SPC - Annual Report 2020 | FinancialReports.eu

Stock Code: 2496

Website: http://mops.twse.com.tw/mops/web/t05st03 Related Website: www.success-prime.com

SUCCESS PRIME CORPORATION

2019 Annual Report

Printing Date: May 12th, 2020

I. Company Spokesperson and Deputy:

Spokesperson: Shu Ling Tseng Title: General Manager Tel: (02) 2389-9200

E-Mail: [email protected]

Deputy spokesperson: Xiang Yi Luo

Title: Manager Tel.: (02) 2389-9200

E-Mail: [email protected]

II. Headquarters, branches, and factory addresses and phone number:

Headquarter: Hsinchu Science Park 35053 2F., No.11, Kezhong Rd., Zhunan Township, Miaoli County, 350

Tel: (037) 586-999 Taipei Branch Office: 10047 17th Floor, No. 17, Xuchang Street, Zhongzheng District, Taipei City Tel: (02) 2389-9200

III. Name, address, and phone of the Stock Agency

Name: Grand Fortune Securities Co., Ltd.

Address: 6F., No. 6, Sec. 1, Zhongxiao W. Rd., Zhongzheng Dist., Taipei City

Website: http://www.gfortune.com.tw

Tel.: (02) 2371-1658

IV. Name, Firm, address, and phone of the acting independent auditors:

CPAs: Shi Jin Chuan, Shu Lin Liu

CPA Firm: Deloitte & Touche Taiwan Address: 20F, No. 100, Songren Rd., Xinyi Dist., Taipei City

Website: www.deloitte.com.tw

Tel.: (02) 2725-9988

V. Foreign securities exchange corporation listing: None

VI. Company Website: http://www.success-prime.com

I. Letter to Shareholders

Dear Shareholders,

The Company mainly produces and sells various types of optical fiber cables, optical fiber communication components, optical communication systems, optical sensing component systems, as well as education services and consultancy services curriculum subjects such across elementary schools, middle schools and high schools.

I. 2019 Summary of Business Results:

(I) Business plan Implementation results

The net consolidated operating Income of 2019 is NT$881,610,000, comparatively less than the net operating Income of the previous year, NT$917,579,000 with a decline rate of 3.92%. The consolidated gain is NT$76,118,000, less than the amount of the previous year, NT$124,866,000 with a 39.04% reduction. The main reason for this decline can be attributed to the declining birthrate decreasing the revenue stream for our high school business.

(II) Budget Implementation results: The Corporation have not disclosed any financial forecasts.

(III) Financial Income and Expenditure and profit analysis

Financial I	ncome and Expenditure andprof	it analysis Consolidated Parent-only 2018 2019 2018 2019 111,810 85,548 114,781 48,042 9,269 1,438 3,343 30,517 121,079 86,986 118,124 78,559 126,454 76,977 124,886 76,118 9.92 5.86 13.19 7.73 16.12 9.75 15.99 9.72 69.35 49.82 67.66 44.99 13.78 8.73 26.89 16.75 7.18 4.41 7.18 4.41 Unit: in thousands of NT$	it analysis Consolidated Parent-only 2018 2019 2018 2019 111,810 85,548 114,781 48,042 9,269 1,438 3,343 30,517 121,079 86,986 118,124 78,559 126,454 76,977 124,886 76,118 9.92 5.86 13.19 7.73 16.12 9.75 15.99 9.72 69.35 49.82 67.66 44.99 13.78 8.73 26.89 16.75 7.18 4.41 7.18 4.41 Unit: in thousands of NT$	it analysis Consolidated Parent-only 2018 2019 2018 2019 111,810 85,548 114,781 48,042 9,269 1,438 3,343 30,517 121,079 86,986 118,124 78,559 126,454 76,977 124,886 76,118 9.92 5.86 13.19 7.73 16.12 9.75 15.99 9.72 69.35 49.82 67.66 44.99 13.78 8.73 26.89 16.75 7.18 4.41 7.18 4.41 Unit: in thousands of NT$	it analysis Consolidated Parent-only 2018 2019 2018 2019 111,810 85,548 114,781 48,042 9,269 1,438 3,343 30,517 121,079 86,986 118,124 78,559 126,454 76,977 124,886 76,118 9.92 5.86 13.19 7.73 16.12 9.75 15.99 9.72 69.35 49.82 67.66 44.99 13.78 8.73 26.89 16.75 7.18 4.41 7.18 4.41 Unit: in thousands of NT$
	Account/Year	Consolidated		Parent-only
		2018	2019	2018	2019
Financial Income and Expenditure	OperatingIncome	111,810	85,548	114,781	48,042
	Non-operatingIncome and expenses	9,269	1,438	3,343	30,517
	Income before tax	121,079	86,986	118,124	78,559
	Net Income	126,454	76,977	124,886	76,118
Profit Analysis	Return on assets(%)	9.92	5.86	13.19	7.73
	Return on Equity (%)	16.12	9.75	15.99	9.72
	ROCE(%)	69.35	49.82	67.66	44.99
	Profit margin(%)	13.78	8.73	26.89	16.75
	Basic EPS	7.18	4.41	7.18	4.41

(IV) Research and Development Status

The research expense for the year 2019 were NT$ 27,687,000 which accounted for 3.14% of the consolidated operating income, NT$108,610,000. In 2019, based on the existing core technology and main products (special GGP fiber technology, BendSafe single / multimode fiber and indoor / outdoor fiber optic cables and other series products), we developed a new generation of optical fiber products. The primary target is the “Light Peak” application market which opens to mainstream business opportunities in the industry.

II. 2020 Business Plans

(I) Operating Strategy

1. Education Business

(1) To capitalize on the current STEM Education Trend and the “2019 Curriculum” by establishing K12 education comprehensive platform and expand business projects.

     - A. Continue to promote "Chen Li Education" in addition to the high school subject supplementary education business, and strive to sprint into the literacy education of the junior high school and elementary school STEM.

     - B. Open up the possibility of vertical integration and inter-industry cooperation, so that products and services can drive more revenue and profit.

  - (2) Cross-strait marketing of Digital Products

     - Aside from the managing Xiamen consulting division, the new digital production primary school outside of physical classrooms and an online student evaluation system accessible to mainland, alongside Chen LI most core competitive mathematics content, teacher training, through the channels of tens of thousands of educational institutions, we would be able to achieve rapid replication and expansion to acquire more revenue streams and benefits.

  - (3) Deepening the operation and management of enterprises

     - The introduction and training of outstanding talents who identify with the concept of Chen Li Education, through participation in the decision-making and future direction of the process, to help the management of enterprises, after M&A; post-investment management, for enterprises to generate another growth momentum.

Optical Fiber Business
- (1) To further drive capacity optimization and reduce costs
  - In order to enhance the competitiveness of products, production capital and equipment will be gradually updated in order to improve production efficiency, reduce production costs and improve product quality management, and enhance the operating margin to create higher operational efficiency.
- (2) Continue to develop new markets and actively promote business growth Continue to actively explore revenue and profit growth, in the future will continue to explore different application areas of the base customers and participate in the domestic China Telecom and other optical fiber/Optical Cable Engineering standard case.
(II) Expected sales volume and its basis

In addition to continuously expanding the sales scale in the domestic market, the company will actively expand diversified sales channels and continuously increase the market share of the brand.

(III) Important production and sales policies
Education: mainly based on physical courses, while providing free virtual services, with 2019 curriculum and STEM trend, to establish a comprehensive K12 education platform.
Optical fiber: Continue to develop optical fiber products with high mechanical strength characteristics, laser optical fibers and other special optical fibers, etc. At the same time, develop various types of optical fiber application products to increase the added value of products.

III. Future company development strategy, affected by external competitive environment, regulatory environment and overall operating environment

The supplementary education industry is a franchised industry. In addition to complying with the laws and regulations formulated by the government, it must be approved by the local government before it can be established. The company's business philosophy is to operate legally and pay attention to public safety. The business bases are all legal teaching environments.

In the optical fiber business, it will make full use of existing production capacity equipment, maximize production, reduce costs, and create profits; in response to the construction needs of FTTH, actively establish the supply capacity of FTTH photochemical box optical component products, and strive to open the privatized market in China FTTH Obtain the first opportunity for product innovation and accelerate to seize the mainland market; at the same time, in response to the rapid growth of global laser applications, optical fiber lasers have gradually replaced CO2 and solid-state lasers, with the advantages of multi-mode optical fiber and special optical fiber research and development capabilities Invested in the development of laser fiber. In the education industry, it will continue to increase the "Chen Li Education" brand in the education market share; and strengthen the service of digital products, through digital tools and services, physical sales of digital services; at the same time continue to explore the possibility of inter-industry cooperation, and making products and services more diverse.

In the future, in order to increase the brand's share in the education business, we will increase cooperation within the same industry and different industries. In the optical fiber business, we will continue to promote capacity optimization and develop new markets and strive to create more profits for shareholders in order to achieve more excellence The operating results have returned all shareholders' support for many years.

On behalf of the Company, I hereby express my gratitude to all the shareholders for your continuous support to the Company and wish you all the best!

Chairman Min-Chun Chen

II. Company Profile

I. Date of Incorporation: June 15, 1991 II. Company History

Year	Important Events
1991	June: Prime Optical Fiber Co., Ltd. was formally established, the registered capital is NT$ 100 million, the amount ofpaid-in capital is NT$50 million.
1992	September: The first trial output of the 2.5μmMultimodepre-body.
1994	February: held "FDDI” Standard type 62.5μmMulti-mode Fiber "product conference.
	March: "Excellent POFC" The domestic registration of the trademark is complete.
	April: Exhaust Gas Treatment and Recycling" R&D Project (12 months period) awarded by the Authority.
	July: “POFC" Trademark US registration completed.
	August: Fiber CladdingLayer to500μmSuccessfulprocessingtechnologydevelopment.
	December: light Scattered shift fiber(Dispersion--Shift Fiber)The development was successful.
1996	October: "POFC" Trademark registration is complete in mainland China.
	November: to obtain SGS European Quality Certification Institute ISO-9002International quality certification.
	December: development and completion of thepre-system as a unit.
1999	November: completion of the Ministry of Economy to assist small and medium-sized enterprises to developa nine-month "large-scale multi-modepre-system" technologydevelopment case.
2000	May: tojoin 3M The Company's Fiber to Table StrategyAllianceprogram.
2001	August: “PHOTO SENSITIVE FIBER” Award the fourth Outstanding Optoelectronic Products Award bythe Optoelectronics Association".
2002	March: officiallylisted on the Taiwan Securities centralized market.
	December: obtained ISO-9001(2000Annual edition)of the NationalQualitycertification.
2003	March: is located in Hsinchu Science Parkphase fourth Chunan newplant officiallystarted.
	April: official issuance of overseas convertible bonds (ECB), The successful collection of million new Taiwanese dollars.
2004	April: won the "Excellent Technology Award Winning" award-winning technology of the 2nd Taiwan Optical Communications Industry Alliance (TOCIA): "High-temperature CVD erbium-doped fiber preforms and optical fiber manufacturing process technology.
	November: to the Zuko authority to complete the change registration, the Company formally moved to Hsinchu Science Park Chunan base.
	December: "Development and application of integrated fiber grating Sensing system" is supported by the Bamboo Bureau's Innovation TechnologyResearch and Development award.
2005	March: self-developed "optical fiber bending meter", won the Taiwan Optical Communication Industry Alliance (TOCIA) Hosted the "Outstanding Product Award" of the Third Taiwan Optical Communication Elite Award.
	May: "Optical fiber laser Module Development Plan" by the Ministry of Economy industry branch subsidies.
	June: and the United States. Company signed COATING Transfer of technology and procurement from GGP Fiber Of important contracts.
2006	December: successfullydeveloped the first fiber laser module.
2008	January: 3M (Taiwan) Co., Ltd. visited the factory to carry out FTTH on-site vertical optical cable connector(NPC)and connection sub-construction education and training,and issued a training

	certificate to the Company's trainees after the meeting.
	March: The Company's ECB was fully converted into the Company's common stock, and therefore introduced a new professional investor - Singapore Dark Horse Asset Management Co., Ltd., becoming the Company's largest shareholder.
	September: Company's high-strength cable, high-strength bending house optical fiber cable, high- strength fiber hoppingwiringand otherproducts through the China Telecom test specifications.
2009	February: to obtainISO-9001(2008Annual edition)InternationalQualitycertification.
	May: to obtain high-strength bendingfiber(BendSafe™)Trademarks of Taiwan region.
	September: high strength bend resistant fiber(Bend Safe™)Products obtained by Intel Corporation(Intel)Used in the latest launch of the Light Peak Solutions, and at the Intel Development Forum(IDF)Published in the.
2009	October: A new type of patent in Taiwan is obtained from the structure of the monthly axle-free cable winding body.
	November: The POFC study on optical fiber lasers for advanced high-power near-infrared and visible light bands for scientific research and industrial use in the cooperation program for the Qing Dynasty "was subsidized bythe National Science and researchprogram.
	December: cooperation with Asahi Ming Optoelectronics Intelligent Building Energy saving and carbon reduction program. Obtained the National Space Center of the National Experimental Institute(National Space Organization)Procurement of a batch of high-strength bending fiber(BendSafe™), And successfully completed the delivery acceptance, so thatBendSafe™Optical fibers have been successfully applied to the national space program.
2010	February: non-axle cable windingbodystructure to obtain a new type ofpatent in mainland China.
	March: to obtain high-strength bendingfiber(Bend Safe™)Trademark rights in mainland China.
	April: Launched high-strength optical fiber cable with innovative "shaftless carton packaging" to break through the obstacle of FTTH.
	October: Company and Qing Dynasty industry cooperation program-ˬLight Peak Research on novel Optical fiber for Technology "has been subsidized by the National Science Research and Development project.
2011	June: Participated in the Taipei International Optoelectronics Exhibition and demonstrated the advantages of ‘BendSafeTM for FTTH cabling construction’, which include more efficient use of manpower, time and cost.
	September: The Company sets up the Remuneration Committee in accordance with the provisions of the relevant laws and regulations.
2012	February: The Company hired Dr. Stan Lumish, an American optical communications expert, as a senior consultant.
	May: in order to promote corporate governance, the Company in accordance with the provisions of the relevant laws and regulations to set upaudit committees.
	July: Provisional shareholders ' meeting resolution through the Company changed its name to "excellent Success Co.,Ltd."(Success Prime Corporation)ˤ
	August: Science Park Authority approved the filing Company changed its name to "excellent Success Co.,Ltd."(Success Prime Corporation)ˤ
2014	October: Huihua Investment Co., Ltd. made a public acquisition of the Company's common stock shares.
2015	June: Participated in the <2015Annual cross-Strait Optical communication Forum> sponsored by Cross-Strait Optical Communication IndustryAlliance Council.

	June: application for scientific industrial Park R&D Cooperation program "R&D of high energy noise-like pulsed fiber laser for material processing" was developed by the Hsinchu Science Industrial Park Authority of the Ministry of Science and Technology to develop the cooperation grant for excellencein industryand science.
	September: General Manager Heng Tai Xiang participated in 2015 OF week Seminar on optical communication technology and applications, presented at the conference“How to create a rugged fiber entrysolution for new hard skin fibers”.
	November: exercise of employee equityfirst application for recognition and listing.
2016	Successful manufacture of stealth fiber successfully obtained two Chinese standard cases (Inner Mongolia; Guangdong Shaoguan China Telecom); The achievement of the product from a small amount of personal specimens began to enter the standard model of the milestone.
	General meeting of shareholders resolution through the reduction of funds to cover losses and private equity to handle cash increase in the issuance of common stock cases.
	October: acquisition of common stock of Chen Li Education Co., Ltd.1,680,000Shares, with a shareholdingratio of 15%ˤ
2017	March: acquisition of common stock of Chen Li Education Co., Ltd.8,176,000 Shares, the cumulative shareholdingratio is 88%ˤ
	Chen Li Education Co.,Ltd. began to be incorporated into the Company's consolidated statements.
	July: acquisition of common stock of Chen Li Education Co., Ltd.1,344,000 Shares, the cumulative shareholdingratio is100%ˤ
	October: investment set upsubsidiaryPrime Optical Fiber Co.,Ltd.
2018	January: in order to expand the Kaohsiung supplementary education market, acquired Yi He Short-term cram schooljointlyset upan Prime Education ConsultingCo.,Ltd.
	March: share subscription warrants of 800,000 Share.
	August: capital reserve transferred to common stock$8,314Thousand NT.
2019	October: In order to develop elementary school digital education products other than national curriculum. The corporation has acquired Chuang-Si Technology Co., Ltd., and subsequently changed its name to“Chen Li Elm Co., Ltd.”
2020	January: The Corporation has joint-ventured with the head of the biology academics division to create a new entity,“Li-ren EducationCo.,Ltd.” tofurtherexpandthe operation tothefield ofbiology.
	February: The Corporation has joint-ventured with the leading American education brand, American Eagle Institute, and Teacher Zhang Min-ru to create a new subsidiary “Chen Li Zhiyi Education Co., Ltd.”This purpose of the joint-venture is to expand operations to Hsinchu Zhubei community.
	March: The board of directors have passed a resolution on the sale of the Optic fiber business Division. The sale of this division will be transferred to the Corporation’s 100% owned subsidiary-Prime Optical FiberCorporation.The base date of this saleis on 2020/05/15.

III. Corporate Governance Report

I. Organization

(I) Organizational Chart

==> picture [663 x 367] intentionally omitted <==

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

Shareholders
Board
Audit Committee
Board of
Directors
Remuneration
Committee
Auditing Room
Chairman
Chairman’s Office
General Manager
General Manager Office
Administrative Education
Optical fiber Education
Management Finance Dept. Material IT Dept. Legal Dept.
Division Division Editing Team
Department
----- End of picture text -----

(II) Functions of the Main Departments

Dept.	Functions
Chairman Office	1. Assist in strategic planning for long/short/midterms targets.
	2. Organize and establish Corporation’s system and formulate operating strategies.
General Manager Office	1. Organization and operation coordination, process improvement and adjustment and supervision of each unit's rights and responsibilities.
	2. Assist senior executives to conduct business decision analysis.
Audit Committee	1. Review the adequacy and consistency of internal control processes to ensure the effectiveness of internal control. Perform audit check according to the annual plan approved by Board Meeting.
	2.Revise Annual audit plan and conduct project-based audit to supervise operational status to filter out anomalies that would enhance corporate governance as well as to establish corporate risk assessment and control mechanism.
Optical Fiber Division	1.Development of new optical fiber customers, market intelligence gathering, and customer business transactions all matters of management
	2.Optical fiber product planning and application, new product release, old product replacement andprovideproduct line development approach
	3.Manufacturing and production related to a variety of business, to ensure quality, enhance the production capacity of people, machines, materials in one
	4.Responsible for quality inspection and testing of raw materials, product development and manufacturing shipments to meet customer requirements
Education Service Division	1. Assist in formulatingcorporate digital business development strategies andgoals.
	2. Digital business development unit: middle school, high school, and vocational school.
	3. Evaluation and development of digital business authorization.
	4.Cooperate with entity Cram School to develop virtual reality integration business plan.
Finance Department	1.Group's accounting processing,accountingreportproduction and analysis,etc.
	2.Fund Management and fund management of thegroup
	3.Group's financial Insurance Management, stock management in accordance with Securities& Exchange Act,related laws and regulations.
Administrative Management Department	1.Human resources planning, personnel recruitment appointments, payroll management, education and training, employee welfare relations and other related matters
	2.Development of salary raise/promotion, performance reward operation and human capital related management measures
	3.Management matters related togeneral services matters,equipment andproperty
	4.Responsible for teachers, teaching materials, artistic design, equipment and external procurement and request matters
	5.Concierge Fee request and supplier evaluation Management
	6.Responsible for the repair and maintenance of the general services in the factory, the general office and the School Workers Safety and health services
Information Technology	1.Investment and Security policyformulation and securitymanagement.
	2.Hardware and computer system maintenance, network management and Information System development

	3.Program-writing and maintenance, support and integration management information operations, etc.
	4.Information Equipment Management
Education Material Editing Team	1.Professional teacher arrangement and management and teacher training
	2.Planningand management of courses
	3.Artistic Design of teachingmaterials
	4.Teachingmaterials,Pamphlets,advertisingarrangements and management
	5.Operation and management of teachingoffice in national and high schools
	6.Digitalphotographyand activity photography
Legal Department	1. Responsible for the handling of related legal matters related to the operations of the Company.
	2. Intellectual PropertyManagement,litigation case handlingand contract reviews.

II. Directors, Supervisors, General Manager, Deputy General Manager, Departmental Manager, and Management Team (I) Directors and Supervisors

							April 20th,2020	April 20th,2020	April 20th,2020	April 20th,2020	April 20th,2020	April 20th,2020	April 20th,2020	April 20th,2020	April 20th,2020	April 20th,2020	April 20th,2020	April 20th,2020	April 20th,2020	April 20th,2020
Title	National ity	Name	Gen der	Date Elected	Year s	Initial Elected Date	Shareholding when elected		Number of shares held		Spouses, minor children now hold shares		To hold shares in the name of others		Education and selected past elections	Current additional positions	Other supervisors, directors or monitors with as spouse or kin within the second-degree			Note
							Number of shares	Holding Ratio	Number of shares	Holdin g Ratio	Number of shares	Holding Ratio	Numbe r of shares	Holdin g Ratio			Title	Name	Relationship
Chairma n	Republi c of China	Min-Chun Chen (note 3)	M	2019.05.02	3	2019.01.21	-	-	-	-	-	-	-	-	(note 2)	(note 2)	Director Director Director	Shu- LingTseng Yen- Shuan Chen Yun Chen	Spouse Within second degrees Within second degrees
Director	Republi c of China	Shu-ling Tseng (note 4)	F	2019.05.02	3	2019.01.23	-	-	18,000	0.10%	-	-	-	-	(note 2)	(note 2)	Chairma n Director Director	Min-Chun Chen Yen- Shuan Chen Yun Chen	Spouse Within second degrees Within second degrees	Note 5
Director	Samoa	Far East International Commercial Bank entrusted with the custody of Endow Capital Management Co., Ltd. Investment (Note1)	-	2019.05.02	3	2017.01.18	1,716,592	9.83%	1,716,592	9.83%	-	-	-	-	(note 2)	(note 2)	-	-	-
	Republi c of China	Representative: Xiang-Qi Fang	M	2019.05.02	3	2019.05.02	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None
	Republi c of China	Representative: Rui-Xian Lin (note 1)	M	2019.05.02	3	2015.05.12	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None
	Republi c of China	Representative: Shih- Tsui Yen (dismissed)	F	2018.12.24	3	2018.12.24	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None

~~10~~

Title	National ity	Name	Gen der	Date Elected	Year s	Initial Elected Date	Shareholding when elected	Shareholding when elected	Number of shares held	Number of shares held	Spouses, minor children now hold shares	Spouses, minor children now hold shares	To hold shares in the name of others	To hold shares in the name of others	Education and selected past elections	Current additional positions	Other supervisors, directors or monitors with as spouse or kin within the second-degree	Other supervisors, directors or monitors with as spouse or kin within the second-degree	Other supervisors, directors or monitors with as spouse or kin within the second-degree
							Number of shares	Holding Ratio	Number of shares	Holdin g Ratio	Number of shares	Holding Ratio	Numbe r of shares	Holdin g Ratio			Title	Name	Relationship
	Republi c of China	Representative: Wei Yuan Deng (dismissed)	M	2018.12.24	3	2018.12.24	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None
Director	Samoa	Bash Consultant Incorporated Representative: Yen- Shuen Chen	-	2019.05.02	3	2019.05.02	1,716,592	9.83%	1,716,592	9.83%	-	-	-	-	(note 2)	(note 2)	-	-	-
	Republi c of China	Representative: Yen- Shuan Chen	F	2019.05.02	3	2019.05.02	-	-	-	-	-	-	-	-	(note 2)	(note 2)	Chairma n Director Director	Min-Chun Chen Shu-ling Tseng YunChen	Within second degrees
	Republi c of China	Representative: Yun Chen	F	2019.05.02	3	2019.05.02	-	-	-	-	-	-	-	-	(note 2)	(note 2)	Chairma n Director Director	Min-Chun Chen Shu-ling Tseng Yen- Shuen Chen	Within second degrees
Director	Republi c of China	Yu Yin Investment Co., Ltd (dismissed)	-	2016.05.09	3	2015.05.12	11,484,000	24.56%	-	-	-	-	-	-	(note 2)	(note 2)	-	-	-
		Representative: Shi-feng Chen (dismissed)	M	2016.05.09	3	2015.12.29	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None
		Representative: Zu-li Weng (dismissed)	M	2016.05.09	3	2015.12.29	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None
		Representative~~�~~ Hao Yu Lin (dismissed)	M	2016.05.09	3	2015.12.29	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None
		Representatve Hongde Xu (dismissed)	M	2016.05.09	3	2015.12.29	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None
Independ ent Director	Republi c of China	Mei-chen Zhuang (Dismissed)	M	2019.05.02	3	2019.05.02	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None
Independ ent Director	Republi c of China	Bing-Quan Shi	M	2019.05.02	3	2019.05.02	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None
Independ ent Director	Republi c of China	Pei-Jun Hong	F	2019.05.02	3	2019.05.02	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None

Title	National ity	Name	Gen der	Date Elected	Year s	Initial Elected Date	Shareholding when elected	Shareholding when elected	Number of shares held	Number of shares held	Spouses, minor children now hold shares	Spouses, minor children now hold shares	To hold shares in the name of others	To hold shares in the name of others	Education and selected past elections	Current additional positions	Other supervisors, directors or monitors with as spouse or kin within the second-degree	Other supervisors, directors or monitors with as spouse or kin within the second-degree	Other supervisors, directors or monitors with as spouse or kin within the second-degree
							Number of shares	Holding Ratio	Number of shares	Holdin g Ratio	Number of shares	Holding Ratio	Numbe r of shares	Holdin g Ratio			Title	Name	Relationship
Independ ent Director	Republi c of China	Hong je Chen (Dismissed)	M	2016.05.09	3	2016.05.09	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None
Independ ent Director	Republi c of China	Yi Chuan Li (Dismissed)	M	2016.05.09	3	2016.05.09	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None
Independ ent Director	Republi c of China	Rui-Xuan Chen (Dismissed)	F	2016.05.09	3	2016.05.09	-	-	-	-	-	-	-	-	(note 2)	(note 2)	None	None	None

Note 1: Rui-Xiang Lin was elected as a director by a legal representative director (Yu Ying Investment) at the 2015.05.12 shareholders meeting, and then was dismissed by the legal representative director at 2015.12.19. Management) was elected as a director. At 2019.05.02 shareholders' meeting, Rui-Xiang Lin was once elected as a director as the representative of the corporate director (Endow Capital Management).

Note 2: The directors of the company currently hold the positions of the company and other companies as follows:

	Current Directors	Current Directors	Current Directors				Past Directors	Past Directors
Title	Name	Work (academic) Experience	Currently holding positions of the company and other companies	Past positions	Name	Date of dismissal	Work (academic) Experience	Currently holding positions of the companyand other companies
Chairman	Min-Chun Chen	National Tsinghua University EMBA Masterof Management Department of Industrial Engineering, National Tsinghua University Chen LiEducation Co., Ltd. Founder.	Chairman, Prudential Education Technology Co., Ltd., Chen Li Education Foundation, Corporation Director	Director	Shi-feng Chen	2019.05.02 Shareholders meeting	University of Illinois Champgne, United States, Dual Master of Accounting/Finance Chairman, Success Prime Corporation	Chairman, Hong Kong merchants Jia Tong Capital Limited Chairman, Yu Ying Investment Co.,Ltd. Director, Mr. Onion
Director	Shu-ling Tseng	Master of Accounting, National Taiwan University (EMBA) Department of Foreign Languages, National Taiwan University	General Manager of Success Prime Corp, Chairman of Chen Li Educational Company, Representative of Chen Li Education Technology, Representative of Prime Education Consulting Company, Chairman of Chen Li Education Foundation, Chairman of CHEN LI's Group Limited, Chairman of CHEN LI's Group (HK) Limited, Chairman of Chen Li (Xiamen)Education Consulting Co.,Ltd.	Director	Shih- Tsui Yen	2019.01.23 dismissed	National Chengchi University Graduate Institute of Technology, Innovation and Intellectual Property Management. High Court Hualian Branch Court Judge, Taoyuan College Inspection officer, Taoyuan Inspection Department Prosecutor, New Taipei City Arbitrator, Republic of China Arbitration Association 2015Member of the Personnel Review Committee of the Court of the Year Division	YST Law Firm Lawyer
Director	Xiang-Qi Fang	Bachelor of Accounting, Fengjia University	Supervisor, Chenli Education Co., Ltd. Supervisor, Prime Education Consulting Group Chairman&General Manager, SULDE International Consulting Corp Chairman, Sulde Strategic Co., Ltd. Director, Keystone Intellectual Property Office	Director	Zu-li Weng	2019.05.02 Shareholders meeting dismissed	Bachelor of law, NTU Master of Commerce, NTU Washington University in ST. Louis Join INTL Law Offices	Lawyer, Weisers Law Offices
Director	Rui-Xian Lin	School of Management of NCU	Chairman, Qilin Chemical Chairman, Prime Optical Fiber Corporation	Director	Wei Yuan Deng	2019.01.21 dismissed	Tax Law Section, Institute of Law, National Taiwan University Faculty of Law, National University of Taiwan HuanYu LawFirm	Lawyer of Hongwei Law Office Independent Director, Mr. Onion
Director	Yen-Shuen Chen	Bachelor of Visual Arts, University of Washington-Seattle Assistant Manager, Success Prime Corporation Graphic Designer, Chenli Education	Product Manager, Chenli Elm Co., Ltd.	Director	Hao Yu Lin	2019.05.02 Shareholders meeting dismissed	Master of International Business, National Taiwan University	Chairman, Taiwan Shin Kong Global Venture Capital Co., Ltd. Director, AZION Corporation

Current Directors	Current Directors	Current Directors	Current Directors	Past Directors	Past Directors	Past Directors	Past Directors	Past Directors
Title	Name	Work (academic) Experience	Currently holding positions of the company and other companies	Past positions	Name	Date of dismissal	Work (academic) Experience	Currently holding positions of the companyand other companies
Director	Yun Chen	Bachelor of Finance, McGill University Assistant,Chenli Education	None	Director	Hongde Xu	2019.02.12 deceased	Master of Aeronautics and Space Engineering,Southampton,UK	None
Independent Director	Bing-Quan Shi	Masters of Accounting, TamKang University, Audit Executive, Deloitte&Touche	Accountant, JYH HER CPAs Independent Director, Lian Hong Technology	Independent Director	Hong-ji Chen	2019.05.02 Shareholders meeting dismissed	PhD, University of Wisconsin, Madison, USA	Independent Director, Coretronics Full- time professor, Department of Information Management, Taiwan University
Independent Director	Pei-Jun Hong	Bachelor of Law, National Taipei University CHIH and WU Attorneys Law Office LCC Partners Law Office	Founder Tengri International Attorneys at Law	Independent Director	Yi- Chuan Li	2019.05.02 Shareholders meeting dismissed	PhD in Business Administration, Macau University of Science and Technology	Director, PLANET, Technology Co., Ltd., General Manager, Lan Bo Wan Development Co., Ltd.
-	-	-	-	Independent Director	Rui- Xuan Chen	2019.05.02 Shareholders meeting dismissed	Bachelor of Accounting, NTU	Company legal representative, Mercuries Home Department Store Supervisor, Tomods Pharmaceutical Makeup (shares)
-	-	-	-	Independent Director	Mei-chen Zhuang	2020.02.27 resigned	Doctoral Degree of Chemical Engineering, Stanford University New York University MBA Bachelor of Chemistry, NTU Deputy General Manager of CEO Office, Liteon Tech	Kechuang Marketing Management Consulting Co., Ltd. Remuneration Committee member, ATE EnergyInternational Co.,Ltd

[Note 3:][2019.01.21 as a representative of Endow Capital Management Co., Ltd. as a director, and was elected as chairman by the board of directors at 2019.01.30. In ] 2019 .05.02 Min-Chun Chen elected as a director in personal entity and was elected as the Chairman by the board of directors on the same day.

