PSC — Audit Report / Information 2020

Nov 11, 2020

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’

REPORT

DECEMBER 31, 2020 AND 2019

---

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

~1~

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

PWCR20003739

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 as at December 31, 2020 and 2019, 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, 2020 and 2019, 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. Our responsibilities under those standards are further described in the Auditors’ 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 Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. 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’s 2020 only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

~2~

The key audit matters of the parent company’s 2020 only financial statements are stated 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(2) for details of significant judgements, estimates and assumption uncertainty. As at December 31, 2020, the unlisted stocks without active market held by the President Securities Corporation totaled 186,334 thousand New Taiwan Dollars 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-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 the 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 is 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 supporting documents.

~3~

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(10) 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, and the excess of the carrying amount over the share of the investee company’s net assets is mainly goodwill. As of December 31, 2020, the amount was 602,375 thousand New Taiwan Dollars. 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 the 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; and

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

~4~

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

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, 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.

Auditors’ 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 auditors’ 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 the generally accepted auditing standards in the Republic of China 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 the generally accepted auditing standards in the Republic of China, 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. 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,

~5~

misrepresentations, or the override of internal control.

1. 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.

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

4.

5.

6.

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 auditors’ 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 auditors’ 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.

~6~

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 of the current period and are therefore the key audit matters. We describe these matters in our auditors’ 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.

Independent Auditors

Lin, Se-Kai Lo, Chiao-Sen

For and on behalf of PricewaterhouseCoopers, Taiwan March 23, 2021

---

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 Independent Auditors’ report 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.

~7~

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(5) 6(6) 6(7) 6(2) 6(3) 6(10) 6(11) 6(12) 6(14) 6(15) 6(46) 6(16)	December 31, 2020 AMOUNT % $ 3,507,116 4 40,831,878 45 353,510 - 12,248,272 14 51,532 - 42,889 - 1,288,127 2 240,796 - 1,007,090 1 737 - 17,635,068 19 4,413 - 20,463 - 9,518 - 2,156,587 2 79,397,996 87 67,484 - 186,334 - 7,247,316 8 2,270,322 3 171,581 - 270,503 1 94,479 - 99,384 - 1,044,489 1 11,451,892 13 $ 90,849,888 100	December 31, 2019	December 31, 2019
		AMOUNT $ 3,507,116 40,831,878 353,510 12,248,272 51,532 42,889 1,288,127 240,796 1,007,090 737 17,635,068 4,413 20,463 9,518 2,156,587 79,397,996 67,484 186,334 7,247,316 2,270,322 171,581 270,503 94,479 99,384 1,044,489 11,451,892 $ 90,849,888	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	%
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 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 Non-current assets 122000 Financial assets at fair value through profit or loss - non-current 123200 Financial assets at fair value through other comprehensive income - non- current 124100 Investments accounted for under the equity method 125000 Property and equipment, net 125800 Right-of-use assets 126000 Investment property 127000 Intangible assets 128000 Deferred tax assets 129000 Other assets-non-current 120000 Total non-current assets 906001 Total Assets				5 54 - 12 - - 1 - 1 - 14 - - - 1
				88
				- - 7 3 - 1 - - 1
				12
				100

(Continued)

~8~

PRESIDENT SECURITIES CORPORATION PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes 6(17) 6(18) 6(19) 6(20) 6(21) 6(22) 6(23) 6(46) 6(46) 6(24) 6(26) 6(26) 6(27)	December 31, 2020 AMOUNT % $ 578,976 1 7,298,896 8 2,622,141 3 19,096,165 21 1,381,470 2 1,809,955 2 903,852 1 28,105 - 18,038,119 20 332 - 1,098,674 1 1,975,239 2 6,008,310 7 324,555 - 61,875 - 76,474 - 61,303,138 68 8,627 - 103,607 - 2,813 - 24,388 - 139,435 - 61,442,573 68 13,998,378 15 91,261 - 3,111,013 4 7,600,316 8 3,771,859 4 834,488 1 29,407,315 32 $ 90,849,888 100	December 31, 2019	December 31, 2019
		AMOUNT $ 578,976 7,298,896 2,622,141 19,096,165 1,381,470 1,809,955 903,852 28,105 18,038,119 332 1,098,674 1,975,239 6,008,310 324,555 61,875 76,474 61,303,138 8,627 103,607 2,813 24,388 139,435 61,442,573 13,998,378 91,261 3,111,013 7,600,316 3,771,859 834,488 29,407,315 $ 90,849,888	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	%
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 Non-current liabilities 225100 Non-current provisions 226000 Non-current lease liabilities 228000 Deferred tax liability 229000 Other liabilities-non-current 220000 Total non-current 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				4 12 1 26 2 2 - - 14 - 1 2 3 - - -
				67
				- - - -
				-
				67
				17 - 3 9 3 1
				33
				100

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

~9~

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

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

Items

Year ended December 31 2020 2019 Notes AMOUNT % AMOUNT % 6(28) $ 2,465,522 29 $ 1,528,416 25 6(29) 76,506 1 62,811 1 22,312 - 22,192 - 6(30) 3,351,750 40 2,833,461 45 77,732 1 75,832 1 6(31) 1,052,595 12 1,163,195 19 382,536 4 305,758 5 6(32) 995,619 12 711,103 11 6(33) 268,439 3 37,413 1 6(34) ( 117,021) ( 1) ( 21,418) - 6(35) 100,358 1 15,309 - ( 83,151) ( 1) ( 2,377) - 2,870 - - - 6(36) 95,405 1 93,864 1 40,206 - 35,784 1 6(37) ( 120,517) ( 1) ( 987,583) ( 16) 6(38) ( 15,308) - ( 6,498) - 6(39) ( 122,869) ( 1) 362,655 6 8,472,984 100 6,229,917 100 6(40) ( 373,105) ( 5) ( 399,172) ( 6) ( 5,658) - - - 6(41) ( 249,390) ( 3) ( 506,284) ( 8) ( 182) - ( 133) - ( 11,731) - ( 10,658) - ( 26) - ( 39) - 6(42) ( 2,796,016) ( 33) ( 2,044,099) ( 33) 6(43) ( 157,405) ( 2) ( 154,827) ( 3) 6(44) ( 1,357,216) ( 16) ( 1,089,758) ( 18) ( 4,950,729) ( 59) ( 4,204,970) ( 68) 3,522,255 41 2,024,947 32 6(10) 303,699 4 329,744 5 6(45) 100,642 1 159,690 3 3,926,596 46 2,514,381 40 6(46) ( 319,078) ( 4) ( 145,845) ( 2) $ 3,607,518 42 $ 2,368,536 38

400000 Revenues 401000 Brokerage handling fee revenue 404000 Revenues from underwriting business 406000 Net gain on wealth management 410000 Net gain on sale of trading securities 421100 Revenue from providing agency service for stock affairs 421200 Interest revenue 421300 Dividend revenue 421500 Net valuation gain on operating securities at fair value through profit or loss 421600 Net gain on covering of borrowed securities and bonds with resale agreements-short sales 421610 Net valuation loss on borrowed securities and bonds with resale agreements-short sales at fair value through profit or loss 421750 Net realised gain on financial assets measured at fair value through other comprehensive income-bonds 422000 Net loss on issuance of ETNs 422100 Administrative and handling fee revenues from issuance of ETNs 422200 Net gain from issuance of call (put) warrants 424100 Future commission revenue 424400 Net loss from derivatives 425300 Impairment loss and reversal of impairment loss 428000 Other operating income Total revenues 500000 Expenditure and expense 501000/ 502000/ 503000 Handling charges 507000 ETNs administrative expenses 521200 Interest expenses 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 Operating profit 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)

~10~

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

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

Items

Year ended December 31 2020 2019 Notes AMOUNT % AMOUNT % ($ 20,158) - ($ 34,860) ( 1) 6(3) 369,407 5 11,111 - 91,900 1 ( 23,857) - 6(46) 4,032 - 6,972 - 27,298 - ( 77,467) ( 1) 28 - ( 5,523) - $ 472,507 6 ($ 123,624) ( 2) $ 4,080,025 48 $ 2,244,912 36 6(47) $ 2.58 $ 1.69 $ 2.57 $ 1.69

Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 805510 Remeasurements of defined benefit plan 805540 Net 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 or loss subsequently 805610 Translation gain (loss) on the financial statements of foreign operating entities 805615 Net unrealised gain 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 (in dollars) 985000 Diluted earnings per share (in dollars)

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

~11~

PRESIDENT SECURITIES CORPORATION PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

For the year ended December 31, 2019 Balance at January 1, 2019 Net income for the year ended December 31, 2019 Other comprehensive income 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 For the year ended December 31, 2020 Balance at January 1, 2020 Net income for the year ended December 31, 2020 Other comprehensive income(loss) for the year ended December 31, 2020 Total comprehensive income Appropriations of 2019 earnings: Legal reserve Special reserve Cash dividends Stock dividends Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance at December 31, 2020	Notes		Common stock		Capital reserve				Retained earnings			Other equity interest	Other equity interest	Other equity interest		Treasuryshares		Total equity
							Legal reserve		Special reserve		Unappropriated earnings	Translation gain and loss on the financial statements of foreign operating entities		Unrealised gains or losses on financial assets measured at fair value through other comprehensive income
	6(27) 6(27)	$ 13,904,281 - - - - - - - ( 180,381 ) $ 13,723,900 $ 13,723,900 - - - - - - 274,478 - $ 13,998,378		$ 142,702 - - - - - - - ( 51,441 ) $ 91,261 $ 91,261 - - - - - - - - $ 91,261			$ 2,755,737 - - - 121,032 - - - - $ 2,876,769 $ 2,876,769 - - - 234,244 - - - - $ 3,111,013		$ 6,945,453 - - - - 185,377 - - - $ 7,130,830 $ 7,130,830 - - - - 469,486 - - - $ 7,600,316	$ 1,278,472 2,368,536 ( 26,099 ) 2,342,437 ( 121,032 ) ( 185,377 ) ( 959,395 ) - - $ 2,355,105 $ 2,355,105 3,607,518 ( 17,197 ) 3,590,321 ( 234,244 ) ( 469,486 ) ( 1,372,390 ) ( 274,478 ) 177,031 $ 3,771,859		$ 19,251 - ( 77,467 ) ( 77,467 ) - - - - - ($ 58,216 ) ($ 58,216 ) - 27,298 27,298 - - - - - ($ 30,918 )	$ 600,089 - ( 20,058 ) ( 20,058 ) - - - - - $ 580,031 $ 580,031 - 462,406 462,406 - - - - ( 177,031 ) $ 865,406		$ - - - - - - - ( 231,822 ) 231,822 $ - $ - - - - - - - - - $ -		$ 25,645,985 2,368,536 ( 123,624 ) 2,244,912 - - ( 959,395 ) ( 231,822 ) - $ 26,699,680 $ 26,699,680 3,607,518 472,507 4,080,025 - - ( 1,372,390 ) - - $ 29,407,315

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

~12~

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(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 Net valuation gain on operating securities at fair value through profit or loss Net valuation loss on borrowed securities and bonds with resale agreements-short sales at fair value through profit or loss Interest expenses Interest income (including financial income) Dividend income Share of profit of subsidiaries, associates and joint ventures accounted for under the equity method (Gain) loss on disposal of property and equipment Loss on disposal of investments (Gain) loss on valuation of non-operating financial instrument Net 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

