SPC - Annual Report 2019 | FinancialReports.eu

Stock Symbol�2496

Success Prime Corporation and Subsidiaries

Consolidated Financial Statements For the Years Ended December 31, 2019 and 2018 with Independent Auditors’ Report

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

Phone: (037) 586999

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

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, 2019 under the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” are all the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standards 10 “Consolidated Financial Statements”. In addition, all the relevant information required to be disclosed in the consolidated financial statements have been disclosed. Hence, we do not prepare a separate set of consolidated financial statements.

Very truly yours,

Success Prime Corporation

Chairman: Min -Chun Chen March 24, 2020

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Success Prime Corporation

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Opinion

We have audited the accompanying consolidated financial statements of Success Prime Corporation and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2019 and 2018, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

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 Consolidated Financial Statements section of our report. We are independent of the Group 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 judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the consolidated 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 2019 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 Note 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 reverify 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 Note 4(10), 5(2) 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 2019 and 2018 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, 2019 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 24, 2020

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)

December 31, 2019 Amount � $185,533 13 10,046 546 57,840 1,387 1 - 4 - 6,432 - 21,316 1 8,697 1 291,797 20 4,500 - 4,860 - 309,114 21 222,391 15 404,144 27 81,419 5 12,297 1 38,365 3 83,663 6 6,662 - 29,291 2 1,196,706 80 $1,488,503 100 $80,000 253,119 5 17 - 24,211 - 2 72,844 5 9,758 1 67,702 2,430 5 - 3,033 - 513,097 35 21,870 1,700 3,710 1 - - 156,580 11 183,860 12 696,957 47 174,594 12 367,081 25 26,354 2 1,611 - 240,544 16 268,509 18 (2,600) - (21,956) (2) 785,628 53 5,918 - 791,546 53 ASSETS Current assets Cash and cash equivalents(note 6) Financial assets at amortized cost(note 4, 8 and 32) Notes receivables(note 4 and 9) Accounts receivables(note 4 and 9) Other receivables Current income tax assets Inventories(note 4 and 10) Other current assets(note 17) Total current assets Non-current assets Financial assets measured at fair value through other comprehensive income(note 4 and 7) Financial assets at amortized cost(note 4, 8 and 32) Property, plant and equipment(note 4, 12 and 32) Right-of-use assets(note 3, 4 and 13) Trademarks(note 4 and 14) Goodwill(note 14) Other intangible assets(note 4 and 15) Deferred income tax assets(note 4 and 25) Cash surrender value of term life insurance(note 4 and 16) Defined benefit assets(note 4 and 21) Other non-current assets(note 17 and 31) Total non-current assets Total assets LIABILITIES AND EQUITY Current liabilities Short-term borrowings(note 4, 18 and 32) Unearned tuition receipts(note 23) Notes payable Accounts payable(note 19) Other payables(note 20) Current income tax liabilities Lease liabilities-current(note 3, 4, 13 and 31) Current portion of long-term loans payable(note 4, 18 and 32) Other current liabilities(note 20) Total current liabilities Non-current liabilities Long-term debt payable(note 4, 18 and 32) Provisions Deferred income tax liabilities(note 4 and 25) Lease liabilities- Non-current(note 3, 4, 13 and 31) Total non-current liabilities Total liabilities Equity attributable to shareholders of the company(note 22) 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 22) Total Equity Total liabilities and equity $1,488,503 100	December 31, 2018	December 31, 2018
		Amount �
		$210,011 16 4,561 457 72,575 193 - - 6 - 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 $135,000 258,899 10 20 527 29,818 - 2 77,137 6 13,087 1 - - - - 6,313 1 520,771 40 - 1,700 4,044 - - - - - 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

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(note 4 and 23)
Sales Revenue
Service Revenue
Total operating revenue
Operating costs(note 10, 24 and 31)
Cost of sales
Cost of services
Total operating costs
Gross profit
Operating expenses(note 21 and 24)
Marketing
General and administrative
Research and development
Total operating expenses
Income from operations
Non-operating income and expenses(note 24)
Other income(note 31)
Other gains and losses(note 31)
Finance costs
Total non-operating income and expenses
Income before income tax
Income tax expense(note 25)
Net income for the year

2019
2018
Amount
�
Amount
�
$235,366
27
$218,361
24
646,244
73
699,218
76
881,610
100
917,579
100
153,888
17
140,467
15
332,750
38
346,537
38
486,638
55
487,004
53
394,972
45
430,575
47
72,329
8
79,673
9
209,408
24
224,393
24
27,687
3
14,699
2
309,424
35
318,765
35
85,548
10
111,810
12
9,003
1
8,697
1
(1,131)
-
2,122
-
(6,434)
(1)
(1,550)
-
1,438
-
9,269
1
86,986
10
121,079
13
(10,009)
(1)
5,375
1
76,977
9
126,454
14
(continued)

Other Comprehensive Income (loss)(note 21 and 25) Items that will not be reclassified subsequently to profit or loss: Remeasurements of defined benefit plans Income tax relating to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign financial statements Income tax benefit relating to items that may be reclassified subsequently to profit or loss Other comprehensive income (loss), net of income tax Total comprehensive income for the year Net income (loss) attributable to: Shareholders of the parent Non-controlling interests Total comprehensive income (loss) attributable to: Shareholders of the parent Non-controlling interests Earnings per share(note 26) Basic Diluted		2019	2018 Amount � �� - �� - �� - �� - �� - �� - �� - �� 14 �� 14 �� - �� 14 �� 14 �� - �� 14 �� ��
		Amount �
		�� - �� - �� - �� - - - �� - �� - �� 9 �� 9 �� - �� 9 �� 9 �� - �� 9 �� ��

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

Success Prime Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

Equity Attributable to Stockholders of the Parent

Balance at January 1, 2018 Appropriation of 2017 earnings Legal Reserve Special Reserve Capital surplus transferred to common stock Cash dividends distributed by the Company- NT$ 6.50 per share Issuance of ordinary shares under employee stock options Increase in non-controlling interest Net income (loss) of 2018 Other comprehensive income (loss) after tax of 2018 Total comprehensive income (loss) of 2018 Buy-back of treasury stock Balance at December 31, 2018 Appropriation of 2018 earnings Legal Reserve Special Reserve Cash dividends distributed by the Company - $4.00 per share Decrease in non-controlling interests-cash dividends issued to non-controlling shareholders by subsidiary Net income (loss) of 2019 Other comprehensive income (loss) after tax of 2019 Total comprehensive income (loss) of 2019 Balance at December 31, 2019		Share	Capital Amount $165,480 - - 8,314 - 800 - - - - - 174,594 - - - - - - $174,594	Capital Surplus $479,549 - - (8,314) (108,082) 3,928 - - - - - 367,081 - - - - - - $367,081			Retaine	d Earnings	Total
		Shares (Thousands) 16,548 - - 831 - 80 - - - - - 17,459 - - - - - - $17,459				Legal Reserve $130 13,738 - - - - - - - - 13,868 12,486 - - - - - $26,354	Special Reserve $- - 772 - - - - - - - 772 - 839 - - - - $1,611	Unappropriated Earnings $137,373 (13,738) (772� - - - 124,866 (153) 124,713 - 247,576 (12,486) (839) (69,042) - 76,118 (783) 75,335 $240,544

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 Adjustments to reconcile profit (loss) Depreciation expense Amortization expense Finance costs Increases in cash surrender value of term life insurance Interest income Loss on disposal of property, plant and equipment Inventory valuation losses Net loss (gain) on foreign exchange Gains from bargain purchases Changes in operating assets and liabilities: Notes receivables Account receivables Other receivables Inventories Other current assets Defined benefit assets Notes payable Accounts payable Other payable Unearned 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 financial assets at fair value through other comprehensive income		2019		2018 $121,079 18,207 1,109 1,550 (4,829) (992) 1 2,934 (760) - 812 (43,398) 1,436 (32,367) 22,985 (94) (1,639) (503) 18,479 (26,491) (18,789) 58,730 959 (1,550) (11,765) 46,374 ($9,211) 9,211 -
		$86,986 90,166 1,536 6,434 (108) (724) 143 17,027 2,467 (727) (89) 15,318 (1,161) 20,258 1,994 (86) (527) (6,317) (5,247) (5,770) (3,761) 217,812 691 (6,434) (13,817) 198,252 (6,095) - (4,500)

Acquisition of net cash outflow from subsidiaries(note 28) Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Purchase of intangible assets Payment of life insurance costs Cash inflow on the 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 Long-term debt Payments of lease liabilities 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	2019 ($9,410) (30,968) 3 (5,194) 4,208 (903) - - (52,859) 384,300 (439,300) 24,300 (66,780) (69,042) - - (1,429) (167,951) (1,920) (24,478) 210,011 $185,533	2018
		- - (49,675) 36 (7,298) 3,980 (2,677) (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

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, 2019 AND 2018 (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). Chen Li Education Co., Ltd. (hereinafter referred to as 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 24, 2020.

