SPC - Annual Report 2018 | FinancialReports.eu

Stock Symbol：2496

Success Prime Corporation and Subsidiaries

Consolidated Financial Statements For the Years Ended December 31, 2018 and 2017 with Independent Auditors’ Report

Address: 2F No. 11, Kezhong Road, Zhunan Town, Miaoli County, Science Park, Hsinchu, Taiwan

Phone: (037) 586999

Directory

		Directory
			Pages
1.		Cover	1
2.		Directory	2
3.		Representation Letter	3
4.		Independent Auditors’ Report	4-7
5.		Consolidated Balance Sheets	8
6.		Consolidated Statements of Comprehensive Income	9-10
7.	Consolidated Statements of Changes in Equity		11
8.	Consolidated Statements of Cash Flows		12-13
9.	Notes	to the Consolidated Financial Statements
	(1)	General	14
	(2)	The Authorization of Financial Statements	14
	(3)	Application of New and Revised International	14
		Financial Reporting Standards
	(4)	Summary of Significant Accounting Policies	18-30
	(5)	Critical Accounting Judgements and Key Sources of	30
		Estimation and Uncertainty
	(6)	Cash and Cash Equivalents	31
	(7)	Financial Assets at Amortized Cost-2018	31
	(8)	Inactive Market Debt Instrument Investment-2017	32
	(9)	Notes and Accounts Receivables, Other Receivables	32
	(10)	Inventories	34
	(11)	Subsidiaries	35
	(12)	Property, Plant, Equipment	35
	(13)	Goodwill	36
	(14)	Trademark Rights and Other Tangible Assets	37
	(15)	Life Insurance Termination Cash Value	38
	(16)	Other Assets	38
	(17)	Short-Term Borrowings	38
	(18)	Notes and Accounts Payable	39
	(19)	Other Liabilities	39
	(20)	Retirement Benefit Plan	39
	(21)	Equity	42
	(22)	Net Profit of the Year	45
	(23)	Income Tax	47
	(24)	Earnings Per Share	49
	(25)	Share Base Payment Agreement	50
	(26)	Merger of Enterprises	51
	(27)	Equity Transaction with Non-controlling Interests	54
	(28)	Operating Lease Agreement	54
	(29)	Capital Risk Management	54
	(30)	Financial Instruments	54
	(31)	Transaction of Related Parties	57
	(32)	Quality-Backed Assets	59
	(33)	Information on Foreign Currency Assets and	59
		Liabilities with Significant Impact
	(34)	Notes Disclosure Items	60
	(35)	Departmental Information	61
	(36)	Cash Flow Information	63
.	Tables		64-69

Tables

REPRESENTATION LETTER

The entities that are required to be included in the consolidated financial statements of Success Prime Corporation as of and for the year ended December 31, 2018, under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard 10, “Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Success Prime Corporation and Subsidiaries do not prepare a separate set of combined financial statements.

Very truly yours,

COMPANY: SUCCESS PRIME COROPORATION CHAIRMAN: MIN CHUN CHEN

March 20, 2019

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Success Prime Corporation

Opinion

We have audited the accompanying consolidated financial statements of Success Prime Corporation and its subsidiaries (SPC), which comprise the balance sheets as of December 31, 2018 and 2017, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the 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 of 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 audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and 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 Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements for the year ended December 31, 2018. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters of 2018 Success Prime Corporation consolidated financial statements are described as follow:

Revenue Recognition of Education Services

Success Prime Corporation’s main source of business revenue is from education service, note on its revenue recognition policy please refer to the Consolidated Financial Report Attachment 4(15). The revenue recognition of the Success Prime Corp. Education Service, collect student prepaid full tuition payment, then calculated and recognized as revenue according to the actual teaching timeline of the course. Due to the wide range of education service revenue from various courses offered, and the large volume of transactions, the auditors believe that the correctness of the revenue calculation from education services may possess potential risks and therefore list it as a key audit matter.

The audit procedure by the Auditors is as follows:

Understand and test the effectiveness of the design and implementation of the main internal control system for the calculation process of education service revenue.
Verify the authenticity of the information related to the Education Service Revenue statement used by the Success Prime Corp., including random spot check on the collection of student tuition matches the prepaid account amount, and check on the consistency between the teaching time periods used for revenue amortization and actual class syllabus schedule.
Test the validity of the calculation formulas of the tuition distribution calculation and re-verify the correctness of the calculation spreadsheet.

Assessment of Goodwill and Trademark Impairment

The Goodwill and Trademark rights of the Success Prime Corp. are considered as significant assets, displaying high value amount in the consolidated balance sheet. In accordance with the IFRS Article 36 regulation on "impairment of assets", Success Prime Corp. shall conduct annual impairment testing of Goodwill and Trademark rights, as well as measure the recoverable amount of Goodwill and Trademark rights. When the Management is deciding future operating cash flows, the consideration will base on future business outlook of the projected sales growth rate and profit margin, and calculate the weighted average capital cost rate as the discount rate. As these estimations and judgments of assumptions and management subjective views might be affected by high uncertainty of future markets or economic conditions, they are classified as key audit matters. The disclosure of relevant accounting policies and information of Goodwill and Trademark rights, please refer to the Consolidated Financial Statements Attachment 4, 5, 13 and 14.

The main verification procedures by the accountant for Management impairment assessment of Goodwill and Trademark rights as follows:

Assess the professional qualifications, suitability and independence of external independent evaluation experts entrusted by Management to assist the impairment tests implementation, identifying items that imposes no effect on their objectivity and no limit on the scope of their work, and that the methods used by the evaluators use are in compliance with regulations.
Understand the process and basis of revenue growth rate and profit margin projected by Management to estimate future operational outlook, and whether it takes into account the recent operation results, historical trends and industry profile.
Evaluate the recoverable amount calculated by the management base on the value of use model, the weighted average cost rate used, including the assumptions of risk-free compensation interest rate, volatility and overpayment risk, and whether it is consistent with Company’s current status and its industry conditions, then re-execute and verify the calculations.

Other Matters

Success Prime Corp. has prepared 2018 and 2017 parent company only financial statements and an Audit Report has been issued by the Auditors, for reference.

Responsibility of Management and Governance Units over the Consolidated Financial Statements

The responsibility of the Management is to formulate the Consolidated Financial Statements in accordance to the financial reports preparation guidelines by securities issuer and be approved by the Financial Supervisory Commission; to release Consolidated Financial Statements that is prepared through effective international Financial Reporting Standards, International accounting standards, and permissible interpretation notices; to maintain the necessary internal controls relating to the preparation of Consolidated Financial Statements, ensuring that the Consolidated Financial Statements do not contain significant false representations of fraud or error.

In preparing the Consolidated Financial Statements, the responsibilities of the management also include assessing the ability of the Success Prime Corp. to sustain its operations, the disclosure of related matters, and the adoption of the accounting basis for sustainable operations, unless the Management intends to liquidate Success Prime Corp. or terminate business, or other options that are not practical besides than liquidation or closure.

The governance unit of the Success Prime Corp. (the Audit Committee included) has the responsibility to supervise financial reporting procedures.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 consolidated financial statements.

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on 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 consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2018 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Chin-Chuan Shih and Shu-Lin Liu.

Deloitte & Touche Taipei, Taiwan Republic of China March 20, 2019

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with 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 consolidated financial statements are those generally applied in the Republic of China. For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

Success Prime Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

ASSETS Current assets Cash and cash equivalents (Note 6) Financial assets at amortized cost (Note7) Investments in debt instrument without active market (Note 8) Notes and accounts receivable, net (Note 9) Other receivables (Note 9) Current tax assets Inventories (Note 10) Other current assets (Note 16) Total current assets Non-current assets Financial assets at amortized cost (Notes 7, 32) Investments in debt instrument without active market (Notes 8, 32) Property, plant and equipment (Notes 12,32) Trademarks (Note 14) Goodwill (Note 13) Other intangible assets, net (Note 14) Deferred income tax assets (Note 2, 3) Cash termination value of life insurance (Note 15) Net defined benefit assets (Note 20) Other non-current assets (Notes 16, 31) Total non-current assets Total assets LIABILITIES AND EQUITY Current liabilities Short-term borrowings (Notes 17, 32) Notes and accounts payable (Note 18) Current income tax liabilities Other payables (Note 19) Advance tuition receipts Other current liabilities (Note 19) Total current liabilities Non-current liabilities Deferred income tax liabilities (Notes 23) Non-current provisions Total non-current liabilities Total liabilities Equity attributable to shareholders of the company (Note 21) Ordinary shares Capital surplus Retained earnings Legal Reserve Special Reserve Unappropriated retained earnings Total retained earnings Other equity interest Treasury shares Total equity attributable to owners of the Company Non-controlling interests (Note 21) Total Equity Total liabilities and equity	December31,2018 Amount ％ $210,011 16 4,561 - - - 73,032 6 193 - 6,435 1 58,039 4 10,990 1 363,261 28 4,420 - - - 304,248 23 404,144 31 81,419 6 2,988 - 38,015 3 83,555 6 7,561 1 23,716 2 950,066 72 $1,313,327 100 $135,000 10 30,345 2 13,087 1 77,137 6 258,889 20 6,313 1 520,771 40 4,044 - 1,700 - 5,744 - 526,515 40 174,594 13 367,081 28 13,868 1 772 - 247,576 19 262,216 20 (1,611) - (21,956) (2) 780,324 59 6,488 1 786,812 60 $1,313,327 100	December31,2017	December31,2017
			Amount ％
			$268,983 21st - - 4,662 - 30,509 3 1,596 - 35 - 28,606 2 32,934 3 367,325 29 - - 4,420 - 271,495 22 404,144 32 81,419 6 420 - 19,314 2 78,726 6 7,492 1 25,318 2 892,748 71 $1,260,073 100 $65,000 5 32,494 3 5,347 - 59,800 5 285,380 23 25,086 2 473,107 38 3,506 - 1,700 - 5,206 - 478,313 38 165,480 13 479,549 38 130 - - - 137,373 11 137,503 11 (772) - - - 781,760 62 - - 781,760 62 $1,260,073 100

The accompanying notes are an integral part of the consolidated financial statements.

Success Prime Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars)

Operating revenue
Sales Revenue
Service Revenue
Total operating revenue
Operating costs (Notes 10, 22)
Cost of sales
Cost of services
Total operating costs
Gross profit
Operating expenses (Notes 20, 22, 31)
Marketing
General and administrative
Research and development
Total operating expenses
Income from operations
Non-operating income and expenses
Other income (Note 22)
Other gains and losses (Note 22)
Finance costs (Note 22)
Total non-operating income and expenses
Income before income tax
Income tax expense (Note 23)
Net income

2018
2017
Amount％
Amount％
$218,361 24
$200,253 24
699,218
76
622,156
76
917,579
100
822,409
100
140,467 15
129,982 16
346,537
38
285,938
35
487,004
53
415,920
51
430,575
47
406,489
49
79,673
9
49,280
6
224,393 24
199,077 24
14,699
2
9,434
1
318,765
35
257,791
31
111,810
12
148,698
18
8,697
1
4,275
-
2,122
-
4,414
1
(1,550)
-
(999)
-
9,269
1
7,690
1
121,079 13
156,388 19
5,375
1
2,369
-
126,454
14
158,757
19
(continued)

Total other comprehensive income (loss) (Notes 20, 23) Items that will not be reclassified to profit or loss: Remeasurements of the defined benefit pension-plans Income tax relating to items that will not be reclassified to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences arising from the translation of the foreign operations Income tax benefit relating to items that may be reclassified subsequently to profit or loss Total other comprehensive income (loss) after tax Total comprehensive income Net income (loss) attributable to: Shareholders of the company Non-controlling interests Total comprehensive income (loss) attributable to: Shareholders of the company Non-controlling interests Earnings per share (Note 24) Basic earnings per share Diluted earnings per share		2018	2017
		Amount	% Amount ％
		(25) (128) (153) (650) (189) (839) (992) $125,622 $124,866 1,588 $126,454 $123,874 1,588 $125,462 $7.18 $7.16	- (564) - - 96 - - (468) - - (1,112) - - 189 - - (923) - - (1,391) - 14 $157,366 19 14 $154,981 19 - 3,776 - 14 $158,757 19 14 $153,741 19 - 3,625 - 14 $157,366 19 $8.92 $8.86

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

Success Prime Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars)

			Equity Attributable to Stockholders	Equity Attributable to Stockholders	of the Company			Total Equity
CapitalStock -Common Equity Shares (In Thousands) Amount 15,760 $157,600 - - - - 788 7,880 - - - - - - - - - - - - 16,548 165,480 - - - - 831 8,314 - - 80 800 - - - - - - - - - - 17,459 $174,594	Capital	Surplus $525,655 - - (7,880) (38,226) - - - - - 479,549 - - (8,314) (108,082) 3,928 - - - - - $367,081		Retained	surplus	Total $1,304 - (1,174) - - - (17,140) 154,981 (468) 154,513 137,503 - - - - - - 124,866 (153) 124,713 - $262,216	Other Foreign Currency Translation Reserve $- - - - - - - - (772) (772) (772) - - - - - - - (839) (839) - ($1,611)
Shares (In Thousands) 15,760 - - 788 - - - - - - 16,548 - - 831 - 80 - - - - - 17,459			Legal Reserve $- 130 - - - - - - - - 130 13,738 - - - - - - - - - $13,868	Special Reserve $- - - - - - - - - - - - 772 - - - - - - - - $772	Unappropriated Earnings $1,304 (130) (1,174) - - - (17,140) 154,981 (468) 154,513 137,373 (13,738) (772) - - - - 124,866 (153) 124,713 - $247,576
								$684,559 - (1,174) - (38,226) 69,954 (90,719) 158,757 (1,391) 157,366 781,760 - - - (108,082) 4,728 4,900 126,454 (992) 125,462 (21,956) $786,812

The accompanying notes are an integral part of the consolidated financial statements.

