104 — Audit Report / Information 2018

Nov 14, 2018

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Stock Code:3130

104 CORPORATION

FINANCIAL STATEMENTS

With Independent Auditors’ Report For the Years Ended December 31, 2018 and 2017

Address: 10F., No. 119-1, Baozhong Rd., Xindian Dist., New Taipei City 231, Taiwan, R.O.C. Telephone: 886-2-2912-6104

The independent auditors’ report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and financial statements, the Chinese version shall prevail.

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Table of contents

Contents 1 Cover page 2 Table of contents 3 Independent Auditors’ Report 4 Balance Sheets 5 Statements of Comprehensive Income 6 Statements of Changes in Equity 7 Statements of Cash Flows 8 Notes to Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Significant commitments and contingencies (10) Losses due to major disasters (11) Significant subsequent events (12) Other (13) Other disclosures items 1) Information on significant transactions 2) Information on investees 3) Information on investment in Mainland China (14) Segment information 9 Statements of major accounting items

Page

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Independent Auditors’ Report

To the Board of Directors of 104 Corporation:

Opinion

We have audited the financial statements of 104 Corporation ("the Company"), which comprise the balance sheets as of December 31, 2018 and 2017, the statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2018 and 2017, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2018 and 2017, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements taken as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Based on our judgement, the key audit matters that should be communicated in this audit report are as follows:

Revenue recognition

Please refer to note 4(12) for accounting policy related to revenue recognition, and note 6(13) for the disclosure related to revenue from contracts with customers of the financial statements.

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Description of key audit matter:

The Company’s operating revenues is the main indicator for investors and management to assess their financial or business performance. Since the Company is a listed company, it has a high risk of false representation. Furthermore, in 2018, the Company is required to adopt the International Financial Reporting Standard No. 15 for the first time, wherein its recognition of revenue and its judgment of the timing of the transfer of commodity control rights are extremely important for the expression of its financial statements. The Company’s operating revenues mainly derive from providing online advertising and consulting services, wherein they are recognized in the following different ways. Additionally, the Company often received its payments in advance after the contracts are signed; therefore, the amount is deferred according to the Company’s policy and recognized as revenue once the service is performed. The aforementioned matter is the basis for the Company’s management to determine the amount of revenue that can be recognized, therefore, revenue recognition was considered to be one of the key audit matters in our audit.

How the matter was addressed in our audit:

Our audit procedures included:

• ‧ Assessing and testing the design, as well as the effectiveness of the operating on the control over sales and collection cycle. Selecting appropriate samples and comparing them to relevant documents such as customer order and confirmation of completion order signed by customer to assess whether revenue and deferred revenue have been appropriately recognized.

• ‧ Performing comparison analysis on operating revenue of the current period to last period and the latest quarter to assess the existence of any significant exceptions, and further identify and analyze the reasons, if there is any significant exception.

• ‧ Performing test-of-detail on operating revenue to assess the assertions of existence and accuracy, as well as the appropriateness of recognition.

• ‧ Examining relevant documents of a period before and after the balance sheets date, such as customer order, information reported back from business department, or confirmation of completion of duty executed by customer, and verify the accuracy of the amount recognized as revenue in accordance with the timing of service provided or quantity provided to determine whether the deferred revenue should not be recognized as revenue and whether operating revenue has been appropriately recognized.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

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

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In preparing the financial statements, management is responsible for assessing the Company’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 the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 auditing standards generally accepted 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 financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. 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 the Company’s internal control.

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

4. 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 the Company’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 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 the Company to cease to continue as a going concern.

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

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the investments in other entities accounted for using the equity method to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion.

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

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

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

The engagement partners on the audit resulting in this independent auditors’ report are Min-Ju Chao and Lily Lu.

KPMG

Taipei, Taiwan (Republic of China) March 13, 2019

Note to Readers

The accompanying financial statements are intended only to present the statement of financial position, financial performance and its cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and financial statements, the Chinese version shall prevail.

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(English Translation of Financial Statements and Report Originally Issued in Chinese)

104 CORPORATION

Balance Sheets

December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: Cash and cash equivalents (note 6(1)) Notes receivable, net (note 6(3)) Accounts receivable, net (notes 6(3), (13) and 7) Other receivables (note 7) Other financial assets－current (note 8) Other current assets Total current assets Non-current assets: Financial assets at fair value through profit or loss－non-current (note 6(2)) Investments accounted for using equity method (note 6(4)) Property, plant and equipment (note 6(5)) Intangible assets (note 6(6)) Deferred tax assets (note 6(9)) Prepayments for equipment Refundable deposits Other financial assets－non-current (note 8) Total non-current assets Total assets	December 31, 2018 Amount % $ 1,961,227 81 565 - 47,524 2 22,194 1 150 - 14,519 1 2,046,179 85 4,914 - 101,845 5 243,763 10 3,514 - 5,673 - 1,594 - 5,998 - 10,000 - 377,301 15 $ 2,423,480 100	Liabilities and Equity Current liabilities: Contract liability－current (note 6(13)) Notes payable Accounts payable Other payables (notes 6(15) and 7) Current tax liabilities Deferred revenue (note 6(14)) Other current liabilities Total current liabilities Non-current liabilities: Net defined benefit liability (note 6(8)) Total non-current liabilities Total liabilities Equity (notes 6(8), (9), (10) and (11)) Common stock Capital surplus Retained earnings: Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity: Foreign currency translation differences for foreign operations Others Total other equity Total equity Total liabilities and equity December 31, 2017 Amount % 1,917,721 82 1,196 - 35,974 2 9,948 - - - 13,461 1 1,978,300 85 - - 117,698 6 206,451 9 6,705 - 4,731 - - - 5,498 - 10,000 - 351,083 15 2,329,383 100	December 31, 2018 Amount % $ 442,143 18 395 - 6,018 - 365,414 15 61,862 3 - - 48,787 2 924,619 38 5,666 - 5,666 - 930,285 38 331,917 14 397,859 16 378,199 16 2,941 - 386,934 16 768,074 32 ( 4,051 ) - ( 604) - ( 4,655) - 1,493,195 62 $ 2,423,480 100	December 31, 2017
				Amount % - - 2 - 6,920 - 319,382 14 41,094 2 386,006 16 42,550 2 795,954 34 7,213 - 7,213 - 803,167 34 332,072 14 399,549 17 378,199 17 - - 422,717 18 800,916 35 ( 2,941 ) - ( 3,380) - ( 6,321) - 1,526,216 66 2,329,383 100

See accompanying notes to financial statements.

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(English Translation of Financial Statements and Report Originally Issued in Chinese) 104 CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

Operating revenue (notes 6(13), (14) and 7) Operating costs (notes 6(5), (6), (7), (8), (10), (11), (15) and 7) Gross profit Operating expenses (notes 6(3), (5), (6), (7), (8), (10), (11), (15) and 7): Selling expenses Administrative expenses Research and development expenses Total operating expenses Operating income Non-operating income and expenses (notes 6(16), (17) and 7): Other income Other gains and losses Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method Total non-operating income and expenses Income before income tax Less: income tax expenses (note 6(9)) Net income Other comprehensive income (loss): Items that will not be reclassified subsequently to profit or loss (notes 6(8) and (9)) Remeasurements from defined benefit plans Income tax related to items that will not be reclassified subsequently to profit or loss Total items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss Foreign currency translation differences for foreign operations Income tax related to items that are or may be reclassified subsequently to profit or loss Total items that may be reclassified subsequently to profit or loss Other comprehensive loss Total comprehensive income Basic earnings per share (note 6(12)) Basic earnings per share Diluted earnings per share	2018	% 100 10 90 39 11 21 71 19 2 - 1 3 22 4 18 - - - - - - - 18 8.51 8.44	2017
	Amount $1,552,514 158,319 1,394,195 612,922 168,845 322,846 1,104,613 289,582 32,555 63 23,074 55,692 345,274 63,067 282,207 245 34 279 ( 1,110 ) - ( 1,110) ( 831) $ 281,376 $ $		Amount 1,512,766 149,553 1,363,213 569,766 177,722 298,062 1,045,550 317,663 30,171 15 27,087 57,273 374,936 56,813 318,123 ( 4,094 ) 696 ( 3,398) ( 621 ) - ( 621) ( 4,019) 314,104	%
				100 10 90 37 12 20 69 21 2 - 2 4 25 4 21 - - - - - - - 21 9.60 9.51

See accompanying notes to financial statements.

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(English Translation of Financial Statements and Report Originally Issued in Chinese) 104 CORPORATION

Statements of Changes in Equity

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2017 Appropriations and distributions Legal reserve Cash dividends Net income for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) for the year Adjustments for restricted employee shares Cancellation of restricted employee shares Compensation cost of restricted employee shares Balance at December 31, 2017 Effects of retrospective application Balance on January 1, 2018 after adjustments Appropriations and distributions Special reserve Cash dividends Net income for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) for the year Adjustments for restricted employee shares Cancellation of restricted employee shares Compensation cost of restricted employee shares Balance at December 31, 2018	Common stock $ 332,417 - - - - - - ( 345 ) - 332,072 - 332,072 - - - - - - ( 155 ) - $ 331,917	Capital surplus 401,962 - - - - - ( 2,758 ) 345 - 399,549 - 399,549 - - - - - ( 1,845 ) 155 - 397,859			Retained earnings	Retained earnings		Other equity interest	Other equity interest	Total ( 14,010 ) - - - ( 621) ( 621) 1,575 - 6,735 ( 6,321 ) - ( 6,321) - - - ( 1,110) ( 1,110) 634 - 2,142 ( 4,655)	Total equity 1,565,167 - ( 358,838 ) 318,123 ( 4,019) 314,104 ( 952 ) - 6,735 1,526,216 3,116 1,529,332 - ( 318,650 ) 282,207 ( 831) 281,376 ( 1,005 ) - 2,142 1,493,195
									Others ( 11,690 ) - - - - - 1,575 - 6,735 ( 3,380 ) - ( 3,380) - - - - - 634 - 2,142 ( 604)
				Legal reserve 338,362 39,837 - - - - - - - 378,199 - 378,199 - - - - - - - - 378,199	Special reserve - - - - - - - - - - - - 2,941 - - - - - - - 2,941	Unappropriated earnings 506,436 ( 39,837 ) ( 358,838 ) 318,123 ( 3,398) 314,725 231 - - 422,717 3,116 425,833 ( 2,941 ) ( 318,650 ) 282,207 279 282,486 206 - - 386,934

See accompanying notes to financial statements.

