PSC — Audit Report / Information 2019

Nov 14, 2019

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND REPORT OF INDEPENDENT

ACCOUNTANTS

DECEMBER 31, 2019 AND 2018

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

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REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR19003349

To the Board of Directors and Shareholders of President Securities Corporation

Opinion

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

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

Basis for opinion

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

Key audit matters

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

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

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

Fair value measurement of unlisted stocks without active market

Description

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

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

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

How our audit addressed the matter

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

1. Obtained an understanding and assessed policy documents, internal control system, fair value measurement models and approval processes that are related to fair value measurement of unlisted stock;

2. Ascertained whether the measurement methods used by the management are commonly used by the industry;

3. Assessed the reasonableness of parameter of similar companies used by management;

4. Examined inputs and calculation formulas used in valuation methods and agreed such data to their supporting documents.

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Impairment assessment of investments accounted for under equity method

Description

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

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

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

How our audit addressed the matter

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

• 1.Obtained the impairment assessment report prepared by an external valuation expert who was commissioned by the management;

• 2.Assessed the reasonableness of expected future cash flows, discount rate and other significant assumptions applied in the cash flow model;

• 3.Inspected valuation model parameters, formula setting and the accuracy of calculation.

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

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

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

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

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

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

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

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

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

2.

3.

4.

5.

6.

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

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

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

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

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

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

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

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

Lin, Se-Kai

Independent Accountants

Hsiao, Chin-Mu

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

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

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

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PRESIDENT SECURITIES CORPORATION PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(3) 6(4) 6(5) 6(6) 6(6) 6(7) 6(8) 6(2) 6(3) 6(11) 6(12) 6(13) 6(15) 6(16) 6(47) 6(17)	December 31, 2019 AMOUNT % $ 3,829,651 5 43,510,101 54 - - - - 10,024,189 12 102,545 - 88,759 - 517,809 1 101,043 - 543,171 1 697 - 11,786,358 14 2,615 - 18,464 - 10,294 - 544,924 1 71,080,620 88 71,296 - 157,656 - 5,476,748 7 2,270,391 3 167,514 - 272,603 1 70,726 - 132,198 - 985,663 1 9,604,795 12 $ 80,685,415 100	December 31, 2018	December 31, 2018
		AMOUNT $ 3,829,651 43,510,101 - - 10,024,189 102,545 88,759 517,809 101,043 543,171 697 11,786,358 2,615 18,464 10,294 544,924 71,080,620 71,296 157,656 5,476,748 2,270,391 167,514 272,603 70,726 132,198 985,663 9,604,795 $ 80,685,415	AMOUNT $ 3,493,138 26,802,010 296,304 93,193 8,020,488 4,402 8,387 - 78,316 785,431 735 8,236,367 3,895 16,287 7,264 447,498 48,293,715 66,354 146,545 5,347,315 2,269,210 - 274,703 67,004 120,661 1,009,981 9,301,773 $ 57,595,488	%
110000 Current assets 111100 Cash and cash equivalents 112000 Financial assets at fair value through profit or loss - current 113200 Financial assets at fair value through other comprehensive income - current 114010 Bonds purchased under resale agreements 114030 Margin loans receivable 114040 Refinancing security deposits 114050 Receivables from refinance guaranty 114060 Receivable of securities business money lending 114090 Receivables from security lending 114100 Security lending deposits 114110 Notes receivable 114130 Accounts receivable 114140 Accounts receivable - related parties 114150 Prepayments 114170 Other receivables 119000 Other current assets 110000 Total current assets 120000 Noncurrent assets 122000 Financial assets at fair value through profit or loss - noncurrent 123200 Financial assets at fair value through other comprehensive income - noncurrent 124100 Investments in associates 125000 Property and equipment, net 125800 Right-of-use assets 126000 Investment property, net 127000 Intangible assets 128000 Deferred tax assets 129000 Other assets - noncurrent 120000 Total noncurrent assets 906001 Total Assets				6 47 1 - 14 - - - - 1 - 14 - - - 1
				84
				- - 9 4 - 1 - - 2
				16
				100

(Continued)

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PRESIDENT SECURITIES CORPORATION PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes 6(18) 6(19) 6(20) 6(21) 6(22) 6(23) 6(24) 6(47) 6(47) 6(25) 6(27) 6(28)	December 31, 2019 AMOUNT % $ 2,845,502 4 9,596,704 12 848,265 1 20,956,256 26 1,558,717 2 1,888,832 2 56,004 - 633 - 11,467,219 14 310 - 375,582 1 1,235,306 2 2,743,866 3 194,272 - 56,963 - 12,599 - 53,837,030 67 4,180 - 105,452 - 12,148 - 26,925 - 148,705 - 53,985,735 67 13,723,900 17 91,261 - 2,876,769 3 7,130,830 9 2,355,105 3 521,815 1 26,699,680 33 $ 80,685,415 100	December 31, 2018	December 31, 2018
		AMOUNT $ 2,845,502 9,596,704 848,265 20,956,256 1,558,717 1,888,832 56,004 633 11,467,219 310 375,582 1,235,306 2,743,866 194,272 56,963 12,599 53,837,030 4,180 105,452 12,148 26,925 148,705 53,985,735 13,723,900 91,261 2,876,769 7,130,830 2,355,105 521,815 26,699,680 $ 80,685,415	AMOUNT $ 939,879 - 865,530 15,066,599 1,767,269 2,007,202 621 - 7,292,947 55 361,033 790,369 2,687,009 126,192 - 8,596 31,913,301 - - 14,274 21,928 36,202 31,949,503 13,904,281 142,702 2,755,737 6,945,453 1,278,472 619,340 25,645,985 $ 57,595,488	%
210000 Current liabilities 211100 Short-term loans 211200 Commercial papers payable 212000 Financial liabilities at fair value through profit or loss - current 214010 Bonds sold under repurchase agreements 214040 Deposits on short sales 214050 Short sale proceeds payable 214070 Guarantee deposit received on borrowed securities 214090 Equity for each customer in the account 214130 Accounts payable 214150 Advance receipts 214160 Collections on behalf of third parties 214170 Other payables 214200 Other financial liabilities - current 214600 Current tax liability 216000 Current lease liabilities 219000 Other current liabilities 210000 Total current liabilities 220000 Noncurrent liabilities 225100 Non-current provisions 226000 Non-current lease liabilities 228000 Deferred tax liability 229000 Other liabilities - noncurrent 220000 Total noncurrent liabilities 906003 Total Liabilities 301000 Capital 301010 Common stock 302000 Capital reserve 304000 Retained earnings 304010 Legal reserve 304020 Special reserve 304040 Unappropriated earnings 305000 Other equity interest 906004 Total equity 906002 Total liabilities and equity				2 - 1 26 3 3 - - 13 - 1 1 5 - - -
				55
				- - - -
				-
				55
				24 1 5 12 2 1
				45
				100

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

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PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

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

Items

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

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

(Continued)

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PRESIDENT SECURITIES CORPORATION

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

Items	Years ended December 31 2019 2018 Notes AMOUNT % AMOUNT ( $ 34,860 ) ( 1) $ 14,773 6(3) 11,111 - 12,307 ( 23,857 ) - 26,141 6(47) 6,972 - 8,931 ( 77,467 ) ( 1) 85,342 ( 5,523) - ( 2,223) ( $ 123,624) ( 2) $ 145,271 $ 2,244,912 36 $ 1,355,594 6(48) $ 1.72 $ $ 1.72 $	Years ended December 31	Years ended December 31	% - - 1 - 2 - 3 29 0.87 0.87
		2019	2018
Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 805510 Remeasurements of defined benefit plan 805540 Unrealised gain from investments in equity instruments at fair value through other comprehensive income 805560 Other comprehensive gain of subsidiaries, associates, and joint ventures accounted for under equity method 805599 Income tax benefit relating to components of other comprehensive income Items may be reclassified to profit of loss subsequently 805610 Translation (loss) gain on the financial statements of foreign operating entities 805615 Unrealised loss from investments in debt instruments at fair value through other comprehensive income 805000 Current other comprehensive income (loss) (post-tax) 902006Total current comprehensive income Earnings per share 975000 Basic earnings per share 985000 Diluted earnings per share
			$

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

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

(Expressed in thousands of New Taiwan dollars)

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

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

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PRESIDENT SECURITIES CORPORATION

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

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Depreciation Amortization Impairment gain and reversal of impairment loss Valuation (gains) loss on operating securities at fair value through profit or loss Valuation loss (gain) on borrowed securities and bonds with resale agreements-short sales at fair value through profit or loss Interest costs Interest income (include financial income) Dividend income Share of profit of subsidiaries, associates and joint ventures accounted for under the equity method Loss on disposal of property and equipment (Gain) loss on valuation of non-operating financial instrument Loss from lease modification Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income - current Bonds purchased under resale agreements Margin loans receivable Refinancing security deposits Receivables from refinance guaranty Receivable of securities business money lending Receivables from security lending Security lending deposits Notes receivable Accounts receivable Accounts receivable - related parties Prepayments Other receivables Other current assets Changes in operating liabilities Bonds sold under repurchase agreements Financial liabilities at fair value through profit or loss - current Deposits on short sales Short sale proceeds payable Guarantee deposit received on borrowed securities Equity for each customer in the account Accounts payable Advance receipts Collections on behalf of third parties Other payable Other financial liabilities - current Other current liabilities

Notes 2019 2018 $ 2,514,381 $ 1,385,646 6(44) 143,330 61,944 6(44) 11,497 13,931 6(39) 7,170 52,798 6(2)(33) ( 711,103 ) 366,829 6(35) 21,418 ( 22,067 ) 6(42) 506,284 397,110 6(32)(46) ( 1,182,276 ) ( 1,274,766 ) ( 312,397 ) ( 214,549 ) 6(11) ( 329,744 ) ( 379,275 ) 6(46) 928 11 6(46) ( 7,576 ) 4,013 6(46) 15 - ( 16,009,810 ) 10,624,601 290,558 741,883 93,193 ( 93,193 ) ( 2,023,768 ) 3,417,807 ( 98,143 ) 74,948 ( 80,372 ) 58,773 ( 517,809 ) - ( 22,727 ) 10,002 242,260 ( 39,549 ) 38 630 ( 3,126,130 ) 2,404,487 1,280 1,651 ( 4,808 ) 8,827 ( 2,794 ) 1,239 ( 97,426 ) 336,418 5,889,657 ( 5,845,059 ) ( 38,683 ) ( 318,267 ) ( 208,552 ) ( 94,678 ) ( 118,370 ) ( 190,454 ) 55,383 ( 224,774 ) 633 - 3,728,377 ( 1,167,642 ) 255 ( 62 ) 14,549 ( 75,147 ) 449,094 ( 285,908 ) 56,857 ( 512,289 ) 4,003 4,336

(Continued)

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PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Cash (outflow) inflow generated from operations Interest received Dividends received Income tax paid Net cash flows (used in) from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment Loss on disposal of property and equipment Acquisition of intangible assets Investments accounted for under equity method Decrease (increase) in other non-current liabilities Increase in prepayment for equipment Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term loans Increase (decrease) in commercial papers payable Repayments of principal portion of lease liabilities Increase (decrease) in other non-current liabilities Payments of cash dividends Payments to acquire treasury shares Interest paid Net cash flows from (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Notes 2019 2018 ( $ 10,861,328 ) $ 9,230,205 1,237,357 1,322,076 551,092 423,184 ( 84,456 ) ( 304,686 ) ( 9,157,335 ) 10,670,779 6(12) ( 41,146 ) ( 38,643 ) 10 - 6(16) ( 7,557 ) ( 10,187 ) ( 126,000 ) - 11,966 ( 42,016 ) ( 51,785 ) ( 33,171 ) ( 214,512 ) ( 124,017 ) 1,905,623 ( 5,342,089 ) 9,600,000 ( 3,650,000 ) ( 77,342 ) - 3,410 ( 49,201 ) 6(26) ( 959,395 ) ( 1,668,514 ) ( 231,822 ) - ( 502,822 ) ( 395,381 ) 9,737,652 ( 11,105,185 ) ( 29,292 ) 15,225 336,513 ( 543,198 ) 3,493,138 4,036,336 $ 3,829,651 $ 3,493,138

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

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PRESIDENT SECURITIES CORPORATION

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

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

1. HISTORY AND ORGANIZATION

• 1) President Securities Corporation (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.) on December 17, 1988, and was renamed as President Securities Corporation on March 4, 1989. The Company started commercial operations on April 3, 1989. As of December 31, 2019, the Company had 31 operating branches (including the Head Office), and established Offshore Securities Unit in July 2014.