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

(1) 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), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the IFRSs) endorsed and issued into effect by the FSC

Except for the following, whenever applied, 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 would not have any material impact on the accounting policies of the Company and its subsidiaries (collectively, the “Group”):

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. For relevant accounting policies, please see Note 4.

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 previously 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

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 previously 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.

The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 1.74%. The difference between the (i) lease liabilities recognized and (ii) operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 $297,600 Less: Recognition exemption for short-term leases ( 2,971 Undiscounted amounts on January 1, 2019 $294,629 Discounted amounts using the incremental borrowing rate on January 1, 2019 $280,406

The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

Right-of-use assets Total effect on assets Lease liabilities - current Lease liabilities - non-current Total effect on liabilities	As Originally Stated on January1,2019 $ - $ - $ - - $ -	Initial Application Reclassification		Adjustments Arising from Initial Application $ 280,406 $ 280,406 $ 64,984 215,422 $ 280,406	Restated on January1,2019	Restated on January1,2019
		$ - $ - $ - - $ -				$ 280,406 $ 280,406 $ 64,984 215,422 $ 280,406

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

The Group as lessor

The Group does not make any adjustments for leases in which it is a lessor, and it accounts for those leases with the application of IFRS 16 starting from January 1, 2019.

(2) The IFRSs endorsed by the FSC for application starting from 2020

New IFRSs Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform” Amendments to IAS 1 and IAS 8 “Definition of Material”	Effective Date Announced by IASB
	January 1, 2020 (Note 1) January 1, 2020 (Note 2) January 1, 2020 (Note 3)

Note 1: The Group 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 2: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.
Note 3: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

(3) New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or JointVenture” IFRS 17 “Insurance Contracts” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	Effective Date Announced by IASB (Note 1)
	To be determined by IASB January 1, 2021 January 1, 2022

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by the FSC.

(2) Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and defined benefit liabilities.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for an asset or liability.
(3) Classification of current and non-current assets and

liabilities Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

(1) Liabilities held primarily for the purpose of trading;
(2) Liabilities due to be settled within 12 months after the reporting period, and
(3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least

12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

(4) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e. its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective dates of acquisitions up to the effective dates of disposals, 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 upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the interests of the Group 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 the owners of the Company.

See Note 11, Table 6 and Table 7 for the detailed information of subsidiaries (including the percentage of ownership and main business).

(5) 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 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.

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.

(6) 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 noncontrolling interests as appropriate).

(7) 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 carrying amount 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 carrying amount of the life insurance termination cash value will be reduced.

(8) 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.

(9) 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.

(10) 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.

(11) 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.

(12) 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.

(13) Financial instruments

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

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

1. Financial Assets

All regular way purchases or sales of financial assets are recognized and derecognized on a settlement date basis.

1) Measurement Category

Financial assets are classified into the following categories: Financial assets measured at amortized cost and investments in equity instruments at FVTOCI.

A. Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on the disposal of the equity investments; instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

B. Financial assets measured at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

The financial assets are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets measured at amortized cost, including cash and cash equivalents and trade receivables measured at amortized cost, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for:

A. Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such a financial asset; and
B. Financial assets that have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such a financial asset.

Cash equivalents include within 3-month time deposits with original maturities, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

2) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets measured at amortized cost (including trade receivables).

The Group always recognizes lifetime expected credit losses (i.e. ECLs) for trade receivables and lease receivables. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on such a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Group recognizes an impairment gain or 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.

3) Derecognition of financial assets

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

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.

On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

Financial liabilities
1) Subsequent measurement
- All the Group’s financial liabilities are measured at amortized cost using the effective interest method.
2) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the

consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

(14) 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.

(15) Revenue recognition

The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

Revenue from the sale of goods

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. Revenue from the rendering of services

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).

(16) Leases

2019

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially

all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

Rentals that are not dependent on the index or rate in the lease agreement are recognized as revenue in the period in which they occur.

The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, variable lease payments which depend on an index or a rate, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in a lease if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

Rentals that are not dependent on the index or the rate in the lease agreement are recognized as expenses in the period in which they occur.

2018

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

The Group as lessor

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

The Group as lessee

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

(17) Borrowing Costs

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

(18) 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.

(19) 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.

(20) 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.

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.

(21) Taxation

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

Current tax

According to the Income Tax Law, an additional tax of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities 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, unused loss carry forward and unused tax credits for purchases of machinery, equipment and technology, research and development expenditures and personnel training expenditures 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 Group 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 and interests 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 asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow 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 which the liability is settled or the asset 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 Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred taxes

Current and deferred taxes 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 taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management 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 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 period or in the period of the revision and future years if the revision affects both current and future years.

(1) 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.

(2) 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

	December 31, 2019	December 31, 2019	December 31, 2019	December 31, 2018	December 31, 2018
Cash on hand		$ 1,309			$ 4,627
Checking accounts and demand deposits		179,919			200,912
Cash Equivalents
Time deposits within 3 months expiration	date	4,305			4,472
		$185,533			$210,011
The market interest rate range on the balance sheet date		is as follows:
	December 31, 2019			December 31, 2018
Term Deposits		1.45%			3.65%
7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
INCOME
	December 31, 2019		December 31, 2018
Investments in equity instruments
Domestic investments
Unlisted shares
Accuagile Co., Ltd	$	4,500		$	-

In order to enhance its competitive advantage, the Group seeks a strategic alliance of educational digital training system providers and establishes a long-term cooperative relationship. On September 26, 2019, it participated in the cash increase of Accuagile Co., Ltd, and the merged company subscribed 1,500 thousand shares. The investment amount is NT$4,500 thousand in total, and 15% of its equity is acquired.

8. FINANCIAL ASSETS MEASURED AT AMORTIZED COST

Current Performance Security Deposits Time deposits with original maturities exceeding 3 months Interest rate range Non-current Pledge deposit slip Interest rate range	December 31, 2019 $ 5,655 4,391 $ 10,046 2.20% $ 4,860 1.09%~1.12%	December 31, 2018
		$ - 4,561 $ 4,561 3.45% $ 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) 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.
(3) For information on the pledge of financial assets measured at amortization costs, please refer to Note 32.