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(English Translation of Financial Statements and Report Originally Issued in Chinese) 104 CORPORATION

Statements of Cash Flows

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Income before tax Adjustments: Adjustments to reconcile profit: Depreciation expense Amortization expense Expected credit loss / Provision for bad debt expense Interest income Compensation cost of restricted employee shares Share of profit of subsidiaries, associates and joint ventures accounted for using equity method Loss (gain) on disposal of property, plant and equipment Adjustments for restricted employee shares Total adjustments to reconcile profit Changes in operating assets and liabilities: Net changes in operating assets: Notes receivable Accounts receivable Other receivable Other financial assets Other current assets Total net changes in operating assets Net changes in operating liabilities: Contract liabilities Notes payable Accounts payable Other payables Deferred revenue Other current liabilities Net defined benefit liabilities Total net changes in operating liabilities Total net changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Acquisition of intangible assets Increase in prepayments for equipment Net cash flows used in investing activities Cash flows used in financing activities: Cash dividends paid Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year	2018 $ 345,274 39,489 4,434 558 ( 11,912 ) 2,142 ( 23,074 ) 92 ( 1,005) 10,724 631 ( 11,868 ) ( 113 ) ( 150 ) ( 1,058) ( 12,558) 59,651 393 ( 902 ) 14,845 - 6,237 ( 1,302) 78,922 66,364 77,088 422,362 11,879 25,717 ( 43,845) 416,113 ( 4,914 ) ( 42,910 ) - ( 500 ) ( 4,039 ) ( 1,594) ( 53,957) ( 318,650) ( 318,650) 43,506 1,917,721 $ 1,961,227	2017 374,936 46,378 8,266 804 ( 11,641 ) 6,735 ( 27,087 ) ( 54 ) ( 952) 22,449 1,034 2,470 1,998 - ( 5,639) ( 137) - - ( 726 ) 44,258 21,214 ( 6,783 ) ( 1,355) 56,608 56,471 78,920 453,856 11,659 37,828 ( 51,829) 451,514 - ( 30,441 ) 541 707 ( 1,026 ) - ( 30,219) ( 358,838) ( 358,838) 62,457 1,855,264 1,917,721

See accompanying notes to financial statements.

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(English Translation of Financial Statements and Report Originally Issued in Chinese) 104 CORPORATION

Notes to Financial Statements

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars, unless otherwise stated)

(1) Company history

104 Corporation (the "Company") was incorporated as a company limited by shares under the Company Act of the Republic of China in October 1993. The Company, formerly named Fu-Hwa International Market Development Consultant Ltd., was renamed 104 Corporation in August 2000. The Company is engaged in information technology, general advertising services, employment services and human resource consultancy.

(2) Approval date and procedures of the financial statements

These financial statements were authorized for issuance by the board of directors on March 13, 2019.

(3) New standards, amendments and interpretations adopted:

• 1) The impact of the International Financial Reporting Standards ("IFRSs") endorsed by the Financial Supervisory Commission, R.O.C. ("FSC") which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2018.

New, Revised or Amended Standards and Interpretations Amendment to IFRS 2 "Clarifications of Classification and Measurement of Share-based Payment Transactions" Amendments to IFRS 4 "Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts" IFRS 9 "Financial Instruments" IFRS 15 "Revenue from Contracts with Customers" Amendment to IAS 7 "Statement of Cash Flows -Disclosure Initiative" Amendment to IAS 12 "Income Taxes- Recognition of Deferred Tax Assets for Unrealized Losses" Amendments to IAS 40 "Transfers of Investment Property" Annual Improvements to IFRS Standards 2014–2016 Cycle: Amendments to IFRS 12 Amendments to IFRS 1 and Amendments to IAS 28 IFRIC 22 "Foreign Currency Transactions and Advance Consideration"

Effective date per IASB

January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2017 January 1, 2018 January 1, 2018

(Continued)

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104 CORPORATION

Notes to Financial Statements

Except for the following items, the Company believes that the adoption of the above IFRSs would not have any material impact on its financial statements. The extent and impact of signification changes are as follows:

1. IFRS 15 "Revenue from Contracts with Customers"

IFRS 15 establishes a comprehensive framework by a single model through five procedures for determining whether, how much and when revenue is recognized. It replaces the existing revenue recognition guidance, including IAS 18 "Revenue" and IAS 11 "Construction Contracts". The Company applies this standard retrospectively with the cumulative effect, it need not restate those contracts, but instead, continues to apply IAS 11, IAS 18 and the related Interpretations for comparative reporting period. The Company recognizes the cumulative effect upon the initially application of this Standard as an adjustment to the opening balance of retained earnings on January 1, 2018.

The Company uses the practical expedients for completed contracts, which means it need not restate those contracts that have been completed on January 1, 2018.

The following are the nature and impacts on changing of accounting policies:

(A) Rending of services

The Company provides software licensing, customized services and other relevant services. In the past, the Company identifies software licensing, customized services and other relevant services as a single performance obligation, and revenue was recognized on the percentage of services performed to date as total services to be performed during the period of contract. Under IFRS 15, the Company has analyzed that software licensing and customized services are separately identifiable. Software licensing is a single performance obligation and revenue is recognized after the controlling right of software has been transferred. Therefore, the transaction price which is allocated to software licensing will be recognized as revenue after the controlling right of software has been transferred. Customized service revenue is still recognized on the percentage of services performed to date as total services to be performed during the period of contract.

(B) Impacts on financial statements

The following tables summarize the impacts of adopting IFRS15 on the Company’s financial statements:

Impacted line items on the balance sheet Accounts receivable Impact on assets Deferred revenue Contract liability－current Current tax liabilities Deferred tax liabilities Impact on liabilities	D	ec	ember 31, 201	8	January 1, 2018	January 1, 2018	January 1, 2018
	Balances prior to the adoption of IFRS 15 $ 47,524 $ 449,569 - 61,127 -		Impact of changes in accounting policies	Balance upon adoption of IFRS 15	Balances prior to the adoption of IFRS 15 35,974 386,006 - 41,094 -		Impact of changes in accounting policies 240 240 ( 386,006 ) 382,492 - 638 **( 2,876) **	Balance upon adoption of IFRS 15
			- $ - ( 449,569 ) 442,143 735 - $ **( 6,691) **	47,524 - 442,143 61,862 -				36,214 - 382,492 41,094 638

(Continued)

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104 CORPORATION

Notes to Financial Statements

D Impacted line items on the balance sheet Balances prior to the adoption of IFRS 15 Retained earnings $ 380,243 Impact on equity Impacted line items on the income statement	D	ec	ember 31, 201	ember 31, 201	ember 31, 201	8		January 1, 2018	January 1, 2018	January 1, 2018	January 1, 2018	Balance upon adoption of IFRS 15 425,833
			Impact of changes in accounting policies			Balance upon adoption of IFRS 15	B to	alances prior the adoption of IFRS 15 422,717 2018		Impact of changes in accounting policies 3,116 3,116
						386,934
					Balances without adoption of IFRS 15			Impact of changes in accounting policies 3,672 3,672 97 $ 3,575 0.11 0.11 2018			Balance with adoption of IFRS 15
											1,552,514 63,067 8.51 8.44
								Impact of changes in accounting policies 3,672 240 59,651 (63,563) $ -			Balance with adoption of IFRS 15
											345,274 (11,868) 59,651 -

(Continued)

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104 CORPORATION

Notes to Financial Statements

1. IFRS 9 "Financial Instruments"

IFRS 9 replaces IAS 39 "Financial Instruments: Recognition and Measurement" which contains classification and measurement of financial instruments, impairment and hedge accounting.

The Company adopted the consequential amendments to IFRS 7 "Financial Instruments: Disclosures" that are applied to disclosures about 2018 but generally have not been applied to comparative information.

The detail of new significant accounting policies and the nature and effect of the changes to previous accounting policies are set out below:

• (A) Classification of financial assets and financial liabilities

IFRS 9 contains three principal classification categories for financial assets: measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. The standard eliminates the previous IAS 39 categories of held to maturity, loans and receivables and available for sale. Under IFRS 9, derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never bifurcated. Instead, the hybrid financial instrument as a whole is assessed for classification. For an explanation of how the Company classifies and measures financial assets and accounts for related gains and losses under IFRS 9, please refer to note 4(6).

The adoption of IFRS 9 did not have any a significant impact on its accounting policies on financial liabilities.

• (B) Impairment of financial assets

IFRS 9 replaces the "incurred loss" model in IAS 39 with the "expected credit loss" (ECL) model. The new impairment model applies to financial assets measured at amortized cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. – Under IFRS 9, credit losses are recognized earlier than they are under IAS 39 please refer to note 4(6).

• (C) Transition

The adoption of IFRS 9 have been applied retrospectively, except as described below,

• ‧ Differences in the carrying amounts of financial assets resulting from the adoption of IFRS 9 are recognized in retained earnings and other equity interest as on January 1, 2018. Accordingly, the information presented for 2017 does not generally reflect the requirements of IFRS 9 and therefore is not comparable to the information presented for 2018 under IFRS 9.

• ‧ The following assessments have been made on the basis of the facts and circumstances that existed at the date of initial application.

• －

• The determination of the business model within which a financial asset is held.

• － The designation and revocation of previous designations of certain financial

(Continued)

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104 CORPORATION

Notes to Financial Statements

assets and financial liabilities as measured at FVTPL.

－ The designation of certain investments in equity instruments not held for trading as at FVOCI.

• (D) Classification of financial assets on the date of initial application of IFRS 9

The following table shows the original measurement categories under IAS 39 and the new measurement categories under IFRS 9 for each class of the Company's financial assets as of January 1, 2018. (There is no change in both categories and carrying value of financial liabilities.)

==> picture [407 x 158] intentionally omitted <==

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

IAS39 IFRS9
Carrying Carrying
Measurement categories Amount Measurement categories Amount
Financial Assets
Cash and equivalents Loans and receivables 1,917,721 Amortized cost 1,917,721
Receivables, net (notes Loans and receivables 47,358 Amortized cost 47,358
receivable, accounts
receivable and other
receivable)
Other financial assets Loans and receivables 15,498 Amortized cost 15,498
(refundable deposit
and others)
----- End of picture text -----

The above change in accounting policy would not have any material adjustment on the financial statements.

• 2) The impact of IFRS endorsed by FSC but not yet effective

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2019 in accordance with Ruling No. 1070324857 issued by the FSC on July 17, 2018:

070324857 issued by the FSC on July 17, 2018:
New, Revised or Amended Standards and Interpretations IFRS 16 "Leases" IFRIC 23 "Uncertainty over Income Tax Treatments" Amendments to IFRS 9 "Prepayment features with negative compensation" Amendments to IAS 19 "Plan Amendment, Curtailment or Settlement" Amendments to IAS 28 "Long-term interests in associates and joint ventures" Annual Improvements to IFRS Standards 2015–2017 Cycle	Effective date per IASB
	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

Except for the following impact of the adoption of IFRS 16 "Leases", the Company believes that the adoption of the above IFRSs would not have any material impact on its financial statements. The extent and impact of signification changes are as follows:

IFRS 16 replaces the existing leases guidance, including IAS 17 "Leases", IFRIC 4 "Determining

(Continued)

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104 CORPORATION Notes to Financial Statements

– whether an Arrangement contains a Lease", SIC-15 "Operating Leases Incentives" and SIC-27 "Evaluating the Substance of Transactions Involving the Legal Form of a Lease".