Year ended December 31 Notes 2020 2019 $ 3,926,596 $ 2,514,381 6(43) 142,494 143,330 6(43) 14,911 11,497 6(38) 17,510 7,170 6(2)(32) ( 995,619 ) ( 711,103 ) 6(34) 117,021 21,418 6(41) 249,390 506,284 6(31)(44) ( 1,064,310 ) ( 1,182,276 ) ( 390,222 ) ( 312,397 ) 6(10) ( 303,699 ) ( 329,744 ) ( 1 ) 928 25,676 - 6(45) 7,352 ( 7,576 ) 6(45) - 15 3,655,513 ( 16,009,810 ) ( 13,884 ) 290,558 - 93,193 ( 2,239,117 ) ( 2,023,768 ) 51,013 ( 98,143 ) 45,870 ( 80,372 ) ( 770,318 ) ( 517,809 ) ( 139,753 ) ( 22,727 ) ( 463,919 ) 242,260 ( 40 ) 38 ( 6,291,689 ) ( 3,126,130 ) ( 1,798 ) 1,280 ( 1,999 ) ( 4,808 ) ( 578 ) ( 2,794 ) ( 1,611,663 ) ( 97,426 ) ( 1,860,091 ) 5,889,657 1,656,855 ( 38,683 ) ( 177,247 ) ( 208,552 ) ( 78,877 ) ( 118,370 ) 847,848 55,383 27,472 633 6,964,657 3,728,377 22 255 723,092 14,549 740,631 449,094 3,264,444 56,857 63,875 4,003

(Continued)

~13~

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

Cash inflow (outflow) generated from operations Interest received Dividends received Income tax paid Net cash flows from (used in) 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 (Increase) decrease in other non-current liabilities Proceeds from disposal, liquidation and capital reduction of investments accounted for using equity method Increase in prepayment for equipment Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term loans (Decrease) increase in commercial papers payable Payments of lease liabilities (Decrease) increase in other non-current liabilities Distribution of cash dividends Payments to acquire treasury shares Interest paid Net cash flows (used in) from financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Year ended December 31 Notes 2020 2019 $ 6,137,418 ( $ 10,861,328 ) 1,138,004 1,237,357 609,128 551,092 ( 161,284 ) ( 84,456 ) 7,723,266 ( 9,157,335 ) 6(11) ( 23,990 ) ( 41,146 ) 13 10 6(15) ( 10,032 ) ( 7,557 ) ( 3,844,497 ) ( 126,000 ) ( 84,496 ) 11,966 2,263,273 - ( 69,632 ) ( 51,785 ) ( 1,769,361 ) ( 214,512 ) ( 2,266,526 ) 1,905,623 ( 2,300,000 ) 9,600,000 ( 66,454 ) ( 77,342 ) ( 2,537 ) 3,410 6(26) ( 1,372,390 ) ( 959,395 ) - ( 231,822 ) ( 261,268 ) ( 502,822 ) ( 6,269,175 ) 9,737,652 ( 7,265 ) ( 29,292 ) ( 322,535 ) 336,513 3,829,651 3,493,138 $ 3,507,116 $ 3,829,651

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

~14~

PRESIDENT SECURITIES CORPORATION

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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

1. HISTORY AND ORGANIZATION

2. 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, 2020, the Company had 31 operating branches (including the Head Office), and established Offshore Securities Unit in July 2014.

3. 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.

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

5. 4) The number of employees of the Company were 1,434 and 1,447, as of December 31, 2020 and 2019, respectively.

6. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE FINANCIAL

7. STATEMENTS AND PROCEDURES FOR AUTHORIZATION

8. These parent company only financial statements were authorised for issuance by the Board of Directors on March 23, 2021.

9. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

10. 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 2020 are as follows:

as follows:
New Standards,Interpretations andAmendments	Effective Date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’ Amendment to IFRS 16, ‘Covid-19-related rent concessions’	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020 (Note)

~15~

Note ： Earlier application from January 1, 2020 is allowed by FSC.

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

• 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 2021 are as follows:

s follows:
	Effective Date by
	International Accounting
New Standards,Interpretations andAmendments	Standards Board
Amendments to IFRS 4, ‘Extension of the temporary exemption from applying IFRS 9’	January 1, 2021
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, ‘Interest Rate Benchmark Reform— Phase 2’	January 1, 2021

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:

FRSs endorsed by the FSC effective are as follows:
New Standards,Interpretations andAmendments Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ Amendments to IFRS 3, ‘Reference to the conceptual framework’ Amendments to IAS 16, ‘Property, plant and equipment: proceeds before intended use’ Amendments to IAS 37, ‘Onerous contracts— cost of fulfilling a contract’ Annual improvements to IFRS Standards 2018–2020 IFRS 17, ‘Insurance contracts’ Amendments to IFRS 17, 'Insurance contracts' Amendments to IAS 1, ‘Classification of liabilities as current or non-current’ Amendments to IAS 1, ‘Disclosure of accounting policies’ Amendments to IAS 8, ‘Definition of accounting estimates’	Effective Date by International Accounting Standards Board
	To be determined by International Accounting Standards Board January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023

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

~16~

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies are described below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

• 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 measured.

  • (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:

  • (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;

~17~

  - (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.

• 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 recognized in other comprehensive income.

~18~

• 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 amortized cost or fair value through other comprehensive income.

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

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

• D. The Company recognizes 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 recognize 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.

• 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 recognized in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognized as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the 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

~19~

foreign exchange which are recognized in profit or loss, the changes in fair value of debt instruments are taken through other comprehensive income. When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

• 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 recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Company recognizes the impairment provision for lifetime ECLs.

• 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

~20~

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 recognized at cost.

• B. Unrealized 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 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 a subsidiary equals or exceeds its interest in the subsidiary, including any other unsecured receivables, the Company does not recognize 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 recognized at cost.

• 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 recognize 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.

~21~

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

~22~

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

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

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

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

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

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

• 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

~23~

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 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.

~24~

• 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. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.

• B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognized in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognized in profit or loss.

• 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 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

~25~

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 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.

~26~

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 recognized as deferred income tax. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit (loss). Deferred income tax assets are recognized only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. If the future taxable income is probable to provide unused loss carryforwards or deferred income tax credit which can be realized in the future, the proportion of realization is deemed as deferred income tax asset.

• C. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the 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.

• 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.

~27~

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 (including the influence of COVID 19) deemed relevant; 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

~28~

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

• D. Impairment assessment of goodwill

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

~29~

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	December31,2020 December31,2019 430,291 $ 486,626 $ 262,276 92,681 1,057,849 987,144 1,756,700 2,263,200 3,507,116 $ 3,829,651 $

As of December 31, 2020 and 2019, the annual interest rates of time deposits, including foreign time deposits were 0.020%~0.520% and 0.040%~1.065%, respectively.

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 Adjustment of open-ended funds, money market instruments and securities investment by brokers Total Trading securities-dealer Listed (TSE and OTC) stocks Government bonds Corporate bonds Convertible corporate bonds Emerging stocks Overseas stocks Exchange-traded funds Unlisted stocks Subtotal Adjustment of trading securities - dealer Total Trading securities-underwriter Listed (TSE and OTC) stocks Convertible corporate bonds Subtotal Adjustment of trading securities - underwriter Total	December31,2020 25,000 $ 459 25,459 5,546,156 2,699,935 3,317,423 417,025 98,366 17,628,935 2,099,505 14,714 31,822,059 1,190,808 33,012,867 469,460 170,407 639,867 49,913 689,780	December31,2019
		201,298 $ 1,267
		202,565
		6,192,641 3,364,452 6,992,481 146,703 54,554 15,502,816 3,091,765 1,514
		35,346,926 503,131
		35,850,057
		807,209 238,046
		1,045,255 101,417
		1,146,672

~30~

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	December31,2020 3,535,818 $ 20,561 52,681 - 12,084 3,621,144 117,091 3,738,235 36,249 3,319,915 9,373 40,831,878 $ 49,947 $ 2,609 52,556 14,928 67,484 $	December31,2019
		3,142,111 $ 7,647 47,966 64,648 165,249 3,427,621 83,999 3,511,620 15,533 2,782,685
		969 43,510,101 $
		49,921 $ 2,609
		52,530 18,766
		71,296 $

• a. For the years ended December 31, 2020 and 2019, net realized and unrealized gains on financial assets and liabilities at fair value through profit or loss amounted to $4,393,394 and $2,664,463, 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

Equity instruments Trading securities-dealer Listed (TSE and OTC) stocks Adjustment of trading securities - dealer Total Non-current items: Equity instruments Unlisted stocks Adjustment of trading securities Total	December31,2020 189,812 $ 163,698 353,510 $ 6,449 $ 179,885 186,334 $	December31,2019
		- $ -
		- $
		6,449 $ 151,207
		157,656 $

~31~

• 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 $539,844 and $157,656 as at December 31, 2020 and 2019.

• b. For year ended December 31, 2020, the Group sold its stock investments listed on TSE and OTC with fair value of $1,525,695, and an accumulated gain on disposal of $177,031, in order to adjust the investment position.

b.	fair value of such investments amounts to $539,844 and $157,656 as at December 31, 2020 and 2019. For year ended December 31, 2020, the Group sold its stock investments listed on TSE and OTC with fair value of $1,525,695, and an accumulated gain on disposal of $177,031, in order to adjust the investment position.	fair value of such investments amounts to $539,844 and $157,656 as at December 31, 2020 and 2019. For year ended December 31, 2020, the Group sold its stock investments listed on TSE and OTC with fair value of $1,525,695, and an accumulated gain on disposal of $177,031, in order to adjust the investment position.
c.	Amounts recognized in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below: Equity instruments at fair value through other comprehensive income Year ended December 31,2020 Year ended December 31,2019 Fair value change recognised in other comprehensive income 369,407 $ 11,111 $ Cumulative gains (losses) reclassified toretained earnings due to derecognition 177,031) ($ - $ Dividend income recognised in profit or loss Held at end of period 11,444 $ 5,595 $ Derecognised during the period 66,894 - 78,338 $ 5,595 $ Debt instruments at fair value through other comprehensive income Fair value change recognised in other comprehensive income 100,330) ($ 20,832) ($ Cumulative other comprehensive income reclassified to profit or loss Due to derecognition 100,358 $ 15,309 $ Interest income recognised in profit or loss 28,276 $ 784 $
		11,111 $ - $ 5,595 $ - 5,595 $ 20,832) ($ 15,309 $ 784 $

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

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

• 4) Margin loans receivable

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

~32~

5) Accounts receivable

Accounts receivable
	December31,2020		December31,2019
Accounts receivable - related parties	$	4,413	$	2,615
Accounts receivable - non related parties
Settlement price receivable-brokers	$	14,845,933	$	8,775,893
Settlement price receivable-dealer		132,304		857,731
Accounts receivable-international bonds		4,454		601,111
Accounts receivable-foreign bonds		55,001		435,180
Interest receivable		244,723		301,206
Settlement price		2,250,253		745,383
Others		103,025		70,510
Subtotal		17,635,693		11,787,014
Less: Allowance for uncollectible accounts	(	625)	(	656)
Total	$	17,635,068	$	11,786,358

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

follows:
Accounts receivable Accounts receivable - related parties Accounts receivable - non related parties Accounts receivable Accounts receivable - related parties Accounts receivable - non related parties					December 31, 2020							Total
		Up to 30 days		31 to 90 days	91 to 180 days		181 days to 12 months			More than 12 months
		4,413 $ 17,409,892 17,414,305 $		- $ 44,721 44,721 $		- $ - $ 86,814 62,624 86,814 $ 62,624 $ December 31, 2019		- $ 62,624		- $ 31,642 31,642 $		4,413 $ 17,635,693 17,640,106 $ Total
								62,624 $
		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 $		- $ 102,517 102,517 $		- $ 75,020		- $ 46,882 46,882 $		2,615 $ 11,787,014 11,789,629 $
								75,020 $

Note: The above ageing analysis was based on invoice date.

