defined benefit obligation 18,392) ($ 19,010 $ Discount rate	Increase 0.25% Decrease 0.25% 16,344 $ 15,945) ($ 16,758 $ 16,327) ($ Future salaryincreases

(F) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2020 amounts to $39,747.
B. Defined contribution plans:

Effective from July 1, 2005, the Company established a defined contribution plan pursuant to the “Labor Pension Act”, which covers employees with R.O.C. nationality and those who chose or are required to apply the “Labor Pension Act”. The contributions are made monthly based on not

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less than 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The payment of pension benefits is based on the employees’ individual pension fund accounts and the cumulative profit in such accounts. The employees can choose to receive such pension benefits monthly or in lump sum. The pension costs under defined contribution pension plans of the Company for the years ended December 31, 2019 and 2018 were $56,453 and $58,509, respectively.

27) Equity

A. Common stock
(A) As of December 31, 2019, the Company’s authorized capital was $15,000,000 with a par value of $10 (in dollars) per share. As of December 31, 2019 and 2018, the common stocks issued and the outstanding common stocks were 1,372,390 and 1,390,428 thousand shares, respectively.

Movements in the number of the Company’s ordinary shares outstanding are as follows:

(Expressed in thousands)

January 1 Purchase and retirement of treasury shares December 31	Year ended December 31,2019		Year ended December 31,2018
	1,390,428 18,038) ( 1,372,390		1,390,428 - 1,390,428

(B) Treasury shares

In order to maintain the Company’s credit and stockholders’ rights and interests, the Company

bought back outstanding shares. The movement of the number of treasury shares is as follows:

(Expressed in thousands)

		Year ended	Year ended	December 31, 2019	December 31, 2019
Reason for buyback		Shares at the beginning of theperiod		Period increase	Period decrease		Shares at the end of the period		Period-end amount
To maintain the Company's credit and stockholders' rights and interests		-		18,038	18,038) (		-		-

In accordance with Article 28-2 of the Securities and Exchange Act, whenever the buyback is required to maintain the company's credit and shareholders' rights and interests, the shares so purchased shall be cancelled and the amendment registration shall be effected within six months from the date of buyback. In May, 2019, the Board of Directors resolved to retire the treasury shares and completed the registration of change in capital.

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B. Capital reserve

December 31, 2019 December 31, 2018		Sharepremium		Treasury share transactions		Expired stock options		Difference between consideration and carrying amount of subsidiaries acquired or disposed		Total
		24,663 $ 24,986 $		65,675 $ 116,793 $		483 $ 483 $		440 $ 440 $		91,261 $ 142,702 $

Pursuant to the R.O.C. Company Law, capital reserve arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided it should not exceed 10% of the paid-in capital each year. Capital reserve should not be used to cover accumulated deficit unless the legal reserve is insufficient.

C. Legal reserve

Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.

D. Special reserve

In accordance with the “Rules Governing the Administration of Securities Firms”, 20% of the current year's earnings, after paying all taxes and offsetting prior years' operating losses, if any, shall be set aside as special reserve until the cumulative balance equals the total amount of paidin capital. The special reserve shall be used exclusively to cover accumulated deficit or to increase capital and shall not be used for any other purpose. Such capitalization shall not be permitted unless the Company had already accumulated a special reserve of at least 25% of its paid-in capital stock and only quarter of such special reserve may be capitalized.

In accordance with the regulations, the Company shall set aside an equivalent amount of special reserve from accumulated unappropriated retained earnings of the current year based on the decreased amount of equity. If there is any subsequent reversal of the decrease in equity, the earnings may be distributed based on the reversal proportion.

In accordance with Jing-Guan-Zheng-Chuan Letter No. 10500278285 dated August 5, 2016, securities firms should set aside 0.5% to 1% of net income after tax as special reserve, upon the distribution of earnings from 2016 to 2018. From fiscal year 2017, special reserve as mentioned above may be reversed based on an amount equal to employees’ transformation training expenditure, transfer and arrangement expenditure arising from the development of Fintech. Further, according to Jing-Guan-Zheng-Chuan Letter No. 1080321644 dated July 10, 2019, securities firms are no longer required to set aside special reserve starting from 2019. And the special reserve, within the balance of special reserve set aside in the previous years, could be reversed at the same amount for the aforementioned expenditures.

28) Unappropriated earnings and dividends policy
A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall be used to pay all taxes and offset prior years’ operating losses first, and then set aside as legal reserve, accounted for as 10% of the remaining amount, and special reserve, accounted for as 20% of the remaining amount. Upon provision or reversal of special reserve in accordance with the law, any

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remaining amount together with unappropriated earnings at beginning of the period shall be distributed according to the following resolution adopted at the stockholders’ meeting: Distribution shall not be made if the balance of distributable earnings is less than 5% of paid-in capital.

B. In addition, the total amount of dividends declared every year shall be at least 70% of distributable earnings, of which stock dividends shall be at least 50% and cash dividends shall be lower than 50%.
C. The Company may determine a better proportion of cash and stock dividends distribution based on its actual operating conditions and capital utilization plan for the following year.
D. The appropriation of 2018 and 2017 earnings was resolved by the shareholders on June 18, 2019 and June 21, 2018, respectively. Detail is as follows:

Provision of legal reserve Provision of special reserve Provision of special reserve (Note 1) Reversal of special reserve (Note 1) Reversal (provision) of special reserve (Note 2) Cash dividends Total	For the year ended December 31,2018	For the year ended December 31,2018	For the year ended December 31,2017	For the year ended December 31,2017
	Amount	Dividends per share (in dollars)	Amount	Dividends per share (in dollars)
	121,032 $ 242,064 6,052 4,365) ( 58,374) ( 959,395 1,265,804 $	0.69 $	251,972 $ 503,944 12,599 3,023) ( 58,374 1,668,514 2,492,380 $	1.20 $

Note 1 ： Special reserve was provided for employees’ transition for financial technology development according to Jing-Guan-Zheng-Chuan Letter No. 10500278285, and can be reversed for employees’ transition. The Board of Directors of the Company resolved to provide 0.5% as special reserve and made reversal of the special reserve on March 22, 2019 and March 26, 2018.
Note 2 ： Special reserve shall be set aside in the same amount of net debit amount of other equity interest recorded in current year from the profit or loss of current year and the accumulated unappropriated earnings pursuant to paragraph 1 of Article 41 of Securities and Exchange Act and Jing-Guan-Zheng-Chuan Letter No. 1010028514.

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E. The earnings distribution for 2019 as resolved by the Board of Directors on March 26, 2020 is set forth below:

set forth below:
Provision of legal reserve Provision of special reserve Reversal of special reserve (Note 3) Cash dividends Stock dividends Total	For theyear ended December 31,2019
	Amount	Dividends per share (in dollars)
	234,244 $ 473,707 4,221) ( 1,372,390 274,478 2,350,598 $	1.00 $ 0.20 $

Note 3 ： Special reserve was provided for employees’ transition for financial technology development according to Jing-Guan-Zheng-Chuan Letter No. 1080321644, and can be reversed for employees’ transition.
F. For details on employees’ remuneration and directors’ remuneration, please refer to Note 6 (43).

29) Brokerage handling fee revenue

Brokerage handling fee revenue
Revenues from underwriting business Revenues from brokered trading - TWSE Revenues from brokered trading - OTC Others Total Revenues from underwriting securities on a firm commitment basis Others Total	Year ended December 31,2019	Year ended December 31,2018
	1,069,518 $ 426,700 32,198 1,528,416 $ Year ended December 31,2019	1,217,135 $ 439,747 52,774 1,709,656 $ Year ended December 31,2018
	25,139 $ 37,672 62,811 $	22,306 $ 30,922 53,228 $

30) Revenues from underwriting business

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31) Gain (loss) on sale of trading securities

Gain (loss) on sale of trading securities
Interest revenue Dealers: -TAIEX -OTC -Overseas trading Subtotal Underwriters: -TAIEX -OTC Subtotal Hedging: -TAIEX -OTC -Overseas trading Subtotal Total Interest income from margin loans Interest income from bonds Others Total		Year ended December 31,2019	Year ended December 31,2018
	1,686,209 $ 139,489 504,755 2,330,453 47,543 73,592 121,135 340,461 52,232 10,820) ( 381,873 2,833,461 $ Year ended December 31,2019		1,119,471 $ 57,940) ( 79,821) ( 981,710 46,174 11,969 58,143 630,593) ( 123,985) ( 8,260) ( 762,838) ( 277,015 $ Year ended December 31,2018
		484,574 $ 674,047 4,574 1,163,195 $		623,031 $ 632,528 735 1,256,294 $

32) Interest revenue

33) Valuation gain (loss) on trading securities at fair value through profit or loss

Gain (loss) on sale of securities - dealer Loss on sale of securities - underwriting Gain on sale of securities - hedging Total	Year ended December 31,2019	Year ended December 31,2018
	655,672 $ 22,420) ( 77,851 711,103 $	437,071) ($ 13,726) ( 83,968 366,829) ($

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34) Gain on covering of borrowed securities and bonds with resale agreements - short sales

(Loss) gain from the bond investments under resale agreements (Loss) gain from covering - warrants Gain from covering - structured notes Loss from securities borrowing transactions - structured notes Gain from securities borrowing transactions - dealer Total	Year ended December 31,2019 ($ 6,528) ( 3,919) 2,861 ( 1,295) 46,294 37,413 $	Year ended December 31,2018
		$ 7,117 1,816 7,892 - 10,963 27,788 $

35) Valuation (loss) gain on borrowed securities and bonds with resale agreements-short sales at fair value through profit or loss

value through profit or loss
Valuation loss from the bond investments under resale agreements Valuation (loss) gain from securities borrowing transactions - dealer Valuation loss from covering - warrants Total	Year ended December 31,2019 5,265) ($ 5,546) ( 10,607) ( 21,418) ($	Year ended December 31,2018
		3,015) ($ 27,237 2,155) ( 22,067 $

36) Realised gain (loss) on financial assets measured at fair value through other comprehensive income

Gain from issuance of call (put) warrants Foreign bonds Gain on changes in fair value of call warrant liabilities and redemption Loss on exercise of put warrants before maturity Expenses arising out of issuance of put warrants Total	Year ended December 31,2019 15,309 $ Year ended December 31,2019 203,893 $ 31,156) ( 78,873) ( 93,864 $	Year ended December 31,2018
		24,289) ($ Year ended December 31,2018
		1,180,875 $ 35,750) ( 84,740) ( 1,060,385 $

37) Gain from issuance of call (put) warrants

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38) (Loss) gain from derivatives

(Loss) gain from derivatives
Impairment loss and reversal of impairment loss Other operating income Handling charges Financial costs Futures contract (loss) gain Option trading (loss) gain Gain (loss) on foreign exchange derivatives Others Total Provision for impairment Collection of bad debt Total Income from securities lending Net currency exchange gain Handling fee revenues from funds Others Total Brokerage handling fee expense Dealer handling fee expense Refinancing processing fee expense Total Interest expense from repurchase agreements Loans interest expense Other interest expense Total	Year ended December 31,2019		Year ended December 31,2018
	908,766) ($ 18,375) ( 18,870 79,312) ( 987,583) ($ Year ended December 31,2019		194,926 $ 120,606 47,348) ( 68,032) ( 200,152 $ Year ended December 31,2018
	7,170) ($ 672 6,498) ($ Year ended December 31,2019		52,798) ($ 716 52,082) ($ Year ended December 31,2018
		113,544 $ 196,750 45,349 7,012 362,655 $ Year ended December 31,2019		87,487 $ 28,872 44,277 3,831 164,467 $ Year ended December 31,2018
		131,978 $ 264,894 2,300 399,172 $ Year ended December 31,2019		138,569 $ 203,842 1,653 344,064 $ Year ended December 31,2018
		382,546 $ 116,568 7,170 506,284 $		291,956 $ 99,398 5,756 397,110 $

39) Impairment loss and reversal of impairment loss

40) Other operating income

41) Handling charges

42) Financial costs

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43) Employee benefits expense

Salaries Labor and health insurance Pension Other employee benefits Total		Year ended December 31,2019		Year ended December 31,2018
		1,787,058 $ 108,575 61,459 87,007 2,044,099 $		1,512,061 $ 115,499 64,686 95,155 1,787,401 $

A. In accordance to the Company’s Article of Incorporation, the remainder of the year-end income before taxes less income before appropriating employees’ compensation and directors’ remuneration, if any, shall appropriate an employees’ compensation no less than 1.6% and directors’ remuneration no more than 2%. However, when the Company has an accumulated deficit, earnings to cover the deficit shall first be retained before appropriating employees’ compensation and directors’ remuneration.
B. For the years ended December 31, 2019 and 2018, employees’ compensation was accrued at $52,103 and $28,868, respectively; directors’ remuneration was accrued at $52,103 and $28,868, respectively. The aforementioned amounts were recognised in salary expenses.
C. For years ended December 31, 2019, employees’ compensation was estimated at 2% and directors’ remuneration at 2%, based on the period-end income before taxes less income before appropriating employees’ compensation and directors’ remuneration.
D. The actual distributed amount of employees’ and directors’ remuneration for 2018 as resolved by the Board of Directors was in agreement with the estimates in the 2018 financial statements.
E. Information on the appropriation of the Company’s earnings as resolved by the Board of Directors would be posted in the “Market Observation Post System” on the Taiwan Stock Exchange Official website.

44) Depreciation and amortization

Other operating expenses Depreciation Amortization Total Rentals Taxes Computer information expenses Postage Others Total		Year ended December 31,2019		Year ended December 31,2018
		143,330 $ 11,497 154,827 $ Year ended December 31,2019		61,944 $ 13,931 75,875 $ Year ended December 31,2018
		58,880 $ 521,601 5,110 97,435 406,732 1,089,758 $		55,419 $ 592,509 89,040 102,273 348,858 1,188,099 $

45) Other operating expenses

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46) Other gains and losses

Other gains and losses
Financial income Gain (loss) on disposal of investments Loss on valuation of open-ended funds and money-market instruments Loss arising from lease modification Net currency exchange gain (loss) Other non-operating revenues Total	Year ended December 31,2019	Year ended December 31,2018
	19,159 $ 9,073 928) ( 15) ( 7,576 124,825 159,690 $	18,521 $ 11,703) ( 11) ( - 4,013) ( 123,236 126,030 $

47) Income tax

A. Income tax expense

(a)Components of income tax expense:

ome tax Income tax expense (a)Components of income tax expense:
(b)The income tax expense relating to components Current tax: Current tax on profits for the periods Prior year income tax underestimation (overestimation) Tax on undistributed surplus earnings Total current tax Deferred taxes: Origination and reversal of temporary differences Impact of change in tax rate Total deferred taxes Income tax expense Remeasurement of defined benefit obligations Impact of change in tax rate	Year ended December 31,2019
	6,972) ($ - $

209

B. Reconciliation between income tax expense and accounting profit Year ended December 31,2019 Tax calculated based on profit before tax and statutory tax rate 502,876 $ Expenses disallowed by tax regulation 93,470 Prior year income tax underestimation (overestimation) 11,154) ( Tax exempt income by tax regulation 594,419) ( Effect from Alternative Minimum Tax 155,072 Effect from changes in tax regulation - Tax on undistributed earnings - Income tax expense 145,845 $	B. Reconciliation between income tax expense and accounting profit Year ended December 31,2019 Tax calculated based on profit before tax and statutory tax rate 502,876 $ Expenses disallowed by tax regulation 93,470 Prior year income tax underestimation (overestimation) 11,154) ( Tax exempt income by tax regulation 594,419) ( Effect from Alternative Minimum Tax 155,072 Effect from changes in tax regulation - Tax on undistributed earnings - Income tax expense 145,845 $	Year ended December 31,2018
	502,876 $ 93,470 11,154) ( 594,419) ( 155,072 - - 145,845 $	277,129 $ 23,150 5,476 256,066) ( 133,100 9,466) ( 2,000 175,323 $

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

Deferred tax assets： -Temporary differences： Losses on doubtful debts Valuation loss from financial instruments Others Subtotal Deferred tax liabilities： -Temporary differences： Unrealised exchange gain Subtotal Total		For theyear ended Decmeber31,2019	For theyear ended Decmeber31,2019	For theyear ended Decmeber31,2019	For theyear ended Decmeber31,2019	For theyear ended Decmeber31,2019	For theyear ended Decmeber31,2019
		January1	Recognised in profit or loss	Recognised in other comprehensive income			December31
	29,635 $ 9,559 81,467 120,661 $ 14,274) ($ 14,274) ($ 106,387 $		9,844 $ 5,340) ( 61 4,565 $ 2,126 $ 2,126 $ 6,691 $		- $ - 6,972 6,972 $ - $ - $ 6,972 $	39,479 $ 4,219 88,500 132,198 $ 12,148) ($ 12,148) ($ 120,050 $

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For the year ended Decmeber 31, 2018

						Recognised in	Recognised in
			Recognised				other
				in	profit or	comprehensive
		January1			loss		income	December31
Deferred tax assets：
-Temporary differences：
Losses on doubtful debts	$	16,997		$	12,638	$	-	$	29,635
Valuation loss from financial
instruments		47,559	(		38,000)		-		9,559
Others		71,610			926		8,931		81,467
Subtotal	$	136,166	($		24,436)	$	8,931	$	120,661
Deferred tax liabilities：
-Temporary differences：
Unrealised exchange gain	($	15,173)		$	899	$	-	($	14,274)
Subtotal	($	15,173)		$	899	$	-	($	14,274)
Total	$	120,993	($		23,537)	$	8,931	$	106,387

D. As of December 31, 2019, the Company’s income tax returns through 2016 have been assessed and approved by the National Tax Authority.
E. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018.
F. With respect to the income tax returns of the Company for 2016, the Tax Authority assessed to increase income tax payable by $11,820. However, the Company disagreed with the assessments and had filed for administrative remedy. The Company had recognised the income tax expense based on the assessment.

48) Earnings per share

based on the assessment. ) Earnings per share
Basic earnings per share Net income attributable to common shareholders Dilutive effect of common stock equivalents Employee bonus	Amount after tax Weighted-average outstanding common shares (In thousands) Earnings per share (In dollars) 2,368,536 $ 1,373,458 1.72 $ - 3,606 2,368,536 $ 1,377,064 1.72 $ Year ended December 31,2019
	Amount after tax 2,368,536 $ - 2,368,536 $	Weighted-average outstanding common shares (In thousands)
		1,373,458 3,606 1,377,064	1.72 $ 1.72 $

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Basic earnings per share Net income attributable to common shareholders Dilutive effect of common stock equivalents Employee bonus		Amount after tax Weighted-average outstanding common shares (In thousands) Earnings per share (In dollars) 1,210,323 $ 1,390,428 0.87 $ - 2,510 1,210,323 $ 1,392,938 0.87 $ Year ended December 31,2018	Amount after tax Weighted-average outstanding common shares (In thousands) Earnings per share (In dollars) 1,210,323 $ 1,390,428 0.87 $ - 2,510 1,210,323 $ 1,392,938 0.87 $ Year ended December 31,2018	Amount after tax Weighted-average outstanding common shares (In thousands) Earnings per share (In dollars) 1,210,323 $ 1,390,428 0.87 $ - 2,510 1,210,323 $ 1,392,938 0.87 $ Year ended December 31,2018	Amount after tax Weighted-average outstanding common shares (In thousands) Earnings per share (In dollars) 1,210,323 $ 1,390,428 0.87 $ - 2,510 1,210,323 $ 1,392,938 0.87 $ Year ended December 31,2018	Amount after tax Weighted-average outstanding common shares (In thousands) Earnings per share (In dollars) 1,210,323 $ 1,390,428 0.87 $ - 2,510 1,210,323 $ 1,392,938 0.87 $ Year ended December 31,2018
		Amount after tax		Weighted-average outstanding common shares (In thousands)
		1,210,323 $ - 1,210,323 $		1,390,428 2,510 1,392,938		0.87 $ 0.87 $

7. RELATED PARTY TRANSACTIONS

1) Names and relationships of related parties

Names of related parties

Uni-President Enterprises Corp.

President Capital Management Corp. President Futures Corp. Company President Securities (BVI) Ltd Company President Securities (HK) Ltd. Associates President Insurance Agency Corp. Company PSC Venture Capital Investment Limited Company

President Securities (Nominee) Ltd.

President Wealth Management (HK) Ltd.

Uni-President Asset Management Corp. President Chain Store Corp. (PCSC) Ton Yi Industrial Corp. President Tokyo Co., Ltd. Kai Yu (BVI) Investment Co., Ltd Cayman President Holdings Limited President Life Sciences Cayman Co., Ltd

Funds managed by Uni-President Asset Management Corp.

Relationship with the Company Entity having significant influence on the Company Subsidiary of the Company PSC Subsidiary of the Company PSC Subsidiary of the Company PSC Subsidiary of the Company PSC Subsidiary of the Company PSC Subsidiary of the Company PSC Indirect subsidiary of the Company President Securities Indirect subsidiary of the Company President Securities Associate Other related party Other related party Other related party Other related party Other related party Other related party Security investment trust fund raised by the Uni-President Asset Management Corp.

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2) Significant related party transactions and balances A. Futures guarantee deposits receivable

B. Accounts receivable C. Other receivables Subsidiary of the Company PSC: President Futures Corp. Entity having significant influence on the company: Uni-President Enterprises Corp. Subsidiary of the Company PSC: President Futures Corp. Company President Securities (HK) Ltd. Other related party: Others Total Subsidiary of the Company PSC: President Futures Corp. Others Other related party: Others Total		December 31,2019 2,016,203 $ December 31,2019 274 $ 2,620 729 729 4,352 $ December 31,2019 $ 66 18 - 84 $	December 31,2018
			1,670,689 $ December 31,2018
			288 $ 3,900 6,372 597 11,157 $ December 31,2018
			$ 363 21 9 393 $

－
D. Lease transactions lessee

(A) The Company leases business vehicles and multifunction printers, etc., from President Tokyo

Co., Ltd. Rental contracts are typically made for periods of 1 to 5 years. Rents are paid monthly. (B) Right-of-use assets:

a. Acquisition of right-of-use assets:

, Ltd. Rental contracts are typically made for periods of 1 to 5 years. ht-of-use assets: cquisition of right-of-use assets:	Rents are paid monthly
Other related party: President Tokyo Co., Ltd. (Acquisitions amounted to $8,256 thousands for the year ended December 31, 2019)	December 31,2019
	20,190 $

On January 1, 2019 (the date of initial application of IFRS 16), the Company increased right-of-use assets by $14,907.

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b. Disposals of right-of-use assets:

isposals of right-of-use assets:
Other related party: President Tokyo Co., Ltd. Others Total	Year ended December 31,2019
	2,344 $ 629 2,973 $

For the year ended December 31, 2019, the Company’s terminated leases before expiration and expired leases with related parties amounted to $1,887 and $1,086, respectively.

(C) Lease liabilities
a. Lease liabilities current

(C) Lease liabilities a. Lease liabilities`–`current
b. Lease liabilities`–`non-current c. Financial costs d. Gain on lease modification Refundable deposits Other related party: President Tokyo Co., Ltd. Other related party: President Tokyo Co., Ltd. Other related party: President Tokyo Co., Ltd. Others Total Other related party: President Tokyo Co., Ltd. Subsidiary of the Company PSC: President Futures Corp.	December 31,2019 34,000 $	December 31,2019
		4,940 $ December 31,2019 10,782 $ Year ended December 31,2019
		116 $ 1 117 $ December 31,2019 26 $ December 31,2018
		39,000 $

E. Refundable deposits

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F. Accounts payable

F. Accounts payable
G. Guarantee deposit received H. Bonds sold under repurchase agreements I. Handling fee revenue J. Futures commission income Subsidiary of the Company PSC: President Futures Corp. Other related party: Others Total Subsidiary of the Company PSC: President Futures Corp. Others Associate: Uni-President Assets Management Corp. Other related party: President Tokyo Co., Ltd. Total Other related party: President Life Sciences Cayman Co., Ltd Cayman President Holdings Ltd. Subsidiary of the Company PSC: Others Security investment trust fund raised by the Uni-President Asset Management Corp.: Uni-President Asset Management Corp. Other related party: Others Total Subsidiary of the Company PSC: President Futures Corp.	December 31,2019		December 31,2018 24 $ 460 484 $ December 31,2018 $ 16,137 806 530 1,393 18,866 $ December 31,2018 $ - 184,290 184,290 $ Year ended December 31,2019
	242 $ 452 694 $ December 31,2019
	$ 16,137 804 1,044 1,434 19,419 $ December 31,2019
	$ 24,475 - 24,475 $ Year ended December 31,2019

		$ 128 32,992 810
		33,930 $
		Year ended December 31,2019
	35,784 $

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K. Gains on wealth management - trust income from sales of funds

Associates: Uni-President Assets Management Corp.		Year ended December 31,2019		Year ended December 31,2018
		9,817 $		9,453 $

The revenues were collected on a monthly basis in accordance with contract terms.

L. Other operating income - handling charge revenue

Associates: Uni-President Assets Management Corp.		Year ended December 31,2019		Year ended December 31,2018
		43,792 $		43,461 $

The revenues were collected on a monthly basis in accordance with contract terms.

M.Rent income

Rent income
Subsidiary of the Company PSC Uni-President Enterprises Corp. Others Associates: Uni-President Assets Management Corp. Other related party: President Tokyo Co., Ltd. Total	Period 2017.10.01~2024.03.31 2016.01.01~2024.03.31 2017.01.01~2024.03.31	Deposit 595 $ 346 1,044 1,434		Year ended December 31, 2019	Year ended December 31, 2018
				$ 3,644 3,070 7,045 9,422 23,181 $	$ 3,644 3,288 7,085 9,422 23,439 $

Rental income mentioned above is derived from leasing part of the Company’s office space and business premises to various related parties and calculated as agreed by both parties. Lease payments are collected on schedule in accordance with the terms of the lease contracts.

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N. Revenue from providing agency service for stock affairs

O. Loss from derivatives P. Other operating expenses-equipment rental and copy expense Q. Clearing charges-futures R. Service expense Year ended December 31,2019 Year ended December 31,2018 Entity having significant influence on the company: Uni-President Enterprises Corp. 3,506 $ 3,600 $ Subsidiary of the Company PSC Uni-President Enterprises Corp. 66 68 Associate: Uni-President Assets Management Corp. 133 133 Other related party: Ton Yi Industrial Corp. 1,929 1,708 President Chain Store Corp. (PCSC) 1,225 1,227 Others 3,034 3,078 Total 9,893 $ 9,814 $ Year ended December 31,2019 Year ended December 31,2018 Other related party: Cayman President Holdings Limited - $ 1,584) ($ Kai Yu (BVI) Investment Co., Ltd 240) ( - Total 240) ($ 1,584) ($ Year ended December 31,2019 Year ended December 31,2018 Other related party: President Tokyo Co., Ltd. 544 $ 7,115 $ Others - 1,143 Total 544 $ 8,258 $ Year ended December 31,2019 Year ended December 31,2018 Subsidiary of the Company PSC: President Futures Corp. 10,658 $ 14,806 $ Year ended December 31,2019 Year ended December 31,2018 Subsidiary of the Company PSC: President Capital Management Corp. 48,800 $ 36,000 $			Year ended December 31,2019		Year ended December 31,2018

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S. Financial costs

S. Financial costs	S. Financial costs	S. Financial costs	S. Financial costs	S. Financial costs
T. Purchases of trading securities–dealer Year ended December 31,2019 Year ended December 31,2018 Other related party: Cayman President Holdings Limited 1,477 $ 66 $ President Life Sciences Cayman Co., Ltd 528 - Total 2,005 $ 66 $ Year ended December 31, 2019 EndingShares EndingBalance Entity having significant influence on the company: Uni-President Enterprises Corp. 76 5,639 $ 2,458) ($ Other related parties: President Chain Store Corp. - - 209) ( Total 5,639 $ 2,667) ($ Year ended December 31, 2018 EndingShares EndingBalance Entity having significant influence on the company: Uni-President Enterprises Corp. - - $ 579 $ Other related parties: Ton Yi Industrial Corp. - - 16 President Chain Store Corp. - - 944) ( Total - $ 349) ($ Gain(loss) December 31,2019 December 31,2018 Gain(loss)
	Entity having significant influence on the company: Uni-President Enterprises Corp. Other related parties: President Chain Store Corp. Total Entity having significant influence on the company: Uni-President Enterprises Corp. Other related parties: Ton Yi Industrial Corp. President Chain Store Corp. Total
				2,458) ($ 209) ( 2,667) ($ Year ended December 31, 2018 Gain(loss)

		EndingShares - - -		579 $ 16 944) ( 349) ($ Gain(loss)
			- $ - - - $

U. Compensation of key management personnel The compensation of key management such as directors, general managers, vice general managers were as follows:

ere as follows:
Salary and short-term employee benefits Retirement benefits Total		Year ended December 31,2019		Year ended December 31,2018
		154,625 $ 774 155,399 $		130,701 $ 908 131,609 $

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8. PLEDGED ASSETS

The Company’s assets pledged or restricted for use were as follows:

Assets Trading securities (par value) - Corporate bonds - Government bonds - Overseas bonds - International bonds - Bank debentures Financial assets at fair value through other comprehensive income - current - Overseas bonds (par value) Restricted assets: - Demand deposits - Pledged time deposits - Government bonds (par value) Property and equipment - Land and buildings (book value) Pledged time deposits - Operating guarantee deposits Financial assets at fair value through profit or loss - current: Financial assets at fair value through profit or loss - non-current:	December 31,2019 1,600,000 $ 3,330,800 12,421,911 4,110,169 400,000 - 735 400,000 50,000 1,107,127 520,000	December 31,2018 1,300,000 $ 4,100,000 9,157,965 977,874 - 307,150 19,373 400,000 50,000 - 540,000	Purposes
			Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Collections on behalf of third parties and reimbursement for wages and stocks Securities for short-term loans and guarantees for issuance of commercial papers Trust fund deposit-out Securities for short-term loans and guarantees for issuance of commercial papers Security deposits

9. SIGNIFICANT COMMITMENTS

None.

10. SIGNIFICANT LOSS FROM NATURAL DISASTER

None.

11. SIGNIFICANT SUBSEQUENT EVENT

None.