IFRS 16 introduces a single and an on-balance sheet lease accounting model for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. In addition, the nature of expenses related to those leases will now be changed since IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities. There are recognition exemptions for short-term leases and leases of low-value items. The lessor accounting – remains similar to the current standard i.e. the lessors will continue to classify leases as finance or operating leases.

1. Determining whether an arrangement contains a lease

On transition to IFRS 16, the Company can choose to apply either of the following:

• ‧ IFRS 16 definition of a lease to all its contracts; or

• ‧ a practical expedient that does not need any reassessment whether a contract is, or contains, a lease.

The Company plans to apply the practical expedient to grandfather the definition of a lease upon transition. This means that it will apply IFRS 16 to all contracts entered into before January 1, 2019 and identified as leases in accordance with IAS 17 and IFRIC 4.

1. Transition

As a lessee, the Company can apply the standard using either of the following:

• ‧ retrospective approach; or

• ‧ modified retrospective approach with optional practical expedients.

The lessee applies the election consistently to all of its leases.

On January 1, 2019, the Company plans to initially apply IFRS 16 using the modified retrospective approach, right-of-use assets is measured from lease liabilities, the cumulative effect of adopting IFRS 16 will be recognized as an adjustment to the opening balance of retained earnings at January 1, 2019, with no restatement of comparative information. When applying the modified retrospective approach to leases previously classified as operating leases under IAS 17, the lessee can elect, on a lease-by-lease basis, whether to apply a number of practical expedients on transition. The Company chooses to elect the following practical expedients:

• ‧ apply a single discount rate to a portfolio of leases with similar characteristics.

• ‧ exclude the initial direct costs from measuring the right-of-use assets at the date of initial application.

• So far, the most significant impact identified is that the Company will have to recognize the new assets and liabilities for the operating leases of its offices. The Company estimated that the right-of-use assets and the lease liabilities to increase by $106,432 thousand respectively, on January 1, 2019. The Company is not required to make any adjustments for leases in which the

(Continued)

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104 CORPORATION

Notes to Financial Statements

Company is the intermediate lessor in the sub-lease.

The actual impacts of adopting the standards may change depending on the economic conditions and events which may occur in the future.

• 3) The impact of IFRS issued by IASB but not yet endorsed by the FSC

As of the date, the following IFRSs that have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

New, Revised or Amended Standards and Interpretations Amendments to IFRS 3 "Definition of a Business" Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture" IFRS 17 "Insurance Contracts" Amendments to IAS 1 and IAS 8 "Definition of Material"	Effective date per IASB
	January 1, 2020 Effective date to be determined by IASB January 1, 2021 January 1, 2020

The Company is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its financial position and financial performance. The results thereof will be disclosed when the Company completes its evaluation.

(4) Summary of significant accounting policies

The significant accounting policies were applied consistently throughout the periods presented in these financial statements.

Except for note 3, 4(6), and 4(12) that changes in accounting policies, the significant accounting policies presented in the financial statements are summarized as follows:

• 1) Statement of compliance

These financial statements have been prepared in accordance with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers".

• 2) Basis of preparation

• Basis of measurement

Except for the following significant accounts, the consolidated financial statements have been prepared on a historical cost basis:

• (A) Financial instruments measured at fair value through profit or loss are measured at fair value;

• (B) The defined benefit liability is recognized as plan assets measured at fair value, less, the present value of the defined benefit obligation, and measured restrictedly according to note 4(13).

(Continued)

15

104 CORPORATION

Notes to Financial Statements

2. Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the entity operates. The financial statements are presented in New Taiwan dollars, which is the Company’s functional currency. All financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

3) Foreign currency

1. Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Company entities at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the year adjusted for the effective interest and payments during the year, and the amortized cost in foreign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date when fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of the translation.

2. Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the Company’s functional currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated at the average exchange rate. Translation differences are recognized in other comprehensive income and presented in the foreign currency translation reserve in equity.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Company disposes of only part of investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign currency gains and losses arising from such items are considered to form part of a net investment in the foreign operation and are recognized in other comprehensive income, and presented in the translation reserve in equity.

• 4) Classification of current and non-current assets and liabilities

The Company shall classify an asset as current when:

1. It is expected to realized, or intended to be sold or consumed, during normal operating cycle;

2. It is held primarily for the purpose of trading;

3. It is expected to be realized within twelve months after the reporting period; or

(Continued)

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104 CORPORATION

Notes to Financial Statements

1. The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

The Company shall classify all other assets as non-current.

The Company shall classify a liability as current when:

1. It is expected to be settled during normal operating cycle;

2. It is held primarily for the purpose of trading;

3. The liability is due to be settled within twelve months after the reporting period even if the liability has been refinanced as long-term loans or the payments have been rescheduled after the reporting period but before the approval from the board of directors; or

4. It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. 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.

The Company shall classify all other liabilities as non-current.

• 5) Cash and cash equivalents

Cash and cash equivalents comprise checking deposits, demand deposits, time deposits and cash － equivalents bonds purchased under resell agreements (hereinafter referred to as "RS bond"). Cash equivalents are short-term, highly liquid investments that are readily convertible to cash and which are subject to an insignificant risk of changes in value. Time deposits are classified as cash and cash equivalents only when they satisfy the aforementioned definition and are held for the purpose of short-term commitments rather than for investment or other purposes.

• 6) Financial instruments

Financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instruments.

1. Financial assets (policy applicable from January 1, 2018)

Financial assets are classified into the following categories: measured at amortized cost and fair value through profit or loss (FVTPL).

The Company shall reclassify all affected financial assets only when it changes its business model for managing its financial assets.

• (A) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL：

• ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset measured at amortized cost is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses.

(Continued)

17

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Notes to Financial Statements

Interest income, foreign exchange gains and losses, and impairment loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

(B) Fair value through profit or loss

All financial assets not classified as amortized cost as above are measured at FVTPL. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets in this category are measured at fair value at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Subsequent changes that are measured at fair value, which take into account any dividend and interest income, are recognized in profit or loss. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting.

(C) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivable, other receivables, refundable deposits and other financial assets).

Loss allowance for accounts receivable and notes receivable are always measured at an amount equal to lifetime expected credit loss (ECL). Loss allowances for other financial assets are considered reasonable and supportable information that is relevant and available (without undue cost or effort). This includes both quantitative and qualitative information and analysis, based on the Company's historical experience, informed credit assessment and including forward-looking information, when the credit risk on the financial instrument has not increased significantly since initial recognition, a loss allowance is recognized at an amount equal to expected credit loss resulting from possible default events of a financial instrument within 12 months after the reporting date. If, on the other hand, there has been a significant increase in credit risk since initial recognition, a loss allowance is recognized at an amount equal to expected credit loss resulting from all possible default events over the expected life of a financial instrument.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 month after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. The Company recognizes the amount of expected credit losses (or reversal) in profit or loss, as an impairment gain or loss.

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company's procedures for recovery of amounts due.

(Continued)

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Notes to Financial Statements

(D) Derecognition of financial assets

Financial assets are derecognized when the contractual rights to the cash flows from the assets expire, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets.

1. Financial assets (policy applicable before January 1, 2018)

2. (A) Receivables

Receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Receivables comprise trade receivables and other receivables. Such assets are recognized initially at fair value, plus any directly attributable transaction costs. Subsequent to initial recognition, receivables other than insignificant interest on short-term receivables are measured at amortized cost using the effective interest method, less any impairment losses.

(B) Impairment of financial assets

Except for financial assets at fair value through profit or loss, financial assets are assessed for impairment at each reporting date. A financial asset is impaired if, and only if, there is any objective evidence of impairment as a result of one or more events (a loss event) that occurred after the initial recognition of the asset and that loss event (or events) has an impact on the estimated future cash flows of the financial assets that can be estimated reliably.

Objective evidence that financial assets are impaired includes default or delinquency by a debtor (such as delay in payment of interest or principal or default on payments), restructuring of an amount due to the Company on terms that the Company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults, or the disappearance of an active market for a security.

The Company considers the specific assets at individual and aggregate level as the evidence for impairment for receivables. All individually significant receivables are assessed for specific impairment. For individually significant receivables without specific impairment, the Company should further evaluate all impairment that had occurred but not yet assessed at an aggregate level. Receivables that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics.

In assessing collective impairment, the Company uses historical trends of the probability of default, the timing of recoveries, and the amount of loss incurred, adjusted for management's judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than those suggested by historical trends.

An impairment loss in respect of a financial asset is reduced from the carrying amount except for trade receivables, for which an impairment loss is reflected in an allowance account against the receivables. When it is determined a receivable is uncollectible, it is written off from the allowance account. Any subsequent recovery of a receivable written off is recorded in the allowance account. Changes in the amount of the allowance account are recognized in profit or loss.

Impairment losses and recoveries of accounts receivable are recognized in selling expenses.

(Continued)

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104 CORPORATION

Notes to Financial Statements

(C) Derecognition of financial assets

The Company derecognizes financial assets when the contractual rights to the cash inflow from the asset expire or when the Company transfers substantially all the risks and rewards of ownership of the financial assets.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received or receivable and any cumulative gain or loss that had been recognized in other comprehensive income and presented in other – equity unrealized gains or losses from available-for-sale financial assets is recognized in profit or loss, and included in other gains and losses under non-operating income and expenses.

The Company separates the part that continues to be recognized and the part that is derecognized based on the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part derecognized and the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income shall be recognized in profit or loss, and is included in other gains and losses under non-operating income and expenses.

A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is derecognized based on the relative fair values of those parts.

3. Financial liabilities and equity instruments

• (A) Equity instruments

Equity instruments refer to surplus equities of the assets after the deduction of all the debts for any contracts. Equity instruments issued are recognized as the amount of consideration received less the direct cost of issuing.

(B) Other financial liabilities

Financial liabilities not classified as held for trading or designated as at fair value through profit or loss, which comprise trade and other payables, are measured at fair value, plus any directly attributable transaction cost at the time of initial recognition.

• (C) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligation has been discharged or cancelled, or has expired. The difference between the carrying amount of a financial liability removed and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss, and is included in other gains and losses under non-operating income or expenses.

• (D) Offsetting of financial assets and liabilities

The Company presents financial assets and liabilities on a net basis when the Company has the legally enforceable right to offset and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

(Continued)

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104 CORPORATION

Notes to Financial Statements

7) Investment in subsidiaries

When preparing the financial statements, investment in subsidiaries which are controlled by the Company is accounted for using the equity method. Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of profit or loss and other comprehensive income of the subsidiary as well as the distribution received. The Company also recognized its share in the changes in the equity of subsidiaries. In subsidiaries which are controlled by the Company is accounted for preparing the consolidated statement by each period.