Note 4: Since the original general manager Heng-tai Xiang will cooperate with the optical fiber business transfer to the subsidiary, and is scheduled to be transferred to the subsidiary, Prime Optical Fiber Co., Ltd. on the business transfer basis date, the original education business department was appointed by the resolution of the board of directors 2020.03.24 The general manager, Shu-Ling Tseng (spouse of the chairman) served as the general manager

Note 5: The chairman of the company, Min-Chun Chen, and the general manager, Shu-Ling Tseng are spouses. To strengthen the independence of the board of directors, the company intends to enhance the functions of the board of directors and strengthen the supervision function by increasing the number of independent directors. The company has the following specific measures:

� (1) The current two independent directors are specialized in the fields of financial accounting and law and can effectively play their supervisory functions

(2) Every year, each director is arranged to participate in the training of professional director courses by external institutions such as the Securities and Exchange Commission, so as to enhance the operational efficiency of the board of directors.

(3) Independent directors can fully discuss and propose suggestions for the board of directors to implement corporate governance in each functional committee.

(4) More than half of the members of the board of directors do not concurrently serve as employees or managers.

Principal shareholder of Corporate Shareholders

April 20, 2020

		April 20,2020
Corporate Shareholder	Majority Shareholder of Corporate Shareholders	Shareholding ratio
Far East International Commercial Bank entrusted custody of Bash Consulting Co.,Ltd.InvestmentAccount	CHEN,MIN-CHUN	100%
Far East International Commercial Bank entrusted with the custody of Endow Capital Management Co., Ltd. Investment Account.	CHEN TSENG,SHU-LING	100%

2. Professional knowledge and Independence of Directors and Supervisors

April 20 2020

				April 20 2020	April 20 2020	April 20 2020	April 20 2020	April 20 2020	April 20 2020	April 20 2020	April 20 2020	April 20 2020	April 20 2020	April 20 2020	April 20 2020
Conditions Name	Do you have more than five years working experience And the following professional qualifications			Compatible with independence situations(Note1												Number of independe nt directors of other public offering companies
	Lecturer in public and private colleges and universities in the relevant departments of business, legal, financial, accounting or corporate business	Judges, prosecutors, lawyers, accountants or other specialized occupations and technicians who have passed the national examination required for the business of the Company	Work experience required for business, legal, financial, accountingor corporate business	1	2	3	4	5	6	7	8	9	10	11	12
Min-Chun Chen			ü			ü	ü		ü			ü		ü	ü	None
Shu-Ling Tseng			ü			ü	ü		ü			ü		ü	ü	None
Endow Capital Management Shares Representative of the Limited Company: Xiang-Qi Fang (Note4)			ü	ü		ü	ü	ü	ü	ü	ü	ü	ü	ü		None
Endow Capital Management shares Representative of the Limited Company: Rui-Xian Lin (Note4)			ü	ü		ü	ü	ü	ü	ü	ü	ü	ü	ü		None
Bash Consultant Incorporated Representative:Yen-Shuen Chen			ü			ü	ü	ü	ü	ü		ü		ü		None
Bash Consultant Incorporated Representative:Yun Chen			ü	ü		ü	ü	ü	ü	ü		ü		ü		None
Bing-Quan Shi		ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	None
Pei-Jun Hong		ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	None
Mei-Chen Zhuang(note2)			ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	None
Endow Capital Management Inc. Representative: Shih-TsuiYen (note2)		ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü		None
Endow Capital Management Inc. Representative: Wei Yuan Deng (note 2)		ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü		1
Yu-Ying Investment Co., LTD. Representative: Shi-FengChen(note 2)			ü	ü	ü	ü	ü	ü	ü	ü		ü	ü	ü		None
Yu-Ying Investment Co., LTD. Representative: Zu-Li Weng		ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü		None
Yu-Ying Investment Co., LTD. Representative: Hao Yu Lin			ü	ü		ü	ü	ü	ü	ü	ü	ü	ü	ü		1
Yu-Ying Investment Co., LTD. Representative: Hongde Xu (Note3)			ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü		None
Hong-Ji Chen(note 2)	ü		ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	1
Yi-Chuan Li(note 2)			ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	None
Rui-Xing Chen(note 2)			ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	None

Note 1: If the directors and supervisors meet the following conditions during the two years before the election and during their tenure, please mark “ü” in the space below each condition code.

(1) Employees who are not companies or their affiliates.

(2) Directors and supervisors of non-company or related companies (but if the company and its parent company, subsidiary company or subsidiary of the same parent company are independent directors established by this law or local state laws and regulations, they are not limited to this).

(3) Non-self, spouse, minor children, or other natural person shareholders who hold more than 1% of the total issued shares of the company in the name of others or the top ten shareholders.

(4) The spouses, relatives within the second and other relatives of the manager listed in (1) or the persons listed in (2) and (3), or direct blood relatives within the third parent.

(5) Directors, supervisors or legal shareholders who do not directly hold more than 5% of the company's total issued shares, hold the top five shares, or appoint representatives to act as company directors or supervisors in accordance with Article 27, paragraph 1 or 2 of the Company Law Employee (but if the independent directors established by the company and its parent company, subsidiary company or subsidiary of the same parent company in accordance with this law or local national laws and regulations are concurrently held by each other, this is not the limit).

(6) More than half of the shares that are not on the board of directors of the company or have voting rights are the directors, supervisors or employees of other companies controlled by the same person (but if it is the company or its parent company, subsidiary or subsidiary of the same parent company according to this (The independent directors established by the law or local national laws and regulations shall not be limited to this.)

(7) Directors (directors), supervisors (supervisors) or employees of other companies or institutions that are not the same person or spouse with the company's chairman, general manager or equivalent, but if the company and its parent company, subsidiary (If the independent directors established by subsidiaries of the same parent company in accordance with this law or local national laws serve concurrently, they are not limited to this).

(8) Directors (directors), supervisors (supervisors), managers or shareholders holding more than 5% of a specific company or organization that does not have financial or business dealings with the company (but if a specific company or organization holds 20% of the company's total issued shares The above does not exceed 50%, and the independent directors established by the company and its parent company, subsidiary company or subsidiary of the same parent company in accordance with this law or local national laws and regulations concurrently serve each other, not subject to this limit).

(9) Professionals, sole proprietorships, partnerships, business owners of companies or institutions that do not provide audits for companies or related enterprises or have obtained business-related services such as business, legal, financial, accounting and other related services whose cumulative amount of remuneration in the past two years has not exceeded NT$500,000 Partners, directors (directors), supervisors (supervisors), managers and their spouses. However, members of the Remuneration Committee, Public Acquisition Review Committee, or M&A Special Committee that perform their duties in accordance with the relevant laws and regulations of the Securities Exchange Act or the Corporate M&A Act are not limited to this.

(10) There is no kinship relationship with other directors within the scope of spouse or second parent.

(11) There is no one of the circumstances in Article 30 of the Company Law.

(12) There is no Article 27 of the Company Law which stipulates that the government, legal persons or their representatives shall be elected.

Note 2: The re-election of directors in the year of 2019 is complete. Please refer to pages 8-9 of this annual report for the date of dismissal of each director.

(II) General Manager, Deputy General Manager, Associate Manager, Managers of Departments and Branches

													April 20 2020	April 20 2020	April 20 2020
Title (Note1)	Nationality	Name	Gend er	Elected Date	Holding shares		Shares held by spouses and minor children		To hold shares in the name of others		Main Sutra (school) calendar (Note2)	Currently serves as a position for other companies	A manager with a relationship within a spouse or two relatives.
					Number of shares	Holdings Ratio	Number of shares	Holding s Ratio	Numb er of shares	Holding s Ratio			Title	Name	Relationship
General Manager	R.O.C	Shu Ling Tseng	F	2017/07/12	18,000	0.103%	-	-	-	-	Master of Accounting, National Taiwan University (EMBA) Bachelor of Foreign Languages, National Taiwan University	Please refer to page 8.	None	None	None
Optical Fiber Division General Manager	R.O.C	Heng Tai Xiang	M	2014/11/13	2,110	0.001%	12	0.00%			PhD in physics, Bell Laboratories, Department of Communications, TelecommunicationsInstitute, University of Illinois, USA	New Fu Sheng Optoelectronics (Shenzhen)Technic al Chief, Ltd.	None	None	None
Optical Fiber Division Deputy General Manager	R.O.C	Da Wei Chuan	M	2014/08/28	50,000	0.02 9%	-	-	-	-	Master of Advanced Management, School of Science and Technology Management, Tsinghua University	None	None	None	None
Accounting Manager	R.O.C	Xiang Yi Luo (Note2)	F	2019/01/28	-	-	-	-	-	-	Accounting Manager , Chen Li Education Co., Ltd., Accounting Manager, Deloitte AccountingFirm.	None	None	None	None
Accounting Manager	R.O.C	Xuan Yu Chen	F	2016/08/12	-	-	-	-	-	-	Accountant, Elements Innovation Co., Ltd. Deputy Manager of Audit Department,	None	None	None	None

			(Note3)									Ernst & Young Accounting Firm Audit Department Director, HLB Candor Taiwan CPA.

Note 1 : The chairman of the company, Min-Chun Chen, and the general manager, Shu-Ling Tseng are spouses. To strengthen the independence of the board of directors, the company intends to enhance the functions of

the board of directors and strengthen the supervision function by increasing the number of independent directors.

The company has the following specific measures:

(1) The current two independent directors are specialized in the fields of financial accounting and law, and can effectively play their supervisory functions�

(3) Independent directors can fully discuss and propose suggestions for the board of directors to implement corporate governance in each functional committee.

(4)More than half of the members of the board of directors do not concurrently serve as employees or managers.

Note 2: appointed on 2019.01.28, and completed recognition by the Board on 2019.01.30.

Note 3: Internal Job adjustment on 2019.01.28, transferred as the Special Assistant to Chairman.

III. Information of Director (Including Independent Directors), Supervisors, General Manager and the Deputy General Manager.

(I) Remuneration of Directors (including Independent Directors)

December 31[st] , 2018 Unit: NT$; thousand shares

Title	Name			Director’s fee	Director’s fee	Director’s fee	Director’s fee	Director’s fee	Director’s fee	A,B,Cand D The ratio of four total amounts to net profit after tax	A,B,Cand D The ratio of four total amounts to net profit after tax	Concurrently employees receive related Remunerations	Concurrently employees receive related Remunerations	Concurrently employees receive related Remunerations	Concurrently employees receive related Remunerations	Concurrently employees receive related Remunerations	Concurrently employees receive related Remunerations	Concurrently employees receive related Remunerations	Concurrently employees receive related Remunerations	A,B,C,D,E,F, G.The ratio of seven total amounts to net profit aftertax	A,B,C,D,E,F, G.The ratio of seven total amounts to net profit aftertax	Receive remunerati on from non- subsidiary reinvestme nt business or parent company
		Payment (A)		Retirement Pension (B)		Director’s remuneration (C)		Operational implementation costs (D)				Salary, bonus and special fee, etc(E)		Retirement Pension (F)		Employee Reward(G) (Note 6)
		The Company	All companies in the financial report	The Company	All com panies i n the fi nancial report	The Com pany	All comp anies in t he financi al report	The Com pany	All comp anies in t he financi al report	The Co mpany	All com panies in the fina ncial rep ort	The Co mpany	All com panies i n the fin ancial r eport	The Co mpany	All co mpanie s in the financi al repor t	The Compa ny		All compan ies in the fi nancial rep ort		The Com pany	All comp anies in t he financi al report
																Cash Amo unt	Share s Amo unt	Cash Amo unt	Share s amou nt
Chairman	Min-Chun Chen	74	74	-	-	82	82	27	27	0.24%	0.24%	-	528	-	89	-	-	-	-	0.24%	1.05%	None
Director	Shu-Ling Tseng	73	73	-	-	82	82	27	27	0.24%	0.24%	1,248	1,441	80	87	-	-	-	-	1.98%	2.25%	None
Director	Endow Capital Management shares Representative of the Limited Company: Xiang-Qi Fang	40	40	-	-	124	124	15	15	0.23%	0.23%	-	-	-	-	-	-	-	-	0.23%	0.23%	None
Director	Endow Capital Management shares Representative of the Limited Company: Rui- Xian Lin	40	40	-	-	82	82	15	15	0.18%	0.18%	-	-	-	-	-	-	-	-	0.18%	0.18%	None
Director	Bash Consultant Incorporated Representative:Yen- Shuen Chen	40	40	-	-	82	82	18	18	0.18%	0.18%	-	62	-	4	-	-	-	-	0.18%	0.27%	None
Director	Bash Consultant Incorporated Representative: Yun Chen	40	40	-	-	82	82	18	18	0.18%	0.18%	-	-	-	-	-	-	-	-	0.18%	0.18%	None

Independent Director	Bing-Quan Shi	80	80	-	-	247	247	18	18	0.45%	0.45%	-	-	-	-	-	-	-	-	0.45%	0.45%	None
Independent Director	Pei-Jun Hong	80	80	-	-	247	247	18	18	0.45%	0.45%	-	-	-	-	-	-	-	-	0.45%	0.45%	None
Independent Director	Mei-Chen Zhuang	80	80	-	-	206	206	15	15	0.39%	0.39%	-	-	-	-	-	-	-	-	0.39%	0.39%	None
Director	Endow Capital Management Inc. Representative: Shih- Tsui Yen	7	7	-	-	-	-	3	3	0.01%	0.01%	-	-	-	-	-	-	-	-	0.01%	0.01%	None
Director	Endow Capital Management Inc. Representative: Wei Yuan Deng	7	7	-	-	-	-	6	6	0.02%	0.02%	-	-	-	-	-	-	-	-	0.02%	0.02%	None
Director	Yu-Ying Investment Co., LTD. Representative: Shi-Feng Chen	40	40	-	-	-	-	9	9	0.06%	0.06%	-	-	-	-	-	-	-	-	0.06%	0.06%	None
Director	Yu-Ying Investment Co., LTD. Representative: Zu-Li Weng	40	40	-	-	-	-	18	18	0.08%	0.08%	-	-	-	-	-	-	-	-	0.08%	0.08%	None
Director	Yu-Ying Investment Co., LTD. Representative: Hao Yu Lin	40	40	-	-	-	-	18	18	0.08%	0.08%	-	-	-	-	-	-	-	-	0.08%	0.08%	None
Director	Yu-Ying Investment Co., LTD. Representative: HongDe Xu	10	10	-	-	-	-	9	9	0.02%	0.02%	-	-	-	-	-	-	-	-	0.02%	0.02%	None
Independent Director	Hong-Ji Chen	40	40	-	-	-	-	18	18	0.08%	0.08%	-	-	-	-	-	-	-	-	0.08%	0.08%	None
Independent Director	Yi-Chuan Li	40	40	-	-	-	-	21	21	0.08%	0.08%	-	-	-	-	-	-	-	-	0.08%	0.08%	None
Independent Director	Rui-Xing Chen	40	40	-	-	-	-	18	18	0.08%	0.08%	-	-	-	-	-	-	-	-	0.08%	0.08%	None
1.Please state the independent director's remuneration payment policy, system, standards and structure, and describe all the relevance to remuneration according to the responsibilities, risks, time spent and other factors:

The remuneration of the independent directors of the company is the degree of participation and contribution value of each director composed of the salary and Remuneration Committee to the company. After linking the reasonable fairness of performance risk and the remuneration received, it makes recommendations to the board of directors.

2.In addition to the disclosure in the above table, the directors of the company in the most recent year have provided services to all companies in the financial report (such as consultants as non-employees). Remuneration received: None.

(II) Supervisor's remuneration: The company has set up an Audit committee to replace the supervisor, so it is not applicable.

(III) Remunerations of General Manager/Deputy General Manger 2019.12.31 Unit: thousands NT$

Title	Name	Salary(A)	Salary(A)	Retirement Pension(B)	Retirement Pension(B)	Bonus and Allowances (C)	Bonus and Allowances (C)	Employee Compensation (D)	Employee Compensation (D)	Employee Compensation (D)	Employee Compensation (D)	A, B, C and D ratio of four total amounts to net benefits after tax	A, B, C and D ratio of four total amounts to net benefits after tax	payments from outside the subsidiary
		The Company	All companies in the financial report	The Company	All companies in the financial report	The Company	All companies in the financial report	The Company		All companies in the financial report		The Company	All companies in the financial report
								Cash Amount	Share Amount	Cash Amount	Share Amount
General Manager	Shu Ling Tseng	1,248	1,441	80	87	-	-	-	-	-	-	1.74%	2.01%	None
General Manager of Optic Fiber Division	Heng Tai Xiang	1,924	1,924	-	-	320	320	-	-	-	-	2.95%	2.95%	None
Deputy General Manager of Optic Fiber Division	Da Wei Chuan	1,804	1,804	108	108	3,496	3,496	115	-	115	-	7.26%	7.26%	None

(IV) Remuneration of the top five executives with the highest remuneration December 31, 2019 Unit: NT$; thousand shares

Title	Name	Salary(A)	Salary(A)	Retirement Pension (B)	Retirement Pension (B)	Bonus and Allowances (C)	Bonus and Allowances (C)	Employee Compensation (D)	Employee Compensation (D)	Employee Compensation (D)	Employee Compensation (D)	A, B, C and D ratio of four total amounts to net benefits after tax (%)	A, B, C and D ratio of four total amounts to net benefits after tax (%)	payments from outside the subsidia ry
		The Company	All companies in the financial report	The Company	All companies in the financial report	The Company	All companies in the financial report	The Company		All companies in the financial report		The Company	All companies in the financial report
								Cash Amount	Shares Amount	Cash Amount	Shares Amount
General Manager	Shu Ling Tseng	1,248	1,441	80	87	-	-	-	-	-	-	1.74%	2.01%	None
General Manager of Optic Fiber Division	Heng Tai Xiang	1,924	1,924	-	-	320	320	-	-	-	-	2.95%	2.95%	None
Deputy General Manager of Optic Fiber Division	Da Wei Chuan	1,804	1,804	108	108	3,496	3,496	115	-	115	-	7.26%	7.26%	None
Accounting Manager	Xiang Yi Luo (note 1)	1,073	1,152	59	64	120	120	-	-	-	-	1.64%	1.75%	None
Accounting Manager	Hsuan-yu Chen (note 2)	468	468	5	5	-	-	-	-	-	-	0.62%	0.62%	None

(Note 1): Newly appointed on 2019.01.28 and completed recognition from the board of directors on 2019.01.30. (Note 2): On 2019.01.28, with the company's internal job adjustment, she was transferred as the special assistant of the chairman.

(V) Name and distributions of managers who allocate the employee compensations:

December 31, 2019; Unit: in thousands NT$

	Title	Name	Stock	Cash Amount	Total	Total share of net benefits after tax (%)
Mana gers	General manager	Shu Ling Tseng	-	115	115	0.15%
	Optical Fiber division General manager	Heng Tai Xiang
	Optical Fiber DivisionDeputy General Manager	Da Wei Chuan
	Head of Accounti ng	Xiang Yi Luo

Note: The employee compensation for 2019 has not been actually allocated. This table is calculated according to the proportion of the actual distribution amount last year.

(VI) Comparison of the Company and the combined statements of all companies in the last two years to pay the Company's directors, supervisors, general manager and deputy general manager of the total amount of remuneration as an individual or individual financial statements after the net benefit ratio analysis and explain the payment of remuneration policies, standards and combinations, the procedures for the setting of Remunerations, and business performance and future risks:

	Unit: thousands NT$	Unit: thousands NT$	Unit: thousands NT$	Unit: thousands NT$	Unit: thousands NT$	Unit: thousands NT$	Unit: thousands NT$	Unit: thousands NT$
Items	Individual				Consolidated
	2018		2019		2018		2019
	Amount	%	Amount	%	Amount	%	Amount	%
Directors' remuneration	4,355	3.49%	2,336	3.07%	4,355	3.49%	2,336	3.07%
Supervisor remuneration	-	-	-	-	-	-	-	-
General manager/Vice president remuneration	8,482	6.79%	9,095	11.95%	8,554	6.85%	9,295	12.21%
Total	12,837	10.28%	11,431	15.02%	12,909	10.34%	11,631	15.28%

The total remuneration of directors, general managers and deputy general managers paid by the company and all companies in the consolidated statements in 2019 accounted for 15.02% and 15.28% of the net profit after tax, respectively. Since the remuneration of directors, general managers and deputy general managers is mostly fixed remuneration and salary, and the net profit after tax in 2019 is 39.04% lower than that in 2018, the total remuneration paid to directors, general managers and deputy general managers accounts for the proportion of net profit after tax. Increased in one year.

Director's remuneration includes director's remuneration, director's remuneration and travel expenses, etc. In terms of travel expenses, it is submitted to the board of directors for discussion and resolution after the recommendations of the remuneration committee, and is paid according to the director's attendances of the board of directors. Article 20 of the Articles of Association stipulates that when the

company's final accounts are profitable, no more than 5% shall be allocated as directors 'remuneration. After the recommendations of the Remuneration Committee, they shall be submitted to the board of directors for discussion and payment, and the shareholders' meeting report.

The remuneration of the general manager and deputy general manager includes salary, pension and employee compensation, which is determined according to the positions held and the responsibilities undertaken, with reference to the standards of the same industry for similar positions, and appropriate adjustments will be made in accordance with operating performance.

IV. Corporate Governance

(I) The operation of the Board of Directors

A total of 13 Board Meetings were held in the 2019. The attendance of director and supervisor were as follows:

Title	Name	Attendance in Person	By Proxy	Attendance Rate (%)	Note
Chairman	Min-Chun Chen	10	-	100%	2019/01/21 appointed 2019/05/02 re-elected
Director	Shu-Ling Tseng	10	-	100%	2018/01/23 appointed 2019/05/02 re-elected
Director	Endow Capital Management Inc. Representative: Xiang-Qi Fang	6	1	85.71%	2016/05/02 appointed
Director	Endow Capital Management Inc. Representative: Rui-Xian Lin	6	-	85.71%	2019/05/02 appointed
Director	Bash Consultant Incorporated Representative: Yen-Shuen Chen	7	-	100%	2019/05/02 appointed
Director	Bash Consultant Incorporated Representative: YunChen	7	-	100%	2019/05/02 appointed
Independent Director	Bing-Quan Shi	7	-	100%	2019/05/02 appointed
Independent Director	Pei-Jun Hong	7	-	100%	2019/05/02 appointed
Independent Director	Mei Chen Zhuang	6	1	85.71%	2019/05/02 appointed 2020/02/27 resigned

Director	Representative of Endow Capital Management Co., Ltd.: Shih-Tsui Yen(Note4)	1	2	33.33%	2018/12/24 appointed 2019/01/23 dismissed
Director	Representative of Endow Capital Management Co., Ltd.: Wei Yuan Deng	2	1	66.67%	2018/12/24 appointed 2019/01/23 dismissed
Director	Representative of Yu Ying Investment Co., Ltd.:Shi-Feng Chen	3	1	50%	2018/12/24 appointed 2019/01/23 dismissed
Director	Representative of Yu Ying Investment Co., Ltd.:Zu-li Weng	6	-	100%	2019/05/02 dismissed
Director	Representative of Yu Ying Investment Co., Ltd.:Hao Yu Lin	6	-	100%	2019/05/02 dismissed
Director	Representative of Yu Ying Investment Co., Ltd.:Hongde Xu	3	1	50%	2019/02/12 deceased
Independent Director	Hong-Ji Chen	6	-	100%	2019/05/02 dismissed
Independent Director	Yi-Chuan Li	6	-	100%	2019/05/02 dismissed
Independent Director	Rui-Xing Chen	6	-	100%	2019/05/02 dismissed
Other matters to be documented: I. Operation of the board of Directors if one of the following circumstances, the date and period of the Board of Directors, the contents of the motion, the opinions of all independent directors and the handling of the views of independent directors by the Company shall be stated: (I) Securities and Exchange Act Article14(3)Matters listed: Date of Board Meeting Important resolutions Independent Directors’ opinion Corporate response to Opinions Resolutions by the board 2019.01.04 The 11 Term, The 28 time Revise the company's "Management Measures for Obtaining or Disposing of Assets". No objection or abstained opinion. Not applicable. After the chairman consulted all the members present, no objections were passed as approved. 2019.01.19 The 11 Term, The 30 time Appointment of the company's visa accountant (internal adjustment). 2019.01.30 The 11 Term, The 31 time Replacement of accounting manger 2019.03.20 The 11 Term, The 32 time Approved the Company’s 2018 Internal Auditing Plan. Approved 2018Annual Business Report and financial statement case. Approved the 2018 net income allocation plan. Through the revision of the Company funds loan and other people management measures case. Approved the“Endorsement/Guarantee plan. 2019.05.13 The 12 Term, The 1 time Accounting Supervisor replacement.� 2019.12.19 The 12 Term, The 6 time Formulate the Company’ Internal Auditing Plan and related managing procedures

(II) In addition to the preceding matters, other directors ' meeting decisions which are objected to or reserved by an independent director and have a record or written statement: No such circumstances.

circumstances.	circumstances.	circumstances.	circumstances.	circumstances.
II. The implementation of the directors' avoidance of theproposal of interest:
Date of Board Meeting	Name	Resolution	Reasons for avoidance of conflicts of interests	Participati on
2019.01.19	Min-Chun Chen Shu-ling Tseng	Redistribution of subsidiaries- directors and supervisors of Chen Li Education Co., Ltd.	Shu-Ling Tseng is the assignee. Min-Chun Chen is the former’s spouse, should be regarded as interest parties.	Avoidanc e of interests conflicts according to law
2019.03.20	Min-Chun Chen Shu-ling Tseng	Chairman's Salary Review�	Review Min-Chun Chen’s salary� Shu-Ling Tseng is the former’s souse, should be regarded as interest parties.
2019.03.21	Min-Chun Chen Shu-ling Tseng	Examine the list of nominations and candidates for directors and independent directors of the 2019 term Lifting the restrictions of the non- compete clause for new board members.	Min-Chun Chen and Shu-ling Tseng are all nominated candidates.
2019.05.13	Bing-Quan Shi Pei-Jun Hong Mei Chen Zhuang	Appointment of members of the Fifth Remuneration Committee.	Bingquan Shi, Pei-jun Hong and Meichen Zhuang are appointed members of the Remuneration Committee.
	Rui- Xian Lin	The company's optical fiber products business operation adjustment plan.	Rui-Xian Lin is the chairman of the subsidiary, Prime Optical Fiber Co., Ltd.
2019.09.24	Min-Chun Chen Shu-ling Tseng Yen- Shuen Chen Yun Chen	Chuang-Si Technology Co., Ltd. Investment	Min-Chun Chen and Shu-Ling Tseng are all shareholders of Chuang-Si Technology Co., Ltd. Yen-Shuen Chen and Yun Chen are all members within second degrees of relationships to Min-Chun Chen and Shu-Ling Tseng. They are all interestparties.

III. The implementation of the board's self-assessment:

Evaluation Cycle	Evaluation Period	Range	Method	Content
Once per Year	Since the day the director took office To 2019.12.31	Board of Directors	Board of Directors self- evaluation	Handlings of company’s goals and tasks: 3.81 Recognition of board responsibilities: 4.52 Participation in Company’s operations: 4.22 Internal relationship management and communication: 3.48 Directors' Professional and Continuing Education�4.26 Internal Control�4.30 Others�4.67

After reviewing and evaluating the results, it is found that the "internal relationship management and communication" is poor, mainly because the company's COA accountant is present at the company's board of directors during the annual review, but most of the directors participating in the evaluation were elected/re-elected in May, 2019. The directors have not yet had the opportunity to communicate face-to-face with the CPA accountant. Overall, the operation of the board of directors is still in good condition, and will continue to strengthen

based on the evaluation results of the board of directors to improve the effectiveness of corporate governance

IV. Evaluation of the objectives and implementation of strengthening the functions of the board of directors in the current year and the most recent year.
(I) Regularly review and revise the various measures to meet the requirements of the current laws and practical management to ensure the legality of the various measures.
(II) Actively arrange directors to participate in various advanced courses to facilitate the directors to obtain relevant information to maintain their core values and professional advantages and capabilities. The directors of the company arranged for a total of 32 times in the year 2019, a total of 96 hours.

(II) Operation of the Board of Auditors:

The company's audit committee is composed of 3 independent directors. The audit committee aims to assist the board of directors in fulfilling the quality and integrity of the company's supervision of the company's accounting, auditing, financial reporting process and financial control.