• 2) The Company is primarily engaged in underwriting of securities, dealing or brokerage business of securities at the securities exchange markets and business premises, registration and transfer agency service for securities, margin loans and short sales business of securities, securities lending and borrowing business, futures introducing brokerage services, futures dealing, issuance of call (put) warrants, new financial instrument transactions, wealth management business, and trust business.

• 3) The Company’s shares are listed on the Taiwan Stock Exchange.

• 4) The number of employees of the Company were 1,447 and 1,483, as of December 31, 2019 and 2018.

• THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

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

1. 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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Effective Date by
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New Standards, Interpretations and Amendments	Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative	January 1, 2019
compensation’
IFRS 16, ‘Leases’	January 1, 2019
Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’	January 1, 2019
Amendments to IAS 28, ‘Long-term interests in associates and joint	January 1, 2019
ventures’
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 Company’s financial condition and financial performance based on the Company’s assessment.

IFRS 16, ‘Leases’

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

• B. The Company has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as endorsed by the FSC. Accordingly, the Company increased ‘rightof-use asset’ by $203,511, increased ‘lease liability’ by $200,880, and decreased prepayments by $2,631 and this had no effect on retained earnings with respect to the lease contracts of lessees on January 1, 2019.

• C. The Company has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16:

• (A) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4.

• (B) The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.

• (C) The accounting for operating leases whose period will end before December 31, 2019 as short-term leases and accordingly, rent expense of $3,330 was recognised for the year ended December 31, 2019.

• (D) The exclusion of initial direct costs for the measurement of ‘right-of-use asset’.

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• (E) The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

• D. The Company calculated the present value of lease liabilities by using the weighted average incremental borrowing interest rate of 0.767%.

• E. The Company recognised lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognised as of January 1, 2019 is as follows:

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

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

New standards, interpretations and amendments endorsed by FSC effective from 2020 are as follows:

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

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

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

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

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies are described below:

1) Compliance statement

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

2) Basis of preparation

• A. Except for the following items, these financial statements have been prepared under the historical cost convention:

• (A) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

• (B) Financial assets at fair value through other comprehensive income.

• (C) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligations.

• B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretation as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5.

3) Classification of current and non-current items

• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

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  - (A) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;

  - (B) Assets held mainly for trading purposes;

  - (C) Assets that are expected to be realized within twelve months from the balance sheet date;

  - (D) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

  • (A) Liabilities that are expected to be paid off within the normal operating cycle;

  • (B) Liabilities arising mainly from trading activities;

  • (C) Liabilities that are to be paid off within twelve months from the balance sheet date;

  • (D) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

• 4) Translation of foreign currency transactions

• A. Foreign currency translation and presentation

  • Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the “functional currency”). Functional currency and bookkeeping currency of the Company is New Taiwan Dollars.

• B. Foreign currency transactions and balances

  • Foreign currency transactions denominated in a foreign currency or required to settle in a foreign currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.

  • Monetary assets and liabilities denominated in foreign currency are translated by the closing exchange rate at balance sheet date. The closing exchange rate is determined by the market exchange rate. Non-monetary assets and liabilities denominated in foreign currencies which are carried at historical cost are re-translated at the exchange rates prevailing at the original transaction date. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are retranslated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income.

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• C. Translation of foreign operations

  • The operating results and financial position of all the company entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  • (A) Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

  • (B) Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

  • (C) All resulting exchange differences are recognised in other comprehensive income.

• 5) Cash and cash equivalents

• A. In the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with banks, and other short-term highly liquid investments.

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

• 6) Financial assets and financial liabilities at fair value through profit or loss

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

• D. The Company recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

• 7) Financial assets at fair value through other comprehensive income

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Company has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:

  • (a)The objective of the Company’s business model is achieved both by collecting contractual cash flows and selling financial assets; and

  • (b)The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and derecognized using trade date accounting.

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• C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value:

  • (a)The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

  • (b)Except for the recognition of impairment loss, interest income and gain or loss on foreign exchange which are recognised in profit or loss, the changes in fair value of debt instruments are taken through other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss.

• 8) Notes and accounts receivable, other receivables and margin loans receivable

• A. Accounts and notes receivable and margin loans receivables entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• 9) Bonds sold under repurchase agreements and bonds purchased under resale agreements Bond transactions under repurchase or resale agreements are stated at the amount of actual payment or receipt. When transactions of bonds with a condition of resale agreements occur, the actual payment or receipt shall be recognized in ‘bonds purchased under resale agreements’ under current assets. When transactions of bonds with a condition of repurchase agreements occur, the actual payment or receipt shall be recognized in ‘bonds sold under repurchase agreements’ under current liabilities. Any difference between the actual payment/receipt and predetermined redemption (repurchase) price is recognized in interest income or interest expense.

• 10) Impairment of financial assets

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

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11) Derecognition of financial instruments

• A. Derecognition of financial assets

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

• (A) The contractual rights to receive cash flows from the financial asset expire.

• (B) The contractual rights to receive cash flows from the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.

• (C) The contractual rights to receive cash flows of the financial asset have been transferred; however, the Company has not retained control of the financial asset.

• B. Derecognition of financial liabilities

• A financial liability is derecognized when the obligation under the liability specified in the contract is discharged or cancelled or expires.

12) Offsetting financial instruments

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

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

• A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Investments in subsidiaries are accounted for using the equity method and are initially recognised at cost.

• B. Unrealised gains on transactions between the Company and its subsidiaries are eliminated to the extent of the Company’s interest in the subsidiaries. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

• C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, including any other unsecured receivables, the Company does not recognise further losses.

• D. Associates are all entities over which the Company has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.

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• E. The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognise further losses, unless it has incurred statutory/constructive obligations or made payments on behalf of the associate.

• F. When changes in an associate’s equity that are not recognized in profit or loss or other comprehensive income of the associate and such changes not affecting the Company’s ownership percentage of the associate, the Company recognizes its share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.

• G. Unrealised gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

• H. According to "Regulations Governing the Preparation of Financial Reports by Securities Firms", the profit or loss for the period and other comprehensive income presented in parent company only financial reports shall be the same as the allocations of profit or loss for the period and of other comprehensive income attributable to owners of the parent presented in the financial reports prepared on a consolidated basis, and the owners' equity presented in the parent company only financial reports shall be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis.

• I. When there are objective evidences of impairment at balance sheet date, the Company considers the whole investment carrying amount as single asset, and compares its recoverable amount (value in use or fair value less costs of disposal) with the carrying amount, to test its impairment. Value in use is determined by the present value of the Company’s share of the expected future cash flow from the associates. If the recoverable amount is less than its carrying amount, an impairment loss should be recognized. The loss will not be allocated to any of the components (including goodwill), which comprise the carrying amount of the investment. An impairment loss recognized in prior periods shall be reversed if circumstances of impairment no longer exist or have decreased.

14) Property and equipment

• A. Property and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.

• B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate

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

• C. Land is not depreciated. Other property and equipment are subsequently measured using the cost model and depreciated using the straight-line method to allocate their cost over their estimated useful lives.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property and equipment are as follows:

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

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

15) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities Effective 2019

• A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company. For short-term leases or leases of low value assets, lease payments are recognised as an expense on a straightline basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are mainly comprised of fixed payments.

• The Company subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

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• C. At the commencement date, the right-of-use asset is stated at cost comprising mainly the amount of the initial measurement of lease liability.

  • The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

• 16) Investment property

• A. Investment property of the Company is the property held either to earn long-term rental income or for capital appreciation or for both.

• B. Part of the property may be held by the Company for self-use purpose and the remaining are used to generate rental income or capital appreciation. If the property held by the Company can be sold individually, then the accounting treatment should be made respectively. If each part of the property cannot be sold individually and the selfuse proportion is not material, then the property is deemed as investment property in its entirety.

• C. When the future economic benefit related to the investment property is highly likely to flow into the Company and the costs can be reliably measured, the investment property shall be recognized as assets. When the future economic benefit generated from subsequent costs is highly likely to flow into the entity and the costs can be reliably measured, the subsequent expenses of the assets shall be capitalized. All maintenance cost are recognized in profit or loss as incurred.

• D. Investment property is subsequently measured using the cost model. Depreciated cost is used to calculate amortization expense after initial measurement. The depreciation

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

17) Intangible assets

• A. The cost of computer software is amortized using the straight-line method over the useful lives based on acquisition cost, with an amortization period of 4 years.

• B. In accordance with IFRS 3 ‘Business combinations’ as endorsed by FSC, goodwill arises when the acquisition cost exceeds the fair value of identifiable assets and liabilities of the consolidated subsidiary on the consolidation date. The goodwill arising from the consolidated subsidiary is included in the intangible asset. Goodwill is tested annually for impairment and any impairment loss will be recognized when impairment occurs. Impairment losses on goodwill are not reversed.

18) Impairment of non-financial assets

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

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recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.

• B. The recoverable amounts of goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use are evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall not be reversed in the following years.

• C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

19) Financial liabilities at fair value through profit or loss

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

20) Contingent liabilities

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

21) Employee benefits

• A. Short-term employee benefits

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

• B. Termination benefits

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

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

• C. Pensions

• (A) Defined contribution plans

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

• (B) Defined benefit plans

  • a. In a defined benefit plan, the pension paid is determined based on the amount that an employee shall receive upon retirement, which could vary with age, work seniority and salary compensations. The Company recognizes the accrued pension obligations in the balance sheet based on the net amount of actuarial present value of defined benefit obligation less the fair value of fund, which is adjusted with the net of past service cost recognized as liabilities. Defined benefit obligation is assessed annually using projected unit credit method by the actuary. The present value of the defined benefit obligation is determined using the market yield of government bonds of a currency and term consistent with the currency and term of the employment benefit obligations.

  • b. Remeasurement arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.

• D. Employees’ remuneration and directors’ remuneration

• Employees’ and directors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

22) Revenues and expenses

The Company’s revenues and expenses mainly include:

• A. Gains (losses) on sale of securities, securities brokerage fees, and commissions on brokerage and trading are recognized on the transaction date.

• B. Underwriting fees and related service charges: application fees are recognized upon

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

• C. Gains (losses) on futures contracts: The margin of futures transaction is recognized as cost. Costs and expenses are recognized as incurred.

• D. Operating expenses: operating expenses refer to required expenses invested in the Company’s operations, which primarily include employee benefit expense, depreciation and amortization, and other business and administrative expenses.

• 23) Income tax

• A. Current income tax

Income tax payable (refundable) is calculated on the basis of the tax laws enacted in the countries where a company operates and generates taxable income. Except for the transactions or other matters directly recognized in other comprehensive income or equity, in which cases the related income taxes in the period are recognized in other comprehensive income or directly derecognized from equity, all the others should be recognized as income or expense for the period.