Changes in a parent’s ownership interest in a subsidiary that do not result in the loss of control are accounted for within equity.

The Company discontinues the use of the equity method on which its investment ceases to be a subsidiary. Any retained investment is measured at fair value, and the fair value is regarded as the investment’s fair value on its initial recognition as a financial asset. The difference between the previous carrying amount of the subsidiary attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the subsidiary.

• 8) Property, plant and equipment

• Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately, unless the useful life and the depreciation method are the same as those of another significant part of that same item.

The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized as non-operating income and expense.

1. Subsequent cost

Subsequent expenditure is capitalized only when it is probable that the future economic benefits associated with the expenditure will flow to the Company. The carrying amount of those parts that are replaced is derecognized. Ongoing repairs and maintenance are expensed as incurred.

1. Depreciation

The depreciable amount of an asset is determined after deducting its residual amount, and it shall be allocated on a straight-line basis over its useful life. Items of property, plant and equipment with the same useful life may be grouped in determining the depreciation charge. The remainder of the items may be depreciated separately. The depreciation charge for each period shall be recognized in profit or loss.

Land has an unlimited useful life and therefore is not depreciated.

The estimated useful lives, for the current and comparative years, of significant items of property, plant and equipment are as follows:

(Continued)

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104 CORPORATION

Notes to Financial Statements

Buildings	3 to 50 years
Computer equipment	2 to 5 years
Office equipment	3 to 4 years
Leasehold improvement	2 to 5 years
Transportation equipment	3 years
Other equipment	2 to 5 years

Depreciation methods, useful lives, and residual values are audited at each reporting date. If expectations differ from the previous estimates, the change is accounted for as a change in accounting estimate.

• 9) Lease

Operating leases are not recognized in the Company's balance sheets. Payments, other than insurance and maintenance expenditures made under an operating lease, are recognized as expense on a straight-line basis over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense over the term of the lease.

Contingent rent payments are recognized as expense when the adjustments are determined.

• 10) Intangible assets

Intangible assets that are acquired by the Company are measured at cost, less accumulated amortization and any accumulated impairment losses.

1. Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

1. Amortization

The amortizable amount is the cost of an asset, or other amount substituted for cost, less its residual value.

Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of the intangible assets from the date that they are available for use. The estimated useful life of computer software is 1~3 years.

The residual value, amortization period, and amortization method for an intangible asset with a finite useful life shall be audited at least annually at each fiscal year-end. Any change shall be accounted for as a change in accounting estimate.

• 11) Impairment non-derivative financial assets

The Company evaluates any indication of impairment on the reporting date and estimates the recoverable amount for those assets which show indications of impairment. This applies to all non-derivative financial assets excluding the following assets:

1. Deferred tax assets

2. Assets arising from employee benefits

(Continued)

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104 CORPORATION

Notes to Financial Statements

If it is not possible to determine the recoverable amount (fair value less cost to sell and value in use) for an individual asset, then the Company will have to determine the recoverable amount for the asset's cash-generating unit (CGU).

The recoverable amount for an individual asset or a cash-generating unit is the higher of its fair value, less costs to sell, and its value in use. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss. An impairment loss shall be recognized immediately in profit or loss.

The Company should assess at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the entity shall estimate the recoverable amount of that asset.

An impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its recoverable amount. That increase is a reversal of an impairment loss.

• 12) Recognition of Revenue

• Revenue from contracts with customers (policy applicable from January 1, 2018)

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company's main types of revenue are explained below.

• (A) Online advertising and consulting service

The Company provides online advertising and consulting services to enterprises and recognizes its revenue in the accounting period in which service is performed. Part of fixed-price online advertising service contracts which service is provided with specified quantity over a fixed period of time or for services with undefined quantity. Revenue is recognized on the percentage of services to be performed on the reporting date as total services.

Part of fixed-price consulting service contracts include software licensing, customized services and other relevant services. Software licensing and customized services are two single performance obligations, wherein their transaction prices are allocated to each performance obligation on a relative stand-alone selling price basis. At the beginning of the contract, management estimates the stand-alone selling price based on the type of software to be provided and the observable price for providing similar services to similar customers under similar circumstances. If any, the discount is allocated to each performance obligation on a relative stand-alone selling price basis. Software licensing revenue is recognized after the controlling right of software has been transferred. Customized service revenue is recognized on the percentage of services performed to date as total services to be performed during the period of contract.

Under fixed-price contracts, customer pay the fixed amount according to the agreed payment terms. The payment excesses the services be performed as a contract liability.

(Continued)

23

104 CORPORATION

Notes to Financial Statements

(B) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the group does not adjust any of the transaction prices for the time value of money.

2. Revenue (policy applicable before January 1, 2018)

The Company's operating revenues mainly derive from providing online advertising and consulting services. For services rendered with specified quantity over a fixed period of time or for services with undefined quantity, revenue is recognized in accordance with the timing of services being rendered or the quantity of the service, respectively, as well as the amounts which are designated in the online advertising contract. The revenue for consulting service mainly derived from selling software and providing consultation service. Revenue is only recognized after certain task, which are designated in the contracts, are completed. After the Company identified the main items of each completed tasks, revenue is recognized on the percentage of services performed to date to total services to be performed. Additionally, the Company often received its payments in advance after the contracts are signed; therefore, the amount is deferred according to the Company's policy and recognized as revenue once the service is performed.

13) Employee benefits

1. Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

2. Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the Company's obligations and that are denominated in the same currency in which the benefits are expected to be paid.

The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognized asset is limited to the total of any unrecognized past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Company. An economic benefit is available to the Company if it is realizable during the life of the plan, or on settlement of the plan liabilities.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognized in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognized immediately in profit or loss.

(Continued)

24

104 CORPORATION

Notes to Financial Statements

Remeasurements of the defined benefit liability (asset) include (1) actuarial gains and losses; (2) the return on plan assets, excluding the amounts included in net interest on the net defined benefit liability (asset); and (3) any change in effect of the asset ceiling, excluding the amounts included in net interest on the net defined benefit liability (asset). The Company recognizes the remeasurements of the defined benefit liability (asset) in other comprehensive income under retained earnings.

The Company recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change in the fair value of plan assets and any change in the present value of the defined benefit obligation.

1. Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

14) Share-based payment

The grant-date fair value of share-based payment awards granted to employees is recognized as employee expenses, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions, and there is no true-up for differences between expected and actual outcomes.

• 15) Income taxes

Income tax expenses include both current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

Current taxes include tax payables and tax deduction receivables on taxable income (deficits) for the year calculated using the statutory tax rate on the reporting date or the actual legislative tax rate, as well as tax adjustments related to prior years.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases.

Deferred taxes shall not be recognized for the exceptions below:

1. Assets and liabilities that are initially recognized but are not related to a business combination and have no effect on net income or taxable gains (losses) arising from the transaction.

(Continued)

25

104 CORPORATION

Notes to Financial Statements

1. Temporary differences arising from equity investments in subsidiaries or joint ventures where there is a high probability that such temporary differences will not reverse.

2. Initial recognition of goodwill.

Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the statutory tax rate on the reporting date or the actual legislative tax rate.

Deferred tax assets and liabilities may be offset against each other if the following criteria are met:

1. The entity has the legal right to settle tax assets and liabilities on a net basis; and

2. The taxing of deferred tax assets and liabilities fulfills one of the scenarios below:

3. (A) Levied by the same taxing authority; or

4. (B) Levied by different taxing authorities, but where each such authority intends to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation, or where the timing of asset realization and debt liquidation is matched.

A deferred tax asset should be recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. Such unused tax losses, unused tax credits, and deductible temporary differences shall also be re-evaluated every year on the financial reporting date, and they shall be adjusted based on the probability that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized.

• 16) Earnings per share

The Company discloses the Company's basic and diluted earnings per share attributable to ordinary shareholders of the Company. The calculation of basic earnings per share is the profit attributable to the ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is the profit attributable to ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

17) Segment information

The Company discloses its information on operating segments in its consolidated financial statements, so it need not disclose such information in the financial statements.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty

The preparation of the financial statements in conformity with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

(Continued)

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104 CORPORATION

Notes to Financial Statements

Management continues to monitor the accounting estimates and assumptions. Management recognizes any changes in the accounting estimates during the period and the impact of the changes in the accounting estimates in the next period.

There are no critical judgments in applying accounting policies that have significant effect on the amounts recognized in the financial statements.

For the assumptions and estimation uncertainties, there were no significant risk resulting in a material adjustment within the next financial year.

(6) Explanation of significant accounts

• 1) Cash and cash equivalents

Checking deposits Demand deposits Time deposits Cash equivalents－RS bond Cash and cash equivalents in the consolidated statement of cash flows	December 31, 2018 $ 3,177 96,626 1,789,424 72,000 $ 1,961,227	December 31, 2017
		3,207 97,323 1,763,191 54,000 1,917,721

Please refer to note 6(18) for the disclosure of the interest rate risk, currency risk, and sensitivity analysis of the financial assets and liabilities of the Company.

• 2) Financial assets at fair value through profit or loss

Mandatorily measured at fair value through profit or loss －non-current Private fund	December 31, 2018 $ 4,914	December 31, 2017
		$ -

• 3) Notes and accounts receivable and overdue receivables

Notes and accounts receivable and overdue receivables
Notes receivable Accounts receivable Overdue receivable (recorded under other non-current assets) Less: Allowance for doubtful accounts－accounts receivable Allowance for doubtful accounts－overdue receivable (recorded under other non-current assets)	December 31, 2018 $ 565 47,548 252 (24) (252) $ 48,089	December 31, 2017
		1,196 36,173 364 (199) (364) 37,170

(Continued)

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104 CORPORATION

Notes to Financial Statements

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables on December 31, 2018. To measure the expected credit losses, notes, accounts and overdue receivable have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including macroeconomic and relevant industry information.

The loss allowance provision as of December 31, 2018 was determined as follows:

Aging 1~365 days Aging over 365 days	Gross carrying amount $ 48,113 252 $ 48,365	Weighted average loss rate (%)		Expected credit loss
		0.05 100.00		24 252 276

As of December 31, 2017, the Company applies the incurred loss model to consider the loss allowance provision of notes accounts and overdue receivable.

As of December 31, 2017, impairment loss had been fully recognized for those overdue receivables.

The movement in the allowance for notes, accounts and overdue receivable were as follows:

Balance on January 1, 2018 and 2017 per IAS 39 Adjustment on initial application of IFRS 9 Balance on January 1, 2018 per IFRS 9 Impairment losses recognized Amounts written off Accounts recovered Balance on December 31, 2018		2018 $ 563 - 563 558 (863) 18 $ 276	2017	2017
			Individually assessed impairment 323 681 (687) 47 364	Collectively assessed impairment
				76 123 - - 199

Impairment loss recognized for individually assessed impairment is the difference between the carrying amount and the amount expected to be collected as of December 31, 2017. The Company does not hold any collateral for collectible amounts.

