PSC - Audit Report / Information 2019

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.

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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.

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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

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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.

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 a key audit matter.

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.

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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.

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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.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the 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.

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

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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)

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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.

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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

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)

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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.

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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.

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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)

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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.

~14~

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:

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==> picture [458 x 64] intentionally omitted <==

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

Effective Date by
International
Accounting
New Standards, Interpretations and Amendments Standards Board
----- End of picture text -----

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

~16~

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 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 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:

~17~

New Standards, Interpretations and Amendments

Effective Date by International Accounting 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 noncurrent’

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.

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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.

~19~

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%

~20~

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.

~21~

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.

~22~

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

~23~

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

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.

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

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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

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 Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an

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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

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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

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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

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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
- 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 Group will assess the impairment of the investment. The Group assesses its share of

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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)

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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
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

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==> picture [454 x 334] intentionally omitted <==

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

December 31, 2019 December 31, 2018
-
Trading securities hedging
Listed (TSE and OTC) stocks 3,142,111 584,558
Convertible corporate bonds 7,647 613
Warrants 47,966 39,229
Overseas stocks 64,648 -
Exchange traded funds 165,249 154,782
Subtotal 3,427,621 779,182
Adjustment of trading securities - hedging 83,999 6,164
Total 3,511,620 785,346
Options bought - futures 17,136 26,140
Futures guarantee deposits receivable 3,224,122 2,750,048
Derivative financial instrument assets - OTC 969 3,300
Total $ 44,512,465 $ 27,680,473
Non-current items:
Financial assets mandatorily measured at fair value
through profit or loss:
Trading securities - dealer - government bonds $ 49,921 $ 49,895
Unlisted stocks 2,609 2,609
Subtotal 52,530 52,504
Adjustment of trading securities 18,766 13,850
Total $ 71,296 $ 66,354
----- End of picture text -----

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).

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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 11,891,632 $ Upto 30 days	31 to90 days	91 to 180 days	181 days to 12 months	More than 12 months
		69,156 $ 31 to90 days	102,519 $ 91 to 180 days December	75,034 $ 181 days to 12 months 31,2018	46,903 $ More than 12 months	12,185,244 $ Total
	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:

==> picture [438 x 41] intentionally omitted <==

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

December 31, 2019
Carrying amount of Carrying amount of related
Financial assets category transferred financial assets financial liabilities
----- End of picture text -----

Financial assets category Carrying amount of transferred financial assets December 31,2019	Financial assets category Carrying amount of transferred financial assets December 31,2019	Carrying amount of related financial liabilities
Financial assets measured at fair value through profit or loss Repurchase agreement 21,964,175 $ December 31,2018		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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----- Start of picture text -----

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
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(B) Financial liabilities

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December 31, 2019
Gross amounts of Gross amounts of recognised Net amounts of financial Not set off in the balance sheet
recognised financial financial assets set off in the liabilities presented in the Financial Cash collateral
Description liabilities balance sheet balance sheet instruments received Net amount
Derivative financial instruments $ 8,371 $ - $ 8,371 $ 938 $ - $ 7,433
Bonds sold and repurchase
agreements 11,622,022 - 11,622,022 11,622,022 - -
Total $ 11,630,393 $ - $ 11,630,393 $ 11,622,960 $ - $ 7,433
December 31, 2018
Gross amounts of Gross amounts of recognised Net amounts of financial Not set off in the balance sheet
recognised financial financial assets set off in the liabilities presented in the Financial Cash collateral
Description liabilities balance sheet balance sheet instruments received Net amount
Derivative financial instruments $ 11,112 $ - $ 11,112 $ 3,300 $ - $ 7,812
Bonds sold and repurchase
agreements 8,713,387 - 8,713,387 8,713,387 - -
Total $ 8,724,499 $ - $ 8,724,499 $ 8,716,687 $ - $ 7,812
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12) Investments accounted for under the equity method

	December 31,2019	December 31,2018
Uni-President Asset Management Corp.	578,853 $	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 Taipei city 42.49% 42.49% Shareholdingratio	Princial place of businesss December 31, 2019 December 31, 2018 Taipei city 42.49% 42.49% Shareholdingratio	Nature of relationship Methods of measurement
Uni-President Asset Management Corp.			Associate Equity method
		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