Success Prime Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

Cash flows from operating activities Income before income tax Depreciation expense: Amortization expense Reversal of expected credit losses on investments in debt instruments Provision for doubtful accounts Finance costs Interest income Loss on disposal of property, plant and equipment Remeasurements of gain of originally acquired interest Provision for inventory Loss (gain) on foreign exchange, net Increase in cash termination value of life insurance Changes in operating assets and liabilities: Notes and accounts receivables Other receivables Inventories Other current assets Net defined benefit assets Notes and accounts payable Other payables Advance tuition receipts Other current liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash generated by operating activities Cash flows from investing activities Acquisition of Financial assets at amortized cost Proceeds from disposal of Financial assets at amortized cost Acquisition of of Investment in debt instruments without active market	2018 $121,079 18,207 1,109 - 1,550 (992) 1 - 2,934 (760) (4,829) (42,586) 1,436 (32,367) 22,985 (94) (2,142) 18,479 (26,491) (18,789) 58,730 959 (1,550) (11,765) 46,374 (9,211) 9,211 -	2017
		$156,388 16,707 601 11 999 (378) 2 (8,994) (4,694) 1,702 (1,223) 3,682 39,197 2,294 51,573 (109) 5,140 23,913 33,017 (38,410) 281,418 1,012 (1,062) (14,060) 267,308 - - (5,542)

Proceeds from disposal of Investment in debt instruments without active market Acquisition of net cash outflow from subsidiaries (Note 26) Purchase of intangible assets Proceeds from disposal of property, plant and equipment Purchase of property, plant and equipment Net decrease (increase) in refundable deposit Payment of life insurance costs Cash inflow on the disposal of cash termination of life insurance Net cash used in investing activities Cash flows from financing activities Increase in short-term loans Decrease in short-term loans Issuance of cash dividends Employee execution on stock options Payments for buy-back of treasury shares Changes in non-controlling interests Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents NET increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year	2018 $- - (2,677) 36 (49,675) (3,318) (4,092) 4,092 (55,634) 629,500 (559,500) (108,082) 4,728 (21,956) 4,900 (50,410) 698 (58,972) 268,983 $210,011	2017	2017
			$678,183 (427,207) - - (23,550) 718 (7,161) - 215,441 149,000 (283,600) (39,400) - - (90,719) (264,719) (2,798) 215,232 53,751 $268,983

The accompanying notes are an integral part of the consolidated financial statements.

Success Prime Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

1. GENERAL

Success Prime Corporation (hereinafter referred to as the Company) was established in June 15, 1991, the main business operations are production of optical fiber cables, communication components, system, sensors, digital informatics consulting services, and the management of tutorial academy teachers and curriculum education services. On March 2002, the Company’s shares were listed on the Taiwan Stock Exchange (TWSE).

In 2017, the Company segmentally acquired shares of Chen Li Education Enterprise Co., Ltd. (hereinafter referred to as Chen Li Education), hence it became the Company’s 100% owned subsidiary.

Chen Li Education is mainly engaged in the education service industry targeting primary, middle and high-school curriculums tutorial courses.

The Consolidated Financial Report is expressed in the functional New Taiwan Dollar currency (NT$).

2. THE AUTHORIZATION OF FINANCIAL STATEMENTS

The accompanying consolidated financial statements were approved and authorized for issue by the Board of Directors on March 20, 2019.

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

I. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have a significant effect on the Company and its subsidiaries’ accounting policies:

1) IFRS 9 “Financial Instruments” and related amendment

IFRS 9 supersedes IAS 39 “Financial Instruments: Recognition and Measurement”, with consequential amendments to IFRS 7 “Financial Instruments: Disclosures” and other standards. IFRS 9 sets out the requirements for classification, measurement and impairment of financial assets and hedge accounting. Please refer to Note 4 for information relating to the relevant accounting policies.

Based on the facts and circumstances on January 1, 2018, the Company has retroactively adjusted the classification of existing financial assets and chosen not to re-edit the comparison period. The impact on measurement categories, carrying amount and related reconciliation for each class of the Company’s financial assets when retrospectively applying IAS 39 and IFRS 9 on January 1, 2018 is detailed below:

Financial Assets	Measurement Category IAS 39 IFRS 9 Loans and receivables Amortized cost Loans and receivables Amortized cost Loans and receivables Amortized cost Loans and receivables Amortized cost Loans and receivables Amortized cost	CarryingAmount IAS 39 IFRS 9 $ 268,983 $ 268,983 4,662 4,662 32,105 32,105 15,292 15,292 4,420 4,420	N o t e
	IAS 39
Cash and cash equivalents Time deposits with original expiration date exceeding 3 months Notes and accounts receivables, other receivables Refundable deposits Pledge deposit split	Loans and receivables Loans and receivables Loans and receivables Loans and receivables Loans and receivables		(1)

(1) Notes and accounts receivable, other receivables and refundable deposits that were classified as loans and receivables under IAS 39 are now classified at amortized cost with assessment of expected credit loss under IFRS 9.
2) IFRS 15 “Revenue from Contracts with Customers” and related amendments

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersede IAS 18, “Revenue,” IAS 11, “Construction Contracts,” and a number of revenue-related interpretations. Please refer to Note 4 for information relating to the relevant accounting policies.

3) IFRIC 22 "Foreign Currency Transactions and Advance Consideration"

IAS 21 stipulates the original recognition of foreign currency transactions and converts the foreign currency amount into a functional currency record based on the spot exchange rate between the functional currency and the foreign currency on the transaction date. IFRIC 22 further states that if a company has prepaid or received a consideration before the original recognition of a non-monetary asset or liability, the date on which the consideration is paid in advance is determined as the trading date. If the enterprise pays the consideration in advance, the transaction date of each advance payment shall be determined separately.

The Company has applied IFRIC 22 since January 1, 2018.

II. Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers for application starting from 2019 and the IFRSs issued by IASB and endorsed by FSC with effective date starting 2019

New, Amended or Revised Standards and Effective Date Announced Interpretations (the “New IFRSs”) by IASB (Note 1) Annual Improvements to IFRSs 2015-2017 January 1, 2019 Cycle Amendments to IFRS 9 “Prepayment Features January 1, 2019 (Note 2) with Negative Compensation” IFRS 16 “Leases” January 1, 2019 Amendments to IAS 19 “Plan Amendment, January 1, 2019 (Note 3) Curtailment or Settlement” Amendments to IAS 28 “Long-term Interests in January 1, 2019 Associates and Joint Ventures”

New, Amended or Revised Standards and Interpretations (the“New IFRSs”) IFRIC 23 “Uncertainty over Income Tax Treatments”	Effective Date Announced by IASB (Note 1)
	January 1, 2019

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The FSC permits the election for early adoption of the amendments starting from 2018.
Note 3: The Company shall apply these amendments to plan amendments, curtailments or settlements occurring on or after January 1, 2019.
1) IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations.

Definition of a lease

Upon initial application of IFRS 16, the Company will apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 will not be reassessed and will be accounted for in accordance with the transitional provisions under IFRS 16.

The Company as lessee

Upon initial application of IFRS 16, except for payments for low-value asset and short-term leases which will be recognized as expenses on a straight-line basis, the Company will recognize right-of-use assets and lease liabilities for all leases on the consolidated balance sheets. On the consolidated statements of comprehensive income, the Company will present the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities and computed using the effective interest method. On the consolidated statements of cash flows, cash payments for both the principal portion and the interest portion of lease liabilities are classified within financing activities, the interest payment portion will be listed as a operating activity.

Upon initial application of IFRS 16, the Company will apply IFRS 16 retrospectively with the cumulative effect of the retaining surplus at the date January 1, 2019 but will not restate comparative information.

Leases agreements classified as operating leases under IAS 17, will be measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments. Right-of-use assets are subject to impairment testing under IAS 36.

For the leases classified as finance leases under IAS 17, the carrying amount of the leased assets and lease liabilities on December 31, 2018 will be used as the carrying amount of the right-of-use assets and lease liabilities on January 1, 2019.

Impact on assets, liabilities and equity on January 1, 2019

Right-of-use assets Total effect on assets Lease payable - current Lease payable - non-current Total effect on liabilities	Carrying Amount as of December 31, 2018 $ - $ - $ - - $ -	Initial Application Reclassification $ - $ - $ - - $ -	Initial Application Reclassification $ - $ - $ - - $ -		Adjustments Arising from Initial Application $ 283,204 $ 283,204 $ 66,088 217,116 $ 283,204	Adjusted Carrying Amount as of January 1, 2019	Adjusted Carrying Amount as of January 1, 2019	Adjusted Carrying Amount as of January 1, 2019
								$ 283,204 $ 283,204 $ 66,088 217,116 $ 283,204

The Company as lessor

Except for sublease transactions, the Company will not make any adjustments for leases in which it is a lessor, and will account for those leases under IFRS 16 starting from January 1, 2019. On the basis of the remaining contractual terms and conditions on January 1, 2019, all of the Company’s subleases will be classified as operating leases.

Except for the above effects, as of the date of the release of the consolidated financial report, the Company's evaluation of other standards and amendments will not have a significant impact on financial status and financial performance.

III. The IFRSs issued by IASB but not yet endorsed and issued into effect by 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 Contract" Amendments to IAS 1 and IAS 8 “Definition of Material”	Effective Date Issued by IASB (Note 1)
	January 1, 2020 (Note 2) To be determined by IASB January 1, 2021 January 1, 2020 (Note 3)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

Note 2: The Company shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.

Note 3: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

As of the date the accompanying consolidated financial statements were issued, the Company continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the aforementioned standards or interpretations. The related impact will be disclosed when the Company completes the evaluation.

As of the date of issuance of this consolidated financial report, the merger company will continue to assess the impact of other standards, explanations and amendments on the financial position and financial performance, and the related impact will be revealed when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

I. Statement of Compliance

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed by the FSC with the effective dates (collectively, “Taiwan-IFRSs”).

II. Basis of Preparation

The accompanying consolidated financial statements have been prepared on the historical cost basis except for financial instruments and defined benefit assets that are measured at fair values, as explained in the accounting policies below.

The relevant input value of fair value measurement is divided into level 1 to 3 corresponding to its observable degree and importance:

1) Level 1 input value: A quote (unadjusted) in the active market for the same asset or liability available on the measurement date.
2) Level 2 input value: Except for the quoted price of Level 1, the observable input value is directly the price of the asset or liability or indirectly derived from price.
3) Level 3 input value: An unobservable input value of an asset or liability.
III. Classification of Current and Noncurrent Assets and Liabilities

Current assets include:

Assets held primarily for trading purposes;
Assets expected to be realized within 12 months after the balance sheet date; and
Cash and cash equivalents (but excluding those who are restricted by the exchange or liquidation of debts for more than 12 months after the balance sheet date.)

Current liabilities include:

Liabilities held primarily for trading purposes;
Liabilities due for settlement within 12 months after the balance sheet date, and
The liability settlement period cannot be unconditionally deferred to at least 12 months after the balance sheet date.

Those who does not belong to the above current assets or current liabilities shall be classified as non-current assets or non-current liabilities.

IV. Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Income and expenses of subsidiaries acquired or disposed of are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Total comprehensive income of subsidiaries is attributed to the shareholders of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Company’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to shareholders of the parent.

For subsidiaries details, shareholding ratios and business operations, please refer to Note 11’s Table 5 and 6.

V. Merger of Enterprises

The merger of enterprises adopts the acquisition law. The acquisition related cost is listed at the current period as an expense occurred and labor acquisition.

Goodwill is measured by the fair value of the transfer price, the amount of the fair value of the acquirer's non-controlling interest and previously held interest is measured by the net value of the identifiable assets and liabilities after the acquisition date.

A non-controlling interest of the acquiree's current ownership rights and the right to a proportional entitlement to the acquiree’s net assets of the acquiree at the time of liquidation shall be measured at fair value. Other non-controlling interests are measured at fair value.

A merger that is achieved in stages is measured at the fair value of the acquisition date and is re-measured by the merged Company's previously held interest from the acquiree, if any profits or losses are incurred shall be recognized.

VI. Foreign currencies

In preparing the financial statements of each individual consolidated entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

Foreign currency items are converted at the closing exchange rate on each balance sheet date. The exchange difference arising from the delivery of monetary items or the conversion of monetary items is recognized as a profit or loss in the current period of occurrence.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are included in profit or loss for the year except for exchange differences arising on the retranslation of non-monetary items in respect of which profit and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary items that are measured in terms of historical cost in foreign currencies are not retranslated.

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Company’s foreign operations are translated into NT$ using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate).

VII. Life Insurance termination cash value

The life insurance termination cash value is the savings life insurance that the company insured for the employees and the company is the beneficiary. If the premium paid is the contract termination cash value part, it is listed as the deduction of the annual insurance expenses, and the book value of life insurance termination cash is added. If the period of the insurance expires or the contract is terminated, the amount received will be fully received, and the book value of the life insurance termination cash value will be reduced.

VIII. Inventories

Inventories includes raw materials, manufactured goods, in-process products and commodities. Inventory is measured by the cost and the value of net realization, comparing costs with net realizable value is based on individual items except for those in same inventory category. Net realizable value means under normal circumstances the balance after the estimated cost required to complete the investment and sale is deducted. The weighted average method is adopted to calculate inventory cost.

IX. Property, plant and equipment

Property, plant and equipment are recognized at cost and subsequently valued by costs minus the amount of accumulated depreciation. Property, plant and equipment’s amortization is measured based on straight-line basis, and each significant depreciation is separately accounted. At each year end, the Company examines the estimated durability, residual value and depreciation methods, and delays the impact of using altered accounting estimates.

In addition to the listing of property, plant and equipment, the difference between the net disposition price and the carrying amount of the asset is recognized as profit and loss.

X. Goodwill

The goodwill obtained by the merger of enterprises is measured by the amount of goodwill recognized on the date of acquisition as a cost, later valued by the amount after the cost minus the accumulated impairment loss.

For the purpose of the impairment test, goodwill is apportioned among the cash generation units or groups of cash generation units ("cash generation units") that the merger Company expects to benefit from the combined effect.

The cash generation unit of apportioned goodwill carries out the impairment test of that unit each year (and if there are indications that the unit may have already been impaired) by comparing the carrying amount of the unit containing goodwill with its recoverable amount. If the goodwill apportioned to the cash generation unit is obtained by the current merger, the unit shall conduct an impairment test before the end of the year. If the recoverable amount of goodwill’s cash generation unit is less than the carrying amount, the impairment loss reduces the carrying amount of the cash generation unit of apportioned goodwill, and thus should reduce the carrying amount of each assets in proportion to the carrying amount of other assets within the unit. Any impairment losses are directly recognized as current losses. The impairment loss of goodwill may not be rotated during the subsequent period.