• B. Deferred income tax

• Deferred income tax assets and liabilities are measured based on the tax rate of the anticipated period that the future assets realization or the liabilities settlement requires, which is based on the effective or existing tax rate at the balance sheet date. The carrying amounts and temporary differences of assets and liabilities included in the balance sheet are calculated using the liability method and recognised as deferred income tax. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit (loss). Deferred income tax assets are recognized only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. If the future taxable income is probable to provide unused loss carryforwards or deferred income tax credit which can be realized in the future, the proportion of realization is deemed as deferred income tax asset.

• C. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions for income tax liabilities where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

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• D. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

• 24) Share capital

• A. Incremental costs directly attributable to the issuance of new shares are shown as a deduction, net of tax, from equity. Dividends from common stocks are recognized as equity in the financial period in which they are approved by the Company’s shareholders. If the date of dividends declared is later than the balance sheet date, common stocks are disclosed in the subsequent events.

• B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

25) Earnings per share

• A. Earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the year after taking into consideration the retroactive effect of stock dividends and capital reserve capitalized.

• B. When the Company calculates earnings per share, basic earnings per share and diluted earnings per share for all potential ordinary shares shall all be disclosed in accordance with IAS 33 “Earnings per share”.

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

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

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

• 2) Relevant information on key assumptions to be made in the future, key sources of assumption uncertainty made at balance sheet date, and assumptions and estimates that may cause key risks that could affect the carrying amounts of financial assets and liabilities are as follows:

• A. Fair value of financial instruments

  • Financial instruments with no active market or quoted price use valuation technique to determine the fair value. Under such condition, fair value is assessed through the observable information or models of similar financial instruments. If there is no observable input available in a market, the fair value of financial instrument is assessed through appropriate assumptions. When valuation models are adopted to determine the fair value, all the models should be calibrated to ensure that the output can actually reflect actual information and market price. Models should try to take only observable information as much as possible.

• B. Expected credit losses

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

• (A)The criteria used to judge whether there is significant increase in credit risk.

• (B)The selection of appropriate models and assumptions for measuring expected credit losses.

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

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

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

• D. Impairment assessment of goodwill

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

6. DETAILS OF SIGNIFICANT ACCOUNTS

1) Cash and cash equivalents

Checking deposits Current deposits: Deposits denominated in NTD Deposits denominated in foreign currencies Time deposits Total	December31,2019 December 31, 2018 486,626 $ 372,001 $ 92,681 225,347 987,144 544,590 2,263,200 2,351,200 3,829,651 $ 3,493,138 $

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

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2) Financial assets at fair value through profit or loss

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

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

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• a. For the years ended December 31, 2019 and 2018, net realised and unrealised gains on financial assets and liabilities at fair value through profit or loss amounted to $2,664,463 and $1,220,578, respectively.

• b. Details of the Company’s financial assets at fair value through profit or loss pledged to others as collateral are provided in Note 8.

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

• 3) Financial assets at fair value through other comprehensive income

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

• a. The Company has elected to classify unlisted stocks that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounts to $157,656 and $146,545 as at December 31, 2019 and 2018.

• b. Amounts recognised in profit or loss and other comprehensive income in relation to the

• financial assets at fair value through other comprehensive income are listed below:

Equity instruments at fair value through other comprehensive income		Year ended December 31,2019	Year ended December 31,2018
Fair value change recognised in other comprehensive income Dividend income recognised in profit or loss held at end of period Debt instruments at fair value through other comprehensive income	11,111 $ 5,595 $ 20,832) ($ 15,309 $ 784 $		12,307 $ 5,160 $ 22,066 $ 24,289) ($ 8,415 $
Fair value change recognised in other comprehensive income Cumulative other comprehensive income reclassified to profit Due to derecognition Interest income recognised in profit or loss

• c. Details of the Company’s financial assets at fair value through other comprehensive income pledged to others as collateral are provided in Note 8.

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

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4) Bonds purchased under resale agreements

December 31, 2019 December 31, 2018 Overseas bonds $ - $ 93,193

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

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

Foreign currencies (Note)

December 31, 2019 December 31, 2018 - 2.20%

(Note) ： Foreign currencies include USD and EUR.

5) Margin loans receivable

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

6) Accounts receivable

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

(Blank below)

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

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

The above ageing analysis was base on invoice day.

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

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7) Other receivables

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

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

8) Other current assets

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

9) Transfer of financial assets

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

• B. Financial assets that do not meet the derecognition conditions and related financial

liabilities are analysed below:

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

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• 10) Offsetting financial assets and financial liabilities

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

  • (Blank below)

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• B. The offsetting of financial assets and financial liabilities are set as follows:

(1)Financial assets

December 31, 2019

				December 31,2019	December 31,2019	December 31,2019	December 31,2019	December 31,2019
Financial		assets that are offset,or ca	n	be settled under agreements of net settled master nettingarrangements or similar arrangements
Derivative financial instruments Description		Gross amounts of recognised financial assets		Gross amounts of recognised financial liabilities set off in the balance sheet		Net amounts of financial assets presented in the balance sheet		Financial instruments Cash collateral received 938 $ - $ Not set off in the balance sheet	Net amount
								Financial instruments
		938 $		- $ 938 $ December 31,2018				938 $	- $
Financial		assets that are offset,or ca	n	be settled under agreements of net settled master nettingarrangements or similar arrangements
Derivative financial instruments Bonds purchased under resale agreements Total Description		Gross amounts of recognised financial assets		Gross amounts of recognised financial liabilities set off in the balance sheet		Net amounts of financial assets presented in the balance sheet		Financial instruments Cash collateral received 3,300 $ - $ 92,663 - 95,963 $ - $ Not set off in the balance sheet	Net amount
								Financial instruments
		3,300 $ 93,193 96,493 $		- $ - - $		3,300 $ 93,193 96,493 $		3,300 $ 92,663 95,963 $	- $ 530
									530 $

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(2) Financial liabilities

December 31, 2019

==> picture [695 x 234] intentionally omitted <==

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Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements
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
Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements
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
----- End of picture text -----

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11) Investments accounted for under the equity method

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

• A. The Company’s share of its associates’ profits or losses recognised in long-term equity investment accounted for under the equity method for the years ended December 31, 2019 and 2018 were $329,744 and $379,275, respectively.

• B. Details of information of subsidiaries are provided in Note 4(3) of consolidated financial statements.

• C. The financial information of the Company’s principal associates is summarized as follows:

• (a)The basic information of the associate that are material to the Company is as follows:

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

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

Balance sheet

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

Statement of comprehensive income

		Uni-President Asset	Management Corp.	Management Corp.
	Year ended December		Year	ended December
		31,2019		31, 2018
Revenue	$	831,987	$	791,291
Profit for the period
from continuing operations	$	251,386	$	239,809
Other comprehensive (loss)
income- net of tax	(	9,768)		11,569
Total comprehensive income	$	241,618	$	251,378
Dividends received from associates	$	93,631	$	72,511

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12) Property and equipment

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

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

B. The information on property and equipment pledged or restricted as of December 31, 2019 and

2018 is described in Note 8.

－ 13) Leasing arrangements lessee

Effective 2019

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

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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:

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

• C. For the year ended December 31, 2019, the additions to right-of-use assets amounted to $76,212.

• D. The information on income and expense accounts relating to lease contracts is as follows:

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

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

14) Leasing arrangements – lessor

Effective 2019

• A. The Company leases various assets including office and parking space. Rental contracts are typically made for periods of 1 and 5 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

• B. For the year ended December 31, 2019, the Company recognised rent income in the amount of

• $25,788, based on the operating lease agreement, which does not include variable lease payments.

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

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

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15) Investment property

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

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

• A. For the years ended December 31, 2019 and 2018, rental income from the lease of the investment property were both $17,652, and direct operating expenses arising from the investment property were $3,609 and $3,611, respectively.

• B. Details of fair value of investment property are provided in Note 12(5).

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16) Intangible assets

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

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

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were all allocated to the Company’s brokerage segment.

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

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

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

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

17) Other noncurrent assets

risks related to relevant operating segments. 17) Other noncurrent assets
	December 31,2019			December 31,2018
Operation guaranteed deposits	$	520,000		$	540,000
Clearing and settlement fund		244,803			224,205
Refundable deposits		193,565			239,359
Defined benefit obiligations		-			44
Prepayment for equipment		26,575			5,653
Overdue receivables		240,073			213,075
Others		720			720
Subtotal		1,225,736			1,223,056
Less: Allowance for uncollectible
accounts-overdue receivables	(	240,073)	(		213,075)
Total	$	985,663		$	1,009,981
18) Short-term loans
	December 31, 2019			December 31,2018
Unsecured loans	$	2,845,502		$	939,879
Interest rates		0.880%~2.495%			3.411%~3.500%
19) Commercial papers payable
	December 31,2019			December 31,2018
Face value	$	9,600,000		$	-
Less: discount on commercial papers payable	(	3,296)			-
Total	$	9,596,704		$	-
Interest rates		0.530%~0.695%			-

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

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

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

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21) Bonds sold under repurchase agreements

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

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

==> picture [494 x 15] intentionally omitted <==

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

Currency December 31, 2019 December 31, 2018
----- End of picture text -----

Currency	December 31,2019	December 31, 2018
NTD	0.47%~0.62%	0.33%~0.62%
Foreign currencies (Note)	-0.50%~3.40%	-0.30%~4.20%
(Note)：Foreign currencies include AUD, USD and RMB.
22) Accounts payable

22) Accounts payable
23) Other payables Settlement accounts payable - brokered trading Settlement proceeds Settlement accounts payable - operating Accounts payable - international bonds Accounts payable - foreign bonds Spot exchange payable, foreign currencies Others Total Salary and bonus payable Employees’ and directors’ remuneration payable Others Total	December 31,2019 8,410,426 $ 1,223,127 616,917 223 709,611 434,980 71,935 11,467,219 $ December 31,2019 718,595 $ 104,206 412,505 1,235,306 $	December 31,2018
		4,974,010 $ 1,811,674 256,985 78 172,208 - 77,992
		7,292,947 $
		December 31,2018
		415,980 $ 57,735 316,654
		790,369 $

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24) Other financial liabilities - current

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

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

25) Other liabilities-non-current

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

26) Pension plan

A. Defined benefit plans

(A) The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. The Company contributes monthly an amount of 7.2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the supervisory committee of workers' retirement reserve fund, and with Cathay United Bank, under the name of the management committee of employees’ retirement fund. Also, the Company would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method, to the employees expected to be qualified for retirement next year, the Company will make contributions to cover the deficit by next March.

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

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

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

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

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• (D) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2019 and 2018 is given in the Annual Labor Retirement Fund Utilisation Report published by the government. In addition, for retirement fund deposits with Cathay United Bank, under the name of the management committee of employees’ retirement fund, the fund invests in time deposit accounts under Cathay United Bank.

• (E) The principal actuarial assumptions used were as follows:

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

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

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

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

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

• B. Defined contribution plans:

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

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

27) Equity

• A. Common stock

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

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

(Expressed in thousands)

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

• (B) Treasury shares

In order to maintain the Company’s credit and stockholders’ rights and interests, the Company bought back outstanding shares. The movement of the number of treasury shares is as follows:

(Expressed in thousands)

==> picture [471 x 121] intentionally omitted <==

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

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

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

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B. Capital reserve

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

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

• C. Legal reserve

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

• D. Special reserve

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

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

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

• 28) Unappropriated earnings and dividends policy

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

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

• B. In addition, the total amount of dividends declared every year shall be at least 70% of distributable earnings, of which stock dividends shall be at least 50% and cash dividends shall be lower than 50%.

• C. The Company may determine a better proportion of cash and stock dividends distribution based on its actual operating conditions and capital utilization plan for the following year.