The audit committee met for a total of 11 times in 2019, and the audited items mainly includ:

Audit of financial statements and accounting policies and procedures
Internal control system and related policies and procedures
Whether the manager and the director have related party transactions and possible conflicts of interest
Appointment and remuneration of external CPA licensed accountants
Appointment and removal of the head of finance, accounting or internal audit

The following cases were attended by independent directors in 2019:

Title	Name	Actual attendance Number	Entrusted to attend Number	Actual attendance rate(%)	Note
Independent director	Bing-Quan Shi	6	0	100%	2019.05.02 appoined
Independent director	Pei-Jun Hong	6	0	100%	2019.05.02 appoined
Independent director	Mei-Chen Zhuang	5	1	83.33%	2019.05.02 appoined 2020.02.27 resigned
Independent director	Hong-Ji Chen	5	0	100%	2019.05.02 dismissed
Independent director	Yi-Chuan Li	5	0	100%	2019.05.02 dismissed
Independent director	Rui-Xing Chen	5	0	100%	2019.05.02 dismissed

Date of Board Meeting	Important resolutions	Independen t Directors’ opinion	Corporate response to Opinions	Resolutions by the board
2019.01.04 The 11 Term, The 28 time	Revise the company's "Management Measures for Obtaining or Disposing of Assets".	No objection or abstained opinion.	Not applicable.	After the chairman consulted all the members present, no objections were passed as approved.
2019.01.19 The 11 Term, The 30 time	Appointment of the company's visa accountant (internal adjustment).
2019.01.30 The 11 Term, The 31 time	Replacement of accounting manger
2019.03.20 The 11 Term, The 32 time	Approved the Company’s 2018 Internal Auditing Plan. Approved 2018Annual Business Report and financial statement case. Approved the 2018 net income allocation plan. Through the revision of the Company funds loan and other people management measures case. Approved the“Endorsement/Guarantee plan.
2019.05.13 The 12 Term, The 1 time	Accounting Supervisor replacement.�
2019.12.19 The 12 Term, The 6 time	Formulate the Company’ Internal Auditing Plan and related managing procedures

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviating from the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and the root cause
	Yes	No	Abstract Illustration
1. Does the Company based on the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” to set up and disclose the Company’s corporate governance best-practice principles?	V		The Company has based on the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” to set up and disclose the Company’s corporate governance best-practice principles for guidelines on the MOPS in 2017.	None
2.The Company’s equity structure and shareholder’s equity (A) Does the Company have the internal procedures regulated to handle shareholders’ proposals, doubts, disputes and litigation matters; also, have the procedures implemented accordingly? (B) Does the Company possess the list of the Company’s major shareholders and the list of the ultimate controllers of the major shareholders? (C) Does the Company establish and implement the risk control and firewall mechanism with the related parties? (D) Does the Company set up internal norms to prohibit the insiders from utilizing the undisclosed information to trade securities?	V V V V		(A) In addition to the stock affairs agency, the company also has a spokesperson, acting spokesperson, stock affairs and other relevant departments to deal with shareholders' related matters, which can effectively deal with related issues. (B) The Company has a special unit responsible for handling, and appointed a brokerage stock agent to assist in the handling of shares related matters, and master the actual control of the Company's main shareholders and the main shareholders of the final controller list situation, and at any time to maintain a good communication pipeline. (C) Business transactions are conducted in compliance with the Company’s internal control system and the relevant requirements. For reinforcing the control mechanism, the procedures for monitoring subsidiaries are regulated with proper risk control. (D) The Company worked out a “Procedure Preventing Insiders’ Trading” for all employees, managers and board members, as well as those who know the information based on the occupation or control relation to prohibit any behaviors that could beinvolvedin theinsider trading.	None None None None

Evaluation Item			Implementation Status	Deviating from the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and the root cause
	Yes	No	Abstract Illustration
3.Composition and Responsibilities of the Board of Directors (A) Does the Board of Directors have diversified policies regulated and implemented substantively according to the composition of the members? (B) Does the Company, in addition to setting the Remuneration Committee and Audit Committee lawfully, have other functional committee set up voluntarily? (C) Does the Company have the performance evaluation rules and methods for the Board of Directors regulated and have the performance evaluation performed regularly every year? (D) Does the Company have the independence of the public accountant evaluated regularly?	V V V	V	(A)The company has stipulated the diversity policy of the board of directors in the "Corporate Governance Code of Practice". From the perspective of gender equality, the board of directors currently includes four female directors. Professionally, it also includes laws, industry, accounting and other professionals (B)The company has set up both Remuneration and Audit committee. In the future, the company will establish other functional committees according to business needs. (C)The company has formulated a board of directors’ performance evaluation method. At the beginning of 2020, the evaluations for the year 2019 have been completed, and a report of 2020.03.24 has been submitted. In the future, the company will expand the targets for evaluation to individual board members and functional members. (D)The company's board of directors refers to the independence of Article 47 of the Accountant Law and the content of the "Accountant Professional Ethics Code Bulletin" No. 10 "Integrity, Fairness, Objectivity and Independence" to develop a CPA independence evaluation form. After conducting the preliminary evaluation one by one, the board of directors will be reviewed again. The 2020 Annual Accountant Independence Evaluation Case was reviewed and approved by the Audit Committee and the board of directors on 2020.03.24	(A)None (B)Planning for future needs (C)None (D)None

Evaluation Item			Implementation Status	Deviating from the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and the root cause
	Yes	No	Abstract Illustration
5.Does the Company establish a communication channel and build a designated section on its website for stakeholder (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?	V		The company has set up a stakeholder area on the company's website to provide the contact information of the spokesperson and various related business departments to properly respond to the concerns of stakeholders and the smooth communication channel. The Group also has internal employee communication channels for employees to reflect their opinions with company managers.	None
6.Does the Company appoint a professional shareholder service agency to deal with shareholder affairs?	V		The Company appoints Grand Fortune Securities Co., Ltd. Stock Agency department to handle the shareholders'meeting affairs	None
7. Information disclosure (A) Does the Company have a website setup and the financial business and corporate governance information disclosed? (B) Does the Company have adopted other information disclosure methods (such as, establishing an English website, designating responsible person for collecting and disclosing information of the Company, substantiating the spokesman system, placing the juristic person seminar program on the Company’s website, etc.)? (C) ) Does the company announce and declare the annual financial report within two months after the end of the fiscal year, and announce and declare the first, second, and third quarter financial reports and the monthly operating situation within the prescribed time limit?	V	V V	The Company webpage has not been fully set up. All financial reports, corporate governance reports will be updated on the MOPS website. The company has a spokesperson system to speak on behalf of the company. Usually, the company is responsible for the disclosure of company information. The website is also planned to be bilingual in both Chinese and English for foreign investors to read. The company announces and declares the annual financial report within the time limit prescribed by the law, and announces and declares the first, second, and third quarter financial reports and the monthly operating situation within the specified period	The Company expects to website to be set up in 2020 and all related information will be disclosed. No significant difference No significant difference

(IV) Composition, responsibilities and operation of the remuneration committee

1. Remuneration Committee Member Information

Title	Conditions Name	Have more than five years of work experience and the following professional qualifications	Have more than five years of work experience and the following professional qualifications	Have more than five years of work experience and the following professional qualifications	Compliance with the Independence (note 1)	Compliance with the Independence (note 1)	Compliance with the Independence (note 1)	Compliance with the Independence (note 1)	Compliance with the Independence (note 1)	Compliance with the Independence (note 1)	Compliance with the Independence (note 1)	Compliance with the Independence (note 1)	Compliance with the Independence (note 1)	Compliance with the Independence (note 1)	Number of members of the salary and compensatio n committee of other public issuing companies
		Lecturer in public and private colleges and universities for business, legal, financial, accounting or corporate business required related Materials	Judges, prosecutors, lawyers, accountants or other specialized occupations and technicians who have passed the national examination required for the business of the Company	Work experience required in business, legal, financial, accounting or corporate business	1	2	3	4	5	6	7	8	9	10
Independent Director	Bing- Quan Shi		ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	None
Independent Director	Pei-Jun Hong		ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	None
Others	Ying-De Wu	ü			ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	1
Independent Director	Mei- Chen Zhuang			ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	None
Independent Director	Hong-Ji Chen	ü		ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	1
Independent Director	Yi-Chuan Li			ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	None
Independent Director	Rui-Xing Chen			ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü	None

Note 1: If each member meets the following conditions during the two years before the election and during his tenure of office, please mark "ü" in the space below each condition code.

(1) Employees who are not companies or their affiliates.

(2) Directors and supervisors of non-company or related companies (but if the company and its parent company, subsidiary or subsidiary of the same parent company are independent directors established by this law or local state laws and regulations, they are not limited to this).

(3) Non-self, spouse, minor children or natural shareholders who hold more than 1% of the total issued shares of the company in the name of others or the top ten shareholders.

(4) The spouse, relatives within the second or third-kind of the manager other than those listed in (1) or the persons listed in (2), (3), or a direct blood relative within three-parents.

(5) Directors, supervisors or directors of corporate shareholders who do not directly hold more than 5% of the company's total issued shares, hold the top five shares, or appoint representatives to act as company directors or supervisors in accordance with Article 27, paragraph 1 or 2, of the Company Law Employee (but if the independent directors established by the company and its parent company, subsidiary company or subsidiary of the same parent company in accordance with this law or local national laws and regulations concurrently serve each other, it is not limited to this).

(6) More than half of the shares that are not on the board of directors of the company or have voting rights are the directors, supervisors or employees of other companies controlled by the same person (but if they are the company or its parent company, subsidiary or a child of the same parent company) If the independent directors established by the company in accordance with this law or local laws and regulations serve concurrently, they shall not be limited to this).

(7) Directors (directors), supervisors (supervisors) or employees (other than the company and its parent company) of other companies or institutions that are not the same person or spouse with the company’s

chairman, general manager or equivalent , Independent directors set up by a subsidiary company or a subsidiary of the same parent company in accordance with this law or local national laws shall not be limited to this).

(8) Directors (directors), supervisors (supervisors), managers or shareholders holding more than 5% of shares in specific companies or institutions that do not have financial or business dealings with the company (but if specific companies or institutions hold issued shares in the company) If the total number is more than 20% but not more than 50%, and the independent directors established by the company and its parent company, subsidiary company or subsidiary company of the same parent company in accordance with this law or local national laws and regulations concurrently serve each other, this limit shall not apply).

(9) Professionals, sole proprietorships, partnerships, companies or institutions that do not provide audits for companies or related companies or business, legal, financial, accounting and other related services that do not exceed NT$500,000 in cumulative compensation in the past two years Business owners, partners, directors (directors), supervisors (supervisors), managers and their spouses. However, members of the Salary and Compensation Committee, Public Acquisition Review Committee, or M&A Special Committee that perform their duties in accordance with the relevant laws and regulations of the Securities Exchange Act or the Corporate M&A Act are not limited to this.

(10) There is no one of the circumstances in Article 30 of the Company Law.

2. Operations of Remunerations

(1) There are 3 members of the company's salary and compensation committee.

2. Operations of Remunerations (1) There are 3 members of the company's salary and compensation committee.	2. Operations of Remunerations (1) There are 3 members of the company's salary and compensation committee.	2. Operations of Remunerations (1) There are 3 members of the company's salary and compensation committee.	2. Operations of Remunerations (1) There are 3 members of the company's salary and compensation committee.	2. Operations of Remunerations (1) There are 3 members of the company's salary and compensation committee.	2. Operations of Remunerations (1) There are 3 members of the company's salary and compensation committee.
(2) The term of the members of the current term: from May 13, 2019 to May 1, 2022. In the year 2019, Remuneration Committee met three times. The qualifications and attendance of the members are as follows: Title Name Actual attendance Entrusted to attend Actual attendance rate (%) Note ConvenerBing-Quan Shi 1 - 100% 2019.05.13 appointed Members Pei-Jun Hong 1 - 100% 2019.05.13 appointed MembersYing-De Wu - - - 2020.05.12 appointed Members Mei-Chen Zhuang 1 - 100% 2019.05.13 appointed/2020.02.27 resigned Convener Hong-Ji Chen 2 - 100% 2019.05.02 Re-election of the Board of Directors Members Yi-Chuan Li 2 - 100% 2019.05.02 Re-election of the Board of Directors Members Rui-Xing Chen 2 - 100% 2019.05.02 Re-election of the Board of Directors Other matters to be documented: (1) If the board does not adopt or amend the recommendations of the Pay compensation Board, it shall specify the date, period of the Board, the content of the motion, the outcome of the Board's resolution and the Company's treatment of the comments of the Pay Committee(If the remuneration paid by the Board of Directors is better than that of the Pay compensation committee, the difference and the reasons for it should be stated):No. (2) The resolutions of the Compensation and Remuneration Committee, if members have objections or reservations and have a record or written statement, shall state the date, period, content of the opinions of all members and the treatment of the members' opinions: None.
Title	Name	Actual attendance	Entrusted to attend	Actual attendance rate (%)	Note
Convener	Bing-Quan Shi	1	-	100%	2019.05.13 appointed
Members	Pei-Jun Hong	1	-	100%	2019.05.13 appointed
Members	Ying-De Wu	-	-	-	2020.05.12 appointed
Members	Mei-Chen Zhuang	1	-	100%	2019.05.13 appointed/2020.02.27 resigned
Convener	Hong-Ji Chen	2	-	100%	2019.05.02 Re-election of the Board of Directors
Members	Yi-Chuan Li	2	-	100%	2019.05.02 Re-election of the Board of Directors
Members	Rui-Xing Chen	2	-	100%	2019.05.02 Re-election of the Board of Directors
Other matters to be documented: (1) If the board does not adopt or amend the recommendations of the Pay compensation Board, it shall specify the date, period of the Board, the content of the motion, the outcome of the Board's resolution and the Company's treatment of the comments of the Pay Committee(If the remuneration paid by the Board of Directors is better than that of the Pay compensation committee, the difference and the reasons for it should be stated):No. (2) The resolutions of the Compensation and Remuneration Committee, if members have objections or reservations and have a record or written statement, shall state the date, period, content of the opinions of all members and the treatment of the members' opinions: None.

(V) Fulfilment of social responsibility:

(V) Fulfilment of social responsibility:
Evaluation Item		Operational scenarios(Note1)		The difference and reason between the code of Practice on corporate social responsibility of listed and OTC companies
	Yes	No	Summary description (Note2)
1.Does the company conduct risk assessments on environmental, social and corporate governance issues related to the company's operations in accordance with the principle of materiality, and formulate relevant risk management policies or strategies?		V	The company has formulated a code of practice for corporate social responsibility and continues its efforts in accordance with its content.	No significant difference
2. Is the company set up to promote corporate social responsibility (operation unit) and the board of directors authorizes the senior management to handle it, and report the handling situation to the board of directors?		V	The company has not set up a full-time promotion unit, and each related department will try its best to promote the performance according to their duties and standards.	No significant difference
3. Development of a sustainable environment (A) Does the Company have an appropriate environmental management system established in accordance with its industrial character? (B) Is the company committed to improving the utilization efficiency of various resources and using recycled materials with low impact on environmental load? (C) Does the company assess the potential risks and opportunities of climate change for companies now and in the future, and take measures to address climate-related issues? (D) Has the company counted greenhouse gas emissions, water consumption and total weight of waste in the past two years, and formulated policies for energy conservation and carbon reduction, greenhouse gas reduction, water use reduction or other waste management?	V V	V V	The company conducts verification and environmental engineering technician visas for air pollution, waste water, waste and other management projects according to regulations. For waste, there is also a plan for cleaning up business waste, and it will be implemented in accordance with relevant regulations.to continuously improve the efficiency of the use of resources. The company is committed to carrying out activities such as resource classification and recycling to maintain earth resources and protect environmental sanitation In response to the impact of climate change on operating activities, the Company maintains active attention to energy saving and carbon reduction and greenhouse gas reduction. Although the company does not carry out greenhouse gas inventories, it is committed to implementing energy saving and carbon reduction, such as electronic form documents, energy saving, resource recycling, etc.	None None No significant difference No significant difference

4. Social issues (A) Has the company formulated relevant management policies and procedures in accordance with relevant regulations and international human rights conventions? (B) Does the company formulate and implement reasonable employee welfare measures (including compensation, vacation and other benefits), and appropriately reflect the operating performance or results in employee compensation? (C) Does the company provide a safe and healthy working environment for employees and regularly implement safety and health education for employees? (D) Does the company establish an effective career development training program for employees? (E) Has the company complied with relevant regulations and international standards regarding customer health and safety, customer privacy, marketing and labeling of products and services, and has formulated relevant consumer protection policies and appeal procedures? (F) Does the company formulate supplier management policies that require suppliers to follow relevant regulations on environmental protection, occupational safety and health, or labor human rights, and their implementation?	V V V V V V V V V		The company has implemented the labor-based laws, labor insurance regulations, employee welfare regulations and related laws. The company complies with the labor standards and regulations, handles employee remuneration and vacation systems, and handles related welfare measures in accordance with the employee welfare regulations. The company advertises labor safety to employees from time to time. In case of flu or infectious diseases, the company advertises wearing masks and disinfectants at the entrances and exits for employees. The company will pass daily education and training from time to time , Training employees career development. The company attaches great importance to customer opinions, has provided product contact windows and email mailboxes on the company's website, and has set up a stakeholder area to provide channels for customer questions, complaints or suggestions. The company adheres to the principle of integrity and properly handles and gives feedback to protect customers rights and interests. Before cooperating with suppliers, the company will evaluate the suitability of suppliers according to internal procedures, and through regular audits of cooperative suppliers, to ensure that suppliers comply with relevant regulations on environmental protection, safety or health issues, so as to enhance the corporate society Responsibility policy	None None None None None None None None

5. Whether the company refers to the preparation of the international general report Standards or guidelines, preparation of corporate social responsibility reports and other reports that disclose company non-financial information? Did the pre-report report obtain the confidence or assurance opinion of the third-party verification unit?		V	The company has not yet prepared a corporate responsibility report.	Still evaluating
6. If the Company has its own code of corporate social responsibility in accordance with the Code of Practice on corporate social responsibility of listed cabinets, please specifythe difference between its operation and the code set: None
7. Other important information that helps to understand the operational circumstances of corporate social responsibility: None

(VI) Companies to fulfill the integrity of the business situation and implementation measures:

Evaluation Item	Operational scenarios(Note1)	Operational scenarios(Note1)	Operational scenarios(Note1)	The difference and reason of the Code of good faith management with the listed cabinet Company
	Yes	No	Summary description (note 2)
1. The setting of good faith management policies and solutions (A) whether the Company has stated in its regulations and external documents the policies and practices of operating in good faith and the commitment of the Board and Management to actively implement their business policies? (B) Whether the Company has established a program for the prevention of dishonesty, and has established operational procedures, codes of conduct, disciplinary and complaint systems for irregularities and implementation in the various program? (C) Whether the Company shall implement preventive measures against the business activities which have a high risk of dishonest conduct within the second section of article seventh of the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies" or other business scope?	V V	V	The company has not yet established Ethical Corporate Management Best Practice Principles, but when signing various contracts external parties, they are in accordance with the principle Ethical corporate management, negotiate reasonable contract content, and actively fulfill the contractual commitments. The company has internal operation rules and reward and punishment systems In order to prevent the occurrence of dishonesty of colleagues and establish an effective accounting system and internal control system, regularly audit the implementation of the situation, and report the results to the board of directors. The company's reward and punishment clauses in the "Personnel Regulations" have provisions for preventing dishonesty and have established effective accounting systems and internal control systems. Internal auditors regularly check compliance with the preceding system.	No significant differences None None

Evaluation Item			Operational scenarios(Note1)	The difference and reason of the Code of good faith management with the IPO/OTC Company
	Yes	No	Summary description
2. The implementation of Ethical Corporate Management (A) whether the Company evaluates the integrity record of the subject and sets out the terms of good faith in its contract with the transaction object? (B) Whether the Company has established a special (part) unit to promote corporate integrity management under the Board of directors and regularly reports its implementation to the board of Directors? (C) Does the Company have a policy to prevent conflicts of interest, provide a channel for proper presentation, and implement it? (D) Whether the Company has established an effective accounting system and internal control systems for the implementation of good faith operations, which are regularly checked by internal audit units, or commissioned by accountants to carry out checks? (E) Whether the Company regularly organizes education and training within and outside the integrity operation?	V V	V V V	The company has established an evaluation mechanism for its customers and suppliers. When entering into a contract with it, the rights and obligations of both parties are specified in detail, and there are provisions for integrity. The company has not set up a dedicated unit to promote the integrity of the enterprise. The management department only promotes integrity promotion partly, and occasionally publishes relevant information promotion through employee internal training or company announcements. The company's reward and punishment clauses in the "Personnel Regulations" have provisions for preventing conflicts of interest and provide appropriate statement channels through the company's email. The Company's accounting system and internal control systems are regularly checked by internal audit units to ensure that the design and implementation of the system is practical and effective. The Company does not regularly hold the relevant education and training courses in good faith management within the Company.	None No significant difference None No significant difference

			The company's reward and punishment clauses in the "Personnel Regulations" have provisions for preventing dishonesty, and have established effective accounting systems and internal control systems. Internal auditors regularly check compliance with the preceding system.	Plan and arrange related internal and external education and training
3. Operation of the Company's whistle-blower system (A) whether the Company has formulated a specific system of whistle-blowing and reward, and has established a convenient prosecution pipeline, and has assigned appropriate admissibility to the subject of the complaint Accountable personnel? (B) Whether the Company has established standard operating procedures and relevant confidentiality mechanisms for the investigation of prosecution matters? (C) Whether the Company has taken measures to protect whistleblowers from improper disposal as a result of prosecution?	V V	V	The company sets up personnel regulations and reward and punishment measures and has a suggestion box. If the company's personnel suspect or find violations, they can report to the company, and assign appropriate personnel to deal with the object of the report. The company has established personnel regulations and reward and punishment measures, and has the duty to keep the information of the parties concerned confidential. The company has established personnel regulations and reward and punishment measures, and has the confidentiality obligation for the whistleblower, and to protect the informant from improper disposal due to the whistleblowing.	None No significant difference None

4. Strengthening information disclosure

(A) whether the Company, on its website and the Public Information Observatory, exposes the contents of its Code of good faith and promotes its effectiveness?

The company has not yet formulated Ethical It will be determined V Corporate Management Best Practice Principles according to the company's situation.

If the Company has its own integrity code of practice in accordance with the "Code of good faith management of listed cabinets companies", please specify the difference between its operation and the code laid down: It has not yet been decided.
Other important information to help understand the integrity of the Company's business operations:
- The company follows the corporate law, securities trading law, business accounting law and other relevant regulations or other business conduct
- related laws and regulations as the basis for the implementation of management.
- The company has signed NDA with its employees. All employees must strictly observe the secrets of the company's secrets in
- handling affairs and business and must not disclose them, and have the obligation to keep the company's business secrets confidential.
- (3) The company has set up the "Measures for Preventing the Management of Insider Transactions", which specifies that directors, managers and employees shall not disclose the internal information they know to others, and shall not inquire or collect from those who know the internally important information of the company A company that is not related to an individual's position has not disclosed material internal information. It
- is also not allowed to disclose internal material information that has not been disclosed to the company outside of any business transactions.
(VII) If a Company has a code of corporate governance and related regulations, it should disclose the way it is consulted: Please refer to the Market Observation Post System (Http://mops.twse.com.tw).
(VIII) Other important information related to enhance understanding of the operational circumstances of corporate governance must be disclosed together: none.

(IX) Internal Control

 1. Statement of Internal Control: On the Next page

Success Prime Corporation Statement of Internal Control

Date: March 24, 2020

The internal control of the Company for 2019, based on the results of its own assessment, may state the following:

(1) The Company is aware of the establishment, implementation and maintenance of internal control system is the responsibility of the Company's board of directors and managers, and the Company has established this system. Its purpose is to the effectiveness and efficiency of the operation(Including profit, performance and security of assets, etc.), reporting reliability, time duration, transparency and compliance with relevant norms and relevant laws and regulations to comply with the objectives of the achievement, to provide reasonable assurance.
(2) The internal control system has its own innate limitations, no matter how perfect the design, effective internal control system can only provide limited measures to ensure the achievement of the above three objectives, and the effectiveness of the internal control system may change as a result of changes in the environment and circumstances. However, the Company's internal control system has a self-monitoring mechanism, missing once identified, the Company to take corrective action.
(3) The Company is based on the "Open issuing Company to establish internal control system processing Guidelines" (hereinafter referred to as the "treatment criteria") under the effectiveness of the internal control system judgment project, to judge whether the internal control system design and implementation is effective. The internal control system used in the "Processing guidelines" determines the project, which is based on the process of management control, dividing the internal control system into five subsections:1.Control of the environment 2.Risk Assessment 3.Operational Control 4.Information and Communication and 5.Supervision of the operation. Each component also includes a number of projects. Please refer to the "Handling guidelines" for the aforementioned items.
(4) The Company has adopted the above-mentioned internal control system to assess and evaluate the effectiveness of the design and implementation of the internal control system.
(5) Based on the results of the preceding assessment, the Company considers that the internal control system of the Company on December 31[st] , 2019 (containing the supervision and management) of the subsidiaries, including understanding the effectiveness of the operation and the extent to which the efficiency objectives have been achieved, and that the report is reliable, timely and The design and implementation of the internal control system, such as transparenc y and compliance

with relevant norms and relevant laws and regulations, is valid and can reasonably ensure the achievement of the above objectives.

(6) This statement will become the main content of the Company's annual report and public statement, and open to the outside world. If there is hypocrisy, concealment and other illegal circumstances, the contents disclosed above will involve the legal liability of 20th, 32nd, 171th and 174th of the securities trading law.
(7) This statement was approved by the board of directors of the Company on March 24[th] , 2020. Among the attended 8 directors, no one disagreed. The rest agreed with the contents of this statement.

Success Prime Corporation

Chairman: Min-Chun Chen General

Manager: Heng Tai Xiang

Those who entrust the Accountants to review the internal control system shall disclose the accountant's evaluation report: Not applicable.
(X) The Company and its internal personnel have been punished in accordance with the law for the most recent year and the published annual report, and the Company has imposed penalties, major deficiencies and improvements on its internal personnel for violating the internal control system: None.
(XI) Important resolutions of the shareholders ' meeting and the Board of directors in the most recent year and up to the publication date of the annual report:
Important resolutions and Implementations of the Shareholders Meeting:

1. Important	resolutions and Implementations of the Shareholders	Meeting:
Date of the meeting	Important Resolution matters	Implementation
2019.05.02 Regular meeting of Shareholders	1.Approved 2018 Business Report and financial statement. 2.Approved 2018 net income allocation case. 3.Approved the revision of the Company “Regulations Governing the Acquisition and Disposal of Assets”. 4.Approved the “Procedure for loan/funding to other entities.” 5. Approved the “Regulations for Endorsement and Guarantee.” 6. Approved the 12thterm Directors/Independent Directors Election. 7.Approved the lifting of the non-compete clause restrictions for new directors.	1. The results of the resolution have been followed. 2. July 25th, 2019 has been set as the ex- dividend base date, and the cash dividend will be distributed on August 15th, 2019. 3. Implemented according to the revised content. 4. Implemented according to the revised content. 5. Implemented according to the revised con 6. Change registration and related announcements according to law. 7. The results of the resolution have been followed.

2. Important Board Resolutions:	2. Important Board Resolutions:
Date of the meeting	Important Resolution matters
2019.01.04	1.Passedthe company's 2019 operation plan. 2.Passedthe proposed application for Mega International Bank's credit line. 3. Passed the company's management methods for acquiring or disposing of assets.
2019.01.10	1. Passed the company's subsidiaries supervision operation method.
2019.01.19	1. Passed the appointment of the company's visa accountant. 2. Passed the company's 2018 year-end manager year-end bonus.
2019.01.30	1. Passed the re-election of the company's chairman. 2. Passed the election of the twelfth directors and independent directors. 3. Passed the case concerning the holding of 2019 shareholders' general meeting. 4. Passed the case of accepting shareholder proposals and nomination matters. 5. Passed the change case of the company's accounting supervisor.
2019.03.20	1. Passed the case of assigning directors and supervisors of the subsidiary Chen Li Education Co., Ltd. 2. Passed the 2018 internal control system effectiveness assessment and internal control system statement. 3. Passed the distribution of employee compensation and directors' compensation in 2018 4. Passed the 2018 annual business report and financial statements. 5. Passed the 2018 surplus distribution plan. 6. Passed the salary remuneration review proposal of the company's new chairman and the head of accounting. 7. Passed the case of amending the company's capital loan and management measures for others. 8. Passed the company's endorsement guarantee management measures. 9. Added a case for convening the 2019 shareholders'general meeting.
2019.03.21 (Interim Board meeting)	1. Passed the review of the nomination of directors and candidates for independent directors in the 2019 Annual General Meeting of the Company. 2. Passed the lifting of the prohibition of directors' prohibition of business competition.
2019.05.02 (Interim Board meeting)	1. Passed the election of the chairman.�
2019.05.13	1. Passed the financial report for the first quarter of 2019. 2. Passed the 2018 cash dividend ex-dividend benchmark date case. 3. Passed the case of appointing the company's fifth salary and compensation committee. 4. Passed the company's standard operating procedures for handling directors' requirements. 5. Passed the capital increase case of the subsidiary Excellent Optical Fiber Co., Ltd 6. Passed the adjustment of optical fiber products business operation. 7. Passed the change case of the company's audit supervisor.
2019.08.08	1. Passed the financial report for the second quarter of 2019. 2. Passed the case of directors' remuneration and carriage fees of the company. 3. Passed the salary remuneration case of the general manager of important subsidiaries. 4. Passed the revision of the company's approval authority form. 5. Passed to revise the supervision methods of the company's subsidiaries. 6. Passed the renewal of the credit limit of the company's Taipei Fubon Bank.
2019.09.24	1. Passed by the company's 2016 shareholders' general meeting to resolve the private equity issuance of common stock B by cash increase. 2. Passed the company's plan to declare (please) make up for the private placement of ordinary shares and new shares allotted by the office development bank and listed companies.
2019.10.24	1. Passed the case of investing in Chuang-Si Digital Technology Co., Ltd.
2019.11.08	1. Passed the financial report for the third quarter of 108. 2. Passed the quota application for the company's Shanghai Commercial Savings Bank.

Date of the meeting	Important Resolution matters
2019.12.19	1. Passed the company's 2020 annual audit plan. 2. Passed the company's 2020 internal budget. 3. Passed the company's proposed biological Yin-Qin teacher joint venture to establish a new company case. 4. Passed the company's plan to transfer the long-term credit line of Shanghai Commercial Savings Bank. 5. Passed for renewal of the contract through the company's Mega International Bank's credit line. 6. Passed the company's revision of the internal control system and related management measures.
2020.03.24	1. Passed the company's joint venture with Mr. Min-Ru Zhan and Eagles Cultural Enterprise Co., Ltd. to establish a new company. 2. Passed the 2019 internal control system effectiveness assessment and internal control system statement. 3. Passed the distribution of employees' compensation and directors' compensation in 2019. 4. Passed the 2019annual business report and financial statements. 5. Passed of the 2019 surplus distribution plan. 6. Passed the case of issuing new shares through capital reserve conversion. 7. Passed the Case of cash dividend payment through capital reserve. 8. Passed the business concession case of the company's optical fiber business department. 9. Passed the change case of the general manager of the company. 10. Passed the change case of our company spokesperson. 11. Passed the by-election for the shortfall of independent directors of the company 12. Passed the case concerning the convening of the 2020 regular shareholders' meeting. 13. Passed the company's independent evaluation of accountants. 14. Passed the appointment of the company's visa accountant. 15. Passed to amend the company's internal control system and related management measures.
2020.04.23	1. Passed the case of transferring the shares of the company to employees. 2. Passed the review of the list of candidates for independent director by-election of the company's 2020 regular shareholders meeting 3. Passed the lifting of the new independent directors'prohibition on competition.
2020.05.12	1. Passed the company's 2020 first quarter consolidated financial report. 2. Passed the distribution of directors' remuneration in 2019. 3. Passed the appointment of members of the Company's 5th Salary and Remuneration Committee.

(XII) The main contents of the most recent year and the date of publication of the annual report to the directors or supervisors who have different opinions and have a record or written statement on the adoption of important resolutions by the board: none.
(XIII) Summary of resignations and dismissal of the Company's chairman, general manager, accounting supervisor, treasurer, Internal audit supervisor and R&D Director in the most recent year and as of the annual report.

the annual report.
Title	Name	Date of arrival	Dismissal Date	Reasons
Chairman	Shi-feng Chen	2015.12.29	2019.01.30	Resignations
Accounting Manager	Xuan Yu Chen	2016.08.12	2019.01.28	Job adjustment, transferred as assistant to Chairman
Audit Supervisor	Fujian Tsai	2013.02.20	2019.05.13	Job adjustment
General Manager	Heng Tai Xiang	2014.11.13	2020.03.24	Since the company will coordinate with the optical fiber business for the transfer of the subsidiary, it is scheduled to be transferred to the subsidiary of the Prime Optical Fiber Co., Ltd. after the business transfer base date, so the position adjustment is made.
Deputy General Manager of Optical Fiber Division	Da Wei Chuan	2014.08.01	2020.03.24

V. Accountant Information

Name of the AccountingFirm	Name of Accountant	Name of Accountant	Check Period	Note
Deloitte Taiwan	Jinchuan Shi	Shulin Liu	2019	Internal adjustment of accounting firms

Unit: NT$

Unit: NT$	Unit: NT$	Unit: NT$	Unit: NT$	Unit: NT$

Range of fundedprojects		Audit fees	Non-audit public fees	Total
1	Below2,000Thousand		✓
2	2,000Thousand ~4,000Thousand	✓		✓
3	4,000Thousand ~6,000Thousand
4	6,000Thousand~8,000Thousand
5	8,000Thousand~10,000Thousand
6	10,000Thousand or more

(I) The amount of audit and non-audit public fees and non-audit services provided to the certified public accountant, the firm to which the certified public accountant belongs, and its

affiliations.