(Continued)

28

104 CORPORATION

Notes to Financial Statements

4) Investments accounted for under the equity method

The details of the investments accounted for under the equity method at the reporting date were as follows:

follows:
Subsidiaries	December 31, 2018 $ 101,845	December 31, 2017
		117,698

For other related information, please refer to the consolidated financial statements for the year ended December 31, 2018.

5) Property, plant and equipment

Movement of the cost, depreciation, and impairment loss of the property, plant and equipment of the Company for the years ended December 31, 2018 and 2017, were as follows:

Cost or deemed cost: January 1, 2018 Additions Disposals Reclassifications December 31, 2018 January 1, 2017 Additions Disposals Reclassifications December 31, 2017 Depreciation and impairment loss: January 1, 2018 Depreciation Disposals December 31, 2018 January 1, 2017 Depreciation Disposals December 31, 2017 Carrying amount: December 31, 2018 December 31, 2017 January 1, 2017		Land		Buildings		Computer equipment		Office equipment		Leasehold improvement		Transportation equipment		Other equipment		Unfinished construction		Total
		$ 103,562 - - - $ 103,562 $ 103,562 - - - $ 103,562 $ - - - $ - $ - - - $ - $ 103,562 $ 103,562 $ 103,562		75,072 710 - - 75,782 69,410 1,847 - 3,815 75,072 30,117 3,317 - 33,434 26,726 3,391 - 30,117 42,348 44,955 42,684		300,971 67,365 ( 20,718 ) - 347,618 292,448 24,390 ( 15,867 ) - 300,971 256,850 29,229 ( 20,626) 265,453 237,812 34,907 ( 15,869) 256,850 82,165 44,121 54,636		3,070 - - - 3,070 3,903 - ( 833 ) - 3,070 3,061 9 - 3,070 3,720 174 ( 833) 3,061 - 9 183		38,949 5,197 - 1,470 45,616 39,915 315 ( 1,281 ) - 38,949 32,153 4,155 - 36,308 27,800 5,220 ( 867) 32,153 9,308 6,796 12,115		523 - - - 523 1,523 - ( 1,000 ) - 523 363 160 - 523 1,113 175 ( 925) 363 - 160 410		28,035 2,151 ( 388 ) - 29,798 25,994 617 ( 2,320 ) 3,744 28,035 21,187 2,619 ( 388) 23,418 20,996 2,511 ( 2,320) 21,187 6,380 6,848 4,998		- 1,470 - ( 1,470) - - 7,559 - ( 7,559) - - - - - - - - - - - -		550,182 76,893 ( 21,106 ) - 605,969 536,755 34,728 ( 21,301 ) - 550,182 343,731 39,489 ( 21,014) 362,206 318,167 46,378 ( 20,814) 343,731 243,763 206,451 218,588

6) Intangible assets

The cost, amortization and impairment of the intangible assets of the intangible assets of the Company for the years ended December 31, 2018 and 2017, were as follows:

Costs: Balance on January 1, 2018 Additions Balance on December 31, 2018	Software $ 95,191 1,243 $ 96,434

(Continued)

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104 CORPORATION

Notes to Financial Statements

Balance on January 1, 2017 Additions Balance on December 31, 2017 Amortization and impairment loss: Balance on January 1, 2018 Amortization for the year Balance on December 31, 2018 Balance on January 1, 2017 Amortization for the year Balance on December 31, 2017 Carrying amount: Balance on December 31, 2018 Balance on December 31, 2017 Balance on January 1, 2017	Software $ 92,395 2,796 $ 95,191 $ 88,486 4,434 $ 92,920 $ 80,220 8,266 $ 88,486 $ 3,514 $ 6,705 $ 12,175

The amortization of intangible assets in 2018 and 2017 was recorded as expenses under the following categories in the statements of comprehensive income:

Operating costs Operating expenses 7) Operating leases	2018 $ 2,026 $ 2,408	2017
		4,469
		3,797

Non-cancellable operation lease rentals payable were as follows:

Less than one year Between one and five years	December 31, 2018 $ 29,778 25,973 $ 55,751	December 31, 2017
		22,373 22,125
		44,498

The Company leases offices and official car under operating leases. The leases typically run for a period of 1 to 5 years with an option to renew the lease.

Operating lease expenses were as follows:

Operating costs Operating expenses	2018 $ 9,516 24,282 $ 33,798	2017
		9,087 23,221
		32,308

The Company did not take responsibility for the residual value of the aforementioned rental of offices. As a result, all the risks and rewards still remained substantially with the lessor. The Company classified those office leases as operating leases accordingly.

(Continued)

30

104 CORPORATION

Notes to Financial Statements

8) Employee benefits

1. Defined benefit plans

Reconciliation of defined benefit obligations at present value and plan assets at fair value were as follows:

Present value of the defined benefit obligations Fair value of plan assets Net defined benefit liability	December 31, 2018 $ 52,459 (46,793) $ 5,666	December 31, 2017
		50,671 (43,458) 7,213

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Act) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

(A) Composition of plan assets

The Company allocates pension funds in accordance with the "Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund", and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Company's Bank of Taiwan labor pension reserve account balance amounted to $46,793 thousand as of December 31, 2018. For information on the utilization of the labor pension fund assets including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

• (B) Movements in present value of the defined benefit obligations

The movements in present value of the defined benefit obligations for the Company were as follows:

Defined benefit obligation at January 1 Current service costs and interest Remeasurement of the net defined benefit liability －Actuarial gains and losses arising from changes in financial assumptions Defined benefit obligation at December 31	2018 $ 50,671 870 918 $ 52,459	2017
		45,881 975 3,815 50,671

(Continued)

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104 CORPORATION

Notes to Financial Statements

• (C) Movements in fair value of plan assets

The movements in fair value of plan assets for the Company were as follows:

Fair value of plan assets at January 1 Interest income Remeasurements of net defined benefit asset– the return on plan assets (excluding amounts included in the interest during this period) Contributions made Fair value of plan assets at December 31	2018 $ 43,458 565 1,163 1,607 $ 46,793	2017 41,407 704 (279) 1,626 43,458

• (D) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company were as follows:

Current service costs Net interest on the defined benefit liability Operating costs Selling expenses Administrative expenses Research and development expenses	2018 $ 212 94 $ 306 $ 22 145 73 66 $ 306	2017
		195 76 271 24 112 44 91 271

• (E) Remeasurements of the net defined benefit liability recognized under other comprehensive income

The Company's remeasurements of the net defined benefit liability recognized in other comprehensive income in 2018 and 2017 were as follows:

Cumulative amount at 1 January Recognition during the year Cumulative amount at 31 December	2018 $ (2,772) 245 $ (2,527)	2017
		1,322 (4,094) (2,772)

• (F) Actuarial assumptions

The significant actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increases rate	December 31, 2018 1.10% 3.50%	December 31, 2017
		1.30% 3.50%

(Continued)

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104 CORPORATION

Notes to Financial Statements

The expected contribution to be made by the Company to the defined benefit plans for the next annual reporting period is $1,575 thousand.

The weighted-average duration of the Company's defined benefit plans is 15 years.

• (G) Sensitivity analysis

When calculating the present value of the defined benefit obligations, the Company uses judgments and estimations to determine the actuarial assumptions, including discount rates and future salary changes, as of the balance sheet date. Any changes in the actuarial assumptions may significantly impact the amount of the defined benefit obligations.

As of December 31, 2018 and 2017, the effect of changes in principal actuarial assumptions on the present value of the defined benefit obligations were as follows:

At December 31, 2018 Discount rate Future salary increase rate At December 31, 2017 Discount rate Future salary increase rate	Effect on defined benefit obligation	Effect on defined benefit obligation
	Increase of 0.25% (1,895) 1,799 (1,919) 1,835	Decrease of 0.25% 1,982 (1,734) 2,010 (1,766)

The above sensitivity analysis is based on the effect of changes in a single assumption under the condition that other assumptions remain constant. In practice, many changes in assumptions may be linked together. The method used for the sensitivity analysis and calculation of the net defined benefit liability are the same.

2. Defined contribution plans

The Company allocates 6% of each employee's monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under this defined contribution plan, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The Company's pension costs under the defined contribution method were $33,835 thousand and $30,962 thousand for 2018 and 2017, respectively.

(Continued)

33

104 CORPORATION

Notes to Financial Statements

9) Income taxes

According to the amendments to the "Income Tax Act" enacted by the office of the President of the Republic of China on February 7, 2018, an increase in the corporate income tax rate from 17% to 20% is applicable upon filing the FY2018 corporate income tax return.

1. The components of income tax expense (benefit) for 2018 and 2017 were as follows:

Current tax expense (benefit) Current period Adjustment for prior periods 10% surtax on unappropriated retained earnings Deferred tax expense (benefit) Origination and reversal of temporary differences Adjustment in tax rate Income tax expense	2018 $ 65,347 (734) - 64,613 (907) (639) (1,546) $ 63,067	2017 59,027 (2,398) 76 56,705 108 - 108 56,813

The amount of income tax benefit recognized in other comprehensive income (loss) for 2018 and 2017 were as follows:

2018 Items that will not be reclassified subsequently to profit or loss Remeasurements of defined benefit plans $ 34 Reconciliation of income tax and profit before tax for 2018 and 2017 were as 2018 Income before income tax $ 345,274 Income tax using the Company's domestic tax rate $ 69,055 Adjustment in tax rate (639) Non-deductible expenses - Investment income recognized under equity method (4,615) Adjustment for prior periods (734) 10% surtax on unappropriated retained earnings - Total $ 63,067

2017 696 follows: 2017 374,936 63,739 - 1 (4,605) (2,398) 76 56,813

(Continued)

34

104 CORPORATION

Notes to Financial Statements

2. Deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2018 and 2017 were as follows:

Deferred tax assets:

Balance at January 1, 2018 Recognized in profit or loss Recognized in other comprehensive income Balance at December 31, 2018 Balance at January 1, 2017 Recognized in profit or loss Recognized in other comprehensive income Balance at December 31, 2017 Deferred tax liabilities: Balance at January 1, 2018 Recognized directly in equity Recognized in profit or loss Balance at December 31, 2018		Defined benefit plans $ 1,226 (127) 34 $ 1,133 $ 760 (230) 696 $ 1,226		Cumulative compensated absences 3,486 1,054 - 4,540 3,383 103 - 3,486		Allowance for bad debts 19 (19) - - - 19 - 19 $ $	Allowance for bad debts 19 (19) - - - 19 - 19 $ $	Total 4,731 908 34 5,673 4,143 (108) 696 4,731 Other - 638 (638) **- **
							$
							$

1. Assessment of tax

The R.O.C. income tax authorities have examined and approved the Company's income tax returns through 2016.