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

• 6) Other receivables

Other receivables
	December	31,2020	December	31,2019
Interest receivable	$	2,392	$	3,746
Others		7,180		6,602
Less: Impairment loss	(	54)	(	54)
Total	$	9,518	$	10,294

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

~33~

7) Other current assets

Pending settlements Pledged time deposits Deposits-in for foreign currency securities Underwriting share proceeds collected on behalf of customers Temporary payments Others Total	December31,2020 427,009 $ 400,000 647,622 651,290 1,841 28,825 2,156,587 $	December31,2019 34,990 $ 400,000 - 18 108,566 1,350 544,924 $

8) 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:

December31,2020	December31,2020	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 20,375,875 $ December31,2019	Carrying amount of transferred financial assets
		19,096,165 $ Carrying amount of related financial liabilities
Financial assets category Financial assets measured at fair value through profit or loss Repurchase agreement	Carrying amount of transferred financial assets
	21,964,175 $	20,956,256 $

9) 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.

~34~

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

• (1)Financial assets

==> picture [694 x 163] intentionally omitted <==

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

December 31, 2020
Financial assets that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements
Gross amounts Gross amounts of recognised Net amounts of financial Not set off in the balance sheet
of recognised financial liabilities set off in assets presented in the Financial Cash collateral
Description financial assets the balance sheet balance sheet instruments received Net amount
Derivative financial instruments $ 9,303 $ - $ 9,303 $ 9,303 $ - $ -
December 31, 2019
Financial assets that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements
Gross amounts Gross amounts of recognised Net amounts of financial Not set off in the balance sheet
of recognised financial liabilities set off in assets presented in the Financial Cash collateral
Description financial assets the balance sheet balance sheet instruments received Net amount
Derivative financial instruments $ 938 $ - $ 938 $ 938 $ - $ -
----- End of picture text -----

~35~

(2) Financial liabilities

December 31, 2020

==> picture [694 x 232] intentionally omitted <==

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

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 $ 26,252 $ - $ 26,252 $ 9,303 $ - $ 16,949
Bonds sold under repurchase
agreements 14,051,616 - 14,051,616 14,051,616 - -
Total $ 14,077,868 $ - $ 14,077,868 $ 14,060,919 $ - $ 16,949
December 31, 2019
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 under repurchase
agreements 11,622,022 - 11,622,022 11,622,022 - -
Total $ 11,630,393 $ - $ 11,630,393 $ 11,622,960 $ - $ 7,433
----- End of picture text -----

~36~

10) Investments accounted for under the equity method

Investments accounted for under the equity method
Subsidiaries President Futures Corp. President Securities (HK) Ltd. President Wealth Management (HK) Ltd. President Securities (Nominee) Ltd. President Capital Management Corp. President Securities (BVI) Ltd President Insurance Agency Corp. PSC Venture Capital Investment Limited Company Associates Uni-President Asset Management Corp. Jin Yuan President Securities Co.,Ltd.	December31,2020 2,102,027 $ 1,361,333 56,002 1,672 320,169 - 29,698 242,139 4,113,040 602,375 2,531,901 7,247,316 $	December31,2019 1,924,380 $ 72,935 - - 322,208 2,301,733 28,561 248,549
		4,898,366 578,382 - 5,476,748 $

• A. The Company’s share of its associates’ profits or losses recognized in long-term equity investment accounted for under the equity method for the years ended December 31, 2020 and 2019 were $303,699 and $329,744, respectively. The dissolution and liquidation of President Securities (BVI) was approved by the Board of Directors in March 2020.

• B. The Company holds 42.46% of the equity of Uni-President Asset Management Corp., making it the single largest shareholder of the associates, while the other equity is mainly held by the other 15 shareholders. Half of the voting rights of the shareholders attending the shareholders meeting exceeds the voting rights of the Company, and the Company does not take an active role in the management of the associates. This shows that the Company has no actual ability to direct relevant activities. The Company has no control over Uni-President Asset Management Corp., but has significant influence over it.

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

• D. 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 Jin Yuan President Securities Co.,Ltd. Xiamen	December 31, 2020 December 31, 2019 42.46% 42.46% 49.00% - Shareholdingratio	Nature of relationship Associate Associate	Methods of measurement
			Equity method Equity method
	42.46% 49.00%

Note: The Company participated in the establishment of Jin Yuan President Securities Co., Ltd. since May 2020.

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

~37~

Balance sheet

Balance sheet
			Uni-PresidentAsset	Management Corp.
			December31,2020			December31,2019
Current assets		$	656,152		$	543,681
Non-current assets			687,024			627,350
Current liabilities	(		292,750)	(		176,271)
Non-current liabilities	(		54,266)	(		55,102)
Total net assets		$	996,160		$	939,658
Share in associte's net assets		$	423,003		$	399,010
Goodwill and others			179,372			179,372
Carrying amount of the associate		$	602,375		$	578,382
Balance sheet

Balance sheet
			Jin Yuan President
			Securities Co.,Ltd.
			December 31, 2020
Current assets		$	5,083,846
Non-current assets			174,020
Current liabilities	(		85,687)
Non-current liabilities	(		5,034)
Total net assets		$	5,167,145
Share in associte's net assets		$	2,531,901
Carrying amount of the associate		$	2,531,901
Statement of comprehensive income

Statement of comprehensive income
		Uni-PresidentAsset	Management Corp.
	Year ended December		Year	ended December
		31,2020		31,2019
Revenue	$	941,595	$	831,987
Profit for the period from
continuing operations	$	258,096	$	251,386
Other comprehensive income (loss)-
net of tax		20,871	(	9,768)
Total comprehensive income	$	278,967	$	241,618
Dividends received from associates	$	94,466	$	93,631
Statement of comprehensive income

Other comprehensive income (loss)- net of tax Total comprehensive income $ Dividends received from associates $ Statement of comprehensive income	20,871 ( 278,967 $ 94,466 $	9,768) 241,618 93,631
		Jin Yuan President
		Securities Co.,Ltd.
		Eight months ended
		December 31,2020
Revenue	$	74,454
Loss for the period from
continuing operations	($	83,388)
Total comprehensive loss	($	83,388)
Dividends received from associates	$	-

~38~

11) Property and equipment

) Property and equipment
January1					2020
		Land	Buildings		Equipment		Leasehold improvements		Total
Cost Accumulated depreciation and impairment Total January 1 Additions Disposal Reclassifications Depreciation December 31 December31		1,573,570 $ - 1,573,570 $ 1,573,570 $ - - - - 1,573,570 $ Land	980,799 $ 397,833) ( 582,966 $ 582,966 $ 1,340 - 32,076 27,036) ( 589,346 $ Buildings		158,227 $ 60,690) ( 97,537 $ 97,537 $ 22,397 13) ( 14,436 37,497) ( 96,860 $ Equipment		31,424 $ 15,106) ( 16,318 $ 16,318 $ 253 - - 6,025) ( 10,546 $ Leasehold improvements		2,744,020 $ 473,629) ( 2,270,391 $ 2,270,391 $ 23,990 13) ( 46,512 70,558) ( 2,270,322 $ Total
Cost Accumulated depreciation and impairment Total January1		1,573,570 $ - 1,573,570 $	1,010,840 $ 421,494) ( 589,346 $		180,060 $ 83,200) ( 96,860 $ 2019		22,293 $ 11,747) ( 10,546 $		2,786,763 $ 516,441) ( 2,270,322 $
		Land		Buildings		Equipment		Leasehold improvements		Total
Cost Accumulated depreciation and impairment Total January 1 Additions Disposal Reclassification Depreciation December 31 December31		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
Cost Accumulated depreciation and impairment Total		1,573,570 $ - 1,573,570 $	980,799 $ 397,833) ( 582,966 $		158,227 $ 60,690) ( 97,537 $		31,424 $ 15,106) ( 16,318 $		2,744,020 $ 473,629) ( 2,270,391 $

• A. No interest was capitalized for property and equipment for the years ended December 31, 2020 and 2019.

B. The information on property and equipment pledged or restricted as of December 31, 2020 and 2019 is described in Note 8.

~39~

－ 12) Leasing arrangements lessee

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

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

Buildings Transportation equipment (Business vehicles) Office equipment (Photocopiers) Total Buildings Transportation equipment (Business vehicles) Office equipment (Photocopiers) Total		December 31,2020	December 31,2020	December 31,2019 CarryingAmount 151,128 $ 15,727 659 167,514 $ Year ended December 31,2019
		CarryingAmount
		147,180 $ 15,283 9,118 171,581 $ Year ended December 31,2020
		Depreciation charge		Depreciation charge
		$	63,380 5,258 1,198 69,836	71,405 $ 6,331 1,267 79,003 $
		$

• C. For the years ended December 31, 2020 and 2019, the additions to right-of-use assets amounted to $73,910 and $76,212, respectively.

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

Year ended December 31, 2020 Items affecting profit or loss Interest expense on lease liabilities 1,301 $ Expense on short-term lease contracts 3,264 Expense on variable lease payment 224	Year ended December 31,2019
	1,265 $ 3,831 317

• E. For the years ended December 31, 2020 and 2019, the Company’s total cash outflow for leases amounted to $71,243 and $82,755, respectively.

• F. The Company has applied the practical expedient to “Covid-19-related rent concessions”, and recognized the other gains or losses from changes in lease payments arising from the rent concessions amounting to $116 by decreasing rent expense for the year ended December 31, 2020.

• 13) Leasing arrangements – lessor

• 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.

~40~

• B. For the years ended December 31, 2020 and 2019, the Company recognized rent income in the amount of $ 25,228 and $25,788, respectively, 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 31,2020		December 31,2019
		- $ 23,557 23,187 23,133 5,960 75,837 $		25,159 $ 22,480 21,883 21,883 5,345 96,750 $

14) Investment property

) Investment property
January1			2020
		Land Buildings Total 198,099 $ 107,076 $ 305,175 $ - 32,572) ( 32,572) ( 198,099 $ 74,504 $ 272,603 $ 198,099 $ 74,504 $ 272,603 $ - 2,100) ( 2,100) ( 198,099 $ 72,404 $ 270,503 $ Land Buildings Total 198,099 $ 107,076 $ 305,175 $ - 34,672) ( 34,672) ( 198,099 $ 72,404 $ 270,503 $ 2019
Cost Accumulated depreciation and impairment Total January 1 Depreciation December 31 December31
Cost Accumulated depreciation and impairment Total January1
		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 $
Cost Accumulated depreciation and impairment Total January 1 Depreciation December 31 December31
Cost Accumulated depreciation and impairment Total

~41~

• A. For the years ended December 31, 2020 and 2019, rental income from the lease of the investment property were $16,570 and $17,652, respectively, and direct operating expenses arising from the investment property were $3,864 and $3,609, respectively.

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

• 15) Intangible assets

) Intangible assets
January1				2020
	Computer software			Goodwill
Cost Accumulated depreciation and impairment Total January 1 Additions Reclassifications Depreciation December 31 December31	44,326 $ 15,701) ( 28,625 $ 28,625 $ 10,032 28,632 14,893) ( 52,396 $ Computer software			42,004 $ - 42,004 $ 42,004 $ - - - 42,004 $ Goodwill
Cost Accumulated depreciation and impairment Total January1	75,854 $ 23,458) ( 52,396 $
		Computer sofware		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 $
Cost Accumulated depreciation and impairment Total January 1 Additions Reclassifications Depreciation December 31 December31	43,167 $ 18,167) ( 25,000 $ 25,000 $ 7,457 7,662 11,494) ( 28,625 $ Computer software			42,004 $ - 42,004 $ 42,004 $ - - - 42,004 $ Goodwill
Cost Accumulated depreciation and impairment Total	44,326 $ 15,701) ( 28,625 $			42,004 $ - 42,004 $

A. No interest was capitalized for intangible assets for the years ended December 31, 2020 and 2019.

~42~

• 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 were all allocated to the Company’s brokerage segment.