• D. The appropriation of 2018 and 2017 earnings was resolved by the shareholders on June 18, 2019 and June 21, 2018, respectively. Detail is as follows:

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

• Note 1 ： Special reserve was provided for employees’ transition for financial technology development according to Jing-Guan-Zheng-Chuan Letter No. 10500278285, and can be reversed for employees’ transition. The Board of Directors of the Company resolved to provide 0.5% as special reserve and made reversal of the special reserve on March 22, 2019 and March 26, 2018.

• Note 2 ： Special reserve shall be set aside in the same amount of net debit amount of other equity interest recorded in current year from the profit or loss of current year and the accumulated unappropriated earnings pursuant to paragraph 1 of Article 41 of Securities and Exchange Act and Jing-Guan-Zheng-Chuan Letter No. 1010028514.

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

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

• Note 3 ： Special reserve was provided for employees’ transition for financial technology development according to Jing-Guan-Zheng-Chuan Letter No. 1080321644, and can be reversed for employees’ transition.

• F. For details on employees’ remuneration and directors’ remuneration, please refer to Note 6 (43).

29) Brokerage handling fee revenue

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

30) Revenues from underwriting business

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31) Gain (loss) on sale of trading securities

			Year ended			Year ended
		December 31,2019			December 31,2018
Dealers:
-TAIEX	$		1,686,209	$		1,119,471
-OTC			139,489	(		57,940)
-Overseas trading			504,755	(		79,821)
Subtotal			2,330,453			981,710
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	$		2,833,461	$		277,015

32) Interest revenue

Interest revenue
Interest income from margin loans Interest income from bonds Others Total	Year ended December 31,2019		Year ended December 31,2018
	484,574 $ 674,047 4,574 1,163,195 $		623,031 $ 632,528 735 1,256,294 $

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

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

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34) 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
(Loss) gain from covering - warrants	(	3,919)		1,816
Gain from covering - structured notes		2,861		7,892
Loss from securities borrowing transactions
- structured notes	(	1,295)		-
Gain from securities borrowing transactions
- dealer		46,294		10,963
Total	$	37,413	$	27,788

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

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

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

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

37) Gain from issuance of call (put) warrants

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38) (Loss) gain from derivatives

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

39) Impairment loss and reversal of impairment loss

40) Other operating income

41) Handling charges

42) Financial costs

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43) Employee benefits expense

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

• A. In accordance to the Company’s Article of Incorporation, the remainder of the year-end income before taxes less income before appropriating employees’ compensation and directors’ remuneration, if any, shall appropriate an employees’ compensation no less than 1.6% and directors’ remuneration no more than 2%. However, when the Company has an accumulated deficit, earnings to cover the deficit shall first be retained before appropriating employees’ compensation and directors’ remuneration.

• B. For the years ended December 31, 2019 and 2018, employees’ compensation was accrued at $52,103 and $28,868, respectively; directors’ remuneration was accrued at $52,103 and $28,868, respectively. The aforementioned amounts were recognised in salary expenses.

• C. For years ended December 31, 2019, employees’ compensation was estimated at 2% and directors’ remuneration at 2%, based on the period-end income before taxes less income before appropriating employees’ compensation and directors’ remuneration.

• D. The actual distributed amount of employees’ and directors’ remuneration for 2018 as resolved by the Board of Directors was in agreement with the estimates in the 2018 financial statements.

• E. Information on the appropriation of the Company’s earnings as resolved by the Board of Directors would be posted in the “Market Observation Post System” on the Taiwan Stock Exchange Official website.

44) Depreciation and amortization

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

45) Other operating expenses

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46) Other gains and losses

Other gains and losses
Income tax A. Income tax expense (a)Components of income tax expense: (b)The income tax expense relating to components Financial income Gain (loss) on disposal of investments Loss on valuation of open-ended funds and money-market instruments Loss arising from lease modification Net currency exchange gain (loss) Other non-operating revenues Total Current tax: Current tax on profits for the periods Prior year income tax underestimation (overestimation) Tax on undistributed surplus earnings Total current tax Deferred taxes: Origination and reversal of temporary differences Impact of change in tax rate Total deferred taxes Income tax expense Remeasurement of defined benefit obligations Impact of change in tax rate	Year ended December 31,2019 19,159 $ 9,073 928) ( 15) ( 7,576 124,825 159,690 $ Year ended December 31,2019
	6,972) ($ - $

47) Income tax

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

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

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

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For the year ended Decmeber 31, 2018

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

• D. As of December 31, 2019, the Company’s income tax returns through 2016 have been assessed and approved by the National Tax Authority.

• E. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018.

• F. With respect to the income tax returns of the Company for 2016, the Tax Authority assessed to increase income tax payable by $11,820. However, the Company disagreed with the assessments and had filed for administrative remedy. The Company had recognised the income tax expense based on the assessment.

48) Earnings per share

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

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==> picture [468 x 191] intentionally omitted <==

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

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
----- End of picture text -----

7. RELATED PARTY TRANSACTIONS

1) Names and relationships of related parties

Names of related parties

Uni-President Enterprises Corp.

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

President Securities (Nominee) Ltd.

President Wealth Management (HK) Ltd.

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

Funds managed by Uni-President Asset Management Corp.

Relationship with the Company

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

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2) Significant related party transactions and balances

A. Futures guarantee deposits receivable

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

－ D. Lease transactions lessee

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

Co., Ltd. Rental contracts are typically made for periods of 1 to 5 years. Rents are paid monthly.

• (B) Right-of-use assets:

a. Acquisition of right-of-use assets:

ht-of-use assets: cquisition of right-of-use assets:
Other related party: President Tokyo Co., Ltd. (Acquisitions amounted to $8,256 thousands for the year ended December 31, 2019)	December 31,2019
	20,190 $

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

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b. Disposals of right-of-use assets:

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

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

• (C) Lease liabilities

• a. Lease liabilities current

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

• E. Refundable deposits

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F. Accounts payable

F. Accounts payable
G. Guarantee deposit received H. Bonds sold under repurchase agreements I. Handling fee revenue J. Futures commission income Subsidiary of the Company PSC: President Futures Corp. Other related party: Others Total Subsidiary of the Company PSC: President Futures Corp. Others Associate: Uni-President Assets Management Corp. Other related party: President Tokyo Co., Ltd. Total Other related party: President Life Sciences Cayman Co., Ltd Cayman President Holdings Ltd. Subsidiary of the Company PSC: Others Security investment trust fund raised by the Uni-President Asset Management Corp.: Uni-President Asset Management Corp. Other related party: Others Total Subsidiary of the Company PSC: President Futures Corp.		December 31,2019 242 $ 452 694 $ December 31,2019 $ 16,137 804 1,044 1,434 19,419 $ December 31,2019 $ 24,475 - 24,475 $ Year ended December 31,2019			December 31,2018 24 $ 460 484 $ December 31,2018 $ 16,137 806 530 1,393 18,866 $ December 31,2018 $ - 184,290 184,290 $ Year ended December 31, 2019
			$ 128 32,992 810
			33,930 $
			Year ended December 31,2019
		35,784 $

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

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

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

L. Other operating income - handling charge revenue

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

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

M.Rent income

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

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

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N. Revenue from providing agency service for stock affairs

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

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S. Financial costs

S. Financial costs	S. Financial costs	S. Financial costs	S. Financial costs	S. Financial costs
T. Purchases of trading securities–dealer U. Compensation of key management personnel The compensation of key management such as directors, general managers, vice general managers were as follows: Year ended December 31, 2019 Year ended December 31, 2018 Other related party: Cayman President Holdings Limited 1,477 $ 66 $ President Life Sciences Cayman Co., Ltd 528 - Total 2,005 $ 66 $ Year ended December 31, 2019 EndingShares EndingBalance Entity having significant influence on the company: Uni-President Enterprises Corp. 76 5,639 $ 2,458) ($ Other related parties: President Chain Store Corp. - - 209) ( Total 5,639 $ 2,667) ($ Year ended December 31, 2018 EndingShares Ending Balance Entity having significant influence on the company: Uni-President Enterprises Corp. - - $ 579 $ Other related parties: Ton Yi Industrial Corp. - - 16 President Chain Store Corp. - - 944) ( Total - $ 349) ($ Gain (loss) December 31,2019 December 31,2018 Gain(loss) Year ended December 31,2019 Year ended December 31,2018 Salary and short-term employee benefits 154,625 $ 130,701 $ Retirement benefits 774 908 Total 155,399 $ 131,609 $
		154,625 $ 774 155,399 $		130,701 $ 908 131,609 $

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8. PLEDGED ASSETS

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

Assets

December 31, 2019 December 31, 2018

Purposes

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

9. SIGNIFICANT COMMITMENTS

None.

10. SIGNIFICANT LOSS FROM NATURAL DISASTER

None.

11. SIGNIFICANT SUBSEQUENT EVENT

None.

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12. OTHER

1) Management objective and policy of financial risks

• A. Risk management objective

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

• B. Risk management system

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

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

• C. Risk management organization

• Risk management organization: Board of Directors, Risk Management Committee, Risk Control Office, Business units and other related segments (such as Office of Auditing, Office of General Manager, Compliance segment, Legal segment and Finance segment) are in charge of planning, supervising and execution.

• (A) The Board of Directors should ensure the effectiveness of risk management and be responsible for the ultimate result and the following duties:

  • a. To establish proper risk management system, operating process, and risk management culture in the Company with allocation of necessary resource for better execution and operation.

  • b. Policy of risk management review

  • c. Review and approval of business application, transaction authorization and risk limit.

• (B) The Risk Management Committee reports to the Board of Directors and is responsible for the following:

  • a. Review risk management policy

  • b. Review the highest risk tolerance

  • c.Submit regular reports to the Board of Directors in relation to the risk management status of the whole Company

• (C) The General Manager supervises daily risk management of the entire Company and is responsible for the following:

  • a. Supervise and monitor daily risk management of the entire Company

  • b. Approval of management exceptions

• (D) Assets and Liabilities Committee reports to the General Manager and is responsible for the following:

  • a. Set up the ultimate guidelines for assets and liabilities management of the entire Company

  • b. Analyze and control the entire Company’s assets and liabilities portfolio

  • c. Approval of various businesses’ quotas

  • d. Gather and analyze information on domestic and offshore interest rate, exchange rate, prosperity fluctuation, political and economic environmental changes, and predict the financial trend in the future

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• (E) Risk Control Office implements risk management policy and related regulations and reports to the Risk Management Committee. Risk Control Office also reports daily risk management to the General Manager and is responsible for the following:

  • a. Establish Risk Management Policy of the entire Company

  • b. Develop effective method for measurement and risk management in an entity

  • c. Review risk management system of business units

  • d. Generate risk report through information gathering and consolidation

  • e. Analyze various business risks and report to the General Manager

  • f. Report the risk management situation to the Risk Management Committee according to a meeting’s nature and needs

  • g. Carry out duties as designated by the Risk Management Committee and control risks of business units

• (F) Auditing Office is responsible for the following:

  • a. Execute operating risk control

  • b. Include the risk management system into internal audit program and carry out the daily audit schedule.

  • c. Assess the effectiveness of internal control and verify the executed result.

• (G) Compliance segment and legal segment under the Office of General Manager are responsible for the following:

  • a. Compliance segment should make sure that the business operation and risk management system are in compliance with relevant regulations.

  • b. Legal segment is responsible for legal risk control

  • c. Compliance segment also provides services of Anti-Money Laundering and Counter Terrorism Financing, including designs specification and internal control, establishes transaction monitoring, oversees the effective implementation of business units, conducts the employee training and reports any suspicion of money laundering.

• (H) Finance segment is responsible for the following:

  • a. Verify the correctness of position information and reasonability of profit and loss calculation.