Name of the Accounting Firm	Name of Accountant	Audit Fees	Non-audit fees	Non-audit fees	Non-audit fees	Non-audit fees	Non-audit fees	Audit period	Note
			System design	Business registration	HR	Others (note)	Sum
Deloitte Taiwan	Jinchuan Shi Shulin Liu	2,975	-	-	-	350	350	2019

Note: Including the private placement office review of NT$ 100 thousands, the bonded factory inventory count of NT$ 20 thousand, and the subsidiary transfer pricing report of NT$.230 thousand

(II) If the accounting firm is replaced and the audit public fee paid in the replacement

year is lower than the audit public fee in the previous year: No such situation.

(III) Audit public expenditure decreased by more than 15% compared with the previous year: no such situation.

VI. Change of Accountants

(I) About the former accountant

1. Year 2018

1. Year 2018
Replacement Date	March 27th, 2018
Reason	Internal adjustment of accounting firms(Liu Jiang holds accountant's ageretirement)
Description is the termination or non-acceptance of the appointment by the appointing person or accountant	Parties Situation			Accountant	Appointing persons
	Proactive termination of appointment			Not applicable, for the internal rotation of the firm
	No longer accept(Go on)Appointed
Comments and reasons for the issuance of unqualified opinions other than reservations in the latest twoyears	None
There is no disagreement with the issuer.	Yes		Accounting principles orpractices
			Disclosure of financial reports
			Check scope or steps
			Other

	None	V
	Note
Other disclosure matters (Article 10-5, of the present guidelines shall be disclosed to the person)	None of this is the case

2.Year 2019

January19th, 2019	January19th, 2019	January19th, 2019	January19th, 2019
Internal adjustment of accountingfirms
Parties Situation		Accountant	Appointing persons
Proactive termination of appointment		Not applicable, for the internal rotation of the firm
No longer accept(Go on)Appointed
None
Yes	Accounting principles orpractices
	Disclosure of financial reports
	Check scope or steps
	Other

None
Note

Other disclosure matters (Article tenth, paragraph fifth, of the present guidelines shall be disclosed to the person)	None of this is the case

(II) About the Successor Accountant

1. Year 2018

2018
Name of the Firm	Deloitte Taiwan
Name of Accountant	JianliangLiu,Wenxin Lin
Date of Appointment	2018.03.27
Consultation matters and results prior to appointment on accounting treatment or accounting principles for a particular transaction and comments on the possible issuance of financial reports	None of this is the case
Written opinion of the successor accountant on the different opinions of the former accountant	None of this is the case

Year 2019

Name of the Firm	Deloitte Taiwan
Name of Accountants	Jing-Chuan Shi,Shu-lin Liu
Date of Appointment	2019.01.19
Consultation matters and results prior to appointment on accounting treatment or accounting principles for a particular transaction and comments on the possible issuance of financial reports	None of this is the case
Written opinion of the successor accountant on the different opinions of the former accountant	None of this is the case

(III) The former accountant's section on this guideline Article 10 No. 6 No.6 Paragraph 1 and Paragraph 2 -3 to the matter: Not applicable

VII. The Chairman, general manager, and manager responsible for finance or accounting of Company, who has worked and related to the CPA firm: None.

VIII. Changes in equity of directors, supervisors, managers and major shareholders

(I) Directors, supervisors, managers and major shareholders' equity changes

Title	Name	Year ended 2019 (Note 1)	Year ended 2019 (Note 1)	As of April 30, 2020	As of April 30, 2020
		Number of shares held Increase(decrease)	Number of pledged shares Increase(decrease)	Number of shares held Increase(decrease)	Number of pledged shares Increase(decrease)
Legal Director	Far East International Commercial Bank entrusted with the custody of Endow Capital Management Inc. Investment Account	-	-	-	-
Legal Director	Far East International Commercial Bank entrusted custody of Bash Consulting Co., Ltd. Investment Special Account	-	-	-	-
Legal Director	Yu Ying Investment Co., Ltd.	(234,000)	(228,000)	-	-
Director	Min-Chun Chen	-	-	-	-
Director	Shu-ling Tseng	-	-	27,000	-
Representative of Legal Director	Endow Capital Management Co., Ltd. Representative: Xiang-Qi Fang	-	-	-	-
Representative of Legal Director	Endow Capital Management Co., Ltd. Representative: Rui-Xian Lin	-	-	-	-
Representative of Legal Director	Endow Capital Management Co., Ltd. Representative: Shih-Tsui Yen	-	-	-	-
Representative of Legal Director	Endow Capital Management Co., Ltd. Representative: Wei Yuan Deng	-	-	-	-
Representative of Legal Director	Bash Consultant Incorporated Representative: Yen-Shuen Chen	-	-	-	-
Representative of Legal Director	Bash Consultant Incorporated Representative: Yun Chen	-	-	-	-
Representative of Legal Director	Yu Ying Investment Co., Ltd. Representative: Shi-Feng Chen	-	-	-	-
Representative of Legal Director	Yu Ying Investment Co., Ltd. Representative: Zu-li Weng	-	-	-	-
Representative of Legal Director	Yu Ying Investment Co., Ltd. Representative: Hao-Yu Lin	-	-	-	-
Representative of Legal Director	Yu Ying Investment Co., Ltd. Representative: Hong-De Xu	-	-	-	-
Independent Director	Bing-Quan Shi	-	-	-	-
Independent Director	Pei-Jun Hong	-	-	-	-
Independent Director	Mei-Chen Zhuang (note 2)	-	-	-	-
Independent Director	Hong-Ji Chen	-	-	-	-
Independent Director	Yi-Chuan Li	-	-	-	-
Independent Director	Rui-Xing Chen	-	-	-	-
General Manager	Shu-ling Tseng	-	-	27,000	-
General manager	Heng Tai Xiang	-	-	-	-
Deputy General Manager	Da Wei Chuan	-	-	(34,000)	-
Head of Accounting	Xiang Yi Luo (note 3)	-	-	-	-
Head of Accounting	Hsuan-Yu Chen (note 4)	-	-	-	-
Major Shareholder	Far East International Commercial Bank entrusted with the custody of Optimistic Forward Investment Account	-	-	-	-

Note 1: Due to the re-election of the shareholders' meeting in 2019, the increase (decrease) in the number of shares held only exposes the difference between the directors during their term of office. Please refer to pages 7-9 of this annual report for their new appointments.

Note 2: 2019.05.02 were re-elected in the shareholders meeting, and resigned on 2020.02.27.

Note 3: Newly appointed on 2019.01.28 and recognized by the board of directors on 2019.01.30.

Note 4: On 2019.01.28, in coordination with the company's internal job adjustment, she was transferred to the special assistant of the chairman room.

(II) Relative to the transfer of equity. Persons who are related: None

(III) Equity pledge Information:

Name	Reasons for thechange of pledge	Date of change	Trading counterpart	Relationship between the counterparty and the Company, directors, supervisors and shareholding ratio of more than 10% shareholders	Number of Shares	Holdings Ratio	Pledge Ratio	Quality Lending (Redemption) Amount
Yu Ying Investment Co., Ltd.	Called	2019/01/14	Far East International Commercial Bank Co., Ltd.	-	108,000	0.62%	-	Called
Yu Ying Investment Co.,Ltd.	Called	2019/01/15	Far East International Commercial Bank Co., Ltd.	-	20,000	0.11%	-	Called
Yu Ying Investment Co.,Ltd	Called	2019/01/25	Far East International Commercial Bank Co., Ltd.		100,000	0.57%	-	Called

(IX) Information of shareholders with top 10 shareholdings, as related parties, spouse, or within second-degree relatives:

April 20[th] , 2020; Unit: Shares

NAME	HOLDING SHARES	HOLDING SHARES	SHARES HELD BY SPOUSES AND CHILDREN	SHARES HELD BY SPOUSES AND CHILDREN	SHARES IN THE NAME OF ANOTHER PERSON	SHARES IN THE NAME OF ANOTHER PERSON	THE NAME OR NAME AND RELATIONSHIP OF THE FORMER TOP TEN SHAREHOLDERS WHO ARE RELATED TO EACH OTHER OR TO THEIR SPOUSES AND RELATIVES WITHIN TWO RELATIVES.	THE NAME OR NAME AND RELATIONSHIP OF THE FORMER TOP TEN SHAREHOLDERS WHO ARE RELATED TO EACH OTHER OR TO THEIR SPOUSES AND RELATIVES WITHIN TWO RELATIVES.	N O T E
	Number of share	sShareholdin g ratio	Number of shares	Holding s Ratio	Number of share	s Holding s Ratio	Name (Or name)	Relationshi p	-
Far East International Commercial Bank entrusted custody Optimistic Forward INC..	1,935,145	11.08%	-	-	-	-	-	-	-
Far East International Commercial Bank entrusted with the custody of Endow Capital Management Co., Ltd. Investment specialty	1,716,592	9.83%	-	-	-	-	-	-	-

Far East International Commercial Bank entrusted custody of Bash Consulting Co., Ltd. Investment Special Account	1,716,592	9.83%	-	-	-	-	-	-	-
Far East International Commercial Bank entrusted custody Reap Global Investment Co., Ltd. Investment specialty	1,500,387	8.59%	-	-	-	-	-	-	-
Witty Sino Holdings Co.,Ltd.	1,500,204	8.59%	-	-	-	-	-	-	-
Far East International Commercial Bank entrusted custody Capability Global Development Co., Ltd. Investment specialty	801,664	4.59%
Hung-Liang Chen	543,000	3.11%	-	-	-	-	-	-	-
Well-Being Enterprise Co., Ltd.	478,000	2.74%	-	-	-	-	-	-	-
Guang-Zong Tan	402,100	2.30%	-	-	-	-	-	-	-


E.SUN Bank keeps the Investment Account of De-Tai Company	238,350	1.37%	-	-	-	-	-	-	-

X. The number of shares directly or indirectly controlled by the Company's directors, supervisors, managers investing towards same business, and combined to calculate the comprehensive shareholding ratio:

December 31[st] , 2019; Unit: Shares

Affiliated Enterprises	Ownership by the Company	Ownership by the Company	Directors, supervisors, managers and investments in direct or indirect control of the business	Directors, supervisors, managers and investments in direct or indirect control of the business	Total Ownership	Total Ownership
	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio
Chen Li Education Co.,Ltd.	11,200,000	100%	-	-	11,200,000	100%
Prime Optical Fiber Co.,Ltd.	1,000,000	100%	-	-	1,000,000	100%
Prime Education Consulting Co., Ltd.	510,000	51%			510,000	51%
Chenli Elm Co., Ltd.	1,500,000	100%			1,500,000	100%

Note: The Company adopts the equity method

IV. Financing Information

I. Capital & Shares

(1) Sources of Capital Stock

May 4, 2020 Unit: in thousands of NT$/ thousands shares

Years	Issue Price	Share capital	Share capital	Paid-in Capital	Paid-in Capital	Note	Note	Note
		Number of shares (Thousand shares)	Amount	Number of shares	Amount)	Sources of equity	Recipients of property other than cash to be credited to the shares	Other
1991.0 6	10	10,000	100,000	5,000	50,000	Cash replenishment 37,500	-	1990.12.29(79) Yuan Tou Zi No.15123
						Replenishment of technical units12,500
1992.1 1	10	10,000	100,000	10,000	100,000	Cash replenishment 37,500	-	-
						Replenishment of technical units12,500
1993.1 1	10	20,000	200,000	12,500	125,000	Cash replenishment 25,000	-	1993.11.16(82) Yuan Tou Zi No.14737
1994.0 9	10	20,000	200,000	17,500	175,000	Cash replenishment 50,000	-	-
1996.0 7	10	40,000	400,000	40,000	400,000	Cash replenishment 225,000	-	1996.05.16(85) Yuan Tou Zi No.07414
1997.0 9	10	120,000	1,200,000	60,000	600,000	Cash replenishment 200,000	-	1997.07.17(86) Taiwan Financial Certificates(1) No. 53384
2000.0 8	10	120,000	1,200,000	62,000	620,000	Cash replenishment 20,000	-	2000.07.11 (89) Taiwan Financial Certificates(1) No. 59923
2002.0 7	10	120,000	1,200,000	74,330	743,300	Surplus to increase capital123,300	-	2002.07.17 (91) Taiwan Financial Certificates(1) No.0910139852
2004.0 8	10	120,000	1,200,000	42,801	428,010	Reduction of capital315,290	-	2004.08.09 "FSC (1)" No.0930132052
2007.0 4	10	120,000	1,200,000	66,521	665,211	Overseas convertible Corporate debt transfer to equity237,201.3 6	-	2007.05.29 (96) Yuan Shang Zi No.14395

2008.0 4	1.98	250,000	2,500,000	206,925	2,069,252	Overseas convertible Corporate debt transfer to equity395,959.6 1	-	2008.05.26 (97) Yuan Shang Zi No.14228
2008.1 2	1.17	250,000	2,500,000	221,027	2,210,277	Private Cash Replenishment1 41,025.65	-	2008.12.18 (97) Yuan Shang Zi No.36121
2009.1 1	1.81	250,000	2,500,000	237,602	2,376,023	Private Cash Replenishment1 65,745.86	-	2009.11.09 (98) Yuan Shang Zi No.30801
2010.0 2	-	250,000	2,500,000	36,133	361,336	Reduction of capital2,014,687 .4 (In-circulation shares include4,665,99 5Shares for private equity, not yet on the market)	-	2010.02.24 (99) Yuan Shang Zi No.4674
2013.0 7	10	250,000	2,500,000	39,133	391,336	Private Cash Replenishment3 0,000	-	2013.08.09 (102) Yuan Shang Zi No.1020024195
2015.0 6	6.3	250,000	2,500,000	46,133	461,336	Private Cash Replenishment7 0,000	-	2015.06.29 (104) Zhu Tou Zi No.20150018177
2016.0 3	10	250,000	2,500,000	46,757	467,576	The exercise of shareholding voucher6,240	-	2016.03.10 (105) Zhu Shang Zi No.1050006170
2016.0 8	10	250,000	2,500,000	46,917	469,176	The exercise of shareholding voucher1,600		2016.08.02 (105) Zhu Shang Zi No.1050021155
2016.0 8	-	250,000	2,500,000	7,560	75,600	Reduction of capital393,575.8 6
2016.0 9	73.25	250,000	2,500,000	15,760	157,600	Private Cash Replenishment 82,000		2016.09.12 (105) Zhu Shang Zi No.1050025323
2017.0 8	10	200,000	2,000,000	16,548	165,480	Capital reserve transfer and replenishment7, 880		2017.09.06 (106) Zhu Shang Zi No.1060024094
2018.0 3	10	200,000	2,000,000	16,628	166,280	The exercise of shareholding voucher800		2018.05.04 (107) Zhu Shang Zi No.1070013752
2018.0 8	10	200,000	2,000,000	17,459	174,594	Capital reserve Transfer of capital8,314		2018.08.06 (107) Zhu Shang Zi No.1070023770

April 20, 2020; Unit shares

Shares Kinds	Authorized Capital Stock	Authorized Capital Stock	Authorized Capital Stock	Note
	Circulation of external shares(Note1)	Non-issued shares	Total
Common	17,459,400	182,540,600	200,000,000	Shares of listed companies, including199,000 Shares Treasury uni

(2) Shareholder Structure

April 20, 2020

Shareholder structure Number	Government agencies	Financial institutions	Other legal entities	Foreign institutions and Foreigners	Personal	Total
Number	-	2	16	20	4,400	4,438
Number of sharesheld	-	105	2,528,030	8,255,869	6,675,396	17,459,400
Shareholding ratio	-	-	14.48%	47.29%	38.23%	100%

(3) Shareholding Dispersion

April 20, 2020

Shareholdingrating	Number of	Number of shares held	Shareholdingratio
1-999	3,300	213,138	1.22%
1,000-5,000	919	1,653,591	9.47%
5,001-10,000	100	715,935	4.10%
10,001-15,000	36	426,396	2.44%
15,001-20,000	23	399,277	2.29%
20,001-30,000	13	349,442	2.00%
30,001-40,000	7	235,000	1.35%
40,001-50,000	9	403,515	2.31%
50,001-100,000	12	787,365	4.51%
100,001-200,000	9	1,443,707	8.27%
200,001-400,000	1	238,350	1.37%
400,001-600,000	3	1,423,100	8.15%
600,001-800,000	0	0	0.00%
800,001-1,000,000	1	801,664	4.59%
1,000,001Stocks or more	5	8,368,920	47.93%
Total	4,438	17,459,400	100.00%

(4) List of major shareholders: the proportion of shareholders or equity with a share of more than 5% of the shares in the top 10 is the name of the shareholders, the amount of the shareholding and the proportion.

April 20th, 2020; Unit: shares

April 20th, 2020; Unit: shares	April 20th, 2020; Unit: shares	April 20th, 2020; Unit: shares

Shares Name of majorshareholder	Number of shares held	Shareholding Ratio(%)
Far East International Commercial Bank entrusted custodyOptimistic Forward Investment limited.	1,935,145	11.08%
Far East International Commercial Bank entrusted with the custody of Endow Capital Management Co., Ltd. Investment specialty	1,716,592	9.83%
Far East International Commercial Bank entrusted custody of Bash Consulting Co., Ltd. Investment Special Account	1,716,592	9.83%
Far East International Commercial Bank entrusted custody Reap Global Investment Co., Ltd. Investment specialty	1,500,387	8.59%
WittySino Holdings Co.,Ltd.	1,500,204	8.59%
Far East International Commercial Bank entrusted custody Capability Global Development Co., Ltd. Investment specialty	801,664	4.59%
Hung-LiangChen	543,000	3.11%
Well-BeingEnterprise Co.,Ltd.	478,000	2.74%
Guang-ZongTan	402,100	2.30%
E.SUN Bank keeps the Investment Account of De-Tai Company	238,350	1.37%

(5) Market value per share, net worth, surplus, dividend and related data for the last two years

5) Market value per share, net worth, surplus, dividend and related data for the last two year	5) Market value per share, net worth, surplus, dividend and related data for the last two year	5) Market value per share, net worth, surplus, dividend and related data for the last two year	5) Market value per share, net worth, surplus, dividend and related data for the last two year	5) Market value per share, net worth, surplus, dividend and related data for the last two year

Year Project		2018	2019	As of May12th 2020
Market value per share (Note1)	Highest	204.50	110.00	79.50
	Lowest	75.50	61.40	46.80
	Average	160.18	80.59	65.44
NET value per share (Note2)	Before Allocation	44.69	45.00	45.79
	After Allocation	40.69	(Note 9)	(Note 9)
Per share Surplus	Weighted average number ofshares(Thousand shares)	17,385	17,260	17,260

	Earnings per share	Earnings per share	Before adjusting	7.18	4.41	0.82
			After Adjustment (note 3)	7.18	(Note 9)	(Note 9)
Per share Dividend	Cash Dividend			4.00	(Note 9)	Not applicable
	Stock grants	Surplus rights Issue		-	(Note 9)	Not applicable
		Capital reserve rights issue		-	(Note 9)	Not applicable
	Accumulated unpaid dividends(Note4)			-	(Note 9)	Not applicable
Investment return Analysis	P/E ratio(Note5)			17.67	18.29	Not applicable
	Profit ratio(Note6)			31.72	(Note 9)	Not applicable
	Dividend Yield (Note7)			3.15%	(Note 9)	Not applicable

In the event of a surplus or capital reserve transfer, the market value and cash dividend information adjusted retroactively according to the number of shares issued should be disclosed.

Note 1: A list of the highest and lowest market prices for common shares for each year and an annual average market price based on the transaction values and volumes for each year.

Note 2: Please fill in the number of shares issued at the end of the year and in accordance with the sub-annual shareholders ' meeting resolution.

Note 3: If there is a need to adjust for stock grants, the pre-adjustment and adjusted surplus per share should be shown.

Note 4: If the terms of issue of equity securities stipulate that the dividends not issued in the current year have to be accumulated to

the year of surplus, they shall disclose, respectively, the outstanding dividends for the year ended when they were paid.

Note 5: P/E ratio = when the annual average price per share/surplus per share.

Note 6: Profit ratio = Average annual closing price per share/cash dividend per share for the year.

Note 7: Cash Dividend Yield = Cash dividend per share/average closing price per share for the year.

Note 8: Net value per share, surplus per share should be included in the most recent quarter of the published date of the annual report by the accountant's check (approval) data; the remaining fields should be filled in as annual data as of the publication date of the annual report.

Note 9: The resolution will be finalized after the 2019 Annual General Meeting of Shareholders.

(6) Dividend policy and implementation status of the Company

Dividend allocation policy as stipulated in the Articles of association

If there is an after-tax surplus in the annual accounts of the Company, it shall first make up for the loss of 10% of the statutory surplus after the previous annual losses, provided that the statutory surplus reserve has reached the amount of capital paid by the Company, and may, subject to operational requirements or statutory requirements, refer to or reverse the reserve of special surplus; In addition to considering that the business needs of the Company are retained as unallocated surpluses, the proposed surplus allocation by the Board of Directors is submitted to the shareholders ' meeting for assignment. The Company is a capital-intensive industry, is currently in the business growth stage, and in order to meet the Company's

long-term stable development needs, the Company's dividend policy should take into account

the industry environment and surplus status, future capital expenditure needs and long-term financial planning and other situations, if there is a surplus distribution dividend, The proportion of cash dividend payment should not be less than 10% of the total dividend allocated in the current year, and the rest is issued by stock dividend.

The proposed dividend distribution of the shareholders ' meeting

2019 Net Profit Allocation has been approved by the Board of Directors on 2020/03/24 for the issuance of cash dividends NT$ 17,260,400 (NT$1 per share), distribution of cash dividends of NT$ 8,630,200 (NT$0.5 per share) from the capital reserve, and the issuance of new shares 1,726,040 shares (100 stock grants per thousand shares) from capital gains from the capital reserves. The aforementioned has not yet been approved by the shareholders ' meeting.

(7) The Impact of issuance of bonus shares on the Company's business performance, earnings per share and shareholders’ return on investment

Annual Items	Annual Items	Annual Items	2020 years (estimated)
Opening paid-down capital amount (thousand NT$)			174,594
Current situation of Share Dividends	Cash dividends per share (NT$)		NT$ 1.5
	Share dividends per share capital increase by Earning Surplus		-
	Share dividends per share - Capital surplus transferred to capital		0.1 shares
Business performance Comparison	Operating Income (thousand NT$)		Note
	Increase (decrease) in operating benefit over the same period last year
	Net operating profit after tax (thousand NT$)
	Increase (decrease) in net operating profit after tax compared to the same period last year
	Earnings per share (NT$)
	Increase (decrease) in earnings per share compared to the same period last year
	Average annual return on investment (average annual return ratio countdown)
Simulation of EPS and PE Ratio	If the surplus is converted to a capital increase Full-value cash dividend	Proposed earnings per share (NT$)
		Proposed average annual return on investment
	The transfer from capital surplus to common stock not processed	Proposed earnings per share (NT$)
		Proposed average annual return on investment

		Both capital increase from capital surplus and capital increase from retained earnings not processed and distributed through cash dividends	Proposed earnings per share (NT$)
			Proposed average annual return on investment

Note: The Company is not required to disclose its financial forecast information for 2020, therefore no disclosure on the impact of issuance of bonus shares on the company's business performance, earnings per share and shareholder return on investment.

(8) Remuneration of employees, directors and supervisors
The extent or scope of remuneration of employees and directors contained in the Articles of Incorporation:

If the Company has any profit in the year, it shall make no less than 3% Remuneration and not higher for employees 5% Remuneration for directors. However, when the Company has accumulated losses, it should pre-reserve the amount of the repair code. The person to whom the preceding employee is paid for stock or cash, including employees of subordinate companies who meet certain conditions.

The estimated basis for the evaluation of the remuneration amount of employees and directors in this period, the basis for calculating the number of shares in the distribution of stock dividends and the accounting treatment if the actual distribution amount is different from the estimated number of accounts.

The basis for assessing the remuneration of employees and directors in the year 2019 is based on the pre-tax net profit in 2019 (replacement of the amount before remuneration of employees and directors and supervisors), and 3% of the amount is paid for employees and 1.5% for directors. If the employee's compensation is based on stock distribution, the calculation of the number of shares is based on the closing price of the day before the board's decision. If the actual allotted amount is different from the estimated number, it will be treated as a change in accounting estimates and listed as profit or loss in the subsequent year.

The Board of directors and distribution of remuneration Unit: NT$

(1)Employee compensation distributed by cash or stock and compensation of directors and supervisors

Distributed Items Allotment status	Employee Compensation-Stock	Employee Compensation-Cash	Board remuneration
Actual distributed amount approved by the Board	-	2,467,812	1,233,906
Annual estimated amount of expenses recognized	-	2,467,812	1,233,906
Differences	-	-	-
Differences and explanations	Not applicable	Not applicable	Not applicable

(2) The amount of employee compensation distributed by stocks and the proportion of the total net profit after tax and the total employee compensation for individual or individual financial reports in the current period

This time the board of directors did not propose to distribute employees' compensation with stocks, so it is not applicable.

Actual distribution of remuneration of employees and directors(Including the number of shares distributed, the amount and the share price) in the previous year. The difference between the remuneration of the recognized staff and the directors shall be explained by the difference, the cause and the handling of the situation: Unit: NT$

Distributed Items Allotment status	Employee Compensation-Stock	Employee Compensation-Cash	Board remuneration
Actual distributed amount approved by the Board	-	3,749,978	3,124,982
Annual estimated amount of expenses recognized	-	3,749,978	3,124,982
Differences	-	-	-
Differences and explanations	Not applicable	Not applicable	Not applicable

(9) Buy-back Shares in the Company:
Completion of the implementation in the most recent year and up to the date of printing of the annual report: None.
Continued implementation in the most recent year and up to the date of printing of the annual report: None.

2020.05.12

report: None.	2020.05.12
Buy back period	Third Time
Buy Back the purpose	Transfer of shares to employees
Type of Buy Back stock	Common stock
Upper limit of the total value of the Buy Back Stocks	NT$589,839,000 (Calculated according to the published 2019 financial reports audited by accountants)
Buy Back Period	2020/4/23~2020/06/22
Estimated Buy Back quantity	200,000 shares
Buy Back interval prices (NT$)	42~89.1 NT$ (When the company's stock price is lower than the lower price limit of the set range, it will continue to buy back the shares)
Types and quantities of shares bought back	Common stock 19,000 shares
Total value of shares bought back	NT$ 1,171,029
The ratio of the quantity bought back to the estimated quantity bought back (%)	9.5%

II. Company Debt: none.

III. Preferred Stock processing situation: none.

IV. Overseas Depository Certificate processing situation: none.

V. Procedures of Employee Stock Option Certificate : none.

VI. Restricted Stock Awards for Employees:

In order to retain and attract talents, the company issued 400 thousand new shares, priced at NT$0 per share, total value of NT$4,000,000, with limited employee rights on June 14, 2018 by the resolution of the shareholders' meeting. During the year, the board of directors was authorized to issue one or several times within the quota.

VII.Mergers and acquisitions or transfer of other companies' shares to issue new shares: none.

VIII. Implementation of the capital

(1) Plan Outline:

As of the quarter before the printing date of the annual report, the previous issuance or private placement of securities has not been completed or has been completed within the past three years and the planned benefits have not yet shown: None. (2) Status of Implementation: None.

V. Operation Overview

I. Business Content

(1) Scope of Business
Main Business Operation

The Company is one of the main optical fiber product manufacturers, mainly produce optical fiber cable products, optical communication systems and optical testing prototypes. In addition, the Company also provides education services and consulting management services for elementary schools, middle schools, and high schools.

Operation Ratio

Unit: in thousands of New Taiwan Dollars

peration Ratio	Unit: in thousands of New Taiwan Dollars	Unit: in thousands of New Taiwan Dollars
Operation ratio Account	2019
	Sales Amount	Operation Ratio
Education and Consulting Services	646,544	73.34%
Optical Fiber	178,078	20.20%
Cable	56,603	6.42%
Others	385	0.04%
Total	881,610	100.00%

Current list of Goods (Services)
1) Education and Consulting Services: The Company's business education operation includes face-to-face tutoring, consulting and digital learning services, creating a comprehensive K12 education platform.

A. High School Department

The comprehensive academic learning services that follows the K12 curriculum includes Chen Li Mathematics, Zhang Wei English, Jiang Hao English, Tsing Hua Physics, Li Zhe Chemistry, Li Yan Mandarin and other subject curriculum. Other curriculum teaching services are provided such as university standardized test review with a class size of 100 or above students per class.

B. Middle and Primary School Department

Middle school: Guide the content of the test-taking courses according to the syllabus, including grade one to grade nine academic subject courses, helping students to achieve top position in school ranking. The middle school courses adopt large, medium, and small class size teaching modules.

Elite Academy includes: STEM Science Mathematics series, How Humans Think series (Primary Mathematics, Core Mathematics, Thinking Mathematics). The academy helps guide students' way of thinking, improving their problem-solving skills, logic and reasoning ability. The course combines scientific knowledge, mechanical module, programming language and mathematics ability to help students in primary and secondary schools to build strong foundation for future success. Small class teaching size is provided.

Description of small and medium class size: Each classroom usually consists 10-20 students, using face-to-face teaching module. The small number of students allows teachers to pay more attention to each student and better adapt to the needs of each student.

C. Digital services

Since the physical education service has been extended to all subjects and all age group covering kindergarten classes to high school, the Company has begun to develop cloud learning services to provide more complete services for students in different regions with different needs, expanding beyond the reach of the physicality, to achieve real and virtual integration goals.

The main courses and services currently developed include high school mathematics, vocational mathematics, university concept calculus and other audio-visual courses; and online puzzle solving services provided to students, and cross-platform and crossmedium (computer, mobile phone, tablet; Android, iOS) services.

2) Optical fiber Series: single-mode fiber, multi-mode fiber, special fiber.
3) Optic Fiber Cable Series: boxed optic fiber cable, outdoor optic fiber cable, indoor optic fiber cable, armored optic fiber cable.
New products (services) planned for development
1) Education Business

In response to the popularity of digital mediums and the gradual decline in costs, government policies have helped to increase the acceptance of digital learning by parents and students; and the analysis and recommendations of digital services or tools can enhance the mastery of student learning. Therefore, the Company will gradually strengthen the depth of digital services of the existing teaching locations.

A. STEM Mathematics has a complete teaching system under the Elite Academy division and achieved excellence in both domestic and international mathematics related competitions. The digital learning platform will be further developed to create the only STEM mathematics flagship product that integrates real and virtual learning in Taiwan. The concept of scientific mathematics will be extended to primary school curriculum and collaboration with regional centers will take place.
B. Integrate the Group's internal resources through the Cloud Academy platform and adopt a proactive development strategy in digital education products and services. This is done primarily through the integration of resources consisting faculty, marketing strategy, teaching materials, online digital learning system application, and actively developing digital courses of high school and middle school materials. In addition, online textbooks, online questionnaires and answering services are provided.
a. Digital courses and teaching materials: High School Mathematics, General Review of Academic Tests, General Review of Examinations, University Calculus.
b. Intelligent Test Evaluation Diagnostic system: National Middle and High school Department.
c. Online Counselling Service.

2) Optical fiber Business

A. High energy laser fiber product series
B. Biotech medical optical fiber cable product series
C. Optical fiber products for navigation use

(2) Industry Profile

1. Current Industry status and development

1) Education Business

The prevalence and diversity of the tutoring culture of Taiwan's progression-oriented education is widespread in the daily life of students and parents. Under the leadership of academicism and diploma myths, the supplementary education industry provides various types of educational services and promotes the supplementary education industry. It has

gradually developed into a systematic and chain-oriented enterprise structure. According to the industrial and commercial census data, the ratio of the output value of Taiwan's cram schools to GDP is about 0.23%. It has created many employment opportunities and substantial output value, although it has not been publicized. According to statistics, the overall output value of Taiwan's supplementary education industry can only be estimated based on a small number of reports. The size of Taiwan's tutoring training market is about NT$170 billion, and the cram school class is only one part.