1. Business income tax administrative remedies

The Company's income tax return for the year 2014 had been examined by the National Taxation Bureau of the Northern Area, Ministry of Finance, in 2016, and the additional tax amounted to $2,151 thousand. The examination difference is due to the difference in offsetting the taxable amounts of the investment tax credit. The Company disagreed with the examination results and requested a reexamination. The additional assessed tax payables were recognized as tax expense for the year 2016. The Company had received correction of notification of tax assessment for the year 2014 from the tax authorities in March 2017 and the Company had recognized the refund amount of $2,171 thousand as tax income for the year ended December 31, 2017.

(Continued)

35

104 CORPORATION

Notes to Financial Statements

10) Share capital and other equity

As of December 31, 2018 and 2017, the total value of nominal ordinary shares amounted to $500,000 thousand. Par value of each share is $10 (dollars), and in total, there are 50,000 thousand authorized ordinary shares, of which 33,191 thousand shares and 33,207 thousand shares, respectively, were issued.

1. Shares

Reconciliation of shares outstanding and issued for 2018 and 2017 were as follows:

Balance of shares outstanding at January 1 Granted of restricted employee shares Balance of shares outstanding at December 31 Balance of restricted employee shares at January 1 Granted of restricted employee shares Cancellation of restricted employee shares Balance of restricted employee shares at December 31 Balance of shares issued at December 31	Unit: Thousand shares 2018 2017 33,147 33,111 25 36 33,172 33,147 60 131 (25) (36) (16) (35) 19 60 33,191 33,207

2. Capital surplus

The details of capital surplus were as follows:

Paid-in capital in excess of par value Restricted employee shares	December 31, 2018 $ 395,098 2,761 $ 397,859	December 31, 2017
		391,986 7,563 399,549

In accordance with the Company Act, realized capital reserves can only be reclassified as share capital or distributed as cash dividends after offsetting losses. The aforementioned capital reserves include share premiums and donation gains. In accordance with the Securities Offering and Issuance Guidelines, the amount of capital reserves to be reclassified under share capital shall not exceed 10 percent of the actual share capital amount.

3.

Retained earnings

The Company's article of incorporation stipulates that Company's after-tax earnings should first be used to offset the prior years' deficits, if any. Of the remaining balance, 10% is to be appropriated as legal reserve until the balance of the legal reserve equals the total authorized capital and then remaining undistributed earnings shall be distributed according to a resolution of the shareholders' meeting.

When a company incurs no loss, it may, pursuant to a resolution to be adopted by a shareholders' meeting, distribute its legal reserve by issuing new shares or by distributing cash, only the portion of legal reserve which exceeds 25% of the capital may be distributed.

(Continued)

36

104 CORPORATION

Notes to Financial Statements

The aforesaid earning distribution shall be formulated by the board of directors and forward to the shareholder's meeting for approval by a resolution.

In accordance with the dividend policy of the Company's article of incorporation, the Company shall take into consideration its operating environment, industry developments, and the future capital needs and long-term financial plan, the Company adopts a stable dividends policy. As the Company is in its growth phase, business expansion and capital needs over next few years, therefore, the Company should distribute the undistributed earnings in the form of shares or in cash. The cash dividends shall not be less than 10% of total dividends. However, distribution of earnings shall be made in view of the year's earnings and financial condition, and adjusted in the shareholders' meeting.

(A) Special reserve

In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, a portion of the current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders' equity. Similarly, a portion of undistributed prior-period earnings (which does not qualify for earnings distribution) shall be reclassified as special earnings reserve to account for the cumulative changes to other shareholders' equity pertaining to prior periods. The amounts of subsequent reversals pertaining to the net reduction of other shareholders' equity shall qualify for additional distributions. The carrying amount of special reserve amounted to $2,941 thousand, and $0 thousand as of December 31, 2018, and 2017.

(B) Earning distribution

Earning distribution for 2017 was decided via the general meeting of shareholders held on May 30, 2018. The Company decided to distribute a cash dividend of $9.6 (dollars) per share, totaling $318,650 thousand.

Earning distribution for 2016 was decided via the general meeting of shareholders held on June 8, 2017. The Company decided to distribute a cash dividend of $10.8 (dollars) per share, totaling $358,838 thousand.

The employee restricted shares are not required to be repaid according to the Company's agreement with employees. For the years 2018 and 2017, the amount adjusted to selling expense after considering the employee turnover rate are $206 thousand and $231 thousand, respectively.

The related information about the aforementioned earnings distribution of 2017 and 2016 is available on the Market Observation Post System website.

(Continued)

37

104 CORPORATION

Notes to Financial Statements

－ 11) Other share-based payment arrangement restricted employee shares

A resolution was passed during the shareholders' meeting held on June 19, 2014, for the issuance of 230 thousand new restricted employee shares. The restricted shares were registered with and approved by the Securities and Futures Bureau of the Financial Supervisory Commission, R.O.C., on August 8, 2014.

The Company decided to issue 130 thousand and 12 thousand first restricted shares in 2014 during the board meeting held on August 13, 2014 and July 2, 2015, with the board resolution date as the record date, at a fair value of $125 (dollars) and $145 (dollars) per share, respectively. All shares have been issued, and the Company has completed the registration process.

The resolution was passed during the board of director's meeting held on November 10, 2016, for the cancellation of 7 thousand unvested shares due to employee resignation, and the registration was completed.

The resolution was passed during the board of directors' meeting held on March 16, 2017, for the cancellation of 1.5 thousand unvested shares, and the registration was completed on April 10, 2017.

Those employees with the restricted employee shares are entitled to them for free, with the condition that these employees continue to provide service to the Company for 2 years, that the yearly personal performance score is above grade 100, and that there is no violation of the rules in the employee code of conduct of the Company.

The proportion of shares granted by each vesting condition will be as follows from the time an employee is granted the restricted stock:

50% of the restricted employee shares are vested in year 1 after the grant date.

50% of the restricted employee shares are vested in year 2 after the grant date.

The restricted employee shares are kept by a depository and clearing corporation, which is appointed by the Company's share transfer agency before they are vested. These shares shall not be sold, pledged, transferred, gifted, or disposed of any other means to third parties during the custody period. The voting rights of these shareholders are executed by the custodian, and the custodian will act based on law and regulations. If the shares remain unvested after the vesting period, the Company will retrieve all the unvested shares at the issue price, and cancel the shares thereafter.

The Company decided to issue the first restricted employee shares of 2016 with consideration of attracting and retaining talented people based on the resolution approved at the shareholders' meeting held on June 7, 2016. Conditions for restricted employee shares are as follows:

1. The proposed 2016 restricted employee shares will issue 273 thousand shares, with a par value of 10 dollars per share, totaling $2,730 thousand.

2. Issuance price: to issue new shares to employees gratuitously without any charges.

3. Shares can be issued in whole or in parts within 1 year after the effective registration with the authority.

(Continued)

38

104 CORPORATION

Notes to Financial Statements

1. Vesting condition: If the qualified employee is still in service at the following time points, the employee's yearly personal performance is above grade A and did not violate any law, labor contract, working rules, and employee code of conduct of the Company, the proportion of shares granted by each vesting condition will be as follows from the time an employee is granted the restricted stock:

2. (A) 1/3 of the restricted employee shares are vested in year 1 after the grant date

3. (B) 1/3 of the restricted employee shares are vested in year 2 after the grant date

4. (C) 1/3 of the restricted employee shares are vested in year 3 after the grant date

5. If the granted restricted employee shares cannot be vested by dividing into three years, then they should be calculated based on higher portion for the former and lower portion for the latter basis.

The restricted employee shares mentioned above were registered with and approved by the Securities and Futures Bureau of the Financial Supervisory Commission, R.O.C., on August 1, 2016.

The Company decided to issue 125 thousand first restricted shares in 2016 during the board meeting held on August 11, 2016, with the board resolution date as the record date, at a fair value of $137 (dollars) per share. All shares have been issued, and the Company has completed the registration process.

The resolution was approved during the board of directors' meeting held on March 16, 2017, August 10, 2017, March 14, 2018, and June 14, 2018, for the cancellation of $14.5 thousand, $18.5 thousand, $14.5 thousand, and $1 thousand unvested shares, respectively; wherein the registration had been completed.

For the years 2018 and 2017, the amounts adjusted to capital surplus after considering the estimated employee turnover rate are $1,845 thousand and $2,758 thousand, respectively, and the amounts adjusted to other equity-other are $634 thousand and $1,575 thousand, respectively.

Compensation costs of the aforementioned restricted employee shares amounted to $2,142 thousand and $6,735 thousand were recognized as operating costs and expenses in 2018 and 2017, respectively.

• 12) Earnings per share

The calculation of basic and diluted earnings per share in 2018 and 2017 were as follows:

Basic EPS: Net income Weighted-average number of common shares outstanding (thousand shares) Basic EPS (New Taiwan dollars)	2018 $ 282,207 33,156 $ 8.51	2017
		318,123
		33,125
		9.60

(Continued)

39

104 CORPORATION

Notes to Financial Statements

Diluted EPS: Net income Weighted-average number of common shares outstanding (thousand shares) Effect of potentially dilutive common stock Employees' compensation Restricted employee shares Weighted-average number of common shares outstanding－diluted (thousand shares) Diluted EPS (New Taiwan dollars) 13) Revenue from contracts with customers 1. The details of revenue were as follows: Primary geographical markets: Taiwan Other countries Primary services: Online and consultation services	2018 $ 282,207 33,156 247 35 33,438 $ 8.44	2017
		318,123 33,125 264 67 33,456 9.51 2018
		$ 1,547,483 5,031 $ 1,552,514 $ 1,552,514

Please refer to note 6(14) for details on revenue for the year ended December 31, 2017.

1. Contract balances

Accounts receivable Less: Allowance for impairment Total Contract liabilities－rendering of services	December 31, 2018 $ 47,548 (24) $ 47,524 $ 442,143	January 1, 2018
		36,413 (199) 36,214 382,492

Please refer to note 6(3) for details on accounts receivable and allowance for impairment.

The amount of revenue recognized for the year ended December 31, 2018 that was included in the contract liability balance at the beginning of the period was $279,477 thousand.

(Continued)

40

104 CORPORATION

Notes to Financial Statements

14) Revenue and deferred revenue

The details of revenue were as follows:

Revenue of online services Revenue of platform and consultation services Net operating revenue The details of deferred revenue were as follows: Revenue of online services Revenue of platform and consultation services Others Total	2017 $ 1,264,174 248,592 $ 1,512,766 December 31, 2017 $ 348,873 37,039 94 $ 386,006

Please refer to note 6(13) for details on revenue for the year ended December 31, 2018.