Statement of comprehensive income	Statement of comprehensive income	Statement of comprehensive income	Statement of comprehensive income	Statement of comprehensive income	Statement of comprehensive income	Statement of comprehensive income	Statement of comprehensive income
) Property and equipment Year ended December 31, 2019 Year ended December 31, 2018 Revenue 831,987 $ 791,291 $ Profit for the period from continuing operations 251,386 $ 239,809 $ Other comprehensive income - net of tax 9,768) ( 11,569 Total comprehensive income 241,618 $ 251,378 $ Dividends received from associates 93,706 $ 72,569 $ Uni-President Asset Management Corp. January1 Land Buildings Equipment Leasehold improvements Total 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 $

13) Property and equipment

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 $ 96,820 $ 18,384 7,326 1,228 1,798 221,669 $ 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:

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

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.

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

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:

Currency December 31,2019 NTD 0.47%~0.62% Foreign currencies (Note) -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

Guarantee deposits received Net defined benefit obligation Total	December 31,2019 December 31, 2018 8,396 $ 4,984 $ 7,118 10,881 15,514 $ 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) (		-		- $

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 changes in capital.

B. Capital reserve

Capital reserve
December 31, 2019 December 31, 2018	Share premium	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

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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 $

~56~

32) Gain on sale of trading securities

Gain on sale of trading securities
			Year ended		Year ended
		December 31,2019		December 31,2018
Dealers:
-TAIEX	$		1,684,876	$	1,119,476
-OTC			124,807	(	77,620)
-Overseas trading			515,109	(	82,074)
Subtotal			2,324,792		959,782
Underwriters:
-TAIEX			47,543		46,174
-OTC			73,592		11,969
Subtotal			121,135		58,143
Hedging:
-TAIEX			340,461	(	630,593)
-OTC			52,232	(	123,985)
-Overseas trading	(		10,820)	(	8,260)
Subtotal			381,873	(	762,838)
Total	$		2,827,800	$	255,087

Subtotal Total	381,873 2,827,800 $		762,838) ( 255,087 $
33) Interest revenue Interest income from margin loans Interest income from bonds Others Total	Year ended December 31, 2019		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) ($

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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			December 31, 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

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39) (Loss) gain from derivatives

(Loss) gain from derivatives
		Year ended		Year ended
	December 31, 2019		December 31, 2018
Futures contract (loss) gain	($	774,499)	$	430,058
Option trading (loss) gain	(	57,745)		82,196
Gain (loss) on foreign exchange derivatives		18,870	(	47,348)
Others	(	79,312)	(	68,032)
Total	($	892,686)	$	396,874

40) Impairment loss and reversal of impairment loss

Provision for impairment Recovery of bad debts Total

	Year ended		Year ended
December 31,2019		December 31, 2018
($	7,170)	($	63,977)
	673		716
($	6,497)	($	63,261)

41) Other operating income

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 113,544 $ 87,487 $ 191,648 24,514 45,384 44,314 82,165 78,224 432,741 $ 234,539 $

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

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44) Employee benefits expense

Employee benefits expense
		Year ended		Year ended
	December 31, 2019		December 31, 2018
Salaries	$	2,097,446	$	1,843,674
Labor and health insurance		124,249		129,687
Pension		71,030		73,720
Other employee benefits		101,412		108,610
Total	$	2,394,137	$	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

website. Depreciation and amortization
Depreciation Amortization Total		Year ended December 31,2019		Year ended December 31,2018
		181,005 $ 24,620 205,625 $		71,559 $ 22,139 93,698 $

46) Other operating expenses

Other operating expenses
Rentals Taxes Computer information expenses Postage Others Total		Year ended December 31,2019		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 $

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47) Other gains and losses

Year ended December 31,2019 Financial income 189,277 $ Gain (loss) on disposal of investments 21,629 Gain (loss) on valuation of non-operating financial instruments 10,859 Net currency exchange gain 5,400) ( Other non-operating revenues 172,625 Total 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:

e tax ome tax expense Components of income tax expense:
Current tax: Current tax on profits for the periods Prior year income tax (overestimation) underestimation Tax on undistributed surplus Total current tax Deferred taxes: Temporary differences Impact of change in tax rate Total deferred taxes Income tax expense	Year ended December 31,2019 203,253 $ 12,328) ( - 190,925 6,952) ( - 6,952) ( 183,973 $	Year ended December 31,2018
		184,551 $ 6,287 2,000 192,838 36,278 9,862) ( 26,416 219,254 $

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 $	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 $	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 $	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 $	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)