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

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

2020 Growth rate 0.00% Discount rate 9.79% Brokerage	2019 0.00% 11.16% Segment

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.

16) Other non-current assets

risks related to relevant operating segments. 16) Other non-current assets
		December31,2020			December31,2019
Operation guaranteed deposits		$	505,000		$	520,000
Clearing and settlement fund			243,407			244,803
Refundable deposits			257,611			193,565
Net defined benefit assets			16,688			-
Prepayment for equipment			21,063			26,575
Overdue receivables			39,388			240,073
Others			720			720
Subtotal			1,083,877			1,225,736
Less: Allowance for uncollectible
accounts-overdue receivables	(		39,388)	(		240,073)
Total		$	1,044,489		$	985,663
17) Short-term loans
		December31,2020			December31,2019
Unsecured loans	$		578,976	$		2,845,502
Interest rates			0.590%~0.700%			0.880%~2.495%
18) Commercial papers payable
		December31,2020			December31,2019
Face value		$	7,300,000		$	9,600,000
Less: discount on commercial papers payable	(		1,104)	(		3,296)
Total		$	7,298,896		$	9,596,704
Interest rates			0.200%~0.340%			0.530%~0.695%

~43~

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

		December31,2020	December31,2020		December31,2019	December31,2019
Liabilities on sale of borrowed securities
- hedged		$	243,446		$	192,174
Valuation adjustment on liabilities on sale of
borrowed securities - hedged			28,741			8,617
Liabilities on sale of borrowed securities
- non-hedged			688,401			208,143
Valuation adjustment on liabilities on sale of
borrowed securities - non-hedged			79,206	(		17,707)
Subtotal			1,039,794			391,227
Issuance of call ( put ) warrants			10,937,977			6,639,919
Gain on price fluctuation	(		912,291)	(		945,819)
Market value (A)			10,025,686			5,694,100
Warrants redeemed	(		9,807,568)	(		5,473,503)
Loss on price fluctuation			461,682			163,564
Market value (B)	(		9,345,886)	(		5,309,939)
Warrants - net (A+B)			679,800			384,161
Options sold - TAIFEX			15,405			17,390
Outstanding Liability for Issuance of ETNs			683,685			19,222
Valuation adjustment on outstanding Liability for
Issuance of ETNs			52,029			549
Subtotal			735,714			19,771
Derivative financial liabilities - OTC			151,428			35,716
Total		$	2,622,141		$	848,265

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 recognized as warrants repurchase and charged as a deduction to liabilities for issuance of warrants. The warrants have six to twelve months exercise period from the date of issuance. The issuer has the option to settle either by cash or stock delivery.

20) Bonds sold under repurchase agreements

Bonds sold under repurchase agreements
Government bonds Corporate bonds Bank debentures International bonds Foreign bonds Total	December31,2020 2,856,072 $ 951,350 200,000 1,037,127 14,051,616 19,096,165 $	December31,2019
		3,445,144 $ 1,601,547 400,889 3,886,654 11,622,022
		20,956,256 $

The above bonds sold under repurchase agreements as of December 31, 2020 and 2019 were due within one year and were contracted to be repurchased at the agreed-upon price plus interest charge

~44~

on the specific date after the transaction. The total repurchase amounts were $19,112,268 and $21,035,116, respectively, and the annual interest rates in every currency were shown as follows:

21) Accounts payable 22) Other payables 23) Other financial liabilities-current Currency NTD Foreign currencies (Note) Note：Foreign currencies include AUD, EUR, USD, 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 Equity-linked notes (ELN) - Options Principal guaranteed notes (PGN) - fixed income Total	December31,2020 0.17%~0.26% -0.40%~3.10% GBP, RMB and SGD. December 31, 2020 16,849,132 $ 471,589 513,165 27,575 14,454 54,719 107,485 18,038,119 $ December31,2020 1,228,688 $ 163,608 582,943 1,975,239 $ December31,2020 17,000 $ 5,991,310 6,008,310 $	December31,2019 0.47%~0.62% -0.50%~3.40% December 31, 2019
		8,410,426 $ 1,223,127 616,917 223 709,611 434,980 71,935
		11,467,219 $
		December31,2019 718,595 $ 104,206 412,505
		1,235,306 $
		December31,2019
		4,000 $ 2,739,866
		2,743,866 $

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). 24) Other liabilities-non-current

Other liabilities-non-current
Guarantee deposits received Net defined benefit liabilities - non-current Total	December31,2020 24,388 $ - 24,388 $	December31,2019
		25,338 $ 1,587
		26,925 $

~45~

25) 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 which ranges between 2.0% and 7.2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the supervisory committee of workers' retirement reserve fund, and with Cathay United Bank, under the name of the management committee of employees’ retirement fund. Also, the 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	31,2020	December	31,2019
Present value of defined benefit obligations	$	795,455	$	819,706
Fair value of plan assets	(	812,143)	(	818,119)
Net defined benefit (assets) liabilities	($	16,688)	$	1,587

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

Year ended December 31,2020		Present value of defined benefit obligations	Fair value ofplan assets	Net defined benefit liabilities (assets)
	819,706 $ 4,678 5,738 830,122 - 26,308 3,356 29,664 - 64,331) ( 64,331) ( 795,455 $		818,119) ($ - 5,727) ( 823,846) ( 9,506) ( - - 9,506) ( 43,122) ( 64,331 21,209 812,143) ($	1,587 $ 4,678 11 6,276 9,506) ( 26,308 3,356 20,158 43,122) ( - 43,122) ( 16,688) ($
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

~46~

Year ended December 31,2019 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		Present value of defined benefit obligations	Fair value ofplan assets Net defined benefit liabilities (assets) 785,897) ($ 44) ($ - 5,006 8,644) ( - 794,541) ( 4,962 7,249) ( 7,249) ( - 28,807 - 13,302 7,249) ( 34,860 38,235) ( 38,235) ( 21,906 - 16,329) ( 38,235) ( 818,119) ($ 1,587 $
	785,853 $ 5,006 8,644 799,503 - 28,807 13,302 42,109 - 21,906) ( 21,906) ( 819,706 $

(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 utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2020 and 2019 is given in the Annual Labor Retirement Fund Utilization Report published by the government. In addition, for retirement fund deposits with Cathay United Bank, under the name of the management committee of employees’ retirement fund, the fund invests in time deposit accounts under Cathay United Bank.

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

Discount rate Future salary increases		Year ended December 31,2020 Year ended December 31, 2019 0.30% 0.70% 2.50% 2.50%

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

~47~

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

==> picture [453 x 161] intentionally omitted <==

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

Discount rate Future salary increases
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2020
Effect on present value
of defined benefit
obligation ($ 16,592) $ 17,108 $ 14,741 ($ 14,399)
December 31, 2019
Effect on present value
of defined benefit
obligation ($ 18,175) $ 18,762 $ 16,344 ($ 15,945)
----- End of picture text -----

• (F) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2021 amounts to $46,641.

• 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 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, 2020 and 2019 were $62,258 and $56,453, respectively.

26) Equity

• A. Common stock

• (A) As of December 31, 2020, the Company’s authorized capital was $15,000,000 with a par value of $10 (in dollars) per share. As of December 31, 2020 and 2019, the common stocks issued and the outstanding common stocks were 1,399,838 and 1,372,390 thousand shares, respectively.

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

January 1 Purchase and retirement of treasury shares Stock dividends December 31		(Expressed in thousands) Year ended December 31,2020 Year ended December 31,2019 1,372,390 1,390,428 - 18,038) ( 27,448 - 1,399,838 1,372,390	(Expressed in thousands) Year ended December 31,2020 Year ended December 31,2019 1,372,390 1,390,428 - 18,038) ( 27,448 - 1,399,838 1,372,390
		1,372,390 - 27,448 1,399,838	1,390,428 18,038) ( - 1,372,390

The Company was approved by the board of directors on March 26, 2020 and the shareholders' meeting resolved on June 19, 2020 to increase capital with an undistributed surplus of $274,478, and issue 27,448 thousand ordinary shares with a par value of $10 (in dollars) per share. The capital increase base date is at August 10, 2020, the total issued share capital after the capital

~48~

increase was $13,998,378, divided into 1,399,838 thousand shares, each with a denomination of $10 (in dollars) per share.

• (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 [462 x 123] 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.

B. Capital reserve

Capital reserve
December 31, 2020 December 31, 2019		Sharepremium		Treasury share transactions		Expired stock options		Difference between consideration and carrying amount of subsidiaries acquired or disposed 440 $ 440 $	Total
		24,663 $ 24,663 $		65,675 $ 65,675 $		483 $ 483 $			91,261 $ 91,261 $

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 paid-

~49~

in 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-Quan 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, employee transfer and settlement expenditure arising from the development of Fintech. Further, according to Jing-Guan-Zheng-Quan 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.

27) Unappropriated earnings and dividends policy

• A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall be used to pay all taxes and offset prior years’ operating losses first, and then set aside as legal reserve, accounted for as 10% of the remaining amount, and special reserve, accounted for as 20% of the remaining amount. Upon provision or reversal of special reserve in accordance with the law, any remaining amount together with unappropriated earnings at beginning of the period shall be distributed according to the following resolution adopted at the stockholders’ meeting: Distribution shall not be made if the balance of distributable earnings is less than 5% of paid-in capital.

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

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

~50~

• D. The earnings distribution for 2019 as resolved by the Board of Directors on June 19, 2020; the appropriation of 2018 earnings was resolved by the shareholders on June 18, 2019. Details are as follows:

Legal reserve Special reserve Special reserve (Note 1) Reversal of special reserve (Notes 1&3) Special reserve (Note 2) Cash dividends Stock dividends Total	Amount Dividends per share (in dollars) 234,244 $ 473,707 - 4,221) ( - 1,372,390 1.00 $ 274,478 0.20 2,350,598 $ Year ended December 31, 2019	Amount Dividends per share (in dollars) 121,032 $ 242,064 6,052 4,365) ( 58,374) ( 959,395 0.69 $ - - 1,265,804 $ Year ended December 31, 2018

• Note 1: Special reserve was provided for employees’ transition for financial technology development according to Jing-Guan-Zheng-Chuang Letter No. 10500278285 and can be reversed for employees’ transition.

• 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-Chuang Letter No. 1010028514.

• Note 3: Special reserve was reversed according to Jing-Guan-Zheng-Chuang Letter No. 10800321644.

• E. The earnings distribution for 2020 as resolved by the Board of directors on March 23, 2021 is set forth below:

orth below:
Legal reserve Special reserve Reversal of special reserve (Note 4) Cash dividends Stock dividends Total	Year ended December 31,2020
	Amount	Dividends per share (in dollars)
	376,735 $ 721,504 7,620) ( 2,099,756 559,935 3,750,310 $	1.50 $ 0.40 $

• Note 4: Special reserve was provided for employees’ transition for financial technology development based on Jing-Guan-Zheng-Chuang Letter No. 1080321644 and can be reversed for employees’ transition.

