PSC - Proxy Solicitation & Information Statement 2016

Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.

Meeting Notice of

2016 General Shareholders’ Meeting

Time and Date: 9:00 AM, June 14th, 2016,
Place: B1, No. 8, Dongxing Rd., Taipei City, Taiwan ROC
Total outstanding PSC shares: 1,295,248,054 shares.

Total shares represented by shareholders present in person or by proxy: 932,232,016 shares (of which, 111,186,525 shares voted via electronic transmission). Percentage of shares held by shareholders present in person or by proxy: 71.97%.

Chairman: Chung-Shen Lin, the Chairman of the Board of Directors
Directors present in person: Chung-Shen Lin, Kuan-Chen Lin, Ming CHEN Chang, Li-Yang Tu, Shu-Fen Lee, Tsung-Yi Liu, Hui-Tzu Hsieh Hung.
Independent directors present present in person: Yann Ping Liang, Tsai-Yi Wu, Kai- Yun Fu.
Recorder: Chiung-Huang Huang
Chairman's Address (omitted)
Items for Discussion(1)

Item 1 (Proposed by the Board of Directors)

Topic: To amend the” Articles of Incorporation” in accordance with the amendment of the Company Act. Please proceed to vote.

Explanation:

To amend the Paragraph 23, 23-1,and 26 of the” Articles of Incorporation” in accordance with the amendments of article 235-1, 235,and 240 of the Company Act.
The major amendments: In an effort to encourage employees and management, the Company will distribute compensation to employees and the Directors from pre-tax profits. Where the company has pre-tax profits, the total value of funds to be distributed among employees shall not be less than 1.6% of pre-tax profits; while the total value of funds to be distributed among the Directors shall not be more than 2% of pre-tax profits. If the company has losses carried forward, compensation should only be paid to employees and Directors after funds have been set aside as reserve for such losses.
For the comparison table, please see Appendix I.
As shares voted against the proposal via electronic transmission were received, the chairman announced to put the proposal to vote for resolution.
Voting Result: 932,232,016 shares were represented at the time of voting. 911,381,280 shares voted for the proposal (of which
91,579,058 shares exercised via electronic transmission); 101,892 shares voted against the proposal (of which 101,892 shares exercised via electronic transmission). 20,748,844 shares abstain from voting (of which 19,505,575 shares exercised via electronic transmission). 0 shares invalid from voting (of which 0 shares exercised via electronic transmission).
97.76% of the shares were cast in favor of this proposal, which was more than 50% of the shares represented at the time of voting.

RESOLVED, that the above proposal be and hereby were accepted as submitted.

- - 1. Report Items

(1) 2015 Business Report

Explanation: The Company’s Business Report for 2015, please see

Appendix II.

(2) 2015 Audit Committee's Review Report

Explanatory: For 2015 Audit Committee's Review Report, please see Appendix III.

(3) 2015 Remuneration of Employees and Directors

Explanation:

1. To comply with the Ordinance No. 10402413890(June 11, 2015) and the Ordinance No. 10402427800(October 15, 2015) issued by the Ministry of Economic Affair.
In accordance with Article 23 of the Company’s bylaws approved by the resolution of shareholder’s meeting, the Company will distribute compensation to employees and the Directors from pre-tax profits. Where the company has pre-tax profits, the total value of funds to be distributed among employees shall not be less than 1.6% of pre-tax profits; while the total value of funds to be distributed among the Directors shall not be more than 2% of pre-tax profits. If the company has losses carried forward, compensation should only be paid to employees and Directors after funds have been set aside as reserve for such losses.
The proposal of 2015 Remuneration of Employees and Directors has been approved by the the second meeting of the 3th Remuneration Committee and the 5th meeting of 10th Board of Directors. It is proposed that a total of NT$22,292,609 to be distributed to employees and NT$22,292,609 to be distributed to Directors in accordance with the allocation rules of the10th Board of Directors. The above mentioned compensation will be in cash.
Compensation should only distribute base on the approval of the shareholders’ meeting.

(4) The Result of Treasury Share Repurchase Program

Explanation: The implementation of shares buyback is as follows:

The Reported information of Shares Buyback


Term of buyback	10 th	11th
(1)Purpose of the buyback	cancellation of shares	cancellation of shares
(2)Limited monetary amount of total buyback	NT$ 750,800,000	NT$576,300,000
(3)Scheduled number of shares buyback	40,000,000 shares	30,000,000 shares
(4)Scheduled period for the buyback	2015/09/18~2015/11/17	2016/01/28~2016/3/25
(5)Scheduled buyback price range for each share	NT$9.03-18.77	NT$9.03-18.77

The Implementation of Shares Buyback


Term of buyback	10 th	11th
(1)Number of shares bought back	19,323,000 shares	8,548,000 shares
(2)Total monetary amount of bought back	NT$ 278,025,673	NT$114,097,699
(3)Average price for each bought back share	NT$14.39	NT$13.35
(4)Cumulative number of shares held	19,323,000 shares	8,548,000 shares
(5)Cumulative number of shares bought back as a percentage of total outstanding shares	1.46 %	0.66 %

Capital Reduction:
In accordance with the article 28-2, paragraph 1, subparagraph 3of the Securities and Exchange Act, amendment registration shall be effected within six months from the date of buyback.
Details are as follows:


Term of buyback	10 th	11th
(1)Date and Ordinance No. of the Authority’s approval	Nov. 23, 2015 FSC Ordinance No. 1030020595	March 31, 2016 FSC Ordinance No. 1050010487
(2) Date of Board resolution	Jan.23, 2016 the 5th meeting of 10th Board of Directors	May 5, 2016 the 7th meeting of 10th Board of Directors
(3). Record date for capital reduction	Feb.19, 2016	May 12, 2016
(4) Amount of the capital reduction	NT$ 193,230,000	NT$ 12,952,480,540
(5) Paid in capital after the capital reduction	NT$13,037,960,540	NT$ 12,952,480,540

(5) Amendment to the “Ethical Corporate Management BestPrinciples”

As our Company has established the Audit Committee to replace Supervisors, the Ethical Corporate Management Best Principles shall be amended accordingly.
The major amendments are to amend article 2,8,9,10,11,12,13,14,16 and 19 to delete the relevant rules of Supervisors.
For the comparison table of amendments to“Ethical Corporate Management Best Principles”, please see Appendix IV.
- 1. Items to be Approved
Item 1 (proposed by the Board of Directors)

Topic: Adoption of the 2015 consolidated financial statements.

(1) The 2015 consolidated financial statements have already been successfully audited by CPA Lin Se-Kai and CPA Huang Gin-Jei of PricewaterhouseCoopers Taiwan.

(2). The Business Report, the financial statements, and the consolidated financial statements have been reviewed by the Audit Committee and approved by the Board of Directors

(3) For the Business Report, the financial statements, and the consolidated financial statements, please see Appendix II and Appendix V.

As shares voted against the proposal via electronic transmission were received, the chairman announced to put the proposal to vote for resolution.
Voting Result: 932,232,016 shares were represented at the time of voting. 911,487,967 shares voted for the proposal (of which
91,685,475 shares exercised via electronic transmission); 99,475 shares voted against the proposal (of which 99,475 shares exercised via electronic transmission). 20,644,574 shares abstain from voting (of which 19,401,305 shares exercised via electronic transmission). 0 shares invalid from voting (of which 0 shares exercised via electronic transmission).
97.77% of the shares were cast in favor of this proposal, which was more than 50% of the shares represented at the time of voting.

RESOLVED, that the above proposal be and hereby were accepted as submitted.

Item 2 (Proposed by the Board of Directors)

Topic: Adoption of the Proposal for the 2015 earnings distribution.

(1) The proposal for distribution of 2015 earnings are prepared In accordance with regulations and the Company’s Articles of Incorporation. Please refer to the 2015 Earnings Distribution Proposal as Appendix VI.

(2) After first being decreased by $8,948,098 as a result of actuarial losses on defined benefit plans, and then setting aside special reserve and legal reserve, unappropriated earnings available for distribution for 2015 is $673,938,400. Proposed cash dividend is $260,759,211, which is equivalent to $0.2 per share. Proposed stock dividend is $404,176,780, which is equivalent to $0.31 per share. Upon the approval of Shareholders' Meeting, it is proposed that the Board of Directors be authorized to resolve the ex-dividend date and record date of a capital increase.