9. NOTES RECEIVABLES AND ACCOUNTS RECEIVABLES

Notes receivables Measured at amortized costs Total carrying amount Result from operations Accounts receivables Measured at amortized costs Total carrying amount Less: Allowance loss	December 31,2019 $ 546 $ 546 $ 57,840 - $ 57,840	December 31, 2018	December 31, 2018
		(	$ 457 $ 457 $ 72,586 11) $ 72,575

The average credit period for sales of goods was 30~90 days. To mitigate credit risk, the merged 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 Group measures the loss allowance for trade receivables at an amount equal to lifetime ECLs (excluding special individual payments that listed are as 100% loss). The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience with the respective debtors and an analysis of the debtors’ current financial positions, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of conditions at the reporting date. The Group estimates expected credit losses based on the number of days for which receivables are past due. As the Group’s historical credit loss experience shows significantly different loss patterns for different customer segments, the provision for losses based on past due status of receivables is not further distinguished according to different segments of the Group’s customer base.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

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

December 31, 2019

December 31, 2019
Gross carrying amount Loss allowance (lifetime ECL) Amortized cost		Not Overdue $ 46,252 - $ 46,252	Overdue 0-30 Days $ 6,812 - $ 6,812		Overdue 31-90 Days $ 4,776 - $ 4,776	Overdue 366 Days Above $ - - $ -		Total
								$ 57,840 - $ 57,840

December 31, 2018

Gross carrying amount Loss allowance (lifetime ECL) Amortized cost		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		Total
							$ 11 ( 11) $ -		$ 72,586 ( 11) $ 72,575

The movements of the allowance for doubtful trade receivables are as follows:

Balance at January 1 Less: Amounts written off Balance at December 31		2019 $ 11 11) $ -		2018
	(			$ 11 - $ 11

As of December 31, 2019 and 2018, the Group’s average period of notes receivable is not overdue.

10. INVENTORIES

	December	December	31, 2019	December	31, 2018
Finished goods		$	8,853	$	40,242
Raw materials			9,858		9,085
Work in progress			757		1,998
Merchandise			1,848		6,714
	$		21,316	$	58,039

The cost of inventories sold in 2019 and 2018 were NT$153,888,000 and NT$140,467,000 respectively. The cost of goods sold in 2019 and 2018 respectively included a net loss of value of inventory of NT$17,027,000 and NT$2,934,000.

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. Chen Li Education Co., Ltd. CHEN LI Education Group Limited CHEN LI Education 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. (Success Prime Education) Chen Li ELM Co., Ltd. (Chen Li ELM) 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 Education services Holding Company Holding Company Educational Advisory services	% of Ownership December 31, 2019 December 31, 2018 100% 100% 100% 100% 51% 51% 100% - 100% 100% 100% 100% 100% 100%	Note
			December 31, 2019 100% 100% 51% 100% 100% 100% 100%
				- - Note 1 Note 2 - - -

Note 1: 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 using NT$ 5,100,000 in January 2018, holding 51% of its total equity.

Note 2: In order to further realize the benefits of educational products, the merged company acquired 100% equity of Chuang-Si Digital Technology Co., Ltd. from related parties through a resolution agreement by the board of directors on October 24, 2019. The transaction base date was October 31, 2019, and the purchase price was NT$ 9,900,000. After the merged company completed the acquisition of Chuang-Si Digital Technology Co., Ltd., the Company name changed to Chen Li ELM the main direction of future operation and development focuses on primary education products and services. Please refer to Note 28.

12. PROPERTY, PLANT, EQUIPMENT

Cost January 1, 2018 Balance Addition Disposition Reclassification Net Exchange Difference December 31, 2018 Balance Accumulated depreciation January 1, 2018 Balance Depreciation Fee Disposition Reclassification Net Exchange Difference December 31, 2018 Balance December 31, 2018 Net amount Cost January 1, 2019 Balance Addition Disposition Net Exchange Difference December 31, 2019 Balance Accumulated depreciation January 1, 2019 Balance Depreciation Fee Disposition Reclassification December 31, 2019 Balance December 31, 2019 Net amount	Own Land $ 197,096 27,394 - - - $ 224,490 $ - - - - - $ - $ 224,490 $ 224,490 - - - $ 224,490 $ - - - - $ - $ 224,490	Buildings Machinery Equipment Leasing of modified items Office Equipment Other Equipment Total $ 29,759 $ 2,301 $ 67,194 $ 27,772 $ 2,941 $ 327,063 5,316 4,197 8,077 6,047 350 51,381 - ( 1,162 ) ( 5,304 ) ( 4,782 ) ( 218 ) ( 11,466 ) - - - 1,667 ( 1,667 ) - - - ( 415) ( 47) - ( 462) $ 35,075 $ 5,336 $ 69,552 $ 30,657 $ 1,406 $ 366,516 $ 2,172 $ 1,625 $ 39,628 $ 10,483 $ 1,660 $ 55,568 812 624 8,622 7,941 208 18,207 - ( 1,162 ) ( 5,304 ) ( 4,745 ) ( 218 ) ( 11,429 ) - - - 854 ( 854 ) - - - ( 61 ) ( 17) - ( 78) $ 2,984 $ 1,087 $ 42,885 $ 14,516 $ 796 $ 62,268 $ 32,091 $ 4,249 $ 26,667 $ 16,141 $ 610 $ 304,248 $ 35,075 $ 5,336 $ 69,552 $ 30,657 $ 1,406 $ 366,516 - 1,906 20,519 4,669 - 27,094 - ( 85 ) ( 9,721 ) ( 7,446 ) - ( 17,252 ) - - ( 760 ) ( 91) - ( 851 ) $ 35,075 $ 7,157 $ 79,590 $ 27,789 $ 1,406 $ 375,507 $ 2,984 $ 1,087 $ 42,885 $ 14,516 $ 796 $ 62,268 891 1,746 9,863 8,754 241 21,495 - ( 78 ) ( 9,648 ) ( 7,380 ) - ( 17,106 ) - - ( 198) ( 66) - ( 264) $ 3,875 $ 2,755 $ 42,902 $ 15,824 $ 1,037 $ 66,393 $ 31,200 $ 4,402 $ 36,688 $ 11,965 $ 369 $ 309,114

For the year 2019 and 2018, there was no indication of an impairment loss; therefore, the Group did not perform impairment assessment.

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

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

Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 32.

13. LEASE ARRANGEMENTS

(1) Rights-of-use assets - 2019

ghts-of-use assets - 2019
Carrying amounts Buildings Additions to right-of-use assets Depreciation charge for right-of-use assets Buildings	December 31, 2019
		$ 222,391 2019
		$ 10,656 $ 68,671

The Group’s evaluation did not find any sign of impairment on 2019 right-of-use assets.

(2) Lease liabilities - 2019

Carrying amounts Current Non-current Range of discount rate for lease liabilities was as follows: Buildings	December 31, 2019
	$ 67,702 156,580 $ 224,282 December 31, 2019
	1.63%�1.74%

Range of discount rate for lease liabilities was as follows:

(3) Material lease-in activities and terms

The Group also leased certain land and buildings for the use as plant and office in a period of three to ten years. Part of the Group's building lease agreement will adjust the lease payments every year from the second year of the house rental price announced by the DirectorateGeneral of Budget, Accounting and Statistics of the Executive Yuan. The Group does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Group is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

2018

The future minimum lease payments of non-cancellable operating lease commitments are as follows:

Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years	December 31, 2018	December 31, 2018
		$ 72,295 161,990 63,315 $297,600

(4) Other lease information

) Other lease information
Total cash outflow for leases		2019
		$ 71,166

14. G OODWILL AND TRADEMARKS

. GOODWILL AND TRADEMARKS
Goodwill Trademarks		2019 $ 81,419 $ 404,144		2018
				$ 81,419 $ 404,144

The Goodwill and Trademark value of Merged Company's acquisition of Chen Li Education in 2017, mainly comes from the expected growth of future revenue from Education enterprise. The intangible asset, trademark, has a legal life of 10 years but is renewable every 10 years at minimal cost. Management believes the Group will renew the trademark continuously and has the ability to do so. Various studies on areas including product life cycles, market, competitive and environmental trends, and brand extension opportunities have been performed by the management of the Group, which supported its opinion that there is no foreseeable limit to the period over which the trademarked products are expected to generate net cash flows. Therefore, the trademark is considered to have an indefinite useful life. The trademark will not be amortized until its useful life is determined to be finite. Instead it will be tested for impairment annually and whenever there is an indication that it may be impaired. The Company conducted an impairment test on goodwill and trademark rights on December 31, 2019. After the assessment, the recoverable amount of the cash-generating unit was greater than its carrying amount, so no impairment loss was recognized.