~51~

28) Brokerage handling fee revenue

Revenues from brokered trading - TWSE Revenues from brokered trading - OTC Others Total

Year ended December 31,2020 1,787,358 $ 617,121 61,043 2,465,522 $	Year ended December 31,2019
	1,069,518 $ 426,700 32,198 1,528,416 $

29) Revenues from underwriting business

Revenues from underwriting securities on a firm commitment basis Others Total

Year ended December 31, 2020 25,222 $ 51,284 76,506 $	Year ended December 31, 2019
	25,139 $ 37,672 62,811 $

30) Net gain (loss) on sale of trading securities

Net gain (loss) on sale of trading securities
Dealers: -TAIEX -OTC -Overseas trading Subtotal Underwriters: -TAIEX -OTC Subtotal Hedging: -TAIEX -OTC -Overseas trading Subtotal Total	Year ended December 31,2020		Year ended December 31,2019
	1,745,296 $ 32,375 1,233,469 3,011,140 Year ended December 31, 2020		1,686,209 $ 139,489 504,755 2,330,453 Year ended December 31,2019
	59,566 65,373 124,939 159,062 53,329 3,280 215,671 3,351,750 $	47,543 73,592 121,135 340,461 52,232 10,820) ( 381,873 2,833,461 $

~52~

31) Interest revenue

31) Interest revenue	31) Interest revenue	31) Interest revenue
32) Net valuation gain (loss) on trading securities at fair value through profit or loss 33) Net gain on covering of borrowed securities and bonds with resale agreements-short sales Year ended December 31, 2020 Year ended December 31, 2019 Interest income from margin loans 502,286 $ 484,574 $ Interest income from bonds 535,601 674,047 Others 14,708 4,574 Total 1,052,595 $ 1,163,195 $ Year ended December 31,2020 Year ended December 31, 2019 Gain on sale of securities - dealer 1,014,047 $ 655,672 $ Loss on sale of securities - underwriting 51,505) ( 22,420) ( Gain on sale of securities - hedging 33,077 77,851 Total 995,619 $ 711,103 $ Year ended December 31,2020 Year ended December 31,2019 Loss from the bond investments under resale agreements ($ 5,861) ($ 6,528) Gain (loss) from covering - warrants 8,731 ( 3,919) Gain from covering - structured notes 1,504 2,861 Loss from securities borrowing transactions - structured notes ( 147) ( 1,295) Gain from securities borrowing transactions - dealer 262,471 46,294 Gain from covering - equity options 1,540 - Gain from securities borrowing transactions - equity options 201 - Total 268,439 $ 37,413 $
	Year ended December 31,2020
	($ 5,861) 8,731 1,504 ( 147) 262,471 1,540 201 268,439 $	($ 6,528) ( 3,919) 2,861 ( 1,295) 46,294 - -
		37,413 $

~53~

34) Net valuation loss on borrowed securities and bonds with resale agreements-short sales at fair value

through profit or loss

through profit or loss	through profit or loss	through profit or loss	through profit or loss
Net Realized gain on financial assets measured at fair value through other comprehensive income Year ended December 31,2020 Year ended December 31,2019 Valuation loss from the bond investments under resale agreements - $ 5,265) ($ Valuation (loss) gain from securities borrowing transactions - dealer 92,095) ( 5,546) ( Valuation loss from covering - warrants 5,292 10,607) ( Valuation gain from securities borrowing transactions - equity options 2 - Valuation loss from covering - equity options 30,220) ( - Total 117,021) ($ 21,418) ($
Foreign bonds	Year ended December 31,2020 100,358 $		Year ended December 31,2019
			15,309 $

35) Net Realized gain on financial assets measured at fair value through other comprehensive income

36) Net gain from issuance of call (put) warrants

Net 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 31,2020	Year ended December 31,2019
	367,407 $ 114,508) ( 157,494) ( 95,405 $	203,893 $ 31,156) ( 78,873) ( 93,864 $

37) Net loss from derivatives

38) Impairment loss and reversal of impairment loss Futures contract gain (loss) Option trading (loss) gain (Loss) gain on foreign exchange derivatives Others Total Provision of provision for impairment Collection of bad debt Total	Year ended December 31,2020	Year ended December 31,2019
	265,861 $ 159,758) ( 43,196) ( 183,424) ( 120,517) ($ Year ended December 31,2020	908,766) ($ 18,375) ( 18,870 79,312) ( 987,583) ($ Year ended December 31,2019
	17,510) ($ 2,202 15,308) ($	7,170) ($ 672 6,498) ($

~54~

39) Other operating income

Other operating income
			Year ended		Year ended
		December 31, 2020		December 31, 2019
Income from securities lending		$	151,265	$	113,544
Net currency exchange gain	(		326,402)		196,750
Handling fee revenues from funds			46,855		45,349
Others			5,413		7,012
Total	($		122,869)	$	362,655

40) Handling charges

Handling charges
Brokerage handling fee expense Dealer handling fee expense Refinancing processing fee expense Total		Year ended December 31,2020 218,425 $ 149,976 4,704 373,105 $	Year ended December 31, 2019
			131,978 $ 264,894 2,300 399,172 $

41) Financial costs

Financial costs
Employee benefits expense Interest expense from repurchase agreements Loans interest expense Other interest expense Total Salaries Labor and health insurance Pension Other employee benefits Total		Year ended December 31,2020		Year ended December 31, 2019
		180,657 $ 60,866 7,867 249,390 $ Year ended December 31,2020		382,546 $ 116,568 7,170 506,284 $ Year ended December 31,2019
		2,508,670 $ 120,577 66,947 99,822 2,796,016 $		1,787,058 $ 108,575 61,459 87,007 2,044,099 $

42) Employee benefits expense

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, 2020 and 2019, employees’ compensation was accrued at $81,804 and $52,103, respectively; directors’ remuneration was accrued at $81,804 and $52,103, respectively. The aforementioned amounts were recognized in salary expenses.

~55~

• C. For years ended December 31, 2020, 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 2019 as resolved by the Board of Directors was in agreement with the estimates in the 2019 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.

43) Depreciation and amortization

Depreciation Amortization Total	Year ended December 31, 2020 Year ended December 31, 2019 142,494 $ 143,330 $ 14,911 11,497 157,405 $ 154,827 $

44) Other operating expenses

Other operating expenses
Other gains and losses Postage Taxes Security lending expenses Computer information expenses Others Total Financial income (Loss) gain on disposal of investments Net currency exchange gain (loss) Other net non-operating revenues Total		Year ended December 31, 2020		Year ended December 31,2019
		68,637 $ 708,890 93,702 102,723 383,264 1,357,216 $ Year ended December 31,2020		58,880 $ 521,601 85,186 97,435 326,656 1,089,758 $ Year ended December 31,2019
	11,715 $ 40,290) ( 7,352) ( 136,569 100,642 $			19,159 $ 9,073 7,576 123,882 159,690 $

45) Other gains and losses

~56~

46) Income tax

A. Income tax expense

(a)Components of income tax expense:

me tax ncome tax expense a)Components of income tax expense:
			Year ended				Year ended
		December 31,2020				December 31,2019
Current tax:
Current tax on profits for the periods		$	319,537			$	163,690
Prior year income tax overestimation	(		27,970)		(		11,154)
Total current tax			291,567				152,536
Deferred taxes:
Origination and reversal of temporary
differences			27,511		(		6,691)
Total deferred taxes			27,511		(		6,691)
Income tax expense		$	319,078			$	145,845
b)The income tax expense relating to components of			other comprehensive income is as follows
			Year ended				Year ended
		December 31,2020				December 31, 2019
Remeasurement of defined benefit
obligations	($		4,032)		($		6,972)
Reconciliation between income tax expense and accounting profit
			Year ended				Year ended
	December 31, 2020				December 31,2019
Tax calculated based on profit before tax and statutory tax rate	$		785,319		$		502,876
Expenses disallowed by tax regulation			21,336				93,470
Prior year income tax underestimation	(		27,970)	(			11,154)
Tax exempt income by tax regulation	(		755,544)	(			594,419)
Effect from Alternative Minimum Tax			295,937				155,072
Income tax expense	$		319,078		$		145,845

• (b)The income tax expense relating to components of other comprehensive income is as follows ：

B. Reconciliation between income tax expense and accounting profit

~57~

• 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 Unrealised exchange loss Pension Others Subtotal Deferred tax liabilities： -Temporary differences： Valuation gain from financial instruments Unrealised exchange gain Subtotal Total Deferred tax assets： -Temporary differences： Losses on doubtful debts Valuation loss from financial instruments Pension Others Subtotal Deferred tax liabilities： -Temporary differences： Unrealised exchange gain Subtotal Total		YearendedDecember31,2020	YearendedDecember31,2020	YearendedDecember31,2020	YearendedDecember31,2020	YearendedDecember31,2020
		January1	Recognised in profit or loss		Recognised in other comprehensive income		December 31
		January1	Recognised in profit or loss		Recognised in other comprehensive income		December 31
	29,635 $ 9,559 76,285 5,182 120,661 $ 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 83,257 5,243 132,198 $ 12,148) ($ 12,148) ($ 120,050 $

D. As of December 31, 2020, the Company’s income tax returns have been approved by the Tax Authority until 2018, except for 201 7.

~58~

• E. With respect to the income tax returns of the Company for 2016, the Tax Authority assessed to increase income tax payable by $2,822. However, the Company disagreed with the assessments and had filed for administrative remedy. The Company had recognized the income tax expense based on the assessment.

47) Earnings per share

==> picture [459 x 375] intentionally omitted <==

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

Year ended December 31, 2020
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 $ 3,607,518 1,399,838 $ 2.58
Dilutive effect of common stock
equivalents
Employee bonus - 4,446
$ 3,607,518 1,404,284 $ 2.57
Year ended December 31, 2019
Weighted-average
outstanding Earnings per
Amount common shares share
after tax (In thousands) (In dollars)
Basic earnings per share
Net income attributable to
common shareholders $ 2,368,536 1,400,927 $ 1.69
Dilutive effect of common stock
equivalents
Employee bonus - 3,678
$ 2,368,536 1,404,605 $ 1.69
----- End of picture text -----

The above-mentioned weighted average number of outstanding shares has been adjusted based on the proportion of capital increase on August 4, 2020, and the earnings per share for the year ended December 31, 2019 have been recalculated.

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

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

~59~

Names of related parties 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 Tokyo Co., Ltd. ScinoPharm Taiwan, Ltd. Ton Yi Industrial Corp. President Chain Store Corp. (PCSC) Kai Yu (BVI) Investment Co., Ltd Cayman President Holdings Limited President (BVI) International Investment Holdings Ltd Funds managed by Uni-President Asset Management Corp.

Relationship with 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 Associate Other related party 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.