When disposing an operation of the apportioned goodwill’s cash generation unit, the goodwill value related to the disposition of the operation is included in the operation’s carrying amount to determine the profit and loss of the disposition.

XI. Intangible assets

1) Acquired separately

Separately acquired intangible assets with finite useful lives are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized using the straight-line method over the following estimated useful lives. At each year end, the merger Company examines the estimated durability, residual value and depreciation methods, and delays the impact of using altered accounting estimates. The uncertain durability of intangible assets should be listed as a loss using cost minus accumulated depreciation.

2) Acquired by Merger

Goodwill arising on an acquisition of a business is carried at cost as established at the acquisition date, subsequently the valuation method is the same as that of the intangible asset acquired separately.

3) Derecognition

When derecognizing the intangible assets, the difference between the net disposition price and the asset’s carrying amount is recognized as the profit and loss of the current period.

XII. Impairment of tangible and intangible assets (except Goodwill)

At each balance sheet date, the merger Company assesses whether there are any indications that tangible and intangible assets (except goodwill) may already been impaired. If any indication of impairment exists, the recoverable amount of the asset is estimated. If it is not possible to estimate the recoverable amount of individual assets, the Company estimates the recoverable amount of the cash generation unit to which the asset belongs to. Shared assets are apportioned to separate cash generation units on a reasonable consistent basis. For intangible assets with uncertain durability, impairment tests are carried out annually and when there are signs of impairment.

The recoverable amount is the selecting the higher value between the fair value minus the sale cost or its use value. If the recoverable amount of an individual assets or cash generation unit is lower than its carrying amount, the carrying amount of the asset or cash generation unit is reduced to its recoverable amount, and the impairment loss is recognized as a profit or loss.

When the impairment loss is in subsequent rotation, the carrying amount of the asset or cash generation unit is increased to the revised recoverable amount, provided that the increase in carrying amount does not exceed the carrying amount (less amortization or depreciation) determined by the asset or cash generation unit when no impairment loss is recognized in the previous year. The rotation of impairment losses is recognized as profit or loss.

XIII. Financial instruments

Financial assets and financial liabilities are recognized in the Consolidated Balance Sheet when the Company becomes a party to the terms of the instrument contract.

When recognizing financial assets and liabilities, if they are not measured by fair value through profit or loss, it should be the transaction cost of the acquired or distributed financial assets and liabilities based on gross fair value. The transaction cost should immediately be recognized as profit or loss.

1) Financial Assets

The customary transaction of financial assets adopts accounting recognition and derecognition at the trading day.

(1) Measurement Category

2018

The types of financial assets held by the Company are financial assets measured at amortized cost.

Financial assets measured at amortized cost

The financial assets are classified as measured at amortized cost if the Company meet both of the following conditions when investing in financial assets:

A. Held under some business model, the purpose of which is to hold financial assets to collect contract cash flow; and
B. The contract terms result in cash flows on a specific date, which entirely pays off the principal amount and its interest that are circulating outside.

Financial assets (including cash and cash equivalents, debt instrument investments, receivables and refundable deposits at amortized cost), are recognized based on amortization cost, any foreign currency exchange gains and losses are recognized in profit or loss as measured by the amortized cost using carrying amount of effective interest law decision less any impairment losses.

Interest income is calculated at the effective interest rate multiplied by the total carrying amount of the financial assets, except in the following two cases:

A. The credit for purchase or initiation detracts from the financial assets, and the interest income is calculated by multiplying the credit adjusted effective interest rate with the cost of financial asset after amortization.
B. Financial asset that is not an initial or purchased credit impairment, but subsequently turns into credit impairment, the interest income is calculated by multiplying the effective interest rate by the cost of financial assets after amortization.

Cash equivalents include time deposits that can be self-acquired within 3 months, with high liquidity, and can be easily transfer into fixed cash value with minimal risk and is used to fulfill short-term cash commitments.

2017

The types of financial assets held by the Company are loans and receivables. Loans and receivables (including cash and cash equivalents, non-active market debt instrument investment, notes and accounts receivables, other receivables and refundable deposits) are measured by the amortized cost using carrying amount of effective interest law decision less any impairment losses, only recognition of short-term accounts receivables’ interest that are insignificant are exempt.

(2) Impairment of financial assets

2018

At the end of each reporting period, a loss allowance for expected credit loss is recognized for financial assets at amortized cost (including accounts receivable).

The loss allowance for accounts receivable is measured at an amount equal to lifetime expected credit losses. For financial assets at amortized cost and investments in debt instruments that are measured at FVTOCI, 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.

The expected credit loss is the weighted average credit loss that takes the risk of default as the weight. The 12-month expected credit loss represents the expected credit loss arising from the possible default of the financial instrument within 12 months from the report date. Expected credit losses during the duration represent the expected credit losses arising from all possible defaults of the financial instrument over its expected lifetime.

The Company recognizes an impairment loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial asset.

2017

Other financial assets are assessed by the Company for indicators of impairment at the end of each reporting period. Those financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, their estimated future cash flows have been affected.

For financial assets carried at amortized cost, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective impairment evidence from the receivables collection may include the Company's past collection experience, the increased number of deferred payments over the average credit period, and the circumstances relating to arrears payment of receivables can be observed, these are some observable changes in the national or regional economic situation.

For financial assets carried at amortized cost, the amount of the impairment loss is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial assets at the date the impairment loss is reversed does not exceed what the amortized cost would have been had the impairment loss not been recognized.

Objective impairment evidence of other financial assets may include:

A. Significant financial difficulties of the issuer or debtor;
B. Contract breach, such as delay or non-payment of interest or principal payments;
C. Possibility of the debtor is entering bankruptcy or other financial restructuring increases majorly; or
D. The active market for financial assets has disappeared due to financial difficulties.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit and loss, except for the write-off of the allowance account due to uncollectible accounts receivable.

(3) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the financial asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset to another entity.

When derecognizing financial assets before 2017 (inclusive), the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss. From 2018 onwards, on derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

2) Financial liabilities

(1) Follow-up measurement

All financial liabilities are measured at amortized cost using the effective interest method.

(2) Derecognition of financial liabilities

When the Company derecognizes financial liabilities, the difference between the carrying amount of the financial liability derecognized and the consideration paid and payable (include any transferred non-cash assets or liabilities) is recognized in profit or loss.

XIV. Provision

The amount recognized as a provision (including the contractual obligation that the lease contract should be maintained or restored before returning it to the lessor) is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, it carrying amount is the present value of those cash flows.

Decommissioning cost

The Company shall, within the scope of the duty, rehabilitation or similar obligations of property, plant and equipment, recognize as provision for the costs of the removal or rehabilitation of property, plant and equipment.

XV. Revenue recognition

2018

After the Company identifies the performance obligation in the client contract, the transaction price is apportioned to the performance obligations and the revenue is recognized when the performance obligations are met.

1) Revenue of goods sale

Goods sales revenue comes from the sale of various types of fiber optic cables, optical fiber communication components, optical communication systems and optical sensor component systems. As the above products arrive at the customer's designated location or at the time of departure, the customer has the right to set the price and use of the goods and has the primary responsibility for re-sales, and bear the risk of obsolescence of the goods, the Company should recognize revenue and accounts receivables at the time.

When the material processing is performed, the control of the ownership of the processed product is not transferred, and the income is not recognized when the material is removed.

2) Labor revenue

Labor revenue comes from digital information consulting services and the education tutorial services consisting primary, middle and high school curriculum courses. The revenue related to the digital information consulting services is recognized when the service is provided. The education service revenue is recognized based on the taught proportion of the course (teaching progress).

2017

Revenue is measured at the fair value of the received or receivable price and deducts the estimated customer returns, discounts and other similar discount.

I. Sale of goods

The sale of goods is recognized as revenue when following conditions are fully met:

(1) The Company has transferred the significant risks and rewards of the ownership of the goods to the buyer;
(2) The Company does not continuously participate in the management of the goods sold, nor maintain effective control;
(3) The amount of revenue can be measured reliably;
(4) The economic benefits associated with the transaction are likely to flow into the Company; and
(5) The costs associated with the transaction that have occurred or will occur can be measured reliably.

When the material is processed, the significant risks and rewards of ownership of the processed products are not transferred and are not for sale when processing materials.

II. Provision of services

Labor revenue is recognized as the proportion of services performed (teaching progress).

III. Interest revenue

Interest revenue of the financial assets and economic benefits are likely to flow into the Company, and the revenue can be reliably measured when recognized. Interest revenue is recognized on the basis of time based on the accrual of the principal circulating outside and the applicable effective interest rate.

XVI. Leases

Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Company as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

The Company as lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

XVII. Borrowing Costs

Borrowing costs are recognized when incurred as a profit or loss at the current period.

XVIII. Government Grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received. Government grants are recognized as profits and losses on a systematic basis during the period in which the costs associated with compensation intentions are recognized as expenses by the Company.

XIX. Employee Benefits

1) Short term Employee Benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for service rendered by employees.

2) Retirement benefits

For defined contribution retirement benefit plans, payments to the benefit plan are recognized as an expense when the employees have rendered service entitling them to the contribution. For defined benefit retirement benefit plans, the cost of providing benefit is recognized based on actuarial calculations.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the Projected Unit Credit Method. Service cost (including current service cost), and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability (assets) represents the actual deficit (remaining) in the Company’s defined benefit plan.

XX. Share-based Payment Agreement Employee Stock Option

1) Employee Stock Option

Employee stock options are based on the fair value of the equity instruments granted to the day and the best estimate of the expected value. The expenses are recognized on a straight-line basis over the vested period, and the capital reserve-employee stock options are adjusted at the same time. If it is available immediately on the date of the grant, it will be recognized on the grant date.

The Company corrects the estimated number of expected employee stock options on each balance sheet date. If the original estimated quantity is corrected, the impact quantity is recognized as profit or loss, so that the accumulated expenses reflect the revised estimate, and the capital reserve-employee stock option is relatively adjusted.

2) Employee Rights Restricted Stocks

Employee Rights Restricted Stock is based on the fair value of the equity instruments granted to the date and the best estimate of the expected value. The expenses are recognized on a straight-line basis over the vested period, and other benefits are adjusted at the same time (employees have not earned compensation). If it is available immediately on the date of the grant, it will be recognized on the grant date.

When the company issues stocks that restrict employees' rights, it recognizes other interests (the employee’s compensations not earned) on the date of issue, and also adjusts the capital reserve - the stocks that limit employee rights. In the case of a paid issuance, the employee is required to refund the price when leaving the company, the relevant payables shall be recognized. If an employee leaves the company within the vested period without returning the dividends received, the fee is recognized when the dividend is declared, and the retained earnings and capital reserve are also adjusted - the employee rights restricted stocks.

The Company corrects the expected vested limit on the number of employees' rights restricted stocks on each reporting date. If the original estimated quantity is corrected, the impacted number is recognized as profit or loss, so that the accumulated expenses reflect the revised estimate, and the capital reserve is adjusted relatively – restricting employee's rights stock.

XXI. Income Tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

Income tax on unappropriated earnings (excluding earnings from foreign consolidated subsidiaries) is expensed in the year the shareholders approved the appropriation of earnings which is the year subsequent to the year the earnings are generated. Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, net operating loss carryforwards and tax credits for research and development expenses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is

probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered. The deferred tax assets which originally not recognized is also reviewed at the end of each reporting period and recognized to the extent that it is probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset is realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

In the application of the aforementioned Company’s accounting policies, the Company is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years.

I. Impairment of Tangible and Intangible Assets (Other than Goodwill)

In the process of evaluating the potential impairment of tangible and intangible assets other than goodwill, the Company is required to make subjective judgments in determining the independent cash flows, useful lives, expected future revenue and expenses related to the specific asset groups with the consideration of the nature of semiconductor industry. Any changes in these estimates based on changed economic conditions or business strategies could result in significant impairment charges or reversal in future years.

II. Estimation of goodwill impairment

When deciding whether goodwill is impaired, it is necessary to estimate the use value of the cash generation unit assessed on goodwill. In order to calculate the use value, the

management should estimate the future expected cash flow from the cash generation unit and decide on the appropriate discount rate for the present value calculation. If the actual cash flow is less than expected, significant impairment losses may be incurred.

6. CASH AND CASH EQUIVALENTS

Cash reserve and working capital Bank check and demand deposits Cash Equivalents Time deposits within 3 months expiration date	December 31, 2018 $ 4,627 200,912 4,472 $ 210,011	December 31, 2017	December 31, 2017
			$ 5,499 258,914 4,570 $ 268,983

The market interest rate range on the balance sheet date is as follows:

December 31, 2018 Term Deposit 3.65% FINANCIAL ASSETS AT AMORTIZED COST-2018 Current Time deposits within 3 months expiration date Interest rate range Non-Current Pledge deposit slip (1) Interest rate range	December 31, 2018	December 31, 2017 4.25% December31,2018 $ 4,561 3.45% $ 4,420 1.09%~1.12%	December 31, 2017

7. FINANCIAL ASSETS AT AMORTIZED COST-2018

Interest rate range

(1) According to the regulations of the education bureaus of the counties and cities where the branch is located, after the tutorial school’s register has been approved, the deposit slip in the name of the tutorial school, without governmental approval, should not be put to use.
(2) This type of deposit is classified as an inactive market debt instrument investment under IAS 39. For reclassification and 2017 information, please refer to Note 3 and 8.
(3) The Company assesses that the expected credit risk of the financial assets measured by amortization cost is not high, and its credit risk has not increased after the original recognition.
(4) For information on the pledge of financial assets measured at amortization costs, please refer to Note 32.

8. INACTIVE MARKET DEBT INSTRUMENT INVESTMENT-2017

Current Time deposits within 3 months expiration date Interest rate range Non-Current Pledge deposit slip (1) Interest rate range	106年12月31日
	$ 4,662 4.3% $ 4,420 1.09%~1.12%

(1) According to the regulations of the education bureaus of the counties and cities where the branch is located, after the tutorial school’s register has been approved, the deposit slip in the name of the tutorial school, without governmental approval, should not be put to use.
(2) For information on the pledge of inactive market debt instrument investment, please refer to Note 32.