(3) In the event that the shares outstanding changes, it is proposed that the the Board of Directors be authorized to adjust the amount per share to be distributed to shareholders based on the number of actual shares outstanding on the record date for distribution. Dividends of less than $1 shall be transferred to the Company's Employee Benefit Council.

E. Items for Discussion(2)

Item 1 (Proposed by the Board of Directors)

Topic: Amendments to the “Operating Procedures for Endorsement and Guarantee”.

(1) In accordance with the Ordinance No. 10400253551 ,and Ordinance No. 1040041400 issued by the FSC on Aug.7, 2015 and Nov.19, 2015, the Operating Procedures for Endorsement and Guarantee should be amended.

(2) For the comparison table of amendments to” Operating Procedures for Endorsement and Guarantee”, please see Appendix VII.

Item 2 (Proposed by the Board of Directors)

Topic: The proposal of issuance of new shares through capitalization of retained earnings.

(1) In order to strengthen the Company’s operating capital position, it is proposed to distribute stock dividend $404,176,780, which is equivalent to $0.31 per share with each share to have a par value of NT$10.

(2) For shareholders receiving less than 1 newly issued share, they should apply to the company’s shareholder services department within 5 days of the capital increase date of record, and shareholders who fail to register before that date will receive a discounted cash payment. Cash payments will be rounded down to the nearest NT$1, with any fractional share being allocated to the Company’s Employee Benefit Council with par value.

(3) Company share buybacks, treasury share transfers, and cancellation of shares may alter the total number of outstanding company shares and thereby affect the ratio by which earnings are distributed to shareholders. The Chairman of the Board shall be authorized to adjust the distribution ratios approved in the General Shareholder Meeting so as to accurately reflect the total number of outstanding shares as of the capital increase date of record.

(4) It is proposed that the Board of Directors be authorized to set distribution events, such as the ex-dividend and capital increase record date, after approval by a shareholders’ meeting and after approval by the competent authority. In case of changes of the regulation or of competent authority’s order, the Board of Directors shall be authorized to handle all the relevant matters.

Item 3 (Proposed by the Board of Directors)

Topic: Amendment to “Procedures for Engaging in Derivatives Trading”.

(1) These Procedures are adopted in accordance with the article 36 and 37 of the Securities and Exchange Act and the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” published by the Financial Supervisory Commission. Procedures for Engaging in Derivatives Trading shall be submitted to the shareholders' meeting for approval.

(2) Responding to the restructuring of the Risk Control Department, amendment to “Procedures for Engaging in Derivatives Trading” is necessary correspond to reality.

(3) For comparison table, please see Appendix VIII..

E. Extraordinary Motions: None

F. Adjournment:

There being no other business and special motion, upon a motion duly made and seconded, the meeting was adjourned.

Appendix I

Comparison table of Amendments to” Articles of Incorporation”


Article	Amendment	Original Articles
Article 23	In an effort to encourage employees and management, the Company will distribute compensation to employees and the Directors from pre-tax profits. Where the company has pre-tax profits, the total value of funds to be distributed among employees shall not be less than 1.6% of pre-tax profits; while the total value of funds to be distributed among the Directors shall not be more than 2% of pre-tax profits. If the company has losses carried forward, compensation should only be paid to employees and Directors after funds have been set aside as reserve for such losses. Employees’ compensation should be paid in the form of cash or company shares. A resolution regarding compensation to be distributed should be passed at a Board of Director’s meeting by a majority vote at a meeting attending by two-thirds or more of the Directors, after which the results should be reported to the shareholders. Only those individuals meeting the specific criteria of employees shall be considered employees for the purposes of the employees’ compensation distributions.	From the profit earned by the Company upon annual account closing, the sum to pay all taxes and make up previous loss, if any, shall be first withheld, then 10% for legal reserves, 20% as special reserves, set aside or reverse special reserves in accordance with other laws or regulations and together with retained earnings, shall be determined by the shareholders’ meeting and be duly allocated at the following ratios: 1. Remuneration to directors 3% 2. Bonus to employees 2% 3. Bonus to shareholders 95% The profit may be retained and not allocated if the total allocable profit is not up to 5% of the paid-in capital.
Article 23-1	If there are surplus profits after the closing of the books in a given fiscal year, then, after paying applicable taxes and making up losses from previous years, the company should set aside 10% of remaining profits as legal reserve, 20% as special reserve, and any other reserves as required by applicable laws or regulations, and, if any profits still remain, the board of directors shall put forth a motion to the shareholders for distribution of the remaining profits to shareholders. In the event that the remaining profits represent less than 5% of the value of the company’s paid-in capital, then no such distribution is necessary. The Company’s dividend policy should be based on the long-term financial structure and stability of the Company so as to allow for continued growth, which creates the best value for shareholders. The dividend distribution in a given year shall not be less than 70% of the surplus profits available for distribution. Stock dividends should not account for less than 10% of the total dividend distributed, and cash shall not account for more than 50% of the total dividend distributed. However, the Company may take into consideration the actual status of the Company’s operations and future capital needs when determining an appropriate ratio of cash and shares for the dividend distribution.	The Company takes a policy of dividend payment to maintain sound long-term financial structure and stabilize continual growth to maximize benefits to shareholders, in the following manners: 1. The total amount of dividend shall not be below 70% of the allocable profit as per the preceding article. 2. Out of the dividend which can be allocated according to the preceding article, stock dividend shall not be below 50% and cash dividend shall not exceed 50%. 3. The dividend may be allocated in stock dividend in full when the Company is in major investment or development policies.
Article 26	These Articles were duly established on November 26, 1988 and the first amendment was approved on December 28, 1988; ------------; the twenty sixth amendment on June 14, 2016.	These Articles were duly established on November 26, 1988 and the first amendment was approved on December 28, 1988; ------------; the twenty fifth amendment on June 18, 2015.

Appendix II

2015 Operating Report

Macro Environment and Business Strategy

Looking back on 2015, we saw a stable global economy at the start of the year, with monetary policies loose, the main TWSE index rising, reaching its peak of 10,014 points in April. In the second half of the year, the unresolved Greek debt crisis, the RMB devaluation, weakening oil prices, and rising US interest rates, all worked to drag the Taiwan markets down from a high for the year of 10,014, to a low for the year of 7,203. The TWSE index ended 2014 at 9,307, and then ended 2015 down 969 points to close at 8,388, for a drop 10.41% for the year. Accordingly, we were extra vigilant with all of our businesses in 2015, and, by making stable investments and controlling risk, we were able to maintain stable profitability despite the challenges in the markets.

Execution and the Outcome

Looking at our brokerage business, 2015 saw large swings in the market trading volumes and a drop in margin trading. Our average market share for the year was 3.26%, ranking us 8th among the top-11 domestic brokerage firms. Going forward, we will continue to strictly control business risks, maintain strong creditworthiness, provide exceptional service and diversified products, and strengthen our client base, all in an effort to pursue stable growth and market share.

Looking at our underwriting business, we handled a total of 39 deals in 2015, ranking us 10th within the industry. In choosing the deals we work on to raise capital or to list, we look at the industry and the credit risks involved. Going forward we will continue to monitor risk controls for our positions, maintain a top-notch team, pursue quality clients, and expand our business.

Looking at our proprietary trading business, 2015 saw large swings in the market, from a high of 10,014 points in the first half of the year, to a low of 7,203 in the second half of the year, for a range of 2,811 points, ending the year down 10.41%. Despite this, our proprietary trading division was able to identify quality investment targets, to follow international economic trends and thereby control risks, to diversify investments internationally and spread out risk, which resulted in trading performance that beat the TWSE index and produced stable profits for the company.

Looking at our fixed income business, the Taiwan bond market has been in a bull market, which has produced steady profits. But, overseas, with central banks in various countries lowering interest rates, trading in foreign bonds has become much trickier. Going forward, we will continue to monitor the markets for arbitrage opportunities and will capitalize on macroeconomic and policy forces and invest in bonds denominated in various currencies. We will continue to monitor larger trends so as to turn in stable profits.

Looking at our derivatives products business, we are 8th in the industry in terms of the number of warrants issued and the total value of warrants issued. For our warrant business, we focus on identifying solid market making opportunities and on building a professional brand image, and thereby produce stable revenues. Going forward, we will continue to issue quality warrant products. As for our futures and options business, we will continue to trade a more diverse range of products and strategies so as to better reduce our portfolio risk, we will enhance risk control measures, and will bolster overall profitability.