The recoverable amount of the cash-generating unit is determined on the basis of the valuein-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 13.8% and 13.3% are calculated in 2019 and 2018 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 carrying amount of the cash-generating unit to exceed the total recoverable amount.

15. OTHER INTANGIBLE ASSETS

	Computer	Computer	Teacher
	software		Contract		Total
Cost
January 1, 2018 Balance	$	1,921	$	589	$	2,510
Addition		2,677		-		2,677
Transfer from prepaid
equipment		1,000		-		1,000
December 31, 2018 Balance	$	5,598	$	589	$	6,187
	Computer		Teacher
	software		Contract		Total
Accumulated amortization
January 1, 2018 Balance	$	1,712	$	378	$	2,090
Amortization costs		898		211		1,109
December 31, 2018 Balance	$	2,610	$	589	$	3,199
December 31, 2018 Net amount	$	2,988	$	-	$	2,988
Cost
January 1, 2019 Balance	$	5,598	$	589	$	6,187
Addition		903		-		903
Obtained by Merger of enterprises		10,748		-		10,748
December 31, 2019 Balance	$	17,249	$	589	$	17,838
Accumulated amortization
January 1, 2019 Balance	$	2,610	$	589	$	3,199
Amortization costs		1,536		-		1,536
Obtained by Merger of enterprises		806		-		806
December 31, 2019 Balance	$	4,952	$	589	$	5,541
December 31, 2019 Net amount	$	12,297	$	-	$	12,297

Intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Teacher Contract 1.3 years Computer Software 1~5 years

16. LIFE INSURANCE TERMINATION CASH VALUE

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

		2019		2018
Year-Start Balance	$	83,555	$	78,726
Number of life insurance
payments- current year		-		4,092
Number of life insurance
termination- current year		-	(	4,092 )
Increase in the cash value of life
insurance termination this year		108		4,829
Year-End Balance	$	83,663	$	83,555
. OTHER ASSETS
	December 31,		December 31,
		2019		2018
Current
Prepaid Fees	$	4,931	$	5,820
Refundable Deposit		739		1,401
Prepaid Payment		490		577
Other		2,537		3,192
	$	8,697	$	10,990
Non-current
Refundable Deposit	$	18,917	$	17,209
Prepaid Equipment Payment		10,374		6,507
	$	29,291	$	23,716

17. OTHER ASSETS

18. BORROWINGS

(1) Short-term borrowings

Secured borrowings(Note 32) Bank borrowings Unsecured borrowings Bank borrowings	December 31, 2019 $ 80,000 - $ 80,000	December 31, 2018 $ 35,000 100,000 $ 135,000	December 31, 2018 $ 35,000 100,000 $ 135,000
			$ 35,000 100,000 $ 135,000

The interest rates of bank revolving borrowings were 1.55% and 1.72% respectively at December 31, 2019 and 2018.

(2) Long-term borrowings

Secured borrowings (Note 32) Bank borrowings Less: Current portion Long-term borrowings	December 31, 2019 $ 24,300 ( 2,430) $ 21,870	December 31, 2019 $ 24,300 ( 2,430) $ 21,870
		$ 24,300 2,430) $ 21,870

The bank borrowings are secured by the Group’s own land and buildings (see Note 32). The borrowings’ maturity date is December 24, 2029. As of December 31, 2019, the effective annual interest rate is 1.59%, amortized over 10 years.

19. ACCOUNTS PAYABLE

. ACCOUNTS PAYABLE
Hourly fee payables to Teachers Trade Payables Others	December 31, 2019 $ 14,802 5,085 4,324 $ 24,211	December 31, 2018
			$ 18,588 7,953 3,277 $ 29,818

20. OTHER LIABILITIES

Other Payables Salary payable Compensation payable to Employees Compensation payable to Directors Other Other Current Liabilities Advance Payment Other	December 31, 2019 $ 29,330 2,805 1,369 39,340 $ 72,844 $ 552 2,481 $ 3,033	December 31, 2018	December 31, 2018
			$ 36,292 3,750 3,125 33,970 $ 77,137 $ 680 5,633 $ 6,313

21. RETIREMENT BENEFIT PLANS

(1) 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.

(2) Defined benefit plan

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Group assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Group is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Group has no right to influence the investment policy and strategy. The Company agreed to suspend the transfer on December 31, 2019, and 2018 in accordance with the letter of the No. 1080007178 and No. 1070010673 of the Hsinchu Science and Technology Parks Authority of the Ministry of Science and Technology.

The amounts in the consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit assets	December 31, 2019 $ 8,676 ( 15,338) ($ 6,662)	December 31, 2018	December 31, 2018
	( (	( (	$ 7,110 14,671) $ 7,561)

Movements in net defined benefit assets were as follows:

Balance at January 1, 2018 Net interest expense (revenue) Recognized in profit or loss Remeasurement Return on plan assets (excluding the amount included in net interest) Actuarial loss- demographic assumptions change Actuarial loss - change in financial assumptions Actuarial loss - experience adjustments Recognized in other comprehensive income Balance at December 31, 2018 Net interest expense (revenue) Recognized in profit or loss Remeasurement Return on plan assets (excluding the amount included in net interest) Actuarial loss- demographic assumptions change Actuarial loss - change in financial assumptions Actuarial loss - experience adjustments Recognized in other comprehensive income Balance at December 31, 2019	Present Value o f D e f i n e d B e n e f i t O b l i g a t i o n $ 6,609 82 82 - 16 81 322 419 7,110 80 80 - 46 227 1,213 1,486 $ 8,676	Fair Value of the Plan Assets ($ 14,101) ( 176) ( 176) ( 394 ) - - - ( 394) ( 14,671) ( 166) ( 166) ( 501 ) - - - ( 501) ($ 15,338)	Net Defined Benefit Assets
			($ 7,492) ( 94) ( 94) ( 394 ) 16 81 322 25 ( 7,561) ( 86) ( 86) ( 501 ) 46 227 1,213 985 ($ 6,662)

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

enefit plans is as follows:
General and administration expenses (retirement fund profit)		2019 $ 86)		2018
	(		(	$ 94)

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government/corporate bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

aluations were as follows:
Discount rate Expected rate of salary increase	December 31, 2019 0.800% 1.125%	December 31, 2018
		1.125% 1.125%

If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

would increase (decrease) as follows:
Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 0.25% increase 0.25% decrease	December 31, 2019 ($ 178) $ 184 $ 177 ($ 172)	December 31, 2018
	( (	( (	$ 166) $ 171 $ 166 $ 161)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The average duration of the defined benefit obligation	December 31, 2019 10 years	December 31, 2018
		12 years

22. EQUITY

I. Capital Stock

ital Stock
Authorized shares (in thousands) Authorized capital Issued and paid shares (in thousands) Issued capital	December 31, 2019 200,000 $ 2,000,000 17,459 $ 174,594	December 31, 2018
			200,000 $ 2,000,000 17,459 $ 174,594

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

The Company has increase cash capital through private financing as follows:

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

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. The first to fourth and fifth private equity common shares mentioned above were completed on November 23, 2018 and October 30, 2019, respectively.

II. Capital surplus

To make up for losses, issue cash, or stock dividends Stock Issue Premium Only to make up for losses Employees stock options exercised Employees stock options expired	December 31, 2019 $360,198 2,591 4,292 $367,081	December 31, 2018	December 31, 2018
			$360,198 2,591 4,292 $367,081

The changes in the balance of various capital reserves of the Company in 2018 is as follows:

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

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.