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12. OTHER

1) Management objective and policy of financial risks

A. Risk management objective

The Company continually strengthens risk culture to every employee and makes sure that the Company can actively develop various businesses under a healthy and effective risk management system. At the same time, by creating value of an entity and continually increasing profit, profit maximization may be achieved within appropriate risk tolerance.

B. Risk management system
In order to ensure the completeness of risk management system, run the balancing mechanism of risk management, and improve the division efficiency of risk management, the Company sets up “Risk Management Policy”. Such policy aims to establish internal system compliance and the guiding tools for policies communication within the Company and enable every layer of the Company engaged in different tasks to identify, evaluate, monitor, and control various risks with establishment of consistent compliance rules for risks of each business so that the risks can be controlled within the limits set in advance.

The Company’s risk management system covers risks incurred from businesses in and off the balance sheet, such as market risk, credit risk, liquidity risk, operating risk, legal risk, model risk which are all included in the risk management.

C. Risk management organization
Risk management organization: Board of Directors, Risk Management Committee, Risk Control Office, Business units and other related segments (such as Office of Auditing, Office of General Manager, Compliance segment, Legal segment and Finance segment) are in charge of planning, supervising and execution.
(A) The Board of Directors should ensure the effectiveness of risk management and be responsible for the ultimate result and the following duties:
- a. To establish proper risk management system, operating process, and risk management culture in the Company with allocation of necessary resource for better execution and operation.
- b. Policy of risk management review
- c. Review and approval of business application, transaction authorization and risk limit.
(B) The Risk Management Committee reports to the Board of Directors and is responsible for the following:
- a. Review risk management policy
- b. Review the highest risk tolerance
- c.Submit regular reports to the Board of Directors in relation to the risk management status of the whole Company
(C) The General Manager supervises daily risk management of the entire Company and is responsible for the following:
- a. Supervise and monitor daily risk management of the entire Company
- b. Approval of management exceptions
(D) Assets and Liabilities Committee reports to the General Manager and is responsible for the following:
- a. Set up the ultimate guidelines for assets and liabilities management of the entire Company
- b. Analyze and control the entire Company’s assets and liabilities portfolio
- c. Approval of various businesses’ quotas
- d. Gather and analyze information on domestic and offshore interest rate, exchange rate, prosperity fluctuation, political and economic environmental changes, and predict the financial trend in the future

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(E) Risk Control Office implements risk management policy and related regulations and reports to the Risk Management Committee. Risk Control Office also reports daily risk management to the General Manager and is responsible for the following:
- a. Establish Risk Management Policy of the entire Company
- b. Develop effective method for measurement and risk management in an entity
- c. Review risk management system of business units
- d. Generate risk report through information gathering and consolidation
- e. Analyze various business risks and report to the General Manager
- f. Report the risk management situation to the Risk Management Committee according to a meeting’s nature and needs
- g. Carry out duties as designated by the Risk Management Committee and control risks of business units
(F) Auditing Office is responsible for the following:
- a. Execute operating risk control
- b. Include the risk management system into internal audit program and carry out the daily audit schedule.
- c. Assess the effectiveness of internal control and verify the executed result.
(G) Compliance segment and legal segment under the Office of General Manager are responsible for the following:
- a. Compliance segment should make sure that the business operation and risk management system are in compliance with relevant regulations.
- b. Legal segment is responsible for legal risk control
- c. Compliance segment also provides services of Anti-Money Laundering and Counter Terrorism Financing, including designs specification and internal control, establishes transaction monitoring, oversees the effective implementation of business units, conducts the employee training and reports any suspicion of money laundering.
(H) Finance segment is responsible for the following:
- a. Verify the correctness of position information and reasonability of profit and loss calculation.
- b. Control and analyze self-owned capital adequacy ratio.
- c. Analyze the appropriateness of structures of the assets and liabilities.
(I) Business units are responsible for the following:
- a. Set up risk management details of various businesses according to the risk management policy and other related regulations.
- b. Provide sufficient position information and risk control information to the Risk Control Office.
(J) Settlement division is responsible for:
- a. Clearing and settlement; risk control and management of margin purchase and short sale of securities.
- b. Risk control and management of trading middle office and enforcement of rules governing risk management of business segments.
D. Risk management policy

In order to ensure the completeness of risk management system, run the balancing mechanism of risk management, and improve the division efficiency of risk management, the Company sets up “Risk Management Policy”. Such policy aims to establish internal system compliance and the guiding tools for policies communication within the Company and enable every layer of the Company engaged in different tasks to identify, evaluate, monitor, and control various risks with establishment of consistent compliance rules for risks of each business so that the risks can be controlled within the limits set in advance.

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Risk management processes include risk identification, risk evaluation, risk supervision and various risk control. Each kind of risk evaluations and responding strategies are described as follows:

  - (A) Market risk management The Company has implemented risk management information system (Risk Manager) in relation to market risk control. All trading positions of the Company have been included in the daily risk control system for the calculation of Value at Risk (VaR). Limit exceeding indicators are mainly the nominal principal, stop-loss, sensitivity (Greeks) and VaR. The risk management report is presented on a daily basis for implementation of regular control and limit exceeding handling procedures.

  - (B) Credit risk management In relation to risk control, the quantitative model of default rate adopts KMV model to calculate the default rate of issuers with credit exposure of the issuing company and the trading counterparties, and credit risk of securities disclosed in the report. The credit exposure is mitigated through regular review of credit status.

  - (C) Fund liquidity risk Unit in charge of fund procurement regularly predicts future fund demand and supply, and consolidates company guarantee or endorsement and capital lending businesses to monitor the condition of fund procurement on a daily basis.

E. Hedging and risk-offsetting strategy
- (A) Policies of hedging and risk mitigating are parts of the Company’s risk management policies, and the hedging position and hedged trading position are supposed to be one portfolio, of which the gain and loss and risk information are measured on a consolidated basis.
- (B) The overall position (hedging position and trading position) is included in the daily risk management system to calculate Value at Risk and other relevant information. Limit exceeding indicators mainly include nominal principal, stop-loss point, price sensitivity and VaR. With the presentation of daily risk management report, routine control and limit exceeding treatment can be executed.
- (C) The continued effectiveness of hedging and risk-offsetting strategy is measured by the gain and loss of overall position (hedging position and trading position), in order to track reasonableness of the profit or loss of hedging position and the offsetting relationship with the profit or loss of trading position, and to control them within a reasonable range.
2) Credit risk
A. Source and definition of credit risk
- The credit risk exposure of the Company as a result of engagement in financial transactions include issuer’s credit risk, credit risk of counterparty and credit risk of underlying assets:
- (A) Credit risk of the issuer refers to the issuers of financial debt instruments held by the Company failing to repay its obligation due to the fact that the issuer breaches the contract resulting in the risk of financial loss to the Company.
- (B) Credit risk of counterparty refers to risk of financial loss to the Company arising from default by the counterparty of financial instruments on the settlement or payment obligation.
- (C) Credit risk of the underlying assets happens when the credit rating of the underlying assets linked to the financial instrument is downgraded by the rating agency or when the losses occur as a result of contract default.

The financial assets held by the Company which could result in credit risk include bank deposit, debt securities, derivatives transactions in OTC, bonds purchased/sold under resale/repurchase agreements, refundable deposit of securities lending, futures trade margins, other refundable deposits and receivables.

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B. Maximum credit risk exposure and credit risk concentration

The maximum exposure to credit risk of financial assets in the parent company only balance sheet, without consideration of the collateral or other credit enhancements, is equivalent to the carrying amount. In Taiwan, the sources of credit risk of the Company are primarily resulting from cash deposited with banks or other financial institutions, debt securities issued or guaranteed by a bank, derivative instruments transaction underwritten by the Company, and all counterparties of customer margin deposits accounts being financial institutions. Credit risks of various financial assets are as follows:

(A) Cash and cash equivalents

Cash and cash equivalents include time deposit, demand deposits and checking deposits. Correspondent institutions are mainly domestic financial institutions.

(B) Financial assets at fair value through profit and loss -current
a. Fund
- The funds held by the Company are bond funds. As the positions held are not significant, credit risk is deemed low.
b. Commercial bond

The commercial bonds held by the Company are repurchase agreements. As all the counterparties are financial institutions with good credit, the credit risk from counterparties is extremely low.

c. Debt securities

Debt securities are mainly positions like government bonds, convertible corporate bonds and foreign bonds and the issuers are primarily R.O.C. government, domestic and foreign legal entities. 33% of convertible corporate bond is guaranteed by banks. Details are as follows:

(a)Bonds

The bonds held by the Company are mostly government bonds (inclusive of central and local government). As a whole, the credit risk of the bonds held by the Company is low.

(b) Corporate bonds

The corporate bonds held by the Company are mainly underlying investment with good credit rating and those with rating above (S&P BB).

(c)Convertible corporate bond

The convertible corporate bonds held by the Company are mostly issued by the domestic legal entities. The Company mitigates highly risky credit exposure of the issuers by control through Taiwan Corporate Credit Risk Index (TCRI).

(d)Foreign bonds

The foreign bonds held by the Company are mainly underlying investment with good credit rating and those with rating above (S&P BB).

(C) Financial assets at fair value through other comprehensive income - current The foreign government bonds held by the Company are classified as debt instruments at fair value through other comprehensive income. In general, the bonds held by the Company are with lower credit risk.
(D) Derivatives- futures trade margin

When engaging in futures trades in stock exchange market, the Company needs to deposit margin into a margin deposit account of a financial institution designated by the futures merchants as a guarantee to fulfil contractual obligation in the future. As a result, the credit risk is low.

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(E) Derivatives-OTC
The Company signs International Swaps and Derivatives Association (ISDA) agreements with each counterparty when engaging in OTC derivatives as an agreement regarding such transactions for both parties. In the agreement, it provides a fundamental contractual model for OTC derivative transactions. If any party breaches the contract or terminates the transactions early, then all the open interest covered in the agreement should be settled by net amount as bound in the contract. When the ISDA agreement is signed, the Credit Support Annex (CSA) is also signed. According to the CSA, collateral will be transferred from a party to the other during transaction process to mitigate the risk of counterparty in open interest. Please refer to Note 6(10).
Types of OTC derivative transactions in which the Company is engaged include swap transaction. The counterparties are all from financial service industry and mainly located in Taiwan and United Kingdom.
(F) Bonds investment under a resale agreement Bonds sold under a resale agreement are the bonds that the client sold to the Company at a price, interest rate, length of period as agreed by two parties and the client shall repurchase the bonds at the specified price upon maturity. The Company needs to assume credit risk from counterparties when underwriting such business, as the payment being delivered to the other party. With consideration of good collateral obtained, the net of credit risk exposure from counterparties can be effectively reduced. As all the counterparties are financial institutions with good credit rating, the credit risks from counterparties are extremely low. Please refer to Note 6(10).
(G) Margin loans receivable
Margin loans receivable are the loans provided to the client in order to process businesses of margin trading and short sale using the securities purchased through financing as collateral. The Company monitors the clients’ margin ratio through information system on a daily basis. As the margin ratio of margin trading is set at 130% according to Regulations Governing the Conduct of Securities Trading Margin Purchase and Short Sale Operations by Securities Firms, the credit risk is extremely low.
(H) Receivable of securities business money lending Receivable of securities business money lending are the non-restricted purpose loan business and monetary financing business, pursuant to an agreement between a securities firm and a customer, using customer securities and other commodities as collateral. The Company regularly assesses its customer line of credit and implements appropriate credit control.
(I) Guaranteed price for securities lending Guaranteed price for securities lending is the sale price of the Company’s securities sold by other securities firms through margin trading after deduction of securities transactions tax and service fee, which is deposited in other securities firms as collateral. As all the counterparties are financial institutions with good credit rating, the credit risk from counterparties is extremely low.
(J) Refundable deposits for securities lending Refundable deposits for securities lending are the margins deposited in other securities firm as collateral when the Company’s securities are sold. As all the counterparties are financial institutions with good credit, the credit risk from counterparties is extremely low.
(K) Receivables
Receivables are the credit rights arising from the securities business including settlement receivables of consignment trading, settlement receivables of operating securities sold, financing interest receivables of self-operating credit transaction, receivables of consignment trading for securities, and receivables from banks’ underwriting on foreign

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exchange transactions and foreign fund demand. As the majority of the Company’s receivables from the consignment businesses and self-operating businesses are settlement of securities from OCT or TWSE, the credit risk is extremely low. As the foreign exchange transactions are simply the receipt or payment of different currencies and the correspondent banks are of good credit rating, the credit risk is extremely low.

(L) Other current assets

Other current assets are mainly the collateral deposited in the bank for application for shortterm debt limit and guarantee for application for issuance of commercial papers. As the correspondent banks are all financial institutions with good credit rating, the credit risk is extremely low.

(M) Financial assets at fair value through profit and loss – non-current In order to underwrite trust business, the Company deposits central government bonds in the Central Bank as collateral. Regardless of the bonds themselves or the financial institutions where the bonds deposited, the credit risk is extremely low.
(N) Other non-current assets

Other non-current assets mainly comprise operating guarantee deposits, settlement funds, and refundable deposits. Operating guarantee deposits are mainly deposited in domestic banks with good credit rating. Settlement funds are deposited in securities exchange. Settlement funds are used as compensation when a party to a marketable securities transaction fails to fulfil the settlement obligation. The credit risks from the institutions where these two assets are deposited are extremely low. The refundable deposits refer to cash or other assets which are deposited externally by the Company and can be used as refundable deposits. Because deposits are placed in various financial institutions and each deposit amount is small, the credit risk is dispersed and the credit exposure of overall refundable deposit is extremely low.

C. Expected credit loss assessment

In the assessment of impairment and calculation of expected credit losses, the Company considers reasonable and supporting information about past events, current conditions and future economic conditions. The Company determines at the balance sheet date whether there has been a significant increase in credit risk since initial recognition or whether credit impairment has occurred, and recognises expected credit loss according to which stage the asset belongs: no significant increase in credit risk or low credit risk at balance sheet date (Stage 1), significant increase in credit risk (Stage 2), and credit impaired (Stage 3). 12-month expected credit losses are recognised for assets in Stage 1, and lifetime expected credit loses are recognised for assets in Stage 2 and Stage 3.

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The definition of and expected credit losses recognised for each stage are as follows:

Item	Stage1	Stage2	Stage 3
Definition	No significant deterioration of credit quality of the financial asset since initial recognition, or the financial asset is considered low-risk at the balance sheetdate.	Significant deterioration of credit quality of the financial asset since initial recognition, but the asset is not yet credit impaired.	The financial asset is credit impaired at the financial reporting date.
Expected credit losses recognition	12-month expected credit losses	Lifetime expected credit losses	Lifetime expected credit losses

(A) Judgements of the significant increase in credit risk since initial recognition Judgements and assumptions used to determine whether the credit risk has a significant increase since initial recognition when the Company calculates expected credit loss under IFRS 9 are as follows:
a. If contractual payments are over 30 days past due according to the payment terms, the financial asset is considered to have significant increase in credit risk since initial recognition.
b. There is significant increase in credit risk at the reporting date if the credit rating of the issuer has been downgraded by more than 2 grades and the final external credit rating at the reporting date is non-investment grade, if the interest payments are over 30 days past due, or if there has been a default in the past.
(B) Definition of default and credit-impaired financial assets
According to the definition of credit impairment set by IFRS 9, a financial asset is creditimpaired when one or more events that have occurred and have a significant impact on the expected future cash flows of the financial asset. The criteria used to judge whether a financial asset is credit-impaired since initial recognition includes but is not limited to the following:
a. Contractual payments or principal or interest payments on bonds are over 3 months (90 days) past due.
b. Bond investment is rated as “in default” by external credit rating agencies.
c. Bond issuer has filed for bankruptcy, restructure, or other debt clearance procedures.
d. Issuer or counterparty has financial difficulties.
(C) Writing-off policy

If any of the following condition applies, the Company will write off the non-recoverable portion of the overdue receivables as bad debt.

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a. Debt cannot be fully or partially recovered due to dissolution of, disappearance of, settlement with, bankruptcy declaration by the debtor, or any other reason.
b. The collateral and the assets of the primary and secondary debtors could not be auctioned off after multiple attempts and multiple price discounts, and the Company has not received any real benefits in assuming the collateral.
c. Payments are over two years past due and could not be recovered after attempts to collect.
(D) Measurement of expected credit losses
The Company considers reasonable supporting information which shows significant increase in credit risk since initial recognition when calculating expected credit losses. Main indexes include: internal/external credit rating, information of past due, credit spread, other market information in relation to the borrower, issuer or counterparty, and significant increase in credit risk of other financial instrument of the same borrower.
a. Investments in bills and bonds
- (a)Probability of default was based on external credit rating, which include forwardlooking information.
- (b)Loss given default was based on the average loss given default of external credit rating of investment position and counterparties.
- (c)Exposure at default

Stage 1, Stage 2 and Stage 3: Total carrying amount (including interest receivable).

(E)Consideration of forward-looking information
- Historical loss rate (based on the historical experience in the past 3 to 5 years) as obtained and compared with economic environment in the past, nowadays and future (forward-looking factor) to see whether there is any significant change, and then to properly adjust future loss rate standards. If any significant default event occurs, the loss rate in the current year will be included in the calculation of future loss rate standard.
D. Table of movements in loss provision of the Company
(A) For the years ended December 31, 2019 and 2018, there were no changes in the loss allowance for investments in debt instruments measured at fair value through other comprehensive income.
(B) Except for debt investments and its interest receivable, the Company applies the modified approach to measure the loss allowance at an amount equal to lifetime expected credit losses for receivables and overdue receivables. The movements in loss provision of marginal receivables, accounts receivable, other receivable-others and other non-current assetsoverdue receivables of the Company are as follows:

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Year ended December 31, 2019

Marginal receivable	Marginal receivable	Accounts receivable	Accounts receivable	Other receivable	Other non- current assets- overdue receivables	Total	Total
61,669 $ 20,067 - 37,930) ( 43,806 $ Marginal receivable						277,693 $ 7,170 274) ( - 284,589 $ Total
	Marginal receivable		Accounts receivable	Other receivable	Other non- current assets- overdue receivables
84,093 $ 27,996 50,420) ( 61,669 $		4,359 $ 2,648 4,346) ( 2,661 $		- $ 288 - 288 $	136,443 $ 21,866 54,766 213,075 $		224,895 $ 52,798 - 277,693 $

3) Liquidity risk

A. Definition and source of liquidity risk

Liquidity risk refers to possible financial losses arising from the inability to realize the asset or to obtain sufficient fund to fulfil the financial liabilities soon to be matured. Above situations may weaken the sources of cash from the Company’s trading and investment activities.

B. Liquidity risk management procedure and stimulation test

In order to prevent operational crisis as a result of liquidity risk, the Company has established responding crisis process with regular monitoring over liquidity gap of fund.

(A) Procedure
In addition to the operating capital for various business and long-term investment, the Company needs to maintain revolving funds at a certain level for daily operation. The use of remaining fund shall avoid high concentration and should be based on the principle of holding sound earning assets with high liquidity and treated in compliance with policies of the Company.

The responsive unit for fund procurement adjusts the liquidity gap to ensure proper liquidity according to the daily volume and movement in the market.

(B) Stimulation test
a. The Company reviews fund liquidity risk from a perspective of supply and demand of fund every month with simulation analysis of available fund for emergency including scenario analysis of cash, funding limit of financial institutions, margin loans and short sale, and value of disposal of position in order to compute maximum available fund and

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fund demand. Finally, safety stock of fund is reviewed to monitor liquidity risk.

  - b. Above liquidity risk is generally reviewed monthly. However, if the available limit of increment banking credit risk in financing limit of a financial institution is lower than a certain amount (that is, the amount may be timely adjusted according to the fund liquidity in the market and the actual fund demand and supply in an entity), the safety stock will be reviewed weekly. After the early warning report for fund is submitted, the head of finance segment will call for a fund control meeting.

  - c. Other than individual funding liquidity risk of an entity, stress test of minimization funding supply and maximization funding demand in the event of significant crisis is simulated, including:

     - (a)When there is a significant crisis in the market, the financing limit of the financial institutions and the value of disposal of position can be deemed the minimized ratio of fund supply which is then adjusted according to actual condition to compute the total fund supply under maximum stress.

     - (b)Except for the operating expense, the stock concept is adopted for the calculation of total fund demand under maximum stress.

     - (c)The Company should conduct a review to see whether the total minimized fund supply is more than maximized total fund demand. The Company should further review how long (by month) the difference may cover the operating expenses so that the safety stock of fund (by month) under stress test can be computed.

     - (d)The minimum safety stock of fund under stress test (by month) may be adjusted according to the crisis itself and only operating expense for at least 6 months under a normal stimulation can be deemed safe.

C. Maturity analysis for the financial assets and financial liabilities held for liquidity risk management
(A) The Company holds cash and sound earning assets with high liquidity in order to fulfil the payment obligation and potential emergency fund demand in the market. Financial assets held for liquidity risk management are mainly cash and cash equivalents, among which, all time deposits mature within a year. Financial assets at fair value through profit and loss are mainly listed stocks, convertible bonds and debt securities. As all of them have positions in active market, the liquidity risk is deemed low.

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(B) Maturity analysis for the financial liabilities is as follows:

		December 31,2019
Immediately	Less than 3 months	3-12 months	1-5years - $ - - - - - - - - 85,924 - - 155,491 241,415 $	Total
600,000 $ 350,000 391,227 457,039 - 1,558,717 1,888,832 - 11,439,298 284,082 - - - 16,969,195 $	2,245,502 $ 9,250,000 - - 21,035,116 - - 56,004 27,921 5,576 176,676 1,797,292 1,067 34,595,154 $	- $ - - - - - - - - - 1,058,630 946,574 5,857 2,011,061 $		2,845,502 $ 9,600,000 391,227 457,039 21,035,116 1,558,717 1,888,832 56,004 11,467,219 375,582 1,235,306 2,743,866 162,415
				53,816,825 $

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		December 31,2018
Immediately	Less than 3 months	3-12 months	1-5years - $ - - - - - - - 87,780 - - 87,780 $	Total
623,514 $ 598,457 267,073 - 1,767,269 2,007,202 - 7,275,941 268,589 648 - 12,808,693 $	316,365 $ - - 15,134,144 - - 621 17,006 4,664 129,223 1,378,506 16,980,529 $	- $ - - - - - - - - 660,498 1,308,503 1,969,001 $		939,879 $ 598,457 267,073 15,134,144 1,767,269 2,007,202 621 7,292,947 361,033 790,369 2,687,009
				31,846,003 $

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D. Maturity analysis for lease contracts and capital expenditures Effective 2018
Operating lease commitment is the total minimum lease payments that the Company should make as a lessee or minimum lease income as lessor under an operating lease term which is not cancelable. The capital expenditure commitment is the contract commitment signed for acquisition of capital expenditure of construction and equipment.

The following table illustrates maturity analysis for lease contract and capital expenditure commitment of the Company:

commitment of the Company:
December 31,2018 Not later than one year Later than one year but not later than five years Over five years Total		Operating leases expenditures(Lessee)		Operating leases income(Lessor)
		76,982 $ 123,565 2,808 203,355 $		12,633 $ 3,882 - 16,515 $

4) Market risk

A. Definition of market risk

Market risk refers to the risk of decrease in the Company’s revenue or value of investment portfolio as a result of the changes in exchange rate, commodity price, interest rate, and stock price or other market risk factors.

The Company continually exercises risk management tools such as sensitivity analysis, Value at Risk, stress test and so on to completely and effectively measure, monitor and manage market risk.

B. Value at Risk (VaR)

Value at Risk is used to measure the possible maximum potential losses in investment portfolio as a result of movement in market risk factor in a specified period and confidence level. The Company currently uses confidence level of 95% to calculate Value at Risk of one day. A VaR model must reasonably, completely and accurately measure the maximum potential risks of financial instruments or investment portfolio before being adopted as a risk management model by the Company. The VaR model used in risk management is continually certified and retrospectively tested to demonstrate that the model can reasonably and effectively measure the maximum potential risks of financial instruments or investment portfolios.

Statistical table for one-dayVaR of transactions	Statistical table for one-dayVaR of transactions	Statistical table for one-dayVaR of transactions	Statistical table for one-dayVaR of transactions
Year ended December 31,2019 December 31, 2019 VaR Maximum VaR Average VaR Minimum	Amount 99,926 $ 168,442 93,088 27,518	Year ended December 31,2018 December 31, 2018 VaR Maximum VaR Average VaR Minimum	Amount 53,973 $ 258,223 111,350 32,743

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Statistical table for VaR of various risk indicators of transactions

Year ended

Year ended
December 31,2019 December 31, 2019 VaR Maximum VaR Average VaR Minimum Year ended December 31,2018 December 31, 2018 VaR Maximum VaR Average VaR Minimum	Foreign exchange 5,000 $ 27,860 6,610 1,566 Foreign exchange 3,521 $ 40,485 11,270 2,854	Interest 17,268 $ 72,934 35,173 8,308 Interest 8,223 $ 33,482 16,585 7,429	Share ownership
			101,873 $ 168,753 90,473 24,844 Share ownership
			52,543 $ 264,509 111,320 27,951

C. Information on gap of foreign exchange risk

The following table summarizes financial instruments of foreign assets or liabilities by currency and the foreign exchange exposure presented by book value as of December 31, 2019 and 2018 ： (Blank below)

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Financial assets in foreign currencies Cash and cash equivalents Financial assets at fair value through profit or loss Investments under equity method Others Financial liabilities in foreign currencies Short-term loans Financial liabilities at fair value through profit or loss Bonds sold under repurchase agreements Others			December 31,2019	December 31,2019	December 31,2019
	USD 247,624 $ 15,858,467 2,301,733 1,023,068 2,245,502 12,434 12,219,296 3,016,289	EUR 954 $ 1,834,006 - 2,274 - 2,749 1,445,146 -	AUD 2,447 $ 852,473 - 3,593 - 1,710 700,804 5,729	RMB 282,302 $ 1,299,213 - 126,910 - 13,715 1,023,554 371,927	HKD 276,838 $ 164,475 72,935 101,145 - 465 - 83,056	Others 176,979 $ 236,952 - 721 - 1,072 119,876 33,166	Total
							987,144 $ 20,245,586 2,374,668 1,257,711 2,245,502 32,145 15,508,676 3,510,167

Note: As of December 31, 2019, foreign exchange rates of the above currencies to TWD were 1 USD = 29.98 TWD; 1 EUR = 33.59 TWD; 1 AUD = 21.005 TWD; 1 RMB = 4.305 TWD; and 1 HKD = 3.849 TWD, respectively.

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Financial assets in foreign currencies Cash and cash equivalents Financial assets at fair value through profit or loss Available-for-sale financial assets - current Bonds purchased under resale agreements Investments under equity method Others Financial liabilities in foreign currencies Short-term loans Financial liabilities at fair value through profit or loss Bonds sold under repurchase agreements Others			December 31,2018	December 31,2018	December 31,2018
	USD 350,128 $ 7,249,134 296,304 93,193 2,298,272 257,087 939,879 159,839 6,980,674 1,461,060	EUR 1,378 $ 1,368,025 - - - 3,609 - 1,479 1,167,834 -	AUD 2,651 $ 755,860 - - - 4,570 - 1 700,087 2,691	RMB 3,237 $ 1,827,805 - - - 43,961 - 6,433 819,621 206,660	HKD 433 $ 63,507 - - 72,792 2,287 - - - 1,493	Others 186,763 $ 1,707 - - - - - 5,137 - -	Total
							544,590 $ 11,266,038 296,304 93,193 2,371,064 311,514 939,879 172,889 9,668,216 1,671,904

Note: As of December 31, 2018, foreign exchange rates of the above currencies to TWD were 1 USD = 30.715 TWD; 1 EUR = 35.200 TWD; 1 AUD = 21.665 TWD; 1 RMB = 4.472 TWD; and 1 HKD = 3.921 TWD, respectively.

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D. The total exchange gain (loss), including realized and unrealized, arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2019 and 2018, amounted to $196,750 and $28,872, respectively.
5) Fair value and hierarchy information
A. Financial instruments and non-financial instruments not measured at fair value. Except for those listed in the table below, the carrying amounts of the Company’s financial instruments not measured at fair value (including cash and cash equivalents, bonds purchased under resale agreements, margin loans receivable, refinancing guaranty deposits, guaranteed proceeds receivable from refinancing, guaranteed price deposits for security borrowing, security borrowing deposits, customer margin deposit account, notes and accounts receivable, other receivables, short-term loans, commercial paper payable, bonds sold under repurchase agreements, guarantee deposit received from short sales, guaranteed price deposits received from securities borrowers, security borrowing deposits, equity of futures traders, accounts payable, collection for others, and other payables) approximate their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(5)3.

Non-financial assets December 31, 2019 Investment property December 31, 2018 Investment property	Total 665,646 $ 663,672 $	Quoted prices of the same assets in active markets (level 1)	Other significant observable inputs (level 2)	Significant non-observable inputs(level 3)
		- $ - $	665,646 $ 663,672 $	- $ - $

The fair value of investment property held by the Company was assessed by external valuation experts using comparison approach and income approach, or the fair value can be assessed based on the market price of the area adjacent to the location where the Company’s investment property is located.

B. Valuation techniques
(A)For financial instruments held for trading purposes which are classified as non-derivative instruments, their fair values are based on their quoted prices in an active market. If there is no quoted market price for reference, a valuation technique will be adopted to measure the fair value. Estimates and assumptions of valuation technique adopted by the Company are in agreement with the information of estimates and assumptions adopted by market users for financial instrument pricing and the said information shall be accessible to the Company. For those classified as derivative instruments, their fair values are based on their market prices if their quoted prices are available from an active market. If quoted market prices in an active market are not available, SWAP and IRS are valued at the discounted cash flow method, and options are valued at the Black-Scholes model.
(B) When available-for-sale financial assets have quoted market prices available in an active market, the fair value is determined using the market price.
C. Fair value hierarchy of the financial instruments
(A) Definitions for the hierarchy classifications of financial instruments measured at fair value

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a. Level 1 Level 1, are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date. An active market has to satisfy all the following conditions: 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 Company’s investments in listed stocks, beneficiary certificates, on-the-run Taiwan central government bonds and derivative instruments with quoted market prices, are deemed as level 1.
b. Level 2 Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Investments of the Company such as off-the-run issue of emerging stock, government bonds, corporate bonds, bank debentures, convertible corporate bonds, currency swaps, interest rate swaps, options, asset swaps, and most derivatives are all classified within level 2. For the years ended December 31, 2019 and 2018, there was no significant transfer of financial instruments between Level 1 and Level 2.
c. Level 3 Unobservable inputs for the assets or liability. The fair value of the Company’s investment in unlisted stocks is included in Level 3.