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

gnificant related party transactions and balances Futures guarantee deposits receivable
Accounts receivable 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: ScinoPharm Taiwan, Ltd. President Chain Store Corp. (PCSC) Others Total		December 31,2020		December 31, 2019
		2,825,942 $ December 31,2020 25 $ 3,389 149 399 378 73 4,413 $		2,016,203 $ December 31,2019
				274 $ 2,620 729 515 161 53 4,352 $

B. Accounts receivable

~60~

C. Other receivables

Subsidiary of the Company PSC: President Futures Corp. Others Other related party: Others Total	December 31,2020 December 31,2019 $ 257 $ 66 20 18 18 - 295 $ 84 $

• －

• 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:
isposals of right-of-use assets: ase liabilities Lease liabilities–current Lease liabilities–non-current Financial costs Other related party: President Tokyo Co., Ltd. Other related party: President Tokyo Co., Ltd. Other related party: President Tokyo Co., Ltd. Other related party: President Tokyo Co., Ltd. Other related party: President Tokyo Co., Ltd. Others Total			December 31,2020		December 31,2019 8,256 $ Year ended December 31,2019 1,887 $ December 31, 2019 4,940 $ December31,2019 10,782 $ Year ended December 31,2019 116 $ 1 117 $
		14,471 $ Year ended December 31,2020	14,471 $
		- $ December 31,2020
		7,016 $ December31,2020 17,378 $ Year ended December 31,2020
		144 $ - 144 $

• b. Disposals of right-of-use assets:

• (C) Lease liabilities

• a. Lease liabilities current

• b. Lease liabilities non-current

• c. Financial costs

~61~

d. Net gain on lease modification

d. Net gain on lease modification
E. Refundable deposits F. Accounts payable G. Guarantee deposit received H. Bonds sold under repurchase agreements Other related party: President Tokyo Co., Ltd. Subsidiary of the Company PSC: President Futures Corp. Subsidiary of the Company PSC: President Futures Corp. Other related party: President Tokyo Co., Ltd. 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 Kai Yu (BVI) Investment Co., Ltd Cayman President Holdings Limited Total		Year ended December 31, 2020		Year ended December 31,2019 26 $ December 31, 2019
		- $ December 31, 2020
		34,000 $ December 31,2020		34,000 $ December 31,2019
		104 $ - 104 $ December 31,2020		242 $ 452 694 $ December 31,2019 $ 16,137 804 1,044 1,434 19,419 $ December 31,2019
		$ 16,137 811 1,044 1,434 19,426 $ December 31,2020
		- $ 148,096 489,856 637,952 $		24,475 $ - - 24,475 $

~62~

I. Handling fee revenue

Handling fee revenue
		Year ended		Year ended
	December 31, 2020		December 31, 2019
Subsidiary of the Company PSC:
Others	$	48	$	128
Security investment trust fund raised
by the Uni-President Asset Management Corp.:
Uni-President Asset Management Corp.		47,108		32,992
Other related party:
Others		2,354		810
Total	$	49,510	$	33,930

Terms of handling fee revenue mentioned above are similar to those of transactions with third parties. J. Futures commission income

J. Futures commission income
K. Gins on wealth management-trust income from sales of funds The revenues were collected on a monthly basis in accordance with contract terms. L. Other operating income-handling charge revenue Year ended December 31, 2020 Year ended December 31, 2019 Subsidiary of the Company PSC: President Futures Corp. 40,206 $ 35,784 $ Year ended December 31,2020 Year ended December 31,2019 Associates: Uni-President Assets Management Corp. 5,260 $ 9,817 $	Year ended December 31, 2020		Year ended December 31, 2019
			35,784 $ Year ended December 31,2019

The revenues were collected on a monthly basis in M. Rent income Associates: Uni-President Assets Management Corp.		Year ended December 31,2020	Year ended December 31,2019

ent income
Subsidiary of the Company PSC： President Capital Management 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 2018.04.01~2024.03.31	Deposit 595 $ 353 1,044 1,434		Year ended December 31, 2020		Year ended December 31, 2019
				$ 3,644 2,747 6,811 9,422 22,624 $		$ 3,644 3,070 7,045 9,422 23,181 $

~63~

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.

N. Revenues from underwriting business

Revenues from underwriting business
Stock custodian income Entity having significant influence on the company: Uni-President Enterprises Corp. Entity having significant influence on the company: Uni-President Enterprises Corp. Subsidiary of the Company PSC Uni-President Enterprises Corp. Associate: Uni-President Assets Management Corp. Other related party: ScinoPharm Taiwan, Ltd. Ton Yi Industrial Corp. President Chain Store Corp. (PCSC) Others Total		Year ended December 31,2020 300 $ Year ended December 31,2020 3,697 $ 66 135 2,635 1,220 2,097 663 10,513 $	Year ended December 31,2019 - $ Year ended December 31,2019 3,506 $ 66 133 2,371 1,225 1,929 663 9,893 $

O. Stock custodian income

Terms of stock custodian income mentioned above are similar to third parties.

P. Net loss from derivatives

P. Net loss from derivatives
Q. Other operating expenses-equipment rental and Other related party: Cayman President Holdings Limited Kai Yu (BVI) Investment Co., Ltd Total Other related party: President Tokyo Co., Ltd.	Year ended December 31,2020		Year ended December 31,2019
	copy expense 1,189) ($ 36) ( 1,225) ($ Year ended December 31,2020		- $ 240) ( 240) ($ Year ended December 31,2019
		1,889 $	544 $

~64~

R. Clearing charges-futures

			Year ended December 31,2020 11,731 $ Year ended December 31,2020 50,400 $ Year ended December 31, 2020	Year ended December 31,2020 11,731 $ Year ended December 31,2020 50,400 $ Year ended December 31, 2020
			$
			$
Entity having significant influence on the company: Uni-President Enterprises Corp. Other related parties: President Chain Store Corp. ScinoPharm Taiwan, Ltd. Others Total Entity having significant influence on the company: Uni-President Enterprises Corp. Other related parties: President Chain Store Corp. Total
		Ending Shares (In thousands)
		5 - - -
		Ending Shares (In thousands)
		76 -

~65~

V. Compensation of key management personnel

The compensation of key management such as directors, general managers, vice general managers were as follows:

ere as follows:
		Year ended		Year ended
	December 31,2020		December 31, 2019
Salary and short-term employee benefits	$	264,054	$	154,625
Retirement benefits		660		774
Other long-term employee benefits		-		-
Termination benefits		-		-
Share-based payment		-		-
Total	$	264,714	$	155,399

8. PLEDGED ASSETS

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

Assets Financial assets at fair value through profit or loss - current: Trading securities (par value) - Corporate bonds - Government bonds - Overseas bonds - International bonds - Bank debentures Restricted assets: - Demand deposits - Pledged time deposits Financial assets at fair value through profit or loss - non-current: - Government bonds (par value) Property and equipment - Land and buildings (book value) Pledged time deposits - Operating guarantee deposits	December31,2020 950,000 $ 2,634,800 15,119,396 1,034,879 200,000 652,010 400,000 50,000 1,101,768 505,000	December31,2019 1,600,000 $ 3,330,800 12,421,911 4,110,169 400,000 735 400,000 50,000 1,107,127 520,000	Purposes
			Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Securities for bonds sold under repurchase agreements Collections on behalf of third parties and reimbursement for wages and stocks Securities for short-term loans and guarantees for issuance of commercial papers Trust fund deposit-out Securities for short-term loans and guarantees for issuance of commercial papers Security deposits

9. SIGNIFICANT COMMITMENTS

None.

~66~

10. SIGNIFICANT LOSS FROM NATURAL DISASTER

None.

11. SIGNIFICANT SUBSEQUENT EVENT

None.

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, Finance segment and Settlement 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

~67~

  - c. Approval of various businesses’ quotas

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

• (E) Risk Control Office implements risk management policy and related regulations and reports 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

~68~

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.

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.

~69~

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.

• 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 papers

The commercial papers 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. 31% of convertible corporate bond is guaranteed by banks. Details are as follows:

• (a)Government 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

~70~

merchants as a guarantee to fulfil contractual obligation in the future. As a result, the credit risk is low.

• (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(9).

• Types of OTC derivative transactions in which the Company is engaged include structured notes and 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(9).

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

• (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.

~71~

• (K) Receivables

• Receivables are the credit rights arising from the securities business including settlement receivables of consignment trading, settlement receivables of operating securities sold, financing interest receivables of self-operating credit transaction, receivables of consignment trading for securities, and receivables from banks’ underwriting on foreign exchange transactions and foreign fund demand. As the majority of the 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 recognizes expected credit loss according to which stage the asset belongs: no significant increase in credit risk or low credit risk at balance sheet date (Stage 1), significant increase in credit risk (Stage 2), and credit impaired (Stage 3). 12-month expected credit losses are recognized for assets in Stage 1, and lifetime expected credit loses are recognized for assets in Stage 2 and Stage 3.

~72~

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

Item	Stage 1	Stage 2	Stage 3
Definition	No significant deterioration of credit quality of the financial asset since initial recognition, or the financial asset is considered low-risk at the balance sheet date.	Significant deterioration of credit quality of the financial asset since initial recognition, but the asset is not yet credit impaired.	The financial asset is credit impaired at the financial reporting date.
Expected credit losses recognition	12-month expected credit losses	Lifetime expected credit losses	Lifetime expected credit losses

• (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.

• 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.

~73~

• 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, 2020 and 2019, 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 receivables-others and other non-current assetsoverdue receivables of the Company are as follows:

~74~

Year ended December 31, 2020

		Year ended December31,2020	Year ended December31,2020	er31,2020
At January 1 Provision (reversal of provision) for impairment Derecognised At December 31 At January 1 Provision (reversal of provision) for impairment Derecognised Transfers At December 31	Marginal receivable	Accounts receivable Other receivables Other non- current assets- overdue receivables 656 $ 54 $ 240,073 $ 31) ( - 2,507 - - 203,192) ( 625 $ 54 $ 39,388 $ Accounts receivable Other receivables Other non- current assets- overdue receivables 2,661 $ 288 $ 213,075 $ 528 234) ( 13,191) ( - - 274) ( 2,533) ( - 40,463 656 $ 54 $ 240,073 $ Year ended December31,2019		Other non- current assets- overdue receivables	Total
	43,806 $ 15,034 - 58,840 $ Marginal receivable				284,589 $ 17,510 203,192) ( 98,907 $ Total
	61,669 $ 20,067 - 37,930) ( 43,806 $	2,661 $ 528 - 2,533) ( 656 $	288 $ 234) ( - - 54 $	213,075 $ 13,191) ( 274) ( 40,463 240,073 $	277,693 $ 7,170 274) ( - 284,589 $

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

~75~

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.

(Blank below)

~76~

(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				December31,2020	December31,2020	December31,2020	December31,2020
		Immediately		Less than 3 months		3-12 months		1-5years - $ - - - - - - - - 80,784 - - 103,607 184,391 $	Total
		- $ - 1,039,794 1,550,679 - 1,381,470 1,809,955 - 18,023,694 1,010,210 985 - - 24,816,787 $		578,976 $ 7,300,000 - - 19,112,268 - - 803,016 14,425 7,680 222,277 2,017,803 19,214 30,075,659 $		- $ - - 31,668 - - - 100,836 - - 1,751,977 3,990,507 42,661 5,917,649 $			578,976 $ 7,300,000 1,039,794 1,582,347 19,112,268 1,381,470 1,809,955 903,852 18,038,119 1,098,674 1,975,239 6,008,310 165,482
									60,994,486 $

~77~

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				December31,2019	December31,2019	December31,2019	December31,2019
		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 $

~78~

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	Statistical table	Statistical table	Statistical table	Statistical table
for one-day VaR	of transactions	for one-dayVaR	of transactions
December31,2020	Amount	December 31, 2019		Amount
	172,331 $		$	99,926
VaR Maximum	274,866	VaR Maximum		168,442
VaR Average	158,787	VaR Average		93,088
VaR Minimum	76,059	VaR Minimum		27,518

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

Year ended
December 31,2020 December 31, 2020 VaR Maximum VaR Average VaR Minimum Year ended December 31,2019 December 31, 2019 VaR Maximum VaR Average VaR Minimum	Foreignexchange 3,413 $ 55,596 7,103 1,489 Foreignexchange 5,000 $ 27,860 6,610 1,566	Interest 24,024 $ 91,620 39,354 15,428 Interest 17,268 $ 72,934 35,173 8,308	Share ownership
			175,695 $ 267,430 155,821 67,873 Share ownership
			101,873 $ 168,753 90,473 24,844

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, 2020 and 2019 ：

~79~

Financialassetsin foreigncurrencies 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 350,244 $ 13,281,876 - 808,186 318,976 50,740 9,996,698 2,945,156	EUR 2,479 $ 3,486,806 - 10,371 - 3,898 3,080,106 -	AUD RMB HKD Others 2,247 $ 260,037 $ 269,730 $ 173,112 $ 1,006,892 1,267,289 378,212 424,984 - 2,531,901 1,419,007 - 1,918 34,377 5,161 28,645 - - - - 3,441 3,426 172 5,422 853,836 871,401 - 286,703 240 263,221 52,811 27,835 December31,2020	Total
				1,057,849 $ 19,846,059 3,950,908 888,658 318,976 67,099 15,088,744 3,289,263

Note: As of December 31, 2020, foreign exchange rates of the above currencies to TWD were 1 USD = 28.48 TWD; 1 EUR = 35.02 TWD; 1 AUD = 21.95 TWD; 1 RMB = 4.377 TWD; and 1 HKD = 3.673 TWD, respectively.