(1) 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 24 (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 appropriation of earnings for 2018 and 2017, which had been proposed by the Company’s general meeting of shareholders on May 2, 2019 and June 14, 2018, respectively. The appropriation and dividends per share were as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)		2018 $ 12,486 $ 839 $ 69,042 $ 4.00		2017
				$ 13,738 $ 772 $ - $ -

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

The proposed appropriation of earnings for 2019 by the Board of Directors on March 24, 2020 is as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)		2019
		$ 7,612 $ 989 $ 17,260 $ 1.00

On March 24, 2019, the Company transferred capital to the capital reserve of NT$17,260,000 according to the resolution of the shareholders' meeting and distributed cash of NT$8,631,000, cash dividend per share is NT$0.5.

The appropriation of earnings for 2019 is to be discussed at the shareholders' meeting scheduled on June 18, 2020.

(2) Non-controlling interests

) Non-controlling interests
Balance at January 1 Increased non-controlling interest in the establishment of subsidiaries Net profit for the year Subsidiaries issue cash dividends to non-controlling equity shareholders Balance at December 31			2019 6,488 - 859 1,429) 5,918		2018
	(	$		$	- 4,900 1,588 - 6,488
		$		$

(3) 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, 2019, 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.

23. REVENUE

. REVENUE
Client contracts revenue Revenue from services- Educational service and consultancy Revenue from sales of goods- optical fiber products		2019 $ 646,244 235,366 $ 881,610		2018
				$ 699,218 218,361 $ 917,579

(1) Explanation on client contracts revenue, please refer to Note 4 (15).
(2) Remaining contracts balance
Notes receivable and accounts receivable balance, please refer to Note 9.
Contract liabilities – current

maining contracts balance Notes receivable and accounts Contract liabilities–current	receivable balance, please	refer to Note 9.	refer to Note 9.
Contract liabilities–current (listed as prepaid revenue)	December 31, 2019 $ 253,119	December 31, 2018
			$ 258,889

Receivables received from customers (tuition fee income from tutoring classes), and the monthly income is transferred when the service is provided. The change in contract liabilities is mainly due to the difference between when the performance obligation is fulfilled and when the customer pays.

24. NET PROFIT OF THE YEAR

(1) Other Revenue

Subsidy revenue Acceptance and technical service revenue Interest revenue on bank deposits Other		2019 $ 3,984 1,630 724 2,665 $ 9,003	2018 $ 1,899 3,058 992 2,748 $ 8,697	2018 $ 1,899 3,058 992 2,748 $ 8,697
		$ $		1,899 3,058 992 2,748 $ 8,697

The subsidy income is mainly the funds subsidized by the merged company to implement the A + enterprise innovation R & D quenching chain plan of the Ministry of Economic Affairs.

(2) Other Profit and Loss

Cheap purchase benefits (Note 28) Net foreign currency exchange benefits (losses) (Note) Disposition of property, equipment and plant losses Other	2019 $ 727 ( 1,341 ) ( 143 ) ( 374) ($ 1,131)	2018
		$ - 2,132 ( 1 ) ( 9) $ 2,122

Note: The Company’s 2019 and 2018 foreign exchange profits and losses are as follows:

	2019 $ ( 2019	1,272 2,613) ($ 1,341) (	2018 $ 4,586 ( 2,454) $ 2,132 2018 $ 1,550 - $ 1,550 2018 $ 18,207 - 1,109 $ 19,316 2018 $ 12,331 5,876 $ 18,207 $ 380 729 $ 1,109 2018 $ 263,281 8,745 94) 271,932 - $ 271,932 $ 37,437 234,495 $ 271,932

	$ 2,048 4,386 $ 6,434 2019		$ 1,550 - $ 1,550 2018
	$ 21,495 68,671 1,536 $ 91,702 2019		$ 18,207 - 1,109 $ 19,316 2018
	$ 76,853 13,313 $ 90,166 $ 189 1,347 $ 1,536 2019		$ 12,331 5,876 $ 18,207 $ 380 729 $ 1,109 2018
(	$ 253,579 8,720 86) 262,213 1,484 $ 263,697 $ 38,106 225,591 $ 263,697	(	$ 263,281 8,745 94) 271,932 - $ 271,932 $ 37,437 234,495 $ 271,932

(6) Employees’ compensation and remuneration of directors

In accordance with the provisions of the Articles of Incorporation, the employees' compensations are provided at not less than 3% and remuneration of directors are not more than 5% before deducting the pre-tax benefits of the employees and directors. The estimated 2019 and 2018 employees’ compensation and remuneration of directors were decided by the Board on March 24, 2020 and March 20, 2019 respectively as follows:

Employees’compensation -Estimated ratio -Amount Remuneration of directors -Estimated ratio -Amount		2019 3% $ 2,468 1.5% $ 1,234		2018
				3% $ 3,750 2.5% $ 3,125

If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amount of employees’ compensation and remuneration of directors paid and the amount recognized in the consolidated financial statements for the years ended December 31, 2018 and 2017.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

25. INCOME TAXES

(1) Major components of income tax expense recognized in profit or loss:

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior period Deferred tax In respect of the current year Changes in tax rates Income tax expense recognized in profit or loss		2019 $ 8,063 2,117 311 $ 10,491 $ 482 ) - $ 482) $ 10,009		2018
	( (		( ( ( (	$ 810 12,286 9 $ 13,105 $ 15,202 ) 3,278) $ 18,480) $ 5,375)

A reconciliation of accounting loss and income tax expenses were as follows:

Income before tax Income tax expense calculated at the statutory rate Income tax unappropriated earnings Tax-free income and non- deductible costs Impact number of non- recognitions of deferred income tax assets Adjustments for prior year Changes in tax rates Income tax expense recognized in profit or loss		2019 $ 86,986 $ 21,540 2,117 5,193 ) 8,766 ) 311 - $ 10,009		2018
	( (		( ( (	$ 121,079 $ 24,514 12,286 897 39,803 ) 9 3,278) $ 5,375)

The Income Tax Act in the ROC was amended in 2018, and the corporate income tax rate was adjusted from 17% to 20%. The effect of the change in tax rate on deferred tax income to be recognized in profit or loss is recognized in full in the period in which the change in tax rate occurs. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings will be reduced from 10% to 5%; the tax rate applicable to subsidiaries in China will be 25%.

(2) Income tax recognized in other consolidated profits and losses

Deferred income tax In respect of the current year -Conversion of foreign operating institutions -Remeasured number of defined benefit plan Income tax recognized in other consolidated profits and losses		2019 $ - 202 $ 202	( ( (	2018
				$ 189 ) 128) $ 317)

(3) Deferred tax assets and liabilities

The changes in deferred tax assets and liabilities are as follows: 2019

2019
Deferred tax assets Temporary differences Allowance for inventory loss Use equity law to identify foreign investment losses Other Loss carryforwards		Opening Balance $ 5,239 1,000 1,255 7,494 30,521 $ 38,015	Recognized in Profit or Loss $ 3,405 1,019 ( 168) 4,256 ( 3,906) $ 350	Recognized in other comprehens iveincome $ - - - - - $ -		Closing Balance
			( (			$ 8,644 2,019 1,087 11,750 26,615 $ 38,365

2018

Deferred income tax liabilities Temporary differences Land revaluation Defined benefit plans Bargain purchase gains Unrealized net profits of exchange Deferred taxassets Temporary differences Allowance for inventory loss Use equity law to identify foreign investment losses Other Loss carryforwards Deferredincome tax liabilities Temporary differences Land revaluation Defined benefit plans Unrealized net profits of exchange		$ 2,232 1,513 - 299 $ 4,044 Opening Balance $ 3,954 1,466 1,392 6,812 12,502 $ 19,314 $ 2,232 1,274 - $ 3,506	$ - 22 145 ( 299) ($ 132) Recognized in Profit or Loss $ 1,285 ( 466 ) 52 871 18,019 $ 18,890 $ - 111 299 $ 410	$ - ( 202 ) - - ($ 202) Recognized in other comprehens ive income $ - - ( 189) ( 189) - ($ 189) $ - 128 - $ 128		$ 2,232 1,333 145 - $ 3,710 Closing Balance
				( ( (		$ 5,239 1,000 1,255 7,494 30,521 $ 38,015 $ 2,232 1,513 299 $ 4,044