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B. Reconciliation between income tax expense and accounting profit

		Year ended		Year ended
	December 31,2019		December 31,2018
Tax calculated based on profit before
tax and statutory tax rate (note)	$	549,033	$	336,929
Expenses disallowed by tax regulation		93,358		23,971
Prior year income tax (over)underestimation	(	12,328)		6,287
Tax exempt income by tax regulation	(	601,162)	(	273,171)
Effect from Alternative Minimum Tax		155,072		133,100
Tax on undistributed earnings		-		2,000
Effect from changes in tax regulation		-	(	9,862)
Income tax expense	$	183,973	$	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 $

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Deferred tax assets: -Temporary differences: Losses on doubtful debts Other Subtotal Deferred tax liabilities: -Temporary differences: Unrealised exchange gain Other Subtotal Total		January1	Recognized in profit or loss Recognized in other comprehensive income December 31 12,638 $ - $ 29,635 $ 39,059) ( 11,129 95,813 26,421) ($ 11,129 $ 125,448 $ 131 $ - $ 15,044) ($ 126) ( 139) ( 1,029) ( 5 $ 139) ($ 16,073) ($ 26,416) ($ 10,990 $ 109,375 $ For theyear ended December 31,2018
	16,997 $ 123,743 140,740 $ 15,175) ($ 764) ( 15,939) ($ 124,801 $

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.

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49) Earnings per share

==> picture [453 x 383] intentionally omitted <==

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

Year ended December 31, 2019
Weighted-average
outstanding Earnings per
Amount common shares share
after tax (In thousands) (In dollars)
Basic earnings per share
Net income attributable to
common shareholders $ 2,368,536 1,373,458 $ 1.72
Dilutive effect of common
stock equivalents
Employee bonus - 3,606
$ 2,368,536 1,377,064 $ 1.72
Year ended December 31, 2018
Weighted-average
outstanding Earnings per
Amount common shares share
after tax (In thousands) (In dollars)
Basic earnings per share
Net income attributable to
common shareholders $ 1,210,323 1,390,428 $ 0.87
Dilutive effect of common
stock equivalents
-
Employee bonus 2,510
$ 1,210,323 1,392,938 $ 0.87
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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

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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 274 $ 729 1,003 $ December 31, 2019	December 31,2018
		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.

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b. Disposition of right-of-use assets

Disposition of right-of-use assets
Other related party: President Tokyo Co., Ltd. Other Total		December31,2019
		2,344 $ 629 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 $

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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. H. Gain on wealth management - trust income from sales of funds

	Year ended		Year ended
	December 31,2019	December 31, 2018
Associates:
Uni-President Assets Management Corp.	9,817 $	$	9,453
The revenues were collected on a monthly basis in accordance with contract			terms.
I. Other operating revenue-handling fee revenues from underwriting funds
	Year ended		Year ended
	December 31,2019	December 31, 2018
Associates:
Uni-President Assets Management Corp.	43,792 $	$	43,461

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

					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.

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K. Stock custodian income

Year ended December 31,2019 Entity having significant influence on the company: Uni-President Enterprises Corp. 3,506 $ Associate: Uni-President Assets Management Corp. 133 Other related party: Ton Yi Industrial Corp. 1,225 President Chain Store Corp. (PCSC) 1,929 Others 3,034 Total 9,827 $	Year ended December 31,2018 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 - $ 1,584) ($ 240) ( - 240) ($ 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 $

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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	Ending Shares (In thousands) Ending Balance 76 5,639 $ - 10,277 - - 15,916 $ December 31,2019 December 31,2018			Year ended December 31,2019
			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:

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Salary and short-term employee benefits Retirement benefits Other long-term employee benefits Termination benefits Share-based payment Total	Year ended December31,2019 Year ended December31,2018 203,207 $ 186,989 $ 1,437 1,579 - - - - - - 204,644 $ 188,568 $

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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 - 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 December 31,2018 1,600,000 $ 1,300,000 $ 3,330,800 4,100,000 400,000 - 12,421,911 9,157,965 4,110,169 977,874 - 307,150 735 19,373 531,251 635,263 50,000 50,000 1,107,127 - 660,000 680,000 2,000 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

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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.