Profitability Analysis and Business Income, Expenses, and Targets

In the first half of 2015, monetary policies around the world were loose, allowing the Taiwan index to surge past 10,000 points. But, the second half of the year saw global markets rocked by the People’s Bank of China suddenly devaluing the RMB without warning. Trading volumes also shrank, with average daily trading volumes for 2015 coming in at NT$116.9billion, which was down from the average from 2014 of NT$120.1billion, or down 2.66%. In 2015, our professional team was able to utilize its solid trading experience, professional judgment, and vigilant risk controls, to produce stable profits. Total revenues for the year came in at NT$3.511 billion. Costs and expenses came in at NT$3.445 billion, non-operating income was NT$1.004 billion, and net income was NT$957 million, or EPS of 0.72, ranking us 6th among the top-11 securities firms. Our ROA came in at 2.11%, ROE was 4.18%, and we achieved 94.66% of our full-year target.

Future Directions

In 2016, the US is entering a cycle of rising interest rates, while Europe and Japan are continuing their loose economic policies. The global economy will continue to experience loose capital. The PRC economy will continue to undergo readjustment. Crude oil will face over-supply, which will continue to impact the markets. Indeed, financial markets will face a number of uncertainties in the coming year and we will need to respond cautiously. Going forward, President will keep its finger on the pulse of the markets; will continue to pursue stable, long-term profits; will diversify its investments around the world; and will strengthen its risk control measures. Our management team will leverage all of the company’s strengths to provide quality products and services and use stable operating strategies to produce stable profitability, thereby creating value for the company and for shareholders.

Chairman of the Board President Head of Accounting Dept.

LIN,CHUNG-SHEN Lin, Kuan-Chen An, Chi-Li

APPENDIX III

APPENDIX IV

Comparison table of Amendments to” Ethical Corporate Management Best Practice Principles”


Article	Amendment	Original Articles
Article 2	(Prohibited Unethical Behavior) The Company’s directors, managers, employees, and any other person with actual controlling authority (hereafter, “Controlling Persons”), when conducting the business of the Company, shall not, either directly or indirectly, provide, promise, request, or receive any improper benefits, or act in a manner that is unethical, illegal, or contrary to his/her fiduciary duties (hereafter, “Unethical Behavior”). Counterparties to the abovementioned Unethical Behavior include government officials; candidates running for political office; political parties or political party members; or the directors, supervisors, managers, employees, or Controlling Persons of any public or private company; or anyone else with a conflict of interest.	(Prohibited Unethical Behavior) The Company’s directors, supervisors, managers, employees, and any other person with actual controlling authority (hereafter, “Controlling Persons”), when conducting the business of the Company, shall not, either directly or indirectly, provide, promise, request, or receive any improper benefits, or act in a manner that is unethical, illegal, or contrary to his/her fiduciary duties (hereafter, “Unethical Behavior”). Counterparties to the abovementioned Unethical Behavior include government officials; candidates running for political office; political parties or political party members; or the directors, supervisors, managers, employees, or Controlling Persons of any public or private company; or anyone else with a conflict of interest.
Article 8	(Offering and Accepting Bribes) When conducting the business of the Company, the directors, managers, employees, and Controlling Persons shall not, either directly or indirectly, provide, promise, request, or receive any improper benefits, including offering discounts, commissions, middle-man fees, or using a third party customers, agents, contractors, suppliers, government officials, or other parties with a conflict of interest to either provide or receive improper benefits. This does not apply to those legally operating within the jurisdiction.	(Offering and Accepting Bribes) When conducting the business of the Company, the directors, supervisors, managers, employees, and Controlling Persons shall not, either directly or indirectly, provide, promise, request, or receive any improper benefits, including offering discounts, commissions, middle-man fees, or using a third party customers, agents, contractors, suppliers, government officials, or other parties with a conflict of interest to either provide or receive improper benefits. This does not apply to those legally operating within the jurisdiction.
Article 9	(Prohibition on Making Illegal Political Donations) When making any political donations, whether directly or indirectly, to any political party, political organization, or individual political figure, the Company, its directors, managers, employees and Controlling Persons, should abide by all laws pertaining to political donations and internal company policies, and must not seek any political benefits from such donations or any form of quid pro quo.	(Prohibition on Making Illegal Political Donations) When making any political donations, whether directly or indirectly, to any political party, political organization, or individual political figure, the Company, its directors, supervisors, managers, employees and Controlling Persons, should abide by all laws pertaining to political donations and internal company policies, and must not seek any political benefits from such donations or any form of quid pro quo.
Article 10	(Improper Charitable Donations or Support) When making any charitable donations or supporting any charities, whether directly or indirectly, the Company, its directors, managers, employees and Controlling Persons, should abide by all relevant laws and internal company policies, and must ensure that such efforts are not construed as bribes.	(Improper Charitable Donations or Support) When making any charitable donations or supporting any charities, whether directly or indirectly, the Company, its directors, supervisors, managers, employees and Controlling Persons, should abide by all relevant laws and internal company policies, and must ensure that such efforts are not construed as bribes.
Article 11	(Improper Gifts, Hospitality, or Other Improper Benefits) The Company, its directors, managers, employees, and Controlling Persons, should not accept any gifts, hospitality, or improper benefits, as a means of building a relationship with the Company or as a means of influencing the business of the Company.	(Improper Gifts, Hospitality, or Other Improper Benefits) The Company, its directors, managers, supervisors, employees, and Controlling Persons, should not accept any gifts, hospitality, or improper benefits, as a means of building a relationship with the Company or as a means of influencing the business of the Company.
Article 13	(Abiding by the Laws During the Course of Executing Business of the Company) The Company’s Directors, managers, employees, and Controlling Persons should abide by all relevant laws and internal company policies when conducting the business of the Company.	(Abiding by the Laws During the Course of Executing Business of the Company) The Company’s Directors, supervisors, managers, employees, and Controlling Persons should abide by all relevant laws and internal company policies when conducting the business of the Company.
Article 14	(Conflicts of Interest for Directors and Managers) The Company should establish policies aimed at preventing conflicts of interest and should create channels of communication so that directors and managers can proactively report whether any conflicts of interest exist. The Company should be extra vigilant in ensuring that directors who may have conflicts of interest with regard to certain motions before the board be required to describe and explain the circumstances of such potential conflicts, and, where necessary, that he/she be prevented from participating in discussions on, and from exercising his/her voting rights with regard to, any such motions for which there are suspected conflicts. Directors should not make improper personal arrangements with other directors to support one another. Directors and managers of the Company should not use their position within the company to provide improper benefits to himself/herself, or to his/her spouse, parents, children, or anyone else.	(Conflicts of Interest for Directors and Managers) The Company should establish policies aimed at preventing conflicts of interest and should create channels of communication so that directors, supervisors, and managers can proactively report whether any conflicts of interest exist. The Company should be extra vigilant in ensuring that directors who may have conflicts of interest with regard to certain motions before the board be required to describe and explain the circumstances of such potential conflicts, and, where necessary, that he/she be prevented from participating in discussions on, and from exercising his/her voting rights with regard to, any such motions for which there are suspected conflicts. Directors should not make improper personal arrangements with other directors to support one another. Directors, supervisors, managers of the Company should not use their position within the company to provide improper benefits to himself/herself, or to his/her spouse, parents, children, or anyone else.
Article 16	(Training and Testing) The Company should arrange periodic ethical behavior training and counseling for directors, managers, employees and Controlling Persons. Training courses should also be arranged for all divisions within the Company to familiarize those relevant employees with the Company’s Ethical Corporate Management Best Practice Principles, so that they have a clear understanding of the importance of the Company’s Ethical Corporate Management Best Practice Principles and of the consequences for violating those principles. The Company should ensure that human resource department policies and employee performance evaluations are linked to the Company’s Ethical Corporate Management Best Practice Principles, and should establish a clear system of rewards for abiding by those policies.	(Training and Testing) The Company should arrange periodic ethical behavior training and counseling for directors, supervisors, managers, employees and Controlling Persons. Training courses should also be arranged for all divisions within the Company to familiarize those relevant employees with the Company’s Ethical Corporate Management Best Practice Principles, so that they have a clear understanding of the importance of the Company’s Ethical Corporate Management Best Practice Principles and of the consequences for violating those principles. The Company should ensure that human resource department policies and employee performance evaluations are linked to the Company’s Ethical Corporate Management Best Practice Principles, and should establish a clear system of rewards for abiding by those policies.
Article 19	(Review and Amendment of Ethical Corporate Management Best Practice Principles) The Company should stay abreast of good examples, both domestic and foreign, of ethical behavior and should encourage directors, managers, and employees to recommend, review, and amend the Company’s Ethical Corporate Management Best Practice Principles when necessary, so as to enhance the effectiveness of the Company’s Ethical Corporate Management Best Practice Principles.	(Review and Amendment of Ethical Corporate Management Best Practice Principles) The Company should stay abreast of good examples, both domestic and foreign, of ethical behavior and should encourage directors, supervisors, managers, and employees to recommend, review, and amend the Company’s Ethical Corporate Management Best Practice Principles when necessary, so as to enhance the effectiveness of the Company’s Ethical Corporate Management Best Practice Principles.