~80~

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 December31,2019	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.

~81~

• 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, 2020 and 2019, amounted to ($ 326,402) and $196,750, 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, 2020 Investment property December 31, 2019 Investment property	Total Quoted prices of the same assets in active markets (level 1) 667,546 $ - $ 665,646 $ - $	Other significant observable inputs (level 2) Significant non-observable inputs (level 3) 667,546 $ - $ 665,646 $ - $

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

  • 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

~82~

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, onthe-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, 2020 and 2019, 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)

~83~

(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 comprehensive income-current Stock investments Financial assets at fair value through profit or loss - non-current Stock investments Bond investments Financial assets at fair value through other comprehensive income-non-current 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	31,2020
	Total 11,927,130 $ 23,302,082 2,237,129 353,510 16,991 50,493 186,334 1,039,794 3,365,537 1,582,347	Level 1 11,903,943 $ 1,170,822 2,237,129 353,510 - - - 1,039,794 3,356,164 1,430,919	Level 2 23,187 $ 22,131,260 - - - 50,493 - - 9,373 151,428	Level3
				- $ - - - 16,991 - 186,334 - - -

~84~

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

~85~

(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	January1	Recorded in profit or loss Recorded in other comprehensive income(loss) Acquired/ Issued Transfers into level 3 4,189) ($ - $ - $ - $ - 28,678 - - Year ended December 31, 2019 Year ended December31,2020 Valuation amount Increased	Recorded in profit or loss Recorded in other comprehensive income(loss) Acquired/ Issued Transfers into level 3 4,189) ($ - $ - $ - $ - 28,678 - - Year ended December 31, 2019 Year ended December31,2020 Valuation amount Increased	Recorded in profit or loss Recorded in other comprehensive income(loss) Acquired/ Issued Transfers into level 3 4,189) ($ - $ - $ - $ - 28,678 - - Year ended December 31, 2019 Year ended December31,2020 Valuation amount Increased	Decreased	Decreased	December 31
		Recorded in profit or loss			Sold/ Settled	Transfers out from level 3
	21,180 $ 157,656			- $ -	- $ -	- $ -	16,991 $ 186,334
Financial assets at fair value through profit or loss - non-current Equity investments Financial assets at fair value through other comprehensive income - non-current Equity investments	January1	Valuation amount	Increased		Decreased		December 31
		Recorded in profit or loss Recorded in other comprehensive income (loss) 4,735 $ - $ - 11,111	Acquired/ Issued Transfers into level 3 - $ - $ - -		Sold/ Settled	Transfers out from level 3
	16,445 $ 146,545				- $ -	- $ -	21,180 $ 157,656

(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:
December31,2020	Fairvalue	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
Financial assets at fair value through profit or loss - non-current Venture capital shares Financial assets at fair value through other comprehensive income - non-current Unlisted stocks	16,991 $ 186,334	Net asset value Market approach	Not applicable Price to earnings ratio multiple Discount for lack of marketability	- 1.46~1.90 6.99%~9.65%	Not applicable The higher the multiple,the higher the fair value The higher the discount for lack of marketability, the lower the fair value

~86~

==> picture [445 x 45] intentionally omitted <==

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

Range
Valuation Significant (weighted Relationship of inputs
December 31, 2019 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	$	21,180	Net asset value	Not applicable	Not applicable	Not applicable
Financial assets at fair value
through other comprehensive
income - non-current
Unlisted stocks		157,656	Market approach	Price to earnings ratio multiple Discount for lack of marketability	1.32~1.76 7.93% ~9.75%	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 Company’s risk management department is responsible for the verification of fair value categorized in Level 3. The department assesses the independence, reliability, consistency and representativeness of the source information, regularly verifies the valuation models and calibrates the parameters to ensure the valuation process and results are in compliance with IFRSs.

• (F) For the fair value measurement of Level 3, the sensitivity analysis of the fair value to the reasonable alternative hypothesis shows that the fair value measurement of the financial assets by the 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 categorized within Level 3 if the inputs used in valuation models have changed up or down by 1%:

December 31,2020	Recognised in profit or loss	Recognised in profit or loss	Recognised in other comprehensive income	Recognised in other comprehensive income
	Favourable change	Unfavourable change	Favourable change	Unfavourable change
Financial assets at fair value through profit or loss -non- current Venture capital shares Financial assets at fair value through other comprehensive income - non-current Unlisted stocks	Not applicable -	Not applicable -	- $ 1,863	- $ 1,863) (

~87~

December 31, 2019 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	Favourable change Unfavourable change Favourable change Unfavourable change Not applicable Not applicable - $ - $ - - 1,577 1,577) ( Recognised inprofit or loss Recognised in other comprehensive income	Favourable change Unfavourable change Favourable change Unfavourable change Not applicable Not applicable - $ - $ - - 1,577 1,577) ( Recognised inprofit or loss Recognised in other comprehensive income
		- $ 1,577) (

• 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, 2020 and 2019, the capital adequacy ratios were 339% and 378%, 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.

~88~

A. Balance sheet of trust accounts

A. Balance sheet of trust accounts
B. Income statement of trust accounts Trust assets Bank savings Structured notes Stock Bond Bonds sold under repurchase agreements Fund Securities lending Accounts receivable Total of trust assets Trustliabilities Accounts payable Trust capital Net income (loss) Cumulative loss Total of trust liabilities Item Trust income Interest income Cash dividends received Income from stocks lending Investment gains (losses) - realized Investment gains (losses) - unrealized Subtotal Trust expenses Management fee Service fee Borrowing costs Remittance fee Income before income tax Income tax expense Net income			December31,2019 283,288 $ 347,256 135,196 402,246 115,006 3,270,575 71,047 74,063 4,698,677 $ December 31, 2019 53,204 $ 4,586,918 100,346 41,791) ( 4,698,677 $ Year ended December 31,2019
	20,430 $ 47,788 587 225,435 806,875 1,101,115 1,099) ( 526) ( 134) ( - 1,099,356 10 1,099,366 $	17,631 $ 5,780 6,145 7,188 64,616 101,360 - 227) ( 764) ( 1) ( 100,368 22) ( 100,346 $

~89~

C. Property list of trust accounts

==> picture [455 x 155] intentionally omitted <==

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

Item December 31, 2020 December 31, 2019
Bank savings $ 492,979 $ 283,288
Structured notes 664,243 347,256
Funds 3,877,584 3,270,575
Bond 423,452 402,246
Bonds sold under repurchase agreements 21,794 115,006
Stock 928,705 135,196
-
Securities lending 71,047
Others 36,087 74,063
Total $ 6,444,844 $ 4,698,677
----- End of picture text -----

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 million or 20 percent of contributed capital ： None.

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

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

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

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

(Blank below)

~90~

2) Related information of investee companies

A. Related information of investee companies

Name of the investor	Name of the investee company	Location	Date of registration	Reference number and the date of approval letter issued byFSC	Major operatingactivities	Balance on December 31,2020 Original i	Balance on December 31, 2019 nvestment	EndingBalance	EndingBalance		Revenue of investee company	Net income (loss) of investee company	Investment income (loss) recognised by the Company	Cash dividends	Notes
								Shares 63,817,303 30,000,000 192,600,000 23,400,000 1,000,000 67,746,000 14,904,630 1,000,000 30,000,000 12,000	Percentage 96.69% 100.00% 100.00% 100.00% 100.00% 100.00% 42.46% 100.00% 100.00% 0.03%	Bookvlaue
President Securities Corp. President Insurance Agency Corp.	President Futures Corp. President Capital Management Corp. President Securities (HK) Ltd. President Wealth Management (HK) Ltd. President Securities (Nominee) Ltd. President Securities (BVI) Ltd.(Note 3) Uni-President Asset Management Corp. President Insurance Agency Corp. PSC Venture Capital Investment Limited Company Uni-President Asset Management Corp.	Taipei Taipei Hong Kong Hong Kong Hong Kong British Virgin Islands Taipei Taipei Taipei Taipei	1994.03.01 1997.04.15 1994.07.26 2002.03.31 1999.08.06 1998.02.26 1992.09.03 2008.04.29 2013.10.29 1992.09.03	1994.03.01 Jing- Tou-Shen (83) Gong-Shang Letter No.1114 (Note 1) 1997.02.25 (86) Tai-Cai-Zheng (4) Letter No.17769 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 1997.10.27 (86) Tai-Cai-Zheng (2) Letter No.04840 2000.07.19 (89) Tai-Cai-Zheng (2) Letter No.56407 (Note2) 2013.08.08 Jing- Guan-Zheng-Chuan Letter No.1020028529 2000.07.19 (89) Tai-Cai-Zheng (2) Letter No.56407	Futures brokerage and dealer Securities investment consulting Securities dealer, brokerage, underwriting and consulting Wealth management Nominee Service Securities investment and holding company Investment Trust Insurance Agent Consultation of investment management and venture capital; other unprohibited or unrestricted businesses beyond the permit Investment Trust	644,650 $ 326,000 848,735 92,091 3,403 - 667,622 10,000 300,000 478	644,650 $ 326,000 34,030 - - 2,264,573 667,622 10,000 300,000 478			2,102,027 $ 320,169 1,361,333 56,002 1,672 - 602,375 29,698 242,139 490	943,742 $ 70,759 139,983 - - - 941,595 45,243 2,331 941,595	214,024 $ 2,095) ( 21,051 362 73) ( 5,644 258,096 9,489 6,411) ( 258,096	206,956 $ 2,061) ( 28,615 209 40) ( 5,644 109,597 9,493 6,410) ( 88	112,318 $ - - - - - 94,466 8,363 - 76	Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Associates Subsidiary of the Company Subsidiary of the Company Associates

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.

Note3 ： President Securities (BVI) Ltd. was approved by the board of directors in March 2020 to deal with the dissolution and liquidation matters, and the Company has received the original investment funds remitted by President Securities (BVI) Ltd. on July 31, 2020. The liquidation process is currently in progress.

~91~

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 31,2020 Original i	Balance on December 31, 2019 nvestment	Shares Percentage Book vlaue - 0.00% - $ - 0.00% - - 0.00% - EndingBalance	Revenue of investee company	Net income (loss) of investee company	Investment income (loss) recognised by the Company	Cash dividends Notes
President Securities (BVI) Ltd.	President Securities (HK) Ltd. President Wealth Management (HK) Ltd. President Securities (Nominee) Ltd.	Hong Kong Hong Kong Hong Kong	1994.07.26 2002.03.31 1999.08.06	1993.11.4 (82) Tai- Cai-Zheng (2) Letter No.40913 Securities dealer, brokerage, underwriting and consulting 2001.12.11 (90) Tai-Cai-Zheng (2) Letter No.166728 Wealth management 1997.10.27 (86) Tai-Cai-Zheng (2) Letter No.04840 Nominee Service	- $ - -	814,705 $ 92,091 3,403		139,983 $ - -	21,051 $ 362 73) (	7,564) ($ 153 33) (	- $ Subsidiary of the Company - Subsidiary of the Company - Subsidiary of the Company

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

• C. Endorsements and guarantees for others ： None.