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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 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

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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

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 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	Stage 1	Stage 2	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 sheet date.	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	Marginal receivable	Year ended December 31, 2019	Year ended December 31, 2019	Year ended December 31, 2019	Total
		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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						Year ended	Year ended	Year ended	December	31,2018	31,2018
											Other non-
									Other	current assets-
		Marginal			Accounts			receivable -			overdue
		receivable			receivable				other		receivables		Total
At January 1	$		84,093	$		4,359	$		495	$	136,443	$	225,390
Provision (reversal of
Reversal of impairment			27,996			2,648			11,467		21,866		63,977
Write-offs			-			-	(		645)		-	(	645)
Effect of foreign exchange			-			-			16		-		16
Transfers	(		50,420)	(		4,346)			-		54,766		-
At December 31	$		61,669	$		2,661	$		11,333	$	213,075	$	288,738

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 Group’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 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.

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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 income(Lessor) 84,135 $ 6,244 $ 127,303 1,239 2,808 - 214,246 $ 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
		USD		EUR		AUD		RMB		HKD			Others		Total
Financial assets in foreign currencies
Cash and cash equivalents	$	1,266,500	$	2,084	$	2,447	$	472,541	$	886,968		$	177,172	$	2,807,712
Financial assets at fair value through profit or loss		16,127,328		1,834,006		852,473		1,299,213		185,712			238,446		20,537,178
Others		5,828,140		42,691		3,593		142,811		1,617,554			35,456		7,670,245
Financial liabilities in foreign currencies
Short-term loans		2,364,960		-		-		-			-		-		2,364,960
Financial liabilities at fair value through profit or loss		12,434		2,749		1,710		13,715			465		1,072		32,145
Bonds sold under repurchase agreements		12,219,296		1,445,146		700,804		1,023,554			-		119,876		15,508,676
Others		7,757,580		40,361		5,729		386,181		1,098,824			67,505		9,356,180
Note: As of December 31, 2019, foreign exchange rates	of the above currencies to TWD				were	1 USD = 29.980		TWD; 1 EUR=		33.590	TWD;
1 AUD= 21.005 TWD; 1 RMB= 4.305 TWD; and 1 HKD=		3.849 TWD,	respectively.

							December 31, 2018	December 31, 2018	December 31, 2018
		USD		EUR		AUD		RMB		HKD		Others		Total
Financial assets in foreign currencies
Cash and cash equivalents	$	1,271,343	$	1,818	$	2,859	$	196,244	$	562,346	$	187,005	$	2,221,615
Financial assets at fair value through profit or loss		7,413,891		1,368,025		755,860		1,830,128		68,767		4,071		11,440,742
Financial assets at fair value through other
comprehensive income - current		296,304		-		-		-		-		-		296,304
Bonds purchased under resale agreements		93,193		-		-		-		-		-		93,193
Others		3,819,366		14,015		4,570		70,935		1,726,076		177,703		5,812,665
Financial liabilities in foreign currencies
Short-term loans		939,879		-		-		-		-		-		939,879
Financial liabilities at fair value through profit or loss		159,839		1,479		1		6,433		-		5,137		172,889
Bonds sold under repurchase agreements		6,980,674		1,167,834		700,087		819,621		-		-		9,668,216
Others		4,997,071		10,399		2,691		228,763		1,010,705		177,326		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.

Quoted prices of the same assets in Other significant Significant active markets observable inputs non-observable Total (level 1) (level 2) inputs (level 3) Non-financial assets December 31, 2019 - - Investment property $ 665,646 $ $ 665,646 $ December 31, 2018 - - Investment property 663,672 663,672

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	Total Level 1 12,152,248 $ 12,087,400 $ 25,159,729 870,587 3,958,261 3,958,261 21,180 - 50,116 - 591,596 - 391,227 391,227 3,242,227 3,241,258 457,401 421,685 December	Level 2 23,617 $ 24,289,142 - - 50,116 - - 969 35,716 31,2019	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 - - -

~90~

(C) The following table is the movement of financial assets at Level 3:

January1	Recorded in profit or loss Recorded in other comprehensive income(loss) Acquired/ Issued Transfers into level 3 3,768) ($ - $ 28,025 $ - $ 4,735 - - - - (12,983) - - Year ended December 31,2019 Valuation amount Increased Year ended December 31,2018 Valuation amount Increased	Recorded in profit or loss Recorded in other comprehensive income(loss) Acquired/ Issued Transfers into level 3 3,768) ($ - $ 28,025 $ - $ 4,735 - - - - (12,983) - - Year ended December 31,2019 Valuation amount Increased Year ended December 31,2018 Valuation amount Increased	Recorded in profit or loss Recorded in other comprehensive income(loss) Acquired/ Issued Transfers into level 3 3,768) ($ - $ 28,025 $ - $ 4,735 - - - - (12,983) - - Year ended December 31,2019 Valuation amount Increased Year ended December 31,2018 Valuation amount Increased	Recorded in profit or loss Recorded in other comprehensive income(loss) Acquired/ Issued Transfers into level 3 3,768) ($ - $ 28,025 $ - $ 4,735 - - - - (12,983) - - Year ended December 31,2019 Valuation amount Increased Year ended December 31,2018 Valuation amount Increased	Decreased	Decreased	December 31
	Recorded in profit or loss				Sold/ Settled	Transfers out from level 3
16,974 $ 16,445 604,579 January1					- $ - $ - - - - Sold/ Settled Transfers out from level 3 - $ - $ - - - - Decreased		41,231 $ 21,180 591,596 December 31
	Recorded in profit or loss	Recorded in other comprehensive income(loss)	Acquired/ Issued	Transfers into level 3
- $ 20,147 567,306	1,776) ($ 3,702) ( -	- $ - 37,273	18,750 $ - -	- $ - -			16,974 $ 16,445 604,579

~91~

(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:

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

~92~

(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 $ 170) ($ Not applicable Not applicable - -		- $ - 6,046	- $ - 6,046) (

~93~

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.

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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 $

~95~

B. Income statement of trust accounts

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

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Year ended December Year ended December
Item 31, 2019 31, 2018
Trust income
Interest income $ 17,631 $ 8,028
Cash dividends received 5,780 11,334
Income from stock lending 6,145 117,957
Investment gains-realised 7,188 556
Investment gain (losses)-unrealised 64,616 ( 387,327)
Subtotal 101,360 ( 249,452)
Trust expenses
Service fee ( 227) ( 18)
Borrowing costs ( 764) ( 4,041)
Remittance fee ( 1) ( 1)
Income (loss) before income tax 100,368 ( 253,512)
Income tax expense ( 22) ( 5)
Net Income (loss) $ 100,346 ($ 253,517)
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C. Property list of trust accounts

Items December 31, 2019 Bank savings 283,288 $ Structured notes 347,256 Stock 135,196 Bond 402,246 Bnds under repurchase agreements 115,006 Fund 3,270,575 Securities lending 71,047 Others 74,063 Total 4,698,677 $ DECEMBER 31, 2019 AND 2018 PROPERTY LIST OF TRUST ACCOUNTS	Items December 31, 2019 Bank savings 283,288 $ Structured notes 347,256 Stock 135,196 Bond 402,246 Bnds under repurchase agreements 115,006 Fund 3,270,575 Securities lending 71,047 Others 74,063 Total 4,698,677 $ DECEMBER 31, 2019 AND 2018 PROPERTY LIST OF TRUST ACCOUNTS		December 31,2018
	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 $

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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”.

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Article Calculation formula December 31, 2019 December 31, 2018 Standard Enforcement
Calculation Ratio Calculation Ratio
Stockholders’ equity 3,379,420 3,415,060 Met the
17 38.45 47.02 ≧ 1
(Total liability－futures trader’s equity) 87,895 72,636 requirement
Current assets 4,272,473 4,090,550 Met the
17 48.61 56.32 ≧ 1
Current liabilities 87,895 72,636 requirement
Stockholders’ equity 3,379,420 3,415,060 ≧ 60% Met the
22 844.86% 853.77%
Minimum paid-in capital 400,000 400,000 ≧ 40% requirement
Adjusted net capital 3,152,768 3,271,606 ≧ 20%
Met the
22 Total amount of customer margins required 842.71% 1633.65%
374,121 200,263 ≧ 15% requirement
for the open positions of futures traders
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9) Status of the subsidiary in the limitations on financial ratios imposed by the futures trading act and the related implementation The table below is prepared according to “Regulations Governing Futures Commission Merchants”.

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

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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)

~98~

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

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Details of transactions
Percentage (%) of
total consolidated
Relationship net revenues or
No.(Note1) Company Counterparty (Note 2) Account Amount Conditions 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 Clearing charges 10,658 Note 4 0.15%
0 President Securities Corp. President Futures Corp. 1 Other non-operating revenues 6,212 Note 4 0.09%
President Capital Management
0 President Securities Corp. 1 Expense from investment advisory 48,800 Note 4 0.68%
Corp.
President Capital Management
0 President Securities Corp. 1 Other non-operating revenues 3,644 Note 4 0.05%
Corp.
President Insurance Agency
0 President Securities Corp. 1 Other non-operating revenues 1,047 Note 4 0.01%
Corp.
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~99~

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.