APPENDIX V

Report of Independent Accountants Translated from Chinese

PWCR15002790

To the Board of Directors and Shareholders of President Securities Corporation

We have audited the accompanying balance sheets of President Securities Corporation as of December 31, 2015 and 2014, and the related statements of comprehensive income, of changes in equity and of cash flows for the years ended December 31, 2015 and 2014. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of President Securities Corporation as of December 31, 2015 and 2014 and their financial performance and cash flows for the years ended December 31, 2015 and 2014 in conformity with the “Regulations Governing the Preparation of Financial Reports by Securities Firms” and “Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants”.

PricewaterhouseCoopers, Taiwan

March 22, 2016

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

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

PRESIDENT SECURITIES CORPORATION

BALANCE SHEETS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)


		December 31, 2015			December 31, 2014
ASSETS	Note	Amount		%		Amount		%
Current assets
Cash and cash equivalents	6(1)	$	2,767,365	5		$	2,893,011	5
Financial assets at fair value through profit or loss - current	6(2)		29,018,236	48			21,718,683	38
Available-for-sale financial assets - current	6(3)		402,961	1			-	-
Bonds purchased under resale agreements	6(4)		770,353	1			1,502,364	3
Margin loans receivable	6(5)		10,434,581	17			13,408,762	24
Refinancing security deposits			2,159	-			219	-
Receivables from refinance guaranty			4,135	-			1,670	-
Receivables from security lending			74,345	-			12,224	-
Security lending deposits			75,703	-			11,042	-
Notes receivable			3,142	-			994	-
Accounts receivable - net	6(6)		4,587,818	8			5,942,910	10
Accounts receivable - related parties	6(6)		4,109	-			4,504	-
Prepayments			32,223	-			24,102	-
Other receivables	6(7)		1,491,342	2			303,344	1
Other current assets	6(8)		2,503,733	4			2,260,110	4
Total current assets			52,172,205	86			48,083,939	85
Noncurrent assets
Financial assets at fair value through profit or loss - noncurrent	6(2)		50,980	-			50,518	-
Financial assets at cost - noncurrent	6(11)		10,466	-			18,293	-
Investments in associates	6(12)		4,661,144	8			4,410,508	8
Property and equipment, net	6(13)		2,354,427	4			2,393,640	4
Investment property, net	6(14)		281,003	-			283,104	1
Intangible assets			103,000	-			115,878	-
Deferred tax assets	6(43)		54,447	-			45,472	-
Other assets - noncurrent	6(15)		1,063,405	2			1,106,126	2
Total noncurrent assets			8,578,872	14			8,423,539	15
TOTAL ASSETS		$	60,751,077	100		$	56,507,478	100

(Continued)

PRESIDENT SECURITIES CORPORATION

BALANCE SHEETS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)


			December 31, 2015						December 31, 2014
LIABILITIES AND EQUITY	Note		Amount				%			Amount		%
Current liabilities
Short-term loans	6(16)		$	3,123,288			5			$	6,630,058	12
Commercial papers payable	6(17)			5,599,149			9				3,749,032	7
Financial liabilities at fair value through profit or loss - current	6(18)			1,439,975			2				2,067,573	4
Bonds sold under repurchase agreements	6(19)			15,602,560			26				9,084,470	16
Deposits on short sales				1,509,258			3				1,519,052	3
Short sale proceeds payable				1,744,273			3				1,842,391	3
Guarantee deposit received on borrowed securities				348,570			1				935,571	2
Accounts payable	6(20)			4,390,677			7				5,797,954	10
Advance receipts				349			-				89	-
Collections on behalf of third parties				1,084,727			2				268,094	-
Other payables	6(21)			2,184,830			4				1,084,899	2
Other financial liabilities - current	6(22)			851,796			1				294,585	-
Current tax liability	6(43)			81,488			-				132,115	-
Other current liabilities				2,859			-				2,538	-
Total current liabilities				37,963,799			63				33,408,421	59
Noncurrent liabilities
Deferred tax liability	6(43)			47,932			-				46,608	-
Other liabilities - noncurrent	6(23)			21,334			-				19,825	-
Total noncurrent liabilities				69,266			-				66,433	-
Total liabilities				38,033,065			63				33,474,854	59
Equity attributable to owners of the parent company
Capital
Common stock	6(25)			13,231,191			22				13,231,191	23
Capital reserve				256,116			-				256,116	1
Retained earnings	6(26)
Legal reserve				2,328,253			4				2,173,255	4
Special reserve				6,018,542			10				5,708,547	10
Unappropriated earnings				960,922			2				1,549,976	3
Other equity				201,014			-				113,539	-
Treasury shares	6(25)	(		278,026	)	(	1	)			-	-
Total equity				22,718,012			37				23,032,624	41
TOTAL LIABILITIES AND EQUITY			$	60,751,077			100			$	56,507,478	100

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

STATEMENTS OF COMPREHENSIVE INCOME

EXCEPT FOR EARNINGS PER SHARE AMOUNT)

			For the years ended December 31,
			2015							2014
	Note		Amount				%			Amount				%
Revenues
Securities brokerage fees	6(27)		$	1,351,352			38			$	1,486,244			34
Underwriting fees	6(28)			67,179			2				51,230			1
Gains on trading of securities	6(29)			358,246			10				935,794			21
Interest income	6(30)			1,261,382			36				998,753			23
(Loss) gain on valuation of trading securities	6(31)	(		503,626	)	(	14	)			96,762			2
Gain on short covering and trading securities - RS financing covering	6(32)			9,048			-				195			-
Gain (loss) on valuation of borrowed securities and bonds with resale agreements	6(33)			55,208			2			(	52,378	)	(	1	)
Gain on warrants issuance	6(34)			618,375			18				246,305			6
(Loss) gain on derivative financial instruments	6(35)	(		34,959	)	(	1	)			186,983			4
Other operating income	6(36)			328,614			9				426,964			10
Total revenues				3,510,819			100				4,376,852			100
Expenses
Handling charges	6(37)	(		178,558	)	(	5	)	(		198,077	)	(	5	)
Interest expenses	6(38)	(		340,018	)	(	10	)	(		159,670	)	(	4	)
Securities commission expense		(		253	)		-		(		311	)		-
Clearing charges		(		15,506	)		-		(		17,152	)		-
Other operating expenditures		(		69	)		-				-			-
Employee benefits	6(39)	(		1,587,940	)	(	45	)	(		1,707,450	)	(	39	)
Depreciation and amortization	6(40)	(		111,389	)	(	3	)	(		101,985	)	(	2	)
Other operating expenses	6(41)	(		1,211,498	)	(	35	)	(		1,031,010	)	(	24	)
Total expenditures and expenses		(		3,445,231	)	(	98	)	(		3,215,655	)	(	74	)

(Continued)

STATEMENTS OF COMPREHENSIVE INCOME

(EXCEPT FOR EARNINGS PER SHARE AMOUNT)