(4) Losses deduction of deferred income tax assets not recognized in the balance sheet

Loss carryforwards Expire in 2022 Expire in 2023 Expire in 2024 Expire in 2025 Expire in 2027 Expire in 2028 Expire in 2029	December 31, 2019 $ 4,701 - 12,191 24,784 3,182 17,369 1,271 $ 63,498	December 31, 2018	December 31, 2018
			$ 4,701 8,604 53,678 24,784 3,182 14,078 - $ 109,027

(5) Related information of unused loss carry-forwards

5) Related information of unused loss	carry-forwards
Expire in 2019 Expire in 2020 Expire in 2022 Expire in 2023 Expire in 2024 Expire in 2025 Expire in 2027 Expire in 2028 Expire in 2029	December 31, 2019 $ - 15,284 67,323 13,679 53,678 24,784 3,182 17,369 1,271 $ 196,570	December 31, 2018
			$ 33,979 50,925 67,323 13,679 53,678 24,784 3,182 14,078 - $ 261,628

(6) Income Tax Assessments

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:

follows:
Company Name Success Prime Corporation Chen Li Education Success Prime Optical Fiber Chen Li ELM	Approved Year
	2017 2017 2017 2018

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.

26. EARNINGS PER SHARE

Unit: NT$ per share

Basic earnings per share Diluted earnings per share		2019 $ 4.41 $ 4.40		2018
				$ 7.18 $ 7.16

The income and weighted average number of ordinary shares outstanding in the computation of earnings per share from continuing operations were as follows:

Net Income for the Year Income for the year attributable to owners of the Company Number of shares Weighted average common shares used to calculate basic earnings per share Impact of potential common shares with dilution effect: Employee compensation Weighted average common shares used to calculate diluted earnings per share		2019 $ 76,118 2019 17,260 48 17,308

Since the Group offered to settle compensation or bonuses paid to employees in cash or shares, the Group assumed the entire amount of the compensation or bonus will be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

27. SHARE-BASED PAYMENT AGREEMENTS

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.

(1) Information on the issuance of 2012 employees stock options is as follows:

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

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.

(2) Employee restricting new shares proposal

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.

28. MERGER OF ENTERPRISES

(1) Subsidiaries acquired

Chuang-Si Technology Co. Ltd.	Main operating a c t i v i t i e s Education Service	Acquisition Day Oct 31, 2019	O w n e r s h i p r i g h t s w i t h voting rights /Acquisition r a t i o ( % ) 100%	Transfer Price	Transfer Price
					$ 9,900

The Group acquired Chuang-Si Technology, later renamed Chen Li ELM Co. Ltd (hereinafter as Chen Li ELM), for the deployment of primary school education business and expansion of the operation of the merged company.

(2) Transfer Price

Cash

Chen Li ELM $ 9,900

Note: The fair value measured by the acquisition date on Oct 31, 2019.

(3) Assets acquired and liabilities incurred on the date of acquisition

Current assets Cash Accounts receivable and other receivables Inventory Prepaid payments and other current assets Non-current assets Right-of-use assets Other intangible assets Current liabilities Accounts payable and other payables Lease liabilities Other current liabilities	Chen Li ELM	Chen Li ELM
	( ( (	$ 490 1,098 562 457 621 9,942 1,469 ) 621 ) 453) $ 10,627

(4) Bargain purchase benefits arising from acquisitions

4) Bargain purchase benefits arising from acquisitions
Transfer price Less: Fair value of identifiable net assets acquired Bargain purchase benefits arising from acquisitions	Chen Li ELM
	( (	$ 9,900 10,627) $ 727)

(5) Net cash outflow from subsidiaries acquisition

Price of cash payment Less: Cash balance obtained	Chen Li ELM $ 9,900 ( 490) $ 9,410	Chen Li ELM $ 9,900 ( 490) $ 9,410	Chen Li ELM $ 9,900 ( 490) $ 9,410
		$ $
			9,410

(6) The impact of merger on business results

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

ows:
2019 Operating revenue 2019 Net income	Chen Li ELM
	$ 2,267 $ 120

If the acquisition date of enterprises merger takes place on the start date of the fiscal year, The proposed 2019 operating revenue of the merger company is NT$888,191,000 and the proposed net income is NT$75,035,000, 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:

The fair value of the computer software at the time of the original accounting of the business combination is used as the basis for amortization calculation, rather than calculating the amortization based on the book amount recognized in the financial statements before the acquisition.

29. CAPITAL MANAGEMENT

The Group manages its capital to ensure that the Group will be able to operate under the premises of going concerns and growth while maximizing the return to shareholders through the optimization of the debt and equity balance.

The capital structure of the Group is composed of the Group’s net debt (ie borrowings less cash) and equity (ie share capital, capital reserve and retained earnings).

The merged company does not need to comply with other external capital requirements.

30. FINANCIAL INSTRUMENTS

(1) Fair value of financial instruments not measured at fair value The management considers that the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair values.

(2) Fair value of financial instruments measured at fair value on a recurring basis

Fair value hierarchy

December 31, 2019

Level 1 L e v e l 2 L e v e l 3 T o t a l Financial assets at FVTOCI Equity securities Stocks unlisted in the ROC $ - $ - $ 4,500 $ 4,500

Valuation technic and input value used in Level 3 fair value measurement

Category of financial instruments Evaluation of technology and input values Unlisted equity investments Net Assets Method: Reference to the value of net assets measured by an external independent institution at fair value to assess the fair value of the subject matter of the investment. Market Method: Assess the fair value of the investment by reference to the recent operating activity of the subject or the market transaction price and market conditions of the investment subject or other similar subjects.

Fair value assessment for Level 3 can reasonably replace assumptions of sensitivity analysis

The merged company's fair value measurement of financial instruments is reasonable, and no self-built evaluation model is used for level 3 fair value measurement, so there is no need to perform a sensitivity analysis that may replace hypotheses.

(3) Categories of financial instruments

) Categories of financial instruments
Financial assets Measured at amortized costs (Note 1) Measured at FVTOCI- equity investment instrument Financial liabilities Measured at amortized cost (Note 2)		December 31, 2019 $ 279,868 4,500 201,355		December 31, 2018
				$ 310,827 - 242,482

Note 1: The balance consists of cash and cash equivalents, notes and accounts receivables, other receivables and refundable deposits (other non-current assets), which are measured at amortized cost.
Note 2: The balances included financial liabilities measured at amortized cost, which comprise, notes payable and trade payables (including payables to related parties), other payables (including other payables to related parties), payable for purchases of equipment and long-term loans (including current portion).

(4) Financial risk management objectives and policies

The main financial instruments of the consolidated company include cash and cash equivalents, financial assets measured at amortized cost, bills receivable, accounts receivable, equity investment instruments, bills payable, accounts payable, borrowings and lease liabilities. The financial management department of the merged company provides services for each business unit, coordinates the operation of entering the domestic and international financial markets, and monitors and manages the financial risks related to the operation of the merged company by analyzing the risk internal risk report according to the degree of risk and breadth. These risks include market risk (including exchange rate risk and interest rate risk), credit risk and liquidity risk.

1) Market Risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (1) below), and in interest rates (see (2) below).

(1) Foreign currency risk

For the carrying amount 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 (USD) and Chinese Yuan (CNY) exchange rates.