9. NOTES RECEIVABLES, ACCOUNTS RECEIVABLES, OTHER RECEIVABLES

Notes receivables Measured at amortized costs Total book value Result of operations Accounts receivables Measured at amortized costs Total book value Less: Allowance loss Other receivables Business tax refund receivable Interest receivable Other Subtotal Less: Allowance for bad debts	December 31, 2018 $ 457 $ 457 $ 72,586 ( 11) $ 72,575 $ - 57 136 193 - $ 193	December 31, 2017	December 31, 2017
	(	( (	$ 1,269 $ 1,269 $ 29,251 11) $ 29,240 $ 1,442 - 9,433 10,875 9,279) $ 1,596

2018

The average credit period for the sale of the Company is 90~120 days. To mitigate credit risk, the Company's management assigns a dedicated team responsible for the decision of the credit line, credit approval and other monitoring procedures to ensure that the recovery of

overdue receivables has taken appropriate action. In addition, the Company reviews the recoverable amounts of receivables on the reporting date to ensure that receivables that cannot be recovered include appropriate impairment losses. As result, the Company’s management believes that the credit risk has been significantly reduced.

The Company adopts IFRS 9, the simplified practice recognizes the loss of the allowance for accounts receivable on the basis of the expected credit loss during the lifetime (excluding special individual payments that listed are as 100% loss). The expected credit loss during the lifetime is calculated using the preparation matrix, which takes into account the customer's past default record and current financial position, industrial economic situation. Due to the Company’s historical record of credit loss, there is no significant difference in the loss pattern of different customer groups, so the preparation matrix does not further distinguish the customer base, only the expected credit loss rate is set based on the number of days when the accounts receivable is overdue.

If there is evidence that the counterparty is facing serious financial difficulties and the Company is unable to reasonably anticipate the recoverable amount, the Company will directly reverse the relevant accounts receivable, and continue the recovery activity, as the amount from the recovery is recognized as the profit or loss.

The Company measures the allowance loss of accounts receivables in accordance with the preparation matrix as follows:

December 31, 2018

Total Book Value Allowance Loss (expected credit loss during lifetime period) At amortized costs	Not Overdue $ 29,533 - $ 29,533		Overdue 0-30 Days $ 41,803 - $ 41,803	Overdue 31-90 Days $ 1,239 - $ 1,239	Overdue 366 Days Above $ 11 ( 11) $ -		Total
					(	(	$ 72,586 11) $ 72,575

Information on changes in the allowance loss for accounts receivable is as follows:

Beginning and Ending Balances (IAS 39, IFRS 9）		2018
		$ 11

Deadline is December 31, 2018, the Company’s average age of notes receivable is not overdue.

2017

The Company’s credit policy in 2017 is the same as 2018 credit policy mentioned above. For the assessment of the allowance for bad debts of accounts receivable, due to historical record, the accounts receivable that were overdue for more than 365 days cannot be recovered, the Company recognizes 100% allowance for bad debts for accounts receivable aged over 365 days. For accounts receivable aging between 181 to 365 days, the allowance for bad debts is based on the past default records of the counterparty and its current financial status to estimate the unrecoverable amount.

The accounts receivable that were overdue at the balance sheet date, but the Company had not yet recognized for bad debts, because the quality of its credit had not changed significantly, the Company’s management believed that its amount could still be recovered and did not hold any collateral or other credit enhancement protection against such accounts receivable.

The age analysis of accounts receivable is as follows:

Not Overdue 0 ~ 30 days 31~90 days 366 days or more Total	December 31, 2017	December 31, 2017
		$ 25,607 3,603 30 11 $ 29,251

The age analysis is based on the number of overdue days.

The age analysis of accounts receivable that are overdue but not impaired is as follows:

0 ~ 30 days 31~90 days Total	December 31, 2017	December 31, 2017
		$ 3,603 30 $ 3,633

The age analysis is based on the number of overdue days.

Changes in allowance for bad debts of accounts receivables and other receivables is as follows:

January 1, 2017 Remaining Balance Add: Bad debt cost of current period Obtained by Merger December 31, 2017 Remaining Balance	Accounts receivables $ - 11 - $ 11	Other receivables	Other receivables
			$ - - 9,279 $ 9,279

10. INVENTORIES

Product Raw materials Work in progress Commodity	December 31, 2018 $ 40,242 9,085 1,998 6,714 $ 58,039	December 31, 2017	December 31, 2017
			$ 16,667 8,149 3,443 347 $ 28,606

The cost of inventories sold in 2018 and 2017 were NT$140,467,000 and NT$129,982,000 respectively. The cost of goods sold in 2018 and 2017 respectively included a net loss of value of inventory of NT$2,934,000 and a net appreciation of the value of inventories of NT$4,694,000. The net realizable recovery value of the 2017 inventories was due to the increase in the inventories’ sales price in a specific market.

11. SUBSIDARIES

Listed in Consolidated Financial Statement of Subsidiaries:

The main body of this consolidated financial report is as follows:

Name of Investment Company Success Prime Corp. Success Prime Corp. Success Prime Corp. Chen Li Education Co., Ltd. CHEN LI Group Limited CHEN LI Group (HK) Limited	Name of Subsidiary Chen Li Education Co., Ltd. (Chen Li Education) Prime Optical Fiber Co., Ltd. (Prime Optical Fiber) Prime Consulting Co., Ltd. (Education Consulting) CHEN LI Education Group Limited CHEN LI Education Group (HK) Limited Chen Li (Xiamen) Education Consulting Co., Ltd.	Nature of Business Education services Optical fiber Production Educational Advisory services Holding Company Holding Company Educational Advisory services	Percentage of Equity held	Percentage of Equity held	Note
			2018 December 31	2017 December 31
			100% 100% 51% 100% 100% 100%	100% 100% - 100% 100% 100%	- - Note - - -

In order to expand the tutoring business in Kaohsiung city, the Company’s Board of Directors’ passed the resolution on December 15, 2017, and established Prime Education in January 1, 2018, holding 51% of total equity.

12. PROPERTY, PLANT, EQUIPMENT

Cost January 1, 2017 Balance Addition Disposition Obtained by Merger Net Exchange Difference Reclassification December 31, 2017 Balance Accumulated depreciation January 1, 2017 Balance Disposition Depreciation Fee Obtained by Merger Net Exchange Difference December 31, 2017 Balance December 31, 2017 Net amount Cost January 1, 2018 Balance Addition Disposition Net Exchange Difference Reclassification December 31, 2018 Balance Accumulated depreciation January 1, 2018 Balance Disposition Depreciation Fee Net Exchange Difference Reclassification December 31, 2018 Balance December 31, 2018 Net amount		Own land		Buildings	Machinery equipment	Leasing of modified items	Office equipment	Other Equipment	Total
		$ - - - 197,096 - - $ 197,096 $ - - - - - $ - $ 197,096 $ 197,096 27,394 - - - $ 224,490 $ - - - - - $ - $ 224,490		$ - - - 29,759 - - $ 29,759 $ - - 611 1,561 - $ 2,172 $ 27,587 $ 29,759 5,316 - - - $ 35,075 $ 2,172 - 812 - - $ 2,984 $ 32,091	$ 212,414 440 ( 210,553 ) - - - $ 2,301 $ 211,688 ( 210,553 ) 490 - - $ 1,625 $ 676 $ 2,301 4,197 ( 1,162 ) - - $ 5,336 $ 1,625 ( 1,162 ) 624 - - $ 1,087 $ 4,249	$ 30,003 8,806 ( 15,451 ) 32,627 413 10,796 $ 67,194 $ 26,121 ( 15,451 ) 9,600 19,344 14 $ 39,628 $ 27,566 $ 67,194 8,077 ( 5,304 ) ( 415 ) - $ 69,552 $ 39,628 ( 5,304 ) 8,622 ( 61 ) - $ 42,885 $ 26,667	$ 6,390 8,555 ( 9,206 ) 20,562 61 1,410 $ 27,772 $ 6,390 ( 9,204 ) 5,164 8,130 3 $ 10,483 $ 17,289 $ 27,772 6,047 ( 4,782 ) ( 47 ) 1,667 $ 30,657 $ 10,483 ( 4,745 ) 7,941 ( 17 ) 854 $ 14,516 $ 16,141	$ 11,936 96 ( 12,038 ) 10,996 - ( 8,049) $ 2,941 $ 11,562 ( 12,038 ) 842 1,294 - $ 1,660 $ 1,281 $ 2,941 350 ( 218 ) - ( 1,667) $ 1,406 $ 1,660 ( 218 ) 208 - ( 854) $ 796 $ 610	$ 260,743 17,897 ( 247,248 ) 291,040 474 4,157 $ 327,063 $ 255,761 ( 247,246 ) 16,707 30,329 17 $ 55,568 $ 271,495 $ 327,063 51,381 ( 11,466 ) ( 462 ) - $ 366,516 $ 55,568 ( 11,429 ) 18,207 ( 78 ) - $ 62,268 $ 304,248

Depreciation fees are calculated on a straight-line basis according to the following durable years:

Buildings	25~32 years
Machinery Equipment	2~5 years
Leasing of Modified Items	3~8 years
Office Equipment	2~7 years
Other Equipment	2~5 years

13. G OODWILL

DWILL
Cost Year-start Balance Obtained by Merger current year (Note 26) Year-end Balance		2018 $ 81,419 - $ 81,419		2017
				$ - 81,419 $ 81,419

The Company's acquisition of Chen Li Education in 2017 generated Goodwill and Trademark rights of NT$ 81,419,000 and NT$ 404,144,000 respectively, mainly from the expected growth of future revenue from Education enterprise. The Company conducted a impairment test on goodwill and trademark rights on December 31, 2018. After the assessment, the recoverable amount of the cash-generating unit was greater than its book value, so no impairment loss was recognized.

The recoverable amount of the cash-generating unit is determined on the basis of the value-in-use, and the cash flow estimate of the financial management budget approved by the Company for the next five years is calculated, and the annual discount rates of 13.3% and 14.1% are calculated in 2018 and 2017 respectively. The cash flow estimate for the financial budget is based on historical data and estimates of future industry changes. The management believes that any reasonably possible change in the key assumptions underlying the recoverable amount will not result in the total book value of the cash-generating unit to exceed the total recoverable amount.

14. TRADEMARK RIGHTS AND OTHER INTANGIBLE ASSETS

Cost January 1, 2017 Balance Obtained by Merger of enterprises Disposition December 31, 2017 Balance Accumulated amortization January 1, 2017 Balance Amortization costs Obtained by Merger of enterprises Disposition December 31, 2017 Balance January 1, 2017 Net amount December 31, 2017 Net amount Cost January 1, 2018 Balance Addition Self-prepaid equipment transfers December 31, 2018 Balance Accumulated amortization January 1, 2018 Balance Amortization costs December 31, 2018 Balance January 1, 2018 Net amount December 31, 2018 Net amount	Computer software $ 1,270 1,269 ( 618) $ 1,921 $ 1,200 223 907 ( 618) $ 1,712 $ 70 $ 209 $ 1,921 2,677 1,000 $ 5,598 $ 1,712 898 $ 2,610 $ 209 $ 2,988	Teacher Contract $ - 589 - $ 589 $ - 378 - - $ 378 $ - $ 211 $ 589 - - $ 589 $ 378 211 $ 589 $ 211 $ -	Trademark $ - 404,144 - $ 404,144 $ - - - - $ - $ - $ 404,144 $ 404,144 - - $ 404,144 $ - - $ - $ 404,144 $ 404,144	Total	Total
	( (			( (	$ 1,270 406,002 618) $ 406,654 $ 1,200 601 907 618) $ 2,090 $ 70 $ 404,564 $ 406,654 2,677 1,000 $ 410,331 $ 2,090 1,109 $ 3,199 $ 404,564 $ 407,132

The legal period of the trademark is 10 years, but the legal period can be extended for a very small cost every 10 years. The Company’s management believes that the intention and ability to continue to extend its useful life. The management has implemented research including product life cycle surveys, markets, competitiveness, environmental trends and brand expansion opportunities. The results of the study indicate that the trademark rights are expected to generate net cash inflows for non-determined durability years, so that the non-determined durability years are intangible assets. The durability period of the trademark right will not be amortized until it is determined to be limited, but the impairment test should be conducted annually, regardless of any signs of impairment. For the description of the impairment test this year, please refer to Note 13.

Amortization costs are calculated on a straight-line basis according to the following durable years:

Teacher Contract 1.3 years Computer Software 3 years

15. LIFE INSURANCE TERMINATION CASH VALUE

Information of changes in the cash value of annuity insurance termination is as follows:

Year-Start Balance Obtained by merger of enterprises Number of life insurance payments this year Number of life insurance termination this year Increase in the cash value of life insurance termination this year Year-End Balance	2018 $ 78,726 - 4,092 ( 4,092 ) 4,829 $ 83,555	2017	2017
			$ - 70,342 7,161 - 1,223 $ 78,726

16. OTHER ASSETS

Current Prepaid Fees Refundable Deposit Prepaid Rent Prepaid Payment Other Noncurrent Refundable Deposit Prepaid Equipment Payment	December 31, 2018 $ 5,056 1,401 764 577 3,192 $ 10,990 $ 17,209 6,507 $ 23,716	December 31, 2017	December 31, 2017
			$ 3,459 340 2,625 25,930 580 $ 32,934 $ 14,952 10,366 $ 25,318

17. SHORT-TERM BORROWINGS

Secured Loan (Note 32） Bank loan Unsecured Loan Bank loan	December 31, 2018 $ 35,000 100,000 $ 135,000	December 31, 2017	December 31, 2017
			$ - 65,000 $ 65,000

The interest rates of bank revolving loans were 1.72% and 1.89% respectively at December 31, 2018 and 2017.

18. NOTES AND ACCOUNTS PAYABLE

Hourly fee payable to Teachers Accounts Payable Notes Payable Other	December 31, 2018 $ 18,588 7,953 527 3,277 $ 30,345	December 31, 2017	December 31, 2017
			$ 13,163 14,564 2,166 2,601 $ 32,494

19. OTHER LIABILITIES

Other Payables Salary payable Compensation payable to Employees Compensation payable to Directors Other Other Current Liabilities Advance Payment Other	December 31, 2018 $ 36,292 3,750 3,125 33,970 $ 77,137 $ 680 5,633 $ 6,313	December 31, 2017	December 31, 2017
			$ 26,949 5,212 3,689 23,950 $ 59,800 $ 22,593 2,493 $ 25,086

20. RETIREMENT BENEFIT PLANS

I. Defined Contribution Plans

The pension system of the "Labor Pensions Ordinance" applicable to the Company, its subsidiaries, Chen Li Education, Prime Education and Prime Optical Fiber is a government-mandated retirement plan, which is based 6% of monthly salary contribution to the personal account of the Labor Insurance Bureau.