(Blank below)

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(B)Hierarchy of fair value estimation of financial instruments

Financial instrument items measured at fair value Recurring fair value Non-derivative financial instruments Assets Financial assets at fair value through profit or loss-current Stock investments Bond investments Others Financial assets at fair value through profit or loss - noncurrent Stock investments Bond investments Financial assets at fair value through comprehensive income-noncurrent Stock investments Liabilities Financial liabilities at fair value through profit or loss -current Derivative financial instruments Assets Financial assets at fair value through profit or loss-current Liabilities Financial liabilities at fair value through profit or loss - current		December	31,2019
	Total 11,988,505 $ 25,159,729 3,562,680 21,180 50,116 157,656 391,227 2,799,187 457,038	Level 1 11,975,770 $ 870,587 3,562,680 - - - 391,227 2,798,218 421,322	Level 2 12,735 $ 24,289,142 - - 50,116 - - 969 35,716	Level3
				- $ - - 21,180 - 157,656 - - -

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Financial instrument items measured at fair value Recurring fair value Non-derivative financial instruments Assets Financial assets at fair value through profit or loss-current Stock investments Bond investments Others Financial assets at fair value through comprehensive income-current Bond investments Financial assets at fair value through profit or loss - noncurrent Stock investments Bond investments Financial assets at fair value through comprehensive income-noncurrent Stock investments Liabilities Financial liabilities at fair value through profit or loss -current Derivative financial instruments Assets Financial assets at fair value through profit or loss-current Liabilities Financial liabilities at fair value through profit or loss - current		December	31,2018
	Total 1,811,467 $ 18,173,118 4,528,698 296,304 16,445 49,909 146,545 598,457 2,288,727 267,073	Level 1 1,794,143 $ 1,064,491 4,528,698 296,304 - - - 598,457 2,285,427 242,383	Level 2 17,324 $ 17,108,627 - - - 49,909 - - 3,300 24,690	Level3
				- $ - - - 16,445 - 146,545 - - -

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(C) The following table is the movement of financial assets at Level 3:

		Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019
Financial assets at fair value through profit or loss - non-current Equity investments Financial assets at fair value through other comprehensive income - non-current Equity investments	January1	Valuation amount		Increased		Decreased		December 31
		Recorded in profit or loss	Recorded in other comprehensive income(loss)	Acquired/ Issued	Transfers into level 3	Sold/ Settled	Transfers out from level 3
	16,445 $ 146,545	4,735 $ - $ - $ - 11,111 - Year ended December 31,2018			- $ -	- $ -	- $ -	21,180 $ 157,656
Financial assets at fair value through profit or loss - non-current Equity investments Financial assets at fair value through other comprehensive income - non-current Equity investments	January1	Valuation amount		Increased		Decreased		December 31
		Recorded in profit or loss	Recorded in other comprehensive income(loss)	Acquired/ Issued	Transfers into level 3	Sold/ Settled	Transfers out from level 3
	20,147 $ 134,238	3,702) ($ -	- $ 12,307	- $ -	- $ -	- $ -	- $ -	16,445 $ 146,545

(D) The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

value measurement:
December 31,2019	Fair value	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
Financial assets at fair value through profit or loss - non-current Venture capital shares Financial assets at fair value through other comprehensive income - non-current Unlisted stocks	21,180 $ 157,656	Net asset value Market approach	Not applicable Price to earnings ratio multiple Discount for lack of marketability	Not applicable 1.32~1.76 7.93%~9.75%	Not applicable The higher the multiple,the higher the fair value The higher the discount for lack of marketability, the lower the fair value

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December 31,2018	Fair value	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
Financial assets at fair value through profit or loss - non-current Venture capital shares Financial assets at fair value through other comprehensive income - non-current Unlisted stocks	16,445 $ 146,545	Net asset value Market approach	Not applicable Price to earnings ratio multiple Discount for lack of marketability	Not applicable 1.91~2.05 30%	Not applicable The higher the multiple,the higher the fair value The higher the discount for lack of marketability, the lower the fair value

(E)Valuation process for fair value at Level 3

The parent company’s risk management department is responsible for the verification of fair value categorised in Level 3. The department assesses the independence, reliability, consistency and representativeness of the source information, regularly verifies the valuation models and calibrates the parameters to ensure the valuation process and results are in compliance with IFRSs.

(F) For the fair value measurement of Level 3, the sensitivity analysis of the fair value to the reasonable alternative hypothesis shows that the fair value measurement of the financial assets by the Company is reasonable. However, use of different valuation models or assumptions may result in different measurement. The following is the impact to profit or loss or to other comprehensive income from financial assets and liabilities categorised within Level 3 if the inputs used in valuation models have changed up or down by 1%:

December 31,2019	Recognised inprofit or loss	Recognised inprofit or loss	Recognised in other comprehensive income	Recognised in other comprehensive income
	Favourable change	Unfavourable change	Favourable change	Unfavourable change
Financial assets at fair value through profit or loss -non-current Venture capital shares Financial assets at fair value through other comprehensive income - non-current Unlisted stocks	Not applicable -	Not applicable -	- $ 1,577	- $ 1,577) (

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December 31,2018	Recognised inprofit or loss	Recognised inprofit or loss	Recognised in other comprehensive income	Recognised in other comprehensive income
	Favourable change	Unfavourable change	Favourable change	Unfavourable change
Financial assets at fair value through profit or loss -non-current Venture capital shares Financial assets at fair value through other comprehensive income - non-current Unlisted stocks	Not applicable -	Not applicable -	- $ 1,465	- $ 1,465) (

6) Capital management

A. Objective of capital management
(A) The represented capital adequacy ratio basically shall not be lower than 200% in compliance with the warning standard addressed in the “Rules Governing Securities Firms”.
(B) The Company includes all risks involved in the investment position as a part of risk management, such as market risk, credit risk, liquidity risk, operating risk, legal risk, and model risk and so on. Each risk management responsive unit should identify, evaluate, monitor and control various risks in order to enable the Company to defend impact from financial market, reflect the current operating strategies and make the investment portfolio applied to business planning and development.
B. Capital management policy and procedure
In order to secure the long-term and stable development of various businesses and effectively assume risks, the Company manages capital based on the business development, related regulations and financial market environment. Major capital evaluation processes include:
(A) Each segment should provide accurate and valid source of information to maintain calculation accuracy of capital adequacy ratio.
(B) After the reporting at the 10th of each month, capital adequacy ratio should be computed by the end of every month. If the result is close to the legal standard, every unit will be called to attend a meeting for discussion and strategic planning to ensure that the basic objective of capital adequacy ratio is not less than 200%.
(C) Both the risk limits and economic capital of the Company should be agreed by the Board of Directors. The Company should quarterly report details of risk control with disclosure of investment condition in order to assess whether the risk position exceeds the limit and whether the investment direction is in line with the market trend. Within the authorized risk limits, the Company is actively engaged in development of various businesses and continually increases profit, creates company value, and complies with the capital management objective.

The Company calculates and reports the capital adequacy ratio according to “Rules Governing Securities Firms”. As of December 31, 2019 and 2018, the capital adequacy ratios were 378% and 567%, respectively, as required by the regulations..

7) Assets and liabilities of trust accounts

Pursuant to Article 17 of Enforcement Rules of the Trust Enterprise Act, balance sheet, income statement, and property list of trust accounts shall be disclosed in the parent company only financial statements on a semiannual basis.

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A. Balance sheet of trust accounts

A. Balance sheet of trust accounts
B. Income statement of trust accounts Trust assets Bank savings Structured notes Stock Bond Bonds sold under repurchase agreements Fund Securities lending Accounts receivable Total of trust assets Trust liabilities Accounts payable Trust capital Net income (loss) Cumulative loss Total of trust liabilities Item Trust income Interest income Cash dividends received Income from stocks lending Investment gains - realized Investment gains (losses) - unrealized Subtotal Trust expenses Service fee Borrowing costs Remittance fee Income before income tax Income tax expense Net income
	17,631 $ 5,780 6,145 7,188 64,616 101,360 227) ( 764) ( 1) ( 100,368 22) ( 100,346 $	8,028 $ 11,334 117,957 556 387,327) ( 249,452) ( 18) ( 4,041) ( 1) ( 253,512) ( 5) ( 253,517) ($

B. Income statement of trust accounts

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C. Property list of trust accounts

C. Property list of trust accounts
Item Bank savings Structured notes Funds Bond Stock Bonds sold under repurchase agreements Securities lending Others Total	December 31,2019 283,288 $ 347,256 3,270,575 402,246 115,006 135,196 71,047 74,063 4,698,677 $	December 31,2018
		179,211 $ 380,552 2,019,812 252,251 - 187,279 164,989 29,429
		3,213,523 $

(Blank)

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13. OTHER DISCLOSURE ITEMS

1) Information about significant transactions

A. Lending to others: Excluding security margin trading and conditional bond trading business, there is no lending of funds to either the shareholders or other parties.
B. Endorsements and guarantees for others ： None.
C. Acquisitions of real estate exceeding $300,000 or 20 percent of contributed capital ： None.
D. Disposals of real estate exceeding $300,000 or 20 percent of contributed capital ： None.
E. Purchases or sales transactions discount on brokers’ charges with related parties in excess of $5,000 ： None.
F. Receivables from related parties exceeding $100,000 or 20 percent of contributed capital ： None.
G. Significant transactions between parent company and subsidiaries are provided in Note 7.

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2) Related information of investee companies

A. Related information of investee companies

Name of the investor	Name of the investee company	Location	Date of registration	Reference number and the date of approval letter issued byFSC	Major operating activities	Balance on December 31, 2019 Original in	Balance on December 31, 2018 vestment	EndingBalance	EndingBalance		Revenue of investee company	Net income (loss) of investee company	Investment income (loss) recognised by the Company	Cash dividends	Notes
								Shares 63,817,303 30,000,000 10,000,000 67,746,000 14,904,630 1,000,000	Percentage 96.69% 100.00% 5.19% 100.00% 42.46% 100.00%	Book vlaue
President Securities Corp.	President Futures Corp. President Capital Management Corp. President Securities (HK) Ltd. President Securities (BVI) Ltd. Uni-President Asset Management Corp. President Insurance Agency Corp.	Taipei Taipei Hong Kong British Virgin Islands Taipei Taipei	1994.03.01 1997.04.15 1994.07.26 1998.02.26 2000.08.18 2008.04.29	1994.03.01 Jing- Tou-Shen (83) Gong-Shang Letter No.1114 (Note 1) 1997.02.25 (86) Tai-Cai-Zheng (2) Letter No.17769 1993.11.4 (82) Tai- Cai-Zheng (2) Letter No.40913 1997.10.27 (86) Tai-Cai-Zheng (2) Letter No.04840 2000.07.19 (89) Tai-Cai-Zheng (2) Letter No.56407 (Note2)	Futures brokerage Securities investment consulting Securities dealer, brokerage, underwriting and consulting Securities investment and holding company Investment Trust Insurance Agent	644,650 $ 326,000 34,030 2,264,573 667,622 10,000	644,650 $ 200,000 34,030 2,264,573 667,622 10,000			1,924,380 $ 322,208 72,935 2,301,733 578,382 28,561	710,925 $ 57,196 181,778 - 831,987 56,654	160,258 $ 1,392 29,218 52,125 251,386 9,294	154,963 $ 1,435 1,516 52,125 106,930 9,298	146,142 $ - - - 93,631 12,644	Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Associates Subsidiary of the Company

246

Name of the investor Name of the investee company Location Date of registration Reference number and the date of approval letter issued byFSC Major operating activities President Securities Corp. PSC Venture Capital Investment Limited Company Taipei 2013.10.29 2013.08.08 Jing- Guan-Zheng-Chuan Letter No.1020028529 Consultation of investment management and venture capital; other unprohibited or unrestricted businesses beyond the permit President Insurance Agency Corp. Uni-President Asset Management Corp. Taipei 2000.08.18 2000.07.19 (89) Tai-Cai-Zheng (2) Letter No.56407 Investment Trust President Securities (BVI) Ltd. President Securities (HK) Ltd. Hong Kong 1994.07.26 1993.11.4 (82) Tai- Cai-Zheng (2) Letter No.40913 Securities dealer, brokerage, underwriting and consulting President Wealth Management (HK) Ltd. Hong Kong 2002.03.31 2001.12.11 (90) Tai-Cai-Zheng (2) Letter No.166728 Wealth management President Securities (Nominee) Ltd. Hong Kong 1999.08.06 1997.10.27 (86) Tai-Cai-Zheng (2) Letter No.04840 Nominee Service	Balance on December 31, 2018 Balance on December 31, 2017 Shares Percentage 300,000 300,000 30,000,000 100.00% 478 478 12,000 0.03% 814,705 814,705 182,600,000 94.81% 92,091 92,091 23,400,000 100.00% 3,403 3,403 1,000,000 100.00% Original investment EndingBalance	Book vlaue	Revenue of investee company	Net income (loss) of investee company	Investment income (loss) recognised by the Company	Cash dividends Notes
		248,549 471 1,332,349 58,319 1,826	6,113 831,987 181,778 - -	3,474 251,386 29,218 703 77) (	3,477 86 27,702 703 77) (	- Subsidiary of the Company 75 Associates - Subsidiary of the Company - Indirect subsidiary of the Company - Indirect subsidiary of the Company

Note1 ： As FSC was established in July, 2004, President Futures Corp. was apporved by the Investment Commission, Ministry of Economic Affairs. Note2 ： When securities corporations invest in domestic business within FSC's limitation, there is no need to obtain the approval from FSC in advance, according to Tai-Cai-Zheng (2) Letter No.0930000005. Therefore, there was no reference numbers for President Personal Insurance Agency Co., Ltd. and President Insurance Agency Corp.

B. Lending to others: Excluding security margin trading and conditional bond trading business, there is no lending of funds to either the shareholders or other parties.

247

C. Endorsements and guarantees for others ： None.
D. Acquisitions of real estate exceeding $300 million or 20 percent of contributed capital ： None.
E. Disposals of real estate exceeding $300 million or 20 percent of contributed capital ： None.
F. Purchases or sales transactions discount on brokers’ charges with related parties in excess of $5,000,000 ： None.
G. Receivables from related parties exceeding $100 million or 20 percent of contributed capital ： None.
H. Accordance with Jing-Guan-Zheng-Quan-Zi Letter No. 10300375782, the Company is required to disclose details of businesses run by foreign enterprises that were incorporated in the countries identified as non-signatories to the IOSCO MMoU or have not obtained securities or futures license of signatories to the IOSCO MMoU ：
a) Securities held as of December 31, 2019 of President Securities (BVI) Ltd ：

Securities types and name	Type	Number of shares	Carryingvalue	Carryingvalue	Expressed in U.S. Dollars Fair vaule	Expressed in U.S. Dollars Fair vaule
			Unit price 0.243 $ 0.083 0.061	Amount	Unitprice	Amount
Investments in associates	STOCK STOCK STOCK	182,600,000 23,400,000 1,000,000		44,441,252 $ 1,945,270 60,913 46,447,435 $	0.243 $ 0.083 0.061	44,441,252 $ 1,945,270 60,913 46,447,435 $
President Securities (HK) Ltd. President Wealth Management (HK) Ltd. President Securities (Nominee) Ltd. Total

b) Derivative financial instrument transactions and the source of capital of President Securities (BVI) Ltd.: None.
c) Revenue from engagement in cosultation on assets management business, service contents and litigation ： None.

248

d) Balance sheets

PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS DECEMBER 31, 2019 AND 2018

Assets		December 31,2019	December 31,2019	December 31,2019		December 31,2018	December 31,2018	December 31,2018	Liabilities and shareholders’equity		December 31,	December 31,	Expressed in U.S. 2019 December 31,	Expressed in U.S. 2019 December 31,	Expressed in U.S. 2019 December 31,	Expressed in U.S. 2019 December 31,	dollars 2018
		Amount		%		Amount		%			Amount		%		Amount		%
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Other receivables Total current assets Investment in associates Total assets		30,135,890 $ - 195,869 30,331,759 46,447,436 76,779,195 $		39 - 1 40 60 100		25,277,023 $ 4,090,016 194,910 29,561,949 45,267,338 74,829,287 $		34 6 - 40 60 100	Current liabilties Other payables Total liabilities Shareholders’equity Share capital Capital reserve Retained earnings Retained earnings Other equity Exchange differences on translation of foreign financial statements Total shareholders’ equity Total liabilities and shareholders’ equity		3,565 $ 3,565 67,746,000 757,813 7,702,523 569,294 76,775,630 76,779,195 $		- - 88 1 - - 89 100		3,563 $ 3,563 67,746,000 757,813 6,016,267 305,644 74,825,724 74,829,287 $		- - 91 1 8 - 100 100

249

PRESIDENT WEALTH MANAGEMENT (HK) LTD. BALANCE SHEETS DECEMBER 31, 2019 AND 2018

Assets		December 31,2019	December 31,2019	December 31,2019		December 31,2018	December 31,2018	December 31,2018	Liabilities and shareholders’equity		December 31,	December 31,	2019		Expressed in HK dollar December 31,2018	Expressed in HK dollar December 31,2018	Expressed in HK dollar December 31,2018
		Amount		%		Amount		%			Amount		%		Amount		%
Current assets Cash and cash equivalents Other receivables Total current assets Total assets		15,116,479 $ 55,378 15,171,857 15,171,857 $		100 - 100 100		14,943,066 $ 50,492 14,993,558 14,993,558 $		100 - 100 100	Current liabilities Other payables Total liabilities Shareholders’ equity Share capital Retained earnings (accumulated deficit) Total shareholders’ equity Total liabilities and shareholders’ equity	20,075 $ 20,075 23,400,000 8,248,218) ( 15,151,782 15,171,857 $		- - 154 54) ( 100 100		20,075 $ 20,075 23,400,000 8,426,517) ( 14,973,483 14,993,558 $		- - 156 56) ( 100 100

250

PRESIDENT SECURITIES (NOMINEE) LTD. BALANCE SHEETS DECEMBER 31, 2019 AND 2018

Assets		December 31,2019	December 31,2019	December 31,2019		December 31,2018	December 31,2018	December 31,2018	Liabilities and shareholders’equity		December 31,	December 31,	2019		Expressed in HK dollar December 31,2018	Expressed in HK dollar December 31,2018	Expressed in HK dollar December 31,2018
		Amount		%		Amount		%			Amount		%		Amount		%
Current assets Cash and cash equivalents Other receivables Total current assets Total assets		491,537 $ 109 491,646 491,646 $		100 - 100 100		509,539 $ 1,516 511,055 511,055 $		100 - 100 100	Current liabilities Other payables Total liabilities Shareholders’ equity Share capital Retained earnings (accumulated deficit) Total shareholders’ equity Total liabilities and shareholders’ equity	17,190 $ 17,190 1,000,000 525,544) ( 474,456 491,646 $		4 4 203 107) ( 96 100		17,190 $ 17,190 1,000,000 506,135) ( 493,865 511,055 $		3 3 196 99) ( 97 100

251

e) Statements of comprehensive income

PRESIDENT SECURITIES (BVI) LTD. STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

							Expressed in U.S. dollars	Expressed in U.S. dollars	Expressed in U.S. dollars
		December 31,2019					December 31,2018
Accounts		Amount		%			Amount		%
Expenditures
Employee benefits	($	49,953)	(		3)	($	49,965)	(	3)
Other operating expenses	(	18,574)	(		1)	(	18,427)	(	1)
Total expenditures and expenses	(	68,527)	(		4)	(	68,392)	(	4)
Non-operating gains and losses
Share of the profit or loss of associates and joint
ventures accounted for using the equity method		916,448			54		1,174,066		67
Other gains and losses		838,335			50		650,116		37
Total non-operating gains and losses		1,754,783			104		1,824,182		104
Profit before tax		1,686,256			100		1,755,790		100
Income tax expense		-			-		-		-
Net income	$	1,686,256			100	$	1,755,790		100

252

PRESIDENT WEALTH MANAGEMENT (HK) LTD STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

						Expressed	Expressed	in HK dollars
		December 31,2019				December 31,2018
Accounts		Amount		%		Amount		%
Expenditures
Other operating expenses	($	43,730)	(	25)	($	41,570)	(	30)
Total expenditures and expenses	(	43,730)	(	25)	(	41,570)	(	30)
Non-operating gains and losses
Other gains and losses		222,028		125		179,886		130
Profit before tax		178,298		100		138,316		100
Income tax expense		-		-		-		-
Net income	$	178,298		100	$	138,316		100

253

PRESIDENT SECURITIES (NOMINEE) LTD. STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

						Expressed	in HK dollars
		December 31,2019				December 31,2018
Accounts		Amount		%		Amount	%
Expenditures
Other operating expenses	($	25,071)		129	($	24,590)	128
Total expenditures and expenses	(	25,071)		129	(	24,590)	128
Non-operating gains and losses
Other gains and losses		5,662	(	29)		5,447 (	28)
Profit (loss) before tax	(	19,409)		100	(	19,143)	100
Income tax expense		-		-		-	-
Net income (loss)	($	19,409)		100	($	19,143)	100

f) Transactions between related parties and foreign business ： None.

3) Information of overseas branches and representative office

Overseas branches and representative office	Nationality	Date of registration	Reference number and the date of approval letter given by Securities and Futures Bureau of FSC	Main business activities	Operating income	(Loss) profit before tax (Note 1)	Assignment of workingcapital	Assignment of workingcapital	Assignment of workingcapital	Assignment of workingcapital	Material transaction account with head office	Note
							Balance on January 1, 2019	Increase of working capital	Deduction of working capital	Balance on December 31, 2019
Representative office of President Securities Corp. in Xiamen	Xiamen	2008.08.22	2008.01.21 Jing-Guan- Zheng-Chuan Letter No.0960073542	Non-operating activities of securities business consultation, contact, and market survey	-	($ 6,799)	-	-	-	-	-	-

Note 1: Operating expenses generated by the representative office.

4) Disclosure of investment in Mainland China `：` Not applicable

254

PRESIDENT SECURITIES CORPORATION AND

SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2019 AND 2018

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.

255

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR19003670

To the Board of Directors and Shareholders of President Securities Corporation

Opinion

We have audited the accompanying consolidated balance sheets of President Securities Corporation and subsidiaries as at December 31, 2019 and 2018, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of President Securities Corporation and subsidiaries as at December 31, 2019 and 2018, 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 Firms”, and “Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants” , 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 Securities Corporation and subsidiaries in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

256

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2019. 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.

The key audit matters of the consolidated financial statements for the year ended December 31, 2019 are as follows:

Fair value measurement of unlisted stocks without active market

Description

Please refer to Note 4(8) for the accounting policies on unlisted stocks without active market (shown as “financial assets at fair value through other comprehensive income”) and Note 5(2) for details of critical accounting judgements, estimates and assumption uncertainty. As at December 31, 2019, the unlisted stocks without active market held by the President Securities Corporation and subsidiaries totalled $591,596 thousand and were shown as “financial assets at fair value through other comprehensive income” (Level 3 fair value).

Due to the lack of an active market, the fair value of the unlisted stocks held by the President Securities Corporation and subsidiaries was determined using valuation method. Management measured their fair value by using comparable listed companies in the market approach. The main assumption of the market approach is calculation based on the latest published price-to-book ratio of comparable listed companies in similar industries, and considering discounts on market liquidity or risk particularity.

Above-mentioned estimation of fair value involves various assumptions and material unobservable inputs, which has high uncertainty and relies on the subjective judgement of management. Any changes in judgements and estimates may affect the ultimate result of accounting estimates and have an impact on the financial statements of the President Securities Corporation and subsidiaries. Thus, we have included the fair value measurement of unlisted stocks without active market as a key audit matter in our audit.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

Obtained an understanding and assessed policy documents, internal control system, fair value

257

measurement models and approval processes that are related to fair value measurement of unlisted stocks;

Ascertained whether the measurement methods used by the management are commonly used by the industry;
Assessed the reasonableness of parameter of similar companies used by management;
Examined inputs and calculation formulas used in valuation models and agreed such data to supporting documents.

Impairment assessment of investments accounted for under equity method

Description

Please refer to Note 4(14) for accounting policies on investments accounted for under equity method and its impairment, Note 5(2) for the uncertainty of accounting estimates and assumptions applied on asset impairment, and Note 6(12) for details of investments accounted for under equity method.

President Securities Corporation and subsidiaries held 42.49% of equity of Uni-President Asset Management Corp. which was accounted for under equity method. As of December 31, 2019, the amount was $578,853 thousand. Impairment assessment is based on the expected future cash flow of the investee, discounted at an appropriate discount rate, to measure the recoverable amount of the cash generating unit.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

Obtained the impairment assessment report prepared by an external valuation expert who was commissioned by the management;
Assessed the reasonableness of expected future cash flows, discount rate and other significant assumptions applied in the cash flow model;
Inspected valuation model parameters, formula setting and the accuracy of calculation.

258

Other matter – Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only financial statements of President Securities Corporation, as at and for the years ended December 31, 2019 and 2018.

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 Firms”, “Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants”, and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statement that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including audit committee, are responsible for overseeing President Securities Corporation and subsidiaries’ financial reporting process.

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 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.

259

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of President Securities Corporation and subsidiaries’ internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on President Securities Corporation and subsidiaries’ ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the 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 Securities Corporation and 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 Securities Corporation and subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

260

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, 2019 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Lin, Se-Kai

Independent Accountants

Hsiao, Chin-Mu

For and on behalf of PricewaterhouseCoopers, Taiwan March 26, 2020

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and financial performance 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.