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

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

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

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

• H. Accordance with Jing-Guan-Zheng-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, 2020 of President Securities (BVI) Ltd ： None.

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

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

~92~

d) Balance sheets

PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS December 31, 2019

		PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS December 31, 2019	PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS December 31, 2019	PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS December 31, 2019	PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS December 31, 2019	PRESIDENT SECURITIES (BVI) LTD. BALANCE SHEETS December 31, 2019
Assets Current assets Cash and cash equivalents Other receivables Total current assets Investment in associates Total assets		Amount % Liabilities and shareholders’equity Amount Current liabilties 30,135,890 $ 39 Other payables 3,565 $ 195,869 1 Total liabilities 3,565 30,331,759 40 Shareholders’equity 46,447,436 60 Share capital 67,746,000 Capital reserve 757,813 Retained earnings Accumulated deficit 7,702,523 Other equity Exchange differences on translation of foreign financial statements 569,294 Total shareholders’ equity 76,775,630 76,779,195 $ 100 Total liabilities and shareholders’ equity 76,779,195 $ Expressed in U.S. December31,2019 December31,					dollars 2019
		Amount			Amount		%
		30,135,890 $ 195,869 30,331,759 46,447,436 76,779,195 $			3,565 $ 3,565 67,746,000 757,813 7,702,523 569,294 76,775,630 76,779,195 $		- - 88 1 10 1 100 100

Note ： President Securities (BVI) Ltd. was approved by the board of directors in March 2020 to deal with the dissolution and liquidation matters, and the Company has received the original investment funds remitted by President Securities (BVI) Ltd. on July 31, 2020. The liquidation process is currently in progress.

~93~

PRESIDENT WEALTH MANAGEMENT (HK) LTD. BALANCE SHEETS

December 31, 2020 AND 2019

==> picture [753 x 54] intentionally omitted <==

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

Expressed in HK dollars
December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019
Assets Amount % Amount % Liabilities and shareholders’equity Amount % Amount %
----- End of picture text -----

Current assets Cash and cash equivalents Other receivables Total current assets Total assets	15,254,818 $ 12,553 15,267,371 15,267,371 $	100 - 100 100	15,116,479 $ 55,378 15,171,857 15,171,857 $	Current liabilities 100 Other payables 20,400 $ - 20,075 $ - - Total liabilities 20,400 - 20,075 - 100 Shareholders’ equity Share capital 23,400,000 153 23,400,000 154 Retained earnings Accumulated deficit 8,153,029) ( 53) ( 8,248,218) ( 54) ( Total shareholders’ equity 15,246,971 100 15,151,782 100 100 Total liabilities and shareholders’ equity 15,267,371 $ 100 15,171,857 $ 100

~94~

PRESIDENT SECURITIES (NOMINEE) LTD. BALANCE SHEETS December 31, 2020 AND 2019

						BALANCE SHEETS December 31, 2020 AND 2019 PRESIDENT SECURITIES (NOMINEE) LTD.
Assets		Amount 472,052 $ 6 472,058 472,058 $ December31,		% 2020		Amount % Liabilities and shareholders’equity Current liabilities 491,537 $ 100 Other payables 109 - Total liabilities 491,646 100 Shareholders’ equity Share capital Retained earnings Accumulated deficit Total shareholders’ equity 491,646 $ 100 Total liabilities and shareholders’ equity December31,2019
						Amount 491,537 $ 109 491,646 491,646 $					Amount	%
Current assets Cash and cash equivalents Other receivables Total current assets Total assets		472,052 $ 6 472,058 472,058 $		100 - 100 100			16,800 $ 16,800 1,000,000 544,742) ( 455,258 472,058 $		3 3 212 (115) 97 100	17,190 $ 17,190 1,000,000 525,544) ( 474,456 491,646 $		4 4 203 107) ( 96 100

~95~

e) Statements of comprehensive income

PRESIDENT SECURITIES (BVI) LTD. STATEMENTS OF COMPREHENSIVE INCOME

SEVEN MONTHS ENDED JULY 31, 2020 AND FOR THE YEARS ENDED DECEMBER 31, 2019

Accounts Expenditures Employee benefits Other operating expenses Total expenditures and expenses Non-operating gains and losses Share of the profit or loss of associates and joint ventures accounted for using the equity method Other gains and losses Total non-operating gains and losses Profit before tax Income tax expense Net income	Expressed in U.S. dollars Amount % Amount % 15,501 $ 63 49,953) ($ 3) ( 9,039 37 18,574) ( 1) ( 24,540 100 68,527) ( 4) ( - - 916,448 54 49 - 838,335 50 49 - 1,754,783 104 24,589 100 1,686,256 100 - - - - 24,589 $ 100 1,686,256 $ 100 Seven months endedJuly 31,2020 December31,2019	Expressed in U.S. dollars Amount % Amount % 15,501 $ 63 49,953) ($ 3) ( 9,039 37 18,574) ( 1) ( 24,540 100 68,527) ( 4) ( - - 916,448 54 49 - 838,335 50 49 - 1,754,783 104 24,589 100 1,686,256 100 - - - - 24,589 $ 100 1,686,256 $ 100 Seven months endedJuly 31,2020 December31,2019
	Amount 15,501 $ 9,039 24,540 - 49 49 24,589 - 24,589 $
		54 50
		104
		100 -
		100

~96~

PRESIDENT WEALTH MANAGEMENT (HK) LTD STATEMENTS OF COMPREHENSIVE INCOME

SEVEN MONTHS ENDED JULY 31, 2020 AND FOR THE YEARS ENDED DECEMBER 31, 2019

						Expressed in HK dollars	Expressed in HK dollars
		December	31,2020			December	31,2019
Accounts		Amount		%		Amount	%
Expenditures
Other operating expenses	($	41,435)	(	44)	($	43,730)	25) (
Total expenditures and expenses	(	41,435)	(	44)	(	43,730)	25) (
Non-operating gains and losses
Other gains and losses		136,625		144		222,028	125
Profit before tax		95,190		100		178,298	100
Income tax expense		-		-		-	-
Net income	$	95,190		100	$	178,298	100

~97~

PRESIDENT WEALTH MANAGEMENT (HK) LTD STATEMENTS OF COMPREHENSIVE INCOME

SEVEN MONTHS ENDED JULY 31, 2020 AND FOR THE YEARS ENDED DECEMBER 31, 2019

						Expressed in HK dollars	Expressed in HK dollars	Expressed in HK dollars
		December	31, 2020			December	31, 2019
Accounts		Amount		%		Amount		%
Expenditures
Other operating expenses	($	23,535)		123	($	25,071)		129
Total expenditures and expenses	(	23,535)		123	(	25,071)		129
Non-operating gains and losses
Other gains and losses		4,337	(	23)		5,662	(	29)
Loss before tax	(	19,198)		100	(	19,409)		100
Income tax expense		-		-		-		-
Net loss	($	19,198)		100	($	19,409)		100

f) Transactions between related parties and foreign business ： None.

3) Information of overseas branches and representative office

==> picture [732 x 105] intentionally omitted <==

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

Reference number and
the date of approval Material
Overseas branches letter given by Securities (Loss) profit Assignment of working capital transaction
and representative Date of and Futures Bureau of Main business Operating before tax Balance on Increase of Deduction of Balance on account with
office Nationality registration FSC activities income (Note 1) January 1,2020 working capital working capital December 31, 2020 head office Note
Representative Xiamen 2008.08.22 2008.01.21 Jing-Guan- Non-operating - ($ 5,339) - - - - - -
office of President Zheng-Chuan Letter activities of securities
Securities Corp. No.0960073542 business consultation,
in Xiamen (Note 2) contact, and market
survey
----- End of picture text -----

Note 1 : Operating expenses generated by the representative office. Note 2：The office in Xiamen was permitted to cancel the registration by Market and Quality Supervision Commission of Xiamen Municipality at August 24, 2020.

~98~

4) Disclosure of investment in Mainland China

a) Information of investment in Mainland China

==> picture [757 x 220] intentionally omitted <==

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

Accumulated Investment
amount of Amount remitted from Taiwan to Accumulated income (loss) Accumulated
remittance Mainland China/ Amount amount of recognized by the Book value of amount of
from Taiwan remitted back to Taiwan for the remittance from Ownership Company for the investments in investment
to Mainland year ended December 31, 2020 Taiwan to Net income of held by the year ended Mainland income remitted
Investee in Investment China as of Remitted to Mainland China investee as of Company December 31, China as of back to Taiwan
Mainland Main business Paid-in capital method January 1, Mainland Remitted back to as of December December 31, (direct or 2020 December 31, as of December
China activities (Note 4) (Note 1) 2020 China Taiwan 31, 2020 2020 indirect) (Note 2) 2020 31, 2020
Jin Yuan Securities brokering, $ 5,252,400 Directly $ - $ 2,481,388 $ - $ 2,481,388 ($ 83,388) 49% ($ 40,860) $ 2,531,901 $ -
President securities dealing, invest in a
The financial
Securities securities company in
statements that
Co.,Ltd. underwriting and Mainland
sponsoring service China are audited by
international
accounting firm
which has
cooperative
relationship with
accounting firm in
R.O.C.
----- End of picture text -----

b) Limitation on investment in Mainland China (expressed in thousands of dollars)

==> picture [714 x 79] intentionally omitted <==

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

Investment amount approved Ceiling on investments in
Accumulated amount of remittance from
by the Investment Commission Mainland China imposed
Company name Taiwan to Mainland China as of December
of the Ministry of Economic by the Investment
31, 2020
Affairs (MOEA) Commission of MOEA
Jin Yuan President Securities Co.,Ltd. $ 2,481,388 $ 2,481,388 $ 17,644,389
----- End of picture text -----

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:

(1) Directly invest in a company in Mainland China.

• (2) Through investing in an existing company in the third area, which then invested in the investee in Mainland. (Please indicate investment

~99~

company in the third area.)

• (3) Others.

• Note 2: In the ‘Investment income (loss) recognized by the Company for the year ended December 31, 2020’ column:

• (1) It should be indicated if the investee was still in the incorporation arrangements and had not yet any profit during this period.

• (2) Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:.

  • a. The financial statements that are audited and attested by international accounting firm which has cooperative relationship with accounting firm in R.O.C.

  • b. The financial statements that are audited and attested by R.O.C. parent company's CPA.

  • c. Others.

Note 3: The numbers in this table are expressed in New Taiwan Dollars.

Note 4: The paid-in capital of Jin Yuan President Securities Co.,Ltd. is CNY 1.2 billion.

• 5) Major shareholder information

Major shareholder Number of shares held (thousands) Shareholding ratio Uni-President Enterprises Corp. 401,458 28.67%

• Note 1: The information of major shareholders in this table is based on the last business day of the end of each quarter by Taiwan Depository and Clearing Corp., which determines shareholders holding more than 5% of ordinary shares and special shares of securities firms that have completed unregistered delivery (including treasury shares). As for the share capital recorded in the financial report of the securities firm and the actual number of shares delivered by the securities firm without physical registration, there may be differences due to different calculation bases.

• Note 2: In the case of the above information, if a shareholder delivers shares to the trust, it is disclosed in individual accounts by the trustee who opened the trust account by the trustee. As for the shareholders’ declaration of insider’s shareholding in accordance with the Securities and Exchange Act, their shareholding includes their own shareholding plus the shares delivered to the trust and the right to use the trust property. For information on insider’s equity declaration, please refer to the Market Observation Post System.

~100~