  • b. Control and analyze self-owned capital adequacy ratio.

  • c. Analyze the appropriateness of structures of the assets and liabilities.

• (I) Business units are responsible for the following:

  • a. Set up risk management details of various businesses according to the risk management policy and other related regulations.

  • b. Provide sufficient position information and risk control information to the Risk Control Office.

• (J) Settlement division is responsible for:

  • a. Clearing and settlement; risk control and management of margin purchase and short sale of securities.

  • b. Risk control and management of trading middle office and enforcement of rules governing risk management of business segments.

• D. Risk management policy

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

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

• (A) Market risk management

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

• (B) Credit risk management

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

  - (C) Fund liquidity risk

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

• E. Hedging and risk-offsetting strategy

  • (A) Policies of hedging and risk mitigating are parts of the Company’s risk management policies, and the hedging position and hedged trading position are supposed to be one portfolio, of which the gain and loss and risk information are measured on a consolidated basis.

  • (B) The overall position (hedging position and trading position) is included in the daily risk management system to calculate Value at Risk and other relevant information. Limit exceeding indicators mainly include nominal principal, stop-loss point, price sensitivity and VaR. With the presentation of daily risk management report, routine control and limit exceeding treatment can be executed.

  • (C) The continued effectiveness of hedging and risk-offsetting strategy is measured by the gain and loss of overall position (hedging position and trading position), in order to track reasonableness of the profit or loss of hedging position and the offsetting relationship with the profit or loss of trading position, and to control them within a reasonable range.

• 2) Credit risk

• A. Source and definition of credit risk

  • The credit risk exposure of the Company as a result of engagement in financial transactions include issuer’s credit risk, credit risk of counterparty and credit risk of underlying assets:

  • (A) Credit risk of the issuer refers to the issuers of financial debt instruments held by the Company failing to repay its obligation due to the fact that the issuer breaches the contract resulting in the risk of financial loss to the Company.

  • (B) Credit risk of counterparty refers to risk of financial loss to the Company arising from default by the counterparty of financial instruments on the settlement or payment obligation.

  • (C) Credit risk of the underlying assets happens when the credit rating of the underlying assets linked to the financial instrument is downgraded by the rating agency or when the losses occur as a result of contract default.

The financial assets held by the Company which could result in credit risk include bank deposit, debt securities, derivatives transactions in OTC, bonds purchased/sold under resale/repurchase agreements, refundable deposit of securities lending, futures trade margins, other refundable deposits and receivables.

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• B. Maximum credit risk exposure and credit risk concentration

• The maximum exposure to credit risk of financial assets in the parent company only balance sheet, without consideration of the collateral or other credit enhancements, is equivalent to the carrying amount. In Taiwan, the sources of credit risk of the Company are primarily resulting from cash deposited with banks or other financial institutions, debt securities issued or guaranteed by a bank, derivative instruments transaction underwritten by the Company, and all counterparties of customer margin deposits accounts being financial institutions. Credit risks of various financial assets are as follows:

• (A) Cash and cash equivalents

Cash and cash equivalents include time deposit, demand deposits and checking deposits. Correspondent institutions are mainly domestic financial institutions.

• (B) Financial assets at fair value through profit and loss -current

• a. Fund

  • The funds held by the Company are bond funds. As the positions held are not significant, credit risk is deemed low.

• b. Commercial bond

The commercial bonds held by the Company are repurchase agreements. As all the counterparties are financial institutions with good credit, the credit risk from counterparties is extremely low.

• c. Debt securities

Debt securities are mainly positions like government bonds, convertible corporate bonds and foreign bonds and the issuers are primarily R.O.C. government, domestic and foreign legal entities. 33% of convertible corporate bond is guaranteed by banks. Details are as follows:

• (a)Bonds

The bonds held by the Company are mostly government bonds (inclusive of central and local government). As a whole, the credit risk of the bonds held by the Company is low.

• (b) Corporate bonds

The corporate bonds held by the Company are mainly underlying investment with good credit rating and those with rating above (S&P BB).

• (c)Convertible corporate bond

The convertible corporate bonds held by the Company are mostly issued by the domestic legal entities. The Company mitigates highly risky credit exposure of the issuers by control through Taiwan Corporate Credit Risk Index (TCRI).

• (d)Foreign bonds

The foreign bonds held by the Company are mainly underlying investment with good credit rating and those with rating above (S&P BB).

• (C) Financial assets at fair value through other comprehensive income - current The foreign government bonds held by the Company are classified as debt instruments at fair value through other comprehensive income. In general, the bonds held by the Company are with lower credit risk.

• (D) Derivatives- futures trade margin

When engaging in futures trades in stock exchange market, the Company needs to deposit margin into a margin deposit account of a financial institution designated by the futures merchants as a guarantee to fulfil contractual obligation in the future. As a result, the credit risk is low.

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• (E) Derivatives-OTC

• The Company signs International Swaps and Derivatives Association (ISDA) agreements with each counterparty when engaging in OTC derivatives as an agreement regarding such transactions for both parties. In the agreement, it provides a fundamental contractual model for OTC derivative transactions. If any party breaches the contract or terminates the transactions early, then all the open interest covered in the agreement should be settled by net amount as bound in the contract. When the ISDA agreement is signed, the Credit Support Annex (CSA) is also signed. According to the CSA, collateral will be transferred from a party to the other during transaction process to mitigate the risk of counterparty in open interest. Please refer to Note 6(10).

• Types of OTC derivative transactions in which the Company is engaged include swap transaction. The counterparties are all from financial service industry and mainly located in Taiwan and United Kingdom.

• (F) Bonds investment under a resale agreement Bonds sold under a resale agreement are the bonds that the client sold to the Company at a price, interest rate, length of period as agreed by two parties and the client shall repurchase the bonds at the specified price upon maturity. The Company needs to assume credit risk from counterparties when underwriting such business, as the payment being delivered to the other party. With consideration of good collateral obtained, the net of credit risk exposure from counterparties can be effectively reduced. As all the counterparties are financial institutions with good credit rating, the credit risks from counterparties are extremely low. Please refer to Note 6(10).

• (G) Margin loans receivable

• Margin loans receivable are the loans provided to the client in order to process businesses of margin trading and short sale using the securities purchased through financing as collateral. The Company monitors the clients’ margin ratio through information system on a daily basis. As the margin ratio of margin trading is set at 130% according to Regulations Governing the Conduct of Securities Trading Margin Purchase and Short Sale Operations by Securities Firms, the credit risk is extremely low.

• (H) Receivable of securities business money lending Receivable of securities business money lending are the non-restricted purpose loan business and monetary financing business, pursuant to an agreement between a securities firm and a customer, using customer securities and other commodities as collateral. The Company regularly assesses its customer line of credit and implements appropriate credit control.

• (I) Guaranteed price for securities lending Guaranteed price for securities lending is the sale price of the Company’s securities sold by other securities firms through margin trading after deduction of securities transactions tax and service fee, which is deposited in other securities firms as collateral. As all the counterparties are financial institutions with good credit rating, the credit risk from counterparties is extremely low.

• (J) Refundable deposits for securities lending Refundable deposits for securities lending are the margins deposited in other securities firm as collateral when the Company’s securities are sold. As all the counterparties are financial institutions with good credit, the credit risk from counterparties is extremely low.

• (K) Receivables

• Receivables are the credit rights arising from the securities business including settlement receivables of consignment trading, settlement receivables of operating securities sold, financing interest receivables of self-operating credit transaction, receivables of consignment trading for securities, and receivables from banks’ underwriting on foreign

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exchange transactions and foreign fund demand. As the majority of the Company’s receivables from the consignment businesses and self-operating businesses are settlement of securities from OCT or TWSE, the credit risk is extremely low. As the foreign exchange transactions are simply the receipt or payment of different currencies and the correspondent banks are of good credit rating, the credit risk is extremely low.

• (L) Other current assets

Other current assets are mainly the collateral deposited in the bank for application for shortterm debt limit and guarantee for application for issuance of commercial papers. As the correspondent banks are all financial institutions with good credit rating, the credit risk is extremely low.

• (M) Financial assets at fair value through profit and loss – non-current In order to underwrite trust business, the Company deposits central government bonds in the Central Bank as collateral. Regardless of the bonds themselves or the financial institutions where the bonds deposited, the credit risk is extremely low.

• (N) Other non-current assets

Other non-current assets mainly comprise operating guarantee deposits, settlement funds, and refundable deposits. Operating guarantee deposits are mainly deposited in domestic banks with good credit rating. Settlement funds are deposited in securities exchange. Settlement funds are used as compensation when a party to a marketable securities transaction fails to fulfil the settlement obligation. The credit risks from the institutions where these two assets are deposited are extremely low. The refundable deposits refer to cash or other assets which are deposited externally by the Company and can be used as refundable deposits. Because deposits are placed in various financial institutions and each deposit amount is small, the credit risk is dispersed and the credit exposure of overall refundable deposit is extremely low.

• C. Expected credit loss assessment

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

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The definition of and expected credit losses recognised for each stage are as follows:

Item	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

• (A) Judgements of the significant increase in credit risk since initial recognition Judgements and assumptions used to determine whether the credit risk has a significant increase since initial recognition when the Company calculates expected credit loss under IFRS 9 are as follows:

• a. If contractual payments are over 30 days past due according to the payment terms, the financial asset is considered to have significant increase in credit risk since initial recognition.

• b. There is significant increase in credit risk at the reporting date if the credit rating of the issuer has been downgraded by more than 2 grades and the final external credit rating at the reporting date is non-investment grade, if the interest payments are over 30 days past due, or if there has been a default in the past.

• (B) Definition of default and credit-impaired financial assets

• According to the definition of credit impairment set by IFRS 9, a financial asset is creditimpaired when one or more events that have occurred and have a significant impact on the expected future cash flows of the financial asset. The criteria used to judge whether a financial asset is credit-impaired since initial recognition includes but is not limited to the following:

• a. Contractual payments or principal or interest payments on bonds are over 3 months (90 days) past due.

• b. Bond investment is rated as “in default” by external credit rating agencies.

• c. Bond issuer has filed for bankruptcy, restructure, or other debt clearance procedures.

• d. Issuer or counterparty has financial difficulties.

• (C) Writing-off policy

If any of the following condition applies, the Company will write off the non-recoverable portion of the overdue receivables as bad debt.

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• a. Debt cannot be fully or partially recovered due to dissolution of, disappearance of, settlement with, bankruptcy declaration by the debtor, or any other reason.

• b. The collateral and the assets of the primary and secondary debtors could not be auctioned off after multiple attempts and multiple price discounts, and the Company has not received any real benefits in assuming the collateral.

• c. Payments are over two years past due and could not be recovered after attempts to collect.

• (D) Measurement of expected credit losses

• The Company considers reasonable supporting information which shows significant increase in credit risk since initial recognition when calculating expected credit losses. Main indexes include: internal/external credit rating, information of past due, credit spread, other market information in relation to the borrower, issuer or counterparty, and significant increase in credit risk of other financial instrument of the same borrower.

• a. Investments in bills and bonds

  • (a)Probability of default was based on external credit rating, which include forwardlooking information.

  • (b)Loss given default was based on the average loss given default of external credit rating of investment position and counterparties.

  • (c)Exposure at default

Stage 1, Stage 2 and Stage 3: Total carrying amount (including interest receivable).

• (E)Consideration of forward-looking information

  • Historical loss rate (based on the historical experience in the past 3 to 5 years) as obtained and compared with economic environment in the past, nowadays and future (forward-looking factor) to see whether there is any significant change, and then to properly adjust future loss rate standards. If any significant default event occurs, the loss rate in the current year will be included in the calculation of future loss rate standard.