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 reduced the net profit before tax of the Company in

2019 and 2018 by NT$ 555,000 and NT$ 289,000 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 Group is exposed to fluctuating interest rate risk from outstanding bank loans. Changes in interest rates would affect the future cash flows but not the fair value.

The financial assets and liabilities balance 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, 2019 $ 14,351 184,748 104,300	December 31, 2018
		$ 9,033 205,277 135,000

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 2019 and 2018 will increase by NT$80,000 and NT$70,000 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, 2019. 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, of 2019 and 2018, the unused financing capital was NT$239,345,000 and NT$91,000,000 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, 2019

Non-derivative financial liabilities Non-interest- bearing liabilities Fluctuating interest rates instruments		1~6 Months $ 75,346 81,215 $ 156,561	6 months~1 year	6 months~1 year	1 year above	1 year above
				$ 21,709 1,215 $ 22,924		$ - 21,870 $ 21,870

Additional information about the maturity analysis for lease liabilities:

Lease liabilities	Less than 1 year $ 71,961		1-5 Years $ 119,716	5-10 Years $ 45,265		Total
						$ 236,942

December 31, 2018

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

31. TRANSACTION WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Besides information disclosed elsewhere in the other notes, details of transactions between the Group and other related parties are disclosed below.

(1) Related parties and their relationships associated with the Company:

Related parties Relationship with the merged Company Shu-Ling Tseng Chairman of the Education Subsidiary Min-Chun Chen Founder of the Subsidiary (From January 30, 2019, is the Chairman of the Group)

Related parties Relationship with the merged Company Shu-Ling Tseng General Manager of the Education Subsidiary Min-Chun Chen Founder of the Subsidiary (From January 30, 2019, is the Chairman of the Group) Chuang-Si Digital Technology Related party (the chairman and supervisor of the Co., Ltd. company are the same person as the general manager and chairman of the company's education subsidiary and are included in the merged entity from November 1, 2019)

(2) Service cost

2) Service cost
Related parties Related party		2019 $ 3,301		2018
				$ -

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

Related parties Shu-Ling Tseng Min-Chun Chen	December 31, 2019 $ 1,960 880 $ 2,840	December 31, 2018 $ 1,960 880 $ 2,840

As mentioned in (4) below, the company pays the refundable deposit of the lease to the related party according to the market conditions.

(4) Leasing Agreement

Account Lease liabilities Related parties	Related parties	Related parties	December 31, 2019 $ 15,531 14,162 $ 29,693 2019 $ 336 302 $ 638 $ - - $ -	December 31, 2019			December 31, 2018	December 31, 2018
	Shu-Ling Tseng Min-Chun Chen as							$ - - $ - 2018
Interest expense Shu-Ling Tseng Min-Chun Chen Rental expense�listed operation cost� Shu-Ling Tseng Min-Chun Chen							$ - - $ - $ 8,580 7,200 $ 15,780

The merged company leases offices and teaching venues from related parties, and the lease conditions

are comparable to those of non-related parties.

(5) Rental agreement

Leasing revenue summarized as below:

Related Parties Related party		2019 $ 257		2018
				$ -

The merged company subleases part of the office area to related parties, and the lease conditions

are the same as those of non-related parties.

(6) Acquisition of financial assets

Related Parties Related party Shu-Ling Tseng Min-Chun Chen	Account	Number of shares transaction 1,000,000 shares 500,000 shares	Transaction subject	Price obtained $ 6,600 $ 3,300	Price obtained $ 6,600 $ 3,300
	Investment using equity method Investment using equity method		Chuang-Si Technology Chuang-Si Technology		$ 6,600 $ 3,300

The Company acquired 100% equity of Chuang-Si Technology on October 31, 2019, making it a subsidiary of the company, please refer to Note 28.

(7) Remuneration of Key Management Levels

Short term Employee Benefits Post-employment benefits		2019 $ 19,354 376 $ 19,730		2018
				$ 27,148 371 $ 27,519

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

32. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

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

Performance bond (accounting for financial assets measured at amortized cost-current) Pledged deposit slips (financial assets measured at amortized cost- non-current) Land and buildings		December 31, 2019 $ 5,655 4,860 255,173 $ 265,688		December 31, 2018	December 31, 2018
					$ - 4,420 223,399 $ 227,819

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, 2019

Foreign currency assets Monetary accounts US Dollars RMB Foreign currency liabilities Monetary item US Dollars December 31, 2018 Foreign currency assets Monetary accounts US Dollars RMB Foreign currency liabilities Monetary item US Dollars	Foreign Currency $ 2,768 2,223 1,209 Foreign Currency $ 1,422 2,185 787	Exchange rate 29.580 4.208 29.580 Exchange rate 30.665 4.447 30.665	Balance
			$ 81,877 9,354 35,762 Balance

			$ 43,606 9,717 24,133

The Company has realized and unrealized the foreign currency exchange gains and losses in the 2019 and 2018. 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

(1) Main transaction items and
(2) 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): Table 3.
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 4.
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.
Others: Business relationship, significant transactions and amounts between parent and subsidiaries and between the subsidiary companies themselves: Table 5.
Information on the investee company: Table 6.
(3) 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 7.
2. Any of the significant transactions with investee companies in mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses: None

i. The amount and percentage of the purchase and the closing balance and percentage of the relevant payables.
ii. The amount and percentage of goods sold and the closing balance and percentage of related receivables.
iii. The amount of the property transaction and the amount of profit and loss it generates.
iv. The closing balance of the bill endorsement or the provision of the collateral and its purpose.
v. The maximum balance, closing balance, interest rate range and total interest in the current period of the facility.
vi. 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 Group should report the 2019 and 2018 departments as below:

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.

(1) Departmental revenue and operating results

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

2019

analyses as follows: 2019
Revenue from external customers Consolidated revenue Departmental gains and losses Interest revenue Bargain purchase gains Interest revenue Disposition of property, plant and equipment losses benefits Financial costs Other revenue Other losses Net profit before tax	Optical fiber enterprise division $ 235,066 $ 235,066 $ 21,590		Education Enterprise Division $ 646,544 $ 646,544 $ 63,958		Total
				$ 881,610 $ 881,610 $ 85,548 724 727 ( 143 ) ( 1,341 ) ( 6,434 ) 8,279 ( 374) $ 86,986

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

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.

(2)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		2019 $ 646,544 178,078 57,098 385 882,105 495 ) $ 881,610		2018	2018
	(		(	$ $	699,218 162,834 50,874 5,188 918,114 535 ) 917,579

(3) 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	Revenue from external customers 2019 2018 $ 722,556 $ 749,506 48,127 100,464 75,685 41,981 35,242 25,628 $ 881,610 $ 917,579	Revenue from external customers 2019 2018 $ 722,556 $ 749,506 48,127 100,464 75,685 41,981 35,242 25,628 $ 881,610 $ 917,579	Non-current assets
		2019	December 31 2019 December 31 2018 $ 1,048,019 $ 797,802 15,137 18,713 - - - - $ 1,063,156 $ 816,515
	$ $	722,556 48,127 75,685 35,242 881,610	$ 1,048,019 15,137 - - $ 1,063,156

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.

(4) 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 2019 and 2018.

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 in equipment payable Net cash payments		2019 $ 27,094 3,867 7 $ 30,968	2018
			$ 51,381 ( 2,859 ) 1,153 $ 49,675

2019

Table 1

Success Prime Corporation and Subsidiary

LOANS TO OTHERS

Unit: New Taiwan Dollar

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	Guarante	e 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 party	Yes	$ 27,748	$ -	$ -	1.9%	(2)	$ -	Business Turnover	$ -	�	$ -	$ 27,748 (Note 3�	$ 27,748 (Note 3�	�

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�According to the board of directors meeting (September 17, 2018), 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, 2018 is NT$226,689,000 x 10% of the total).