In recent years, due to the impact of the declining birthrate, the Statistics Department of the Ministry of Education pointed out that because the people generally attach importance to education, the school is flourishing, and with the age of knowledge, the education and lifelong learning are gradually expanding, offsetting the impact of minority births. The GDP in the past decade from 2007 to 2018 has not changed much.

The overall market size has not diminished at first glance, however, as far as the education-oriented remedial industry is concerned, its expansion quantity and market size have gradually become saturated, and according to the Ministry of Industry's nearly ten years of statistics, the growth of the number of cram schools has gradually become slow, slightly saturated trend.

==> picture [342 x 172] intentionally omitted <==

Picture: Statistical map of the growth of Cram classes in the last ten years

Data Source: 2018, The Ministry of Education and the county and city short-term remedial information management system

2) Optical Fiber Business- 2019 Broadband network industry development status
A. On November 18, 2019, local time in the United States, the World Fiber Optic Cable Conference opened in Charlotte, North Carolina. CRU analysis director Michael Finch said at the conference that although the world fiber optic cable market faces certain adjustments, Needless to say, it is now the best time to discuss the latest developments such as 5G network deployment and hyperscale data center investment.
B. According to the CRU report, due to the increase in light rod production capacity in 2019, global fiber demand has only slightly increased by 2%, making single-mode fiber in a state of oversupply, and prices have fallen rapidly, as shown in the following table:

==> picture [595 x 177] intentionally omitted <==

C. According to the CRU report, the top three global FTTx installations are China,
Europe, and the United States, as shown in the following table:

==> picture [595 x 196] intentionally omitted <==

D. According to October 31, 2019, at the China Light Summit, the China Information and Communication Research Institute and the Broadband Development Alliance jointly issued the "China Broadband Development White Paper (2019)", China's new infrastructure construction is accelerating, The popularity of broadband continues to increase, and the development of the broadband industry will reach a new level.

In recent years, due to the emergence of emerging technologies such as 5G, Internet of Things, and Internet of Vehicles, the construction of related new infrastructure has also been in full swing. The development of these emerging technologies and the construction of their infrastructure have laid a foundation for the integration of the broadband industry and these new things. The foundation, the application of 5G, the construction of a gigabit network, and the construction of an IoT ecosystem have gradually become hot spots in the development of broadband networks in countries around the world. In 2019, China has also actively promoted the rapid implementation of these innovative applications, and fully rolled out Gigabit networks and 5G commercial and mobile Internet of Things to deeply cover various scenarios. Today, my country's broadband network-related infrastructure is still accelerating.

E. From 2017 to 2019, the total length of optical cable lines continues to increase. As of the end of June 2019, the total length of optical cable lines in China has reached 45.46 million kilometers, an increase of 13% over the same period last year.
F. The penetration rate of fixed broadband networks has also increased year by year. As of the end of June 2019, the penetration rate of fixed broadband population reached 31.1%, which exceeded the average level of OECD 36 countries for the first time (30.9%). The number of fixed broadband users was 435 million, which was at the end of 2018, there were an increase of about 41 million households.
G. Mobile broadband continues to spread, 4G network is still the core Although the 5G industry has been born and 5G has been successfully commercialized, the core of China Mobile's broadband is still 4G. From 2014 to 2019, the number of 4G base stations increased year by year. In the first half of 2019, there were 4.448 million 4G base stations, accounting for 60.8% of the total number of mobile broadband base stations.
H. At the same time, the penetration rate of 4G users is also increasing year by year. As of the end of June 2019, China's 4G user penetration rate was 77.6%, and according to GSMA data, the global 4G user penetration rate was only 47.4%. It can be seen that although the 5G industry has begun to be used, there is still a long way to go before it can replace the 4G industry.
I. In April 2019, the 6th China Laser Market Summit Forum jointly organized by the Laser Processing Professional Committee of the Chinese Optical Society and the Munich Expo Group was successfully held in Shanghai. The global fiber laser market is expected to grow at a compound annual growth rate of approximately 13% between 2020 and 2024. It is expected that the increasing demand for optical fiber lasers with laminated shapes and the advancement of optical fiber laser technology will promote the growth of this market. Since 2014, the installed rate of lasers worldwide has accounted for almost 50% in Asia, and China has accounted for 30% of the global total, exceeding the total installed capacity in Europe for the first time. In 2017, China accounted for almost 45% of the global total. In 2018, the output value of China's laser processing industry was about 50 billion. Domestic low-power fiber lasers shipped nearly 90,000 units, 15,000 units of medium power (less than 3kW), 1,000 units of high power 3kW, and 200 units of 6kW There are 10 units of 12kW and 12kW. High-power welding will be the next hot spot in the market, and it is expected that the domestic sales of 12kW fiber lasers will be close to 100 units. In terms of the medium and high power laser equipment market, the company with the largest sales of high power (≥3kW) laser equipment in 2018 has installed nearly 1,000 units annually; 200 sets of 6kW laser cutting machines with domestic light sources have been installed, and 12kw has achieved sales; domestic The output value of nearly 10 equipment companies has exceeded 1 billion yuan; high-power welding has begun to use domestic light sources; "digital automation" continues to develop into "intelligence". In addition, the domestic sales of UV laser products in 2018 exceeded 12,000 units, an increase of 18% over 2017; the growth of RFC02 lasers was not large, and the total amount of small and medium power remained at

about 10,000 units, mainly used for coding and printing Non-metal industries such as marking and cutting; the application market for ultra-fast lasers still needs to be cultivated, and batch delivery is currently achieved, mainly in the 3C industry. American Laser Focus World magazine, in terms of market segments, the application of low-power and high-power diode lasers continued to grow in 2018. Due to the double decline in semiconductor lasers and OLED screens, excimer lasers have declined slightly. Fiber lasers will maintain steady growth.

  - J. The company's optical fiber business department has kept abreast of the development of the single-mode optical fiber market for many years, and has taken the product line to customers in different fields in advance to avoid the impact of the single-mode optical fiber market on the optical fiber business unit. At the same time, the development of optical fibers for lasers will be strengthened.

Industry upstream, midstream and downstream structure
1) Education Business

Because of its special nature of selling "teaching service", the product is an abstract course and service, and the tangible teaching materials and teaching resources are complementary, except for most non-scale or franchisees, because they do not have the matching ability of teaching materials development and teacher training, they will need to purchase teaching resources, teaching materials and other raw materials. And Chen Li Education has its own R&D in teaching materials, courseware and teaching staff to develop the ability, so it is not affected by the fluctuation of the upstream industry, and Chen Li Education for the operation of the midstream, so also not affected by the restriction of downstream industry is actually the all-around education group with complete industrial chain.

==> picture [595 x 163] intentionally omitted <==

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

Upstream Midstream Downstream
• Educational ��
resources and
��
Teachers
��
��
��
��
----- End of picture text -----

2) Optical Fiber Business

��

==> picture [399 x 281] intentionally omitted <==

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

��
��
��
Ferrule/Sleeve GRIN Lens YVO4/LiNbO3 YIG/BIG Thin film filter Si, GaAs, InP ��
��
�
��
Fiber ��
Connector Patchcord Coupler Collimator Circulator Modulator LED/LD �
��
Isolator ��
�� PD Semiconductor
Fiber grating Attenuator AWG Interleaver Switch Optical amplifier �
��
Cable �
DWDM ��
��/�� OADM Optical Amplifier Transceiver module �
Mux/demux �
��
��
Tunable Laser Transmitter Receiver
OXC
�
��
��
�
�
�all fiber �micro optics �planer waveguide �three types �
�
----- End of picture text -----

Various Development Trends of Products 1) Education Business

Under the current situation that market demand is limited and corporate profits still need to be continuously expanded, in the next ten years, if Taiwan's further education and education industry wants to create higher profitability, it will have to compete fiercely with its counterparts in China, and seek digital transformation and demand. Take a refined, high-cost service model, expand the enterprise territory by means of mergers and acquisitions, or seek a greater market overseas for higher revenue streams.

Based on this development strategy, Chen Li Education established several departments to open up the market of Chen Li's untouched areas and actively engaged in mergers and acquisitions in Taiwan. In terms of physical division, it includes 11 campuses of Chen Li Education (High School), including (6) Taipei, (1) Hsinchu, (2) Taichung (including Feng-Yuan), (1) Chiayi, and (1) Tainan. At the same time, it is also the only one in China to enter the education market, providing education consulting services for (5) branches in Xiamen.

2) Optical Fiber Business

A. Optical fiber to household

Taiwan ranks fifth in the global penetration of optical fiber (FTTx), second to Hong Kong, Japan, South Korea and the United Arab Emirates. Chunghwa Telecom plans to invest more than RMB 20 billion in 10 years to build a FTTH all-optical network. In 2015, 80% of homes will be able to access 100Mbps cable broadband networks, with 6 million fiber users and wireless broadband users. The 2 million households have officially entered Taiwan's broadband service from the M era into the G

generation.

The goal of China's broadband development is shown in the following table:

Index	2013	2015	2020
Fixed Broadband User	210 million	270 million	400 million
FTTH Users	30 million	70 million
Urban Broadband User	160 million	200 million
Rural Broadband User	50 million	70 million
Fixed Broadband Penetration rate	40%	50%	70%
Urban Broadband Penetration Rate	55%	65%
Rural Broadband Penetration Rate	20%	30%
Broadband Access for urban areas	20M (80% user)	20M	50M
Developed City		100M (Some Cities)	1000M (Some Cities)
Broadband Access for rural areas	4M (85% user)	4M	12M
Broadband Access for large businesses		>100M	> 1000M
FTTH household coverage	130 million	200 million	300 million
Broadband Usage ratio for Administrative Villages	90%	95%	>98%

In 2012, there were more than 14 million users of optical fiber to the European market. Compared with 27 member states of the European Union in 2006 plus Switzerland, Norway and Iceland, there are already 820,000 fiber-optic users, which is 14 of the previous numbers. Though there has been a 2% decline in North America and 3% decline in Eastern Europe, the demand for optical fiber cable in Eastern Europe (excluding Russia) has increased by 15%. Although Western European countries have been struggling during the recession these years, the demand for optical fiber cable in the region has increased by 9% in 2012. In Spain and Italy, for example, despite the negative growth in GDP, the demand for optical fiber cable in both countries has increased by double digits.

B. Audio and Video market

The global audio and video market is expected to expand at a compound annual growth rate of 28.7% between 2011 and 2015. In addition to long-distance telecommunications fiber transmission, short-distance all-fiber room requirements, as well as terminal equipment interconnection requirements are gradually expanding. Intel launched the Light Peak program in 2009, looking forward to becoming the nextgeneration transmission standard. Light Peak copper is currently used. The boardbased Thunderbolt has been adopted by the Apple MacBook at speeds up to 10 Gbps, which will benefit the high-capacity transmission editing of audio and video. Active Optical Cable (AOC) is an emerging application for expanding the transmission interface cable by extending the existing copper cable transmission distance. Following Intel's Thunderbolt fiber-optic cable project, high-definition multimedia interface (HDMI), the production of fiber-optic cables is on the market, and USB 3.0 fiber-optic cables will be introduced. Only the current cost is still high, mainly focusing on the development of high-end markets. The InfiniBand interconnect data

transfer rate used in HPC has also grown rapidly from 4x10G QDR two years ago to 4x14G FDR. In addition, the Ethernet data center industry is also very concerned about AOC technology. In February 2012, Cisco announced the acquisition of Lightwire, a startup of Si-photonics, which also shows the rising trend of active fiber.

C. Data Center

Multimode fiber is the primary transmission medium for next-generation data center cabling systems. In the field of data centers, optical fibers can reduce carbon dioxide emissions, reduce greenhouse gases, reduce power consumption, and save space. At the same time, the use of optical fiber materials has the least impact on the environment compared to that of the copper cables and has contributed greatly to the construction of Green Data Centers. In addition, in the active equipment of the data center, the optical fiber is far lower (more efficient) than the copper cable in terms of power consumption, cooling function, space occupation, and heat dissipation, and it is obvious that the fiber meets the advantages of green energy conservation. Therefore, the development of fiber-optic wiring technology will achieve the best balance between high density and sustainability; at the same time, the data center system also provides a huge business opportunity for high-strength bending-resistant fiber-optic wiring technology.

4. Competition Overview

1) Education Business

Chen Li Education Group has been established for 30 years, the first largest educational service group, and the first corporate supplementary education organization in Taiwan. In 2012, with the introduction of professional managers to strengthen the performance orientation and team structure inheritance of enterprise-oriented management operations.

Chen Li Education is the most complete and most competitive supplementary education enterprise in Taiwan for 12 years. The province's branch schools have reached 12 from North to South, extending from high school mathematics to middle and elementary school. The teaching of science and education is a leading enterprise for the education of Taiwan.

Over the years, Taiwan’s industry has been fiercely competing in the territory. The quality and sophistication of marketing, enrollment, products, management and service in Taiwan’s supplementary education industry are far ahead of China, and Chen Li’s education is a leader in Taiwan’s supplementary education.

2) Optical fiber Business

2) Optical fiber Business
Products	Current major competitors
Single Mode fiber	Corning�Fujikura�Furukawa�Sumitomo�YOFC
Multimode fiber	Corning�OFS�Draka�J-Fiber�YOFC�Fiber Home
Multimode Pre-body	ShinEtsu Chemical co.,
Passive components	Shàng quán�Guāng hóng jiàn shèng�Lián zhǎn
High strength boxed Optical cable	OFS�Optical Cable Corporation�AFL�SAMSUNG
MPO Heartwarming optical fiber cablejumpingwiring	Shàng quán
Light Peak Multimode fiber	Corning

(3) Technology and Innovation Overview
R & D expenses invested in the most recent year and up to the date of publication of the annual report

annual report	annual report	annual report
Unit: in thousands of New Taiwan Dollars
Year/Account	2019	2020 Q1
R&D Expense	27,687	6,624
Net profit	881,610	199,927
% of Netprofit	3.14%	3.31%

Successfully developed technology or product
1) Education Business
- A. High school general subjects, vocational mathematics, elementary school digital curriculum
- B. Intelligent Test diagnosis system for middle and high school
- C. Online Counselling Services

2) Optical fiber Business

After more than ten years of research and development, the company has established excellent optical fiber engineering technology, from single-mode and multi-mode to various special optical fiber products, which are widely used in the telecommunications industry. All products meet the requirements of the International Telecommunication Union (ITU-T) , Quality and price are competitive in the international market. However, in recent years, the traditional optical fiber communication market has gradually matured, and the application range of optical fiber has gradually expanded to the consumer electronics industry. End customers have extended from telecom operators to ordinary consumers. In addition to the large differences in fiber characteristics, product types It is also dominated by various types of optical cables and presents diversified development. In addition, the general consumer is completely unfamiliar with optical fiber products. Therefore, in order to respond to the transformation of this industry, the company must actively develop and innovate various optical fiber products suitable for consumer electronics. We will develop a new generation of optical fiber products based on the company's current core technology and main products (special GGP fiber technology, BendSafe single / multimode fiber and indoor / outdoor fiber optic cables and other series products). The primary goal is to " "Light Peak" application market is ushering in mainstream business opportunities in the industry.

A. Nd> 30 high mechanical strength bend-resistant optical fiber (SMF & MMF), 80μm large core multimode fiber.
B. BendSafe high mechanical strength and bending resistance indoor optical cable, boxed cable (Boxed Cable), convenient FTTH mechanical splicing optical cable, special optical cable for large-bandwidth video and audio data transmission, transparent optical cable.
C. Flat Patch Cord, Fan-out Patch Cord, Pigtail Patch Cord, Clear Cord, Curl Cord, Splitter, Fiber Distribution Hub.
D. Light Peak Technology.
E. Industrial automation large-diameter optical fiber.
F. Optical fiber for health care and biotechnology.

(4) Long-term and short-term business development plans
Education Business
- 1) Short-term plan
  - A. Continue to increase the market share of the "Chen Li Education" brand in the education market
    - In addition to the existing high school supplementary education business, it will vigorously sprint into the education fields of junior high schools and elementary schools, continue to gradually expand the number of branches with the K-12 (kindergarten to high school) structure, and cooperate with children and beauty around the world to open various classes in mathematics and STEM To drive the growth of the overall operation.
  - B. Strengthen the services of digital products
    - Actively develop cloud-based smart digital courses in high schools and junior high schools, continue to plan different physical curriculum combinations and digital learning products, and improve mutual support for virtual and real teaching.
- 2) Mid-term plan
  - A. Through digital tools and services, carry out physical sales of digital services, increase revenue and profit.
  - B. Continue to explore the possibility of inter-industry and inter-industry cooperation, so as to provide more diversified products and services.
- 3) Long-term plan

Build a global Chinese education service platform under the Chen Li education brand, integrate world education resources, and make Chen Li Education the most influential Chinese education leading brand.

Optical Fiber Business
1) Short-term plan
- A. Make full use of the existing production capacity equipment, maximize production, reduce costs and create profits.
- B. In response to the construction needs of FTTH, actively establish the supply capacity of FTTH photochemical box optical component products to meet the small and diversified demand characteristics of the market, and establish a close strategic partnership with downstream system manufacturers to increase market share.
- C. Establish product management and supply capabilities of the BendSafe Patch Cord product line to meet the service needs of product distributors and strive for stable product orders. In addition, and actively improve the quality of products, develop products that meet international standards to expand the global market.
- D. Master the development trend of high-resolution, 3D, high-frequency digital audio and video transmission application requirements, based on BendSafe optical fiber and optical cable technology, diversify the development of various types of optical cables that satisfy the AV and Security application markets, and market with channel strategic partners Promotion and sales to increase market share and BendSafe brand awareness in this part of the market.
2) Long-term plan
- A. Develop fiber-to-the-home (FTTH) house-specific optical cables and on-site construction solutions to promote simple and fast construction at the construction site with the lowest cost equipment and rough-study personnel; we hope to open the privatized market in China FTTH Next, we will obtain product innovation opportunities and accelerate to seize the mainland market.
- B. In response to the rapid growth of global laser applications, CO2 and solid-state lasers have been gradually replaced by optical fiber lasers. Since the company was founded, it has been founded on the advantages of multimode optical fibers and special optical fibers. The company can show a good opportunity for its technical capabilities, so it is fully investing in the development of optical fibers for lasers, and it is expected that it will have a good harvest in the near future.

II. Overview of the market, production and sales (1) Market analysis

Major product sales regions

Sales Region	2018	2018	2019	2019
	Amount	%	Amount	%
Taiwan	749,506	81.68%	722,556	81.96%
China	100,464	10.95%	48,127	5.46%
USA	41,981	4.58%	75,685	8.58%
Others	25,628	2.79%	35,242	4.00%
Total	917,579	100.00%	881,610	100.00%

Demand and Supply of Future Markets and Growth 1) Education Business

It is apparent that Taiwan's cram school education industry still has substantial demand, though the market showed some saturation. The Chinese market, on the other hand, is showing rising demand, and the demand and growth of the Chinese market in recent years, China's primary and secondary school extracurricular tutoring market growth is large and rapid, private education and training institutions after 20Years of development, national education and training enterprises began to emerge in large numbers. Face near1Trillion education and training market, some private enterprises hope to expand market share by entering the capital market. At present, it seems that the market in some cities fierce competition, but the total amount is not yet saturated, in addition to the first-tier cities, there are still many areas that lack of high market share of strong brands, the future still has a lot of investment opportunities and possibilities. According to the Sohu Institute of Education Survey of the "China K-12 External tutoring industry Status quo and trend ", extracurricular tutoring market has the following characteristics:

A. Large Population

According to statistics from the Ministry of Education of China, as of the end of 2016, there were 23.66 million students in ordinary high schools; 43.29 million students were enrolled in ordinary junior high schools; and 99.13 million students were enrolled in ordinary primary schools. In other words, the K-12 market has more than 160 million potential students.

B. Competitive nature

The overall market of K-12 is highly dispersed, and due to the significant differences in the selection of examinations, propositions, teaching materials and teachers in different provinces and cities, the standardization expansion is difficult. However, the entry threshold is relatively low, and the cash flow in the prepaid mode is good, making the training institutions highly dispersed. And education is difficult to replace, and it happens all the time. Once the performance is not as expected, the possibility of students searching for alternatives is extremely high.

C. Separation

Compared with other consumption, the prominent characteristic of educational consumption is that the selector and the consumers are separated- Parents choose, children spend. This leads to their own attention to the results of the industry coupled with a high degree of information asymmetry, parents’ preferences is,

therefore, determined by the results of the improvements of their children’s academic performances, while neglecting the impact of family education and other unaccounted actors.

D. Long Duration

Compared to vocational, study abroad and other training, its trainees often stop the course after completing a certain period of course and obtaining the corresponding effect. Extracurricular tutoring services throughout students’ 12 Years of education, which 12 Years of education often affect the future of a student's life and are therefore less affected by the economic cycle.

In other words, the overall market demand for training and education in China is relatively too large to be fully satisfied. There have been proposals to expand the market with Internet technology, but with the 10 years development of digital education in China, it can be concluded that the uniqueness of the K-12 education can not to be supplanted by the Internet, and most digital learning is still confined to the area of digital teaching materials, but cannot achieve profit.

Chen Li Education is a physical training institution based on famous teachers, highquality courses and refined management, the goal will be to introduce entities as the main charge, and master the overall curriculum progress, but also to provide free online, mobile network services, the development of suitable for China's localization of education and training model, to capture the ChineseK-12Market.

2) Optical Fiber Business

According to the CRU report, the overall optical fiber market grew by 10% in 2017 compared with 2016. It is estimated that 2018 will continue to grow. Statistics by region are as follows. Furthermore, with the deployment of 5G in 2020, the increase in bandwidth demand will inevitably drive the demand for optical fiber. Growth.

Area	2015	2016	2017	Growth rate	2018 (estimated)	Note
North America	46 M-KM	52 M-KM	60 M-KM	15.38%	+Continuous growth	Data Center
Europe	46 M-KM	49 M-KM	55 M-KM	12.24%	+Continuous growth	FTTH & 5G
Japan	11 M-KM	12 M-KM	12 M-KM	00.00%	-Remain steady
China	250 M-KM	278 M-KM	300M-KM	7.91%	+Continuous growth	Three major operators & 5G
India	21 M-KM	24 M-KM	30 M-KM	25.00%	+Continuous growth
Other	39 M-KM	42 M-KM	45 M-KM	7.14%	+Continuous growth	Southeast Asia & Africa
Total	413 M-KM	457 M-KM	502 M-KM	9.85%	+Continuous growth

3. Competitive Niche

1) Education Business

Chen Li Education Group has been established for 30 years, the first largest educational service group in Taiwan, and the first corporate supplementary education organization in Taiwan. In 2012, along with the introduction of professional managers to strengthen the performance orientation and team structure inheritance of enterprise-oriented management operations.

Chen Li Education for the whole Taiwan12The State religion, education integration of the most complete and competitive supplementary teaching enterprises, 12 provincial branches of the province extending from North to south, and covering from High school

mathematics professional field to the general high school education, the general middle school education, and elite elementary education, making Chen-Li one of the leading enterprises in this field.

Over the years, Taiwan's education industry has exhibited fierce competition, Taiwan's supplementary education industry marketing, enrollment, products, management, service quality and exquisite degree have been significantly ahead of China, and Chen Li is no doubt, the experienced leader of Taiwan's supplementary teaching.

The aforementioned shows that core competitiveness of Chen Li Education are as follows:

A. Exceptional management of Teachers and Teaching Resources

The whole Taiwan supplementary education industry mostly starts with the famous teacher, through the famous teacher one person's aura, creates the supplementary teaching myth, so far, the figurehead Chen Li is the only teacher who does not teach in the first line, out for 10 years already. However, Chen Li Education Group has been flourishing since then, and thereby, becoming the leader of the whole Taiwan supplementary/cram school industry.

B. 12 Direct branches all over five years

Many tutoring industries in Taiwan are mostly expanded by the mode of franchise and chain stores. The direct physical branch schools are limited, and their teaching quality control and brand image are difficult to maintain accurately. Chen Li is conducted in the direct mode of 11 high school branches, which can be met everywhere. Chen Li's brand, each management class is specially trained by Chen Li, teaching, administrative, marketing and multi-talented personnel, from the point of operation to each branch school to operate and layout, in order to maintain operational stability and high quality, which do not fail the students and Parents' expectations.

C. Implementing the three in one business model of teachers, administration and brand management
The successful three-in-one package that constitute the core of the enterprise is the selfless dedication that takes into account the quality of the teaching teachers, the efficiency of administrative management and brand management. The three components contribute to the unprecedented success of Chen Li Education Group as one of the earliest education Company to be publicly listed.
D. The integration mode of Physical and Visual Education: Physical classroom education with the provision of free virtual service Chen Li Education Group will take the entity branch as the main operating and charging channel, the establishment of the student market, teaching, enrollment as the main business, and the establishment of virtual education platform and action App, Providing free personalized education services for students and parents in class, providing students with pre-class preview, after-school review, test diagnosis, consulting, class scheduling system, important time-history reminders and other functions, providing parents ' students with absenteeism, learning status and other inquiry service through virtual platform without time limit and no space limit. Hope to be able to turn virtual subscriptions into sales, the use of virtual characteristics, brand reputation and education service recommendations. There is also a free trial and trial service for freshmen, the creation of available benefits on the Web, the encouragement of their entry into the physical market for face-to-face courses, the provision of diagnostic analysis of the students ' large-scale tests, the recommendation of their preparations and crash-courses, and tailor-made learning programs for students to do more with less.

2) Optical Fiber Business

The Company has complete independent optical fiber production technology capabilities, especially leading the introduction of high-strength bending-resistant optical fiber, not only in line with the latest telecommunications specifications, but also superior to the general optical fiber mechanical specifications, showing the characteristics of bending, pressure and folding resistance It can be convenient for fiber storage and home wiring environment. Moreover, the moisture resistance and weather resistance of high-strength bending-resistant fiber can greatly simplify the cable structure and reduce the wire diameter, which not only reduces the cost of the cable material, but also combines the weak current pipeline existing in wiring construction work that meets the market demands for “reliability”, “convenience” and “low cost”.

Advantages, Disadvantages and Countermeasures of the Future Prospects
1) Education Business
- A. Favorable factors
  - a. Has more than 30 years of Taiwan's supplementary education industry management experience, has experienced the market from the demand for quality attention, good at mastering the fine team operation process, to create highquality education services.
  - b. The high cost cultivation of famous teachers, the construction of teaching team as a connection and continuation.
  - c. Standardize R & D, teaching and administrative processes to establish the durability and stability of brand management.
  - d. Individualized tutoring learning strategies to help each child with different learning performance to carry out a comprehensive layout and learning planning, to obtain the best strategy, to win personal learning performance.
  - e. For Taiwan's largest all-around integrated teaching industry, through the integration of physical stores and virtual / digital services to maintain high penetration rate.
  - f. China adopts more of a single-subject mode of learning, and Chen Li, having some experience and years of accumulation of general products, real examination of the market and the main needs of the examination market, not only with crosssubject, cross-disciplinary teaching services, but also with cross-disciplinary textbook and constant R & D capabilities and quality.
- B. Unfavorable factors
  - a. Due to the small number of children and changes in education policies in the Taiwan market, the high-school, middle school, primary school and digital market sectors have undergone dramatic changes. The Company will prioritize middle and high school markets
  - b. China's market policy changes greatly which creates uncertainty for Taiwanese firms to operate in mainland.
  - c. The reserve, training and concept identification of China's outstanding talents is a major challenge.
  - d. The Taiwan experience of large group class-teaching cannot be completely replicated in China, which is different from the one-on-one and small class teaching preferences of the Chinese market.
  - e. The difference of cross-strait education system, textbook research and development need to restructure and redevelop.

  - f. The teaching teacher must quantify to cope with the huge market demand and the business model, and the staff turnover rate of the part-time teachers, its administrative control and the quality of teaching problems abound.

C. Countermeasures
- a. Keeping Taiwanese companies on the basis of continuous operation, maintaining stable profits, avoiding excessive shifting of the center of gravity due to the cross-border market, steady and steady, and reducing investment risks.
- b. To provide free education services with physical branch schools as the main fee field, virtual apps and websites, establish an integrated strategy of real masters and virtual assistants, and control the input costs in accordance with the acceptance of the virtual market.
- c. Gradually accumulate market familiarity and mastery from cross-strait exchange visits, cooperative joint ventures, direct entry into direct sales, etc. with a gradual annual strategy to cultivate the foundation for future expansion operations and maintain development flexibility.
2) Optical fiber business
A. Favorable factors
- a. Asia is the main area for the global development of "fiber to the home", which is conducive to the company's business promotion.
- b. Optical fiber broadband application products are developing towards home and personalization. The company's high-strength bend-resistant boxed optical cable is the most competitive product that can meet this development trend.
- c. The company's GGP and BendSafe patented optical fiber products have high mechanical strength characteristics, comply with the latest telecommunications specifications, and have a mass production scale. They can quickly combine the advantages of Taiwan's electronics and optoelectronics industry and apply optical fibers to computers, communications, networks and Consumer products such as displays.
B. Unfavorable factors
- a. Many countries and regions that are leading the development of "optical fiber to the home", in order to protect their industrial development, formulate more policies and measures that are beneficial to local telecommunications operators and local enterprises. Relatively speaking, Taiwan ’s local market is limited in size and tends to open up foreign product competition, which is very unfavorable for the development of domestic enterprises.
- b. Major optical fiber manufacturers in the world have invested a lot of research and development funds and have successively launched various types of special optical fibers to form competition.
C. Countermeasures
- a. Continue to develop optical fiber products with high mechanical strength characteristics and increase the technological leading distance to competitors.
- b. Develop various types of optical fiber application products to increase product added value. For example: FTTx related optical cable products and components, various types of optical cables suitable for Data Center, high-frequency broadband optical cables suitable for AV applications, AOC, Light Peak, etc.
- c. Strengthen the counseling and management of suppliers, shorten the product delivery period, effectively reduce costs, improve the market competitiveness of customers, and increase revenue.
- d. Develop laser optical fiber and other special optical fibers.

     - e. Strengthen cooperation with international leading brand companies to market the global market.