~100~

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

~101~

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	Expressed in U.S. Dollars Unitprice Amount Note Fair vaule	Expressed in U.S. Dollars Unitprice Amount Note Fair vaule
			Unit price	Amount	Unitprice
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

~102~

PRESIDENT SECURITIES (BVI) LTD.

BALANCE SHEETS

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DECEMBER 31, 2019 AND 2018
December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Assets Amount % Amount % Liabilities and shareholders’equity Amount % Amount %
Current assets Current liabilties
Cash and cash equivalents $ 30,135,890 39 $ 25,277,023 34 Other payables $ 3,565 - $ 3,563 -
Financial assets at fair
value through profit or - 6
loss - current - 4,090,016 Total liabilities 3,565 - 3,563 -
Other receivables 195,869 - 194,910 - Shareholders’equity
Total current assets 30,331,759 39 29,561,949 40 Share capital 67,746,000 88 67,746,000 91
Investment in associates 46,447,436 61 45,267,338 60 Capital reserve 757,813 1 757,813 1
Retained earnings
Retained earnings 7,702,523 10 6,016,267 8
Other equity
Exchange differences on translation
of foreign financial statements 569,294 1 305,644 -
Total shareholders’ equity 76,775,630 100 74,825,724 100
Total assets $ 76,779,195 100 $ 74,829,287 100 Total liabilities and shareholders’ equity $ 76,779,195 100 $ 74,829,287 100
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~103~

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

~104~

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

~105~

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

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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

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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

Segment revenues Segment profit or loss Segment revenues Segment profit or loss		Brokerage segment		Proprietary Tradingsegment
		2,190,228 $ 282,369 $ Brokerage segment		1,157,345 $ 689,190 $ Proprietary Tradingsegment
		2,427,154 $ 535,277 $		953,022 $ 533,484 $	219,726 $ 130,906) ($		1,195,636 $ 329,011 $

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.

~108~

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.

~109~

AI assistant

PSC — Audit Report / Information 2019

52209_rns_2019-11-14_76634ff0-8e61-46cd-a158-4d1f9477651e.pdf

PRESIDENT SECURITIES CORPORATION AND

SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

Opinion

Basis for opinion

Key audit matters

Fair value measurement of unlisted stocks without active market

Description

Impairment assessment of investments accounted for under equity method

Description

Other matter – Parent company only financial reports

Responsibilities of management and those charged with governance for the consolidated financial statements

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

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

1. HISTORY AND ORGANIZATION

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2) Basis of preparation

B. Subsidiaries included in the consolidated financial statements:

11) Impairment of financial assets

12) Derecognition of financial instruments

13) Offsetting financial instruments

14) Investments accounted for under the equity method

15) Property and equipment

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

17) Investment property

18) Intangible assets

19) Impairment of non-financial assets

20) Financial liabilities at fair value through profit or loss

22) Employee benefits

23) Revenues and expenses

25) Share capital

26) Earnings per share

27) Operating segments

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

D. Impairment assessment of goodwill

6. DETAILS OF SIGNIFICANT ACCOUNTS

1) Cash and cash equivalents

2) Financial assets at fair value through profit or loss

3) Financial assets at fair value through other comprehensive income

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

4) Bonds purchased under resale agreements

(Note) ： Foreign currencies include USD and EUR.

5) Margin loans receivable

6) Customer margin account

7) Accounts receivable

9) Other current assets

10) Transfer of financial assets

11) Offsetting financial assets and financial liabilities

(A) Financial assets

(B) Financial liabilities

12) Investments accounted for under the equity method

Balance sheet

Statement of comprehensive income

13) Property and equipment

－ 14) Leasing arrangements lessee

Effective 2019

15) Leasing arrangements – lessor

Effective 2019

C. The maturity analysis of the lease payments under the operating leases is as follows:

16) Investment property

17) Intangible assets

18) Other noncurrent assets

19) Short-term loans

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

22) Bonds sold under repurchase agreements

23) Accounts payable

PSC Audit Report / Information 2019

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

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

`－` 14) Leasing arrangements lessee