The employees of the mainland subsidiaries of the Company are members of the retirement benefit scheme operated by the local government. The subsidiary is required to allocate a specific percentage of salary costs to the retirement benefit plan to provide funding for the program. The obligation of the Company to make a retirement benefit plan for this government operation is only a specific amount.

II. Defined Benefit Plans

The pension system handled by the Company in accordance with China's Labor Standards Law is a defined welfare retirement plan managed by the government. The payment of employee pension is calculated based on the service years and the average salary for the six months prior to the approved retirement date. The Company originally provided a pension of 2% of the employee's monthly salary, and the labor retirement reserve supervision committee deposited it in the name of the committee into the special account of the Taiwan bank. Before the end of the year, if the estimated balance of the special account is insufficient, the next year amount is paid. Labors estimated to meet the retirement conditions will be assessed once before the end of March of the following year. The special account is entrusted to the Labor Fund Management Bureau of the Ministry of

Labor. The Company has no right to influence the investment management strategy. However, the Company agreed to suspend the transfer on December 31, 2018, and 2017 in accordance with the letter of the No.1070010673 and No.1060006213 of the Hsinchu Science and Technology Parks Authority of the Ministry of Science and Technology.

The amount of the defined benefit plan listed in the consolidated balance sheet is shown below:

Present Value of defined benefit obligations Fair value of planned assets Net defined benefit assets	December 31, 2018 $ 7,110 (14,671) ($ 7,561)	December 31, 2017	December 31, 2017
	( (	( (	$ 6,609 14,101) $ 7,492)

The changes in Net Defined Benefit Assets are as follows:

January 1, 2017 Interest Fees (Revenue) Recognized in profit and loss Number of further measurements Compensation of planned assets (other than amounts included in net interest) Actuarial loss- changes in demographic assumptions Actuarial loss- changes in financial assumptions Actuarial loss- experience adjustment Recognized in other consolidated profit and loss December 31, 2017 Interest Fees (Revenue) Recognized in profit and loss Number of further measurements Compensation of planned assets (other than amounts included in net interest) Actuarial loss- changes in demographic assumptions Actuarial loss- changes in financial assumptions Actuarial loss- experience adjustment Recognized in other consolidated profit and loss December 31, 2018	PV of defined benefit obligations	PV of defined benefit obligations	Fair value of planned assets	Net defined benefit assets
		$ 6,017 83 83 - 16 78 415 509 6,609 82 82 $ - 16 81 322 419 $ 7,110	( $ 13,964 ) ( 192) ( 192) 55 - - - 55 ( 14,101 ) ( 176) ( 176) ( $ 394 ) - - - ( 394) ($ 14,671)	( $ 7,947 ) ( 109) ( 109) 55 16 78 415 564 ( 7,492 ) ( 94) ( 94) ( $ 394 ) 16 81 322 25 ($ 7,561)

The amount of the benefit plan recognized in the profit and loss is summarized as follows:

Administrative expenses (Pension benefits)		2018 $ 94)		2017
	(		(	$ 109)

The Company's pension system under the “Labor Standards Act” is exposed to the following risks:

1) Investment risk: The Labor Fund Application Bureau of the Ministry of Labor invests in domestic and foreign equity securities, debt securities and bank deposits, respectively, through self-employment and entrusted operations. However, the amount of the Company's planned assets is not low. The income from the local bank's 2-year fixed deposit rate.
2) Interest rate risk: The decline in the interest rate of government bonds will increase the present value of defined benefit obligations, but the debt investment compensation of the planned assets will also increase, and the effect of the two on the net defined benefit assets will partially offset.
3) Payroll Risk: The calculation of the present value of the benefit obligation determines the future salary of the project member. The increase in the salaries of project members would therefore increase the present value of the defined benefit obligations.

The present value of the defined benefit obligation of the Company is actuarial by a qualified actuary. The significant assumptions for the measurement date are as follows:

Discount rate Expected rate of increase in Salary	December 31, 2018 1.125% 1.125%	December 31, 2017
		1.25% 1.125%

If there is a reasonable possible change in the significant actuarial assumptions, the amount of increase (decrease) in the present value of the defined benefit obligation will be as follows, with all other assumptions fixed:

Discount rate Increase 0.25% Reduce 0.25% Expected rate of increase in Salary Increase 0.25% Reduce 0.25%	December 31, 2018 ($ 166) $ 171 $ 166 ($ 161)	December 31, 2017	December 31, 2017
	( (	( (	$ 158) $ 164 $ 159 $ 154)

Since actuarial assumptions may be interrelated and only a single hypothetical change is unlikely, the sensitivity analysis described above may not reflect the actual change in the present value of the defined benefit obligation.

Average maturity period of a defined benefit obligation	December 31, 2018 12 year	December 31, 2017
		13 year

21. EQUITY

I. Capital Stock

ital Stock
Authorized shares (in thousands) Authorized capital Issued and paid shares (in thousands) Issued capital	December 31, 2018 200,000 $ 2,000,000 17,459 $ 174,594	December 31, 2017
			250,000 $ 2,500,000 16,548 $ 165,480

On June 14, 2018 and June 16, 2017, the Company passed the capital reserve to increase capital of NT$8,314,000 and NT$7,880,000 respectively. In addition, in February 2018, the Company issued new shares of NT$ 800,000 due to employee exercising employee shares.

The Company has increase cash	The Company has increase cash	capital through	private financing as follows:	private financing as follows:	private financing as follows:
	First time	Second time	Third time	Forth time	Fifth time
Shareholders ' meeting	97.10.31	97.10.31	102.05.03	104.05.12	105.05.09
resolution Date
Private funding Base	97.11.21	98.12.31	102.07.25	104.06.23	105.08.31
Date
Number of shares	14,103	16,575	3,000	7,000	8,200
(thousand shares)
Denomination (NT$)	10.00	10.00	10.00	10.00	10.00
Subscription Price (NT$)	1.17	1.81	10.00	6.30	73.25
Total private financing	16,500	30,000	30,000	44,100	600,650
amount (thousands NT$)

In 2008, 2009, 2013, 2015 and 2016, private financing capital stocks successively processed capital reductions to make losses in 2010 and 2016, and then transferred capital reserves to capital increase in 2017 and 2018, resulting in the increase or decrease of capital of the Company. The number of private financing common shares in each of the years were 381,000 shares, 448,000 shares, 533,000 shares, 1,243,000 shares and 9,040,000 shares respectively.

The above rights and obligations of private financing of new shares are the same as those of ordinary shares issued by the Company. However, according to the Securities Exchange Law, after 3 years of delivery of private financing ordinary shares and reapply public issuance, can apply for listing transaction on the market.

II. Capital surplus

To make up for losses, issue cash, or stock dividends(1) Stock Issue Premium Only to make up for losses Employees stock options exercised Employees stock options expired Not used for any purpose Employees stock options	December 31, 2018 $ 360,198 2,591 4,292 - $ 367,081	December 31, 2017	December 31, 2017
			$ 472,666 2,238 4,292 353 $ 479,549

The changes in the balance of various capital reserves of the Company in 2018 and 2017 are as follows:

January 1, 2017 Balance Distribution of cash Transfer of increased capital December 31, 2017 Balance January 1, 2018 Balance Distribution of cash Transfer of increased capital Employees exercise stock options December 31, 2018 Balance		Stock Issuance Premium $ 518,772 38,226 ) 7,880) $ 472,666 $ 472,666 108,082 ) 8,314 ) 3,928 $ 360,198	Employees stock options exercised Employees stock options expired $ 2,238 $ 4,292 - - - - $ 2,238 $ 4,292 $ 2,238 $ 4,292 - - - - 353 - $ 2,591 $ 4,292	Employees stock options exercised Employees stock options expired $ 2,238 $ 4,292 - - - - $ 2,238 $ 4,292 $ 2,238 $ 4,292 - - - - 353 - $ 2,591 $ 4,292	Employees stock options $ 353 - - $ 353 $ 353 - - ( 353) $ -		Total
	( ( ( (			$ 2,238 - - $ 2,238 $ 2,238 - - 353 $ 2,591	(	( ( ( (	$ 525,655 38,226 ) 7,880) $ 479,549 $ 479,549 108,082 ) 8,314 ) 3,928 $ 367,081

The excess of the capital reserve in excess of the premium amount (including the issuance of common shares with excess in denomination) to cover the losses, when the Company has no loss can be used to issue cash dividends or stock dividends, provided that the amount of share capital is limited to a certain percentage of the collected share capital each year.

III. Retained Earnings and Dividend Policy

The Company’s Articles of Incorporation provide that, when allocating the net profits for each fiscal year, the Company shall first offset its losses in previous years and then set aside the following items accordingly: Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals Company’s paid-in capital; special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge; any balance left over shall be allocated according to the resolution of the shareholders’ meeting. The Company’s Articles of Incorporation provide the policy about the profit-sharing bonus to employees, please refer to Note 22 (6).

The dividend policy of the Company shall take into account the environment and surplus status of the industry, the demand for future capital expenditure and the long-term financial planning, and if there is a surplus to distribute dividends, the proportion of cash dividend payment shall not be lower than 10% of the total dividend allocated in the current year, and the rest is distributed in the form of stock dividends.

The appropriation for legal capital reserve shall be made until the reserve equals the Company’s paid-in capital. The reserve may be used to offset a deficit or be distributed as dividends in cash for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.

The Company according to the Financial Commission’s issued letter No. 1010012865, No.1010047490, No.1030006415 and “Adoption of international Financial Reporting Standards (IFRSs), a question and answer on the application of the special surplus reserve” and other provisions to mention and rotate the special surplus reserve.

The Company held regular shareholders' meetings on June 14, 2018 and June 16, 2017 respectively. The resolutions passed the 2017 and 2016 annual surplus allocation as follows:

ows:
Legal Reserve Special Reserve Cash Dividend	Surplus Allocation case 2017 2016 $ 13,738 $ 130 772 - 1,174	Dividend per	share (NT$)
	2017 $ 13,738 772	2018 $ -	2017
			$ 0.07

On June 14, 2018 and June 16, 2017, the Company transferred capital to the capital reserve of NT$8,314,000 and NT$7,880,000 according to the resolution of the shareholders' meeting and distributed the capital reserve of NT$108,082,000 and NT$38,226,000, cash dividend per share is NT$6.50 and NT$2.43 respectively.

The proposed 2018 annual reserve distribution by the Board of Directors on March 20, 2019 is as follows:

Legal Reserve Special Reserve Cash Dividend	Surplus Allocation case $ 12,486 839 69,042	Dividend per share (NT$)
		$ 4.00

The surplus distribution for the 2018 is to be discussed at the shareholders' meeting scheduled on May 2, 108.

IV. Non-controlling interests

Year-start Balance Increased non-controlling interest in the establishment of subsidiaries Non-controlling interests of acquiring subsidiaries (Note 27） Aadditional non-controlling interests of Subsidiaries Acquisition (Note 26 (4)) Net profit for the year Redemption difference of financial statement conversion of foreign operating institutions Related income tax Year-end Balance		2018 $ - 4,900 - - 1,588 - - $ 6,488	2017
			$ - - ( 73,579 ) 69,954 3,776 ( 182 ) 31 $ -

V. Treasury Stocks

The company transferred the shares to the employees. On August 16, 2018, the board of directors decided to buy back the treasury shares. As of December 31, 2018, it had bought back 199 shares.

The Treasury shares held by the company shall not be pledged under the Securities Exchange law, nor shall they enjoy the rights of dividend distribution and voting right.

22. NET PROFIT OF THE YEAR

I. Other Revenue

Acceptance revenue Government grant revenue (Note) Interest revenue on bank deposits Other		2018 $ 3,058 1,899 992 2,748 $ 8,697		2017
				$ 200 1,000 378 2,697 $ 4,275

Note: The government grant revenue is mainly funded by the Hsinchu Science Park Management Bureau of the Ministry of Science and Technology. The company cooperates with the National Tsinghua University to implement the “High Energy Noise-like Pulsed Fiber Laser for R&D of Materials Processing”.

II. Other Profit and Loss

Re-measure the original profit in the acquired equity (Note 1) Net foreign currency exchange benefits (losses) (Note 2） Disposition of property, equipment and plant losses Other	2018 $ - 2,132 ( 1 ) ( 9) $ 2,122	2017
		$ 8,994 ( 4,566 ) ( 2 ) ( 12) $ 4,414

Note 1: The company obtained a 73% equity interest of Chen Li Education on March 2, 2006. The equity held increased from 15% to 88%, making it a subsidiary of the company. On the acquisition day, the equity of previously acquired party is remeasured at fair value and thus generates benefits of NT$8,994,000.

Note 2: The 2018 and 2017 foreign exchange profits and losses of the Company are as follows:

Total foreign currency exchange profits Total foreign currency exchange losses Net profit (loss) III. Financial Costs Interest on bank loans		2018 $ 4,586 2,454) $ 2,132 2018 $ 1,550		2017
	(		( (	$ 8,466 13,032) $ 4,566) 2017
				$ 999

IV. Depreciation and Amortization

Depreciation- property, plant and equipment Amortization- Other intangible assets Total Depreciation Fees Summary by Function Operating costs Operating expenses Amortization costs aggregated based on the function Operating costs Operating expenses V. Employee Benefit Expenses Short term Employee Benefits Retirement Benefits Defined contribution plans Defined benefit plans (Note 20) Summary by functions Operating costs Operating expenses		2018 $ 18,207 1,109 $ 19,316 $ 12,331 5,876 $ 18,207 $ 380 729 $ 1,109 2018 $ 263,281 8,745 94) $ 271,932 $ 37,437 234,495 $ 271,932		2017
				$ 16,707 601 $ 17,308 $ 13,353 3,354 $ 16,707 $ 183 418 $ 601 2017
	(		(	$ 209,920 8,622 109) $ 218,433 $ 22,177 196,256 $ 218,433

V. Employee Benefit Expenses

VI. Employees’ and Directors ' Compensations

In accordance with the provisions of the Articles of Incorporation, the employees' and directors' compensations are provided at not less than 3% and not more than 5% respectively before deducting the pre-tax benefits of the employees and directors. The employee compensation and directors' compensation estimated in the years of 2018 and 2017 were decided by the Board meeting on March 20, 2019 and March 23, 2018 respectively as follows:

Estimated Ratio

Employees’ Compensation -Estimated ratio -Amount Director’s Compensation -Estimated ratio -Amount		2018 3% $ 3,750 2.5% $ 3,125		2017
				3% $ 4,427 2.5% $ 3,689

If the amount of the annual consolidated financial report changes after the release date, it will be treated according to the accounting estimates and adjusted in the next year.