• D. Table of movements in loss provision of the Company

• (A) For the years ended December 31, 2019 and 2018, there were no changes in the loss allowance for investments in debt instruments measured at fair value through other comprehensive income.

• (B) Except for debt investments and its interest receivable, the Company applies the modified approach to measure the loss allowance at an amount equal to lifetime expected credit losses for receivables and overdue receivables. The movements in loss provision of marginal receivables, accounts receivable, other receivable-others and other non-current assetsoverdue receivables of the Company are as follows:

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Year ended December 31, 2019

		Year ended December 31,2019	Year ended December 31,2019	er 31,2019	er 31,2019
At January 1_IFRS 9 Provision (reversal of provision) for impairment Derecognised Transfers At December 31 At January 1_IFRS 9 Provision (reversal of provision) for impairment Transfers At December 31	Marginal receivable	Accounts receivable Other receivable Other non- current assets- overdue receivables 2,661 $ 288 $ 213,075 $ 528 234) ( 13,191) ( - - 274) ( 2,533) ( - 40,463 656 $ 54 $ 240,073 $ Accounts receivable Other receivable Other non- current assets- overdue receivables 4,359 $ - $ 136,443 $ 2,648 288 21,866 4,346) ( - 54,766 2,661 $ 288 $ 213,075 $ Year ended December 31,2018		Other non- current assets- overdue receivables		Total
	61,669 $ 20,067 - 37,930) ( 43,806 $ Marginal receivable					277,693 $ 7,170 274) ( - 284,589 $ Total
	84,093 $ 27,996 50,420) ( 61,669 $	4,359 $ 2,648 4,346) ( 2,661 $			136,443 $ 21,866 54,766 213,075 $		224,895 $ 52,798 - 277,693 $

3) Liquidity risk

• A. Definition and source of liquidity risk

Liquidity risk refers to possible financial losses arising from the inability to realize the asset or to obtain sufficient fund to fulfil the financial liabilities soon to be matured. Above situations may weaken the sources of cash from the Company’s trading and investment activities.

• B. Liquidity risk management procedure and stimulation test

In order to prevent operational crisis as a result of liquidity risk, the Company has established responding crisis process with regular monitoring over liquidity gap of fund.

• (A) Procedure

• In addition to the operating capital for various business and long-term investment, the Company needs to maintain revolving funds at a certain level for daily operation. The use of remaining fund shall avoid high concentration and should be based on the principle of holding sound earning assets with high liquidity and treated in compliance with policies of the Company.

The responsive unit for fund procurement adjusts the liquidity gap to ensure proper liquidity according to the daily volume and movement in the market.

• (B) Stimulation test

• a. The Company reviews fund liquidity risk from a perspective of supply and demand of fund every month with simulation analysis of available fund for emergency including scenario analysis of cash, funding limit of financial institutions, margin loans and short sale, and value of disposal of position in order to compute maximum available fund and

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fund demand. Finally, safety stock of fund is reviewed to monitor liquidity risk.

  - b. Above liquidity risk is generally reviewed monthly. However, if the available limit of increment banking credit risk in financing limit of a financial institution is lower than a certain amount (that is, the amount may be timely adjusted according to the fund liquidity in the market and the actual fund demand and supply in an entity), the safety stock will be reviewed weekly. After the early warning report for fund is submitted, the head of finance segment will call for a fund control meeting.

  - c. Other than individual funding liquidity risk of an entity, stress test of minimization funding supply and maximization funding demand in the event of significant crisis is simulated, including:

     - (a)When there is a significant crisis in the market, the financing limit of the financial institutions and the value of disposal of position can be deemed the minimized ratio of fund supply which is then adjusted according to actual condition to compute the total fund supply under maximum stress.

     - (b)Except for the operating expense, the stock concept is adopted for the calculation of total fund demand under maximum stress.

     - (c)The Company should conduct a review to see whether the total minimized fund supply is more than maximized total fund demand. The Company should further review how long (by month) the difference may cover the operating expenses so that the safety stock of fund (by month) under stress test can be computed.

     - (d)The minimum safety stock of fund under stress test (by month) may be adjusted according to the crisis itself and only operating expense for at least 6 months under a normal stimulation can be deemed safe.

• C. Maturity analysis for the financial assets and financial liabilities held for liquidity risk management

• (A) The Company holds cash and sound earning assets with high liquidity in order to fulfil the payment obligation and potential emergency fund demand in the market. Financial assets held for liquidity risk management are mainly cash and cash equivalents, among which, all time deposits mature within a year. Financial assets at fair value through profit and loss are mainly listed stocks, convertible bonds and debt securities. As all of them have positions in active market, the liquidity risk is deemed low.

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(B) Maturity analysis for the financial liabilities is as follows:

Short-term loans Commercial papers payable 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 Accounts payable (includes notes payable) Collections on behalf of third parties Other payables Other financial liabilities -current Lease liability Total Financial liabilities at fair value through profit or loss-current						December 31,2019
		Immediately		Less than 3 months		3-12 months	1-5years - $ - - - - - - - - 85,924 - - 155,491 241,415 $	Total
		600,000 $ 350,000 391,227 457,039 - 1,558,717 1,888,832 - 11,439,298 284,082 - - - 16,969,195 $		2,245,502 $ 9,250,000 - - 21,035,116 - - 56,004 27,921 5,576 176,676 1,797,292 1,067 34,595,154 $		- $ - - - - - - - - - 1,058,630 946,574 5,857 2,011,061 $		2,845,502 $ 9,600,000 391,227 457,039 21,035,116 1,558,717 1,888,832 56,004 11,467,219 375,582 1,235,306 2,743,866 162,415
								53,816,825 $

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Short-term loans 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 Accounts payable (includes notes payable) Collections on behalf of third parties Other payables Other financial liabilities -current Total Financial liabilities at fair value through profit or loss-current					December 31,2018	December 31,2018	December 31,2018
		Immediately		Less than 3 months		3-12 months		1-5years - $ - - - - - - - 87,780 - - 87,780 $	Total
		623,514 $ 598,457 267,073 - 1,767,269 2,007,202 - 7,275,941 268,589 648 - 12,808,693 $		316,365 $ - - 15,134,144 - - 621 17,006 4,664 129,223 1,378,506 16,980,529 $		- $ - - - - - - - - 660,498 1,308,503 1,969,001 $			939,879 $ 598,457 267,073 15,134,144 1,767,269 2,007,202 621 7,292,947 361,033 790,369 2,687,009
									31,846,003 $

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• D. Maturity analysis for lease contracts and capital expenditures Effective 2018

• Operating lease commitment is the total minimum lease payments that the Company should make as a lessee or minimum lease income as lessor under an operating lease term which is not cancelable. The capital expenditure commitment is the contract commitment signed for acquisition of capital expenditure of construction and equipment.

The following table illustrates maturity analysis for lease contract and capital expenditure commitment of the Company:

commitment of the Company:
December 31,2018 Not later than one year Later than one year but not later than five years Over five years Total	Operating leases expenditures(Lessee) 76,982 $ 123,565 2,808 203,355 $	Operating leases income(Lessor)
		12,633 $ 3,882 - 16,515 $

4) Market risk

• A. Definition of market risk

Market risk refers to the risk of decrease in the Company’s revenue or value of investment portfolio as a result of the changes in exchange rate, commodity price, interest rate, and stock price or other market risk factors.

The Company continually exercises risk management tools such as sensitivity analysis, Value at Risk, stress test and so on to completely and effectively measure, monitor and manage market risk.

• B. Value at Risk (VaR)

Value at Risk is used to measure the possible maximum potential losses in investment portfolio as a result of movement in market risk factor in a specified period and confidence level. The Company currently uses confidence level of 95% to calculate Value at Risk of one day. A VaR model must reasonably, completely and accurately measure the maximum potential risks of financial instruments or investment portfolio before being adopted as a risk management model by the Company. The VaR model used in risk management is continually certified and retrospectively tested to demonstrate that the model can reasonably and effectively measure the maximum potential risks of financial instruments or investment portfolios.

Statistical table for one-dayVaR of transactions	Statistical table for one-dayVaR of transactions	Statistical table for one-dayVaR of transactions	Statistical table for one-dayVaR of transactions
Year ended December 31,2019 December 31, 2019 VaR Maximum VaR Average VaR Minimum	Amount 99,926 $ 168,442 93,088 27,518	Year ended December 31,2018 December 31, 2018 VaR Maximum VaR Average VaR Minimum	Amount 53,973 $ 258,223 111,350 32,743

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Statistical table for VaR of various risk indicators of transactions Year ended

Year ended Statistical table for Va	R of various risk indic	ators of transactions
December 31,2019 December 31, 2019 VaR Maximum VaR Average VaR Minimum Year ended December 31, 2018 December 31, 2018 VaR Maximum VaR Average VaR Minimum	Foreign exchange 5,000 $ 27,860 6,610 1,566 Foreign exchange 3,521 $ 40,485 11,270 2,854	Interest 17,268 $ 72,934 35,173 8,308 Interest 8,223 $ 33,482 16,585 7,429	Share ownership
			101,873 $ 168,753 90,473 24,844 Share ownership 52,543 $ 264,509 111,320 27,951

C. Information on gap of foreign exchange risk

The following table summarizes financial instruments of foreign assets or liabilities by currency and the foreign exchange exposure presented by book value as of December 31, 2019 and 2018 ： (Blank below)

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Financial assets in foreign currencies Cash and cash equivalents Financial assets at fair value through profit or loss Investments under equity method Others Financial liabilities in foreign currencies Short-term loans Financial liabilities at fair value through profit or loss Bonds sold under repurchase agreements Others	USD 247,624 $ 15,858,467 2,301,733 1,023,068 2,245,502 12,434 12,219,296 3,016,289	EUR 954 $ 1,834,006 - 2,274 - 2,749 1,445,146 -	AUD RMB HKD Others 2,447 $ 282,302 $ 276,838 $ 176,979 $ 852,473 1,299,213 164,475 236,952 - - 72,935 - 3,593 126,910 101,145 721 - - - - 1,710 13,715 465 1,072 700,804 1,023,554 - 119,876 5,729 371,927 83,056 33,166 December 31,2019	Total
				987,144 $ 20,245,586 2,374,668 1,257,711 2,245,502 32,145 15,508,676 3,510,167

Note: As of December 31, 2019, foreign exchange rates of the above currencies to TWD were 1 USD = 29.98 TWD; 1 EUR = 33.59 TWD; 1 AUD = 21.005 TWD; 1 RMB = 4.305 TWD; and 1 HKD = 3.849 TWD, respectively.

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December 31, 2018
USD EUR AUD RMB HKD Others Total
Financial assets in foreign currencies
----- End of picture text -----

Financial assets in foreign currencies		USD		EUR		AUD		RMB		HKD		Others		Total
Cash and cash equivalents	$	350,128	$	1,378	$	2,651	$	3,237	$	433	$	186,763	$	544,590
Financial assets at fair value through
profit or loss		7,249,134		1,368,025		755,860		1,827,805		63,507		1,707		11,266,038
Available-for-sale financial assets
- current		296,304		-		-		-		-		-		296,304
Bonds purchased under resale
agreements		93,193		-		-		-		-		-		93,193
Investments under equity method		2,298,272		-		-		-		72,792		-		2,371,064
Others		257,087		3,609		4,570		43,961		2,287		-		311,514
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		1,461,060		-		2,691		206,660		1,493		-		1,671,904
Note: As of December 31, 2018, foreign exchange rates of the above				currencies	to TWD were 1		USD = 30.715 TWD; 1 EUR = 35.200					TWD;
1 AUD = 21.665 TWD; 1 RMB = 4.472 TWD;	and 1 HKD = 3.921			TWD, respectively.

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• D. The total exchange gain (loss), including realized and unrealized, arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2019 and 2018, amounted to $196,750 and $28,872, respectively.