(2) Important uses of major products and production process (optical fiber business)
Important use of main products
- 1) Single-mode fiber: It has the advantages of low loss, high frequency bandwidth, and immunity to electromagnetic wave interference. It is mainly used in telecommunications networks and cable TV networks. With the rapid development of the Internet, cable TV networks and optical fibers reach the community FTTC) The network must be widely used.
- 2) Multimode fiber: it has the characteristics of large fiber core and high light receiving aperture, easy to connect and can be matched with low-cost light-emitting diode (LDE) and surfaceemitting laser diode (VCSEL), in the multimedia Internet With the rapid development of road applications, multimode fiber will be widely used in high-speed area networks and intranets.
- 3) GGP high-strength bending-resistant optical fiber: Using 3M patented coating technology, the optical fiber has the characteristics of temperature resistance, humidity resistance, pressure resistance and folding resistance. Its bending resistance and long life with high strength make ordinary users no longer worry about damaging optical fibers during wiring. Its temperature resistance and humidity resistance make the drop cable, which has the requirements of simple indoor structure and harsh outdoor environment, suitable for fiber-to-the-home (FTTH) drop cable, indoor fiber cable and high-strength patch cord applications.
- 4) Special optical fiber: Due to the rapid development of the global Internet, the new high-density wavelength division multiplexing system (DWDM) technology has gradually matured. The optical fiber active and passive components required in the DWDM system, such as optical amplifiers and optical attenuation The amount of optical fiber and optical fiber gratings has increased greatly, so that the demand for various special optical fibers required for active and passive components of optical fibers has also grown rapidly, and the prospects are promising.
Production process of main products

==> picture [524 x 48] intentionally omitted <==

(3) Supply status of main raw materials (optical fiber business)

Main raw Materials	Supplier area	Supplystatus
Quartz Tube	Japan,Germany	Good
Chemical raw Materials	Taiwan,China	Good
Gas	Taiwan	Good
Single-mode preformed body	Japan	Good
Overlaymaterials	China,Korea	Good

(4) Customers who accounted for more than 10% of total purchases (sales) in any of the most recent two years
Information on major suppliers in the last two years

Unit: in thousands of New Taiwan Dollars

	2018	2018	2018	2018	2019	2019	2019	2019	2020 Q1	2020 Q1	2020 Q1	2020 Q1
Project	Name	Amount	Percentage of net purchases in the whole year (%)	Relationship with the issuer	Name	Amount	Percentage of net purchases in the whole year (%)	Relationship with the issuer	Name	Amount	Percentage of net purchases in the whole year (%)	Relationship with the issuer
1	036	67,212	19.98	none	036	52,481	18.18	none	C0314	12,514	15.13	none
2	-	-	-	-	-	-	-	-	036	10,425	12.61	none
3	-	-	-	-	-	-	-	-	C0717	9,083	10.98	none
4	others	269,250	80.02	none	others	236,148	81.82	none	others	50,671	61.28	none
	Net purchases	336,462	100.00		Net purchases	288,629	100.00		Net purchases	82,693	100.00

Note: Purchases for the Educational Sector mostly consist of Textbook Publications and Cost of Teachers.; Purchases of mostly raw materials for Optical fiber Business.

Information on major sales customers in the last two years

The group mainly focuses on education (tutoring business), and its sales are mainly tuition income from physical tutoring classes. Due to the characteristics of the industry, sales customers are more dispersed. The combined company's net sales in the first quarter of 2018, 2019 and 2020 were NT$917,579,000, NT$881,610,000 and NT$199,927,000 respectively.

(5) Production value in the last two years (optical fiber business)

Unit: Km; in thousands of New Taiwan Dollars

Year Production value Quantity	2018	2018	2018	2019	2019	2019
	Production capacity	Qty	Output value	Production capacity	Qty	Output value
Fiber	250,000	230,000	139,669	250,000	46,600	81,369
Total	250,000	230,000	139,669	250,000	46,600	81,369

Note 1: Production capacity refers to the quantity that the company can produce under normal operation after measuring the necessary stoppages, holidays and other factors.

Note 2: If the production of each product is substitutable, the production capacity may be combined and annotated.

(6) Sales volume value in the last two years

Unit: Km; in thousands of New Taiwan Dollars

Year Production value Quantity	2018	2018	2018	2018	2019	2019	2019	2019
	Domestic sales		Abroad sales		Domestic sales		Abroad sales
	Qty	Value	Qty	Value	Qty	Value	Qty	Value
Education service and digital information	-	699,218	-	-	-	646,544	-	-
Optical Fiber	-	36,155	-	126,602	-	66,095	-	111,983
Cable	-	35,928	-	14,488	-	28,187	-	28,416
Others	-	5,078	-	110	-	100	-	285
Total	-	776,379	-	141,200	-	740,926	-	140,684

III. Employees

III.	Employees
Account	Year	2018	2019	Till May 12, 2020
Employee Number	Indirect personnel	285	266	257
	Production line employees	17	13	13
	Total	302	279	270
Average age		33.41	35.50	36.06
Average years of service		4.35	4.85	5.06
Education distributed ratio	PHD	-	-	-
	Master	4%	6%	7%
	College	87%	85%	83%
	High school	8%	8%	8%
	Belowhighschool	1%	1%	2%

IV. Information on Environmental Protection Expenditure
(1) In the most recent year and up to the date of publication of the annual report, the losses suffered due to pollution of the environment (including compensation and environmental protection audit results that violate environmental protection laws and regulations, the date of punishment, the font size of the punishment, the provisions of the statute violation, the content of the statute violation, and the content of the punishment), It also discloses the current and future estimated amounts and corresponding measures. If it cannot be reasonably estimated, it should explain the fact that it cannot be reasonably estimated.

The company’s business has always attached great importance to the responsibility of environmental protection and the maintenance of pollution prevention equipment, and entrusted professional qualified cleaning manufacturers to remove waste on behalf of the company, so as to avoid the situation of environmental pollution caused by the company’s operation process, so as of the date of publication of the annual report No environmental pollution loss occurred.

The company upholds the value of practicing "innovation and application", "customer first" and "honesty-based", adheres to the concept of "sustainable operation", and implements the company's environment of "compliance with regulations, pollution prevention, continuous improvement, and green products" policy. At the same time, self-request to reduce the impact of the company's activities in various stages of design, manufacturing, service, etc. on the environment; and through the participation of all staff, environmental management work, actively fulfill the corporate environmental responsibility, and provide green products and services that meet environmental requirements. In order to implement the aforementioned concept, the company has obtained ISO 14001 certification in September 2011.

(2) According to laws and regulations, those who should apply for pollution facility installation permits or pollutant discharge permits or pay pollution prevention fees, or should set up staff members of environmental protection units, explain the circumstances of their application, payment or establishment

Project	Environmental settings	Authorized Article	Update Time
Water pollution prevention and control	Water pollution Control Permit documents	Certificate No. KS014-05	2015.08.04
Waste cleaning	Business Waste Disposal Plan	Certificate No.1090009587	2020.03.31

(3) List the company's investment in major equipment for the prevention and control of environmental pollution, its use and potential benefits

According to laws and regulations, the company does not need to install air pollution control facilities, but the company still upholds its responsibility for environmental protection.

Name of pollution prevention equipment	Equipment Quantity	Uses and expected benefits
Air pollution control facilities	1	Uses: to treat the waste gas produced in the factory process. Benefits: Reduce the impact on the environment (better than environmental protection regulations)

V. Labor Relations

(1) The company's various employee welfare measures, training, training, retirement systems and their implementation, as well as agreements between labor and management and various employee rights protection measures
Employee welfare measures, further education, training
- 1) In order to enable all employees to work together and create a better future, the company allocates shares to employees in accordance with the company law when increasing capital in cash, and if there is a profit in the annual accounts, except when the company has accumulated losses , Reserve the extra amount in advance, and allocate no less than 3% to all employees as employee compensation.
- 2) The company insures labor insurance, health insurance, group life insurance and accident insurance for every employee as the most basic employee welfare measures.
- 3) Employee shareholding: In order to promote employee centripetal force, exert team spirit and participate in the company's growth together, the company provides employee shareholding opportunities to encourage colleagues.
- 4) The Employee Welfare Committee provides subsidies for marriage, funeral, and public injury leave hospitalization. Every year and depending on the company's profit status, it organizes end-to-end dinners, and occasionally organizes employee tours to promote the friendship of colleagues and relatives, and thus improve work morale.
- 5) The company has spared no effort in the cultivation of talents. In addition to the education and training methods, it also irregularly arranges special personnel to participate in external course training or invite experts and scholars to the company to give speeches to plant human resources.
Retirement system

The pension system managed by our company in accordance with my country's "Labor Standards Law" is a defined welfare retirement plan managed by the government. The pension was originally allocated at 2% of the total monthly salary of employees, and was handed over to the Special Account for Bank of Taiwan in the name of the committee by the Labor Retirement Reserve Supervision Committee. However, the company agreed to suspend the appropriation in accordance with the letter of Zhuhuanzi No. 1080007178 and No. 1070010673 of the Hsinchu Science and Industry Park Administration of the Ministry of Science and Technology on December 31, 2019 and 2018, and the above determination was settled in March 2020 Welfare retirement plan.

Since July 1, 1994, the company has allocated 6% of the employee's personal salary paid to the individual pension fund account of the "Labor Insurance Bureau" for employees applying the Labor Pension Regulations (new system).

Situation of labor-management agreement

The two sides of the company have always maintained a harmonious and harmonious labor relationship through rational communication, and there is no need for coordination due to major labor disputes.

Employee rights protection measures

The Company adopts a positive attitude towards the employees 'rights and interests that they should have in accordance with the law. The company will also fully consider the impact of employees' rights and interests when formulating relevant policies. In order to

achieve the maximum balance between the interests of the company and employees.

(2) In the most recent year and up to the date of publication of the annual report, the losses suffered due to labor disputes (including the labor inspection results that violated the Labor Standards Law, the date of punishment, the font size of the punishment, the provisions of the regulations, the content of the regulations, and the content of the punishment should be listed) , And disclose the estimated amount and corresponding measures that may occur at present and in the future. If it is impossible to reasonably estimate, it should state the fact that it cannot be reasonably estimated. The agreement between the employer and the employee of the company is based on the Labor Standards Law and relevant laws and regulations, and cooperates with the personnel management regulations, which are stipulated when employees enter the company's services. In the most recent year and up to the date of publication of the annual report, there have been no losses suffered due to major labor disputes.
VI. Important contract

As of the date of publication of the annual report, the parties, main contents, restrictions and the date of the contract of the supply and marketing contract, technical cooperation contract, engineering contract, long-term loan contract and other important contracts that affect the shareholders ’rights and interests that are still valid and expire in the most recent year.

Nature of the contract	Parties	Contract start and end date	Main content	Restrictions
Purchase raw material contract	Japan○○�Note�	2020.01~2020.09	Preform purchase contract	None
Purchase raw material contract	Taiwan○○�Note�	2014.07~2021.06	Gas purchase contract	None
Long-term loan contract	Shanghai Commercial Bank	2019.12~2029.12	Mortgage loan with Hsinchu Real Estate	None

[Note]: The full name is not disclosed due to the signing of the confidentiality contract.

�

VI. Financial Overview

I. Balance Sheet and Income Statement for the last five years

(1)Condensed consolidated balance sheet over the last five years

I. Balance Sheet (1) Condensed	I. Balance Sheet (1) Condensed	VI. Financial Overview and Income Statement for the last five years consolidated balance sheetoverthe last five years	VI. Financial Overview and Income Statement for the last five years consolidated balance sheetoverthe last five years	VI. Financial Overview and Income Statement for the last five years consolidated balance sheetoverthe last five years	VI. Financial Overview and Income Statement for the last five years consolidated balance sheetoverthe last five years	VI. Financial Overview and Income Statement for the last five years consolidated balance sheetoverthe last five years	VI. Financial Overview and Income Statement for the last five years consolidated balance sheetoverthe last five years
		Unit: in thousands of NT$
Year Account		Financial information for the last five years (Note 1)					As of the March 31, 2020 Financial information (Note 2)
		2015	2016	2017	2018	2019
Liquidity		119,921	714,753	367,325	363,261	291,797	237,853
Property, plant and equipment		8,905	4,982	271,495	304,248	531,505	518,650
Intangible assets		110	70	485,983	488,551	497,860	496,942
Other assets		5,897	106,334	135,270	157,267	167,341	1059,687
Total assets		134,833	826,139	1,260,073	1,313,327	1,488,503	1,413,132
Current liabiliti es	Before allocation	88,329	139,970	473,107	520,771	513,097	432,413
	After allocation	88,329	179,370	581,189	589,813	(Note 3)	(Note 3)
Non-current liabilities		-	1,610	5,206	5,744	183,860	171,105
Total liabiliti es	Before allocation	88,329	141,580	478,313	526,515	696,957	603,518
	After allocation	88,329	180,980	586,395	595,557	(Note 3)	(Note 3)
Equity attributable to the owner of the parent Company		46,504	684,559	781,760	780,324	785,628	799,451
Share Capital		465,204	157,600	165,480	174,594	174,594	174,594
Capital reserve		8,903	525,655	479,549	367,081	367,081	367,081
Retaine d surplus	Before allocation	(427,603)	1,304	137,503	262,216	268,509	282,605
	After allocation	(427,603)	130	137,503	193,174	(Note 3)	(Note 3)
Other rights		-	-	(772)	(1,611)	(2,600)	(2,873)
Treasury stock		-	-	-	(21,956)	(21,956)	(21,956)
Non-controlling interests		-	-	-	6,488	5,918	10,163
Total Equity	Before allocation	46,504	684,559	781,760	786,812	791,546	809,614
	After allocation	46,504	645,159	673,678	717,770	(Note 3)	(Note 3)

Note 1: The financial information for the year 2015 ~ 2019 has been verified and verified by an accountant. Note 2: The financial information for the year ended March 31 was reviewed by accountants. Note 3: The company's 2019 annual earnings distribution statement has not been approved by the shareholders' meeting, so the amount after distribution is not shown.

�

(2)Condensed parent company only balance sheet over the last five years

Unit: in thousands of NT$

(2) Condensed	(2) Condensed	parent company only balance sheetoverthe last five years Unit: in thousands of NT$	parent company only balance sheetoverthe last five years Unit: in thousands of NT$	parent company only balance sheetoverthe last five years Unit: in thousands of NT$	parent company only balance sheetoverthe last five years Unit: in thousands of NT$	parent company only balance sheetoverthe last five years Unit: in thousands of NT$
Year Account		Financial information for the last five years (Note 1)
		2015	2016	2017	2018	2019
Liquidity		119,921	714,753	167,245	245,473	162,052
Property, plant and equipment		8,905	4,982	3,546	6,051	89,235
Intangible assets		110	70	30	694	500
Other assets		5,897	106,334	743,299	746,440	789,267
Total assets		134,833	826,139	914,120	998,658	1,041,054
Current liabiliti es	Before allocation	88,329	139,970	131,086	216,322	156,933
	After allocation	88,329	179,370	239,168	285,364	(Note 2)
Non-current liabilities		-	1,610	1,274	2,012	98,493
Total liabiliti es	Before allocation	88,329	141,580	132,360	218,334	255,426
	After allocation	88,329	180,980	240,442	287,376	(Note 2)
Equity attributable to the owner of the parent Company		46,504	684,559	781,760	780,324	785,628
Share Capital		465,204	157,600	165,480	174,594	174,594
Capital reserve		8,903	525,655	479,549	367,081	367,081
Retaine d surplus	Before allocation	(427,603)	1,304	137,503	262,216	268,509
	After allocation	(427,603)	130	137,503	193,174	(Note 2)
Other rights		-	-	(772)	(1,611)	(2,600)
Treasury stock		-	-	-	(21,956)	(21,956)
Non-controlling interests		-	-	-	-	-
Total Equity	Before allocation	46,504	684,559	781,760	780,324	785,628
	After allocation	46,504	645,159	673,678	711,282	(Note 2)

Note 1: The financial information for the year 2015 ~ 2019 has been verified and verified by an accountant. Note 2: The company's 108 annual earnings distribution statement has not been approved by the resolution of the shareholders' meeting, so the amount after distribution will not be shown for the time being.

�

(3)Condensed consolidated income statement over the last five years

Unit: in thousands of NT $; the earnings (loss) per share is NT$

(3) Condensed	consolidated income statementoverthe last five years Unit: in thousands of NT$;the earnings(loss) per	consolidated income statementoverthe last five years Unit: in thousands of NT$;the earnings(loss) per	consolidated income statementoverthe last five years Unit: in thousands of NT$;the earnings(loss) per	consolidated income statementoverthe last five years Unit: in thousands of NT$;the earnings(loss) per	consolidated income statementoverthe last five years Unit: in thousands of NT$;the earnings(loss) per	share is NT$
Year Account	Financial information for the last five years (Note 1)					As of the March 31, 2020 Financial information
	2015	2016	2017	2018	2019
Operating income	145,854	218,525	822,409	917,579	881,610	199,927
Operating margin	17,591	77,445	406,489	430,575	394,972	88,904
Operating profit and loss	(28,509)	26,255	148,698	111,810	85,548	17,229
Out-of-business income and expenditure	889	2,637	7,690	9,269	1,438	(229)
Net profit before tax (loss)	(27,620)	28,892	156,388	121,079	86,986	17,000
Continued business unit net profit for the current period (loss)	(27,620)	29,712	158,757	126,454	76,977	14,341
Loss of closed units	-	-	-	-	-	-
Net profit for the current period (loss)	(27,620)	29,712	158,757	126,454	76,977	14,341
Other consolidated gains and losses for the current period(NET after-tax amount)	(1,059)	4,003	(1,391)	(992)	(1,772)	(273)
Total consolidated gains and losses forthe current period	(28,679)	33,715	157,366	125,462	75,205	14,068
Net profit belongs to parent Company owner	(27,620)	29,712	154,981	124,866	76,118	14,096
Net profit attributable to non-controlling interests	-	-	3,776	1,588	859	245
Total combined profit and loss attributable to parent Companyowners	(28,679)	33,715	153,741	123,874	74,346	13,823
Total combined profit and loss attributable to non-controlling interests	-	-	3,625	1,588	859	245
Earnings per share (Loss) (NT$)	(7.96)	2.76	8.92	7.18	4.41	0.82

Note 1: The financial information for the year 2015 ~ 2019 has been verified and verified by an accountant. Note 2: The financial information for the year ended March 31 was reviewed by accountants.

�

(4)Condensed parent company only income statement over the last five years

Unit: in thousands of NT $; the earnings (loss) per share is NT$

	Unit: in thousands of NT$;the earnings(loss) per share is NT$	Unit: in thousands of NT$;the earnings(loss) per share is NT$	Unit: in thousands of NT$;the earnings(loss) per share is NT$	Unit: in thousands of NT$;the earnings(loss) per share is NT$	Unit: in thousands of NT$;the earnings(loss) per share is NT$
Year Account	Financial information for the last five years (Note 1)
	2015	2016	2017	2018	2019
Operating income	145,854	218,525	285,701	464,440	454,271
Operating margin	17,591	77,445	142,428	182,354	127,068
Operating profit and loss	(28,509)	26,255	69,836	114,781	48,042
Out-of-business income and expenditure	889	2,637	69,599	3,343	30,517
Net profit before tax (loss)	(27,620)	28,892	139,435	118,124	78,559
Continued business unit net profit for the current period (loss)	(27,620)	29,712	154,981	124,866	76,118
Loss of closed units	-	-	-	-	-
Net profit for the current period (loss)	(27,620)	29,712	154,981	124,866	76,118
Other consolidated gains and losses for the current period(NET after-tax amount)	(1,059)	4,003	(468)	(992)	(1,772)
Total consolidated gains and losses for the current period	(28,679)	33,715	153,741	123,874	74,346
Net profit belongs to parent Company owner	(27,620)	29,712	154,981	124,866	76,118
Net profit attributable to non-controlling interests	-	-	-	-	-
Total combined profit and loss attributable to parent Company owners	(28,679)	33,715	153,741	123,874	74,346
Total combined profit and loss attributable to non-controlling interests	-	-	-	-	-
Earnings per share (Loss) (NT$)	(7.96)	2.76	8.92	7.18	4.41

Note 1: The financial information for the year 2015 ~ 2019 has been verified and verified by an accountant.

�

(5)Independent Auditors’ Opinions Over Last Five Fiscal Years

(5) In	dependent Auditors’ Opinions	Over Last Five Fiscal	Years
��	Accounting firm	Name of CPA	Audit opinions
2015	PwC Taiwan	Guo Hua Tseng Yin Fei Liu	An unqualified opinion” be replaced
2016	Deloitte & Touche	Jiang Bao Liu ShengXiongYao	An Unqualified Opinion with an explanatory paragraph
2017	Deloitte & Touche	Jian Liang Liu Sheng Xiong Yao	An Unmodified Opinion
2018	Deloitte & Touche	Jin Chuan Shi Shulin Liu	An Unmodified Opinion
2019	Deloitte & Touche	Jin Chuan Shi Shulin Liu	An Unmodified Opinion

II. Financial Analysis for the Last Five Fiscal Years

(1) Consolidated Financial Analysis - IFRS

Year Items analyzed (Note 4)	Year Items analyzed (Note 4)	Financial analysis for the last Five fiscal years�Note 2	Financial analysis for the last Five fiscal years�Note 2	Financial analysis for the last Five fiscal years�Note 2	Financial analysis for the last Five fiscal years�Note 2	Financial analysis for the last Five fiscal years�Note 2	As of the March 31, 2020 Financial information (Note 3)
		2015	2016	2017	2018	2019
Financi al Structu re Analys is (%)	Debt ratio	65.51	17.14	37.96	40.09	46.82	42.70
	Long-term capital to property, plant and equipment ratio	522.22	13,772.96	289.86	260.50	183.51	189.09
Liquidi ty Analys is (%)	Current ratio	135.77	510.65	77.64	69.75	56.86	55.00
	Quick ratio	83.96	446.33	64.83	57.28	51.47	46.64
	Interest coverage multiples	-	43.24	157.54	79.12	14.51	13.85
Operati ng perfor mance Analys is	Accounts receivable turnover (times)	3.09	5.84	25.57	17.72	13.41	14.36
	Days Sales Outstanding	118.12	62.50	14.27	20.59	27.21	25.41
	Inventory turnover (times)	1.57	2.14	7.85	7.16	6.54	6.54
	Average payable turnover (times)	7.27	11.39	26.72	19.61	17.83	15.98
	Average Inventory turnover days	232.48	170.56	46.50	50.97	55.81	56.06
	Property, plant and equipment turnover (times)	13.44	31.47	5.95	3.19	2.10	1.52
	Total assets turnover (times)	1.10	0.45	0.79	0.71	0.62	0.55
Profita bility Analys is	Return on total assets (%)	(20.78)	6.30	15.30	9.92	5.86	4.24
	Return on equity (%)	(76.03)	8.13	21.65	16.12	9.75	7.16
	Pre-tax income to paid-in capital ratio (%)	(5.94)	18.33	94.51	69.35	49.82	38.94

�

	Net income ratio (%)	(18.94)	13.60	19.30	13.78	8.73	7.17
	Basic Earnings per share (NT$)	(7.96)	2.90	9.37	7.18	4.41	0.82
Cash flow	Cash flow ratio (%) Cash flow adequacy ratio (%)	(Note 1) (Note 1)	16.44 0.79	56.50 2.93	8.90 1.31	38.63 1.49	(�1) 1.46
	Cash reinvestment ratio (%)	(Note 1)	2.72	63.92	(Note 1)	40.18	(Note 1)
Levera	Operating leverage	0.86	1.15	1.12	1.17	2.07	2.37
ge	Financial leverage	1.00	1.03	1.01	1.01	1.08	1.08

Analysis of deviation over 20% for the last two years:

The ratio of long-term funds to real estate, plant and equipment: due to the application of the IFRS 16 bulletin in 2019, the recognition of lease liabilities has caused a significant increase in non-current liabilities, and the recognition of the right-of-use assets has caused a substantial increase in net real estate, plant and equipment .
Interest protection multiples: due to the decrease in profits in 2019 and the increase in financial costs due to the increase in interest expenses incurred in recognition of lease liabilities due to the application of IFRS 16 Gazette in 2019.
Receivables turnover rate (times) and average cash collection days: due to the decline in revenue in 2019 and the increase in accounts receivable at the end of the period.
Turnover rate of real estate, plant and equipment (times): It is due to the application of IFRS 16 Communiqué in 2019, and the recognition of right-of-use assets has caused a significant increase in the net amount of real estate, plant and equipment.
Return on assets: due to the decrease in profits in 2019 and the increase in interest expenses arising from the recognition of lease liabilities due to the application of IFRS 16 in 2019 .
Return on equity, ratio of net profit before tax to paid-in capital, net profit ratio and earnings per share: due to the decrease in net profit after tax in 2019.
Cash flow ratio: due to the increase in net cash inflow from operating activities in 2019.
Operating leverage: due to reduced revenue in 2019.

Note 1: The net cash flow from operating activities is net cash outflow, so it is not planned to calculate the relevant ratio. Note 2: The financial information for the year 2015 ~ 2019 has been verified by the accountant. Note 3: The financial information for the year ended March 31 was reviewed by accountants. Note 4: The calculation formula of financial analysis is as follows:

Financial structure
(1) Debt-asset Ratio = Total Liabilities / Total Assets.
(2) Long-term Capital to Property, Plant, and Equipment ratio = (Total Equity + Non-current Liabilities) / Net Property, Plant, and Equipment.
Solvency
(1) Current Ratio = Current Assets / Current Liabilities.
(2) Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities.
(3) Interest coverage multiples = Net income before Tax and Interest / Interest Expenses.
Operating Performance
(1) Receivables turnover rate (including bills receivable resulting from accounts receivable and business operations) = Net sales / Average accounts receivable in various periods (including bills receivable resulting from accounts receivable and business operations).
(2) Days Sales Outstanding = 365 / Receivables Turnover Rate.
(3) Inventory Turnover Rate = Cost of Sales / Average Inventory.
(4) Payables turnover rate (including bills payable resulting from accounts payable and business operations) = Cost of sales / Average accounts payable in various periods (including bills payable resulting from accounts payable and business operations).
(5) Average Inventory Turnover Days = 365 / Inventory Turnover Rate.
(6) Property, Plant, and Equipment Turnover Rate = Net Sales / Average Net Property, Plant, and Equipment.
(7) Total Asset Turnover Rate = Net Sales / Average Total Assets.

�

Profitability
(1) Return on assets (ROA) = [Net income + Interest expenses x (1 - interest rates)] / Average total asset.
(2) Return on Equity = Net Income / Average Total Equity.
(3) Net Income ratio = Net Income / Net Sales.
(4) Basic Earnings per Share = (Income Attributable to Owners of Parent Company – Dividends on Preferred Stock) / Weighted Average Number of Shares Issued. (Note 2)
Cash flow
(1) Cash Flow Ratio = Net Cash Flow from Operating Activities / Current Liabilities.
(2) Cash Flow Adequacy Ratio = Net cash flow from operating activities for the most recent five years / (capital expenditures + inventory increase + cash dividend) for the most recent five years.
(3) Cash Reinvestment Ratio = (Net cash flow from operating activities cash dividend) (gross property, plant, and equipment + long-term investment + other non-current assets + working capital). (Note 3)
Leverage
(1) Operating Leverage = (Net Operating Revenue - Variable Operating Costs and Expenses)
/ Operating Income (Note 4).
(2) Financial Leverage = Operating Income / (Operating Income - Interest Expenses).

�

(2) Parent Company Only Statements of Financial Analysis - IFRS

Year Items analyzed (Note 3)	Year Items analyzed (Note 3)	Financial analysis for the last Five fiscal years (Note 2)	Financial analysis for the last Five fiscal years (Note 2)	Financial analysis for the last Five fiscal years (Note 2)	Financial analysis for the last Five fiscal years (Note 2)	Financial analysis for the last Five fiscal years (Note 2)
		2015	2016	2017	2018	2019
Finan cial Structu re Analys is (%)	Debt ratio	65.51	17.14	14.48	21.86	24.53
	Long-term capital to property, plant and equipment ratio	522.22	13,722.96	22,082.18	12,929.04	990.77
Liquidi ty Analys is (%)	Current ratio	135.77	510.65	127.58	113.48	103.26
	Quick ratio	83.96	446.33	84.94	85.52	89.14
	Interest coverage multiples	-	43.24	199.91	74.37	23.61
Operati ng Perfor mance Analys is	Accounts receivable turnover (times)	3.09	5.84	9.03	6.08	4.89
	Days Sales Outstanding	118.12	62.50	40.42	60.03	74.64
	Inventory turnover (times)	1.57	2.14	2.70	4.15	4.41
	Average payable turnover (times)	7.27	11.39	11.15	13.95	14.13
	Average inventory turnover days	232.48	170.56	135.19	87.95	82.76
	Property, plant and equipment turnover (times)	13.44	31.47	67.00	96.79	9.53
	Total assets turnover (times)	1.10	0.45	0.33	0.49	0.44
Profita bility Analys is	Return on total assets (%)	(20.78)	6.30	17.88	13.19	7.73
	Return on equity (%)	(76.03)	8.13	21.14	15.99	9.72
	Pre-tax income to paid-in capital ratio (%)	(5.94)	18.33	84.26	67.66	44.99
	Net income ratio (%)	(18.94)	13.60	54.25	26.89	16.75
	Basic Earnings per share (NT$)	(7.96)	2.90	9.37	7.18	4.41
Cash Flow	Cash flow ratio (%)	(Note 1)	16.44	68.66	13.75	92.77
	Cash flow adequacy ratio (%)	(Note 1)	0.79	1.49	0.74	1.08
	Cash reinvestment ratio (%)	(Note 1)	2.44	6.24	-	-
Levera ge	Operating leverage	0.86	1.15	1.03	1.02	1.30
	Financial leverage	1.00	1.03	1.01	1.01	1.07

�

Analysis of deviation over 20% for the last two years:

The ratio of long-term funds to real estate, plant and equipment: due to the application of the IFRS 16 bulletin in 2019, the recognition of lease liabilities has caused a significant increase in non-current liabilities, and the recognition of the right-of-use assets has caused a substantial increase in net real estate, plant and equipment .
Interest protection multiples: due to the decrease in profits in 2019 and the increase in financial costs due to the increase in interest expenses incurred in recognition of lease liabilities due to the application of IFRS 16 Gazette in 2019.
Receivables turnover rate (times) and average cash collection days: due to the decline in revenue in 2019 and the increase in accounts receivable at the end of the period.
Turnover rate of real estate, plant and equipment (times): It is due to the application of IFRS 16 Communiqué in 2019, and the recognition of right-of-use assets has caused a significant increase in the net amount of real estate, plant and equipment.
Return on assets: due to the decrease in profits in 2019 and the increase in interest expenses arising from the recognition of lease liabilities due to the application of IFRS 16 Communiqué in the year 108, as well as the significant increase in net real estate, plant and equipment due to the recognition of right-of-use assets To.
Return on equity, ratio of net profit before tax to paid-in capital, net profit ratio and earnings per share: due to the decrease in net profit after tax in 2019.
Cash flow ratio: due to the increase in net cash inflow from operating activities in 2019.
Cash Flow Allowance Ratio: It was a net cash outflow due to losses in 2014, and a net cash inflow in the year 108. The difference between the two years resulted in an increase in the net cash flow from operating activities in the last five years. 9 Operating leverage: due to reduced revenue in 2019.

Note 1: The net cash flow from operating activities is net cash outflow, so it is not planned to calculate the relevant ratio. Note 2: The financial information for the year 2015-2019 has been verified and verified by the accountant. Note 3: The calculation formula for financial analysis is shown on the previous page.

�

III. Audit Committee’s Report for the Most Recent Year

Success Prime Corporation Audit Committee’s Report

The Board of directors made the Company the Republic of China 2019 Annual Business Report, consolidated financial statements individual financial statements and earnings allocation of the bill, including the consolidated financial statements, individual financial statements by CPA Chin-Chuan Shi and Shu-lin Liu accountants from Deloitte to check the matter. The above business reports consolidated financial statements, Parent company only financial statements and earnings distribution proposals have been reviewed by the Board of Auditors and are not considered to be inconsistent. The report is based on the Securities & Exchange Act Article 14-4 And Corporate Law No.219 and all the relevant information above is open to further inspections and confirmations.

Sincerely

The Company 2020 Annual meeting of shareholders

March 24, 2020

IV. The most recent annual financial report certified by the accountant, includes the auditors’ audit report, the two-year consolidated balance sheet, the consolidated income statement, the statement of changes in equity, the cash flow statement and the notes or appendix: Pg. 72 to 140.
V. Parent Company Only financial report of the company of the most recent year has been certified by the accountant. But does not contain minor accounting items: Pg. 141 to 201.
VI. The Company and its related subsidiaries shall, in event of financial difficulties in most recent year and as of annual report published date, specify financial position of Company’s financial position: none.