There is no difference between the actual allotment amount of the employee's and director's compensation for 2017 and 2016 and the recognized amount of the consolidated financial report for the 2017 and 2016.

For information on 2019 and 2018 Board Resolutions on employees’ and directors' compensation of the Company's, please visit the "Public Information Observatory Website" of the Taiwan Stock Exchange.

23. INCOME TAX

I. Main accounts of Income tax benefits recognized in profit (loss):

Current income tax This year's generators Unallocated surplus plus levy Adjustments from previous years Deferred income tax This year's generators Changes in tax rates Income tax benefits recognized in profit and loss	2018 $ 810 12,286 9 ( 15,202 ) ( 3,278) ($ 5,375)	2017
		$ 13,013 - ( 151 ) ( 15,231 ) - ($ 2,369)

The adjustments of income accounting and income tax benefits are as follows:

Income tax at the statutory tax rate for net profit before tax (20% and 17% for the year of 2018 and 2017) Unallocated retained earning plus levy Tax-free income and non-deductible costs Impact number of non-recognitions of deferred income tax assets Previous years income tax adjustment Changes in tax rates Income tax benefits recognized in profit and loss	2018 $ 24,514 12,286 897 ( 39,803 ) 9 ( 3,278) ($ 5,375)	2017
		$ 36,636 - ( 11,816 ) ( 27,038 ) ( 151 ) - ($ 2,369)

The tax rate applicable to individual income tax law of the Republic of China in 2017 is 17%. After the amendment in February 2018, the R.O.C Income Tax Law adjusted the income tax rate for profit-making business from 17% to 20%, and it was implemented in 2018. In addition, the tax rate applicable to the undistributed surplus for 2018 will be reduced from 10% to 5%; the tax rate applicable to subsidiaries in China will be 25%.

Due to the uncertainties in the earnings distribution of 2019 shareholders' meeting, the potential income tax consequences of the undistributed surplus in 2018 plus the 5% income tax cannot be reliably determined.

II. Income tax recognized in other consolidated profits and losses

Deferred income tax This year generator -Conversion of foreign operating institutions -Remeasured number of defined benefit plan Income tax recognized in other consolidated profits and losses	2018 ( $ 189 ) ( 128) ($ 317)		2017
			$ 189 96 $ 285

III. Deferred income tax assets and liabilities

The changes in deferred income tax assets and liabilities are as follows: 2018

2018
Deferred income tax assets Temporary differences Allowance for inventory loss Use equity law to identify foreign investment losses Other Loss Deduction Deferredincome tax liabilities Temporary differences Land revaluation Defined benefit plans Unrealized net profits of exchange 2017		Year-start Balance		Acquired Enterprise mergers $ - - - - - $ - $ - - - $ -	Recognized in profit and loss $ 1,285 ( 466 ) 52 871 18,019 $ 18,890 $ - 111 299 $ 410	Recognized in other comprehensive income			Year-end Balance
		$ 3,954 1,466 1,392 6,812 12,502 $ 19,314 $ 2,232 1,274 - $ 3,506				( ( (	$ - - 189) 189) - $ 189) $ - 128 - $ 128		$ 5,239 1,000 1,255 7,494 30,521 $ 38,015 $ 2,232 1,513 299 $ 4,044

2017
Deferred income tax assets	Year-start Balance	Acquired Enterprise mergers	Recognized in profit and loss	Recognized in other comprehensive income $ - - - - 189 - - - 189 - $ 189 $ - ( 96 ) - ($ 96)	Year-end Balance
	$ - - - - - - - - - 1,610 $ 1,610 $ - 1,351 259 $ 1,610	$ - 1,575 - 200 - 502 - 247 2,524 - $ 2,524 $ 2,232 - - $ 2,232	$ 3,954 ( 109 ) 541 171 - ( 353 ) 142 ( 247) 4,099 10,892 $ 14,991 $ - 19 ( 259) ($ 240)		$ 3,954 1,466 541 371 189 149 142 - 6,812 12,502 $ 19,314 $ 2,232 1,274 - $ 3,506
Temporary differences Allowance for inventory loss Use equity law to identify foreign investment losses Leave payable Unrealized net loss of exchange Exchange differences between foreign operating institutions Property, plant and equipment Unrealized cost of goods sold Unrealized Pension funds Loss Deduction Deferred income tax liabilities
Temporary differences Land revaluation Defined benefit plans Unrealized net profits of exchange

IV. Losses deduction of deferred income tax assets not recognized in the balance sheet

Loss Deduction 2018 Expiration 2019 Expiration 2020 Expiration 2021 Expiration 2022 Expiration 2023 Expiration 2024 Expiration 2025 Expiration 2026 Expiration	December 31, 2018 $ - - - - 8,604 53,678 24,784 3,182 4,357 $ 94,605	December 31, 2017	December 31, 2017
			$ 34,569 48,987 50,925 62,622 13,679 53,678 24,784 3,182 - $ 292,426

V. Related information of unused loss deduction

2018 Expiration 2019 Expiration 2020 Expiration 2022 Expiration 2023 Expiration 2024 Expiration 2025 Expiration 2027 Expiration 2028 Expiration	December 31, 2018 $ - 33,979 50,925 62,622 13,679 53,678 24,784 3,182 4,357 $ 247,206	December 31, 2017	December 31, 2017
			$ 108,108 48,987 50,925 62,622 13,679 53,678 24,784 3,182 - $ 365,965

VI. Income Tax Approval Situation

The Company and its subsidiaries operating in the territory of the Republic of China for profit income tax declaration have been approved by the R.O.C tax collection agency as follows:

Company Name Success Prime Corporation Chen Li Education	Approved Year
	2016 2016

The authorities of the Republic of China will not proactively issue approval notices to enterprises. Only in the event of a tax dispute, the payment notice of the year will be issued to each company and the right to impose additional taxation will be retained.

24. EARNINGS PER SHARE

Unit: NT$ per share

Basic earnings per share Diluted earnings per share		2018 $ 7.18 $ 7.16		2017
				$ 8.92 $ 8.86

When calculating the earnings per share, the impact of the free allocation has been retrospectively adjusted. The benchmark date for the free allocation is scheduled for July 28, 2018. Due to retrospective adjustments, the basic and diluted earnings per share of 2017 are as follows:

Basic earnings per share Diluted earnings per share	Before Adjustment $ 9.37 $ 9.31	Unit: NT$ per share After Adjustment $ 8.92 $ 8.86

The earnings used to calculate the earnings per share and the weighted average shares of common stock are as follows:

Net profit of the year

Net profit for calculating basic and diluted earnings per share Number of shares Weighted average common shares used to calculate basic earnings per share Impact of potential common shares with dilution effect: Employee stock options Employee compensation Weighted average common shares used to calculate diluted earnings per share		2018 2017 $ 124,866 $ 154,981 Unit: Thousand shares 2018 2017 17,385 17,379 - 79 48 27 17,433 17,485

If the Company has to choose to pay employees in stock or cash, the diluted earnings per share is calculated. Suppose the employee compensation will be issued in the form of shares, and when the potential common stock has a dilution effect, it takes into account the weighted average external shares in circulation in order to calculate the diluted earnings per share. The dilution effect of these potential ordinary shares will continue to be taken into account when calculating the diluted earnings per share before the deciding employee's compensation for next year.

25. SHARE BASE PAYMENT AGREEMENT

Employees Stock Options

In June and July 2012, the Company granted employees stock options with 1,799,000 units and 1,801,000 units, and each unit can subscribe for 1 unit of common stock. The granted subject are employees who meet certain conditions in the Company. The duration of the options is 6 years, and the holders of the certificates can exercise 50%, 30% and 20% of the stock options

respectively after 2, 3 and 4 years after the issuance expiration. The exercise price of the stock options is the closing price of the ordinary shares on day of issuance. After the stock options are issued, when the ordinary shares of the Company change, the exercise price of the stock options is adjusted according to the prescribed formula.

I. Information on the issuance of 2012 employees stock options is as follows:

Employees stock options		2018	Weighted average Execution Price (NT$) $ 59.1 - 59.1		2017
		Unit (Thousands) 80 - 80) - -			Unit (Thousands) 80 - - 80 80	Weighted average Execution Price (NT$)
Circulating year-start Abstained- current year Executed- current year Circulating year-end Can be executed by year-end	(					$ 62.1 - - 59.1 59.1

At reporting date, the relevant information on external circulation of employees’ stock is as follows:

Range of execution price (NT$) Weighted average remaining contract duration (years)	December 31, 2018 $ - -	December 31, 2017
		$59.1 0.5 years

On November 6, 2017, the company also issued 1,600,000 units of employee stock options according to the board of directors’ resolution. Each unit can subscribe for 1 share of common stock, and the price of the common stock is the share price of the share option on issuance date, but as of December 31, 2018, the Company has not actually issued.

II. New plan of Employee restricting shares

In order to retain and attract talents, the company issued a limited number of new shares of 400,000 shares based on the resolution of the shareholders' meeting on June 14, 2018, with a total amount of NT$ 4,000,000 and the issue price is NT$ 0 per share. It is expected within one year from the shareholders' meeting, the board of directors is authorized to issue once or in part within the quota.

26. MERGER OF ENTERPRISES

I. Subsidiaries acquired

Chen Li Education	Main operating activities Primary, middle, high school curriculum education tutoring	Acquisition Day March 2, 2017	Ownership rights with voting rights /Acquisition ratio(%)		Transfer Price
			88%		$ 629, 644

The Company acquired the Chen Li Education on March 2, 2017 covering digital consulting operations and the business expansion of the merger company.

II. Transfer Price

Cash Financial assets measured in terms of cost (Note)	Chen Li Education	Chen Li Education
		$ 526,150 103,494 $ 629,644

Note: The fair value measured by the acquisition date on March 2, 2017.

III. Assets acquired and liabilities incurred on the date of acquisition

Current assets
Cash
Accounts receivable and other receivables
Prepaid payments and other current assets
Non-current assets
Property, Plant, and Equipment
Inactive market bond investment
Other financial assets
Trademark
Other intangible assets
Deferred income tax assets
Other non-current assets
Current liabilities
Short-term borrowing
Accounts payable and other payables
Income tax liabilities of the current period
Other current liabilities
Deferred income tax liabilities

Chen Li Education

$ 98,943
38,555
56,902
260,711
149,220
70,342
404,144
951
2,524
16,971
( 149,000 )
( 68,751 )
(
6,546 )
( 254,555 )
(
2,232)
$ 618,179

IV. Non-controlling interests

The non-controlling interests of Chen Li Education (12% of ownership rights) is based on the fair value measurement of the non-controlling interest at acquisition date with NT$ 69,954,000. This fair value is estimated using the income method, and the main assumptions used to determine fair value are as follows:

(1) Discount rate is 14.6%；
(2) Long-term sustainable growth rate is 2%; and
(3) Adjust to factors considered by market participants (including the controlling and non-controlling over Chen Li Education and the market liquidity of shares).

V. Goodwill arising from the acquisition

Transfer Price Add: Fair value of acquired equity before the acquisition date (15%) Add: Non-controlling interests（12%） Less: Fair value of identifiable net assets acquired Goodwill arising from the acquisition	Chen Li Education	Chen Li Education
	(	$526, 150 103,494 69,954 618,179) $ 81,419

Acquisition of Chen Li Education generated goodwill, mainly from the premium control. In addition, the pricing paid by the Merger includes the expected combined efficiency, revenue growth, future market development and employee value of Chen Li Education. However, these benefits do not meet the recognition criteria for identifiable intangible assets and are therefore not recognized separately.

VI. Acquisition of net cash outflow from subsidiaries

Price of cash payment Less: Cash balance obtained	Chen Li Education	Chen Li Education
	(	$ 526,150 98,943) $ 427,207

VII. The impact of merger on business results

Since the date of acquisition, the operating results from the acquired enterprise are as follows:

2017 Operating income 2017 Net profit of the year	Chen Li Education	Chen Li Education
		$ 587,508 $ 63,774

If the acquisition date of enterprises merger takes place on the start date of the fiscal year, The proposed 2017 operating income of the merger company is NT$899,645,000 and the proposed net profit is NT$158,985,000, these amounts do not reflect the revenue and operating results that the merged Company can actually generate if the merger is completed on the acquisition start date, nor should it be used as a forecast of future operating results.

Management has taken into account the following factors in the preparation of the proposed operating income and net profit for the acquisition of Chen Li Education at the beginning of the fiscal year, assuming that the merger company has acquired:

(1) Depreciation is calculated on the basis of the fair value of the property, plant, and equipment at the time the enterprise merges using the initial accounting policy, rather than on the book value recognized in the financial statements prior to the acquisition; and
(2) According to the capital conditions and credit evaluation of the merger Company, borrowing costs is estimated by debt to equity ratio.

27. EQUITY TRANSACTION WITH NON-CONTROLLING INTERESTS

On July 4, 2017, the merger company acquired 12% of the shares of its subsidiary Chen Li Education Co., Ltd., and the shareholding ratio increased from 88% to 100%.

Since the above transactions do not change the control of the consolidated company to these subsidiaries, the merged company is treated as an equity transaction.