• 5) Fair value and hierarchy information

• A. Financial instruments and non-financial instruments not measured at fair value. Except for those listed in the table below, the carrying amounts of the Company’s financial instruments not measured at fair value (including cash and cash equivalents, bonds purchased under resale agreements, margin loans receivable, refinancing guaranty deposits, guaranteed proceeds receivable from refinancing, guaranteed price deposits for security borrowing, security borrowing deposits, customer margin deposit account, notes and accounts receivable, other receivables, short-term loans, commercial paper payable, bonds sold under repurchase agreements, guarantee deposit received from short sales, guaranteed price deposits received from securities borrowers, security borrowing deposits, equity of futures traders, accounts payable, collection for others, and other payables) approximate their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(5)3.

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

The fair value of investment property held by the Company was assessed by external valuation experts using comparison approach and income approach, or the fair value can be assessed based on the market price of the area adjacent to the location where the Company’s investment property is located.

• B. Valuation techniques

• (A)For financial instruments held for trading purposes which are classified as non-derivative instruments, their fair values are based on their quoted prices in an active market. If there is no quoted market price for reference, a valuation technique will be adopted to measure the fair value. Estimates and assumptions of valuation technique adopted by the Company are in agreement with the information of estimates and assumptions adopted by market users for financial instrument pricing and the said information shall be accessible to the Company. For those classified as derivative instruments, their fair values are based on their market prices if their quoted prices are available from an active market. If quoted market prices in an active market are not available, SWAP and IRS are valued at the discounted cash flow method, and options are valued at the Black-Scholes model.

• (B) When available-for-sale financial assets have quoted market prices available in an active market, the fair value is determined using the market price.

• C. Fair value hierarchy of the financial instruments

• (A) Definitions for the hierarchy classifications of financial instruments measured at fair value

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• a. Level 1

• Level 1, are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date. An active market has to satisfy all the following conditions: a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The Company’s investments in listed stocks, beneficiary certificates, on-the-run Taiwan central government bonds and derivative instruments with quoted market prices, are deemed as level 1.

• b. Level 2 Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Investments of the Company such as off-the-run issue of emerging stock, government bonds, corporate bonds, bank debentures, convertible corporate bonds, currency swaps, interest rate swaps, options, asset swaps, and most derivatives are all classified within level 2. For the years ended December 31, 2019 and 2018, there was no significant transfer of financial instruments between Level 1 and Level 2.

• c. Level 3

• Unobservable inputs for the assets or liability. The fair value of the Company’s investment in unlisted stocks is included in Level 3.

(Blank below)

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(B)Hierarchy of fair value estimation of financial instruments

Financial instrument items measured at fair value Recurring fair value Non-derivative financial instruments Assets Financial assets at fair value through profit or loss-current Stock investments Bond investments Others Financial assets at fair value through profit or loss - noncurrent Stock investments Bond investments Financial assets at fair value through comprehensive income-noncurrent Stock investments Liabilities Financial liabilities at fair value through profit or loss -current Derivative financial instruments Assets Financial assets at fair value through profit or loss-current Liabilities Financial liabilities at fair value through profit or loss - current		December	31,2019
	Total 11,988,505 $ 25,159,729 3,562,680 21,180 50,116 157,656 391,227 2,799,187 457,038	Level 1 11,975,770 $ 870,587 3,562,680 - - - 391,227 2,798,218 421,322	Level 2 12,735 $ 24,289,142 - - 50,116 - - 969 35,716	Level3
				- $ - - 21,180 - 157,656 - - -

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Financial instrument items measured at fair value Recurring fair value Non-derivative financial instruments Assets Financial assets at fair value through profit or loss-current Stock investments Bond investments Others Financial assets at fair value through comprehensive income-current Bond investments Financial assets at fair value through profit or loss - noncurrent Stock investments Bond investments Financial assets at fair value through comprehensive income-noncurrent Stock investments Liabilities Financial liabilities at fair value through profit or loss -current Derivative financial instruments Assets Financial assets at fair value through profit or loss-current Liabilities Financial liabilities at fair value through profit or loss - current		December	31,2018
	Total 1,811,467 $ 18,173,118 4,528,698 296,304 16,445 49,909 146,545 598,457 2,288,727 267,073	Level 1 1,794,143 $ 1,064,491 4,528,698 296,304 - - - 598,457 2,285,427 242,383	Level 2 17,324 $ 17,108,627 - - - 49,909 - - 3,300 24,690	Level3
				- $ - - - 16,445 - 146,545 - - -

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

Financial assets at fair value through profit or loss - non-current Equity investments Financial assets at fair value through other comprehensive income - non-current Equity investments Financial assets at fair value through profit or loss - non-current Equity investments Financial assets at fair value through other comprehensive income - non-current Equity investments	January1	Recorded in profit or loss Recorded in other comprehensive income(loss) Acquired/ Issued Transfers into level 3 4,735 $ - $ - $ - $ - 11,111 - - 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 4,735 $ - $ - $ - $ - 11,111 - - 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 4,735 $ - $ - $ - $ - 11,111 - - 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
	16,445 $ 146,545 January1				- $ - $ - - Decreased		21,180 $ 157,656 December 31
		Recorded in profit or loss	Recorded in other comprehensive income(loss)	Acquired/ Issued Transfers into level 3	Sold/ Settled	Transfers out from level 3
	20,147 $ 134,238	3,702) ($ -	- $ 12,307	- $ - $ - -	- $ -	- $ -	16,445 $ 146,545

(D) The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

value measurement:
December 31,2019	Fair value	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
Financial assets at fair value through profit or loss - non-current Venture capital shares Financial assets at fair value through other comprehensive income - non-current Unlisted stocks	21,180 $ 157,656	Net asset value Market approach	Not applicable Price to earnings ratio multiple Discount for lack of marketability	Not applicable 1.32~1.76 7.93%~9.75%	Not applicable The higher the multiple,the higher the fair value The higher the discount for lack of marketability, the lower the fair value

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Valuation Significant Range (weighted Relationship of inputs
December 31, 2018 Fair value technique unobservable input average) to fair value
Financial assets at fair value
----- End of picture text -----

Financial assets at fair value
through profit or loss
- non-current
Venture capital shares	$	16,445	Net asset value	Not applicable	Not applicable	Not applicable
Financial assets at fair value
through other comprehensive
income - non-current
Unlisted stocks		146,545	Market approach	Price to earnings ratio multiple Discount for lack of marketability	1.91~2.05 30%	The higher the multiple,the higher the fair value The higher the discount for lack of marketability, the lower
						the fair value

• (E)Valuation process for fair value at Level 3

The parent company’s risk management department is responsible for the verification of fair value categorised in Level 3. The department assesses the independence, reliability, consistency and representativeness of the source information, regularly verifies the valuation models and calibrates the parameters to ensure the valuation process and results are in compliance with IFRSs.

• (F) For the fair value measurement of Level 3, the sensitivity analysis of the fair value to the reasonable alternative hypothesis shows that the fair value measurement of the financial assets by the Company is reasonable. However, use of different valuation models or assumptions may result in different measurement. The following is the impact to profit or loss or to other comprehensive income from financial assets and liabilities categorised within Level 3 if the inputs used in valuation models have changed up or down by 1%:

December 31, 2019	Favourable change Unfavourable change Recognised inprofit or loss	Favourable change Unfavourable change Recognised inprofit or loss	Recognised in other comprehensive income	Recognised in other comprehensive income
			Favourable change	Unfavourable change
Financial assets at fair value through profit or loss -non-current Venture capital shares Financial assets at fair value through other comprehensive income - non-current Unlisted stocks	Not applicable -	Not applicable -	- $ 1,577	- $ 1,577) (

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			Recognised in other comprehensive	Recognised in other comprehensive	Recognised in other comprehensive	Recognised in other comprehensive
	Recognised	inprofit or loss		income
	Favourable	Unfavourable		Favourable	Unfavourable
December 31,2018	change	change		change		change
Financial assets at fair value
through profit or loss -non-current
Venture capital shares	Not applicable	Not applicable	$	-	$	-
Financial assets at fair value
through other comprehensive
income - non-current
Unlisted stocks		-	-	1,465	(	1,465)

6) Capital management

• A. Objective of capital management

• (A) The represented capital adequacy ratio basically shall not be lower than 200% in compliance with the warning standard addressed in the “Rules Governing Securities Firms”.

• (B) The Company includes all risks involved in the investment position as a part of risk management, such as market risk, credit risk, liquidity risk, operating risk, legal risk, and model risk and so on. Each risk management responsive unit should identify, evaluate, monitor and control various risks in order to enable the Company to defend impact from financial market, reflect the current operating strategies and make the investment portfolio applied to business planning and development.

• B. Capital management policy and procedure

• In order to secure the long-term and stable development of various businesses and effectively assume risks, the Company manages capital based on the business development, related regulations and financial market environment. Major capital evaluation processes include:

• (A) Each segment should provide accurate and valid source of information to maintain calculation accuracy of capital adequacy ratio.

• (B) After the reporting at the 10th of each month, capital adequacy ratio should be computed by the end of every month. If the result is close to the legal standard, every unit will be called to attend a meeting for discussion and strategic planning to ensure that the basic objective of capital adequacy ratio is not less than 200%.

• (C) Both the risk limits and economic capital of the Company should be agreed by the Board of Directors. The Company should quarterly report details of risk control with disclosure of investment condition in order to assess whether the risk position exceeds the limit and whether the investment direction is in line with the market trend. Within the authorized risk limits, the Company is actively engaged in development of various businesses and continually increases profit, creates company value, and complies with the capital management objective.

The Company calculates and reports the capital adequacy ratio according to “Rules Governing Securities Firms”. As of December 31, 2019 and 2018, the capital adequacy ratios were 378% and 567%, respectively, as required by the regulations..

7) Assets and liabilities of trust accounts

Pursuant to Article 17 of Enforcement Rules of the Trust Enterprise Act, balance sheet, income statement, and property list of trust accounts shall be disclosed in the parent company only financial statements on a semiannual basis.

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A. Balance sheet of trust accounts

A. Balance sheet of trust accounts
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
Bonds sold under repurchase agreements			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)
Cumulative loss	(		41,791)	(	112,605)
Total of trust liabilities		$	4,698,677	$	3,213,523
B. Income statement of trust accounts
	Year ended December 31,			Year ended December 31,
Item			2019		2018
Trust income
Interest income	$		17,631	$	8,028
Cash dividends received			5,780		11,334
Income from stocks lending			6,145		117,957
Investment gains - realized			7,188		556
Investment gains (losses) - unrealized			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 before income tax			100,368	(	253,512)
Income tax expense	(		22)	(	5)
Net income	$		100,346	($	253,517)

B. Income statement of trust accounts

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C. Property list of trust accounts

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Item December 31, 2019 December 31, 2018
Bank savings $ 283,288 $ 179,211
Structured notes 347,256 380,552
Funds 3,270,575 2,019,812
Bond 402,246 252,251
Stock 115,006 -
Bonds sold under repurchase
135,196 187,279
agreements
Securities lending 71,047 164,989
Others 74,063 29,429
Total $ 4,698,677 $ 3,213,523
----- End of picture text -----

(Blank)

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13. OTHER DISCLOSURE ITEMS

1) Information about significant transactions

• A. Lending to others: Excluding security margin trading and conditional bond trading business, there is no lending of funds to either the shareholders or other parties.

• B. Endorsements and guarantees for others ： None.

• C. Acquisitions of real estate exceeding $300,000 or 20 percent of contributed capital ： None.

• D. Disposals of real estate exceeding $300,000 or 20 percent of contributed capital ： None.

• E. Purchases or sales transactions discount on brokers’ charges with related parties in excess of $5,000 ： None.