261

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2019 AMOUNT % `$` `6,520,146` `7` `44,512,465` `46` `-` `-` `-` `-` `10,024,189` `10` `102,545` `-` `88,759` `-` `517,809` `1` `13,735,712` `14` `101,043` `-` `543,171` `1` `697` `-` `12,184,588` `13` `22,557` `-` `105,548` `-` `1,048` `-` `1,621,697` `2` `90,081,974` `94` `71,296` `-` `591,596` `1` `578,853` `1` `2,443,964` `3` `221,669` `-` `272,603` `-` `129,160` `-` `135,265` `-` `1,228,020` `1` `5,672,426` `6` `$` `95,754,400` `100`	December 31, 2018	December 31, 2018
	AMOUNT `$` `6,520,146` `44,512,465` `-` `-` `10,024,189` `102,545` `88,759` `517,809` `13,735,712` `101,043` `543,171` `697` `12,184,588` `22,557` `105,548` `1,048` `1,621,697` `90,081,974` `71,296` `591,596` `578,853` `2,443,964` `221,669` `272,603` `129,160` `135,265` `1,228,020` `5,672,426` `$` `95,754,400`	AMOUNT `$` `5,932,669` `27,680,473` `296,304` `93,193` `8,020,488` `4,402` `8,387` `-` `11,591,302` `78,316` `785,431` `1,185` `8,726,852` `19,116` `31,973` `5,542` `1,640,223` `64,915,856` `66,354` `604,579` `569,693` `2,442,370` `-` `274,703` `124,210` `125,448` `1,258,060` `5,465,417` `$` `70,381,273`	%
110000 Current assets 111100 Cash and cash equivalents 112000 Financial assets at fair value through profit or loss - current 113200 Financial assets at fair value through other comprehensive income - current 114010 Bonds purchased under resale agreements 114030 Margin loans receivable 114040 Refinancing security deposits 114050 Receivables from refinance guaranty 114060 Receivable of securities business money lending 114070 Customer margin account 114090 Receivables from security lending 114100 Security lending deposits 114110 Notes receivable 114130 Accounts receivable 114150 Prepayments 114170 Other receivables 114600 Current tax assets 119000 Other current assets 110000 Total current assets 120000 Noncurrent assets 122000 Financial assets at fair value through profit or loss - noncurrent 123200 Financial assets at fair value through other comprehensive income - noncurrent 124100 Investments accounted for under equity method 125000 Property and equipment, net 125800 Right-of-use assets 126000 Investment property 127000 Intangible assets 128000 Deferred tax assets 129000 Other assets - noncurrent 120000 Total noncurrent assets 906001 Total Assets			`9` `39` `1` `-` `11` `-` `-` `-` `17` `-` `1` `-` `12` `-` `-` `-` `2`
			`92`
			`-` `1` `1` `4` `-` `-` `-` `-` `2`
			`8`
			`100`

(Continued)

262

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	December 31, 2019 AMOUNT % `$` `2,964,959` `3` `9,596,704` `10` `848,628` `1` `20,956,256` `22` `1,558,717` `2` `1,888,832` `2` `56,004` `-` `13,713,667` `14` `633` `-` `12,456,602` `13` `2,373` `-` `378,293` `-` `1,347,681` `2` `2,743,866` `3` `203,745` `-` `82,407` `-` `21,893` `-` `68,821,260` `72` `4,180` `-` `134,780` `-` `12,894` `-` `15,514` `-` `167,368` `-` `68,988,628` `72` `13,723,900` `14` `91,261` `-` `2,876,769` `3` `7,130,830` `7` `2,355,105` `3` `521,815` `1` `26,699,680` `28` `66,092` `-` `26,765,772` `28` `$` `95,754,400` `100`	December 31, 2018	December 31, 2018
	AMOUNT `$` `2,964,959` `9,596,704` `848,628` `20,956,256` `1,558,717` `1,888,832` `56,004` `13,713,667` `633` `12,456,602` `2,373` `378,293` `1,347,681` `2,743,866` `203,745` `82,407` `21,893` `68,821,260` `4,180` `134,780` `12,894` `15,514` `167,368` `68,988,628` `13,723,900` `91,261` `2,876,769` `7,130,830` `2,355,105` `521,815` `26,699,680` `66,092` `26,765,772` `$` `95,754,400`	AMOUNT `$` `939,879` `-` `866,097` `15,066,599` `1,767,269` `2,007,202` `621` `11,574,634` `-` `8,289,115` `975` `362,578` `916,900` `2,687,009` `136,729` `-` `21,281` `44,636,888` `-` `-` `16,073` `15,865` `31,938` `44,668,826` `13,904,281` `142,702` `2,755,737` `6,945,453` `1,278,472` `619,340` `25,645,985` `66,462` `25,712,447` `$` `70,381,273`	%
210000 Current liabilities 211100 Short-term loans 211200 Commercial papers payable 212000 Financial liabilities at fair value through profit or loss - current 214010 Bonds sold under repurchase agreements 214040 Deposits on short sales 214050 Short sale proceeds payable 214070 Guarantee deposit received on borrowed securities 214080 Futures traders' equity 214090 Equity for each customer in the account 214130 Accounts payable 214150 Advance receipts 214160 Collections on behalf of third parties 214170 Other payables 214200 Other financial liabilities - current 214600 Current tax liability 216000 Current lease liabilities 219000 Other current liabilities 210000 Total current liabilities 220000 Noncurrent liabilities 225100 Non-current provisions 226000 Non-current lease liabilities 228000 Deferred tax liability 229000 Other liabilities-noncurrent 220000 Total noncurrent liabilities 906003 Total Liabilities 300000 Equity attributable to owners of the parent company 301000 Capital 301010 Common stock 302000 Capital reserve 304000 Retained earnings 304010 Legal reserve 304020 Special reserve 304040 Unappropriated earnings 305000 Other equity interest 300000 Total 306000 Non-controlling interests 906004 Total Equity 906002 Total liabilities and equity			`1` `-` `1` `21` `3` `3` `-` `16` `-` `12` `-` `1` `1` `4` `-` `-` `-`
			`63`
			`-` `-` `-` `-`
			`-`
			`63`
			`20` `-` `4` `10` `2` `1`
			`37`
			`-`
			`37`
			`100`

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

263

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars)

Items Yearsended December 31
2019
2018
Notes
AMOUNT
%
AMOUNT
%
6(30)
$
2,236,426
31
$
2,551,963
44
6(31)
62,811
1
53,228
1
22,192
-
18,665
-
6(32)
2,827,800
40
255,087
4
75,766
1
74,814
1
6(33)
1,206,807
17
1,308,644
23
312,919
4
209,781
4
6(34)
741,327
10 (
352,009) (
6)
6(35)
37,413
1
27,788
1
6(36)
(
21,418 )
-
22,067
-
6(37)
15,309
- (
24,289)
-
(
2,377 )
-
-
-
6(38)
93,864
1
1,060,385
18
6(39)
(
892,686 ) (
12)
396,874
7
6(40)
(
6,497 )
- (
63,261) (
1)
6(41)
432,741
6
234,539
4
7,142,397
100
5,774,276
100
6(42)
(
534,451 ) (
8) (
512,618) (
9)
6(43)
(
531,821 ) (
7) (
414,308) (
7)
(
84,424 ) (
1) (
83,305) (
1)
(
94,747 ) (
1) (
119,731) (
2)
(
39 )
- (
46)
-
6(44)
(
2,394,137 ) (
34) (
2,155,691) (
37)
6(45)
(
205,625 ) (
3) (
93,698) (
2)
6(46)
(
1,235,351 ) (
17) (
1,373,736) (
24)
(
5,080,595 ) (
71) (
4,753,133) (
82)

400000Revenues
401000
Brokerage handling fee revenue
404000
Revenues from underwriting
business
406000
Gain on wealth management
410000
Gain on sale of operating
securities
421100
Revenue from providing agency
service for stock affairs
421200
Interest income
421300
Dividend income
421500
Valuation gain (loss) on
operating securities at fair value
through profit or loss
421600
Gain on covering of borrowed
securities and bonds with resale
agreements-short sales
421610
Valuation (loss) gain on
borrowed securities and bonds
with resale agreements-short
sales at fair value through profit
or loss
421750
Realized gain (loss) on financial
assets measured at fair value
through other comprehensive
income - bonds
422000
Loss on issuance of ETNs
422200
Gain from issuance of call (put)
warrants
424400
(Loss) gain from derivatives
425300
Impairment gain and reversal of
impairment loss
428000
Other operating income
Total revenues
500000Expenses
501000/
502000/
503000
Handling charges
521200
Interest expenses
524100
Futures commission expense
524300
Expense of clearing and
settlement
528000
Other operating expenditure
531000
Employee benefits expense
532000
Depreciation and amortization
533000
Other operating expenses
Total expenditures and
expenses

(Continued)

264

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars)

Items	Years ended December 31	Years ended December 31
	2019	2018
		AMOUNT `$` `1,021,143` `101,586` `314,158` `1,436,887` `219,254) (` `$` `1,217,633` `$` `9,671` `37,273` `4,915` `10,990` `85,342` `2,223)` `$` `145,968` `$` `1,363,601` `$` `1,210,323` `$` `7,310` `$` `1,355,594` `$` `8,007` `$`
Operating profit 601000 Share of the profit or loss of associates and joint ventures accounted for under the equity method 602000 Other gains and losses 902001Profit before tax 701000 Income tax expense 902005Net income Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 805510 Remeasurements of defined benefit plans 805540 Unrealized (loss) gain from investments in equity instruments at fair value through other comprehensive income 805550 Other comprehensive gain of associates and joint ventures accounted for under equity method 805599 Income tax benefit relating to components of other comprehensive income Items may be reclassified to profit of loss subsequently 805610 Translation (loss) gain on the financial statements of foreign operating entities 805615 Unrealized loss from investments in debt instruments at fair value through other comprehensive income 805000 Current other comprehensive (loss) income (post-tax) 902006Total current comprehensive income Income attributable to: 913100 Parent company 913200 Non-controlling interest Current comprehensive income attributable to: 914100 Parent company 914200 Non-controlling interests Earnings per share 975000 Basic earnings per share (in dollars) 985000 Diluted earnings per share (in dollars)
		`$`

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

265

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

Notes					Equityattributablet	o	owners of the parent						Non-controlling interests	Total equity
	Common stock	Capital reserve		Retained earnings				Other equityinterest		Treasuryshares		Total
			Legal reserve	Special reserve	Unappropriated earnings	s	Translation gain and loss on the financial tatements of foreign operatingentities	Unrealized gain or loss on financial assets measured at fair value through other comprehensive income	Unrealized gain or loss on financial instruments
6(28) 6(29) 6(28) 6(28) 6(29) 6(28) 6(28)	`$` `13,904,281` `-` `13,904,281` `-` `-` `-` `-` `-` `-` `-` `$` `13,904,281` `$` `13,904,281` `-` `-` `-` `-` `-` `-` `-` `(` `180,381 )` `-` `$` `13,723,900`	`$ 142,702` `-` `142,702` `-` `-` `-` `-` `-` `-` `-` `$ 142,702` `$ 142,702` `-` `-` `-` `-` `-` `-` `-` `(` `51,441 )` `-` `$` `91,261`	`$` `2,503,765` `-` `2,503,765` `-` `-` `-` `251,972` `-` `-` `-` `$` `2,755,737` `$` `2,755,737` `-` `-` `-` `121,032` `-` `-` `-` `-` `-` `$` `2,876,769`	`$` `6,373,559` `-` `6,373,559` `-` `-` `-` `-` `571,894` `-` `-` `$` `6,945,453` `$` `6,945,453` `-` `-` `-` `-` `185,377` `-` `-` `-` `-` `$` `7,130,830`	`$ 2,519,721` `17,538` `2,537,259` `1,210,323` `23,270` `1,233,593` `(` `251,972 )` `(` `571,894 )` `(` `1,668,514 )` `-` `$ 1,278,472` `$ 1,278,472` `2,368,536` `(` `26,099 )` `2,342,437` `(` `121,032 )` `(` `185,377 )` `(` `959,395 )` `-` `-` `-` `$ 2,355,105`		`($` `66,091 )` `-` `(` `66,091 )` `-` `85,342` `85,342` `-` `-` `-` `-` `$` `19,251` `$` `19,251` `-` `(` `77,467 )` `(` `77,467 )` `-` `-` `-` `-` `-` `-` `($` `58,216 )`	`$` `-` `563,430` `563,430` `-` `36,659` `36,659` `-` `-` `-` `-` `$` `600,089` `$` `600,089` `-` `(` `20,058 )` `(` `20,058 )` `-` `-` `-` `-` `-` `-` `$` `580,031`	`$` `7,717` `(` `7,717 )` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-` `$` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-`		`$` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-` `$` `-` `-` `-` `-` `-` `-` `-` `(` `231,822 )` `231,822` `-` `$` `-`	`$` `25,385,654` `573,251` `25,958,905` `1,210,323` `145,271` `1,355,594` `-` `-` `(` `1,668,514 )` `-` `$` `25,645,985` `$` `25,645,985` `2,368,536` `(` `123,624 )` `2,244,912` `-` `-` `(` `959,395 )` `(` `231,822 )` `-` `-` `$` `26,699,680`	`$` `49,308` `13,293` `62,601` `7,310` `697` `8,007` `-` `-` `-` `(` `4,146 )` `$` `66,462` `$` `66,462` `5,299` `(` `672 )` `4,627` `-` `-` `-` `-` `-` `(` `4,997 )` `$` `66,092`	`$` `25,434,962` `586,544` `26,021,506` `1,217,633` `145,968` `1,363,601` `-` `-` `(` `1,668,514 )` `(` `4,146 )` `$` `25,712,447` `$` `25,712,447` `2,373,835` `(` `124,296 )` `2,249,539` `-` `-` `(` `959,395 )` `(` `231,822 )` `-` `(` `4,997 )` `$` `26,765,772`

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

266

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Income and expenses having no effect on cash flows
Depreciation

Amortization

Impairment gain and reversal of impairment loss

(Gain) loss on valuation of trading securities

Loss (gain) on valuation of borrowed securities and bonds
with resale agreements

Financial expense

Interest income (include financial income)

Dividend income
Share of the profit of associates and joint ventures accounted
for under the equity method

Loss on disposal of property and equipment

(Gain) loss on valuation of non-operating financial instrument
Gain from lease modification
Changes in assets/liabilities relating to operating activities
Changes in operating assets
Financial assets at fair value through profit or loss
Financial assets at fair value through other comprehensive
income - current
Bonds purchased under resale agreements
Margin loans receivable
Refinancing security deposits
Receivables from refinance guaranty
Receivable of securities business money lending
Customer margin account
Receivables from security lending
Security lending deposits
Notes receivable
Accounts receivable
Prepayments
Other receivables
Other current assets
Net changes in liabilities relating to operating activities
Bonds sold under repurchase agreements
Financial liabilities at fair value through profit or loss -
current
Deposits on short sales
Short sale proceeds payable
Guarantee deposit received on borrowed securities
Futures traders’ equity
Equity for each customer in the account
Accounts payable
Advance receipts
Collections on behalf of third parties
Other payables
Other financial liabilities - current
Other current liabilities Years ended December 31
Notes
2019
2018
$
2,557,808 $
1,436,887
6(45)
181,005
71,559
6(45)
24,620
22,139
6(40)
7,170
63,977
6(34)
(
741,327 )
352,009
6(36)
21,418 (
22,067 )
6(43)
531,821
414,308
6(33)(47)
(
1,395,998 ) (
1,465,878 )
(
339,434 ) (
235,041 )
6(12)
(
107,016 ) (
101,586 )
6(13)
930
17
6(47)
(
10,859 )
9,166
(
4 )
-
(
16,100,206 )
10,642,991
290,559
741,883
93,193 (
93,193 )
(
2,023,767 )
3,417,807
(
98,143 )
74,948
(
80,372 )
58,773
(
517,809 )
-
(
2,144,410 ) (
1,673,213 )
(
22,727 )
10,002
242,260 (
39,549 )
488
286
(
3,033,875 )
2,319,284
(
6,151 )
11,633
(
74,594 )
27,947
18,526
152,641
5,889,657 (
5,845,059 )
(
38,887 ) (
318,237 )
(
208,552 ) (
94,678 )
(
118,370 ) (
190,454 )
55,383 (
224,774 )
2,139,033
1,681,826
633
-
3,721,592 (
992,369 )
1,398
20
15,715 (
77,000 )
434,820 (
268,655 )
56,857 (
512,289 )
612
9,329

(Continued)

267

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

Cash (outflow) inflow generated from operations
Interest received
Dividends received
Income tax paid
Net cash flows (used in) from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment

Proceeds from disposal of property and equipment
Acquisition of intangible assets

Decrease (increase) in other non-current assets
Increase in prepayment for equipment
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans
Increase (decrease) in commercial papers payable
Repayments principal portion of lease liabilities
Increase (decrease) in other non-current liabilities
Payments of cash dividends
Acquisition of treasury stocks

Interest paid
Changes in non-controlling interest
Net cash flows from (used in) financing activities
Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year Years ended December 31
Notes
2019
2018
( $
10,777,003 ) $
9,365,390
1,452,332
1,510,111
419,418
307,887
(
119,414 ) (
353,696 )
(
9,024,667 )
10,829,692
6(13)
(
49,102 ) (
47,404 )
24
-
6(17)
(
14,353 ) (
19,004 )
17,017 (
50,517 )
(
61,939 ) (
38,039 )
(
108,353 ) (
154,964 )
2,025,081 (
5,505,439 )
9,600,000 (
3,650,000 )
(
103,551 )
-
2,778 (
50,053 )
(
959,395 ) (
1,668,514 )
6(28)
(
231,822 )
-
(
528,228 ) (
412,594 )
(
4,997 ) (
4,146 )
9,799,866 (
11,290,746 )
(
79,369 )
85,342
587,477 (
530,676 )
5,932,669
6,463,345
$
6,520,146 $
5,932,669

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

268

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

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

1. HISTORY AND ORGANIZATION

1) President Securities Corporation (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.) on December 17, 1988, and was renamed as President Securities Corporation on March 4, 1989. The Company started commercial operations on April 3, 1989. As of December 31, 2019, the Company had 31 operating branches (including the Head Office), and established Offshore Securities Unit in July 2014.
2) The Company and subsidiaries (collectively referred herein as the “Group”) are primarily engaged in underwriting of securities, dealing or brokerage business of securities at the securities exchange markets and business premises, registration and transfer agency service for securities, margin loans and short sales business of securities, securities lending and borrowing business, futures introducing brokerage services, futures dealing, issuance of call (put) warrants, new financial instrument transactions, wealth management business, and trust business.
3) The Company’s shares are listed on the Taiwan Stock Exchange.
4) The number of employees of the Group were 1,693 and 1,722 as of December 31, 2019 and 2018, respectively.
THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED
FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance the Board of Directors on March 26, 2020.

APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS 1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

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

269

New Standards,Interpretations and Amendments	Effective Date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative compensation’ IFRS 16, ‘Lease’ Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ Amendments to IAS 28, ‘Long-term interests in associate 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.

IFRS 16, ‘Leases’

A. 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.
B. The Group has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as endorsed by the FSC. Accordingly, the Group increased ‘right-ofuse asset’ by $214,658, increased ‘lease liability’ by $212,027, and decreased prepayments by $2,631 and this had no effect on retained earnings with respect to the lease contracts of lessees on January 1, 2019.
C. The Group has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16:
(A) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4.
(B) The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.
(C) The accounting for operating leases whose period will end before December 31, 2019 as short-term leases and accordingly, rent expense of $3,339 was recognized for the year ended December 31, 2019.
(D) The exclusion of initial direct costs for the measurement of ‘right-of-use asset’.
(E) The use of hindsight in determining the lease term where the contract contains

270

options to extend or terminate the lease.

D. The Group calculated the present value of lease liabilities by using the weighted average incremental borrowing interest rate range from 0.767% to 2.655%.
E. The Group recognized lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognized as of January 1, 2019 is as follows:

lease liabilities recognized as of January 1, 2019 is as follows:
Operating lease commitments disclosed by applying IAS 17 as
at December 31, 2018	$	217,338
Less: Short-term leases	(	2,749)
Total lease contracts amount recognised as lease liabilities by
applying IFRS 16 on January 1, 2019		214,589
Incremental borrowing interest rate at the date of
initial application		0.767%~2.655%
Lease liabilities recognised as at January 1, 2019 by applying
IFRS 16	$	212,027

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

New standards, interpretations and amendments endorsed by FSC effective from 2020 are as follows:

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 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’	January 1, 2020 January 1, 2020 January 1, 2020

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

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

New standards, interpretations and amendments issued by IASB but not yet included in the

IFRSs as endorsed by the FSC are as follows:

271

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies 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”, “ Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants”, 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, these consolidated financial statements have been prepared under the historical cost convention:
(A) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
(B) Financial assets at fair value through other comprehensive income.
(C) Defined benefit liabilities recognized based on the net amount of pension fund assets less 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.

272

3) Basis of consolidation
A. Basis for preparation of consolidated financial statements:
- (A) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
- (B) Intercompany 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 non-controlling interests having a deficit balance.
- (D) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the noncontrolling 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.

273

B. Subsidiaries included in the consolidated financial statements:

Name of Investor	Name of Subsidiary	Main Business Activities Futures brokerage Securities investment consulting Securities dealer, brokerage, underwriting and consulting Securities investment and holding company Insurance Agent Consultation of investment management and venture capital; other unprohibited or unrestricted businesses beyond the permit Securities dealer, brokerage, underwriting and consulting Wealth management Nominee Service	Ownership (%)	Ownership (%)
			December 31,2019 96.69% 100% 5.19% 100% 100% 100% 94.81% 100% 100%	December 31,2018
The Company `〃` `〃` `〃` `〃` `〃` President Securities (BVI) `〃` `〃`	President Futures Corp. (President Futures) President Capital Management Corp. (President Capital Management) President Securities (HK) Ltd.(President Securities (HK)) (Note 1) President Securities (BVI) Ltd.(President Securities (BVI)) President Insurance Agency Corp. (President Insurance Agency) PSC Venture Capital Investment Company Limited (President Venture Capital) President Securities (HK) Ltd. (Note) President Wealth Management (HK) Ltd.(President Wealth Management (HK)) President Securities (Nominee) Ltd. (President Securities (Nominee))			96.69% 100% 5.19% 100% 100% 100% 94.81% 100% 100%

274

Note : The Company holds all the shares of President Securities (HK) with President Securities (BVI).

4) 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;
- (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.
5) Translation of foreign currency transactions
A. Foreign currency translation and presentation
- Items included in the consolidated financial statements of the Group are measured using the currency of the primary economic environment in which the Group operates (the “functional currency”). Functional currency and bookkeeping currency of the Company and its domestic subsidiaries are all New Taiwan Dollars; functional currency and bookkeeping currency of overseas subsidiaries-President Securities (HK), President Wealth Management (HK), and President Securities (Nominee) are Hong Kong Dollars; and functional currency and bookkeeping currency of President Securities (BVI) are US Dollars. The consolidated financial statements are presented in New Taiwan Dollars.

275

B. Foreign currency transactions and balances
- Foreign currency transactions denominated in a foreign currency or required to settle in a foreign are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
- Monetary assets and liabilities denominated in foreign currencies are translated by the closing exchange rate at balance sheet date. The closing exchange rate is determined by the market exchange rate. Non-monetary assets and liabilities denominated in foreign currencies which are carried at historical cost are translated by the exchange rates prevailing at the original transaction date. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are retranslated 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.
C. Translation of foreign operations
- The operating results and financial position of all the group entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- (A) Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
- (B) Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
- (C) All resulting exchange differences are recognized in other comprehensive income.
6) Cash and cash equivalents
A. In the consolidated statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with banks, and other short-term highly liquid investments.
B. 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 and financial liabilities 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 trade date accounting.

276

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 trade 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, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.
9) Notes and accounts receivable, other receivables and margin loans receivable
A. Accounts and notes receivable and margin loans receivables 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) Bonds sold under repurchase agreements and bonds purchased under resale agreements Bond transactions under repurchase or resale agreements are stated at the amount of actual payment or receipt. When transactions of bonds with a condition of resale agreements occur, the actual payment or receipt shall be recognized in ‘bonds purchased under resale

277

agreements’ under current assets. When transactions of bonds with a condition of repurchase agreements occur, the actual payment or receipt shall be recognized in ‘bonds sold under repurchase agreements’ under current liabilities. Any difference between the actual payment/receipt and predetermined redemption (repurchase) price is recognized in interest income or interest expense.

11) Impairment of financial assets

For debt instruments measured at fair value through other comprehensive income, 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.

12) Derecognition of financial instruments

A. Derecognition of financial assets

The Group derecognizes a financial asset when one of the following conditions is met:

(A) The contractual rights to receive cash flows from the financial asset expire.
(B) The contractual rights to receive cash flows from the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
(C) The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.
B. Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability specified in the contract is discharged or cancelled or expires.

13) Offsetting financial instruments

14) Investments accounted for under the equity method

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.

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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 statutory/constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity that are not recognized in profit or loss or other comprehensive income of the associate and such changes not affecting the Group’s ownership percentage of the associate, the Group recognizes its share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.
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. When there are objective evidences of impairment at balance sheet date, the Group considers the whole investment carrying amount as single asset, and compares its recoverable amount (value in use or fair value less costs of disposal) with the carrying amount, to test its impairment. Value in use is determined by the present value of the Group’s share of the expected future cash flow from the associates. If the recoverable amount is less than its carrying amount, an impairment loss should be recognized. The loss will not be allocated to any of the components (including goodwill), which comprise the carrying amount of the investment. An impairment loss recognized in prior periods shall be reversed if circumstances of impairment no longer exist or have decreased.

15) Property and equipment

A. Property and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
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.
C. Land is not depreciated. Other property and equipment are subsequently measured using the cost model and depreciated using the straight-line method to allocate their cost over their estimated useful lives.

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D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property and equipment are as follows:

Useful lives

Buildings 5~50 years Furniture and fixtures 4~10 years Computer equipment 3~5 years Electrical equipment 3~10 years Leasehold improvements 5 years

E. When an asset is sold or retired, the cost and accumulated depreciation are removed from the respective accounts and the resulting gain or loss is included in current operations.

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

Effective 2019

A. Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of low value assets, lease payments are recognized as an expense on a straightline basis over the lease term.
B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are mainly comprised of fixed payments.
The Group subsequently measures the lease liability at amortized cost using the interest method and recognizes interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognized as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.
C. At the commencement date, the right-of-use asset is stated at cost comprising mainly the amount of the initial measurement of lease liability.
The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognized as an adjustment to the right-of-use asset.

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17) Investment property

A. Investment property of the Group is the property held either to earn long-term rental income or for capital appreciation or for both.
B. Part of the property may be held by the Group for self-use purpose and the remaining are used to generate rental income or capital appreciation. If the property held by the Group can be sold individually, then the accounting treatment should be made respectively. If each part of the property cannot be sold individually and the self-use proportion is not material, then the property is deemed as investment property in its entirety.
C. When the future economic benefit related to the investment property is highly likely to flow into the Group and the costs can be reliably measured, the investment property shall be recognized as assets. When the future economic benefit generated from subsequent costs is highly likely to flow into the entity and the costs can be reliably measured, the subsequent expenses of the assets shall be capitalized. All maintenance cost are recognized in profit or loss as incurred.
D. Investment property is subsequently measured using the cost model. Depreciated cost is used to calculate amortization expense after initial measurement. The depreciation method, remaining useful life and residual value should apply the same rules as applicable for property and equipment.

18) Intangible assets

A. The cost of computer software is amortized using the straight-line method over the useful lives based on acquisition cost, with an amortization period of 4 years.
B. Membership in a foreign futures exchange is stated at acquisition cost and has an indefinite useful life as it was assessed to generate continuous net cash inflow in the foreseeable future. It is not amortized, but is tested annually for impairment.
C. In accordance with IFRS 3 ‘Business combinations’ as endorsed by FSC, goodwill arises when the acquisition cost exceeds the fair value of identifiable assets and liabilities of the consolidated subsidiary on the consolidation date. The goodwill arising from the consolidated subsidiary is included in the intangible asset. Goodwill is tested annually for impairment and any impairment loss will be recognized when impairment occurs. Impairment losses on goodwill are not reversed.

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

281

loss is reversed. The increased carrying amount due to reversal 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, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use 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 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) Financial liabilities at fair value through profit or loss

A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.
B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognized in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognized in profit or loss.

21) Contingent liabilities

Contingent liability is a possible obligation that arises from past event, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Or it could be a present obligation as a result of past event but the payment is not probable or the amount cannot be measured reliably. The Group did not recognize any contingent liabilities but made appropriate disclosure in compliance with relevant regulations.

22) Employee benefits

A. Short-term employee benefits

B. 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

282

offer of redundancy benefits in exchange for the termination of employee. The Group recognized expense as it can no longer withdraw an offer of termination benefit or it recognizes relating 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.

C. Pensions
(A) Defined contribution plans

Effective July 1, 2005, the Group established the defined contribution plan for employees of R.O.C. nationality. The employees have the option to participate in the New Plan. Under the New Plan, the Company contributes monthly an amount equivalent to 6% of employees’ salaries to the employees’ personal pension accounts with the “Bureau of Labor Insurance”. Benefits accrued under the New Plan are portable upon termination of employment. Net defined benefit asset can only be recognized when there is a cash refund or elimination in the future accrued pension liabilities.

(B) Defined benefit plans
- a. In a defined benefit plan, the pension paid is determined based on the amount that an employee shall receive upon retirement, which could vary with age, work seniority and salary compensations. The Group recognizes the accrued pension obligations in the consolidated balance sheet based on the net amount of actuarial present value of defined benefit obligation less the fair value of fund, which is adjusted with the net of past service cost recognized as liabilities. Defined benefit obligation is assessed annually using projected unit credit method by the actuary. The present value of the defined benefit obligation is determined using the market yield of government bonds of a currency and term consistent with the currency and term of the employment benefit obligations.
- b. Remeasurement arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.
D. Employees’ remuneration and directors’ remuneration
Employees’ and directors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

23) Revenues and expenses

The Group’s revenues and expenses are recognized as incurred, which mainly include:

A. Gains (losses) on sale of securities, securities brokerage fees, and commissions on brokerage and trading are recognized on the transaction date.
B. Underwriting fees and related service charges: application fees are recognized upon collection; underwriting fees and service charges are recognized when the contract is completed.
C. Gains (losses) on futures contracts: The margin of futures transaction is recognized as

283

cost. Costs and expenses are recognized as incurred.

D. Operating expenses: operating expenses refer to required expenses invested in the Group’s operations, which primarily include employee benefit expense, depreciation and amortization, and other business and administrative expenses.
24) Income tax
A. Current income tax
- Income tax payable (refundable) is calculated on the basis of the tax laws enacted in the countries where a company operates and generates taxable income. Except for the transactions or other matters directly recognized in other comprehensive income or equity, in which cases the related income taxes in the period are recognized in other comprehensive income or directly derecognized from equity, all the others should be recognized as income or expense for the period.
B. Deferred income tax

Deferred income tax assets and liabilities are measured based on the tax rate of the anticipated period that the future assets realization or the liabilities settlement requires, which is based on the effective or existing tax rate at the consolidated balance sheet date. The carrying amounts and temporary differences of assets and liabilities included in the consolidated balance sheet are calculated using the liability method and recognized as deferred income tax. However, the deferred income tax is not accounted for if it arises from initial recognition 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 (loss). Deferred income tax assets are recognized only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. If the future taxable income is probable to provide unused loss carryforwards or deferred income tax credit which can be realized in the future, the proportion of realization is deemed as deferred income tax asset.

C. 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 operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions for income tax liabilities where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
D. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet

284

when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

25) Share capital

A. Incremental costs directly attributable to the issuance of new shares are shown as a deduction, net of tax, from equity. Dividends from common stocks are recognized as equity in the financial period in which they are approved by the Company’s shareholders. If the date of dividends declared is later than the consolidated balance sheet date, common stocks are disclosed in the subsequent events.
B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

26) Earnings per share

A. Earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the year after taking into consideration the retroactive effect of stock dividends and capital reserve capitalized.
B. When the Group calculates earnings per share, basic earnings per share and diluted earnings per share for all potential ordinary shares shall all be disclosed in accordance with IAS 33 “Earnings per share”.

27) Operating segments

The Group’s operating segments are reported in a manner consistent with the internal reports provided to the Chief Operating Decision-Maker. The Group’s performance of segment profit (loss) is assessed based on the profit (loss) before tax, but not segment income, assets and liabilities. The Chief Operating Decision-Maker is responsible for allocating resources and assessing performance of the operating segments.

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

1) As the consolidated financial statements of the Group may be affected by the adoption of accounting policy, accounting estimate and assumption, the Group’s management shall properly exercise its professional judgement, estimates, and assumptions on the information of the key risks that is obtained from other resources and could affect the carrying amounts of financial assets and liabilities in the next fiscal year while adopting critical accounting policies as stated in Note 4. Estimates and assumptions of the Group

285

are the best estimates made in compliance with IFRSs as endorsed by the FSC. Estimates and assumptions are made based on past experience and other factors deemed relevant; however, the actual results may differ from the estimates. The Group evaluates the estimates and assumptions on an ongoing basis and recognizes the adjustment of the estimates only in the period which is affected by the adjustment. If the adjustment simultaneously affects both the current and future periods, it should be recognized in both periods.

2) Relevant information on key assumptions to be made in the future, key sources of assumption uncertainty made at balance sheet date, and assumptions and estimates that may cause key risks that could affect the carrying amounts of financial assets and liabilities are as follows:
A. Fair value of financial instruments
- Financial instruments with no active market or quoted price use valuation technique to determine the fair value. Under such condition, fair value is assessed through the observable information or models of similar financial instruments. If there is no observable input available in a market, the fair value of financial instrument is assessed through appropriate assumptions. When valuation models are adopted to determine the fair value, all the models should be calibrated to ensure that the output can actually reflect actual information and market price. Models should try to take only observable information as much as possible.
B. Expected credit losses

(A)The criteria used to judge whether there is significant increase in credit risk.
(B)The selection of appropriate models and assumptions for measuring expected credit losses.

For judgements and estimations of the above expected credit losses, please refer to Note 12(2).