Cash price of payment Amount of non-controlling interest shall be transferred in the calculation of the book value of the subsidiary's net assets based on relative change in equity Equity Transaction Difference Adjustment Account of Equity Transaction Difference Retained earnings	Chen Li Education	Chen Li Education
	(	$ 90,719 73,579) $ 17,140 $ 17,140

28. OPERATING LEASE AGREEMENT

The operating lease is the office, teaching facilities, and plant, lease rental period is 1~10 years. The total amount of future minimum lease payments for non-cancellation operating leases is as follows:

No more than 1 year 1 ~ 5 years 6 ~ 10 years	December 31, 2018 $ 98,069 186,220 74,790 $ 359,079	December 31, 2017	December 31, 2017
			$ 71, 803 185,252 83,640 $ 340,695

29. CAPITAL RISK MANAGEMENT

The Company’s capital management to ensure that the enterprises within the group can continue to operate suitably under the debt and equity balance, in order to maximize shareholder reward.

The capital structure of the Company consists of net debt of the combined company (loans minus cash) and equity (capital stock, capital reserve and retained earnings).

The Company is not subject to other external capital requirements.

30. FINANCIAL INSTRUMENTS

I. Fair value Information- financial instruments not measured at fair value.

The carrying amount of financial assets and liabilities that are not measured at fair value is expected to be close to their fair value.

II. Fair value information- financial instruments measured at fair value on a repetitive basis.

There were no financial assets and liabilities measured at fair value by the Company at December 31, 2018 and 2017.

III. Types of financial instruments

Financial assets Loans and Receivables (Note1） Financial assets measured at amortized costs (Note 2） Financial liabilities Financial liabilities measured at amortized costs (Note 3）	December 31, 2018 $ - 310,827 242,482	December 31, 2017
		$ 325,462 - 157,294

Note 1: The balance consists of cash and cash equivalents, debt instrument investments in inactive markets, notes and accounts receivables, other receivables and refundable deposits (other non-current assets), which are measured at amortized cost.
Note 2: The balance consists of financial assets measured by amortized cost, such as cash and cash equivalents, notes and accounts receivables, other receivables and refundable deposits (other non-current assets).
Note 3: The balance consists of financial liabilities measured at amortized cost, such as short-term borrowings, notes and accounts payable and other payables.
IV. Purpose and policies of financial risk management

The Company’s major financial instruments include cash and cash equivalents, financial assets measured at amortized cost, notes and accounts receivable, notes and accounts payable and borrowings. The financial management department of the Company provides services for each business unit, coordinates and run the domestic and international financial market operations, monitors and manages the financial risks related to the operations by analyzing the internal risk report that overlooks the degree and extent of risk. These risks include market risk (including exchange rate risk and interest rate risk), credit risk and liquidity risk.

1) Market Risk

The main financial risk is the foreign currency exchange rate risk (see (1) below) and the risk of interest rate changes (see (2) below).

(1) Exchange Rate Risk

For the book value of monetary assets and liabilities denominated in the non-functional currency at the balance sheet date, refer to Note 33.

Sensitivity analysis

The Company is mainly affected by fluctuations in the US dollar and Renminbi (CNY) exchange rate.

The sensitivity analysis only includes foreign currency monetary items that are in circulation and the conversion at the end of the period is adjusted by 1% of the exchange rate change. When the New Taiwan dollar appreciates by 1% against each relevant currency, it will reduce the net profit before tax of the Company in 2018 and 2017 by NT$ 289,000 and NT$ 719,000 respectively. When the New Taiwan dollar depreciates by 1% against each foreign currency, its impact on net profit before tax will be a positive amount of the same amount.

(2) Interest Rate Risk

The interest rate risk mainly comes from the borrowing of floating interest rate. Interest rate fluctuations will affect future cash flows but will not affect the fair value.

The book value of financial assets and liabilities for which the Company is subject to interest rate risk on the balance sheet date is as follows:

Interest rate risk with fair value -Financial assets Cash flow interest rate risk -Financial assets -Financial liabilities	December 31, 2018 $ 9,033 205,277 135,000	December 31, 2017
		$ 9,231 263,273 65,000

Assume that the floating borrowing rate at the end of the reporting period is held during the entire reporting period. When the interest rate increases/decreases by 0.1%, the net profit before tax for the Company's 2018 and 2017 will increase by NT$70,000 and NT$198,000 respectively, while all other variables remain fixed.

2) Credit Risk

Credit risk refers to the risk that the counterparty defaults on the contractual obligations resulting in financial losses to the Company. As the major trading counterparty are all creditworthy financial institutions and corporate organizations, no significant credit risk is expected.

3) Liquidity Risk

The Company reduces the impact of cash flow fluctuations by managing and maintaining sufficient cash. The Management supervises the available quotas of bank financing and ensures compliance with the terms of the loan contract. The consolidated liabilities were higher than the current assets on December 31, 2018. However, the current liabilities mainly consisted of advance receipt of tuition fees. Non-financial liabilities did not result in the outflow of future cash from the Company. Therefore, the Company evaluates little liquidity risk.

Bank borrowing is an important source of liquidity for the Company. As of December 31, 2018, and 2017, the unused financing capital was NT$91,000,000 and NT$35,000,000 respectively.

Liquidity and interest rate risk statement for non-derivative financial liabilities

The analysis of the remaining contractual maturity of non-derivative financial liabilities is based on the undiscounted cash flows of financial liabilities (including principal and estimated interest) based on the date which the Company is required to repay. Therefore, regardless whether the bank immediately executes its rights, the Company may be required to immediately repay the bank loan by the earliest period in the following table; other non-derivative financial liability maturity analysis is prepared according to the agreed repayment date.

Interest cash flow paid at floating interest rate, its outstanding interest amount is derived from the balance sheet daily interest rate curve.

December 31, 2018

Non-derivative financial liabilities Non-interest-bearing liabilities	1~6 Months $ 100,626 135,000 $ 235,626	6 months~1 year	6 months~1 year
			$ 6,856 - $ 6,856

December 31, 2017

Non-derivative financial liabilities Non-interest-bearing liabilities Floating Rate Tool	1~6 Months $ 92,294 65,000 $ 157,294	6 months~1 year	6 months~1 year
			$ - - $ -

31. TRANSACTION OF RELATED PARTIES

Transactions, account remaining balances, earnings and expenses between the Company and its subsidiaries (related parties with the company) are erased in full at the time of merge and are not disclosed in this note. In addition to the disclosure of other notes, the transactions between Company and other related parties are as follows.

I. Name and its relation of the related parties

Name of the related parties Relationship with merged company Shu-Ling Tseng Chairman of the Subsidiary Xiao-Cheng Chu General Manager of Subsidiary Min-Chun Chen Spouse of the Chairman of the Subsidiary (From January 30, 2019, is the chairman of the merged Company)

II. Operating expenses- Lease Rental costs

Name of the related parties Shu-Ling Tseng Min-Chun Chen		2018 $ 8,580 7,200 $ 15,780		2017
				$ 8,580 7,200 $ 15,780

The Company leases the office and the lecture place to the related parties, and the lease conditions are equivalent to those of the general non-relevant parties.

III. Refundable Deposit (other non-current assets included in the account)

Name of the related parties Shu-Ling Tseng Min-Chun Chen	December 31, 2018 $ 1,960 880 $ 2,840	December 31, 2017	December 31, 2017
			$ 1,960 880 $ 2,840

As mentioned in (2) above, the company pays the refundable deposit of the lease to the related party according to the market conditions.

IV. Acquisition of financial assets

2017

Name of the related parties	Account List	Number of shares transaction	Transaction Subject Shares of Chen Li Education		Price obtained
Xiao-Cheng Chu	Investment in equity method (note)	1,344,000 shares			$ 90,719

Note: The amount of the account related to this transaction has been offset when the consolidated financial statements have been prepared.

The consolidated company was approved by the board of directors to purchase the equity of Chen Li Education from the related person Xiao-Cheng Chu in July 2017, and in accordance with the “acquisition or disposal of assets handling procedures”, the other independent auditors provided expert opinions on the reasonableness of the transaction price and the equity valuation, the analysis report is used as the basis for the purchase price.

V. Salaries of Key Management Levels

Short term Employee Benefits Retirement benefits		2018 $ 18,297 371 $ 18,668		2017
				$ 10,823 213 $ 11,036

The salaries of directors and other key management levels are determined by the Compensation Committee based on individual performance and market trends.

32. QUALITY-BACKED ASSETS

The following assets have been provided as collateral for short-term bank borrowing and installment fund for the Tutorial school:

Pledged deposit slips (financial assets measured at amortized cost- non-current) Pledged deposit slips (inactive market debt instruments investment- non-current) Land and buildings	December 31, 2018 $ 4,420 - 223,399 $ 227,819	December 31, 2017	December 31, 2017
			$ - 4,420 - $ 4,420

33. INFORMATION ON FOREIGN CURRENCY ASSETS AND LIABILITIES WITH SIGNIFICANT IMPACT

The following information is aggregated in foreign currencies other than the functional currency of the Company. The exchange rate disclosed is the exchange rate of the foreign currency into the functional currency. The foreign currency assets and liabilities that have significant impact are as follows:

December 31, 2018

Foreign currency assets Monetary accounts US Dollars RMB Foreign currency liabilities Monetary accounts US Dollars December 31, 2017 Foreign currency assets Monetary accounts US Dollars RMB Japanese Yen Foreign currency liabilities Monetary accounts US Dollars	Foreign Currency $ 1,422 2,185 787 Foreign currency $ 2,802 2,109 12,061 809	Exchange rate 30.665 4.447 30.665 Exchange rate 29.710 4.540 0.262 29.710	Book Value
			$ 43,606 9,717 24,133 Book Value

			$ 83,247 9,575 3,162 24,035

The Company has realized and unrealized the foreign currency exchange gains and losses in the 2018 and 2017. Please combine the consolidated income statement. Due to the

large number of foreign currency transactions, it is impossible to disclose the exchange gains and losses according to each significant foreign currency.

34. NOTES DISCLOSURE ITEMS

I. Main transaction items and II. Information related to the transfer of investment business:
Loans to others: Table 1.
Endorsement for others: Table 2.
Holding securities at the end of the period (excluding investment in subsidiaries): none.
Accumulatively buy or sell the same marketable securities amounting to NT$300 million or paid-up capital of more than 20%: None.
The amount of property acquired is NT$300 million or over 20% of paid-up capital: none.
The disposition of property amounts to NT$300 million or over 20% of paid-up capital: none.
The amount of import and sales with related parties amounts to NT$100 million or over 20% of paid-up capital: Table 3.
The receivables from the related party amounted to NT$100 million or more than 20% of the paid-up capital: none.
Engage in derivatives transactions: None.
II. Others: Business relationship, significant transactions and amounts between parent and subsidiaries and between the subsidiary companies themselves: Table 4.
Information on the investee company: Table 5.

II. China Investment Information:

1) The name of the China’s company as investee, the main business operation, the amount of capital received, the mode of investment, the export of funds, the proportion of shareholding, the profit and loss of investment, the carrying amount of the final investment, the profit and loss of the remitted investment and the investment limit to the mainland region: Table 6.
2) The following major transactions occurred directly or indirectly by the mainland invested company through the third region, and their prices, terms of payment, unrealized gains and losses: none.
(1) The amount and percentage of the purchase and the closing balance and percentage of the relevant payables.

(2) The amount and percentage of goods sold and the closing balance and percentage of related receivables.
(3) The amount of the property transaction and the amount of profit and loss it generates.
(4) The closing balance of the bill endorsement or the provision of the collateral and its purpose.
(5) The maximum balance, closing balance, interest rate range and total interest in the current period of the facility.
(6) Other transactions that have a significant impact on the profits and losses or financial position of the current period, such as the provision or receipt of services.

35. DEPARTMENTAL INFORMATION

Information provided to key operational decision makers to allocate resources and assess departmental performance, focusing on the types of products or services that are delivered or provided. The Company was initially a sole optical fiber business from January 1 to July 31, 2016. However, due to the establishment of the Digital Information and Education Services (Education Enterprise Division) since August 2016, the acquisition of Chen Li Education in March 2017 is based on the following reporting departments of the merged Company in 2018 and 2017:

Optical Fiber Enterprise Division - main fiber manufacturing and sales business. Education Enterprise Division - engaged in primary, middle, high school curriculum tutorial services, and provide customized digital information and consulting business.

I. Departmental revenue and operating results

Revenue and operating results of the Company based on the reporting department analyses as follows:

2018 Revenue from external customers Consolidated revenue Departmental gains and losses Interest revenue Disposition of property, plant and equipment losses Net foreign currency exchange benefits Financial costs Other revenue Other losses Net profit before tax	Optical Fiber Enterprise Division $ 218,361 $ 218,361 $ 19,501	Education Enterprise Division $ 699,218 $ 699,218 $ 92,309		Total
			$ 917,579 $ 917,579 $ 111,810 992 ( 1 ) 2,132 ( 1,550 ) 7,705 ( 9) $ 121,079

2017

Revenue from external customers Consolidated revenue Departmental gains and losses Interest revenue Original held acquired equity remeasurement Disposition of property, plant and equipment losses Net foreign currency exchange benefits Financial costs Other revenue Other losses Net profit before tax	Optical Fiber Enterprise Division $ 200,253 $ 200,253 ($ 5,510)	Education Enterprise Division $ 622,156 $ 622,156 $ 154,208		Total
	(		$ 822,409 $ 822,409 $ 148,698 378 8,994 ( 2 ) ( 4,566 ) ( 999 ) 3,897 ( 12) $ 156,388

Departmental interests refer to profits earned by various departments and do not include interest revenue, remeasures of original holdings of acquired equity, net foreign currency exchange losses, financial costs, other revenue, other losses, and income tax expenses. This measure is provided to key operational decision makers to allocate resources to departments and evaluate their performance.

II. Revenue from major products and services

The revenue analysis of the company's main products and services is as follows:

Education services and information Optical Fiber Cable Other Less: Return and discount of sales Total		2018 $ 699,217 162,834 50,874 5,189 918,114 535) $ 917,579	(	2017
	(			$ 622,156 161,762 39,048 2,186 825,152 2,743) $ 822,409

III. Regional Information

The company's continuing business revenue from external customers is divided according to the operation location and non-current assets information of by asset location is as follows:

Taiwan China United States Other	Revenuefromexternalcustomers 2018 2017 $ 749,506 $ 651,862 100,464 120,159 41,981 27,369 25,628 23,019 $ 917,579 $ 822,409	Revenuefromexternalcustomers 2018 2017 $ 749,506 $ 651,862 100,464 120,159 41,981 27,369 25,628 23,019 $ 917,579 $ 822,409	Revenuefromexternalcustomers 2018 2017 $ 749,506 $ 651,862 100,464 120,159 41,981 27,369 25,628 23,019 $ 917,579 $ 822,409	Non-current assets	Non-current assets	Non-current assets
		2018 $ 749,506 100,464 41,981 25,628 $ 917,579		December31 2018 $ 793,241 18,713 - - $ 811,954	December31 2017
						$ 765,647 21,568 - - $ 787,215

Non-current assets do not include classified as life insurance termination cash value, financial assets measured in terms of cost, deferred income tax assets and net defined benefit assets.