15) Employees' compensation and remunerations of directors and supervisors

In accordance with the Articles of incorporation, if the Company operates at a profit (the profit so-called is pre-tax profit before deducting employees' compensation and remunerations of directors and supervisors) it shall contribute 8%-15% of profit as employees' compensation and remunerations of directors and supervisors no more than 3%. However, any losses accumulated by the corporation to date shall be paid off first.

The employees' compensation in the preceding paragraph shall be distributed in the form of shares or in cash and object of payment includes the employees of subsidiaries of the corporation meeting certain specific requirements.

For the years ended December 31, 2018 and 2017, the Company estimated its employees' compensation to be $31,738 and $34,465 thousand, respectively, and the remuneration of directors and supervisors to be $7,694 and $8,355 thousand, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in the Company's Articles. These remunerations were expensed under operating costs or operating expenses during 2018 and 2017. If there are any subsequent adjustments to the actual remuneration amounts, the adjustment will be regarded as changes in accounting estimates and will be reflected in profit or loss in the following year. If the employees' compensation is paid by the Company's stock, the numbers of shares to be distributed were calculated based on the closing price of the Company's ordinary shares, one day before the date of the meeting of board of directors. The related information is available on the Market Observation Post System website. There is no difference between the actual amount distributed as employees' compensation and remunerations of directors and supervisors and the estimated amount recognized in the financial statements for the years ended December 31, 2018 and 2017.

(Continued)

41

104 CORPORATION

Notes to Financial Statements

16) Other income

The details of other income in 2018 and 2017 were as follows:

Interest revenue Rental income Service support and asset authorization income Others	2018 $ 11,912 399 6,239 14,005 $ 32,555	2017
		11,641 853 4,860 12,817 30,171

17) Other gains and losses

The details of other gains and losses in 2018 and 2017 were as follows:

Gains (Loss) on disposal of property, plant and equipment Net foreign exchange (losses) gains Others	2018 $ (92) 155 - $ 63	2017
		54 126 (165) 15

18) Financial instruments

1. Categories of financial instruments

2. (A) Financial liabilities

Financial assets at amortized cost (note): Cash and cash equivalents Notes and accounts receivable Other receivables Other financial assets－current Refundable deposits Other financial assets－non-current Total	December 31, 2018 $ 1,961,227 48,089 22,194 150 5,998 10,000 $ 2,047,658	December 31, 2017
		1,917,721 37,170 9,948 - 5,498 10,000 1,980,337

Note: As of December 31, 2017, they are classified to loans and receivables.

(Continued)

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104 CORPORATION

Notes to Financial Statements

• (B) Financial liabilities

Financial liabilities at amortized cost： Notes and accounts payable Other payables Total	December 31, 2018 $ 6,413 112,853 $ 119,266	December 31, 2017 6,922 124,712 131,634

1. Liquidity risk

The following table shows the contractual maturity of the financial liabilities excluding estimated interest:

December 31, 2018 Non-derivative financial liabilities Notes and accounts payable Other payables December 31, 2017 Non-derivative financial liabilities Notes and accounts payable Other payables		Carrying amount $ 6,413 112,853 $ 119,266 $ 6,922 124,712 $ 131,634	Contractual cash flows 6,413 112,853 119,266 6,922 124,712 131,634	Within 6 months 6,413 112,853 119,266 6,922 124,712 131,634	6-12 months - - - - - -	1-2 years - - - - - -	2-5 years - - - - - -	Over 5 years - -
								-
								- -
								-

The Company does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

2. Interest rate analysis

Please refer to the financial risk management for the disclosure on the interest rate risk.

1. Fair value of financial instruments

2. (A) Fair value hierarchy

The fair value of financial instruments is measured on a recurring basis, the fair value of the Company's financial assets and liabilities, including the information on fair value hierarchy were as follows:

Financial assets at fair value through profit or loss－ non-current Private fund			December 31, 2018	December 31, 2018
			Fair value
		Level 1 $ -	Level 2 -	Level 3 4,914	Total
					4,914

(Continued)

43

104 CORPORATION

Notes to Financial Statements

• (B) Reconciliation of Level 3 fair values

==> picture [407 x 60] intentionally omitted <==

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

2018
Increase Decrease
From Level 3
of financial
liability From Level 3
transfer to of financial
In other Level 3 of assets of
Opening In profit or comprehensiv Purchased or Transfers in financial Sale or Transfers out financial Ending
Name balance loss e income issued of Level 3 assets disposal of Level 3 liability balance
Financial assets at fair value through profit or loss－private fund $ - - - 4,914 - - - - - 4,914
----- End of picture text -----

• (C) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Company's financial instruments that use Level 3 inputs to measure fair value is – financial assets at fair value through profit or loss Private fund.

Quantified information of significant unobservable inputs was as follows:

Item Financial assets at fair value through profit or loss– Private fund	Valuation technique Net Asset Value Method	Significant unobservable inputs ‧Net Asset Value	Inter-relationship between significant unobservable inputs and fair value measurement
			Not applicable

• (D) Fair value measurements in Level 3 sensitivity analysis of reasonably possible alternative assumptions

For fair value measurements in Level 3, changing one or more of the assumptions by 5% to reflect reasonably possible alternative assumptions would have the following effects:

December 31, 2018 Private fund	Profit	or loss	Other comprehensive income	Other comprehensive income
	Favorable	Unfavorable	Favorable	Unfavorable
	$ 246	(246)	-	-

The favorable and unfavorable effects represent the changes in fair value, and fair value is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the interrelationships with another input.

(Continued)

44

104 CORPORATION

Notes to Financial Statements

19) Financial risk management

1. Overview

The Company has exposure to the following risks arising from financial instruments:

• (A) Credit risk.

• (B) Liquidity risk.

• (C) Market risk.

This note presents information about the Company's exposure to each of the above risks and the objectives, policies, and processes for measuring and managing risk. Please see other related notes for quantitative information.

1. Risk management framework

The board of directors has the overall responsibility for the establishment and oversight of the risk management framework.

The Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company's Supervisor is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the board of directors and the Supervisor.

3. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's notes and accounts receivable, other receivables, refundable deposits, etc.

• (A) Cash and cash equivalents

The Company's bank deposits are in different financial institutions with good credit. The Company controls its credit risk for each financial institution and believes that the Company's bank deposits will not have any significant credit risk.

• (B) Receivables and other receivables

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Company's customer base, including the information of past trading experience with customer and adjust the transaction credit limits.

(Continued)

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104 CORPORATION

Notes to Financial Statements

The board of directors and management have established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company's standard payment and delivery terms and conditions are offered. The Company's review includes external ratings (when available), and in some cases, bank references. Credit limits are established for each customer. Customers that fail to meet the Company's benchmark creditworthiness may transact with the Company only on a prepayment basis or basic credit limits.

4. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

5. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will cause the Company suffers possible loss for related transaction. The Company maintains its foreign currency within a level sufficient to meet the operational needs so as to manage exchange rate risk.

－ Financial assets at fair value through profit or loss non-current held by the Company is private fund. Except for exchange rate fluctuations, the value will be exposed to changes of market price in the equity market. The Company carefully selects professional and reputable investment management companies to manage market risks through professional managers. The Company's financial assets exposed to changes in fair value caused by interest rate fluctuation are bank deposits. Nevertheless, the interest rate is not volatile enough to affect the Company's operations.

In summary, the risks of changes in fair value of the related financial instruments and financial liabilities due to exchange rate, interest rate and equity market price changes are not significant.

20) Capital management

The Board's policy is to maintain a strong capital base in order to maintain investor, creditor and market confidence and to sustain future development of the business. Capital includes common stock, capital surplus, retained earnings, and non-controlling interest. The board of directors' controls not only the return on capital ratio, but also the dividend level of the common stock.

The Company's capital management approach did not change for the year ended December 31, 2018.

(7) Related-party transactions

• 1) Names and relationship with related parties

The followings are entities that have had transactions with the Company during the periods covered in the financial statements.

Name of related party 104 Learn Corporation 104 Consulting Corporation	Relationship with the Company
	the Company’s subsidiary (104 Learn Corporation has already been liquidation on October 31, 2018) the Company’s subsidiary

(Continued)

46

104 CORPORATION

Notes to Financial Statements

Name of related party	Relationship with the Company
104 Redpoint Information Technology	the Company’s subsidiary
(Shanghai) Co., Ltd.
104 Human Resources Consultancy	the Company’s subsidiary
(Shanghai) Co., Ltd.
104 Hope Foundation	Other related party

• 2) Transactions with related parties

• Operating revenue

The amount of service revenue by related parties was as follows:

The amount of service revenue by related parties was as	follows:
Subsidiaries	2018 $ 5,467	2017
		1,985

The prices and collection terms for service to subsidiaries are not significantly different from those with third-party customers. The collection terms were one to three months. Receivables from service revenue did not require provisions for bad debt expenses.

1. Operating expenses

The amount of consulting fee by subsidiaries was as follows:

104 Consulting Corporation	2018 $ 48,282	2017
		56,036

1. Rental income

The amount of rental income by related parties was as follows:

Subsidiaries 104 Consulting Corporation Other related parties 104 Hope Foundation	2018 $ 387 12 $ 399	2017
		828 12
		840

The price charged for rental was agreed by both parties, and was collected by telegraphic transfer.

1. Other income

The amount of service support and asset authorization income by related parties was as follows:

Subsidiaries 104 Consulting Corporation 104 Human Resources Consultancy (Shanghai) Co., Ltd.	2018 $ 4,767 1,472 $ 6,239	2017
		3,083 1,777
		4,860

(Continued)

47

104 CORPORATION

Notes to Financial Statements

1. Receivable from related parties

The details of the receivables from related parties was as follows:

Accounts	Type of related parties Subsidiaries Subsidiaries 104 Consulting Corporation 104 Human Resources Consultancy (Shanghai) Co., Ltd. Other related parties	December 31, 2018 $ 1,941 521 298 2 $ 2,762	December 31, 2017
Accounts receivable Other receivables Other receivables			13 1,011 419 2
			1,445

1. Payable to related parties

The details of the payable to related parties was as follows:

Accounts	Type of related parties Subsidiaries - 104 Consulting Corporation	December 31, 2018 $ 11,651	December 31, 2017
Other payables			15,634

• 3) Key management personnel compensation

Key management personnel compensation comprised:

Short-term employee benefits Termination benefits Share-based payments Pledged assets The carrying values of pledged assets were as follows: Pledged assets Object Time deposits (recorded under other financial assets－current) Guarantee for employment services Time deposits (recorded under other financial assets－ non-current) Guarantee for employment services	2018 $ 59,324 1,651 1,918 $ 62,893 December 31, 2018 $ 150 10,000 $ 10,150	2017 65,329 1,401 6,096 72,826 December 31, 2017 - 10,000 10,000
Time deposits (recorded under other financial assets－current) Time deposits (recorded under other financial assets－ non-current)

(8) Pledged assets

(Continued)

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104 CORPORATION

Notes to Financial Statements

(9) Significant commitments and contingencies

• 1) Unrecognized contractual commitments

The Company applied to the Council of Labor Affairs for permission to provide employment services in accordance with the Employment Services Act. As of December 31, December 31, 2018 and 2017 and, the guaranteed amount provided by banks on behalf of the Company was $1,000 thousand.