• F. Receivables from related parties exceeding $100,000 or 20 percent of contributed capital ： None.

• G. Significant transactions between parent company and subsidiaries are provided in Note 7.

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2) Related information of investee companies

A. Related information of investee companies

Name of the investor	Name of the investee company	Location	Date of registration	Reference number and the date of approval letter issued byFSC	Major operating activities	Balance on December 31, 2019 Original in	Balance on December 31, 2018 vestment	EndingBalance	EndingBalance		Revenue of investee company	Net income (loss) of investee company	Investment income (loss) recognised by the Company	Cash dividends	Notes
								Shares 63,817,303 30,000,000 10,000,000 67,746,000 14,904,630 1,000,000	Percentage 96.69% 100.00% 5.19% 100.00% 42.46% 100.00%	Book vlaue
President Securities Corp.	President Futures Corp. President Capital Management Corp. President Securities (HK) Ltd. President Securities (BVI) Ltd. Uni-President Asset Management Corp. President Insurance Agency Corp.	Taipei Taipei Hong Kong British Virgin Islands Taipei Taipei	1994.03.01 1997.04.15 1994.07.26 1998.02.26 2000.08.18 2008.04.29	1994.03.01 Jing- Tou-Shen (83) Gong-Shang Letter No.1114 (Note 1) 1997.02.25 (86) Tai-Cai-Zheng (2) Letter No.17769 1993.11.4 (82) Tai- Cai-Zheng (2) Letter No.40913 1997.10.27 (86) Tai-Cai-Zheng (2) Letter No.04840 2000.07.19 (89) Tai-Cai-Zheng (2) Letter No.56407 (Note2)	Futures brokerage Securities investment consulting Securities dealer, brokerage, underwriting and consulting Securities investment and holding company Investment Trust Insurance Agent	644,650 $ 326,000 34,030 2,264,573 667,622 10,000	644,650 $ 200,000 34,030 2,264,573 667,622 10,000			1,924,380 $ 322,208 72,935 2,301,733 578,382 28,561	710,925 $ 57,196 181,778 - 831,987 56,654	160,258 $ 1,392 29,218 52,125 251,386 9,294	154,963 $ 1,435 1,516 52,125 106,930 9,298	146,142 $ - - - 93,631 12,644	Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Associates Subsidiary of the Company

~97~

Name of the investor	Name of the investee company	Location	Date of registration	Reference number and the date of approval letter issued byFSC	Major operating activities	Balance on December 31, 2018 Original in	Balance on December 31, 2017 vestment	EndingBalance	EndingBalance		Revenue of investee company	Net income (loss) of investee company	Investment income (loss) recognised by the Company	Cash dividends	Notes
								Shares 30,000,000 12,000 182,600,000 23,400,000 1,000,000	Percentage 100.00% 0.03% 94.81% 100.00% 100.00%	Book vlaue
President Securities Corp. President Insurance Agency Corp. President Securities (BVI) Ltd.	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 Hong Kong Hong Kong	2013.10.29 2000.08.18 1994.07.26 2002.03.31 1999.08.06	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	Consultation of investment management and venture capital; other unprohibited or unrestricted businesses beyond the permit Investment Trust Securities dealer, brokerage, underwriting and consulting Wealth management Nominee Service	300,000 478 814,705 92,091 3,403	300,000 478 814,705 92,091 3,403			248,549 471 1,332,349 58,319 1,826	6,113 831,987 181,778 - -	3,474 251,386 29,218 703 77) (	3,477 86 27,702 703 77) (	- 75 - - -	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 Personal Insurance Agency Co., Ltd. and President Insurance Agency Corp.

B. Lending to others: Excluding security margin trading and conditional bond trading business, there is no lending of funds to either the shareholders or other parties.

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• C. Endorsements and guarantees for others ： None.

• D. Acquisitions of real estate exceeding $300 million or 20 percent of contributed capital ： None.

• E. Disposals of real estate exceeding $300 million or 20 percent of contributed capital ： None.

• F. Purchases or sales transactions discount on brokers’ charges with related parties in excess of $5,000,000 ： None.

• G. Receivables from related parties exceeding $100 million or 20 percent of contributed capital ： None.

• H. Accordance with Jing-Guan-Zheng-Quan-Zi Letter No. 10300375782, the Company is required to disclose details of businesses run by foreign enterprises that were incorporated in the countries identified as non-signatories to the IOSCO MMoU or have not obtained securities or futures license of signatories to the IOSCO MMoU ：

• a) Securities held as of December 31, 2019 of President Securities (BVI) Ltd ：

Securities types and name	Type	Number of shares		Carryingvalue	Carryingvalue	Carryingvalue	Expressed in U.S. Dollars Fair vaule	Expressed in U.S. Dollars Fair vaule	Expressed in U.S. Dollars Fair vaule
				Unit price 0.243 $ 0.083 0.061		Amount	Unitprice		Amount
Investments in associates	STOCK STOCK STOCK	182,600,000 23,400,000 1,000,000				44,441,252 $ 1,945,270 60,913 46,447,435 $	0.243 $ 0.083 0.061		44,441,252 $ 1,945,270 60,913 46,447,435 $
President Securities (HK) Ltd. President Wealth Management (HK) Ltd. President Securities (Nominee) Ltd. Total

• b) Derivative financial instrument transactions and the source of capital of President Securities (BVI) Ltd.: None.

• c) Revenue from engagement in cosultation on assets management business, service contents and litigation ： None.

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d) Balance sheets

PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS DECEMBER 31, 2019 AND 2018

						PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS DECEMBER 31, 2019 AND 2018	PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS DECEMBER 31, 2019 AND 2018
Assets		December 31,2019				Amount % Liabilities and shareholders’equity Current liabilties 25,277,023 $ 34 Other payables 4,090,016 6 Total liabilities 194,910 - Shareholders’equity 29,561,949 40 Share capital 45,267,338 60 Capital reserve Retained earnings Retained earnings Other equity Exchange differences on translation of foreign financial statements Total shareholders’ equity 74,829,287 $ 100 Total liabilities and shareholders’ equity December 31,2018			December 31,		Expressed in U.S. 2019 December 31,				dollars 2018
		Amount		%		Amount			Amount		%		Amount		%
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Other receivables Total current assets Investment in associates Total assets		30,135,890 $ - 195,869 30,331,759 46,447,436 76,779,195 $		39 - 1 40 60 100		25,277,023 $ 4,090,016 194,910 29,561,949 45,267,338 74,829,287 $			3,565 $ 3,565 67,746,000 757,813 7,702,523 569,294 76,775,630 76,779,195 $		- - 88 1 - - 89 100		3,563 $ 3,563 67,746,000 757,813 6,016,267 305,644 74,825,724 74,829,287 $		- - 91 1 8 - 100 100

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PRESIDENT WEALTH MANAGEMENT (HK) LTD. BALANCE SHEETS DECEMBER 31, 2019 AND 2018

Assets		December 31,2019	December 31,2019	December 31,2019		December 31,2018	December 31,2018	December 31,2018	Liabilities and shareholders’equity		December 31,	December 31,	2019		Expressed in HK dollar December 31,2018	Expressed in HK dollar December 31,2018	Expressed in HK dollar December 31,2018
		Amount		%		Amount		%			Amount		%		Amount		%
Current assets Cash and cash equivalents Other receivables Total current assets Total assets		15,116,479 $ 55,378 15,171,857 15,171,857 $		100 - 100 100		14,943,066 $ 50,492 14,993,558 14,993,558 $		100 - 100 100	Current liabilities Other payables Total liabilities Shareholders’ equity Share capital Retained earnings (accumulated deficit) Total shareholders’ equity Total liabilities and shareholders’ equity	20,075 $ 20,075 23,400,000 8,248,218) ( 15,151,782 15,171,857 $		- - 154 54) ( 100 100		20,075 $ 20,075 23,400,000 8,426,517) ( 14,973,483 14,993,558 $		- - 156 56) ( 100 100

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PRESIDENT SECURITIES (NOMINEE) LTD. BALANCE SHEETS DECEMBER 31, 2019 AND 2018

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Expressed in HK dollar
December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Assets Amount % Amount % Liabilities and shareholders’equity Amount % Amount %
Current assets Current liabilities
Cash and cash equivalents $ 491,537 100 $ 509,539 100 Other payables $ 17,190 4 $ 17,190 3
Other receivables 109 - 1,516 Total liabilities - 17,190 4 17,190 3
Total current assets 491,646 100 511,055 100 Shareholders’ equity
Share capital 1,000,000 203 1,000,000 196
Retained earnings
(accumulated deficit) ( 525,544) ( 107) ( 506,135) ( 99)
Total shareholders’ equity 474,456 96 493,865 97
Total assets $ 491,646 100 $ 511,055 100 Total liabilities and shareholders’ equity $ 491,646 100 $ 511,055 100
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e) Statements of comprehensive income

PRESIDENT SECURITIES (BVI) LTD. STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

							Expressed in U.S. dollars	Expressed in U.S. dollars	Expressed in U.S. dollars
		December 31,2019					December 31,2018
Accounts		Amount		%			Amount		%
Expenditures
Employee benefits	($	49,953)	(		3)	($	49,965)	(	3)
Other operating expenses	(	18,574)	(		1)	(	18,427)	(	1)
Total expenditures and expenses	(	68,527)	(		4)	(	68,392)	(	4)
Non-operating gains and losses
Share of the profit or loss of associates and joint
ventures accounted for using the equity method		916,448			54		1,174,066		67
Other gains and losses		838,335			50		650,116		37
Total non-operating gains and losses		1,754,783			104		1,824,182		104
Profit before tax		1,686,256			100		1,755,790		100
Income tax expense		-			-		-		-
Net income	$	1,686,256			100	$	1,755,790		100

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PRESIDENT WEALTH MANAGEMENT (HK) LTD STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

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Expressed in HK dollars
December 31, 2019 December 31, 2018
Accounts Amount % Amount %
Expenditures
Other operating expenses ($ 43,730) ( 25) ($ 41,570) ( 30)
Total expenditures and expenses ( 43,730) ( 25) ( 41,570) ( 30)
Non-operating gains and losses
Other gains and losses 222,028 125 179,886 130
Profit before tax 178,298 100 138,316 100
- - - -
Income tax expense
Net income $ 178,298 100 $ 138,316 100
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PRESIDENT SECURITIES (NOMINEE) LTD. STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

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Expressed in HK dollars
December 31, 2019 December 31, 2018
Accounts Amount % Amount %
Expenditures
Other operating expenses ($ 25,071) 129 ($ 24,590) 128
Total expenditures and expenses ( 25,071) 129 ( 24,590) 128
Non-operating gains and losses
Other gains and losses 5,662 ( 29) 5,447 ( 28)
Profit (loss) before tax ( 19,409) 100 ( 19,143) 100
- - - -
Income tax expense
($ 19,409) 100 ($ 19,143) 100
Net income (loss)
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f) Transactions between related parties and foreign business ： None.

3) Information of overseas branches and representative office

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Assignment of working capital
Reference number and the Material
Overseas branches date of approval letter (Loss) profit Balance on Increase of Deduction of Balance on transaction
and representative Date of given by Securities and Main business Operating before tax January 1, working working December 31, account with
office Nationality registration Futures Bureau of FSC activities income (Note 1) 2019 capital capital 2019 head office Note
Representative Xiamen 2008.08.22 2008.01.21 Jing-Guan- Non-operating - ($ 6,799) - - - - - -
office of President Zheng-Chuan Letter activities of
Securities Corp. No.0960073542 securities
in Xiamen business
consultation,
contact, and
market survey
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Note 1: Operating expenses generated by the representative office.

4) Disclosure of investment in Mainland China ： Not applicable

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