IV. Main Customer Information

The main customer group of the Company is general public student groups. Therefore, there is not one single customer who accounts for more than 10% of the operating income on the income statement in 2018 and 2017.

36. CASH FLOW INFORMATION

Simultaneously affect investment and fundraising activities for cash and non-cash items

Acquisition of property, plant and equipment Increase in property, plant and equipment Net increase (decrease) in prepaid equipment- deduction of transfers to intangible assets Decrease (increase) in the amount of equipment payable Net cash payments	2018 $ 51,381 ( 2,859 ) 1,153 $ 49,675		2017
		(	$ 16,197 10,366 3,013) $ 23,550

Table 1

Success Prime Corporation

LOANS TO OTHERS

2018

																Unit: New Taiwan Dollar Total limit amount on loans to others Note $ 27,748 (Note 3） Note 4	Unit: New Taiwan Dollar Total limit amount on loans to others Note $ 27,748 (Note 3） Note 4
Number (Note1）	The company that lends the funds	Receive of loans	Transaction Items	Related Party	Maximum balance for the current period	Closing balance	Actual amount of used	Interest rate range	Loan Properties (Note 2）	Business-related Transaction Amount	Reasons for short-term financing capital	Allowance for bad debt listed	Guarantee Products		Limited loan amount to Individual subject	Total limit amount on loans to others	Note
													Name	Value
1	Chen Li Education	The Company	Other receivables - related parties	Yes	$ 27,748	$ 27,748	$ -	1.9%	(2)	$ -	Business Turnover	$ -	－	$ -	$ 27,748 (Note 3）	$ 27,748 (Note 3）	Note 4

Note 1：The numbering column is described as follows:

(1) Issuer fill in 0.
(2) Companies as investee are numbered sequentially starting from 1.

Note 2： The subject receiving the loans, shall be limited to the following circumstances:

(1) Subject companies with business relations with the SPC.
(2) Necessary party with short-term financing capital.
Note 3：The maximum amount of business transactions in the most recent year between the two parties and 10% of the net value of the latest financial statements of Chen Li Education is calculated to be NT$ 27,748,000 (the business volume of the most recent year is NT$50,800,000 x 10% and the net value of the financial statements on December 31, 2017 is NT$226,689,000 x 10% of the total).

Note 4： Was written off when preparing consolidated financial statements.

2018

Table 2

Success Prime Corporation

ENDORSEMENT GUARANTEE FOR OTHERS

Unit: In thousands of New Taiwan Dollars, unless otherwise noted

Number (Note1）	Name of endorsement guarantor Company	The object of endorsement is guaranteed	The object of endorsement is guaranteed	Limit Endorsement Guarantee for a single enterprise (Note 3）	Highest Endorsement Guaranteed balance of current period	Final Endorsement Guaranteed balance	Actual amount of used	Property Endorsement Guarantee Amount	Cumulative endorsement margin as a percentage of net value from most recent financial statements (%)	Endorsement Guarantee Maximum limit (Note 3）	Parent company endorsement to Subsidiary	Subsidiary endorsement to parent company	Endorsement guarantee for China	Note
		Company Name	Relationship (Note 2）
1	Chen Li Education	The Company	(4)	$ 226,690	$ 226,000	$ 226,000	$ 135,000	$ -	99.7%	$ 340,034	N	Y	N	－

Note 1： The numbering column is described as follows:

(1) Issuer fill in 0.
(2) Companies as investee are numbered sequentially starting from 1.

Note 2：There are six kinds of relationship between the endorsement guarantor and the endorsed subject, can be indicated by the following types:

(1) Companies with business relationship.
(2) Directly hold more than 50% of the common stock of Subsidiaries.
(3) The combined calculation of shares held by the parent company and the subsidiary is 50% more than the investee company.
(4) For parent companies that indirectly hold more than 50% of the common stock directly or through subsidiaries.
(5) Companies that are mutually protected under contractual requirements based on the needs of the contracted project.
(6) A company that is endorsed by each of the contributing shareholders in accordance with their shareholding ratio due to the joint investment relationship.

Note 3：The limit amount of the foreign endorsement guarantee of Chen Li Education Co., Ltd. are as follows:

(1) The amount of the endorsement or guarantee of Chen Li Education and its subsidiaries as a whole to a single enterprise shall not exceed 100% of the net value of the financial statements audited or reviewed by Chen Li Education recently. Chen Li Education directly and indirectly or directly and indirectly to the company with more than 50% of the shares with voting rights of the company, the maximum amount of endorsement guarantees shall not exceed 1.5 times the net value of the company.
(2) The net value is based on the financial statements (2017) reviewed by the most recent Chen Li Education Accountant.

Success Prime Corporation

THE AMOUNT OF IMPORT AND SALES WITH RELATED PARTIES AMOUNTS TO NT$100 MILLION OR OVER 20% OF PAID-UP CAPITAL

2018

Table 3

Unit: New Taiwan Dollar

Import (sale) goods Company	Trading Subject	Relationship	Trading Scenarios	Trading Scenarios	Trading Scenarios		Trading conditions are different from general transaction The situationandreason	Trading conditions are different from general transaction The situationandreason	Notes and accounts receivables (payable)	Notes and accounts receivables (payable)	Note
			Import (sold) goods	Amount	Ratio of total import (sales) goods	Credit Period	Price	During the letter of credit	Balance	Ratio of total notes and accounts receivables (payable)
The Company Chen Li Education	Chen Li Education The Company	Subsidiary Parent company	Labor revenue Labor costs	( $ 224,176 ) 224,176	( 48% ) 64%	30 days 30 days	Note 1 Note 1	- -	$ 61,437 ( 61,437 )	50% ( 94% )	Note 2 Note 2

Note 1: There are no other transactions of the same type available for comparison, and the terms of collection are agreed by both parties.

Note 2: It was written off when preparing the consolidated financial report.

Success Prime Corporation

BUSINESS RELATIONSHIP, IMPORTANT TRANSACTIONS AND AMOUNTS BETWEEN PARENT AND SUBSIDARY COMPANIES AND BETWEEN SUBSIDIARIES

2018

Table 4

Unit: In thousands of New Taiwan Dollars, unless otherwise noted

Number (Note1）	Trader's name	Subject Trading with	Relationship with the Trader (Note2）		Trading Transaction Scenarios	Trading Transaction Scenarios	Trading Transaction Scenarios
				Subjects	Amount	Trading conditions	Percentage of total consolidated revenue or total assets (Note3）
0 〃	The Company 〃	Chen Li Education 〃	1 1	Labor revenue and costs Accounts receivables and payables	$ 224,176 61,437	There are no other transactions of the same type available for comparison, and the terms of payment are agreed by both parties. There are no other transactions of the same type available for comparison, and the terms of payment are agreed by both parties.	24% 5%

Note 1: The business transactions between the parent company and its subsidiaries should be indicated in the number column respectively. The method of filling in the numbers is as follows:

(1) The parent company fills in 0.
(2) Subsidiaries are numbered sequentially by the Arabic number 1 according to the company.
Note 2: There are three types of relationship with the trader. The type of mark can be used. (If it is the same transaction between the parent company or each subsidiary, there is no need to repeat the disclosure. For example, the parent company’s transaction to the subsidiary, if the parent company It has been revealed that there is no need to repeat the disclosure of the subsidiary part; if the subsidiary's transaction to the subsidiary is disclosed, if another subsidiary has been disclosed, the other subsidiary does not need to disclose it repeatedly):
(1) Parent company to subsidiary.
(2) Subsidiary to parent company.

(3) Subsidiaries to subsidiaries.

Note 3: The transaction amount accounts for the calculation of the combined total revenue or total assets ratio. In the case of assets and liabilities, the ending balance is calculated as the total assets. If it is a profit or loss item, the accumulated amount in the period accounts for the combined total. The method of receipt is calculated.
Note 4: The relevant account amount of the above transaction has been written off when preparing the consolidated financial statements.

Success Prime Corporation

RELATED INFORMATION ON THE INVESTEE COMPANY, OPERATING REGIONS AND MORE

FOR THE YEARS ENDED DECEMBER 31, 2018

Table 5							Unit: In thousands of New Taiwan Dollars, unless otherwise noted	Unit: In thousands of New Taiwan Dollars, unless otherwise noted	Unit: In thousands of New Taiwan Dollars, unless otherwise noted	Unit: In thousands of New Taiwan Dollars, unless otherwise noted	Unit: In thousands of New Taiwan Dollars, unless otherwise noted
Name of investment Company	Name of the invested company	Region	Main business Operation	Original Invested Amount			Final hold		Invested Companies Profit and loss Currentperiod	Investment recognized as profit and loss currentperiod	Note
				End of period	End of previous year	Number of shares （Thousand shares）	Ratio	Book Value
The Company The Company The Company Chen Li Education CHEN LI Education Group Limited	Chen Li Education Prime Optical Fiber Prime Education CHEN LI Education Group Limited CHEN LI Education Group (HK) Limited	Taiwan Taiwan Taiwan British Virgin Islands Hong Kong	Education services Wire & Cable Manufacturing Education Consulting Service Holding Company Holding Company	$ 711,369 10,000 5,100 40,543 ( USD 1,292,000 ) 30,059 ( USD 952,000 )	$ 711,369 10,000 - 40,543 ( USD 1,292,000) 30,059 ( USD 952,000)	11,200 1,000 510 - -	100% 100% 51% 100% 100%	$ 651,207 2,460 6,573 33,783 32,890	( $ 407 ) ( 4,358 ) 3,242 3,625 3,655	( $ 652 ) ( 4,358 ) 1,653 Note 1 Note 1	Subsidiary Subsidiary Subsidiary Sun Corp. Sun Corp.

Note 1: The profit and loss of the invested company is included in its investment company. To avoid confusion, it will not be expressed here.

Note 2: In the preparation of the consolidated financial statements, it has been fully written off.

Success Prime Corporation

CHINA INVESTMENT INFORMATION

FOR THE YEARS ENDED DECEMBER 31, 2018

Table 5

Unit: In thousands of New Taiwan Dollars, unless otherwise noted

Mainland Investee Company Name	Main Business Operations	Actual Amount of capital received	Investment method	Beginning of the current period Remitted from Taiwan investment amount	Remittance or recovery of investment amount in current period	Remittance or recovery of investment amount in current period	End of current period Remitted from Taiwan investment amount	Invested companies Profit and loss of current period	Merger Company Proportion of shares in direct or indirect investment	Investments Recognition in current period Profit and Loss (Note 1）	End of investment Book Value	For the period ended Repatriated Investment Income	Note
					Remitted	Recovered
Chen Li (Xiamen) Education Consulting Co., Ltd.	Engaged in educational consulting services and other business	RMB 6,000,000	Through the third regional company CHEN LI Education Group (HK) Limited Investment	$ 28,516	$ -	$ -	$ 28,516	$ 3,681	100%	$ 3,681	$ 31,452	$ -

==> picture [555 x 90] intentionally omitted <==

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

According to the regulations of the
Remittance Accumulated from Taiwan at the end
Ministry of Economic Affairs
of this period Investment amount approved by the Ministry
of Economy
Investment quota for mainland
Amount invested in mainland China
China
$ 28,516（RMB 6,000,000) $ 28,516（RMB 6,000,000） $ 100,395 (Note 2）
----- End of picture text -----

Note 1: Investment gains and losses are recognized in the financial statements audit checked by the Taiwanese parent company's accountant.

Note 2: Based on 60% of the net value of the latest financial statements of Chen Li Education Co., Ltd.

AI assistant

SPC — Annual Report 2018

52126_rns_2018-11-13_9ad1d686-a150-45b1-98ed-259db71ae45d.pdf

Success Prime Corporation and Subsidiaries

REPRESENTATION LETTER

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Revenue Recognition of Education Services

Assessment of Goodwill and Trademark Impairment

Other Matters

Responsibility of Management and Governance Units over the Consolidated Financial Statements

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

Success Prime Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

Success Prime Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars)

Success Prime Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars)

Success Prime Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

Success Prime Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

1. GENERAL

2. THE AUTHORIZATION OF FINANCIAL STATEMENTS

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

Definition of a lease

The Company as lessee

Impact on assets, liabilities and equity on January 1, 2019

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

II. Basis of Preparation

IV. Basis of Consolidation

V. Merger of Enterprises

VI. Foreign currencies

VII. Life Insurance termination cash value

VIII. Inventories

IX. Property, plant and equipment

X. Goodwill

XI. Intangible assets

1) Acquired separately

3) Derecognition

XIII. Financial instruments

1) Financial Assets

Financial assets measured at amortized cost

2017

2017

(3) Derecognition of financial assets

2) Financial liabilities

XIV. Provision

Decommissioning cost

XV. Revenue recognition

2018

1) Revenue of goods sale

I. Sale of goods

II. Provision of services

III. Interest revenue

XVI. Leases

XVII. Borrowing Costs

XVIII. Government Grants

XIX. Employee Benefits

XX. Share-based Payment Agreement Employee Stock Option

2) Employee Rights Restricted Stocks

XXI. Income Tax

1) Current tax

2) Deferred tax

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL ASSETS AT AMORTIZED COST-2018

8. INACTIVE MARKET DEBT INSTRUMENT INVESTMENT-2017

9. NOTES RECEIVABLES, ACCOUNTS RECEIVABLES, OTHER RECEIVABLES

2018

December 31, 2018

2017

10. INVENTORIES

11. SUBSIDARIES

Listed in Consolidated Financial Statement of Subsidiaries:

12. PROPERTY, PLANT, EQUIPMENT

13. G OODWILL

14. TRADEMARK RIGHTS AND OTHER INTANGIBLE ASSETS

15. LIFE INSURANCE TERMINATION CASH VALUE

16. OTHER ASSETS

17. SHORT-TERM BORROWINGS

SPC Annual Report 2018