			For the years ended December 31,
			2015							2014
	Note		Amount				%			Amount				%
Operating profit			$	65,588			2			$	1,161,197			26
Share of the profit or loss of associates and joint ventures accounted for using the equity method	6(12)			341,788			9				401,814			9
Other gains and losses	6(42)			662,668			19				204,385			5
Profit before tax				1,070,044			30				1,767,396			40
Income tax expense	6(43)	(		113,431	)	(	3	)	(		184,227	)	(	4	)
Net income				956,613			27				1,583,169			36
Other comprehensive income (loss)
Components that will not be reclassified to profit of loss subsequently
Remeasurement of defined benefit plans		(		7,299	)		-			(	52,127	)	(	1	)
Other comprehensive loss of associates and joint ventures accounted for under equity method		(		2,890	)		-			(	6,959	)		-
Income tax benefit relating to components of other comprehensive income				1,241			-				8,862			-
Items may be reclassified to profit of loss subsequently
Translation gain and loss on the financial statements of foreign operating entities				90,578			2				130,913			3
Unrealized loss on financial instruments		(		6,355	)		-			(	27,750	)		-
Other comprehensive income of associates and joint ventures accounted for under equity method				3,252			-				10,345			-
Current other comprehensive income (post-tax)				78,527			2				63,284			2
Total current comprehensive income			$	1,035,140			29			$	1,646,453			38
Earnings per share	6(44)
Basic earnings per share (in dollars)			$	0.72						$	1.20
Diluted earnings per share (in dollars)			$	0.72						$	1.20

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

STATEMENTS OF CHANGES IN EQUITY



			Retained earnings			Other equity
Note	Common stock	Capital reserve	Legal reserve	Special reserve	Unappropriated earnings	Translation gain and loss on the financial statements of foreign operating entities	Unrealized gain or loss on financial instruments	Total equity	Total equity


For the year ended December 31, 2014
Balance as of January 1, 2014		$ 13,231,191	$ 256,116	$ 2,071,935		$ 5,792,801			$ 1,013,206		(	$ 27,719	)		$ 27,750			$ -			$ 22,365,280
Appropriations of earnings:
Legal reserve	6(26)	-	-	101,320		-		(	101,320	)		-			-			-			-
Special reserve	6(26)	-	-	-		202,641		(	202,641	)		-			-			-			-
Reversal of special reserve	6(26)	-	-	-	(	286,895	)		286,895			-			-			-			-
Cash dividends	6(26)	-	-	-		-		(	979,109	)		-			-			-		(	979,109	)
Net income for the year		-	-	-		-			1,583,169			-			-			-			1,583,169
Other comprehensive (loss) income for the year		-	-	-		-		(	50,224	)		130,913		(	17,405	)		-			63,284
Balance at December 31, 2014		$ 13,231,191	$ 256,116	$ 2,173,255		$ 5,708,547			$ 1,549,976			$ 103,194			$ 10,345			$ -			$ 23,032,624
For the year ended December 31, 2015
Balance as of January 1, 2015		$ 13,231,191	$ 256,116	$ 2,173,255		$ 5,708,547			$ 1,549,976			$ 103,194			$ 10,345			$ -			$ 23,032,624
Appropriations of earnings:
Legal reserve	6(26)	-	-	154,998		-		(	154,998	)		-			-			-			-
Special reserve	6(26)	-	-	-		309,995		(	309,995	)		-			-			-			-
Cash dividends	6(26)	-	-	-		-		(	1,071,726	)		-			-			-		(	1,071,726	)
Net income for the year		-	-	-		-			956,613			-			-			-			956,613
Other comprehensive (loss) income for the year		-	-	-		-		(	8,948	)		90,578		(	3,103	)		-			78,527
Acquisition of treasury stocks	6(25)	-	-	-		-			-			-			-		(	278,026	)	(	278,026	)
Balance at December 31, 2015		$ 13,231,191	$ 256,116	$ 2,328,253		$ 6,018,542			$ 960,922			$ 193,772			$ 7,242		(	$ 278,026	)		$ 22,718,012

STATEMENTS OF CASH FLOWS


			For the years ended December 31,
	Note			2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit before tax			$	1,070,044			$	1,767,396
Adjustments to reconcile profit before tax to net cash (used in) provided by operating activities:
Income and expenses without cash flow impact
Depreciation	6(40)			87,386				91,307
Amortization	6(40)			24,003				10,678
Write-off of bad debts classified as income	6(6)	(		176	)	(		353	)
Provision for bad debts	6(6)			152,228				2,638
Loss (gain) on valuation of trading securities– current	6(2)(31)			503,626		(		96,762	)
Financial expense	6(38)			340,018				159,670
Interest income	6(30)(42)	(		1,297,186	)	(		1,056,518	)
Dividend income	6(36)	(		147,038	)	(		254,921	)
Share of the profit of associates and joint ventures accounted for using the equity method	6(12)	(		341,788	)	(		401,814	)
Loss on disposal of property and equipment	6(13)			1,210				-
Loss (gain) on valuation of open-ended funds and money-market instruments	6(2)			5,815		(		3,839	)
Loss on impairment of financial assets at cost	6(11)			-				448
Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or loss		(		7,809,456	)	(		3,147,221	)
Available-for-sale financial assets – current		(		409,316	)			322,120
Bonds purchased under resale agreements				732,011		(		1,317,467	)
Margin loans receivable				2,976,169		(		1,895,243	)
Refinancing security deposits		(		1,940	)			24,476
Receivables from refinance guaranty		(		2,465	)			57,964
Receivables from security lending		(		62,121	)			17,769
Security lending deposits		(		64,661	)			38,575
Notes receivable		(		2,148	)			2,366
Accounts receivable				1,296,489				2,131,138
Accounts receivable-related parties				395		(		1,028	)
Prepayments		(		8,121	)			684
Other receivables				285,464		(		286,446	)
Other current assets		(		243,623	)	(		28,802	)
Changes in operating liabilities
Financial liabilities at fair value through profit or loss – current		(		627,598	)			835,419
Bonds sold under repurchase agreements				6,518,090				2,812,355
Deposits on short sales		(		9,794	)			283,209
Short sale proceeds payable		(		98,118	)			242,585
Guarantee deposit received on borrowed securities		(		587,001	)			406,262
Accounts payable		(		1,402,423	)	(		2,046,005	)
Advance receipts				260		(		49	)
Collections on behalf of third parties				816,633		(		158,241	)
Other payables		(		377,821	)			348,265
Other financial liabilities – current				557,211				201,187
Other current liabilities				321				378

STATEMENTS OF CASH FLOWS


			For the years ended December 31,
	Note			2015				2014
Cash provided by (used in) operations			$	1,874,579		(	$	937,820	)
Dividends received				324,899				376,708
Interest received				1,203,348				988,888
Income tax paid		(		170,468	)	(		66,230	)
Net cash provided by operating activities				3,232,358				361,546
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from capital reduction of financial assets measured at cost				7,827				21,903
Acquisition of investments in associates	6(13)	(		23,300	)	(		32,482	)
Proceeds from disposal of property and equipment				174				-
Acquisition of intangible assets		(		1,831	)	(		104,297	)
Decrease (increase) in other non-current assets				38,408		(		147,731	)
Increase in prepayment for equipment		(		36,436	)	(		30,656	)
Net cash used in investing activities		(		15,158	)	(		293,263	)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in short-term loans		(		3,506,770	)			4,180,058
Increase (decrease) in commercial papers payable				1,850,000		(		3,200,000	)
Increase in other non-current liabilities				1,509				70
Payments of cash dividends	6(26)	(		1,071,726	)	(		979,109	)
Acquisition of treasury stocks	6(25)	(		278,026	)			-
Interest paid		(		342,081	)	(		149,760	)
Net cash (used in) provided by financing activities		(		3,347,094	)	(		148,741	)
Effect of exchange rate changes				4,248				3,447
Net decrease in cash and cash equivalents		(		125,646	)	(		77,011	)
Cash and cash equivalents, beginning of year				2,893,011				2,970,022
Cash and cash equivalents, end of year			$	2,767,365			$	2,893,011

Declaration of Consolidated Financial Statements of Affiliated Enterprises

The companies included in the consolidated financial statements of affiliated enterprises prepared by the Company for 2015 (from January 1, 2015 to December 31, 2015) in accordance with Article 33 of the “Regulations Governing the Preparation of Financial Reports by Securities Firms” and “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” are identical with those to be included in the consolidated financial statements of the parent company and subsidiaries in accordance with IFRS 10,“Consolidated Financial Statements”. The relevant information to be disclosed in the consolidated financial statements of affiliated enterprises has already been disclosed in the consolidated financial statements of the parent company and subsidiaries. Therefore, the Company does not prepare the consolidated financial statements of affiliated enterprises separately.