C. Impairment assessment on investment accounted for under equity method When there are impairment indicators that show the investments accounted for under equity method are impaired and the carrying amount can no longer be recovered, the Group will assess the impairment of the investment. The Group assesses its share of

286

the recoverable amount which is based on the discounted value of expected cash flow, and assess the reasonableness of relevant assumptions, including revenue growth rate, operating profit margin, net profit margin, financial forecast, and discount rate.

D. Impairment assessment of goodwill

The periodic impairment assessment of goodwill includes allocation of assets, liabilities, and goodwill to brokerage segment, and determines the recoverable amount based on brokerage segment’s present value of expected future cash flow. The periodic assessment also analyzes reasonableness of relevant assumptions, including expected future trading volumes, market share, segment’s operating profit margin, and discount rates.

6. DETAILS OF SIGNIFICANT ACCOUNTS

1) Cash and cash equivalents

Petty cash Checking deposits Current deposits: Deposits denominated in NTD Deposits denominated in foreign currencies Time deposits Total	December 31,2019 169 $ 1,111,097 287,249 1,091,712 4,029,919 6,520,146 $	December 31,2018
		170 $ 751,462 347,576 833,204 4,000,257
		5,932,669 $

As of December 31, 2019 and 2018, the annual interest rates of time deposits, including foreign time deposits were 0.04% ~ 3.21% and 0.04%~3.93%, respectively. (Blank below)

287

2) Financial assets at fair value through profit or loss

Current items:
Financial assets mandatorily measured at fair value
through profit or loss:
Open-ended funds, money market instruments and
securities investment by brokers
Open-ended mutual funds beneficiary certificates
Commerial bonds
Overseas stocks and funds
Listed (TSE and OTC) stocks
Exchange-traded funds
Subtotal
Adjustment of open-ended funds ,money market
instruments and securities investment by brokers
Total
Trading securities-dealer
Listed (TSE and OTC) stocks
Government bonds
Corporate bonds
Convertible corporate bonds
Emerging stocks
Overseas stocks
Exchange-traded funds
Unlisted stocks
Subtotal
Adjustment of trading securities - dealer
Total
Trading securities-underwriter
Listed (TSE and OTC) stocks
Convertible corporate bonds
Unlisted stocks
Subtotal
Adjustment of trading securities - underwriter
Total

December 31,2019
December 31,2018
266,298
$ 245,000
$ -
1,384,265
-
123,799
4,887
102,168
82,660
-
353,845
1,855,232
2,610
1,172)
(
356,455
1,854,060
6,276,195
299,776
3,364,452
4,700,905
6,992,481
3,265,038
146,703
148,279
65,207
79,091
15,829,161
9,631,148
3,091,765
2,765,819
48,289
50,924
35,814,253
20,940,980
441,238
134,579)
(
36,255,491
20,806,401
807,209
837,441
238,046
479,500
-
14,400
1,045,255
1,331,341
101,417
123,837
1,146,672
1,455,178

288

Trading securities-hedging Listed (TSE and OTC) stocks Convertible corporate bonds Warrants Overseas stocks Exchange traded funds Subtotal Adjustment of trading securities - hedging Total Options bought-futures Futures guarantee deposits receivable Derivative financial instrument assets-OTC Total Non-current items: Financial assets mandatorily measured at fair value through profit or loss: Trading securities - dealer - government bonds Unlisted stocks Subtotal Adjustment of trading securities Total	December 31,2019 3,142,111 7,647 47,966 64,648 165,249 3,427,621 83,999 3,511,620 17,136 3,224,122 969 44,512,465 $ 49,921 $ 2,609 52,530 18,766 71,296 $	December 31,2018
		584,558 613 39,229 - 154,782
		779,182 6,164
		785,346
		26,140
		2,750,048
		3,300
		27,680,473 $
		49,895 $ 2,609
		52,504 13,850
		66,354 $

A. For the years ended December 31, 2019 and 2018, net realized and unrealized gains on financial assets and liabilities at fair value through profit or loss amounted to $2,783,923 and $1,410,192, respectively.
B. Details of the Group’s financial assets at fair value through profit or loss pledged to others as collateral are provided in Note 8.
C. Information relating to credit risk is provided in Note 12(2).

289

3) Financial assets at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income	Financial assets at fair value through other comprehensive income	Financial assets at fair value through other comprehensive income
A. The Group has elected to classify unlisted stocks that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounts to $591,596 and $ 604,579 as at December 31, 2019 and 2018, respectively. 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: December 31,2019 December 31,2018 Current items: Debt instruments Trading securities-dealer Overseas bonds - $ 290,816 $ Adjustment of trading securities - dealer - 5,488 Total - $ 296,304 $ Non-current items: Equity instruments Unlisted stocks 37,565 $ 37,565 $ Adjustment of trading securities 554,031 567,014 Total 591,596 $ 604,579 $ Equity instruments at fair value through other comprehensive income Year ended December 31,2019 Year ended December 31,2018 Fair value change recognised in other comprehensive income - parent company 12,186) ($ 36,448 $ Fair value change recognised in other comprehensive income - non-controlling interest 797) ( 825 Total 12,983) ($ 37,273 $ Dividend income recognised in profit or loss held at end of period 24,192 $ 22,704 $ Debt instruments at fair value through other comprehensive income Fair value change recognised in other comprehensive income 20,832) ($ 22,066 $ Cumulative other comprehensive income reclassified to profit or loss due to derecognition 15,309 $ 24,289) ($ Interest income recognised in profit or loss 784 $ 8,415 $
	12,186) ($ 797) ( 12,983) ($ 24,192 $ 20,832) ($ 15,309 $ 784 $	36,448 $ 825 37,273 $ 22,704 $ 22,066 $ 24,289) ($ 8,415 $

C. Details of the Group’s financial assets at fair value through other comprehensive income pledged to others as collateral are provided in Note 8.

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D. Information relating to credit risk is provided in Note 12(2).

4) Bonds purchased under resale agreements

December 31, 2019 December 31, 2018 Overseas bonds $ - $ 93,193

The above bonds purchased under resale agreements as of December 31, 2019 and 2018 were due within one year and were contracted to be resold at the agreed-upon price plus interest charge on the specific date after transaction. The total resale amounts were $0 and $93,705, respectively. The annual interest rates of every currency were as follows:

December 31, 2019 December 31, 2018 Foreign currencies (Note) - 2.20%

(Note) `：` Foreign currencies include USD and EUR.

5) Margin loans receivable

Margin loans receivable were secured by the securities purchased by customers under margin loans. The annual interest rate was 6.4%.

6) Customer margin account

margin loans. The annual interest rate was 6.4%. Customer margin account
Bank deposit Futures clearing house Other futures commission merchant Securities Total	December 31,2019 10,020,199 $ 1,346,810 2,368,427 276 13,735,712 $	December 31,2018
		8,342,444 $ 1,309,128 1,939,362 368
		11,591,302 $

The difference between the customer margin deposits accounts and futures traders’ equity as of December 31, 2019 and 2018 were outlined below:

		December 31,2019		December 31,2018
Customer margin deposits accounts	$	13,735,712	$	11,591,302
Futures trading margins receivable		32		-
Add: Early customer margin deposits		7,078		10,736
Less: Service fee income pending for transfer	(	16,998)	(	12,294)
Futures exchange tax pending for transfer	(	696)	(	609)
Net interest income pending for transfer	(	3,078)	(	2,412)
Temporary receipts	(	8,383)	(	12,089)
Futures traders' equity	$	13,713,667	$	11,574,634

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7) Accounts receivable

Accounts receivable
		December 31,2019			December 31,2018
Accounts receivable - non related parties
Settlement price receivable-brokers	$		9,135,975	$		6,767,737
Settlement price receivable-dealer			857,731			672,850
Accounts receivable-foreign bonds			601,111			142,329
Spot exchange receivable, foreign currencies			435,180			-
Interest receivable			301,206			338,710
Settlement price			777,031			724,602
Others			77,010			83,285
Subtotal			12,185,244			8,729,513
Less: Allowance for uncollectable accounts	(		656)	(		2,661)
Total	$		12,184,588	$		8,726,852

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

follows:
Accounts receivable Accounts receivable - non-related parties Accounts receivable Accounts receivable - non-related parties			December	31,2019		Total
	Upto 30 days	31 to90 days	91 to 180 days	181 days to 12 months	More than 12 months
	11,891,632 $	69,156 $	102,519 $ December	75,034 $ 31,2018	46,903 $	12,185,244 $ Total
	Upto 30 days	31 to90 days	91 to 180 days	181 days to 12 months	More than 12 months
	8,396,560 $	36,819 $	90,459 $	138,362 $	67,313 $	8,729,513 $

The above ageing analysis was based on invoice date.

B. Information relating to credit risk is provided in Note 12(2).

8) Other receivables

Other receivables
		December	31,2019		December	31,2018
Interest receivable	$		13,812	$		15,577
Others			91,790			27,729
Subtotal			105,602			43,306
Less: Allowance for uncollectible accounts	(		54)	(		11,333)
Total	$		105,548	$		31,973

Information relating to credit risk is provided in Note 12(2).

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9) Other current assets

Other current assets
Pending settlements Pledged time deposits Underwriting share proceeds collected on behalf of customers Temporary payments Others Total	December 31,2019 950,487 $ 531,251 18 138,591 1,350 1,621,697 $	December 31,2018
		984,841 $ 635,263 18,542 746 831
		1,640,223 $

10) Transfer of financial assets

A. During the Group’s activities, the transferred financial assets that do not meet derecognition conditions are mainly debt instruments with purchase agreements or debt instruments lent out in accordance with securities borrowing and lending agreement. The cash flow of the contract has been transferred and related liabilities of transferred financial assets that will be repurchased at a fixed price in the future have been reflected. The Group may not use, sell or pledge the transferred financial assets during the valid period of the transaction. The financial assets were not derecognized as the Group is still exposed to interest rate risk and credit risk.
B. Financial assets that do not meet the derecognition conditions and related financial liabilities are analysed below:

December 31,2019	December 31,2019	Carrying amount of related financial liabilities
Financial assets category Carrying amount of transferred financial assets Financial assets measured at fair value through profit or loss Repurchase agreement 21,964,175 $ December 31,2018	Carrying amount of transferred financial assets
		20,956,256 $ Carrying amount of related financial liabilities
Financial assets category Financial assets measured at fair value through profit or loss Repurchase agreement Financial assets measured at fair value through other comprehensive income Repurchase agreement	Carrying amount of transferred financial assets
	15,506,358 $ 296,304	14,775,766 $ 290,833

11) Offsetting financial assets and financial liabilities

A. The Group has transactions that are or are similar to net settled master netting arrangements but do not meet the offsetting criteria, i.e. derivative financial instruments, resale and repurchase agreements. If one party breaches the contract, the counterparty can choose to use net settlement for the above transactions.
B. The offsetting of financial assets and financial liabilities are set as follows:

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(A) Financial assets

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December 31, 2019
Gross amounts of Not set off in the balance sheet
Gross amounts recognised financial Net amounts of financial Cash
of recognised liabilities set off in the assets presented in the Financial collateral
Description financial assets balance sheet balance sheet instruments received Net amount
Derivative financial
$ 938 $ - $ 938 $ 938 $ - $ -
instruments
December 31, 2018
Gross amounts of Not set off in the balance sheet
Gross amounts recognised financial Net amounts of financial Cash
of recognised liabilities set off in the assets presented in the Financial collateral
Description financial assets balance sheet balance sheet instruments received Net amount
Derivative financial
- - -
$ 3,300 $ $ 3,300 $ 3,300 $ $
instruments
Bonds purchased under
resale agreements 93,193 - 93,193 92,663 - 530
Total $ 96,493 $ - $ 96,493 $ 95,963 $ - $ 530
----- End of picture text -----

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(B) Financial liabilities

Financial liabilities
		December 31,2019
Derivative financial instruments Bonds sold and repurchase agreements Total Description	Gross amounts of recognised financial liabilities	Gross amounts of recognised financial assets set off in the balance sheet	Net amounts of financial liabilities presented in the balance sheet	Financial instruments Cash collateral received 938 $ - $ 11,622,022 - 11,622,960 $ - $ Not set off in the balance sheet	Net amount
				Financial instruments
	8,371 $ 11,622,022 11,630,393 $	- $ 8,371 $ - 11,622,022 - $ 11,630,393 $ December 31,2018		938 $ 11,622,022 11,622,960 $	7,433 $ -
					7,433 $

Derivative financial instruments Bonds sold and repurchase agreements Total Description	Gross amounts of recognised financial liabilities	Gross amounts of recognised financial assets set off in the balance sheet	Net amounts of financial liabilities presented in the balance sheet	Financial instruments Cash collateral received 3,300 $ - $ 8,713,387 - 8,716,687 $ - $ Not set off in the balance sheet	Net amount
				Financial instruments
	11,112 $ 8,713,387 8,724,499 $	- $ - - $	11,112 $ 8,713,387 8,724,499 $	3,300 $ 8,713,387 8,716,687 $	7,812 $ -
					7,812 $

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12) Investments accounted for under the equity method

nvestments accounted for under the equity method
Uni-President Asset Management Corp.	December 31,2019 578,853 $	December 31,2018
		569,693 $

A. The Group’s share of its associates’ profits or losses recognized in long-term equity investment accounted for under the equity method for the years ended December 31, 2019 and 2018 were $107,016 and $101,586, respectively.
B. The financial information of the Group’s principal associates is summarized as follows:
(A) The basic information of the associate that are material to the Group is as follows:

Companyname	Princial place of businesss		December 31, 2019 December 31, 2018 Shareholdingratio	December 31, 2019 December 31, 2018 Shareholdingratio	Nature of relationship	Methods of measurement
Uni-President Asset Management Corp.	Taipei city		December 31, 2019		Associate	Equity method
			42.49%	42.49%

(B) The summarized financial information of the associate that are material to the Group is as follows:

Balance sheet

Balance sheet
Current assets Non-current assets Current liabilities Non-current liabilities Total net assets Share in joint venture's net assets Goodwill and others Carrying amount of the joint venture		Uni-President Asset	December 31,2018 Management Corp.
		December 31,2019
	543,681 $ 627,350 176,271) ( 55,102) ( 939,658 $ 399,331 $ 179,522 578,853 $		502,419 $ 599,619 156,138) ( 27,364) ( 918,536 $ 390,355 $ 179,338 569,693 $

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Statement of comprehensive income

Revenue Profit for the period from continuing operations Other comprehensive income - net of tax Total comprehensive income Dividends received from associates
		Year ended December 31, 2019
	831,987 $ 251,386 $ 9,768) ( 241,618 $ 93,706 $			791,291 $ 239,809 $ 11,569 251,378 $ 72,569 $

13) Property and equipment

) Property and equipment associates	$			93,706 7 $	93,706 7 $	93,706 7 $	2,569
January1				2019
	Land	Buildings		Equipment		Leasehold improvements	Total
Cost Accumulated depreciation and impairment Total January 1 Additions Disposal Reclassifications Depreciation December 31 December 31	1,680,129 $ - 1,680,129 $ 1,680,129 $ - - - - 1,680,129 $ Land	1,053,129 $ 410,315) ( 642,814 $ 642,814 $ 6,019 - 7,293 24,608) ( 631,518 $ Buildings		234,426 $ 132,048) ( 102,378 $ 102,378 $ 40,808 172) ( 13,084 40,393) ( 115,705 $ Equipment		57,963 $ 40,914) ( 17,049 $ 17,049 $ 2,275 782) ( 6,030 7,960) ( 16,612 $ Leasehold improvements	3,025,647 $ 583,277) ( 2,442,370 $ 2,442,370 $ 49,102 954) ( 26,407 72,961) ( 2,443,964 $ Total
Cost Accumulated depreciation and impairment Total January1	1,680,129 $ - 1,680,129 $	1,060,323 $ 428,805) ( 631,518 $		259,114 $ 48,000 $ 143,409) ( 31,388) ( 115,705 $ 16,612 $ 2018			3,047,566 $ 603,602) ( 2,443,964 $ Total
	Land		Buildings		Equipment	Leasehold improvements
Cost Accumulated depreciation and impairment Total January 1 Additions Disposal Reclassifications Depreciation December 31 December 31	1,680,129 $ - 1,680,129 $ 1,680,129 $ - - - - 1,680,129 $ Land	1,052,401 $ 387,713) ( 664,688 $ 664,688 $ 155 - 2,261 24,290) ( 642,814 $ Buildings		212,645 $ 140,857) ( 71,788 $ 71,788 $ 45,377 16) ( 21,316 36,087) ( 102,378 $ Equipment		60,419 $ 42,635) ( 17,784 $ 17,784 $ 1,872 1) ( 6,476 9,082) ( 17,049 $ Leasehold improvements	3,005,594 $ 571,205) ( 2,434,389 $ 2,434,389 $ 47,404 17) ( 30,053 69,459) ( 2,442,370 $ Total
Cost Accumulated depreciation and impairment Total	1,680,129 $ - 1,680,129 $	1,053,129 $ 410,315) ( 642,814 $		234,426 $ 132,048) ( 102,378 $		57,963 $ 40,914) ( 17,049 $	3,025,647 $ 583,277) ( 2,442,370 $

A. No interest was capitalized for property and equipment for the years ended December 31, 2019 and 2018.

B. The information on property and equipment pledged or restricted as of December 31, 2019 and 2018 is described in Note 8.

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`－` 14) Leasing arrangements lessee

Effective 2019

A. The Group leases various assets including buildings, machinery and equipment, business vehicles and multifunction printers. Rental contracts are typically made for periods of 1 to 10 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.
B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Buildings Transportation equipment (Business vehicles) Office equipment (Photocopiers) Total		December 31,2019		Year ended December 31,2019
		CarryingAmount		Depreciation charge
		202,057 $ 18,384 1,228 221,669 $		96,820 $ 7,326 1,798 105,944 $

C. For the year ended December 31, 2019, the additions to right-of-use assets amounted to $147,604.
D. The information on income and expense accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Expense on variable lease payment	Year ended December 31,2019
	2,461 $ 3,843 317

E. For the year ended December 31, 2019, the Group’s total cash outflow for leases amounted to $110,172.

15) Leasing arrangements – lessor

Effective 2019

A. The Group leases various assets including office and parking space. Rental contracts are typically made for periods of 1 and 5 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.
B. For the year ended December 31, 2019, the Group recognized rent income in the amount of $19,071, based on the operating lease agreement, which does not include variable lease payments.

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C. The maturity analysis of the lease payments under the operating leases is as follows:

2020 2021 2022 2023 2024 Total		December 31,2019
		19,003 $ 17,620 17,284 17,284 4,195 75,386 $

16) Investment property

) Investment property
January1		2019
	Land Buildings Total 198,099 $ 107,076 $ 305,175 $ - 30,472) ( 30,472) ( 198,099 $ 76,604 $ 274,703 $ 198,099 $ 76,604 $ 274,703 $ - 2,100) ( 2,100) ( 198,099 $ 74,504 $ 272,603 $ Land Buildings Total 198,099 $ 107,076 $ 305,175 $ - 32,572) ( 32,572) ( 198,099 $ 74,504 $ 272,603 $ 2018
Cost Accumulated depreciation and impairment Total January 1 Depreciation December 31 December 31
Cost Accumulated depreciation and impairment Total January1
	Land Buildings Total 198,099 $ 107,076 $ 305,175 $ - 28,372) ( 28,372) ( 198,099 $ 78,704 $ 276,803 $ 198,099 $ 78,704 $ 276,803 $ - 2,100) ( 2,100) ( 198,099 $ 76,604 $ 274,703 $ Land Buildings Total 198,099 $ 107,076 $ 305,175 $ - 30,472) ( 30,472) ( 198,099 $ 76,604 $ 274,703 $
Cost Accumulated depreciation and impairment Total January 1 Depreciation December 31 December 31
Cost Accumulated depreciation and impairment Total

A. For the years ended December 31, 2019 and 2018, rental income from the lease of the investment property were both $17,652 and direct operating expenses arising from the investment property were $3,609 and $3,611, respectively.
B. Details of fair value of investment property are provided in Note 12(5).

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17) Intangible assets

) Intangible assets
January1			2019
	Computer software		Goodwill
Cost Accumulated depreciation and impairment Total January 1 Additions Reclassifications Depreciation December 31 December 31	138,619 $ 92,082) ( 46,537 $ 46,537 $ 14,253 14,475 23,875) ( 51,390 $ Computer software		42,004 $ - 42,004 $ 42,004 $ - - - 42,004 $ Goodwill
Cost Accumulated depreciation and impairment Total January1	153,387 $ 101,997) ( 51,390 $
		Computer sofware	Goodwill	Customer relationships and others Total 89,829 $ 253,483 $ 49,122) ( 141,387) ( 40,707 $ 112,096 $ 40,707 $ 112,096 $ - 19,004 - 14,628 5,038) ( 21,518) ( 35,669 $ 124,210 $ Customer relationships and others Total 41,085 $ 221,708 $ 5,416) ( 97,498) ( 35,669 $ 124,210 $
Cost Accumulated depreciation and impairment Total January 1 Additions Reclassifications Depreciation December 31 December 31	121,650 $ 92,265) ( 29,385 $ 29,385 $ 19,004 14,628 16,480) ( 46,537 $ Computer software		42,004 $ - 42,004 $ 42,004 $ - - - 42,004 $ Goodwill
Cost Accumulated depreciation and impairment Total	138,619 $ 92,082) ( 46,537 $		42,004 $ - 42,004 $

A. No interest was capitalized for intangible assets for the years ended December 31, 2019 and 2018.

B. Goodwill and customer relationships were acquired through acceptance of transfer of the securities brokerage business of Standard Chartered (Taiwan) Bank's retail banking business, and

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were all allocated to the Group’s brokerage segment.

C. The recoverable amount of goodwill was periodically determined based on its value in use. Calculations of value in use after-tax cash flow projections are based on financial budgets approved by the management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below.

The recoverable amount calculated based on the value in use exceeded the carrying amount, thus the goodwill was not impaired. The key assumptions used for calculation of value in use are as follows:

Growth rate Discount rate	Brokerage Segment 2019 0.00% 11.16%	Brokerage Segment 2018 0.00% 11.96%

18) Other noncurrent assets

risks related to relevant operating segments. Other noncurrent assets
		December 31,2019			December 31,2018
Operation guaranteed deposits	$		660,000	$		680,000
Clearing and settlement fund			343,866			327,619
Refundable deposits			173,210			220,511
Deferred expenses			16,373			16,307
Prepaid pension expenses			904			1,010
Prepayment for equipment			32,947			11,893
Overdue receivables			240,073			213,075
Others			720			720
Subtotal			1,468,093			1,471,135
Less: Allowance for uncollectible accounts	(		240,073)	(		213,075)
Total	$		1,228,020	$		1,258,060

19) Short-term loans

19) Short-term loans
20) Commercial papers payable December 31,2019 Unsecured loans 2,964,959 $ Interest rates 0.880%~3.000% December 31,2019 Face value 9,600,000 $ Less: discount on commercial papers payable 3,296) ( Total 9,596,704 $ Interest rates 0.53%~0.695%	December 31,2018
	939,879 $
	3.411%~3.500%
	December 31,2018
	- $ -
	- $
	-

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21) Financial liabilities at fair value through profit or loss - current

		December 31,2019		December 31,2018
Investments in bonds under resale
agreements - short sales	$	-	$	90,545
Valuation adjustment of financial assets held
for trading		-		3,069
Subtotal		-		93,614
Liabilities on sale of borrowed securities
- hedged		192,174		148,009
Valuation adjustment on liabilities on sale of
borrowed securities - hedged		8,617	(	15,145)
Liabilities on sale of borrowed securities
- non-hedged		208,143		391,436
Valuation adjustment on liabilities on sale of
borrowed securities - non-hedged	(	17,707)	(	19,457)
Subtotal		391,227		504,843
Issuance of call ( put ) warrants		6,639,919		15,115,760
Gain on price fluctuation	(	945,819)	(	7,549,321)
Market value (A)		5,694,100		7,566,439
Warrants redeemed	(	5,473,503)	(	11,955,149)
Loss on price fluctuation		163,564		4,622,139
Market value (B)	(	5,309,939)	(	7,333,010)
Warrants - net (A+B)		384,161		233,429
Options sold - TAIFEX		17,753		9,521
Outstanding Liability for Issuance of ETNs		19,222		-
Valuation adjustment on outstanding Liability for
Issuance of ETNs		549		-
Subtotal		19,771		-
Derivative financial liabilities - OTC		35,716		24,690
Total	$	848,628	$	866,097

Among the warrants issued by the Group, except for contract-based warrants which are Europeanstyle warrants, all other warrants are American-style warrants. Warrants are stated as liabilities for issuance of warrants at issuance price prior to expiration. Upon repurchase of warrants after issuance, the repurchased amounts are recognized as warrants repurchase and charged as a deduction to liabilities for issuance of warrants. The warrants have six to twelve months exercise period from the date of issuance. The issuer has the option to settle either by cash or stock delivery.

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22) Bonds sold under repurchase agreements

Bonds sold under repurchase agreements
Government bonds Corporate bonds Bank debentures International bonds Foreign bonds Total	December 31,2019 3,445,144 $ 1,601,547 400,889 3,886,654 11,622,022 20,956,256 $	December 31,2018
		4,100,351 $ 1,298,032 - 954,829 8,713,387
		15,066,599 $

Currency NTD Foreign currencies (Note)	December 31,2019 0.47%~0.62% -0.50%~3.40%	December 31,2018
		0.33%~0.62% -0.30%~4.20%

(Note) ： Foreign currencies include AUD, EUR, USD, RMB, GBP and SGD.

23) Accounts payable

Other payables Other financial liabilities-current Settlement accounts payable - brokered trading Settlement proceeds Settlement accounts payable - operating Accounts payable - foreign bonds Accounts payable - international bonds Spot exchange payable, foreign currencies Others Total Salary and bonus payable Employees’ and directors’ remuneration payable Others Total Equity-linked notes (ELN) - Options Principal guaranteed notes (PGN) - fixed income Total	December 31,2019 9,370,880 $ 1,223,127 616,917 709,611 223 434,980 100,864 12,456,602 $ December 31,2019 788,324 $ 113,140 446,217 1,347,681 $ December31,2019 4,000 $ 2,739,866 2,743,866 $	December 31,2018
		5,939,260 $ 1,811,674 257,063 172,208 - - 108,910
		8,289,115 $
		December 31,2018
		493,821 $ 69,568 353,511
		916,900 $
		December31,2018
		- $ 2,687,009
		2,687,009 $

24) Other payables

25) Other financial liabilities - current

The Group deals in equity-linked products and combines fixed income instruments with call or put

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options. These products are categorized into ELN (Equity-Linked Notes) and PGN (Principal Guaranteed Notes). On trade date, the contracted amounts are collected in full from the counterparties. The payout amount on maturity will depend on the price fluctuation of the instruments linked to these contracts and be calculated as trading price less option strike price on maturity. All the linked products are financial instruments under the supervision of the SFB (Securities and Futures Bureau).

26) Other liabilities-non-current

Other liabilities-non-current
Guarantee deposits received Net defined benefit obligation Total		December 31,2019		December 31,2018
		8,396 $ 7,118 15,514 $		4,984 $ 10,881 15,865 $

27) Pension plan

A. Defined benefit plans
(A) The Group has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. 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. The Group contributes monthly an amount which ranges between 2.0% and 7.2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the supervisory committee of workers’ retirement reserve fund, and with Cathay United Bank, under the name of the management committee of employees’ retirement fund. Also, the Group would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method, to the employees expected to be qualified for retirement next year, the Group will make contributions to cover the deficit by next March.
(B) The amounts recognized in the balance sheet are as follows:

	December	31,2019	December	31,2018
Present value of defined benefit obligations	$	850,830	$	826,184
Fair value of plan assets	(	844,616)	(	816,313)
Net defined benefit liability	$	6,214	$	9,871

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

For the year ended December 31,2019		Fair value of plan assets
	826,184 $ 5,006 9,089 840,279 - 29,946 8,546 38,492 - 27,941) ( 27,941) ( 850,830 $ Present value of defined benefit obiligations	816,313) ($ - 8,979) ( (825,292) 8,275) ( - - 8,275) ( 38,990) ( 27,941 11,049) ( 844,616) ($ Fair value of plan assets	9,871 $ 5,006 110 14,987 8,275) ( 29,946 8,546 30,217 38,990) ( - 38,990) ( 6,214 $ Net defined benefit (liabilities)assets
Blance at January 1 Current service cost Interest expense (income) Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Blance at December 31 For the year ended December 31,2018
	833,570 $ 5,583 10,032 849,185 - $ 8,189 3,225) ( 4,964 - 27,965) ( 27,965) ( 826,184 $	778,415) ($ - 9,364) ( (787,779) 14,635) ($ - - 14,635) ( 41,864) ( 27,965 13,899) ( 816,313) ($	55,155 $ 5,583 668 61,406 14,635) ($ 8,189 3,225) ( 9,671) ( 41,864) ( - 41,864) ( 9,871 $
Blance at January 1 Current service cost Interest expense(income) Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31

(D) The Bank of Taiwan was commissioned to manage the Fund of the Group’s defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the

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“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, overthe-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 Group has no right to participate in managing and operating that fund and hence the Group 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, 2019 and 2018 is given in the Annual Labor Retirement Fund Utilization Report published by the government. In addition, for retirement fund deposits with Cathay United Bank, under the name of the management committee of employees’ retirement fund, the fund invests in time deposit accounts under Cathay United Bank.

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

Discount rate Future salary increases	For the year ended December 31,2019	For the year ended December 31,2018
	0.70%~0.80%	0.011
	2.00%~3.00%	2.00%~3.00%

Assumptions regarding future mortality rate are set based on the Taiwan Standard Ordinary Experience Mortality Table (2011).