100

�

VII. Review of Financial Position and Financial Performance Analysis

1. Financial situation

VII. Review of Financial Position and Financial Performance Analysis 1. Financial situation	VII. Review of Financial Position and Financial Performance Analysis 1. Financial situation	VII. Review of Financial Position and Financial Performance Analysis 1. Financial situation	VII. Review of Financial Position and Financial Performance Analysis 1. Financial situation	VII. Review of Financial Position and Financial Performance Analysis 1. Financial situation
Unit: in thousands of NT$
Year Items	2018	2019	Difference
			Increase and decrease amount	% Change
Current assets	363,261	291,797	(71,464)	(19.67%)
Property, plant and equipment	304,248	531,505	227,257	74.69%
Other assets	645,818	665,201	19,383	3.00%
Total assets	1,313,327	1,488,503	175,176	13.34%
Current liabilities	520,771	513,097	(7,674)	(1.47%)
Other liabilities	5,744	183,860	178,116	3100.91%
Total liabilities	526,515	696,957	170,442	32.37%
Share captial	174,594	174,594	-	-
Capital reserve	367,081	367,081	-	-
Statutory surplus reserve	13,868	26,354	12,486	90.03%
Special surplus reserve	772	1,611	839	108.68%
Retained surplus	247,576	240,544	(7,032)	(2.84%)
Other rights	(1,611)	(2,600)	(989)	61.39%
Treasury stocks	(21,956)	(21,956)	-	-
Belong to Parent company owner's rights	780,324	785,628	5,304	0.68%
Total shareholders' equity	786,812	791,546	4,734	0.60%
Analysis of changes in the increase and decrease ratio exceeding 20%: 1. Increase in real estate, plant and equipment: mainly due to the use of IFRS 16 to increase the right-of-use assets 2. Increase in other liabilities: Mainly due to the use of IFRS 16 to increase lease liabilities. 3. Increase in statutory surplus: The main reason is that 10% of the 2019 surplus is due to the statutory surplus reserve. 4. Increase in special surplus reserve: Mainly due to the increase in exchange differences in the conversion of financial reports of foreign operating agencies, which is due to the law 5. Decrease in other rights and interests: the main reason is recognition of the exchange difference in the conversion of financial reports of foreign operatingagencies.

101

�

2. Financial performance

Unit: in thousands of NT$

			Unit: in thousands of NT$	Unit: in thousands of NT$
Year Items	2018	2019	Difference
			Increase and decrease amount	% Change
Net operating income	917,579	881,610	(35,969)	(3.92%)
Operating costs	487,004	486,638	(366)	(0.08%)
Operating margin	430,575	394,972	(35,603)	(8.27%)
Operating expenses	318,765	309,424	(9,341)	(2.93%)
Operating Net profit	111,810	85,548	(26,262)	(23.49%)
Out-of-business income and expenditure	9,269	1,438	(7,831)	(84.49%)
Net profit before tax	121,079	86,986	(34,093)	(28.16%)
Income Tax Benefits	5,375	(10,009)	(15,384)	(286.21%)
Net profit (loss) for the year	126,454	76,977	(49,477)	(39.13%)
Other consolidated gains and losses	(992)	(1,772)	(780)	78.63%
Total consolidated gains and losses for the year	125,462	75,205	(50,257)	(40.06%)
Analysis of changes in the increase and decrease ratio exceeding 20%: 1. Decrease in operating net profit and pre-tax net profit: Mainly due to the decline in the net realizable value of inventories and the loss of falling prices. 2. Decrease in non-operating income and expenses: mainly due to the following circumstances: (1) Due to changes in foreign currency exchange rates, 2018 is an exchange benefit and 2019 is an exchange loss; (2) Due to the adoption of IFRS 16 Lease Bulletin in 2019, the interest expense is increased-lease liability. 3. Increase in income tax benefits: Main subsidiaries are profitable due to recognition of income tax expenses. 4. Other comprehensive profit and loss decrease: Mainly due to the recognition of the exchange differences in the conversion of financial reports of foreign operatingagencies.

Analysis of changes in the increase and decrease ratio exceeding 20%:

Decrease in operating net profit and pre-tax net profit: Mainly due to the decline in the net realizable value of inventories and the loss of falling prices.
Decrease in non-operating income and expenses: mainly due to the following circumstances:

(1) Due to changes in foreign currency exchange rates, 2018 is an exchange benefit and 2019 is an exchange loss;

(2) Due to the adoption of IFRS 16 Lease Bulletin in 2019, the interest expense is increased-lease liability.

Increase in income tax benefits: Main subsidiaries are profitable due to recognition of income tax expenses. 4. Other comprehensive profit and loss decrease: Mainly due to the recognition of the exchange differences in the conversion of financial reports of foreign operating agencies.

3. Cash flow

(1) Liquidity analysis for the last two years

Year
	2018		2019		Increase (decrease) %
Items
Cash flow ratio(%)		8.90		38.63	(333.81%)
Cash Flow Allowance Ratio (%)		1.31		1.49	(13.74%)
Cash reinvestment ratio (%)		-		40.18	100.00%

Analysis of changes in increase and decrease ratio: 1. Increase in cash flow ratio: Mainly due to the control and sales of inventory against inventory, the net cash flow of this business activity has increased. 2. The increase in the cash flow allowable ratio: mainly due to the increase in net cash inflow from operating activities in the past five years.

Decrease in the cash reinvestment ratio: Mainly due to the increase in the net cash flow of the business activities.

102

�

(2) Analysis of cash liquidity in the coming year

Unit: In thousands of NT$

				Unit: In thousands of NT$	Unit: In thousands of NT$
Cash Balance beginning period (1)	Estimated net cash flow from operating activities throughout the year(2)	Estimated annual cash outflow (3)	Estimated amount of cash surplus (insufficient) (1) + (2)-(3)	Remedy for Liquidity shortfall
				Investment Plan	Financial Planning
185,533	200,000	157,670	227,863	-	-
Remedial measures and liquidity analysis of expected cash shortfall: None

4. Recent Years Major Capital Expenditures and Impact on Financial and Business: None .

5. Reinvestment Policy for the Most Recent Fiscal Year, the Main Reasons for the Profits/Losses Generated Thereby, the Plan for Improving Re-Investment Profitability, and Investment Plans for the Coming Year

Date: December 31, 2019

Explanation Item	Investment amount (in thousands of NT$)	Policies	The main reason for profit or loss	Improvement Plan	Other future investment plan
Accuagile Co., Ltd.	4,500	Looking for educational digital training system providers of strategic alliances to establish long-term cooperative relations.	This is a long-term investment measured by cost. The company has no control.	Not suitable	None

6. Risk Management

(1) Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures
Interest rate fluctuations

The Company's interest expenses in 2018, 2019 and 2020 Q1 were NT$1,550,000, NT$2,048,000 and NT$395,000 respectively, accounting for 0.17%, 0.23% and 0.20% of net operating income, respectively, and accounting for net profit before tax They are 1.28%, 2.35% and 2.32% respectively, so the impact of changes in interest rates on the company's operating income and net profit before taxation is still limited.

In the future, the company will still regularly evaluate bank borrowing interest rates and maintain good relations with banks in order to obtain a more favorable interest rate when there is a demand for borrowing and reduce interest expenses.

Foreign exchange rate fluctuations

The company's purchases and sales are mainly denominated in New Taiwan dollars. The exchange (loss) gains in each year are mainly derived from the optical fiber business. The company's exchange (loss) gains in 2018, 2019 and 2020 Q1 were NT$2,132,000, (NT$1,341,000) and NT$663,000, accounting for 0.23%, (0.15%) and 0.33% of net operating income, and 1.76%, (1.54%) and 3.90% of net profit before tax respectively.

The financial department of the company keeps close contact with financial institutions at any time to collect relevant information on the exchange rate market in real time to fully grasp the direction and trend of exchange rate changes. Exchange rate changes will not have a significant impact on the company's profit and loss.

3. Inflation

The company always pays attention to the market price changes of the main raw materials of optical fiber to avoid the large fluctuations in the purchase prices of raw materials and eroding the operating profit.

103

�

(2) Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Loans of funds to Others or Endorsement Guarantees, and Derivatives Transactions

The Company has established the Procedures for Loaning of Funds to Others, the Operating Procedures for Endorsements and Guarantees, the Procedures for Handling Derivatives Transactions, and the Procedures for Acquisition and Disposal of Assets. All processes adhere strictly to these procedures in order to keep operation and financial risks under control.

As of the beginning of 2019 to the printing date of this Annual Report, the Company has not engaged in high-risk and leveraged financial investments. Neither did the Company loan any funds or provide any endorsements/guarantees to other parties.

(3) Future R&D Projects and the Expected Expenditure
1) Take advantage of existing GGPOptical fiber products have been Intel Light Peak Solution. The advantages of initial development, coupled with our knowledge of this fiber is higher than that of other manufacturers, and gradually improve performance to develop a more suitable Light Peak Solution Optical fibers and optical cables used in future planning.
2) Product diversity: According to market demand to develop high-bandwidth fiber, large fiber core fiber, multi-fiber nuclear fiber and so on.
- a. Expected investment in R&D: The estimated amount of three years will be in NT$20 Million.
(4) Changes in Domestic and Overseas Policies and Laws That Have an Impact on the Company’s Financial and Business and the Countermeasures:

In addition to the jurisdiction of the Ministry of Education of the central government, the education department of each county and city government also stipulates its individual laws and regulations. Therefore, the establishment and management of tutorial classes will vary in different counties and cities. Cheng also has differences in different counties and cities, so the company regularly inquires about the latest changes in laws and regulations of each county and city government to reduce the significant impact on the company's financial business.

(5) Impact of Changes in Technology and Industry to the Company's Finance and Business and the Countermeasures: None
(6) Impact of Corporate Image Change on Risk Management and Response Measures:None.
(7) Expected Benefits and Potential Risks of Merger and Acquisition:

The company acquired 100% equity of Chuangsi Digital Technology Co., Ltd. in November 2019, and changed the company name to "Chen Li Primary School Co., Ltd." after the completion of the acquisition. Business project, Chen Li Elementary School is a digital education product for elementary schools outside the development discipline. The future goal is to promote the STEMath digital curriculum developed by the primary school to all branches and the children and children ’s pro-classes. Block's established strategies and indicators.

This acquisition has been carefully evaluated and an external valuation report has been obtained as a basis for price reference, and there should be no significant impact on compliance risk.

104

�

(8) Expected Benefits, Potential Risks, and Countermeasures of Factory Expansion: None.
(9) Risks Relating to the Concentration of Purchasing or Sales and the Countermeasures
On weekdays, it maintains a good relationship with existing suppliers. At the same time, it also actively introduces other suppliers to increase the supply of goods and more bargaining space. Most projects have more than two suppliers, to avoid the risk of shortage of materials, the current suppliers are normally supplied, in case of emergency, the replacement supplier will increase the supply to respond.

Because it is mainly education (tutoring business), its sales are mainly tuition income from physical tutoring classes. Due to industrial characteristics, sales customers are more scattered. There have been no customers who accounted for more than 10% of net sales in the last two years Therefore, there should be no risk of concentration of sales.

(10) The Impact of Mass Transfer of Equity or Change by Directors, Supervisors, or Shareholders with over than 10% Interest on the Company, Associated Risks and Response Measures

In the most recent year and as of the date of publication of the annual report, the company ’s directors or large shareholders holding more than 10% of the shares, except for a small number of equity transfers due to investment and financial planning, maintained a generally stable shareholding ratio. Do not cause significant adverse effects.

(11) The Impact of Change of Operating Rights on the Company, Associated Risk and Response Measures: NA.
- The Group has a strong management team, and changes in management rights do not affect the Group ’s operations.
(12) Litigation or non-litigation events shall list the major litigation of the company and its directors, supervisors, general managers, substantive principals, major shareholders holding more than 10% of the shares and subordinate companies that have been determined by judgment or are still in the department , Non-litigation or administrative litigation events, the results of which may have a significant impact on shareholders ’equity or securities prices, should disclose their disputed facts, the amount of the target, the date of the start of the lawsuit, the main parties involved in the litigation and the handling situation as of the date of publication of the annual report: None.

105

�

(13) Other Important Risks and Countermeasures:

In terms of information security, the company actively plans to deploy information security measures to continuously improve the information security environment and reduce information security risks. Every year, internal auditors audit the company's information security management system and review the security operation status, risk control, and event improvement to control and reduce security risks. For the problems found in the internal information audit, real-time information security control is carried out through the correction and prevention process to reduce employee leakage of confidential information of the company and customers; when external information security incidents occur, information security is immediately notified to strengthen the company's information security maturity and improve employees The awareness of preventing external malicious attacks, etc., provides information security for the company's production and operation activities.

7. Other Significant Events: None.

106

�

VIII. Special Disclosure

�� Summary of Affiliated Companies

(1) Overview of related companies

Corporate Affiliation Chart

December 31, 2019

Success Prime Corporation

100% 100% 51% 100% Prime Chen Li Education Prime Optical Education Chen Li ELM Co., Ltd. Fiber Co., Ltd. Consulting 100%

CHEN LI Education Group Limited 100% CHEN LI Educatioin Group (HK) Limited 100% Chen Li (Xiamen) Education Consulting Limited

2.Basic information of related subsidiaries

2.Basic information of related subsidiaries	2.Basic information of related subsidiaries	2.Basic information of related subsidiaries	2.Basic information of related subsidiaries	2.Basic information of related subsidiaries
December 31, 2019�Units�in thousands of NT$
Company Name	Date of establishm ent	Address	Amount of capital received	Main business Operations
Chen Li Education Co., Ltd.	2010/11	17th Floor, No. 17, Xuchang Street, Zhongzheng District, Taipei City	11,200	Education services
Prime Optical Fiber Co., Ltd.	2017/10	2F, No.11 Kezhong Road, Zhunan Town, Miaoli County	10,000	Wire, Cable Manufacturing
CHEN LI Education Group Limited	2014/06	Marcy Building,2 Floor, Purcell Estate, P.O. Box 2416, Road Town, Tortola, BVI	40,543	Holding Company
CHEN LI Educatioin Group (HK) Limited	2014/07	ROOMS 2103-04,21/f., WING ON CENTRE 111 CONNAUGHT ROAD CENTRAL HONG KONG	30,059	Holding Company
Chen-Li (Xiamen) Education Consulting Ltd.	2016/06	Unit D, Unit 03, 8th Floor, Building D, Xiamen International Shipping Center, 97 Xiangyu Road, Xiamen Area (Free Trade Zone), China (Fujian) Pilot Free Trade Zone	28,516	Education consulting services
Prime Education Consulting Co., Ltd.	2018/01	1F, No.163 Baotai Road, Qianzhen District, Kaohsiung City	10,000	Education consulting services
Chen Li ELM Ltd.	2018/04	17th Floor, No. 17, Xuchang Street, ZhongzhengDistrict,TaipeiCity	15,000	Education services

107

�

Presumed to be in Effective Control of the Same Shareholder Information with the Affiliate: None.
4.Overall Business Scope of Affiliated Companies
It is mainly engaged in the production and sale of various types of optical fiber cables, optical fiber communication components, optical communication systems and optical sensing component systems and digital information consulting services.
Directors, Supervisors, and President in all Affiliated Companies:

December 31, 2019�Units�in thousands of NT$

Company Name	Title	Name or Representative	Shares Held	Shares Held
			Number of Shares	Percentage of Shares
Success Prime Corporation	Chairman	Min-Chun Chen	-	-
	Director	Shu-Ling Tseng	-	-
	Corporate director	Endow Capital Management Inc.	1,716,592	9.83%
		Xiang-Qi Fang	-	-
		Rui-Xian Lin	-	-
	Corporate director	Bash Consultant Incorporated	1,716,592	9.83%
		Yen-Shuen Chen	-	-
		Yun Chen	-	-
	Independent Director	Bing-Quan Shi	-	-
	Independent Director	Pei-Jun Hong	-	-
	Independent Director	(Absence)	-	-
Chen Li Education	Corporate director	Success Prime Company	11,200,000	100.00%
		Representative� Shu-Ling Tseng	-	-
		Representative�Qiu Xiao Cheng	-	-
		Representative�Jian Ye Zhang	-	-
	Corporate supervisor	Success Prime Company	11,200,000	100.00%
		Representative� Xiang-Qi Fang	-	-
Prime Optical Fiber	Corporate director	Success Prime Company	1,000,000	100.00%
		Representative� Rui-Xian Lin	-	-
		Representative�Xiang Heng Tai	-	-
		Representative�Da Wei Chuan	-	-
	Corporate supervisor	Success Prime Company	1,000,000	100.00%

108

�

Company Name	Title	Name or Representative	Shares Held	Shares Held
			Number of Shares	Percentage of Shares
		Representative�Yi Qing Wu	-	-
CHEN LI Education Group Limited	Corporate director	Chen Li Education Company	(Contribution) 40,543	100.00%
		Representative� Shu-Ling Tseng	-	-
CHEN LI Educatioin Group (HK) Limited	Corporate director	CHEN LI Education Group Limited	(Contribution) 30,059	100.00%
		Representative� Shu-Ling Tseng	-	-
Chen-Li (Xiamen) Education Consulting Ltd	Corporate director	CHEN LI Educatioin Group (HK) Limited	(Contribution) 28,516	100.00%
		Representative� Shu-Ling Tseng	-	-
Prime Education Consulting Co., Ltd.	Corporate director	Success Prime Company	1,000,000	51.00%
		Representative� Shu-Ling Tseng	-	-
		Representative�Shu Zhen Tseng	-	-
		Representative�Ren Wei Liao	-	-
	Supervisor	Xiang-Qi Fang	-	-
Chen Li ELM	Corporate director	Success Prime Company	1,500,000	100.00%
		Representative� Shu-Ling Tseng	-	-
		Representative�Yen Shuen Chen	-	-
		Representative�Yun Chen	-	-
	Corporate supervisor	Success Prime Company	1,500,000	100.00%
		Representative�Min Chun Chen	-	-

6. Operational Highlights of Affiliated Companies

Units�in thousands of NT$

Company Name	Capital	Total Assets	Total Liabilities	Net Value	Operating Revenue	Operating Profit	Net Profit (Loss) (after tax)
Success Prime Corporation	174,594	1,041,054	255,426	785,628	454,271	48,042	76,118
Chen Li Education	112,000	637,454	445,009	192,445	576,132	39,389	26,110
Prime Optical Fiber	10,000	4,053	1,901	2,152	-	(445)	(308)
CHEN LI Education Group Limited	40,543	27,700	-	27,700	-	(42)	(5,094)
CHEN LI Educatioin Group (HK) Limited	30,059	26,867	-	26,867	-	(36)	(5,034)
Chen-Li (Xiamen) Education Consulting Ltd	28,516	26,982	1,489	25,493	18,370	(5,104)	(4,969)

109

�

Prime Education Consulting Co., Ltd.	10,000	23,241	11,164	12,077	48,900	2,281	1,753
Chen Li ELM	15,000	12,585	1,839	10,746	4,629	(1,036)	(963)

�2�Consolidated financial statements of Affiliates

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

3 Affilation Report� None.
II. Private Placement Securities of the Most Recent Year and Up to the Printing Date of this Annual Report: None .
III. Subsidiaries’ Holding or Disposing the Company’s Shares in the Most Recent Fiscal Year and Up to the Printing Date of this Annual Report: Not applicable .
IV. Other Necessary Supplement: None .
V. The Events Resulting in Significant Impact to Shareholders' Equity or Stock Prices Under Article 36(3) (ii) of Securities and Exchange Act in the Most Recent Fiscal Year and Up to the Printing Date of this Annual Report.: None.

110

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

111

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

Very truly yours,

Success Prime Corporation

Chairman: Min -Chun Chen March 24, 2020

112

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Success Prime Corporation

==> picture [120 x 113] intentionally omitted <==

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.

113

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.

114

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.

115

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.

116

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.

117

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)

118

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)

119

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.

120

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)

121

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

122

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

123

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 Less: Recognition exemption for short-term leases Undiscounted amounts on January 1, 2019 Discounted amounts using the incremental borrowing rate on January 1, 2019	$297,600 ( 2,971) $294,629 $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

124

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.

125

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

126

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.

127

(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.

128

(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

129

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

130

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.

131

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

132

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

133

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.

134

(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,

135

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

136

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

137

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.

138

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.

139

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.

140

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.

141

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

142

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.

143

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.

144

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

145

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.

146

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.

147

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)

148

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

149

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

150

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.

151

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.

152

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

153

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
( 154	$ 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)

155

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

156

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

157

(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.

158

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.

159

(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.

160

(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.

161

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

1. 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.

162

(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.

163

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.

164

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.

165

(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

166

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.

167

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

168

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

169

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

170

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

171

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

172

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

173

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).

174

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.

175

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.

176

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.

177

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.

178

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.

179

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.

180

Stock Symbol�2496

Success Prime Corporation

Parent Company Only 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

181

INDEPENDENT AUDITORS’ REPORT

==> picture [120 x 113] intentionally omitted <==

The Board of Directors and Shareholders Success Prime Corporation

Opinion

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

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters of 2019 Success Prime Corporation consolidated financial statements are described as follow:

Revenue Recognition of Education Services

182

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 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

183

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

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 Company audit. We remain solely responsible for our audit opinion.

184

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

185

Success Prime Corporation

PARENT COMPANY ONLY BALANCE SHEETS (In Thousands of New Taiwan Dollars)

ASSETS Current assets Cash and cash equivalents (note 4 and 6) Financial assets measured at amortized cost(note 4, 8 and 30) Accounts receivables (note 4 and 9) Accounts receivables-related parties (note 4 and 29) Current income tax assets Inventories (note 4 and 10) Other current assets (note 15) Total current assets Non-current assets Financial assets measured at fair value through other comprehensive income (note 4 and 7) Investments accounted for using equity method(note 4, 5 and 11) Property, plant and equipment (note 4 and 12) Right-of-use assets(note 3, 4 and 13) Net investment property(note 4, 14 and 30) Computer software Deferred income tax assets (note 4 and 23) Defined benefit assets (note 4 and 19) Other non-current assets (note 15) Total non-current assets Total assets LIABILITIES AND EQUITY Current liabilities Short-term borrowings(note 4 and 16) Notes payable Accounts payable (note 17 and 29) Other payables(note 18) Other payables-related parties (note 29) Current income tax liabilities Lease liabilities-current(note 3, 4 and 13) Current portion of long-term loans payable(note 4, 16 and 30) Other current liabilities (note 18) Total current liabilities Non-current liabilities Long-term debt payable(note 4, 16 and 30) Deferred income tax liabilities(note 4 and 23) Lease liabilities-non current(note 3, 4 and 13) Guarantee deposits received(note 29) Total non-current liabilities Total liabilities Equity(note 20) Ordinary Shares Capital surplus Retained earnings Legal Reserve Special Reserve Unappropriated retained earnings Total retained earnings Other equity interest Treasury shares Total equity Total liabilities and equity	December 31, 2019 Amount � $70,098 7 5,655 42,492 1 4 19,747 2 10 - 20,871 2 3,179 - 162,052 16 4,500 - 6,051 - 32,631 3 694 - 36,364 4 7,561 1 9,464 1 753,185 75 $998,658 100 $80,000 - 8 - 19,732 2 40,543 56 4 - 2,104 10,372 2,430 - 1 - 1,696 - 156,933 15 21,870 1,478 2 - 74,945 200 8 - 98,493 10 255,426 25 174,594 17 367,081 26,354 35 3 1,611 - 240,544 23 268,509 26 (2,600) (1) (21,956) (2) 785,628 75 $1,041,054 100	December 31, 2019 Amount � $70,098 7 5,655 42,492 1 4 19,747 2 10 - 20,871 2 3,179 - 162,052 16 4,500 - 6,051 - 32,631 3 694 - 36,364 4 7,561 1 9,464 1 753,185 75 $998,658 100 $80,000 - 8 - 19,732 2 40,543 56 4 - 2,104 10,372 2,430 - 1 - 1,696 - 156,933 15 21,870 1,478 2 - 74,945 200 8 - 98,493 10 255,426 25 174,594 17 367,081 26,354 35 3 1,611 - 240,544 23 268,509 26 (2,600) (1) (21,956) (2) 785,628 75 $1,041,054 100	December 31, 2019 Amount � $70,098 7 5,655 42,492 1 4 19,747 2 10 - 20,871 2 3,179 - 162,052 16 4,500 - 6,051 - 32,631 3 694 - 36,364 4 7,561 1 9,464 1 753,185 75 $998,658 100 $80,000 - 8 - 19,732 2 40,543 56 4 - 2,104 10,372 2,430 - 1 - 1,696 - 156,933 15 21,870 1,478 2 - 74,945 200 8 - 98,493 10 255,426 25 174,594 17 367,081 26,354 35 3 1,611 - 240,544 23 268,509 26 (2,600) (1) (21,956) (2) 785,628 75 $1,041,054 100	December 31, 2018	December 31, 2018
					Amount � $60,324 6 - 61,808 - 6 61,437 6 12 - 58,039 6 3,853 1 245,473 25 717,634 79 3,546 - - - 30 - 16,916 2 7,492 1 1,257 - 746,875 82 $914,120 100 $135,000 22 14 - 26,541 3 37,787 - 4 - 12,277 - - 1 - - 4,695 - 216,322 22 - 1,812 - - - 200 - - 2,012 - 218,334 22 174,594 17 367,081 13,868 37 1 772 - 247,576 25 262,216 26 (1,611) - (21,956) (2) 780,324 78 $998,658 100

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

186

Success Prime Corporation

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2019 Amount % $235,066 52 219,205 48 454,271 100 153,713 34 173,490 38 327,203 72 127,068 28 17,143 4 34,188 8 27,695 6 79,026 18 48,042 10 7,243 2 (48) - Operating revenue(note 4, 21 and 29) Sales revenue Service revenue Total operating revenue Operating costs(note 10, 22 and 29) Cost of sales Cost of services Total operating costs Gross profit Operating expenses(note 19, 22 and 29) Marketing General and administrative Research and development Total operating expenses Net income from operations Non-operating income and expenses Other income (note 22 and 29) Other gains and losses (note 22) Finance costs(note 22) Share of profit or loss of subsidiaries(note 4 and 11) (3,474) 26,796 (1) 6 Total non-operating income and expenses 30,517 7		2019	2018
		Amount %	Amount %
			$218,361 47 246,079 53 464,440 100 142,653 31 139,433 30 282,086 61 182,354 39 17,441 4 35,265 8 14,867 3 67,573 15 114,781 24 6,143 1 2,167 1 (1,610) ( 3,357) - (1) 3,343 1

(Continued)

187

2019 2018 Amount % Amount % 78,559 17 118,124 25 (2,441) - 6,742 2 76,118 17 124,866 27 Income before income tax Tax (expense) income (note 23) Net income Total other comprehensive income(note 19 and 23) Items that will not be reclassified to profit or loss: Remeasurements of the defined benefit pension-plans (985) - (25) - Income tax relating to items that will (202) - (128) - (783) - (153) - (989) - (989) (1) - (1) (650) (189) (839) - - - (1,772) (1) (992) - $ 74,346 16 $123,874 27 $4.41 $7.18 not be reclassified to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign financial statements Income tax related to components of other comprehensive income that will be reclassified to profit or loss �ther comprehensive income (loss), net of income tax Total comprehensive income for the year Earnings per share (Note24) Basic earnings per share Diluted earnings per share $4.40 $7.16	2019	2018
	Amount %	Amount %

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

188

Success Prime Corporation and Subsidiaries

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

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 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 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	unt $165,480 - - 8,314 - 800 - - - - 174,594 - - - - - $174,594	Capital Surplus $479,549 - - 8,314 (108,082) 3,928 - - - - 367,081 - - - - - $367,081			Retained	Earnings
		Shares (Thousands) 16,548 - - 831 - 80 - - - - 17,459 - - - - - $17,459	Amo				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	Total

The accompanying notes are an integral part of the consolidated financial statement

189

Success Prime Corporation PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Cash flows from operating activities Income before income tax Adjustments to reconcile profit (loss) Depreciation expense Amortization expense Finance costs Interest income Share of (profit) loss of subsidiaries accounted for using equity method Loss (gain) on disposal of property, plan and equipment Net loss (gain) on foreign exchange Inventory valuation losses gains Gains from bargain purchases Changes in operating assets and liabilities: Notes receivables Accounts receivables Accounts receivable-related parties Inventories Other current assets Net defined benefit assets Notes payable Accounts payable Other payables Other payables-related parties Other current liabilities Cash generated from operations Interest received Interest paid Income taxes paid (refund) Net cash flows generated by operating activities Cash flows from investing activities Acquisition of financial assets at fair value through other comprehensive income Acquisition of financial assets at amortized cost Investments accounted for using Equity Method	2019 $78,559 14,291 194 3,474 (168) (26,796) 4 3,178 17,027 (727) - 40,744 19,747 20,141 (154) (86) (22) (6,873) 1,619 56 (3,027) 161,181 168 (3,474) (12,283) 145,592 (4,500) (5,655) (9,900)	2018 $118,124 2,122 336 1,610 (147) 3,357 - (723) 2,934 - 434 (32,818) (61,437) (32,367) 26,296 (94) (37) 18,501 3,575 - (18,465) 31,201 147 (1,610) 4 29,742 - - (5,100)

190

Acquisition of property, plant and
equipment
Proceeds from disposal of property, plant
and equipment
Increase in refundable deposits
Decrease in refundable deposits
Purchases of intangible assets
Acquisition of investment property
Dividends received from subsidiaries
Net cash flows generated by investing
activities
Cash flows from financing activities
Increase in short-term loans
Decrease in short-term loans
Long-term debt
Increase in deposits received
Payments of lease liabilities
Issuance of cash dividends
Employee execution on stock options
Payments for buy-back of treasury shares
Net cash flows generated by 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
2018
(4,682)
3
(4,800)
4,563
-
(10,690)
-
(5,469)
1,708
(1,000)
-
(32,710)
1,488
58,118
(23,483)
4,857
304,300
629,500
(359,300)
24,300
(559,500)
-
-
(10,194)
200
-
(69,042)
(108,082)
-
4,728
-
(21,956)
(109,936)
(55,110)
( 2,399)
826
9,774
(19,685)
60,324
80,009
$ 70,098
$ 60,324

(

191

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Success Prime Corporation

1. GENERAL

On March 2002, the Company’s shares were listed on the Taiwan Stock Exchange (TWSE).

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

IFRS 16 “Leases”

Definition of a lease

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-ofuse assets and lease liabilities for all leases on the consolidated balance sheets. On the

192

Parent Company Only Financial Statements, 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 Parent Company Only 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.

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 and Undiscounted amounts on January 1, 2019 $ 102,900 Discounted amounts using the incremental borrowing rate on January 1, 2019 $ 95,511

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 January 1, 2019 $ - $ - $ - - $ -	Initial Application Reclassification		Adjustments Arising from Initial Application $ 95,511 $ 95,511 $ 10,193 85,318 $ 95,511 $ 95,511	Restated on January 1, 2019	Restated on January 1, 2019
		$ - $ - $ - - $ -				$ 95,511 $ 95,511 $ 10,193 85,318 $ 95,511 $ 95,511

193

The Company as lessor

The Company 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 Company shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 2: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.
Note 3: The Company 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 Parent Company Only Financial Statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’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 Joint Venture” 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.

194

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of compliance

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(2) Basis of preparation

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

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.

When preparing its parent company only financial statements, the Company used equity method to account for its investment in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owner of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatment between parent company only basis and consolidated basis were made to investments accounted for by equity method, share of profit or loss of subsidiaries, share of other comprehensive income of subsidiaries and related equity items, as appropriate, in the parent company only financial statements.

(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 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;

195

(2) Liabilities due to be settled within 12 months after the reporting period, and
(3) Liabilities for which the Company 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) 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 Company's previously held interest from the acquiree, if any profits or losses are incurred shall be recognized.