Hereby declare

Responsible person:

LIN, CHUNG-SHEN

March 22, 2016

Report of Independent Accountants Translated from Chinese

PWCR15003313

To the Board of Directors and Shareholders of President Securities Corporation

We have audited the accompanying consolidated balance sheets of President Securities Corporation and its subsidiaries as of December 31, 2015, and 2014, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of President Securities Corporation and its subsidiaries as of December 31, 2015 and 2014, and their financial performance and cash flows for the years then ended, in conformity with the “Regulations Governing the Preparation of Financial Reports by Securities Firms”, “Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants”, and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

We have audited the parent company only financial statements of President Securities Corporation ( not presented herein ) as of and for the years ended December 31, 2015 and 2014 on which we have issued an unqualified opinion thereon.

PricewaterhouseCoopers, Taiwan

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

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


		December 31, 2015			December 31, 2014
ASSETS	Note	Amount		%	Amount		%
Current assets
Cash and cash equivalents	6(1)	$	5,115,617	7	$	6,355,219	10
Financial assets at fair value through profit or loss - current	6(2)		29,976,972	43		22,714,617	35
Available-for-sale financial assets - current	6(3)		402,961	1		-	-
Bonds purchased under resale agreements	6(4)		770,353	1		1,502,364	2
Margin loans receivable	6(5)		10,434,581	15		13,408,762	21
Refinancing security deposits			2,159	-		219	-
Receivables from refinance guaranty			4,135	-		1,670	-
Customer margin account	6(6)		7,686,554	11		5,569,228	8
Receivables from security lending			74,345	-		12,224	-
Security lending deposits			75,703	-		11,042	-
Notes receivable			3,142	-		994	-
Accounts receivable	6(7)		5,517,496	8		6,905,877	11
Prepayments			38,211	-		27,794	-
Other receivables	6(8)		1,530,833	2		354,054	-
Current tax assets			1,092	-		1,590	-
Other current assets	6(9)		3,551,317	5		3,106,558	5
Total current assets			65,185,471	93		59,972,212	92
Noncurrent assets
Financial assets at fair value through profit or loss - noncurrent	6(2)		50,980	-		50,518	-
Financial assets at cost - noncurrent	6(12)		41,581	-		49,408	-
Available-for-sale financial assets - noncurrent	6(3)		59,479	-		56,115	-
Investments in associates	6(13)		444,541	1		426,021	1
Property and equipment, net	6(14)		2,520,596	4		2,562,705	4
Investment property, net	6(15)		281,003	-		283,104	1
Intangible assets			144,659	-		160,276	-
Deferred tax assets	6(44)		56,331	-		47,451	-
Other assets - noncurrent	6(16)		1,304,892	2		1,339,736	2
Total noncurrent assets			4,904,062	7		4,975,334	8
TOTAL ASSETS		$	70,089,533	100	$	64,947,546	100
LIABILITIES AND EQUITY
Current liabilities
Short-term loans	6(17)	$	3,736,439	5	$	8,760,977	14
Commercial papers payable	6(18)		5,599,149	8		3,749,032	6
Financial liabilities at fair value through profit or loss - current	6(19)		1,440,081	2		2,068,250	3
Bonds sold under repurchase agreements	6(20)		15,602,560	22		9,084,470	14
Deposits on short sales			1,509,258	2		1,519,052	2

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)


		December 31, 2015				December 31, 2014
LIABILITIES AND EQUITY	Note	Amount			%	Amount		%
Short sale proceeds payable		$	1,744,273		3	$	1,842,391	3
Guarantee deposit received on borrowed securities			348,570		1		935,571	1
Futures traders' equity	6(6)		7,678,157		11		5,553,149	9
Accounts payable	6(21)		5,267,876		8		6,435,497	10
Advance receipts			1,672		-		484	-
Collections on behalf of third parties			1,087,027		2		269,955	-
Other payables	6(22)		2,294,947		3		1,159,281	2
Other financial liabilities - current	6(23)		851,796		1		294,585	-
Current tax liability	6(44)		97,481		-		134,160	-
Other current liabilities			5,861		-		5,132	-
Total current liabilities			47,265,147		68		41,811,986	64
Noncurrent liabilities
Deferred tax liability	6(44)		48,487		-		49,100	-
Other liabilities-noncurrent	6(24)		11,848		-		10,984	-
Total noncurrent liabilities			60,335		-		60,084	-
Total liabilities			47,325,482		68		41,872,070	64
Equity attributable to owners of the parent company
Capital
Common stock	6(26)		13,231,191		19		13,231,191	20
Capital reserve			256,116		-		256,116	1
Retained earnings	6(27)
Legal reserve			2,328,253		3		2,173,255	3
Special reserve			6,018,542		9		5,708,547	9
Unappropriated earnings			960,922		1		1,549,976	3
Other equity			201,014		-		113,539	-
Treasury shares	6(26)	(	278,026	)	-		-	-
Total			22,718,012		32		23,032,624	36
Non-controlling interests			46,039		-		42,852	-
Total equity			22,764,051		32		23,075,476	36
TOTAL LIABILITIES AND EQUITY		$	70,089,533		100	$	64,947,546	100

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE AMOUNT)


			For the years ended December 31,
			2015							2014
	Note		Amount				%			Amount				%
Revenues
Securities brokerage fees	6(28)		$	2,135,628			47			$	2,132,591			41
Underwriting fees	6(29)			67,179			1				51,230			1
Gains on trading of securities	6(30)			377,810			8				948,258			19
Interest income	6(31)			1,332,497			29				1,051,309			20
(Loss) gain on valuation of trading securities	6(32)	(		500,565	)	(	11	)			111,138			2
Gain on short covering and trading securities - RS financing covering	6(33)			9,048			-				195			-
Gain (loss) on valuation of borrowed securities and bonds with resale agreements	6(34)			55,208			1			(	52,378	)	(	1	)
Gain on warrants issuance	6(35)			618,375			14				246,305			5
Gain on derivative financial instruments	6(36)			93,895			2				195,678			4
Other operating income	6(37)			391,768			9				478,971			9
Total revenues				4,580,843			100				5,163,297			100
Expenses
Handling charges	6(38)	(		324,188	)	(	7	)	(		311,754	)	(	6	)
Interest expenses	6(39)	(		357,778	)	(	8	)	(		178,055	)	(	4	)
Futures commission expense		(		79,729	)	(	2	)	(		73,655	)	(	1	)
Clearing charges		(		109,729	)	(	2	)	(		90,731	)	(	2	)
Other operating expenditures		(		69	)		-				-			-
Employee benefits	6(40)	(		1,922,879	)	(	42	)	(		1,978,845	)	(	38	)
Depreciation and amortization	6(41)	(		123,702	)	(	3	)	(		117,581	)	(	2	)
Other operating expenses	6(42)	(		1,410,029	)	(	31	)	(		1,175,651	)	(	23	)
Total expenditures and expenses		(		4,328,103	)	(	95	)	(		3,926,272	)	(	76	)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED)

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE AMOUNT)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


		Equity attributable to owners of the parent company
				Retained earnings			Other equity
Note	Common stock		Capital reserve	Legal reserve	Special reserve	Unappropriated earnings	Translation gain and loss on the financial statements of foreign operating entities	Unrealized gain or loss on financial instruments	Treasury stock	Total	Non-controlling interest	Total equity