• 2) Contingent liabilities: None.

(10) Losses due to major disasters: None.

(11) Significant subsequent events: None.

(12) Other

A summary of employee benefits, depreciation, and amortization, be classified by function as follows:

Function Account	2018	2018	2018	2017	2017	2017
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits Salary Health and labor insurance Pension Remuneration to directors Other personnel expense Depreciation Amortization	82,075 6,066 3,500 - 3,283 15,158 2,026	727,139 52,059 30,641 5,771 23,505 24,331 2,408	809,214 58,125 34,141 5,771 26,788 39,489 4,434	58,687 4,745 2,662 - 3,260 21,127 4,469	679,856 48,587 28,571 6,266 21,692 25,251 3,797	738,543 53,332 31,233 6,266 24,952 46,378 8,266

As of December 31, 2018 and 2017, the Company had 754 and 717 employees, and of which 4 directors were not in concurrent employment, respectively.

(13) Other disclosures items

• 1) Information on significant transactions

The following is the information on significant transactions required by the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" for the Company in 2018:

1. Loans to other parties: None.

2. Guarantees and endorsements for other parties: None.

3. Securities held as of December 31, 2018 (excluding investment in subsidiaries, associates, and joint ventures)：

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Remarks
				Shares/ units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company	Private fund-sparkLabs Taipei Fund I	-	Financial assets at fair value through profit or loss－ non-current	-	4,914	-	4,914

(Continued)

49

104 CORPORATION

Notes to Financial Statements

1. Individual securities acquired or disposed of with accumulated amount exceeding the lower of TWD300 million or 20% of the capital stock: None.

2. Acquisition of individual real estate with amount exceeding TWD300 million or 20% of the capital stock: None.

3. Disposal of individual real estate with amount exceeding the lower of TWD300 million or 20% of the capital stock: None.

4. Related-party transactions for purchases and sales with amounts exceeding the lower of TWD100 million or 20% of the capital stock: None.

5. Receivables from related parties with amount exceeding the lower of TWD100 million or 20% of the capital stock: None.

6. Trading in derivative instruments: None.

7. 2) Information on investees:

The following is the information on investees for the year ended December 31, 2018 (excluding information on investees in Mainland China):

Name of **investor **	Name of investee	Location	Main business and products	Original inves	tment amount	**Balance **	of December 31, 2018	of December 31, 2018	Net income (loss) of investee	Share of profit/ losses of investee (note 1)	Remarks
				December 31, 2018	December 31, 2017	Shares	Percentage of ownership	Book value (note 1)
The Company The Company	104 Learn Corporation 104 Consulting Corporation	Taiwan Taiwan	General advertising services, data processing services, electronic information services, management consultancy, and employment services General advertising services, IT software services, electronic information services, talent dispatching, management consultancy and data processingservices	- 12,678	11,470 12,678	- 1,219	-% 100.00%	- 51,102	(659) 23,001	(659) 23,001	Note 1 Subsidiary

Note 1: The Company liquidation 104 Learn Corporation in 2018.

(Continued)

50

104 CORPORATION

Notes to Financial Statements

• 3) Information on investment in Mainland China:

• The names of investees in Mainland China, the main businesses and products, and other information:

information:	information:	information:	information:	information:
					Unit: thousand dollars
Name of investee	Main businesses and products	Total amount of paid-in capital (note 3)	Method of investment (note 1)	Aggregate investment amount remitted from Taiwan at beginning of year (note 3)	Amount remitted or **returned incurrent year **		Aggregate investment amount remitted from Taiwan at end of year (note 3)	Net income (loss) of investee	Percentage of direct or indirect ownership by the Company (%)	Investment gain (loss) (note 2)	Book value as of December 31, 2018 (note 2)	Amount of investment income remitted back to Taiwan at end of year
					Invested amount	Returned amount
104 Human Resources Consultancy (Shanghai) Co., Ltd. 104 Redpoint Information Technology (Shanghai) Co., Ltd.	Collecting, coordinating, publishing, and consulting on human resource information; recruitment; designing and developing computer software, multimedia, and network systems; designing and producing advertising Developing network technologies and computer software, selling products, providing technical advice and services, and management consultancy	34,091 60,365	(1) (1)	23,909 (USD770) 60,365 (USD2,000)	- -	- -	23,909 (USD770) 60,365 (USD2,000)	(413) 1,021	70.00% 100.00%	(289) 1,021	16,775 33,968	- -

Note 1: Ways of investments are as follows:

  - (1)  direct investment in Mainland China.

  - (2)  others.

• Note 2: The investment gain (loss) and carrying value disclosed above included direct and indirect investments. The investment gain (loss) recognized by the Company is based on the financial statements audited by the auditors of parent company under the equity method.

• Note 3: Based on historical exchange rates.

• Limitation on investment in Mainland China:

Note 3: Based on historical exchange rates. Limitation on investment in Mainland China:	Note 3: Based on historical exchange rates. Limitation on investment in Mainland China:	Note 3: Based on historical exchange rates. Limitation on investment in Mainland China:
Unit: thousand dollars
Aggregate investment amount remitted from Taiwan to Mainland China at the end of the period	Investment amount approved by Investment Commission of Ministry of Economic Affairs	Limitation on investment in Mainland China by Investment Commission of Ministry of Economic Affairs (Note 1)
84,274 (USD 2,770 )	85,094 (USD 2,770 )	895,917

• Note 1: Limitation on investment in Mainland China: 60% of the Company's stockholders' equity of $1,493,195 thousand.

• Note 2: Issued capital and investment capital remitted from Taiwan to Mainland China were translated at historical rates, and the rest of the investment information was translated at the year-end rate of December 31, 2018 (USD:NTD=1:30.72).

• Significant transactions:

There is no significant inter-company transaction with the investment in Mainland China for the year ended December 31, 2018.

(14) Segment information

Please refer to the consolidated financial statements for the year ended December 31, 2018.

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104 CORPORATION

Statement of Cash and Cash Equivalents

December 31, 2018

(Expressed in thousands of New Taiwan Dollars, Except for Foreign Currencies)

Item	Description		Amount
Cash in bank Cash equivalents	Checking deposits Demand deposits－Foreign Currencies (USD785.49@30.72) Demand deposits－New Taiwan Dollars Time deposits (Due date:2019.01.01~2019.12.30) Total RS bond (Due date:2019.01.02; Rate:0.37%)		$ 3,177 26 96,600 1,789,424 1,889,227 72,000 $ 1,961,227

52

104 CORPORATION

Statement of Movement of Investments Accounted for Using the Equity Method

January 1 to December 31, 2018

(Expressed in thousands of New Taiwan Dollars)

Name of investee 104 Learn Corporation 104 Consulting Corporation 104 Human Resources Consultancy (Shanghai) Co., Ltd. 104 Redpoint Information Technology (Shanghai) Co., Ltd.	Beginning Balance Shares Amount 1,000 $ 12,772 1,219 53,806 Note 1 17,450 Note 1 33,670 $ 117,698	Increase (Note 2) Shares Amount - - - - - - - 298 298	Increase (Note 2) Shares Amount - - - - - - - 298 298	Decrease (Note 2) Shares Amount 1,000 12,772 - 2,704 - 675 - - 16,151	Decrease (Note 2) Shares Amount 1,000 12,772 - 2,704 - 675 - - 16,151		Ending Balance Ownership% Amount - - 100.00 51,102 70.00 16,775 100.00 33,968 101,845	Ending Balance Ownership% Amount - - 100.00 51,102 70.00 16,775 100.00 33,968 101,845	Market Value or Net Assets Value Unit price Total amounts - - 41.92 51,102 - 16,775 - 33,968 101,845	Market Value or Net Assets Value Unit price Total amounts - - 41.92 51,102 - 16,775 - 33,968 101,845	Collateral None None None None	Remark
		Shares		Shares 1,000 - - -		Shares - 1,219 Note 1 Note 1	Ownership% - 100.00 70.00 100.00		Unit price - 41.92 - -
		- - - -

Note 1: A limited company－no shares were issued.

Note 2: Included liquidation of 104 Learn Corporation $(12,100) thousand, share of profit (loss) of subsidiaries for using equity method $23,074 thousand, foreign currency translation differences for foreign operations $(1,110) thousand, and dividend distribution $(25,717) thousand.

53

104 CORPORATION

Statement of Other Payables

December 31, 2018

(Expressed in thousands of New Taiwan Dollars)

Item	Description		Amount
Accrued annual bonuses Accrued payroll Employees’ compensation payable Accrued project, performance, and sales bonuses Payable on equipment Others (Note)			$ 78,126 41,461 31,738 90,609 41,213 82,267 $ 365,414

Note：The amount of individual item included in others does not exceed 5% of the account balance.

54

104 CORPORATION

Statement of Operating Costs

January 1 to December 31, 2018

(Expressed in thousands of New Taiwan Dollars)

Item	Description		Amount	Remark
Salary expenses Depreciation expenses Rental expenses Software usage fee Others (Note)			$ 82,075 15,158 9,516 11,187 40,383 $ 158,319

Note：The amount of individual item included in others does not exceed 5% of the account balance.

Statement of Selling Expenses

Item	Description		Amount	Remark
Salary expenses Advertising expenses Commission expenses Others (Note)			$ 373,559 46,664 48,800 143,899 $ 612,922

Note：The amount of individual item included in others does not exceed 5% of the account balance.

55

104 CORPORATION

Statement of Administrative Expenses

January 1 to December 31, 2018

(Expressed in thousands of New Taiwan Dollars)

Item	Description		Amount	Remark
Salary expenses Others (Note)			$ 116,671 52,174 $ 168,845

Note：The amount of individual item included in others does not exceed 5% of the account balance.

Statement of Research and Development Expenses

Item	Description		Amount	Remark
Salary expenses Insurance expenses Others (Note)			$ 236,909 17,962 67,975 $ 322,846

Note：The amount of individual item included in others does not exceed 5% of the account balance.

Statement of movement of property, plant and equipment, please refer to the financial statements note 6(5). Statement of movement of accumulated depreciation of property, plant and equipment, please refer to the financial statements note 6(5).

Statement of movement of intangible assets, please refer to the financial statements note 6(6).

Statement of the revenue, please refer to the financial statements note 6(13).

Statement of the other income, please refer to the financial statements note 6(16).

Statement of other gains and losses, please refer to the financial statements note 6(17).