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

December 31,2019 Effect on present value of defined benefit obligation December 31,2018 Effect on present value of defined benefit obligation	Discount rate	Discount rate	Discount rate		Future salaryincreases	Future salaryincreases
	Increase 0.25%		Decrease 0.25%		Increase 0.25%	Decrease 0.25%
	19,094) ($ 19,387) ($		19,719 $ 20,048 $		17,201 $ 17,695 $	16,773) ($ 17,232) ($

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B. Defined contribution plans:

Effective from July 1, 2005, the Group established a defined contribution plan pursuant to the “Labor Pension Act”, which covers employees with R.O.C. nationality and those who chose or are required to apply the “Labor Pension Act”. The contributions are made monthly based on not less than 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The payment of pension benefits is based on the employees’ individual pension fund accounts and the cumulative profit in such accounts. The employees can choose to receive such pension benefits monthly or in lump sum. The pension costs under defined contribution pension plans of the Group for the years ended December 31, 2019 and 2018 were $64,134 and $65,703, respectively.
C. President Securities (HK), President Wealth Management (HK), and President Securities (Nominee) have defined benefit pension plans in accordance with local laws, and recognized the current pension expenses by contributing to the accrued pension assets. President Securities (HK) recognized pension expenses of $1,780 and $1,766, respectively, for the years ended December 31, 2019 and 2018.

28) Equity

A. Common stock
(A) As of December 31, 2019, the Company’s authorized capital was $15,000,000 with a par value of $10 (in dollars) per share. The outstanding common stocks were 1,372,390 and 1,390,428 thousand shares, respectively.
- Movements in the number of the Company’s ordinary shares outstanding are as follows:

(Expressed in thousands)

January 1 Acquisition of treasury stocks December 31	Year ended December 31,2019		Year ended December 31,2018
	1,390,428 18,038) ( 1,372,390		1,390,428 - 1,390,428

(B) Treasury shares

In order to maintain the Company’s credit and stockholders’ rights and interests, the Company bought back outstanding shares. The movement of the number of treasury shares is as follows:

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(Expressed in thousands)

Year ended December 31, 2019

Reason for buyback	Shares at the beginning of theperiod	Shares at the beginning of theperiod		Period increase	Period decrease	Shares at the end of the period	Shares at the end of the period		Period-end amount
To maintain the Company's credit and stockholders' rights and interests		-		18,038	18,038) (		-		- $

B. Capital reserve

Capital reserve
December 31, 2019 December 31, 2018		Sharepremium		Treasury share transactions		Expired stock options	Difference between consideration and carrying amount of subsidiaries acquired or disposed			Total
		24,663 $ 24,986 $		65,675 $ 116,793 $		483 $ 483 $		440 $ 440 $		91,261 $ 142,702 $

C. Legal reserve

D. Special reserve

In accordance with the regulations, the Company shall set aside an equivalent amount of special

308

reserve from accumulated unappropriated retained earnings of the current year based on the decreased amount of equity. If there is any subsequent reversal of the decrease in equity, the earnings may be distributed based on the reversal proportion.

  - In accordance with Jing-Guan-Zheng-Chuan Letter No. 10500278285 dated August 5, 2016, securities firms should set aside 0.5% to 1% of net income after tax as special reserve, upon the distribution of earnings from 2016 to 2018. From fiscal year 2017, special reserve as mentioned above may be reversed based on an amount equal to employees’ transformation training expenditure, transfer and arrangement expenditure arising from the development of Fintech. Further, according to Jing-Guan-Zheng-Chuan Letter No. 1080321644 dated July 10, 2019, securities firms are no longer required to set aside special reserve starting from 2019. And the special reserve, within the balance of special reserve set aside in the previous years, could be reversed at the same amount for the aforementioned expenditures.

29) Unappropriated earnings and dividends policy
A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall be used to pay all taxes and offset prior years’ operating losses first, and then set aside as legal reserve, accounted for as 10% of the remaining amount, and special reserve, accounted for as 20% of the remaining amount. Upon provision or reversal of special reserve in accordance with the law, any remaining amount together with unappropriated earnings at beginning of the period shall be distributed according to the following resolution adopted at the stockholders’ meeting: Distribution shall not be made if the balance of distributable earnings is less than 5% of paid-in capital.
B. In addition, the total amount of dividends declared every year shall be at least 70% of distributable earnings, of which stock dividends shall be at least 50% and cash dividends shall be lower than 50%.
C. The Company may determine a better proportion of cash and stock dividends distribution based on its actual operating conditions and capital utilization plan for the following year.
D. The appropriation of 2018 and 2017 earnings was resolved by the shareholders on June 18, 2019 and June 21, 2018, respectively. Detail is as follows:

Provision of legal reserve Provision of special reserve Provision of special reserve (Note 1) Reversal of special reserve (Note 1) Reversal (provision) of special reserve (Note 2) Cash dividends Total	For the year ended December 31,2018	For the year ended December 31,2018	For the year ended December 31,2017	For the year ended December 31,2017
	Amount	Dividends per share (in dollars)	Amount	Dividends per share (in dollars)
	121,032 $ 242,064 6,052 4,365) ( 58,374) ( 959,395 1,265,804 $	0.69 $	251,972 $ 503,944 12,599 3,023) ( 58,374 1,668,514 2,492,380 $	1.20 $

Note 1 ： Special reserve was provided for employees’ transition for financial technology

development according to Jing-Guan-Zheng-Chuan Letter No. 10500278285 and can

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be reversed for employees’ transition. The Board of Directors of the Company resolved to provide 0.5% as special reserve and made reversal of the special reserve on March 22, 2019 and March 26, 2018.

Note 2 ： Special reserve shall be set aside in the same amount of net debit amount of other equity interest recorded in current year from the profit or loss of current year and the accumulated unappropriated earnings pursuant to paragraph 1 of Article 41 of
- Securities and Exchange Act and Jing-Guan-Zheng-Chuan Letter No. 1010028514.
E. The earnings distribution for 2019 as resolved by the Board of Directors on March 26, 2020 is set forth below:

For the year ended December 31,

	For the year ended December 31,	For the year ended December 31,
Provision of legal reserve Provision of special reserve Reversal of special reserve (Note 3) Cash dividends Stock dividends Total	2019
	Amount	Dividends per share(in dollars)
	234,244 $ 473,707 4,221) ( 1,372,390 274,478 2,350,598 $	1.00 $ 0.20 $

Note 3 ： Special reserve was provided for employees’ transition for financial technology
- development according to Jing-Guan-Zheng-Chuan Letter No. 1080321644 and can be reversed for employees’ transition.
F. For details on employees’ remuneration and directors’ remuneration, please refer to Note 6 (44).

30) Brokerage handling fee revenue

Brokerage handling fee revenue
Revenues from brokered trading - TWSE Revenues from brokered trading - OTC Revenues from brokered trading - Futures Others Total		Year ended December 31,2019		Year ended December 31,2018
		1,069,390 $ 426,700 604,329 136,007 2,236,426 $		1,217,068 $ 439,747 720,606 174,542 2,551,963 $

31) Revenues from underwriting business

Revenues from underwriting business
Revenues from underwriting securities on a firm commitment basis Others Total		Year ended December 31,2019		Year ended December 31,2018
		25,139 $ 37,672 62,811 $		22,306 $ 30,922 53,228 $

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32) Gain on sale of trading securities

32) Gain on sale of trading securities
33) Interest revenue Dealers: -TAIEX -OTC -Overseas trading Subtotal Underwriters: -TAIEX -OTC Subtotal Hedging: -TAIEX -OTC -Overseas trading Subtotal Total Interest income from margin loans Interest income from bonds Others Total		Year ended December 31,2019	Year ended December 31,2018
	1,684,876 $ 124,807 515,109 2,324,792 47,543 73,592 121,135 340,461 52,232 10,820) ( 381,873 2,827,800 $ Year ended December 31,2019		1,119,476 $ 77,620) ( 82,074) ( 959,782 46,174 11,969 58,143 630,593) ( 123,985) ( 8,260) ( 762,838) ( 255,087 $ Year ended December 31,2018
		525,291 $ 674,048 7,468 1,206,807 $		656,327 $ 649,262 3,055 1,308,644 $

34) Valuation gain (loss) on trading securities at fair value through profit or loss

Gain (loss) on sale of securities - dealer Loss on sale of securities - underwriting Gain on sale of securities - hedging Total	Year ended December 31,2019	Year ended December 31,2018
	685,896 $ 22,420) ( 77,851 741,327 $	422,251) ($ 13,726) ( 83,968 352,009) ($

311

35) Gain on covering of borrowed securities and bonds with resale agreements - short sales

			Year ended			Year ended
		December 31,2019			December 31,2018
(Loss) gain from the bond investments under
resale agreements	($		6,528)	$		7,117
Gain from securities borrowing transactions
- dealer			46,294			10,963
Loss (gain) from covering - warrants	(		3,919)			1,816
Loss from securities borrowing
transactions - PGN	(		1,295)			-
Gain from covering - PGN			2,861			7,892
Total	$		37,413	$		27,788
36) Valuation (loss) gain on borrowed securities and bonds			with resale agreements-short sales at fair
value through profit or loss
			Year ended			Year ended
		December 31,2019			December 31,2018
Valuation loss from the bond
investments under resale agreements	($		5,265)	($		3,015)
Valuation (loss) gain from securities
borrowing transactions - dealer	(		5,546)			27,237
Valuation loss from covering - warrants	(		10,607)	(		2,155)
Total	($		21,418)	$		22,067
37) Realized gain (loss) on financial assets measured at fair			value through other	comprehensive income
			Year ended			Year ended
		December31,2019			December31,2018
Foreign bonds	$		15,309	($		24,289)
38) Gain from issuance of call (put) warrants
			Year ended			Year ended
		December 31,2019			December 31,2018
Gain on changes in fair value of call ( put )
warrant liabilities and redemption	$		203,893	$		1,180,875
Loss on exercise of call ( put ) warrants
before maturity	(		31,156)	(		35,750)
Expenses arising out of issuance of call
( put ) warrants	(		78,873)	(		84,740)
Total	$		93,864	$		1,060,385

312

39) (Loss) gain from derivatives

(Loss) gain from derivatives
Futures contract (loss) gain Option trading (loss) gain Gain (loss) on foreign exchange derivatives Others Total	Year ended December 31,2019	Year ended December 31,2018
	774,499) ($ 57,745) ( 18,870 79,312) ( 892,686) ($	430,058 $ 82,196 47,348) ( 68,032) ( 396,874 $

40) Impairment loss and reversal of impairment loss

Impairment loss and reversal of impairment loss
Other operating income Provision for impairment Recovery of bad debts Total Income from securities lending Net currency exchange gain Handling fee revenues from funds Others Total	Year ended December 31,2019		Year ended December 31,2018
	7,170) ($ 673 6,497) ($ Year ended December 31,2019		63,977) ($ 716 63,261) ($ Year ended December 31,2018
		113,544 $ 191,648 45,384 82,165 432,741 $		87,487 $ 24,514 44,314 78,224 234,539 $

41) Other operating income

42) Handling charges

Handling charges
Financial costs Brokerage handling fee expense Dealer handling fee expense Refinancing processing fee expense Total Interest expense from repurchase agreements Loans interest expense Other interest expense Total	Year ended December 31,2019	Year ended December 31,2018
	255,994 $ 276,157 2,300 534,451 $ Year ended December 31,2019	290,709 $ 220,256 1,653 512,618 $ Year ended December 31,2018
	382,546 $ 130,026 19,249 531,821 $	291,956 $ 108,524 13,828 414,308 $

43) Financial costs

313

44) Employee benefits expense

Employee benefits expense
Salaries Labor and health insurance Pension Other employee benefits Total		Year ended December 31,2019		Year ended December 31,2018
		2,097,446 $ 124,249 71,030 101,412 2,394,137 $		1,843,674 $ 129,687 73,720 108,610 2,155,691 $

A. In accordance with the Company’s Article of Incorporation, the remainder of the year-end income before taxes less income before appropriating employees’ compensation and directors’ remuneration, if any, shall appropriate an employees’ compensation no less than 1.6% and directors’ remuneration no more than 2%. However, when the Company has an accumulated deficit, earnings to cover the deficit shall first be retained before appropriating employees’ compensation and directors’ remuneration.
B. For the years ended December 31, 2019 and 2018, employees’ compensation was accrued at $52,103 and $28,868, respectively; directors’ remuneration was accrued at $52,103 and $28,868, respectively. The aforementioned amounts were recognized in salary expenses.
C. For year ended December 31, 2019, employees’ compensation was estimated at 2% and directors’ remuneration at 2%, based on the period-end income before taxes less income before appropriating employees’ compensation and directors’ remuneration.
D. The actual distributed amount of employees’ and directors’ remuneration for 2018 as resolved by the Board of Directors was in agreement with the estimates in the 2018 financial statements.
E. Information on the appropriation of the Company’s earnings as resolved by the Board of Directors would be posted in the “Market Observation Post System” on the Taiwan Stock Exchange official website.

45) Depreciation and amortization

Exchange official website. Depreciation and amortization
Other operating expenses Depreciation Amortization Total Rentals Taxes Computer information expenses Postage Others Total	Year ended December 31,2019	Year ended December 31,2018
	181,005 $ 24,620 205,625 $ Year ended December 31,2019	71,559 $ 22,139 93,698 $ Year ended December 31,2018
	4,742 $ 569,152 158,719 74,844 427,894 1,235,351 $	112,270 $ 654,999 159,812 70,018 376,637 1,373,736 $

46) Other operating expenses

314

47) Other gains and losses

Financial income Gain (loss) on disposal of investments Gain (loss) on valuation of non-operating financial instruments Net currency exchange gain Other non-operating revenues Total	Year ended December 31,2019 189,277 $ 21,629 10,859 5,400) ( 172,625 388,990 $	Year ended December 31,2018
		157,292 $ 15,723) ( 9,166) ( 3,474 178,281 314,158 $

48) Income tax

A. Income tax expense

(a) Components of income tax expense:

ome tax Income tax expense (a) Components of income tax expense:
			Year ended			Year ended
		December 31,2019			December 31,2018
Current tax:
Current tax on profits for the
periods	$		203,253	$		184,551
Prior year income tax
(overestimation) underestimation	(		12,328)			6,287
Tax on undistributed surplus			-			2,000
Total current tax			190,925			192,838
Deferred taxes:
Temporary differences	(		6,952)			36,278
Impact of change in tax rate			-	(		9,862)
Total deferred taxes	(		6,952)			26,416
Income tax expense	$		183,973	$		219,254
(b)The income tax expense relating to components	of other comprehensive income is as follows`：`
	Year ended December			Year ended December
			31,2019			31,2018
Remeasurement of defined benefit
obligations	($		6,044)		$	1,934
Impact of change in tax rate			-	(		12,924)
Total	($		6,044)	($		10,990)

315

B. Reconciliation between income tax expense and accounting profit

Tax calculated based on profit before tax and statutory tax rate (note) Expenses disallowed by tax regulation Prior year income tax (over)underestimation Tax exempt income by tax regulation Effect from Alternative Minimum Tax Tax on undistributed earnings Effect from changes in tax regulation Income tax expense	Year ended December 31,2019	Year ended December 31,2018
	549,033 $ 93,358 12,328) ( 601,162) ( 155,072 - - 183,973 $	336,929 $ 23,971 6,287 273,171) ( 133,100 2,000 9,862) ( 219,254 $

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

Deferred tax assets: -Temporary differences: Losses on doubtful debts Other Subtotal Deferred tax liabilities: -Temporary differences: Unrealised exchange gain Other Subtotal Total			For theyear ended December 31,2019	For theyear ended December 31,2019	For theyear ended December 31,2019
		January1	Recognized in profit or loss	Recognized in other comprehensive income			December 31
	29,635 $ 95,813 125,448 $ 15,044) ($ 1,029) ( 16,073) ($ 109,375 $		9,844 $ 5,912) ( 3,932 $ 2,896 $ 124 3,020 $ 6,952 $		- $ 5,885 5,885 $ - $ 159 159 $ 6,044 $	39,479 $ 95,786 135,265 $ 12,148) ($ 746) ( 12,894) ($ 122,371 $

316

Deferred tax assets: -Temporary differences: Losses on doubtful debts Other Subtotal Deferred tax liabilities: -Temporary differences: Unrealised exchange gain Other Subtotal Total			For theyear ended December 31,2018	For theyear ended December 31,2018
		January1	Recognized in profit or loss	Recognized in other comprehensive income		December 31
	16,997 $ 123,743 140,740 $ 15,175) ($ 764) ( 15,939) ($ 124,801 $		12,638 $ 39,059) ( 26,421) ($ 131 $ 126) ( 5 $ 26,416) ($	- $ 11,129 11,129 $ - $ 139) ( 139) ($ 10,990 $	29,635 $ 95,813 125,448 $ 15,044) ($ 1,029) ( 16,073) ($ 109,375 $

D. As of December 31, 2019, the Company’s income tax returns through 2016 have been assessed by the National Tax Authority. The income tax returns through 2017 of President Futures and President Venture Capital have been assessed. The income tax returns through 2018 of President Capital Management and President Personal Insurance Agency have also been assessed.
E. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Company has assessed the impact of the change in income tax rate.
F. With respect to the income tax returns of the Company for 2016, the Tax Authority assessed to increase income tax payable by $11,820. The Company disagreed with the assessment and had filed for administrative remedy and had recognized the income tax expense based on the assessment.

317

49) Earnings per share

) Earnings per share
Basic earnings per share Net income attributable to common shareholders Dilutive effect of common stock equivalents Employee bonus Basic earnings per share Net income attributable to common shareholders Dilutive effect of common stock equivalents Employee bonus	Amount after tax Weighted-average outstanding common shares (In thousands) Earnings per share (In dollars) 2,368,536 $ 1,373,458 1.72 $ - 3,606 2,368,536 $ 1,377,064 1.72 $ Amount after tax Weighted-average outstanding common shares (In thousands) Earnings per share (In dollars) 1,210,323 $ 1,390,428 0.87 $ - 2,510 1,210,323 $ 1,392,938 0.87 $ Year ended December 31,2019 Year ended December 31,2018
	Amount after tax	Weighted-average outstanding common shares (In thousands)

	Amount after tax	Weighted-average outstanding common shares (In thousands)
	1,210,323 $ - 1,210,323 $	1,390,428 2,510 1,392,938	0.87 $ 0.87 $

7. RELATED PARTY TRANSACTIONS

1) Names and relationships of related parties

Names of related parties Uni-President Enterprises Corp.

Uni-President Asset Management Corp. Fund managed by Uni-President Asset Management Corp.

President Chain Store Corp. (PCSC) Ton Yi Industrial Corp. President Tokyo Co., Ltd. Kai Yu (BVI) Investment Co., Ltd Cayman President Holdings, Ltd. President Life Sciences Cayman Co., Ltd.

Relationship with the Company Entity having significant influence on the Company Associate Security investment trust fund raised by the Uni-President Assets Management Corp. Other related party Other related party Other related party Other related party Other related party Other related party

318

2) Significant related party transactions and balances

A. Accounts receivable

Significant related party transactions and balances A. Accounts receivable
B. Other receivables C. Guarantee deposit received D. Accounts payable E. Lease transactions`－`lessee Entity having significant influence on the company: Uni-President Enterprises Corp. Other related party: Others Total Other related party: Others Associate: Uni-President Assets Management Corp. Other related party: President Tokyo Co., Ltd. Total Other related party: President Tokyo Co., Ltd.	December 31,2019	December 31,2018
	274 $ 729 1,003 $ December 31,2019	288 $ 597 885 $ December 31,2018
	- $ December 31,2019	9 $ December 31,2018
	1,044 $ 1,434 2,478 $ December 31,2019 452 $	530 $ 1,393 1,923 $ December 31,2018 460 $

(A) The Group leases business vehicles and multifunction printers, etc., from President Tokyo Co., Ltd. Rental contracts periods are typically 1 to 5 years. Rents are paid monthly.
(B) Right-of-use assets:

a. Acquisition of right-of-use assets

ight-of-use assets: . Acquisition of right-of-use assets
Other related party: President Tokyo Co., Ltd. (Acquire of right-of-use assets of 8,599 thousands for the year ended December 31, 2019)		December 31,2019
		22,650 $

Due to the application of International Financial Reporting Standard No. 16, the Group increased its acquisition of right-of-use assets by $17,023 from the related parties on January 1, 2019.

319

b. Disposition of right-of-use assets

Disposition of right-of-use assets
	December	31,2019
Other related party:
President Tokyo Co., Ltd.	$	2,344
Other		629
Total	$	2,973

The Group terminated an agreement amounting to $1,887 before the maturity with the related parties, and the contract with the related parties expired amounting to $1,086 for the year ended December 31, 2019.

(C) Lease liabilities

－
a. Lease liabilities current

ease liabilities ease liabilities`－`current
Lease liabilities`－`noncurrent nterest expense Gain on lease modification Other related party: President Tokyo Co., Ltd. Other related party: President Tokyo Co., Ltd. Other related party: President Tokyo Co., Ltd. Other Total Other related party: President Tokyo Co., Ltd.	December 31,2019 5,775 $ December 31,2019 11,325 $ Year ended December 31,2019 135 $ 1 136 $ December 31,2019 26 $




		26 $

－
b. Lease liabilities noncurrent
c. Interest expense
d. Gain on lease modification
F. Bonds sold under repurchase agreements

Bonds sold under repurchase agreements
Other related party: Cayman President Holdings, Ltd. President Life Sciences Cayman Co., Ltd Total		December 31,2019		December 31,2018
		- $ 24,475 24,475 $		184,290 $ - 184,290 $

320

G. Handling fee revenue

Handling fee revenue
Security investment trust fund raised by the Uni- President Asset Management Corp.: Uni-President Asset Management Corp. Other related party: Other Total		Year ended December 31,2019		Year ended December 31,2018
		33,529 $ 810 34,339 $		30,530 $ 2,339 32,869 $

Terms of handling fee revenue mentioned above are similar to those of transactions with third parties.

parties.	parties.
H. Gain on wealth management-trust income from sales of funds The revenues were collected on a monthly basis in accordance with contract terms. I. Other operating revenue-handling fee revenues from underwriting funds The revenues were collected on a monthly basis in accordance with contract terms. J. Rent income Year ended December 31,2019 Year ended December 31,2018 Associates: Uni-President Assets Management Corp. 9,817 $ 9,453 $ Year ended December 31,2019 Year ended December 31,2018 Associates: Uni-President Assets Management Corp. 43,792 $ 43,461 $	Gain on wealth management-trust income from	sales of funds Year ended December 31,2019		Year ended December 31,2018

					Year ended		Year ended
	Period		Deposit	December 31,2019		December 31,2018
Associates:
Uni-President Assets
Management Corp.	2016.01.01~2024.03.31	$	1,044	$	7,045	$	7,085
Other related party:
President Tokyo Co., Ltd.	2017.01.01~2024.03.31		1,434		9,422		9,422
Total				$	16,467	$	16,507
Rental income mentioned above is derived from			leasing	part of the Group’s			office space and
business premises to various related parties		and	calculated as agreed by			both parties. Lease
payments are collected on schedule in accordance			with the	terms of the lease contracts.

321

K. Stock custodian income

tock custodian income
Entity having significant influence on the company: Uni-President Enterprises Corp. Associate: Uni-President Assets Management Corp. Other related party: Ton Yi Industrial Corp. President Chain Store Corp. (PCSC) Others Total		Year ended December 31,2019		Year ended December 31,2018
		3,506 $ 133 1,225 1,929 3,034 9,827 $		3,600 $ 133 1,227 1,708 3,078 9,746 $

Terms of stock custodian income mentioned above are similar to third parties.

L. Loss from derivatives

Other related party: Cayman President Holdings, Ltd. Kai Yu (BVI) Investment Co., Ltd Total	Year ended December 31,2019	Year ended December 31,2018
	- $ 240) ( 240) ($	1,584) ($ - 1,584) ($

M.Other operating expenses - equipment rental and copy expense

Other related party: President Tokyo Co., Ltd. Others Total		Year ended December 31,2019		Year ended December 31,2018
		544 $ - 544 $		7,115 $ 1,143 8,258 $

N. Financial expense

inancial expense
Other related party: Cayman President Holdings, Ltd. President Life Sciences Cayman Co., Ltd Total		Year ended December 31,2019		Year ended December 31,2018
		1,477 $ 528 2,005 $		66 $ - 66 $

322

O. Purchases of trading securities – dealer

urchases of trading securities–dealer
Entity having significant influence on the company: Uni-President Enterprises Corp. Security investment trust fund raised by the Uni-President Asset Management Corp.: Uni-President Asset Management Corp. Other related parties: President Chain Store Corp. Total Entity having significant influence on the company: Uni-President Enterprises Corp. Security investment trust fund raised by the Uni-President Asset Management Corp.: Uni-President Asset Management Corp. Other related parties: Ton Yi Industrial Corp. President Chain Store Corp. Total	December 31,2019			Year ended December 31,2019
	Ending Shares (In thousands)	Ending Balance	Gain(loss) 2,458) ($ - 209) ( 2,667) ($ Year ended December 31,2018
	Ending Shares (In thousands)	Ending Balance	Gain(loss) 579 $ - 16 944) ( 349) ($
	- - - -	- $ 10,220 - - 10,220 $

P. Compensation of key management personnel

The compensation of key management such as directors, general managers, vice general managers were as follows:

323

Salary and short-term employee benefits Retirement benefits Other long-term employee benefits Termination benefits Share-based payment Total		Year ended December 31,2019		Year ended December 31,2018
		203,207 $ 1,437 - - - 204,644 $		186,989 $ 1,579 - - - 188,568 $

324

8. PLEDGED ASSETS

The Company’s assets pledged or restricted for use were as follows:

Assets Trading securities (par value) - Corporate bonds - Government bonds - Bank debentures - Overseas bonds - International bonds Financial assets at fair value through other comprehensive income - current - Overseas bonds (par value) Restricted assets: - Demand deposits - Pledged time deposits - Government bonds (par value) Property and equipment - Land and buildings (book value) Pledged time deposits - Operating guarantee deposits - Refundable deposits Financial assets at fair value through profit or loss - current: Financial assets at fair value through profit or loss - non-current:	December 31,2019 1,600,000 $ 3,330,800 400,000 12,421,911 4,110,169 - 735 531,251 50,000 1,107,127 660,000 2,000	December 31,2018 1,300,000 $ 4,100,000 - 9,157,965 977,874 307,150 19,373 635,263 50,000 - 680,000 2,000	Purposes
			Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Collections on behalf of third parties and reimbursement for wages and stocks Securities for short-term loans and guarantees for issuance of commercial papers Trust fund deposit-out Securities for short-term loans and guarantees for issuance of commercial papers Security deposits Security deposits

9. SIGNIFICANT COMMITMENTS

None.

10. SIGNIFICANT LOSS FROM NATURAL DISASTER

None.

11. SIGNIFICANT SUBSEQUENT EVENT

None.

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12. OTHER

1) Management objective and policy of financial risks

A. Risk management objective

The Group continually strengthens risk culture to every employee and makes sure that the Group can actively develop various businesses under a healthy and effective risk management system. At the same time, by creating value of an entity and continually increasing profit, profit maximization may be achieved within appropriate risk tolerance.

B. Risk management system
In order to ensure the completeness of risk management system, run the balancing mechanism of risk management, and improve the division efficiency of risk management, the Group sets up “Risk Management Policy”. Such policy aims to establish internal system compliance and the guiding tools for policies communication within the Group and enable every layer of the Group engaged in different tasks to identify, evaluate, monitor, and control various risks with establishment of consistent compliance rules for risks of each business so that the risks can be controlled within the limits set in advance.

The Group’s risk management system covers risks incurred from businesses on and off the balance sheet, such as market risk, credit risk, liquidity risk, operating risk, legal risk, model risk which are all included in the risk management.

C. Risk management organization
Risk management organization: Board of Directors, Risk Management Committee, Risk Control Office, Business units and other related segments (such as Office of Auditing, Office of General Manager, Compliance segment, Legal segment and Finance segment) are in charge of planning, supervising and execution.
(A) The Board of Directors should ensure the effectiveness of risk management and be responsible for the ultimate result and the following duties:
- a. To establish proper risk management system, operating process, and risk management culture in the Group with allocation of necessary resource for better execution and operation.
- b. Policy of risk management review
- c. Review and approval of business application, transaction authorization and risk limit.
(B) The Risk Management Committee reports to the Board of Directors and is responsible for the following:
- a. Review risk management policy
- b. Review the highest risk tolerance
- c.Submit regular reports to the Board of Directors in relation to the risk management status of the whole Group
(C) The General Manager supervises daily risk management of the entire Group and is responsible for the following:
- a. Supervise and monitor daily risk management of the entire Group
- b. Approval of management exceptions
(D) Assets and Liabilities Committee reports to the General Manager and is responsible for the following:
- a. Set up the ultimate guidelines for assets and liabilities management of the entire Group
- b. Analyze and control the entire Group’s assets and liabilities portfolio
- c. Approval of various businesses’ quotas
- d. Gather and analyze information on domestic and offshore interest rate, exchange rate, prosperity fluctuation, political and economic environmental changes, and predict the financial trend in the future
(E) Risk Control Office implements risk management policy and related regulations and reports

326

to the Risk Management Committee. Risk Control Office also reports daily risk management to the General Manager and is responsible for the following:

  - a. Establish Risk Management Policy of the entire Group

  - b. Develop effective method for measurement and risk management in an entity

  - c. Review risk management system of business units

  - d. Generate risk report through information gathering and consolidation

  - e. Analyze various business risks and report to the General Manager

  - f. Report the risk management situation to the Risk Management Committee according to a meeting’s nature and needs

  - g. Carry out duties as designated by the Risk Management Committee and control risks of business units

(F) Auditing Office is responsible for the following:
- a. Execute operating risk control
- b. Include the risk management system into internal audit program and carry out the daily audit schedule.
- c. Assess the effectiveness of internal control and verify the executed result.
(G) Compliance segment and legal segment under the Office of General Manager are responsible for the following:
- a. Compliance segment should make sure that the business operation and risk management system are in compliance with relevant regulations.
- b. Legal segment is responsible for legal risk control
- c. Compliance segment also provides services of Anti-Money Laundering and Counter Terrorism Financing, including designs specification and internal control, establishes transaction monitoring, oversees the effective implementation of business units, conducts the employee training and reports any suspicion of money laundering.
(H) Finance segment is responsible for the following:
- a. Verify the correctness of position information and reasonability of profit and loss calculation.
- b. Control and analyze self-owned capital adequacy ratio.
- c. Analyze the appropriateness of structures of the assets and liabilities.
(I) Business units are responsible for the following:
- a. Set up risk management details of various businesses according to the risk management policy and other related regulations.
- b. Provide sufficient position information and risk control information to the Risk Control Office.
(J) Settlement division is responsible for:
- a. Clearing and settlement; risk control and management of margin purchase and short sale of securities.
- b. Risk control and management of trading middle office and enforcement of rules governing risk management of business segments.
D. Risk management policy

In order to ensure the completeness of risk management system, run the balancing mechanism of risk management, and improve the division efficiency of risk management, the Group sets up “Risk Management Policy”. Such policy aims to establish internal system compliance and the guiding tools for policies communication within the Group and enable every layer of the Group engaged in different tasks to identify, evaluate, monitor, and control various risks with establishment of consistent compliance rules for risks of each business so that the risks can be controlled within the limits set in advance.