2019

Table 2

Success Prime Corporation and Subsidiary

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 isguaranteed	The object of endorsement isguaranteed	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	(3)	$ 288,668	$ 250,900	$ 250,900	$ 80,000	$ -	130.37%	$ 288,668	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 7 kinds of relationship between the endorsement guarantor and the endorsed subject, can be indicated by the following types:

(1) A company with business dealings.

(2) A company that directly and indirectly holds more than 50% of the voting shares.
(3) Companies that directly and indirectly hold more than 50% of the voting shares of the company.
(4) Inter-company companies where the company directly and indirectly holds more than 90% of the voting shares.

(5) A company that is mutually insured according to the contract between inter-industry or co-founders based on the needs of the contracted project.

(6) A company whose endorsement is guaranteed by all capital shareholders according to their shareholding ratio due to a joint investment relationship.

(7) The inter-industry is engaged in the performance guarantee and joint guarantee of the pre-sale house sales contract regulated by the Consumer Protection Law.

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

(1) For companies that directly and indirectly hold more than 50% of the voting rights of Chen Li Education, the total amount of endorsement guarantees and endorsement guarantees of Chen Li Education for a single object is based on Chen Li Education ’s most recent audit or review by an accountant The net value of the financial statements is 150%.

(2) The net value is based on the most recent financial statements (2019) reviewed by Chen Li Education by accountants.

Success Prime Corporation and Subsidiary

MARKETABLE SECURITIES HELD

December 31, 2019

Table 3

Unit: In thousands of New Taiwan Dollars

Holding Company Name	Type and Name of Marketable S e c u r i t i e s	Relationship with the Holding C o m p a n y	Financial Statement Account	D e c e m b e r 3 1 , 2 0 1 9	D e c e m b e r 3 1 , 2 0 1 9	D e c e m b e r 3 1 , 2 0 1 9	D e c e m b e r 3 1 , 2 0 1 9	D e c e m b e r 3 1 , 2 0 1 9	N o t e
				Shares/Units (In T h o u s a n d s )	Carrying Amount		Percentage of O w n e r s h i p ( % )	F a i r V a l u e
The Company	Taiwan unlisted shares Accuagile Co., Ltd	None	Financial assets at FVTOCI	1,500,000		$ 4,500	15	$ 4,500	Note

Note�Fair value is based on the most recent evaluation results.

Table 4

Success Prime Corporation and Subsidiary

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2019

Unit: In thousands of New Taiwan Dollar

Import (sale) goods Company	Trading Subject	Relationship		Trading Scenarios	Trading Scenarios		Trading conditions are different from general transaction The situation and reason	Trading conditions are different from general transaction The situation and reason	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	Service revenue Service costs	( $ 219,091 ) 219,091	( 48% ) 65%	30 days 30 days	Note 1 Note 1	- -	$ 19,747 ( 19,747 )	32% ( 85% )	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 and Subsidiary

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

2019

Table 5

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

Number (Note1�	Trader's name	Subject Trading with	Relationship with the Trader (Note2�		TradingTransaction Scenarios	TradingTransaction Scenarios	TradingTransaction Scenarios
				Subjects	Amount	Trading conditions	Percentage of total consolidated revenue or total assets (Note3�
0 �	The Company �	Chen Li Education �	1 1	Service revenue and costs Accounts receivables and payables	$ 219,091 19,747	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.	25% 1%

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 and Subsidiary

RELATED INFORMATION ON THE INVESTEE COMPANY, OPERATING REGIONS AND MORE

FOR THE YEARS ENDED DECEMBER 31, 2019

Table 6

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

I n v e s t o r C o m p a n y	I n v e s t e e C o m p a n y	L o c a t i o n	M a i n b u s i n e s s O p e r a t i o n	O r i g i n a l I n v	e s t e d A m o u n t	B a l a n c e a s o f D e c e m	B a l a n c e a s o f D e c e m	b e r 3 1 , 2 0 1 9	Net Income (Loss) of t h e I n v e s t e e	Share of Profit (Loss)	N o t e
				December 31, 2 0 1 9	December 31, 2 0 1 8	Number of shares �Thousand shares�	%	C a r r y i n g A m o u n t
The Company Chen Li Education CHEN LI Education Group Limited	Chen Li Education Prime Optical Fiber Prime Education Chen Li ELM CHEN LI Education Group Limited CHEN LI Education Group (HK) Limited	Taiwan Taiwan Taiwan Taiwan British Virgin Islands Hong Kong	Education Services Wire & Cable Manufacturing Education Consulting Service Education Services Holding Company Holding Company	$ 711,369 10,000 5,100 9,900 40,543 ( USD 1,292,000 ) 30,059 ( USD 952,000 )	$ 711,369 10,000 5,100 - 40,543 ( USD 1,292,000 ) 30,059 ( USD 952,000 )	11,200 1,000 510 1,500 - -	100% 100% 51% 100% 100% 100%	$ 676,308 2,152 6,159 10,747 27,700 26,867	$ 26,110 ( 308 ) 1,753 ( 963 ) ( 5,094 ) ( 5,034 )	$ 26,090 ( 308 ) 894 120 Note 1 Note 1	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2

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 and Subsidiary

CHINA INVESTMENT INFORMATION

FOR THE YEARS ENDED DECEMBER 31, 2019

Table 7

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 reco amountinc	very of investment urrent 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 Carrying amount	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	($ 4,969 )	100%	($ 4,969 )	$ 25,493	$ -

Remittance Accumulated from Taiwan at the end of this period Amount invested in mainland China	Investment amount approved by the Ministry of Economy	According to the regulations of the Ministry of Economic Affairs Investment quota for mainland China
$ 28,516�RMB 60,000,000)	$ 28,516�RMB 60,000,000�	$ 115,467 (Note 2�

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 2019

52126_rns_2019-11-13_2ad6ec6a-ef34-4297-858e-3557282f903d.pdf

Success Prime Corporation and Subsidiaries

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

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

Equity Attributable to Stockholders of the Parent

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

1. GENERAL

2. THE AUTHORIZATION OF FINANCIAL STATEMENTS

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

IFRS 16 “Leases”

Definition of a lease

The Company as lessee

The Group as lessor

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 months after the reporting period.

(4) Basis of consolidation

(5) Merger of Enterprises

(6) Foreign currencies

(7) Life Insurance termination cash value

(8) Inventories

(9) Property, plant and equipment

(10) Goodwill

(11) Intangible assets

3) Derecognition

(12) Impairment of tangible and intangible assets (except Goodwill)

(13) Financial instruments

1. Financial Assets

(14) Provision

Decommissioning cost

(15) Revenue recognition

2. Revenue from the rendering of services

(16) Leases

2018

(17) Borrowing Costs

(18) Government Grants

(19) Employee Benefits

1. Short term Employee Benefits

2. Retirement benefits

1. Employee Stock Option

(21) Taxation

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

(2) Estimation of goodwill impairment

6. CASH AND CASH EQUIVALENTS

8. FINANCIAL ASSETS MEASURED AT AMORTIZED COST

9. NOTES RECEIVABLES AND ACCOUNTS RECEIVABLES

December 31, 2019

December 31, 2018

11. SUBSIDARIES

12. PROPERTY, PLANT, EQUIPMENT

13. LEASE ARRANGEMENTS

(1) Rights-of-use assets - 2019

(2) Lease liabilities - 2019

2018

14. G OODWILL AND TRADEMARKS

15. OTHER INTANGIBLE ASSETS

16. LIFE INSURANCE TERMINATION CASH VALUE

17. OTHER ASSETS

18. BORROWINGS

(1) Short-term borrowings

(2) Long-term borrowings

19. ACCOUNTS PAYABLE

20. OTHER LIABILITIES

21. RETIREMENT BENEFIT PLANS

(1) Defined Contribution Plans

(2) Defined benefit plan

SPC Annual Report 2019