For the year ended December 31, 2014
Balance as of January 1, 2014		$ 13,231,191	$ 256,116	$ 2,071,935		$ 5,792,801			$ 1,013,206		(	$ 27,719	)		$ 27,750			$ -1			$ 22,365,280,			$ 40,923			$ 22,406,203
Appropriations of 2013 earnings:
Legal reserve	6(27)	-	-	101,320		-		(	101,320	)		-			-			-			-			-			-
Special reserve	6(27)	-	-	-		202,641		(	202,641	)		-			-			-			-			-			-
Reversal of special reserve	6(27)	-	-	-	(	286,895	)		286,895			-			-			-			-			-			-
Cash dividends	6(27)	-	-	-		-		(	979,109	)		-			-			-		(	979,109	)		-		(	979,109	)
Net income for the year		-	-	-		-			1,583,169			-			-			-			1,583,169			4,112			1,587,281
Other comprehensive (loss) income for the year		-	-	-		-		(	50,224	)		130,913		(	17,405	)		-			63,284			283			63,567
Changes in non-controlling interests		-	-	-		-			-			-			-			-			-		(	2,466	)	(	2,466	)
Balance at December 31, 2014		$ 13,231,191	$ 256,116	$ 2,173,255		$ 5,708,547			$ 1,549,976			$ 103,194			$ 10,345			$ -			$ 23,032,624			$ 42,852			$ 23,075,476
For the year ended December 31, 2015
Balance as of January 1, 2015		$ 13,231,191	$ 256,116	$ 2,173,255		$ 5,708,547			$ 1,549,976			$ 103,194			$ 10,345			$ -1			$ 23,032,624			$ 42,852			$ 23,075,476
Appropriations of 2014 earnings:
Legal reserve	6(27)	-	-	154,998		-		(	154,998	)		-			-			-			-			-			-
Special reserve	6(27)	-	-	-		309,995		(	309,995	)		-			-			-			-			-			-
Cash dividends	6(27)	-	-	-		-		(	1,071,726	)		-			-			-		(	1,071,726	)		-		(	1,071,726	)
Net income for the year		-	-	-		-			956,613			-			-			-			956,613			5,922			962,535
Other comprehensive (loss) income for the year		-	-	-		-		(	8,948	)		90,578		(	3,103	)		-			78,527			103			78,630
Acquisition of treasury stocks	6(26)	-	-	-		-			-			-			-		(	278,026	)	(	278,026	)		-		(	278,026	)
Changes in non-controlling interests		-	-	-		-			-			-			-			-			-		(	2,838	)	(	2,838	)
Balance at December 31, 2015		$ 13,231,191	$ 256,116	$ 2,328,253		$ 6,018,542			$ 960,922			$ 193,772			$ 7,242		(	$ 278,026	)		$ 22,718,012			$ 46,039			$ 22,764,051

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Note			For the year ended December 31, 2015				For the year ended December 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit before tax			$	1,108,704			$	1,791,363
Adjustments to reconcile profit before tax to net cash provided by operating activities:
Income and expenses without cash flow impact
Depreciation	6(41)			94,478				99,490
Amortization	6(41)			29,224				18,091
Write-off of bad debts classified as income	6(16)	(		176	)	(		353	)
Provision for bad debts	6(16)			161,237				2,638
Loss (gain) on valuation of trading securities - current	6(32)			500,565		(		111,138	)
Financial expense	6(39)			357,778				178,055
Interest income	6(31),(43)	(		1,476,709	)	(		1,300,487	)
Dividend income	6(13)	(		162,216	)	(		266,970	)
Share of the profit of associates and joint ventures accounted for using the equity method	6(14)	(		82,130	)	(		71,854	)
Loss on disposal of property and equipment	6(12)			1,234				2
Loss on disposal of investments (financial assets measured at cost)	6(43)			-				448
Loss (gain) on valuation of open-ended funds and money-market instruments				1,664		(		4,531	)
Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or loss		(		7,765,047	)	(		2,887,007	)
Available-for-sale financial assets - current		(		409,316	)			322,120
Bonds purchased under resale agreements				732,011		(		1,317,467	)
Margin loans receivable				2,976,169		(		1,895,243	)
Refinancing security deposits		(		1,940	)			24,476
Receivables from refinance guaranty		(		2,465	)			57,964
Customer margin account		(		2,117,326	)	(		651,794	)
Receivables from security lending		(		62,121	)			17,769
Security lending deposits		(		64,661	)			38,575
Notes receivable		(		2,148	)			2,366
Accounts receivable				1,329,922				1,548,437
Prepayments		(		10,417	)			26,484
Other receivables				287,732		(		288,473	)
Other current assets		(		444,759	)			190,899
Changes in operating liabilities
Financial liabilities at fair value through profit or loss - current		(		628,169	)			836,096
Bonds sold under repurchase agreements				6,518,090				2,812,355
Deposits on short sales		(		9,794	)			283,209
Short sale proceeds payable		(		98,118	)			242,585
Guarantee deposit received on borrowed securities		(		587,001	)			406,262
Futures traders' equity				2,125,008				635,715
Accounts payable		(		1,162,767	)	(		2,169,058	)
Advance receipts				1,188				34
Collections on behalf of third parties				817,072		(		158,136	)
Other payables		(		341,651	)			307,120
Other financial liabilities - current				557,211				201,187
Other current liabilities				729				532

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


	Note			For the year ended December 31, 2015				For the year ended December 31, 2014
Cash provided by (used in) operations			$	2,171,085		(	$	1,078,239	)
Dividends received				221,921				310,042
Interest received				1,384,375				1,233,955
Income tax paid		(		190,463	)	(		82,959	)
Net cash provided by operating activities				3,586,918				382,799
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of available-for-sale financial assets - noncurrent	6(3)			-		(		45,416	)
Proceeds from capital reduction of financial assets measured at cost	6(12)			7,827				21,903
Acquisition of property and equipment	6(14)	(		26,668	)	(		36,025	)
Proceeds from disposal of property and equipment				183				56
Acquisition of intangible assets		(		3,825	)	(		143,252	)
Decrease (increase) in other non-current assets				31,239		(		146,510	)
Increase in prepayment for equipment		(		39,314	)	(		31,490	)
Net cash used in investing activities		(		30,558	)	(		380,734	)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in short-term loans		(		5,024,538	)			5,281,717
Increase (decrease) in commercial papers payable				1,850,000		(		3,200,000	)
Increase in other non-current liabilities				864				2,402
Payments of cash dividend	6(27)	(		1,071,726	)	(		979,109	)
Acquisition of treasury stocks	6(26)	(		278,026	)			-
Interest paid		(		360,276	)	(		167,729	)
Changes in non-controlling interest		(		2,838	)	(		2,466	)
Net cash (used in) provided by financing activities		(		4,886,540	)			934,815
Effect of exchange rate changes				90,578				130,855
Net (decrease) increase in cash and cash equivalents		(		1,239,602	)			1,067,735
Cash and cash equivalents, beginning of year				6,355,219				5,287,484
Cash and cash equivalents, end of year			$	5,115,617			$	6,355,219

APPENDIX VI


President Securities Corporation
2015 Earnings Distribution
	Unit:：NT$
Unappropriated earnings as of January 1, 2015 (Note 1)	$13,257,007
Less：Adjustment to unappropriated earnings of 2015 (Note 2)	(8,948,098)
Unappropriated earnings after adjustment	4,308,909
Add ：Net profit after tax of 2015	956,613,559
Subtotal	960,922,468
Less：Legal Reserve (10%) (Note 3)	(95,661,356)
Special Reserve (20%) (Note 3)	(191,322,712)
Unappropriated earnings Available for Distribution	673,938,400
Distribution items
─ Cash dividend (NT$ 0.20 / per share)	260,759,211
─ Stock dividend (NT$ 0.31 / per share)	404,176,780
Unappropriated earnings as of December 31, 2015	$9,002,409

Note 1: The amount of unappropriated earnings in the earning distributions resolved by the shareholders’ meeting of 2015

Note 2: The Company adopted T-IFRSs (2013 version) in 2015 and unappropriated earnings was decreased by $8,948,098 due to actuarial loss from defined benefits plan (included in other comprehensive income).

Note 3: According to Article 237 of the Company Act, Jingshan Letter No.10102268370 and No.10202433490, Paragraph 1 of Article 41 of the Securities and Exchange Act, Article 14 of Regulations Governing Securities Firms, and Article 23 of the Company’s Article of Incorporation, 10% and 20% were set aside as legal reserve and special reserve.

Note 4: Prior years’ unappropriated earnings shall not be appropriated unless the current year’s unappropriated earnings is insufficient for distribution.