327

Risk management processes include risk identification, risk evaluation, risk supervision and various risk control. Each kind of risk evaluations and responding strategies are described as follows:

  - (A) Market risk management

     - The Group has implemented risk management information system (Risk Manager) in relation to market risk control. All trading positions of the Group have been included in the daily risk control system for the calculation of Value at Risk (VaR). Limit exceeding indicators are mainly the nominal principal, stop-loss, sensitivity (Greeks) and VaR. The risk management report is presented on a daily basis for implementation of regular control and limit exceeding handling procedures.

  - (B) Credit risk management

     - In relation to risk control, the quantitative model of default rate adopts KMV model to calculate the default rate of issuers with credit exposure of the issuing company and the trading counterparties, and credit risk of securities disclosed in the report. The credit exposure is mitigated through regular review of credit status.

  - (C) Fund liquidity risk

     - Unit in charge of fund procurement regularly predicts future fund demand and supply, and consolidates company guarantee or endorsement and capital lending businesses to monitor the condition of fund procurement on a daily basis.

E. Hedging and risk-offsetting strategy
- (A) Policies of hedging and risk mitigating are parts of the Group’s risk management policies, and the hedging position and hedged trading position are supposed to be one portfolio, of which the gain and loss and risk information are measured on a consolidated basis.
- (B) The overall position (hedging position and trading position) is included in the daily risk management system to calculate Value at Risk and other relevant information. Limit exceeding indicators mainly include nominal principal, stop-loss point, price sensitivity and VaR. With the presentation of daily risk management report, routine control and limit exceeding treatment can be executed.
- (C) The continued effectiveness of hedging and risk-offsetting strategy is measured by the gain and loss of overall position (hedging position and trading position), in order to track reasonableness of the profit or loss of hedging position and the offsetting relationship with the profit or loss of trading position, and to control them within a reasonable range.
2) Credit risk
A. Source and definition of credit risk
- The credit risk exposure of the Group as a result of engagement in financial transactions include issuer’s credit risk, credit risk of counterparty and credit risk of underlying assets:
- (A) Credit risk of the issuer refers to the issuers of financial debt instruments held by the Group failing to repay its obligation due to the fact that the issuer breaches the contract resulting in the risk of financial loss to the Group.
- (B) Credit risk of counterparty refers to risk of financial loss to the Group arising from default by the counterparty of financial instruments on the settlement or payment obligation.
- (C) Credit risk of the underlying assets happens when the credit rating of the underlying assets linked to the financial instrument is downgraded by the rating agency or when the losses occur as a result of contract default.

The financial assets held by the Group which could result in credit risk include bank deposit, debt securities, derivatives transactions in OTC, bonds purchased/sold under resale/repurchase agreements, refundable deposit of securities lending, futures trade margins, other refundable deposits and receivables.

B. Maximum credit risk exposure and credit risk concentration

328

The maximum exposure to credit risk of financial assets in the consolidated balance sheet, without consideration of the collateral or other credit enhancements, is equivalent to the carrying amount. In Taiwan, the sources of credit risk of the Group are primarily resulting from cash deposited with banks or other financial institutions, debt securities issued or guaranteed by a bank, derivative instruments transaction underwritten by the Group, and all counterparties of customer margin deposits accounts being financial institutions. Credit risks of various financial assets are as follows:

(A) Cash and cash equivalents

Cash and cash equivalents include time deposit, demand deposits and checking deposits. Correspondent institutions are mainly domestic financial institutions.

(B) Financial assets at fair value through profit and loss - current
a. Fund
- The funds held by the Group are bond funds. As the positions held are not significant, credit risk is deemed low.
b. Commercial papers

The commercial papers held by the Group are under resale agreements. As all the counterparties are financial institutions with good credit, the credit risk from counterparties is extremely low.

c. Debt securities

(a)Bonds

The bonds held by the Group are mostly government bonds (inclusive of central and local government). As a whole, the credit risk of the bonds held by the Group is low.

(b) Corporate bonds

The corporate bonds held by the Group are mainly underlying investment with good credit rating and those with rating above (S&P BB).

(c)Convertible corporate bond

The convertible corporate bonds held by the Group are mostly issued by the domestic legal entities. The Group mitigates highly risky credit exposure of the issuers by control through Taiwan Corporate Credit Risk Index (TCRI).

(d)Foreign bonds

The foreign bonds held by the Group are mainly underlying investment with good credit rating and those with rating above (S&P BB).

(C) Financial assets at fair value through other comprehensive income - current The foreign government bonds held by the Group are classified as debt instruments at fair value through other comprehensive income. In general, the bonds held by the Group are with lower credit risk.

(D) Derivatives- futures trade margin

When engaging in futures trades in stock exchange market, the Group needs to deposit margin into a margin deposit account of a financial institution designated by the futures merchants as a guarantee to fulfil contractual obligation in the future. As a result, the credit risk is low.

(E) Derivatives-OTC

The Group signs International Swaps and Derivatives Association (ISDA) agreements with each counterparty when engaging in OTC derivatives as an agreement regarding such transactions for both parties. In the agreement, it provides a fundamental contractual model

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for OTC derivative transactions. If any party breaches the contract or terminates the transactions early, then all the open interest covered in the agreement should be settled by net amount as bound in the contract. When the ISDA agreement is signed, the Credit Support Annex (CSA) is also signed. According to the CSA, collateral will be transferred from a party to the other during transaction process to mitigate the risk of counterparty in open interest. Please refer to Note 6(11).

Types of OTC derivative transactions in which the Group is engaged include swap transaction. The counterparties are all from financial service industry and mainly located in Taiwan and United Kingdom.

(F) Bonds investment under a resale agreement
Bonds sold under a resale agreement are the bonds that the client sold to the Group at a price, interest rate, length of period as agreed by two parties and the client shall repurchase the bonds at the specified price upon maturity. The Group needs to assume credit risk from counterparties when underwriting such business, as the payment being delivered to the other party. With consideration of good collateral obtained, the net of credit risk exposure from counterparties can be effectively reduced. As all the counterparties are financial institutions with good credit rating, the credit risks from counterparties are extremely low. Please refer to Note 6(11).
(G) Margin loans receivable
Margin loans receivable are the loans provided to the client in order to process businesses of margin trading and short sale using the securities purchased through financing as collateral. The Group monitors the clients’ margin ratio through information system on a daily basis. As the margin ratio of margin trading is set at 130% according to Regulations Governing the Conduct of Securities Trading Margin Purchase and Short Sale Operations by Securities Firms, the credit risk is extremely low.
(H) Receivables of securities business money lending Receivables of securities business money lending are the non-restricted purpose loan business and monetary financing business, pursuant to an agreement between a securities firm and a customer, using customer securities and other commodities as collateral. The Company regularly assesses its customer line of credit and implements appropriate credit control.
(I) Guaranteed price for securities lending Guaranteed price for securities lending is the sale price of the Group’s securities sold by other securities firms through margin trading after deduction of securities transactions tax and service fee, which is deposited in other securities firms as collateral. As all the counterparties are financial institutions with good credit rating, the credit risk from counterparties is extremely low.
(J) Refundable deposits for securities lending Refundable deposits for securities lending are the margins deposited in other securities firm as collateral when the Group’s securities are sold. As all the counterparties are financial institutions with good credit, the credit risk from counterparties is extremely low.
(K) Receivables
Receivables are the credit rights arising from the securities business including settlement receivables of consignment trading, settlement receivables of operating securities sold, financing interest receivables of self-operating credit transaction, receivables of consignment trading for securities, and receivables from banks’ underwriting on foreign exchange transactions and foreign fund demand. As the majority of the Group’s receivables from the consignment businesses and self-operating businesses are settlement of securities from OCT or TWSE, the credit risk is extremely low. As the foreign exchange transactions

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are simply the receipt or payment of different currencies and the correspondent banks are of good credit rating, the credit risk is extremely low.

(L) Other current assets
- Other current assets are mainly the collateral deposited in the bank for application for shortterm debt limit and guarantee for application for issuance of commercial papers. As the correspondent banks are all financial institutions with good credit rating, the credit risk is extremely low.
(M) Financial assets at fair value through profit and loss – non-current In order to underwrite trust business, the Group deposits central government bonds in the Central Bank as collateral. Regardless of the bonds themselves or the financial institutions where the bonds are deposited, the credit risk is extremely low.
(N) Other non-current assets
- Other non-current assets mainly comprise operating guarantee deposits, settlement funds, and refundable deposits. Operating guarantee deposits are mainly deposited in domestic banks with good credit rating. Settlement funds are deposited in securities exchange. Settlement funds are used as compensation when a party to a marketable securities transaction fails to fulfil the settlement obligation. The credit risks from the institutions where these two assets are deposited are extremely low. The refundable deposits refer to cash or other assets which are deposited externally by the Group and can be used as refundable deposits. Because deposits are placed in various financial institutions and each deposit amount is small, the credit risk is dispersed and the credit exposure of overall refundable deposit is extremely low.
C. Expected credit loss assessment
In the assessment of impairment and calculation of expected credit losses, the Group considers reasonable and supporting information about past events, current conditions and future economic conditions. The Group determines at the balance sheet date whether there has been a significant increase in credit risk since initial recognition or whether credit impairment has occurred, and recognizes expected credit loss according to which stage the asset belongs: no significant increase in credit risk or low credit risk at balance sheet date (Stage 1), significant increase in credit risk (Stage 2), and credit impaired (Stage 3). 12-month expected credit losses are recognized for assets in Stage 1, and lifetime expected credit loses are recognized for assets in Stage 2 and Stage 3.

The definition of and expected credit losses recognized for each stage are as follows:

Item	Stage1	Stage2	Stage 3
Definition	No significant deterioration of credit quality of the financial asset since initial recognition, or the financial asset is considered low-risk at the balance sheetdate.	Significant deterioration of credit quality of the financial asset since initial recognition, but the asset is not yet credit impaired.	The financial asset is credit impaired at the financial reporting date.
Expected credit losses recognition	12-month expected credit losses	Lifetime expected credit losses	Lifetime expected credit losses

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(A) Judgements of the significant increase in credit risk since initial recognition
Judgements and assumptions used to determine whether the credit risk has a significant increase since initial recognition when the Group calculates expected credit loss under IFRS 9 are as follows:
a. If contractual payments are over 30 days past due according to the payment terms, the financial asset is considered to have significant increase in credit risk since initial recognition.
b. There is significant increase in credit risk at the reporting date if the credit rating of the issuer has been downgraded by more than 2 grades and the final external credit rating at the reporting date is non-investment grade, if the interest payments are over 30 days past due, or if there has been a default in the past.
(B) Definition of default and credit-impaired financial assets According to the definition of credit impairment set by IFRS 9, a financial asset is creditimpaired when one or more events that have occurred and have a significant impact on the expected future cash flows of the financial asset. The criteria used to judge whether a financial asset is credit-impaired since initial recognition includes but is not limited to the following:
a. Contractual payments or principal or interest payments on bonds are over 3 months (90 days) past due.
b. Bond investment is rated as “in default” by external credit rating agencies.
c. Bond issuer has filed for bankruptcy, restructure, or other debt clearance procedures.
d. Issuer or counterparty has financial difficulties.
(C) Writing-off policy

If any of the following condition applies, the Group will write off the non-recoverable portion of the overdue receivables as bad debt.

a. Debt cannot be fully or partially recovered due to dissolution of, disappearance of, settlement with, bankruptcy declaration by the debtor, or any other reason.
b. The collateral and the assets of the primary and secondary debtors could not be auctioned off after multiple attempts and multiple price discounts, and the Company has not received any real benefits in assuming the collateral.
c. Payments are over two years past due and could not be recovered after attempts to collect.
(D) Measurement of expected credit losses
The Group considers reasonable supporting information which shows significant increase in credit risk since initial recognition when calculating expected credit losses. Main indexes include: internal/external credit rating, information of past due, credit spread, other market information in relation to the borrower, issuer or counterparty, and significant increase in credit risk of other financial instrument of the same borrower.
a. Investments in bills and bonds

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  - (a)Probability of default was based on external credit rating, which include forwardlooking information.

  - (b)Loss given default was based on the average loss given default of external credit rating of investment position and counterparties.

  - (c)Exposure at default

     - Stage 1, Stage 2 and Stage 3: Total carrying amount (including interest receivable).

(E) Consideration of forward-looking information
- Historical loss rate (based on the historical experience in the past 3 to 5 years) as obtained and compared with economic environment in the past, nowadays and future (forwardlooking factor) to see whether there is any significant change, and then to properly adjust future loss rate standards. If any significant default event occurs, the loss rate in the current year will be included in the calculation of future loss rate standard.
D. Table of movements in loss provision of the Group
(A) At December 31, 2019 and 2018, there were no changes in the loss allowance for investments in debt instruments measured at fair value through other comprehensive income.
(B) Except for bond interest receivable which was evaluated along with debt investments, the Group applies the simplified approach to measure the loss allowance at an amount equal to lifetime expected credit losses for marginal receivables, accounts receivable, other receivable-others and overdue receivables. The movements in loss provision of marginal receivables, accounts receivable, other receivable-others and other non-current assetsoverdue receivables of the Group are as follows:

At January 1 Provision (reversal of provision) for impairment Write-offs Derecognized Effect of foreign exchange Transfers At December 31			Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019	Total
		Marginal receivable	Accounts receivable	Other receivable - other	Other non- current assets- overdue receivables
	61,669 $ 20,067 - - - 37,930) ( 43,806 $		2,661 $ 528 - - - 2,533) ( 656 $	11,333 $ 234) ( 10,532) ( 498) ( 15) ( - 54 $	213,075 $ 13,191) ( - 274) ( - 40,463 240,073 $	288,738 $ 7,170 10,532) ( 772) ( 15) ( - 284,589 $

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At January 1 Provision (reversal of Reversal of impairment Write-offs Effect of foreign exchange Transfers At December 31			Year ended December 31,2018	Year ended December 31,2018	Year ended December 31,2018	Total
		Marginal receivable	Accounts receivable	Other receivable - other	Other non- current assets- overdue receivables
	84,093 $ 27,996 - - 50,420) ( 61,669 $		4,359 $ 2,648 - - 4,346) ( 2,661 $	495 $ 11,467 645) ( 16 - 11,333 $	136,443 $ 21,866 - - 54,766 213,075 $	225,390 $ 63,977 645) ( 16 - 288,738 $

3) Liquidity risk

A. Definition and source of liquidity risk

B. Liquidity risk management procedure and stimulation test

In order to prevent operational crisis as a result of liquidity risk, the Group has established responding crisis process with regular monitoring over liquidity gap of fund.

(A) Procedure
In addition to the operating capital for various business and long-term investment, the Group needs to maintain revolving funds at a certain level for daily operation. The use of remaining fund shall avoid high concentration and should be based on the principle of holding sound earning assets with high liquidity and treated in compliance with policies of the Group.

The responsive unit for fund procurement adjusts the liquidity gap to ensure proper liquidity according to the daily volume and movement in the market.

(B) Stimulation test
a. The Group reviews fund liquidity risk from a perspective of supply and demand of fund every month with simulation analysis of available fund for emergency including scenario analysis of cash, funding limit of financial institutions, margin loans and short sale, and value of disposal of position in order to compute maximum available fund and fund demand. Finally, safety stock of fund is reviewed to monitor liquidity risk.
b. Above liquidity risk is generally reviewed monthly. However, if the available limit of increment banking credit risk in financing limit of a financial institution is lower than a certain amount (that is, the amount may be timely adjusted according to the fund liquidity in the market and the actual fund demand and supply in an entity), the safety stock will be reviewed weekly. After the early warning report for fund is submitted, the head of finance segment will call for a fund control meeting.
c. Other than individual funding liquidity risk of an entity, stress test of minimization funding supply and maximization funding demand in the event of significant crisis is simulated, including:
- (a)When there is a significant crisis in the market, the financing limit of the financial

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institutions and the value of disposal of position can be deemed the minimized ratio of fund supply which is then adjusted according to actual condition to compute the total fund supply under maximum stress.

  - (b)Except for the operating expense, the stock concept is adopted for the calculation of total fund demand under maximum stress.

  - (c)The Group should conduct a review to see whether the total minimized fund supply is more than maximized total fund demand. The Group should further review how long (by month) the difference may cover the operating expenses so that the safety stock of fund (by month) under stress test can be computed.

  - (d)The minimum safety stock of fund under stress test (by month) may be adjusted according to the crisis itself and only operating expense for at least 6 months under a normal stimulation can be deemed safe.

C. Maturity analysis for the financial assets and financial liabilities held for liquidity risk management
(A) The Group holds cash and sound earning assets with high liquidity in order to fulfil the payment obligation and potential emergency fund demand in the market. Financial assets held for liquidity risk management are mainly cash and cash equivalents, among which, all time deposits mature within a year. Financial assets at fair value through profit and loss are mainly listed stocks, convertible bonds and debt securities. As all of them have positions in active market, the liquidity risk is deemed low.

(Blank below)

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(B) Maturity analysis for the financial liabilities is as follows:

		December 31,2019
Immediately	Less than 3 months	3-12 months	1-5years - $ - - - - - - - - - 85,925 - - 184,819 270,744 $	Total
600,000 $ 350,000 391,227 457,402 - 1,558,717 1,888,832 - 13,713,667 12,397,124 284,082 - - - 31,641,051 $	2,364,959 $ 9,250,000 - - 21,035,116 - - 56,004 - 59,478 8,286 272,368 1,797,292 7,689 34,851,192 $	- $ - - - - - - - - - - 1,075,313 946,574 24,678 2,046,565 $		2,964,959 $ 9,600,000 391,227 457,402 21,035,116 1,558,717 1,888,832 56,004 13,713,667 12,456,602 378,293 1,347,681 2,743,866 217,186
				68,809,552 $

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December 31, 2018

Short-term loans Financial liabilities at fair value through profit or loss-current Non-derivative financial liabilities Derivative financial liabilities Bonds sold under repurchase agreements Deposits on short sales Deposits payable for securities financing Securities lending refundable deposits Futures traders’ equity Accounts payable (includes notes payable) Collections on behalf of third parties Other payables Other financial liabilities -current Total		Immediately		Less than 3 months		3-12 months		1-5years - $ - - - - - - - - 87,780 - - 87,780 $	Total
		623,514 $ 598,457 267,640 - 1,767,269 2,007,202 - 11,574,634 8,241,191 268,589 648 - 25,349,144 $		316,365 $ - - 15,134,144 - - 621 - 47,924 6,209 237,112 1,378,506 17,120,881 $		- $ - - - - - - - - - 679,140 1,308,503 1,987,643 $			`939,879` `$` 598,457 267,640 15,134,144 1,767,269 2,007,202 621 11,574,634 8,289,115 362,578 916,900 2,687,009
									44,545,448 $

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D. Maturity analysis for lease contracts and capital expenditures Effective 2018
Operating lease commitment is the total minimum lease payments that the Group should make as a lessee or minimum lease income as lessor under an operating lease term which is not cancelable. The capital expenditure commitment is the contract commitment signed for acquisition of capital expenditure of construction and equipment.

The following table illustrates maturity analysis for lease contract and capital expenditure commitment of the Group:

December 31,2018 Not later than one year Later than one year but not later than five years Over five years Total	Operating leases expenditures(Lessee)	Operating leases expenditures(Lessee)		Operating leases income(Lessor)
		84,135 $ 127,303 2,808 214,246 $		6,244 $ 1,239 - 7,483 $

4) Market risk

A. Definition of market risk

Market risk refers to the risk of decrease in the Group’s revenue or value of investment portfolio as a result of the changes in exchange rate, commodity price, interest rate, and stock price or other market risk factors.

The Group continually exercises risk management tools such as sensitivity analysis, Value at Risk, stress test and so on to completely and effectively measure, monitor and manage market risk.

B. Value at Risk (VaR)

Value at Risk is used to measure the possible maximum potential losses in investment portfolio as a result of movement in market risk factor in a specified period and confidence level. The Group currently uses confidence level of 95% to calculate Value at Risk of one day. A VaR model must reasonably, completely and accurately measure the maximum potential risks of financial instruments or investment portfolio before being adopted as a risk management model by the Group. The VaR model used in risk management is continually certified and retrospectively tested to demonstrate that the model can reasonably and effectively measure the maximum potential risks of financial instruments or investment portfolios.

Statistical table for one-dayVaR of transactions	Statistical table for one-dayVaR of transactions	Statistical table for one-dayVaR of transactions	Statistical table for one-dayVaR of transactions
Year ended December 31,2019 December 31, 2019 VaR Maximum VaR Average VaR Minimum	Amount 100,535 $ 170,328 93,998 27,505	Year ended December 31,2018 December 31, 2018 VaR Maximum VaR Average VaR Minimum	Amount 54,865 $ 261,016 112,458 32,838

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Statistical table for VaR of various risk indicators of transactions Year ended

Year ended
December 31,2019	Foreign exchange			Interest		Share ownership
December 31, 2019	$	5,455	$	17,268	$	102,709
VaR Maximum		29,951		72,934		171,470
VaR Average		6,897		35,173		91,793
VaR Minimum		1,479		8,308		24,906
Year ended
December 31,2018	Foreign exchange			Interest	Share ownership
December 31, 2018	$	3,520	$	8,222	$	53,425
VaR Maximum		39,655		33,483		266,250
VaR Average		11,374		16,584		112,550
VaR Minimum		2,852		7,429		27,704

C. Information on gap of foreign exchange risk

The following table summarizes financial instruments of foreign assets or liabilities by currency and the foreign exchange exposure presented by book value as of December 31, 2019 and 2018 ：

(Blank below)

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		December 31,2019	December 31,2019	December 31,2019
		AUD RMB HKD Others 2,447 $ 472,541 $ 886,968 $ 177,172 $ 852,473 1,299,213 185,712 238,446 3,593 142,811 1,617,554 35,456 - - - - 1,710 13,715 465 1,072 700,804 1,023,554 - 119,876 5,729 386,181 1,098,824 67,505 ere 1 USD = 29.980 TWD; 1 EUR= 33.590 TWD; December 31,2018				Total
						2,807,712 $ 20,537,178 7,670,245 2,364,960 32,145 15,508,676 9,356,180
USD 1,271,343 $ 7,413,891 296,304 93,193 3,819,366 939,879 159,839 6,980,674 4,997,071	EUR 1,818 $ 1,368,025 - - 14,015 - 1,479 1,167,834 10,399	AUD 2,859 $ 755,860 - - 4,570 - 1 700,087 2,691	RMB 196,244 $ 1,830,128 - - 70,935 - 6,433 819,621 228,763	HKD 562,346 $ 68,767 - - 1,726,076 - - - 1,010,705	Others 187,005 $ 4,071 - - 177,703 - 5,137 - 177,326	Total
						2,221,615 $ 11,440,742 296,304 93,193 5,812,665 939,879 172,889 9,668,216 6,426,955

Note: As of December 31, 2018, foreign exchange rates of the above currencies to TWD were 1 USD = 30.715 TWD; 1 EUR= 35.200 TWD; 1 AUD= 21.665 TWD; 1 RMB= 4.472 TWD; and 1 HKD= 3.921 TWD, respectively.

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D. The total exchange gain, including realized and unrealized, arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2019 and 2018, amounted to $186,248 and $27,988, respectively.
5) Fair values and hierarchy information
A. Financial instruments and non-financial instruments not measured at fair value.
- Except for those listed in the table below, the carrying amounts of the Group’s financial instruments not measured at fair value (including cash and cash equivalents, bonds purchased under resale agreements, margin loans receivable, refinancing guaranty deposits, guaranteed proceeds receivable from refinancing, guaranteed price deposits for security borrowing, security borrowing deposits, customer margin deposit account, notes and accounts receivable, other receivables, short-term loans, commercial paper payable, bonds sold under repurchase agreements, guarantee deposit received from short sales, guaranteed price deposits received from securities borrowers, security borrowing deposits, equity of futures traders, accounts payable, collection for others, and other payables) approximate their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(5)3.

Non-financial assets December 31, 2019 Investment property December 31, 2018 Investment property	Total 665,646 $ 663,672	Quoted prices of the same assets in active markets (level 1)	Other significant observable inputs (level 2)	Significant non-observable inputs(level 3)
		- $ -	665,646 $ 663,672	- $ -

The fair value of investment property held by the Group was assessed by external valuation experts using comparison approach and income approach, or the fair value can be assessed based on the market price of the area adjacent to the location where the Group’s investment property is located.

B. Valuation techniques
(A)For financial instruments held for trading purposes which are classified as non-derivative instruments, their fair values are based on their quoted prices in an active market. If there is no quoted market price for reference, a valuation technique will be adopted to measure the fair value. Estimates and assumptions of valuation technique adopted by the Group are in agreement with the information of estimates and assumptions adopted by market users for financial instrument pricing and the said information shall be accessible to the Group. For those classified as derivative instruments, their fair values are based on their market prices if their quoted prices are available from an active market. If quoted market prices in an active market are not available, SWAP and IRS are valued at the discounted cash flow method, and options are valued at the Black-Scholes model.

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(B)When available-for-sale financial assets have quoted market prices available in an active market, the fair value is determined using the market price.
C. Fair value hierarchy of the financial instruments
(A)Definitions for the hierarchy classifications of financial instruments measured at fair value a. Level 1

Level 1, are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date. An active market has to satisfy all the following conditions: 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 Group’s investments in listed stocks, beneficiary certificates, on-the-run Taiwan central government bonds and derivative instruments with quoted market prices, are deemed as level 1.

b. Level 2

Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Investments of the Group such as emerging stock without active markets, off-the-run issue of government bonds, corporate bonds, bank debentures, convertible corporate bonds, currency swaps, interest rate swaps, options, asset swaps, and most derivatives are all classified within level 2. For the years ended December 31, 2019 and 2018, there was no significant transfer of financial instruments between Level 1 and Level 2.

c. Level 3

Unobservable inputs for the assets or liability. The fair value of the Group’s investment in equity investment without active market is included in Level 3.

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(B)Hierarchy of fair value estimation of financial instruments

Financial instrument items measured at fair value Recurring fair value Non-derivative financial instruments Assets Financial assets at fair value through profit or loss-current Stock investments Bond investments Others Financial assets at fair value through profit or loss - noncurrent Stock investments Bond investments Financial assets at fair value through other comprehensive income-noncurrent Stock investments Liabilities Financial liabilities at fair value through profit or loss -current Derivative financial instruments Assets Financial assets at fair value through profit or loss-current Liabilities Financial liabilities at fair value through profit or loss - current		December	31,2019
	Total 12,152,248 $ 25,159,729 3,958,261 21,180 50,116 591,596 391,227 3,242,227 457,401	Level 1 12,087,400 $ 870,587 3,958,261 - - - 391,227 3,241,258 421,685	Level 2 23,617 $ 24,289,142 - - 50,116 - - 969 35,716	Level3
				41,231 $ - - 21,180 - 591,596 - - -

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Recurring fair value Non-derivative financial instruments Assets Financial assets at fair value through profit or loss-current Stock investments Bond investments Others Financial assets at fair value through other comprehensive income-current Bond investments Financial assets at fair value through profit or loss - noncurrent Stock investments Bond investments Financial assets at fair value through other comprehensive income-noncurrent Stock investments Liabilities Financial liabilities at fair value through profit or loss -current Derivative financial instruments Assets Financial assets at fair value through profit or loss-current Liabilities Financial liabilities at fair value through profit or loss - current		December	31,2018
	Total 1,955,155 $ 18,298,742 4,647,088 296,304 16,445 49,909 604,579 598,457 2,779,488 267,640	Level 1 1,899,084 $ 1,190,116 4,647,088 296,304 - - - 598,457 2,776,188 242,950	Level 2 39,097 $ 17,108,626 - - - 49,909 - - 3,300 24,690	Level3
				16,974 $ - - - 16,445 - 604,579 - - -

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(C) The following table is the movement of financial assets at Level 3:

		Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019
Financial assets at fair value through profit or loss- current Unlisted stocks Financial assets at fair value through profit or loss - noncurrent Equity investments Financial assets at fair value through other comprehensive income - non-current Unlisted stocks	January1	Valuation amount		Increased		Decreased		December 31
		Recorded in profit or loss	Recorded in other comprehensive income(loss)	Acquired/ Issued	Transfers into level 3	Sold/ Settled	Transfers out from level 3
	16,974 $ 16,445 604,579	3,768) ($ - $ 28,025 $ 4,735 - - - (12,983) - Year ended December 31,2018			- $ - -	- $ - -	- $ - -	41,231 $ 21,180 591,596
Financial assets at fair value through profit or loss- current Unlisted stocks Financial assets at fair value through profit or loss - noncurrent Equity investments Financial assets at fair value through other comprehensive income - non-current Unlisted stocks	January1	Valuation amount		Increased		Decreased		December 31
		Recorded in profit or loss	Recorded in other comprehensive income(loss)	Acquired/ Issued	Transfers into level 3	Sold/ Settled	Transfers out from level 3
	- $ 20,147 567,306	1,776) ($ 3,702) ( -	- $ - 37,273	18,750 $ - -	- $ - -	- $ - -	- $ - -	16,974 $ 16,445 604,579

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December 31,2019	Fair value	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - noncurrent Equity investments Financial assets at fair value through other comprehensive income - non- current December 31,2018 Unlisted stocks Unlisted stocks	21,180 Fair value 41,231 $ 591,596	Net asset value Valuation technique Market approach Market approach	Price to earnings ratio multiple Discount for lack of marketability Not applicable Price to earnings ratio multiple Discount for lack of marketability Significant unobservable input	18.19~21.63 25% Not applicable 1.32~1.76 7.93%~9.75% Range (weighted average)	The higher the multiple, the higher fair value The higher the discount for lack of marketability, the lower the fair value Not applicable The higher the multiple, the higher fair value The higher the discount for lack of marketability, the lower the fair value Relationship of inputs to fair value
Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - noncurrent Equity investments Financial assets at fair value through other comprehensive income - non- current Unlisted stocks Unlisted stocks	16,445 16,974 $ 604,579	Net asset value Market approach Market approach	Price to earnings ratio multiple Discount for lack of marketability Not applicable Price to earnings ratio multiple Discount for lack of marketability	21.25 25% Not applicable 1.91~2.05 30%	The higher the multiple, the higher fair value The higher the discount for lack of marketability, the lower the fair value Not applicable The higher the multiple, the higher fair value The higher the discount for lack of marketability, the lower the fair value

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(E) Valuation process for fair value at Level 3

The parent company’s risk management department is responsible for the verification of fair value categorized in Level 3. The department assesses the independence, reliability, consistency and representativeness of the source information, regularly verifies the valuation models and calibrates the parameters to ensure the valuation process and results are in compliance with IFRSs.

(F) For the fair value measurement of Level 3, the sensitivity analysis of the fair value to the reasonable alternative hypothesis shows that the fair value measurement of the financial assets by the Group is reasonable. However, use of different valuation models or assumptions may result in different measurement. The following is the impact to profit or loss or to other comprehensive income from financial assets and liabilities categorized within Level 3 if the inputs used in valuation models have changed up or down by 1%:

own by 1%:
December 31,2019	Recognised inprofit or loss		Recognised in other comprehensive income
	Favourable change	Unfavourable change	Favourable change	Unfavourable change
Financial assets at fair value through profit or loss - current Unlisted stocks Financial assets at fair value through profit or loss -noncurrent Venture capital shares Financial assets at fair value through other comprehensive income - noncurrent Unlisted stocks December 31,2018	412 $ 412) ($ Not applicable Not applicable - - Recognised inprofit or loss		- $ - $ - - 5,916 5,916) ( Recognised in other comprehensive
	Favourable change	Unfavourable change	Favourable change	Unfavourable change
Financial assets at fair value through profit or loss - current Unlisted stocks Financial assets at fair value through profit or loss -noncurrent Venture capital shares Financial assets at fair value through other comprehensive income - noncurrent Unlisted stocks	170 $ Not applicable -	170) ($ Not applicable -	- $ - 6,046	- $ - 6,046) (

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6) Capital management

A. Objective of capital management
(A) The represented capital adequacy ratio basically shall not be lower than 200% in compliance with the warning standard addressed in the “Rules Governing Securities Firms”.
(B) The Group includes all risks involved in the investment position as a part of risk management, such as market risk, credit risk, liquidity risk, operating risk, legal risk, and model risk and so on. Each risk management responsive unit should identify, evaluate, monitor and control various risks in order to enable the Group to defend impact from financial market, reflect the current operating strategies and make the investment portfolio applied to business planning and development.
B. Capital management policy and procedure
In order to secure the long-term and stable development of various businesses and effectively assume risks, the Group manages capital based on the business development, related regulations and financial market environment. Major capital evaluation processes include:
(A) Each segment should provide accurate and valid source of information to maintain calculation accuracy of capital adequacy ratio.
(B) After the reporting at the 10th of each month, capital adequacy ratio should be computed by the end of every month. If the result is close to the legal standard, every unit will be called to attend a meeting for discussion and strategic planning to ensure that the basic objective of capital adequacy ratio is not less than 200%.
(C) Both the risk limits and economic capital of the Group should be agreed by the Board of Directors. The Group should quarterly report details of risk control with disclosure of investment condition in order to assess whether the risk position exceeds the limit and whether the investment direction is in line with the market trend. Within the authorized risk limits, the Group is actively engaged in development of various businesses and continually increases profit, creates company value, and complies with the capital management objective.

The Group calculates and reports the capital adequacy ratio according to “Rules Governing Securities Firms”. As of December 31, 2019 and 2018, the capital adequacy ratios were 378% and 567%, respectively, as required by the regulations.

348

7) Assets and liabilities of trust accounts

Pursuant to Article 17 of Enforcement Rules of the Trust Enterprise Act, balance sheet, income statement, and property list of trust accounts shall be disclosed in the consolidated financial statements on a semiannual basis.

A. Balance sheet of trust accounts

nce sheet of trust accounts	nce sheet of trust accounts	nce sheet of trust accounts	nce sheet of trust accounts	nce sheet of trust accounts
Trust assets December 31,2019 December 31,2018 Bank savings 283,288 $ 179,211 $ Structured notes 347,256 380,552 Stock 135,196 187,279 Bond 402,246 252,251 Repurchase bond 115,006 - Fund 3,270,575 2,019,812 Securities lending 71,047 164,989 Accounts receivable 74,063 29,429 Total of trust assets 4,698,677 $ 3,213,523 $ Trust liabilities December 31,2019 December 31,2018 Accounts payable 53,204 $ 4,862 $ Trust capital 4,586,918 3,574,783 Net income (loss) 100,346 253,517) ( Retained earnings 41,791) ( 112,605) ( Total of trust liabilities 4,698,677 $ 3,213,523 $ DECEMBER 31, 2019 AND 2018 BALANCE SHEETS
		December 31,2019
Bank savings Structured notes Stock Bond Repurchase bond Fund Securities lending Accounts receivable Total of trust assets Trust liabilities		283,288 $ 347,256 135,196 402,246 115,006 3,270,575 71,047 74,063 4,698,677 $ December 31,2019		179,211 $ 380,552 187,279 252,251 - 2,019,812 164,989 29,429 3,213,523 $ December 31,2018
Accounts payable Trust capital Net income (loss) Retained earnings Total of trust liabilities	53,204 $ 4,586,918 100,346 41,791) ( 4,698,677 $		4,862 $ 3,574,783 253,517) ( 112,605) ( 3,213,523 $

349

B. Income statement of trust accounts

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

Item	Year ended December 31,2019	Year ended December 31,2018
Trust income Interest income Cash dividends received Income from stock lending Investment gains-realised Investment gain (losses)-unrealised Subtotal Trust expenses Service fee Borrowing costs Remittance fee Income (loss) before income tax Income tax expense Net Income (loss)	17,631 $ 5,780 6,145 7,188 64,616 101,360 227) ( 764) ( 1) ( 100,368 22) ( 100,346 $	8,028 $ 11,334 117,957 556 387,327) ( 249,452) ( 18) ( 4,041) ( 1) ( 253,512) ( 5) ( 253,517) ($

C. Property list of trust accounts

PROPERTY LIST OF TRUST ACCOUNTS

Items	Items	Items	Items		December 31,2018

Bank savings Structured notes Stock Bond Bnds under repurchase agreements Fund Securities lending Others Total			283,288 $ 347,256 135,196 402,246 115,006 3,270,575 71,047 74,063 4,698,677 $		179,211 $ 380,552 2,019,812 252,251 - 187,279 164,989 29,429 3,213,523 $

350

8) Status of the company in the limitations on financial ratios imposed by futures trading act, and the related implementation

The table below is prepared according to “Regulations Governing Futures Commission Merchants”.

Calculation formula	December 31,2019	December 31,2019	December 31,2018	December 31,2018	Standard	Enforcement
	Calculation	Ratio	Calculation	Ratio
Stockholders’ equity (Total liability－futures trader’s equity)	`3,379,420` `87,895`	38.45	3,415,060 72,636	47.02	`≧`1	Met the requirement
Current assets Current liabilities	`4,272,473` `87,895`	48.61	4,090,550 72,636	56.32	`≧`1	Met the requirement
Stockholders’ equity Minimumpaid-in capital	`3,379,420` `400,000`	844.86%	3,415,060 400,000	853.77%	`≧`60% `≧`40%	Met the requirement
Adjusted net capital Total amount of customer margins required for the open positions of futures traders	`3,152,768` `374,121`	842.71%	3,271,606 200,263	1633.65%	`≧`20% `≧`15%	Met the requirement

Article	Calculation formula	December 31, 2019	December 31, 2019	December 31, 2018	December 31, 2018	Standard	Enforcement
		Calculation	Ratio	Calculation	Ratio
17	Stockholders’ equity (Total liability－futures trader’s equity)	1,990,192 172,048	11.57	2,001,395 205,634	9.73	`≧`1	Met the requirement
17	Current assets Current liabilities	16,970,531 15,857,926	1.07	14,509,077 13,399,689	1.08	`≧`1	Met the requirement
22	Stockholders’ equity Minimumpaid-in capital	1,990,192 645,000	308.56%	2,001,395 645,000	310.29%	`≧`60% `≧`40%	Met the requirement
22	Adjusted net capital Total amount of customer margins required for the open positions of futures traders	1,622,656 2,744,966	59.11%	1,662,315 2,001,479	83.05%	`≧`20% `≧`15%	Met the requirement

351

10) Prospective risk for futures trading

The main risk for futures merchants engaging in futures trading is credit risk, which could happen if the margin call cannot be made when it should have been made. While being consigned to conduct the futures trading, the Group pays attention to the individual margin account on a daily basis and request additional margin call or reduction in trading volume when necessary according to the condition of individual customer transactions in order to control the credit risk accordingly. The main risk faced by the Group while engaging in self-operating businesses is market price risk- that is risk of changes in market prices of futures or options contracts as a result of fluctuation in underlying investment index. Losses may occur if the market index price and underlying investment move adversely. However, the Group has set up stop-loss point to control such risk for reasons of risk management.

(Blank below)

352

13. OTHER DISCLOSURE ITEMS

1) Information about significant transactions

A. Lending to others: Excluding security margin trading and conditional bond trading business, there is no lending of funds to either the shareholders or other parties.
B. Endorsements and guarantees for others ： None.
C. Acquisitions of real estate exceeding $300,000 or 20 percent of contributed capital ： None.
D. Disposals of real estate exceeding $300,000 or 20 percent of contributed capital ： None.
E. Purchases or sales transactions discount on brokers’ charges with related parties in excess of $5,000 ： None.
F. Receivables from related parties exceeding $100,000 or 20 percent of contributed capital ： None.
G. Significant transactions between parent company and subsidiaries

No.(Note1)	Company	Counterparty	Relationship (Note 2)	Details of transactions	Details of transactions	Details of transactions	Details of transactions
				Account	Amount	Conditions	Percentage (%) of total consolidated net revenues or assets (Note 3)
0	President Securities Corp.	President Futures Corp.	1	Futures Margin - Own Funds	$2,016,203	Note 4	2.11%
0	President Securities Corp.	President Futures Corp.	1	Deposit-out	34,000	Note 4	0.04%
0	President Securities Corp.	President Futures Corp.	1	Accounts receivable	2,615	Note 4	0.00%
0	President Securities Corp.	President Futures Corp.	1	Deposit-in	16,000	Note 4	0.02%
0	President Securities Corp.	President Futures Corp.	1	Future commission revenue	35,784	Note 4	0.50%
0	President Securities Corp.	President Futures Corp.	1	Clearingcharges	10,658	Note 4	0.15%
0	President Securities Corp.	President Futures Corp.	1	Other non-operatingrevenues	6,212	Note 4	0.09%
0	President Securities Corp.	President Capital Management Corp.	1	Expense from investment advisory	48,800	Note 4	0.68%
0	President Securities Corp.	President Capital Management Corp.	1	Other non-operating revenues	3,644	Note 4	0.05%
0	President Securities Corp.	President Insurance Agency Corp.	1	Other non-operating revenues	1,047	Note 4	0.01%

353

Note 1 ： The numbers in the No. column are represented as follows:
The number zero is for parent company.
According to the sequential order, subsidiaries are numbered from 1.
Note 2 ： There are three kinds of transactions between related parties and numbered from 1 to 3 were shown as follows (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.)
Parent company to subsidiaries.
Subsidiaries to parent company.
Subsidiaries to subsidiaries.
Note 3 ： The calculation basis of the trading amount accounting for the total consolidated net revenues or assets is that the account ending balance is divided by the total consolidated assets if it is attributed to the balance sheet accounts, and the accumulated trading amount of the interim period is divided by the total consolidated net revenues if it is attributed to the profit or loss accounts.
Note 4 ： All the prices of the service revenues and consulting service provided between related parties were traded by contracts.
Note 5 ： Based on materiality, only the amounts of the transactions that were above $1 million would be shown in the table.

354

2) Related information of investee companies

A. Related information of investee companies

Name of the investor	Name of the investee company	Location	Date of registration	Reference number and the date of approval letter issued byFSC	Major operatingactivities	Balance on December 31,2019 Original i	Balance on December 31,2018 nvestment	EndingBalance	EndingBalance		Revenue of investee company	Net income (loss) of investee company	Investment income (loss) recognised by the Company	Cash dividends	Notes
								Shares 63,817,303 30,000,000 10,000,000 67,746,000 14,904,630 1,000,000 30,000,000 12,000 182,600,000 23,400,000 1,000,000	Percentage 96.69% 100.00% 5.19% 100.00% 42.46% 100.00% 100.00% 0.03% 94.81% 100.00% 100.00%	Book vlaue
President Securities Corp. President Insurance Agency Corp. President Securities (BVI) Ltd.	President Futures Corp. President Capital Management Corp. President Securities (HK) Ltd. President Securities (BVI) Ltd. Uni-President Asset Management Corp. President Insurance Agency Corp. PSC Venture Capital Investment Limited Company Uni-President Asset Management Corp. President Securities (HK) Ltd. President Wealth Management (HK) Ltd. President Securities (Nominee) Ltd.	Taipei Taipei Hong Kong British Virgin Islands Taipei Taipei Taipei Taipei Hong Kong Hong Kong Hong Kong	1994.03.01 1997.04.15 1994.07.26 1998.02.26 2000.08.18 2008.04.29 2013.10.29 2000.08.18 1994.07.26 2002.03.31 1999.08.06	1994.03.01 Jing- Tou-Shen (83) Gong-Shang Letter No.1114 (Note 1) 1997.02.25 (86) Tai-Cai-Zheng (2) Letter No.17769 1993.11.4 (82) Tai- Cai-Zheng (2) Letter No.40913 1997.10.27 (86) Tai-Cai-Zheng (2) Letter No.04840 2000.07.19 (89) Tai-Cai-Zheng (2) Letter No.56407 (Note2) 2013.08.08 Jing- Guan-Zheng-Chuan Letter No.1020028529 2000.07.19 (89) Tai-Cai-Zheng (2) Letter No.56407 1993.11.4 (82) Tai- Cai-Zheng (2) Letter No.40913 2001.12.11 (90) Tai-Cai-Zheng (2) Letter No.166728 1997.10.27 (86) Tai-Cai-Zheng (2) Letter No.04840	Futures brokerage Securities investment consulting Securities dealer, brokerage, underwriting and Securities investment and holding company Investment Trust Insurance Agent Consultation of investment management and venture capital; other unprohibited or unrestricted Investment Trust Securities dealer, brokerage, underwriting and Wealth management Nominee Service	644,650 $ 326,000 34,030 2,264,573 667,622 10,000 300,000 478 814,705 92,091 3,403	644,650 $ 200,000 34,030 2,264,573 667,622 10,000 300,000 478 814,705 92,091 3,403			1,924,380 $ 322,208 72,935 2,301,733 578,382 28,561 248,549 471 1,332,349 58,319 1,826	710,925 $ 57,196 181,778 - 831,987 56,654 6,113 831,987 181,778 - -	160,258 $ 1,392 29,218 52,125 251,386 9,294 3,474 251,386 29,218 703 77) (	154,963 $ 1,435 1,516 52,125 106,930 9,298 3,477 86 27,702 703 77) (	146,142 $ - - - 93,631 12,644 - 75 - - -	Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Associates Subsidiary of the Company Subsidiary of the Company Associates Subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company

Note1 ： As FSC was established in July, 2004, President Futures Corp. was apporved by the Investment Commission, Ministry of Economic Affairs.

Note2 ： When securities corporations invest in domestic business within FSC's limitation, there is no need to obtain the approval from FSC in advance, according to Tai-Cai-Zheng (2) Letter No.0930000005. Therefore, there was no reference numbers for President Insurance

355

B. Lending to others: Excluding security margin trading and conditional bond trading business, there is no lending of funds to either the shareholders or other parties.
C. Endorsements and guarantees for others ： None.
D. Acquisitions of real estate exceeding $300 million or 20 percent of contributed capital ： None.
E. Disposals of real estate exceeding $300 million or 20 percent of contributed capital ： None.
F. Purchases or sales transactions discount on brokers’ charges with related parties in excess of $5,000,000 ： None.
G. Receivables from related parties exceeding $100 million or 20 percent of contributed capital ： None.
H. Accordance with Jing-Guan-Zheng-Chuan Letter No. 10300375782, the Company is required to disclose details of businesses run by foreign enterprises that were incorporated in the countries identified as non-signatories to the IOSCO MMoU or have not obtained securities or futures license of signatories to the IOSCO MMoU ：
a) Securities held as of December 31, 2019 of President Securities (BVI) Ltd ：

Item	Type	Number of shares	Carryingvalue	Carryingvalue	Fair vaule	Fair vaule
			Unit price	Amount	Unitprice	Amount
Investments in associates	STOCK STOCK STOCK	182,600,000 23,400,000 1,000,000	0.243 $ 0.083 0.061	$44,441,252 1,945,270 60,913 46,447,435 $	0.243 $ 0.083 0.061	$44,441,252 1,945,270 60,913 46,447,435 $
President Securities (HK) Ltd. President Wealth Management (HK) Ltd. President Securities (Nominee) Ltd. Total

b) Derivative financial instrument transactions and the source of capital of President Securities (BVI) Ltd.: None.
c) Revenue from engagement in consultation on assets management business, service contents and litigation ： None.
d) Balance sheets

356

PRESIDENT SECURITIES (BVI) LTD.

BALANCE SHEETS

			PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS	PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS	PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS
Assets	December 31,2019		Amount % Liabilities and shareholders’equity DECEMBER 31, 2019 AND 2018 December 31,2018			December 31,2019		December 31,2018
	Amount	%	Amount	%		Amount	%	Amount	%
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Other receivables Total current assets Investment in associates Total assets	30,135,890 $ - 195,869 30,331,759 46,447,436 76,779,195 $	39 - - 39 61 100	25,277,023 $ 4,090,016 194,910 29,561,949 45,267,338 74,829,287 $	34 6 - 40 60 100	Current liabilties Other payables Total liabilities Shareholders’equity Share capital Capital reserve Retained earnings Retained earnings Other equity Exchange differences on translation of foreign financial statements Total shareholders’ equity Total liabilities and shareholders’ equity	3,565 $ 3,565 67,746,000 757,813 7,702,523 569,294 76,775,630 76,779,195 $	- - 88 1 10 1 100 100	3,563 $ 3,563 67,746,000 757,813 6,016,267 305,644 74,825,724 74,829,287 $	- - 91 1 8 - 100 100

357

PRESIDENT WEALTH MANAGEMENT (HK) LTD. BALANCE SHEETS

DECEMBER 31, 2019 AND 2018

Assets	December 31,	2019	December 31,	2018	Liabilities and shareholders’equity		December 31,2019	December 31,2019	December 31,2019		December 31,2018 Expressed in HK dollars	December 31,2018 Expressed in HK dollars	December 31,2018 Expressed in HK dollars
	Amount	%	Amount	%			Amount		%		Amount		%
Current assets Cash and cash equivalents Other receivables Total current assets Total assets Assets	15,116,479 $ 55,378 15,171,857 15,171,857 $ December 31,	100 - 100 100 2019	Current liabilities 14,943,066 $ 100 Other payables 50,492 - Total liabilities 14,993,558 100 Shareholders’ equity Share capital Retained earnings (accumulated deficit) Total shareholders’ equity 14,993,558 $ 100 Total liabilities and shareholders’ equity Amount % Liabilities and shareholders’equity PRESIDENT SECURITIES (NOMINEE) LTD. BALANCE SHEETS DECEMBER 31, 2019 AND 2018 December 31,2018			20,075 $ - 20,075 - 23,400,000 154 8,248,218) ( 54) ( 15,151,782 100 15,171,857 $ 100 December 31,2019				20,075 $ - 20,075 - 23,400,000 156 8,426,517) ( 56) ( 14,973,483 100 14,993,558 $ 100 December 31,2018 Expressed in HK dollars
	Amount	%	Amount	%			Amount		%		Amount		%
Current assets Cash and cash equivalents Other receivables Total current assets Total assets	491,537 $ 109 491,646 491,646 $	100 - 100 100	509,539 $ 1,516 511,055 511,055 $	100 - 100 100	Current liabilities Other payables Total liabilities Shareholders’ equity Share capital Retained earnings (accumulated deficit) Total shareholders’ equity Total liabilities and shareholders’ equity	17,190 $ 17,190 1,000,000 525,544) ( 474,456 491,646 $		4 4 203 107) ( 96 100		17,190 $ 17,190 1,000,000 506,135) ( 493,865 511,055 $		3 3 196 99) ( 97 100

358

e) Statements of comprehensive income

PRESIDENT SECURITIES (BVI) LTD.

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

							Expressed in U.S.	Expressed in U.S.	dollars
		December 31,		2019			December 31,2018
Accounts		Amount		%			Amount		%
Expenditures
Employee benefits	($	49,953)	(		3)	($	49,965)	(	3)
Other operating expenses	(	18,574)	(		1)	(	18,427)	(	1)
Total expenditures and expenses	(	68,527)	(		4)	(	68,392)	(	4)
Non-operating gains and losses
Share of the profit or loss of associates and joint
ventures accounted for using the equity method		916,448			54		1,174,066		67
Other gains and losses		838,335			50		650,116		37
Total non-operating gains and losses		1,754,783			104		1,824,182		104
Profit before tax		1,686,256			100		1,755,790		100
Income tax expense		-			-		-		-
Net income	$	1,686,256			100	$	1,755,790		100

359

PRESIDENT WEALTH MANAGEMENT (HK) LTD

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

						Expressed in U.S.	Expressed in U.S.	dollars
		December 31,2019				December 31,2018
Accounts		Amount		%		Amount		%
Expenditures
Other operating expenses	($	43,730)	(	25)	($	41,570)	(	30)
Total expenditures and expenses	(	43,730)	(	25)	(	41,570)	(	30)
Non-operating gains and losses
Other gains and losses		222,028		125		179,886		130
Profit before tax		178,298		100		138,316		100
Income tax expense		-		-		-		-
Net income	$	178,298		100	$	138,316		100
	PRESIDENT SECURITIES (NOMINEE) LTD.
	STATEMENTS OF COMPREHENSIVE INCOME
FOR	THE YEARS ENDED DECEMBER 31, 2019 AND			2018
						Expressed in U.S.		dollars
		December 31,2019				December 31,2018
Accounts		Amount		%		Amount		%
Expenditures
Other operating expenses	($	25,071)		129	($	24,590)		128
Total expenditures and expenses	(	25,071)		129	(	24,590)		128
Non-operating gains and losses
Other gains and losses		5,662	(	29)		5,447	(	28)
Profit (loss) before tax	(	19,409)		100	(	19,143)		100
Income tax expense		-		-		-		-
Net income (loss)	($	19,409)		100	($	19,143)		100

360

f) Dealings with foreign businesses in related party transactions: None

3) Information of overseas branches and representative office

Overseas branches and representative office	Nationality	Date of registration	Reference number and the date of approval letter given by Securities and Futures Bureau of FSC	Main business activities	Operating income	(Loss) profit before tax (Note 1)	Assignment of workingcapital	Assignment of workingcapital	Assignment of workingcapital	Assignment of workingcapital	Material transaction account with head office	Note
							Balance on January 1, 2019	Increase of working capital	Deduction of working capital	Balance on September 30, 2019
Representative office of President Securities Corp. in Xiamen	Xiamen	2008.08.22	2008.01.21 Jing-Guan- Zheng-Chuan Letter No.0960073542	Non-operating activities of securities business consultation, contact, and ~~market surve~~	-	($ 6,799)	-	-	-	-	-	-
~~y~~

Note 1: Operating expenses generated by the representative office.

4) Disclosure of investment in Mainland China `：` Not applicable

14. SEGMENTS INFORMATION

1) General information

Financial information by the Group’s segments is disclosed in accordance with IFRS 8. Management has determined the reportable operating segments based on the reports reviewed by the Chief Operating Decision-Maker (CODM) that are used to make strategic decisions. The Group’s operating segments are classified into Brokerage, Proprietary Trading, Fixed Income and Reinvestment according to the sources of income. The remaining operating results which have not reached the threshold requirements are consolidated in ‘other operating segments’. Sources of income from products and services rendered by each segment are as follows:

A. Brokerage segment: consigned trading of the listed securities, margin trading and short sale, assistance in futures trading and other instruments trading as approved by the regulations.
B. Proprietary Trading segment: using the self-owned equity to conduct securities trading such as stocks and bonds trading, and futures and options hedging in Stock Exchange and OTC.
C. Fixed Income segment: bonds segment is engaged in central government bonds, ordinary corporate bonds, convertible corporate bonds, and bills and bonds under repurchase or resale agreements transactions in OTC.
D. Reinvestment segment: companies reinvested by the consolidated entities.
E. Other operating segments include Capital Market segment, Quantitative Trading, Financial Product segment, and Shareholder Services segment.

2) Segments information

361

The accounting policies applied to the Group’s operating segments and summary of accounting policies disclosed in the notes to the financial statements are consistent and identical. The operating gains and losses are measured by the amount before tax and used as basis for performance appraisal. Income and expense attributable to each operating segment are attributed to the segmental gains and losses. Non-attributable indirect expenses and expenses from logistic support segment are amortized to each operating segment based on reasonable calculation standards and the expense nature. Those that cannot be reasonably amortized are listed under “Others”.

3) Profit or loss of segments information

Year ended December 31, 2019

Brokerage segment	Proprietary Tradingsegment		Fixed income segment	Reinvestment segment		Total
2,190,228 $ 282,369 $	1,157,345 $ 689,190 $					7,142,397 $
						2,557,808 $

Brokerage segment	Proprietary Tradingsegment		Fixed income segment	Reinvestment segment	Other operating segments Others 1,065,619 $ 86,881) ($ 214,227 $ 44,206) ($	Total
2,427,154 $ 535,277 $	953,022 $ 533,484 $	219,726 $ 130,906) ($		1,195,636 $ 329,011 $		5,774,276 $
						1,436,887 $

Note 1: As operating income (loss) in total is consistent with consolidated statement of comprehensive income, there is no need for adjustment. Note 2: The Company measures the performance of reportable operating segment based on specific performance indicators instead of assets and liabilities. The performance of reportable operating segment is regularly reviewed and assessed by the CODM as a reference for making resources allocation decision.

The adoption of IFRS 16, ‘Leases’, had the following impact on the segment information in 2019.

362

Depreciation expense increased		Brokerage segment		Proprietary Tradingsegment		Fixed income segment		Reinvestment segment		Other operating segments Others 925 $ 833) ($	Total
		72,096 $		564 $		- $		33,192 $			105,944 $

4) Information on products and services

The Group’s segments are based on different products and services, and had disclosed in general information. It disclosures the types of products and services of the Group’s segments 's source of income. There is no additional disclosure requirement on the income information of products and services.
5) Geographical information

The Group's external customer income from a single foreign country is immaterial, so it would not be disclosed.

6) Major customer information

The Group did not have any significant customers that account for more than 10% of its revenue, so it would not be disclosed.

363

AI assistant

PSC — Annual Report 2019

52209_rns_2020-06-29_64f9a0c9-ec26-41de-9ae5-78253946522e.pdf

2019 ANNUAL REPORT

Notice to readers

I. A Letter to Shareholders

Dear Shareholders,

II. Company Profile

Incorporated

III. Corporate Governance

III. Corporate Governance

I. Business Organization

A. Organizational Chart

B. Function of Each Division

II. Directors’, Supervisors’ and Managers’ Information

A. Directors

1. Information Regarding Directors

3. Professional qualifications and independence analysis of directors

B. Information regarding directors, supervisors, management team and branch manager

C. Remuneration of Directors, Supervisors, President, and Vice Presidents

1. Remuneration of Directors

1.1 Remuneration of Directors (disclosing the name of each individual )

1.2 Remuneration of Directors (Independent Directors Included)

III. Corporate Governance

Range of remuneration for directors

2. Remuneration of the President and Vice Presidents

D. Comparison of Remuneration for Directors, Supervisors, President and Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, President and Vice Presidents

III. Corporate Governance

E. President’s, senior vice presidents’ and senior managers’ remuneration

III. Corporate Governance

III. Implementation of Corporate Governance

A. Board of Directors Meeting

III. Corporate Governance

Other mentionable items:

B. Evaluation of the Board of Directors

C. Operations of the Audit Committee: Number of Meetings, Actual Attendance Rate of each Independent Director, and other mentionable items

III. Corporate Governance

1. Communication methods:

III. Corporate Governance

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

III. Corporate Governance

III. Corporate Governance

III. Corporate Governance

III. Corporate Governance

VII. Information Disclosure

C. Employee rights and wellness

E. Customer policy

F. Directors training

III. Corporate Governance

(3) Risk Management

(4) Our Risk Management Organization

III. Corporate Governance

E. Composition, responsibilities, and operation of the Remuneration Committee

1. Information Regarding Remuneration Committee

III. Corporate Governance

2. Operations of the Remuneration Committee

III. Corporate Governance

F. Corporate Social Responsibility (CSR) and Deviations from “ Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies ”

III. Corporate Governance

III. Corporate Governance

III. Corporate Governance

G. Ethical business operation at the Company and related implementation and Deviations from “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”

1. Ethical business operation

2. Ethical Corporate Management:

III. Corporate Governance

H. Corporate Governance Guidelines and Regulations

III. Corporate Governance

I. Other Important Information Regarding Corporate Governance

J. Internal Control Systems:

1. Internal Control Declaration:

Internal control declaration

Implementation of the internal control system of President Securities Corp.

III. Corporate Governance

L. Major Resolutions of Shareholders Meeting and Board of Directors Meeting

(2) Matters to be discussed

III. Corporate Governance

(3) Election matters

2. Major Resolutions during the Board of Directors Meetings in 2019 and to the Publish Date of the Annual Report: Executed according to the resolution of the Board of Directors Meeting.

III. Corporate Governance

III. Corporate Governance

PSC Annual Report 2019