Note 5: Total common shares outstanding as of December 31, 2015 was 1,303,796,054 shares

APPENDIX VII

Comparison table of Amendments to” Operating Procedures for Endorsement and Guarantee”


Article	Amendment	Original Articles
Article 2	The Company may provide endorsements and guarantees for its overseas subsidiary for which the Company, either directly or indirectly, holds 50% or more of the voting shares.	When offering guarantees, the Company shall only provide collateral in the form of assets.
Article 3	The Company may provide endorsements and guarantees for its overseas subsidiary as mentioned in the previous Article only under the following circumstances: 1. For the purposes of underwriting, the parent company may provide guarantees or offer its assets as collateral. 2. For the purposes of issuing foreign warrants, the parent company may provide guarantees or offer its assets as collateral, where the subsidiary is a signatory to IOSCO. 3. For the purposes of serving as the financial institution using or guaranteeing offshore structured products, for sale within the ROC in accordance with the laws and regulations of the ROC, with another domestic parent company serving as the as the primary sales agent, and where that other domestic parent company should agree to be jointly and severally liable for said offshore structure note products. 4. Where it is necessary for margin operations by local financial institutions, the parent company may provide endorsements or guarantees.	The Company may only provide guarantees for the following counterparties: 1. Foreign securities firms for which the Company holds, either directly or indirectly, 50% or more of the voting shares, and for the purposes of underwriting. 2. Foreign subsidiaries of the Company for which the Company holds, either directly or indirectly, 50% or more of the voting shares, and where this subsidiary is a signatory to IOSCO, and for the purposes of issuing foreign warrants. 3. Foreign subsidiaries of the Company for which the Company holds, either directly or indirectly, 50% or more of the voting shares, and where such subsidiary requires a local margin financial institution. 4. Other counterparties as permitted by the laws.
Article 4	Before the abovementioned guarantee is provided by the Company, a report on the circumstances of the guarantee should be submitted to the board of directors and should be handled within the Company’s endorsement and guarantee limits and in accordance with the Guidelines for Endorsements and Guarantees, and a follow-up report should also be submitted to the Board of Directors after the guarantee has been issued. Major endorsements and guarantees should be submitted to and approved by the Auditing Committee by a majority vote before being submitted to the Board of Directors for resolution. But, where the company requiring the guarantee is a 100%-owned subsidiary of the Company, only a notification needs to be sent to the board after the guarantee has been implemented, and no report is necessary beforehand.	Before the abovementioned guarantee is provided by the Company, a report on the circumstances of the guarantee to be provided should be submitted to the board of directors and should be handled within the Company’s endorsement and guarantee limits and in accordance with the Guidelines for Endorsements and Guarantees, and a follow-up report should also be submitted to the Board of Directors after the guarantee has been issued. But, where the company requiring the guarantee is a 100%-owned subsidiary of the Company, only a notification needs to be sent to the board after the guarantee has been implemented, and no report is necessary beforehand.
Article 4-1	If the company issues endorsements or guarantees than initially complied with Article 2 of the Guidelines for Endorsements and Guarantees, but subsequently do not; or if the Company’s net value changes such that endorsements and guarantees already issued no longer conform to Article 4, a rectification plan should be submitted to the Auditing Committee and the Board of Directors. The timeline stated in the rectification plan should be followed.	If the company issues endorsements or guarantees than initially complied with Article 3 of the Guidelines for Endorsements and Guarantees, but subsequently do not; or if the Company’s net value changes such that endorsements and guarantees already issued no longer conform to Article 4, a rectification plan should be submitted to the Supervisors and the Board of Directors. The timeline stated in the rectification plan should be followed.
Article 5	Where a company meets the description of a subsidiary as defined under Article 2, and where that company has a business need, the Company may provide guarantee, whereby an application should be submitted to the Finance Department, forwarded to the President’s Office, and then approved by the Chairman of the Board, and handled in accordance with Article 4 of the Guidelines for Endorsements and Guarantees.	Where a company meets the description of a subsidiary as defined under Article 3, and where that company has a business need, the Company may provide guarantee, whereby an application should be submitted to the Finance Department, forwarded to the President’s Office, and then approved by the Chairman of the Board, and handled in accordance with Article 4 of the Guidelines for Endorsements and Guarantees.
Article 10	These Procedures should be approved by a majority vote in the Auditing Committee, whereafter it should be approved by the Board of Directors, before being sent to the shareholders for approval. Any amendments made should be handled in the same manner. If These Procedures do not receive a majority approval from the Auditing Committee, it may still be approved by the Board of Directors via a two-thirds vote at a meeting attended by all directors, and the outcome of the Auditing Committee vote should be noted.	These Procedures should be approved by the Board of Directors, before being submitted to the Supervisor for submission to the shareholders for approval. The Company should submit any opinions of dissenting Directors or any written opinions on These Procedures together to the Supervisor who, in turn, should submit the same the shareholders for discussion. Any amendments should be handled in the same manner.

APPENDIX VIII

Comparison table of Amendments to” Procedures for Engaging in Derivatives Trading”


Article	Amendment	Original Articles
Article 3	Trading Principles 1. Division of Responsibilities 2. Settlement Department 3. Confirms every trading order against every order ticket and completes each transaction. 4. Checks and saves copies of all trading orders. 5. Responsible for overseeing and recordation of all master agreements entered into with trading counterparties, plus all schedules, and related information, and for preparing the same for inspection by the regulators. 6. Prepares monthly trading statistics in accordance with the format required by the regulators for derivatives trading. 7. Records trading statistics on a daily basis and confirms whether each trade is for “Hedging” or “Non-hedging” purposes; calculates all realized or expected profits and losses so as to get an accurate picture of the Company’s open positions so as to provide accurate hedging data. 8. Manages derivatives fund access limits, profit and loss snapshots, exceptional events, and then takes necessary risk control. 5. Trading Limits 1. The Company treats its derivative trading as either “Hedging” or “Non-hedging”, based on the nature of the trade. The ALCO sets the total value of the contracts or securities based on the needs of the Company. 2. Business Division position sets position limits and loss limits for each type of trade based on the type of derivative products.	Trading Principles 1. Division of Responsibilities 2. Settlement Department 3. Confirms every trading order against every order ticket and completes each transaction. 4. Checks and saves copies of all trading orders. 5. Risk Control Division 6. Responsible for overseeing and recordation of all master agreements entered into with trading counterparties, plus all schedules, and related information, and for preparing the same for inspection by the regulators. 7. Prepares monthly trading statistics in accordance with the format required by the regulators for derivatives trading. 8. Records trading statistics on a daily basis and confirms whether each trade is for “Hedging” or “Non-hedging” purposes; calculates all realized or expected profits and losses so as to get an accurate picture of the Company’s open positions so as to provide accurate hedging data. 9. Compiles monthly data on derivative trades already booked, including both already realized or expected profits or losses, and prepares regular financial reports in accordance with the format stipulated by the regulators, and publishes key derivatives trading data. 10. Manages derivatives trading risk, fund access limits, profit and loss snapshots, exceptional events, and then evaluates and proposes necessary adjustments to risk management guidelines. 5. Trading Limits The Company treats its derivative trading as either “Hedging” or “Non-hedging”, based on the nature of the trade. The ALCO sets position limits and loss limits for each type of trade based on the needs of the Company and on the total value of the underling.
Article 5	Risk Management Measures 1. The following risk management measures should be employed when conducting any derivatives trades: 2. Market Risk Management On a regular basis, or whenever necessary, the Risk Control Division should work with the various trading divisions to conduct formula price evaluations so as to accurately predict future market fluctuations and the profit or loss effects those changes could have on open positions.	Risk Management Measures 1. The following risk management measures should be employed when conducting any derivatives trades: 2. Market Risk Management On a regular basis, or whenever necessary, the Finance Department should work with the various trading divisions to conduct market evaluations so as to accurately predict future market fluctuations and the profit or loss effects those changes could have on open positions.
Article 7	Internal Auditing Measures 1. Internal auditing personnel should regularly, and when necessary, evaluate the appropriateness of the internal control measures, and should produce a monthly audit report based on a monthly evaluation of the derivatives trading procedures used by the trading departments, so as to identify any serious violations of the regulations in place, and then report to the Audit Committee, if warranted.	Internal Auditing Measures 1. Internal auditing personnel should regularly, and when necessary, evaluate the appropriateness of the internal control measures, and should produce a monthly audit report based on a monthly evaluation of the derivatives trading procedures used by the trading departments, so as to identify any serious violations of the regulations in place, and then to properly notify the Company’s Supervisor in writing, if warranted.
Article 8	Methods for Regular Evaluations and for Handling Abnormal Events 1. The Risk Control Division should conduct regular reviews of the business units in accordance with the following principles: 2. Does current risk management measure appropriate and are they being implemented in accordance with “Guidelines for the Purchase or Sale of Assets by Public Companies” and the Procedures and evaluate the amendment to relevant rules of risk control.	Methods for Regular Evaluations and for Handling Abnormal Events 1. The Risk Control Division should conduct regular reviews of the business units in accordance with the following principles: 2. Does current risk management measure appropriate and are they being implemented in accordance with “Guidelines for the Purchase or Sale of Assets by Public Companies” and the Procedures.
Article 9	Information Disclosure The Business Division, Finance Department and Settlement Department should disclose all necessary information in accordance with relevant laws and regulations issued by the competent authority.	Information Disclosure The Finance Department should disclose all necessary information in accordance with relevant laws and regulations issued by the competent authority.

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