(5) Foreign currencies

In preparing the financial statements of the Company, 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.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

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 from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purpose of presenting parent company only financial statements, the functional currencies of the Company and the Group (including subsidiaries and associates that use currency different from the currency of the Company) are translated into the presentation currency - the New Taiwan dollar as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

196

(6) Inventories

(7) Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries. Subsidiaries are the entities controlled by the Company.

Under the equity method, the investment in a subsidiary is initially recognized at cost and the carrying amount is increased or decreased to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary after the date of acquisition. Besides, the Company also recognizes the Company’s share of the change in other equity of the subsidiary.
Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.
When the Company’s share of losses of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for by the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.
Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.
The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the entire financial statements of the invested company. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes the reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

Profits or losses resulting from downstream transactions are eliminated in full only in the parent’s company only financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the parent’s company financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

(8) Property, plant and equipment

197

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.

(9) Investment Property

Investment Property is properties held for the purpose of earning rent or capital appreciation or both. Investment property also includes land that has not yet been determined for future use. Investment property is initially measured at cost (including transaction costs) and subsequently measured at cost minus accumulated depreciation and accumulated impairment losses. Investment property is depreciated on a straight-line basis.

When derecognition of investment property, the difference between the net disposal price and the carrying amount of the asset is recognized in profit or loss.

(10) Intangible assets
Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

2. 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.

(11) Impairment of tangible and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the smallest group of cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized on the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

198

(12) Financial instruments

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

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 Company 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.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company’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.

199

Subsequent to initial recognition, financial assets measured at amortized cost, including cash 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.
2) Impairment of financial assets

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

The Company always recognizes lifetime expected credit losses (i.e. ECLs) for trade receivables and lease receivables. For all other financial instruments, the Company 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 Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

The Company 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 Company 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.

200

Financial liabilities
1) Subsequent measurement

All the Company’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.

(13) Revenue recognition

The Company 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

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

Service revenue comes from digital information consulting services and management of teacher and academic curriculum services.

The service income is recognized as income in proportion to the performance of service.

(14) Leases

2019

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

The Company 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.

201

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 Company as lessee

The Company 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 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, in-substance fixed payments, or 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 Company 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 Company 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 Company as lessor

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

202

2. The Company as lessee

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

(15) Borrowing Costs

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

(16) Government Grants

(17) Employee Benefits

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

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

(18) Share-based Payment Agreement Employee Stock Option

1. Employee Stock Option

203

Employee Rights Restricted Stocks

(19) 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 recognized for taxable temporary differences associated with

204

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

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 Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred taxes

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’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.

Impairment of Investment Subsidiary

When there are signs of impairment indicating that the investment in the subsidiary may have been impaired and the carrying amount may not be recovered, the Company immediately evaluated the asset impairment associated with the subsidiary from the perspective of the financial statements as a whole. The Company’s management is based on the future cash flow projections of the cash-generating units of the relevant assets, including assumptions such as the estimated sales growth rate and profit margin of the management, and determines the appropriate discount rate used to calculate the present value to assess the impairment.

205

6. CASH

	December 31, 2019	December 31, 2019	December 31,	December 31,
				2018
Cash on hand	$	211	$	197
Checking accounts and demand deposits		69,887
				60,127
	$	70,098	$	60,324

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

INCOME
Investments in equity instruments Domestic investments Unlisted shares Accuagile Co., Ltd Ordinary shares	December 31, 2019 $ 4,500	December 31, 2018 $ -

In order to enhance its competitive advantage, the Company 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 Company subscribed 1,500 thousand shares. The investment amount is NT$4,500 thousand in total, and 15% of its equity is acquired.

206

8. FINANCIAL ASSETS MEASURED AT AMORTIZED COST

Current Performance Security Deposits	December 31, 2019 $ 5,655	December 31, 2018	December 31, 2018
			$ -

(1) 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.
(2) For information on the pledge of financial assets measured at amortization costs, please refer to Note 30.

9. ACCOUNTS RECEIVABLES

ACCOUNTS RECEIVABLES
Measured at amortized costs Total carrying amount Less: Allowance loss	December 31,2019 $ 42,492 - $ 42,492	December 31, 2018

			$	61,808 - 61,808
			$

The average credit period for sales of goods was 30~60 days. To mitigate credit risk, the company's management assigns a dedicated team responsible for the decision of the credit line, credit approval and other monitoring procedures to ensure that the recovery of overdue receivables has taken appropriate action. In addition, the Company reviews the recoverable amounts of receivables on the reporting date to ensure that receivables that cannot be recovered include appropriate impairment losses. As result, the Company’s management believes that the credit risk has been significantly reduced.

The Company 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 Company estimates expected credit losses based on the number of days for which receivables are past due. As the Company’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 Company’s customer base.

The Company 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 Company 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:

207

December 31, 2019

Gross carrying amount Loss allowance (lifetime ECL) Amortized cost	N	o t O v e r d u e $ 30,904 - $ 30,904		Overdue 0 - 3 0 D a y s $ 6,812 - $ 6,812	Overdue 3 1-9 0 D a y s T $ 4,776 - $ 4,776	o t a l
						$ 42,492 - $ 42,492

December 31, 2018

Gross carrying amount Loss allowance (lifetime ECL) Amortized cost	N	o t O v e r d u e $ 18,766 - $ 18,766	0	Overdue - 3 0 D a y s $ 41,803 - $ 41,803	3	Overdue 1 - 9 0 D a y s	T	o t a l
						$ 1,239 - $ 1,239		$ 61,808 - $ 61,808

The Company assesses that there is no need to list impairment losses in 2019 and 2018.

10. INVENTORIES

Finished goods Raw materials Work in progress Merchandise	December 31,

The cost of inventories sold in 2019 and 2018 were NT$153,713,000 and NT$142,653,000 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. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investment in subsidiaries

Investment in subsidiaries
Unlisted Company Chen Li Education Group Co., Ltd. (Chen Li Education) Prime Optical Fiber Co., Ltd. (Prime Optical Fiber) Prime Education Consulting Co., Ltd. (Prime Education) Chen Li ELM Co., Ltd. (Chen Li ELM ) Chen Li ELM Co., Ltd.�Chen Li ELM�	December 31, 2019 $ 676,308 2,152 6,159 10,747 $ 695,366	December 31, 2018
			$ 651,207 2,460 6,753 - $ 660,420

Percentage of equity rights and voting rights

Name of Subsidiary	December 31, 2019	December 31, 2018
Chen Li Education	100%	100%
Prime Optical Fiber	100%	100%
Prime Education	51%	51%
Chen Li ELM	100%	-

208

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

In order to further bring out the benefits of educational products, the company adopted a resolution - of the board of directors on October 24, 2019 to purchase 100% equity of Chuang Si Digital Technology Co., Ltd. from related parties. The transaction base date is October 31, 2019. The purchase price It is NT$9,900,000. After the company completed the acquisition of Chuang-Si Digital Technology Co., Ltd., it changed its company name to Chen Li ELM Co., Ltd., and took primary education products and services as the direction of future operation and development, please refer to Note 26.

The company's profit and loss and other comprehensive profit and loss shares of the subsidiary using the equity method in 2019 and 2018, except that Chen Li Education is recognized according to the financial report verified by the accountant, the rest have not been verified by the accountant, but the management of the company believes that the above If the financial report of the verified subsidiary is verified by accountant, no major adjustments will be made.

For details of the investment subsidiaries held by the Company, please refer to Table 5.

12. PROPERTY, PLANT, EQUIPMENT

Cost January 1, 2018 Balance Addition Disposition December 31, 2018 Balance Accumulated depreciation January 1, 2018 Balance Depreciation Fee Disposition December 31, 2018 Balance December 31, 2018 Net amount Cost January 1, 2019 Balance Addition Disposition December 31, 2019 Balance Accumulated depreciation January 1, 2019 Balance Depreciation Fee Disposition December 31, 2019 Balance December 31, 2019 Net amount	Leasing of modified i t e m s $ 29,223 - - $ 29,223 $ 26,496 1,342 - $ 27,838 $ 1,385 $ 29,223 - - $ 29,223 $ 27,838 1,342 - $ 29,180 $ 43	M a c h i n e r y E q u i p m e n t $ 2,301 4,198 ( 1,162) $ 5,337 $ 1,625 624 ( 1,162) $ 1,087 $ 4,250 $ 5,337 1,814 ( 85) $ 7,066 $ 1,087 1,743 ( 78) $ 2,752 $ 4,314	Other Equipment T $ 517 350 - ( $ 867 $ 374 77 - ( $ 451 $ 416 $ 867 - - ( $ 867 $ 451 134 - ( $ 585 $ 282	o t a l
	i	E
		( ( ( (		$ 32,041 4,548 1,162) $ 35,427 $ 28,495 2,043 1,162) $ 29,376 $ 6,051 $ 35,427 1,814 85) $ 37,156 $ 29,376 3,219 78) $ 32,517 $ 4,639

209

For the year 2019 and 2018, there was no indication of an impairment loss; therefore, the Company 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:

Leasing of Modified Items 3~8 years Machinery Equipment 3~5 years Other Equipment 3 years

13. LEASE ARRANGEMENTS

(1) Rights-of-use assets - 2019

13. LEASE ARRANGEMENTS (1) Rights-of-use assets - 2019
Carrying amounts Buildings Depreciation charge for right-of-use assets Buildings	December 31, 2019
		$ 84,596 2019
		$ 10,915

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

(2) Lease liabilities - 2019

ase liabilities - 2019
Carrying amounts Current Non-current The discount rate for lease liabilities was as follows: Buildings	December 31, 2019
	$ 10,372 74,945 $ 85,317 December 31, 2019
	1.74%

The discount rate for lease liabilities was as follows:

(1) Material lease-in activities and terms

The Company leased buildings for the use as office space, for a period of 10 years.

The company's building lease agreement annual rent is based on the previous year's monthly rent plus 3.9% adjustment in the lease payment. The Company does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Company 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
		$ 11,760 47,040 44,100

210

$ 102,900

(2) Other lease information

Total cash outflow for leases

2019 $ 11,761

14. INVESTMENT PROPERTY

Cost January 1, 2018 Balance Addition December 31, 2018 Balance Accumulated depreciation January 1, 2018 Balance Depreciation Fee December 31, 2018 Balance December 31, 2018 Net amount Cost January 1, 2019 and December 31, 2019 Balance Accumulated depreciation January 1, 2019 Balance Depreciation Fee December 31, 2019 Balance December 31, 2019 Net amount	L	a n d $ - 27,394 $ 27,394 $ - - $ - $ 27,394 $ 27,394 $ - - $ - $ 27,394	B	u i l d i n g s $ - 5,316 $ 5,316 $ - 79 $ 79 $ 5,237 $ 5,316 $ 79 157 $ 236 $ 5,080	T	o t a l
						$ - 32,710 $ 32,710 $ - 79 $ 79 $ 32,631 $ 32,710 $ 79 157 $ 236 $ 32,474

Investment property is the properties held by the Company to earn rental income. It is leased to the subsidiary Chen Li Education as a tutorial school.

The depreciation fee is based on the straight-line basis for the following number of years of durability:

Buildings 32 years

211

The fair value of investment property has not been evaluated by independent evaluators and is only measured by the Company’s management level using the evaluation model commonly used by market participants in the third level input value. The evaluation is based on market evidence similar to the transaction price of the property, and the fair value obtained is evaluated.

Fair value	December 31, 2019	December 31, 2019
		$ 36,550

The lease period of investment real estate is 3 years, which is a fixed lease payment.

In 2019, leased investment real estate under operating leases will receive the total lease payments in the future as follows:

payments in the future as follows:
1styear 2ndyear	December 31, 2019
		$ 1,143 571 $ 1,714

The total future minimum lease payments for non-cancellable business leases in 2018 are as follows:

follows:
Less than 1 year 1�5 years	December 31, 2018
		$ 1,143 1,714 $ 2,857

Please refer to Note 30 for the amount of investment real estate set as loan guarantee.

15. OTHER ASSETS

December 31, 2019 $ 1,001 769 739 670 $ 3,179 $ 10,374 3,988 $ 14,362	December 31, 2018	December 31, 2018

$	$	8 1,728 1,401 716 3,853 6,507 2,957 9,464
$	$
$	$
$	$

16. BORROWINGS

(1) Short-term borrowings

1) Short-term borrowings
Secured borrowings(Note 30) Bank borrowings Unsecured borrowings Bank borrowings	December 31, 2019 $ 80,000 - $ 80,000	December 31, 2018 $ 35,000 100,000 $ 135,000
			$ 35,000 100,000 $ 135,000

212

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

The above-mentioned borrowings from financial institutions are jointly endorsed by the subsidiary Chen Li Education.

17. ACCOUNTS PAYABLE

Hourly fee payables to Teachers Trade Payables	December 31, 2019 $ 14,649 5,083 $ 19,732	December 31, 2018	December 31, 2018
			$ 18,588 7,953 $ 26,541

18. OTHER LIABILITIES

. OTHER LIABILITIES
Other Payables Salary payable Compensation payable to Employees Compensation payable to Directors Service payable Other Other Current Liabilities Advance Payment Other	December 31, 2019 $ 8,999 2,468 1,234 1,643 26,199 $ 40,543 $ 552 1,144 $ 1,696	December 31, 2018
			$ 9,335 3,750 3,125 2,477 19,100 $ 37,787 $ 679 4,016 $ 4,695

19. RETIREMENT BENEFIT PLANS

(1) Defined Contribution Plans

The pension system of the "Labor Pensions Ordinance" applicable to the Company is a government-mandated retirement plan, which is based 6% of monthly salary contribution to the personal account of the Labor Insurance Bureau.

(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 Company 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 Company 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,

213

Ministry of Labor (the “Bureau”); the Company 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 Company’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 ig a t io 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)

214

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 Company 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.

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%

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

215

20. EQUITY

(1)Capital Stock

apital 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

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

(2) 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

216

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

(3)Retained Earnings and Dividend Policy

217

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

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

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

(4)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.

21. REVENUE

. REVENUE
Client contracts revenue Sales of good revenue Service revenue		2019 $ 235,066 219,205 $ 454,271		2018
				$ 218,361 246,079 $ 464,440

(1) Explanation on client contracts revenue, please refer to Note 4 (13). (2) Remaining contracts balance

Accounts receivable balance, please refer to Note 9.

218

22. NET PROFIT OF THE YEAR

(1) Other Revenue

(1) Other Revenue
Government subsidy revenue Acceptance and technical service revenue Interest revenue on bank deposits Other		2019 $ 3,984 1,630 168 1,461 $ 7,243		2018
				$ 1,899 3,058 147 1,039 $ 6,143

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

(2) Other Profit and Loss

2) Other Profit and Loss
Cheap purchase benefits (Note 1) Net foreign currency exchange benefits (losses) (Note 2) Disposition of property, equipment and plant losses		2019 $ 727 771) 4) $ 48)		2018
	( ( (			$ - 2,167 - $ 2,167

Note 1: The company's 2019 consolidated financial report for the cheap purchase benefits arising from the acquisition of 100% equity of Chen Li ELM on October 31, 2019, please refer to Note 28.

Note 2: The Company’s 2019 and 2018 foreign exchange profits and losses are as follows:

follows:
Total foreign currency exchange profits Total foreign currency exchange losses Net profit (loss)		2019 $ 1,842 2,613) $ 771)		2018
	( (		(	$ 4,519 2,352) $ 2,167

(3) Financial Costs

) Financial Costs
Interest on bank loans Interest on rental liabilities Total		2019 $ 1,907 1,567 $ 3,474		2018
				$ 1,610 - $ 1,610

219

(4) Depreciation and Amortization

(4) Depreciation and Amortization
Depreciation- property, plant and equipment Depreciation-Right-of-use assets Depreciation-Investment property Amortization- Computer software Total An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating expenses		2019 $ 3,219 10,915 157 194 $ 14,485 $ 13,511 780 $ 14,291 $ 194		2018
				$ 2,043 - 79 336 $ 2,458 $ 1,743 379 $ 2,122 $ 336

(5) Employee Benefit Expenses

5) Employee Benefit Expenses
Short term Employee Benefits Post-employment benefits Defined contribution plans Defined benefit plans (Note 19) Resignation benefits Total employee benefits expense Operating costs Operating expenses		2019 $ 54,775 1,430 86) 56,119 1,484 $ 57,603 $ 15,894 41,709 $ 57,603		2018
	(		(	$ 62,899 1,623 94) 64,428 - $ 64,428 $ 23,842 40,586 $ 64,428

(6) Employees’ compensation and remuneration of directors

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 Parent Company Only Financial Statements

220

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 Parent Company Only Financial Statements for the years ended December 31, 2018 and 2017.

23. INCOME TAXES

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

Current tax 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 $ 2,117 5) 2,112 329 - 329 $ 2,441		2018
	(		( ( ( (	$ 12,286 10 12,296 16,150 ) 2,888) 19,038) $ 6,742)

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

Income before tax Income tax expense calculated at the statutory rate Tax-free income and non- deductible costs Income tax unappropriated earnings 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 $ 78,559 $ 15,712 5,359 ) 2,117 10,024 ) 5 ) - $ 2,441		2018
	( ( (		( ( (	$ 118,124 $ 23,625 671 12,286 40,446 ) 10 2,888) $ 6,742)

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

2019

2018

221

Deferred income tax In respect of the current year -Remeasured number of defined benefit plan $ 202 ( $ 128 )

(3) Deferred tax assets and liabilities

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

2018

	Opening Balance $ 5,239 604 5,843 30,521 $ 36,364 Opening Balance $ 1,513 - 299 $ 1,812 Opening Balance $ 3,954 460 4,414 12,502 $ 16,916 $ 1,274 - $ 1,274	Recognized in Profit or Loss $ 3,405 40 3,445 ( 3,906) ($ 461) Recognized in Profit or Loss $ 22 145 ( 299) ($ 132) Recognized in Profit or Loss $ 1,285 144 1,429 18,019 $ 19,448 $ 111 299 $ 410	Recognized in other comprehensive income $ - - - - $ - Recognized in other comprehensive income ( $ 202 ) - - ($ 202) Recognized in other comprehensive income $ - - - - $ - $ 128 - $ 128		Closing Balance
					$ 8,644 644 9,288 26,615 $ 35,903 Closing Balance
					$ 1,333 145 - $ 1,478 Closing Balance
					$ 5,239 604 5,843 30,521 $ 36,364 $ 1,513 299 $ 1,812

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

222

Loss carryforwards Expire in 2023 Expire in 2024 Expire in 2025	December 31, 2019 $ - 12,191 24,784 $ 36,975	December 31, 2018	December 31, 2018
			$ 8,604 53,678 24,784 $ 87,066

(5) Related information of unused loss Expire in 2019 Expire in 2020 Expire in 2021 Expire in 2023 Expire in 2024 Expire in 2025	carry-forwards December 31, 2019 $ - 15,284 62,622 13,679 53,678 24,784 $ 170,047	December 31, 2018	December 31, 2018
			$ 33,979 50,925 62,622 13,679 53,678 24,784 $ 239,667

(6) Income Tax Assessments

The Company’s tax returns through 2017 have been assessed by the tax authorities.

24. 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

223

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 Company offered to settle compensation or bonuses paid to employees in cash or shares, the Company 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.

25. SHARE-BASED PAYMENT AGREEMENTS

Employees Stock Options

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

224

2018

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

(2) Employee restricting new shares proposal

26. ACQUIRED SUBSIDIARY

Chuang-Si Digital Technology Co. Ltd.	Main operating activities Education Service	Acquisition Date Oct 31, 2019	Ownership rights with voting rights /Acquisition ratio(%) 100%	Transfer Price	Transfer Price
					$ 9,900

The Company 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 company. For the explanation on the acquisition of Chen Li ELM School, please refer to Note 28 of the Company's 2019 consolidated financial report.

27. CAPITAL MANAGEMENT

The Company manages its capital to ensure that the Company 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 Company is composed of the Company’s net debt (ie borrowings less cash) and equity (ie share capital, capital reserve and retained earnings). The Company does not need to comply with other external capital requirements.

225

28. 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 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

Financial assets at FVTOCI Equity securities Stocks unlisted in the ROC		Level 1 $ -		Level 2 $ -		Level 3 $ 4,500		Total
								$ 4,500

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

Category of financial
instruments
Unlisted equity investments

Evaluationoftechnology andinput values

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 company's fair value measurement of financial instruments is reasonable, and no selfbuilt 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 $ 143,720 4,500 164,831		December 31, 2018
				$ 187,935 - 199,550

Note 1: The balance consists of cash, accounts receivables (include related parties),

226

other receivables (other current assets) and refundable deposits (other noncurrent 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 company include cash, financial assets measured at amortized cost, accounts receivable, equity investment instruments, bills payable, accounts payable, borrowings and lease liabilities. The financial management department of the 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 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 Company’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 31.

Sensitivity analysis

The Company is mainly affected by fluctuations in the US dollar (USD) 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 increased the net profit before tax of the Company in 2019 and 2018 by NT$ 385,000 and NT$ 118,000 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.

227

(2) Interest Rate Risk

The Company is exposed to fixed and 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 $5,655 69,887 104,300	December 31, 2018
		$ - 60,127 135,000

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 decrease or increase by NT$34,000 and NT$75,000 respectively, while all other variables remain fixed.

2) Credit Risk

3) 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 (note) was NT$190,245,000 and NT$91,000,000 respectively.

Note: As of December 31, 2019 and 2018, the amount used jointly by the Company and its subsidiary Chen Li Education was NT$170,900,000 and NT$91,000,000 respectively.

228

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

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	1~6 Months	6 months~1 year $ 3,702 1,215 $ 4,917	1 year above	1 year above
		$ 56,629 81,215 $ 137,844			$ 200 21,870 $ 22,070

December 31, 2018

Non-derivative financial liabilities Non-interest- bearing liabilities Fluctuating interest rates instruments	1~6 Months $ 57,514 135,000 $ 192,514	6 months~1 year $ 6,836 - $ 6,836	1 year above	1 year above
				$ 200 - $ 200

Additional information about the maturity analysis for lease liabilities:

Lease liabilities		Less than 1 year $ 11,760		1-5 Years $ 47,040	5-10 Years $ 32,340		Total
							$ 91,140

229

29. TRANSACTION WITH RELATED PARTIES

In addition to those disclosed in other notes, detail of transactions between the Company and related parties are disclosed below.

(1) Related parties and their relationships associated with the Company: Related parties Relationship with the Company Chen Li Education Subsidiary of the Company Success Prime Optical Fiber Subsidiary of the Company Chen Li ELM Subsidiary of the Company 2) Business Revenue Account Related parties 2019 2018 Service revenue Subsidiary Chen Li Education $ 219,091 $ 224,176	(1) Related parties and their relationships associated with the Company: Related parties Relationship with the Company Chen Li Education Subsidiary of the Company Success Prime Optical Fiber Subsidiary of the Company Chen Li ELM Subsidiary of the Company 2) Business Revenue Account Related parties 2019 2018 Service revenue Subsidiary Chen Li Education $ 219,091 $ 224,176	(1) Related parties and their relationships associated with the Company: Related parties Relationship with the Company Chen Li Education Subsidiary of the Company Success Prime Optical Fiber Subsidiary of the Company Chen Li ELM Subsidiary of the Company 2) Business Revenue Account Related parties 2019 2018 Service revenue Subsidiary Chen Li Education $ 219,091 $ 224,176	(1) Related parties and their relationships associated with the Company: Related parties Relationship with the Company Chen Li Education Subsidiary of the Company Success Prime Optical Fiber Subsidiary of the Company Chen Li ELM Subsidiary of the Company 2) Business Revenue Account Related parties 2019 2018 Service revenue Subsidiary Chen Li Education $ 219,091 $ 224,176
	of the Company of the Company of the Company 2019 $ 219,091		2018
			$ 224,176

(2) Business Revenue

(3) Service cost

3) Service cost
Related parties Subsidiary Chen Li ELM		2019 $ 761		2018
				$ -

(4) Accounts Receivable

4) Accounts Receivable
Related parties Subsidiary Chen Li Education	December 31, 201 $ 19,747	December 31, 2018

			$	61,437

There is no guarantee for payment due from related parties outstanding. The amounts due from related parties in 2019 and 2018 were not provided as allowances for losses.

(5) Accounts payable to related parties

Accounts Accounts payable Other accounts payable	Related parties Subsidiary Chen Li ELM Subsidiary Prime Optical Fiber		2019 $ 407 $ 56		2018
					$ - $ -

The balance of payments due to related parties outstanding is not guaranteed.

230

(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	Price obtained
	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 of the consolidated financial statements.

(7) Obtain Endorsement Guarantee

(7) Obtain Endorsement Guarantee
Related parties Subsidiary Chen Li Education Guaranteed Amount (8) Rental Revenue Type/Name of the related parties Subsidiary Chen Li Education	December 31, 2019 December 31, 2018 $ 250,900 $ 226,000 2019 2018 $ 1,145 $ 572

		$ 572

As stated in Note 14, the investment property of the Company is leased to the subsidiary Chen Li Education, whose rent is based on the market rent and receives a deposit of NT$200,000.

(9) Leasing Agreement

Account Lease expense	Related parties Prime Optical Fiber		2019 $ 160		2018
					$ 3,364

(10) Remuneration of Key Management Levels

Short term Employee Benefits Post-employment benefits		2019 $ 11,127 188 $ 11,315		2018
				$ 14,528 102 $ 14,630

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

231

30. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets have been provided as collateral for financial loans:

Performance bond (accounting for financial assets measured at amortized cost-current) Investment property- land (note) Investment property- buildings (note)		December 31, 2019 $ 5,655 27,394 5,080 $ 38,129		December 31, 2018	December 31, 2018
					$ - - - $ -

Note: The investment property land and buildings held by the company are used as collateral for long-term bank loans.

31. INFORMATION ON FOREIGN CURRENCY ASSETS AND LIABILITIES WITH

SIGNIFICANT IMPACT

December 31, 2019

Foreign currency assets Monetary accounts US Dollars RMB Foreign currency liabilities Monetary item US Dollars	Foreign Currency $ 2,503 57 1,209	Exchange rate 29.580 4.208 29.580	Balance
			$ 74,039 240 35,762

December 31, 2018 Foreign currency assets Monetary accounts US Dollars Foreign currency liabilities Monetary item US Dollars	Foreign Currency $ 1,172 787	Exchange rate 30.665 30.665	Balance

			$ 35,939 24,133

232

32. 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.
Information on the investee company: Table 5.
(3) China Investment Information:
1. Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, investment gain or loss, carrying amount of the investment at the end of the period, repatriation of investment gains, and limit on the amount of investment in the mainland China area: Table 6.
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.
3. i. The amount and percentage of the purchase and the closing balance and percentage of the relevant payables.

233

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.

33. DEPARTMENTAL INFORMATION

The company has disclosed relevant operating department information in the consolidated financial statements in accordance with regulations.

34. 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 in prepaid equipment Decrease (increase) in equipment payable Net cash payments		2019 $ 1,814 3,867 999) $ 4,682		2018
	(			$ 4,548 5,507 635 $ 10,690

234

2019

Table 1

Success Prime Corporation

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).

235

2019

Table 2

Success Prime Corporation

ENDORSEMENT GUARANTEE FOR OTHERS

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

Number (Note1�	Name of endorsement guarantor Company	The object of endorsement 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	(4)	$ 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 6 kinds of relationship between the endorsement guarantor and the endorsed subject, can be indicated by the following types:

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

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

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

236

Success Prime Corporation

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.

237

Table 4

Success Prime Corporation

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 Note	- -	$ 19,747 ( 19,747 )	32% ( 85% )	- -

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

238

Success Prime Corporation

RELATED INFORMATION ON THE INVESTEE COMPANY, OPERATING REGIONS AND MORE

FOR THE YEARS ENDED DECEMBER 31, 2019

Table 5

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 Company Limited	Chen Li Education Prime Optical Fiber Prime Education Chen Li ELM CHEN LI Education Company Limited CHEN LI Education Company (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 Note	Subsidiary Subsidiary Subsidiary Subsidiary Sub-subsidiary Sub-subsidiary

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

239

Success Prime Corporation

CHINA INVESTMENT INFORMATION

FOR THE YEARS ENDED DECEMBER 31, 2019

Table 6

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 Company (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.

240

Title	Name	Date of Class	Organizers	Course Name	Hour
				Guiding corporate governance and social responsibility to corporate
		2019/08/20	Corporate Operation Association		3
				culture

	Min-Chun	2019/10/25	Securities and futures Institute	Publicity meeting for effective use of directors'functions for 2019	3
Chi
arman	Chen	2019/11/06	TWSE	Publicity meeting for effective use of directors'functions	3

				Case analysis on the establishment of board of directors and supervisors
		2019/12/04	Securities and futures Institute		3
				forbreachoftrust and specialbreachoftrust

				Guiding corporate governance and social responsibility to corporate
		2019/08/20	Corporate Operation Association		3
				culture

	Shu-Ling	2019/10/25	Securities and futures Institute	2019 Annual Conference on Prevention of Insider Trading	3
Di
rector	Tseng	2019/11/06	TWSE	Publicity meeting for effective use of directors'functions	3

				Case analysis on the establishment of board of directors and supervisors
		2019/12/04	Securities and futures Institute		3
				for breach of trust and special breach of trust

		2019/07/17	Securities and futures Institute	Securities PrintingFraud by"PrintingStocks for Banknotes"	3
		2019/08/15	Securities and futures Institute	Enterprise Financial Crisis Early Warning and Type Analysis	3
Ll Di	Xii
ega rector	ang-Q	2019/08/28	Securities and futures Institute	Corporate governance and board operation	3
Representative	Fang
		2019/09/17	Securities and futures Institute	Research and Analysis on the Malpractice of Corporate Mergers and	3
				Acquisitions-From the Perspective of Corporate Governance

		2019/12/18	Securities and futures Institute	The skills of directors and supervisors to interpret financial information	3
Ll Dit	RiXi
ega recor	u-an			How do directors and supervisors of listed (OTC) companies perform
Representative	Lin	2019/12/18	Securities and futures Institute		3
				their duties

				Guiding corporate governance and social responsibility to corporate
		2019/08/20	Corporate Operation Association		3
				culture

Legal Director	Yen-Shuen	2019/09/26	Corporate Operation Association	An Analysis of Corporate Governance and Sustainable Practice	3
Representative	Chen			Case Study on Leadership Excellence, Enterprise Transformation and
		2019/10/01	Corporate Operation Association		3
				Succession

		2019/10/25	Securities andfuturesInstitute	2019AnnualConference on Preventionof Insider Trading	3
				Guiding corporate governance and social responsibility to corporate
		2019/08/20	Corporate Operation Association		3
				culture

Legal Director	Yun Chen	2019/09/26	Corporate Operation Association	An Analysis of Corporate Governance and Sustainable Practice	3
Reresentative
p				Case Study on Leadership Excellence, Enterprise Transformation and
		2019/10/01	Corporate Operation Association		3
				Succession

Title	Name	Date of Class	Organizers	Course Name	Hour
		2019/10/25	Securities and futures Institute	2019 Annual Conference on Prevention of Insider Trading	3

Independent	Bing-Quan	2019/11/21	Securities and futures Institute	Discussing the Responsibilities of Directors and Supervisors from the	3
				Illl C f th Siti Mkt
Di	Shi			ega ases o e ecures are
rector		2019/11/21	Securities and futures Institute	The Disclosure of Enterprise Information and the False Responsibility	3

		2019/07/17	Securities and futures Institute	Securities PrintingFraud by"PrintingStocks for Banknotes"	3
		2019/08/15	Securities and futures Institute	Enterprise Financial Crisis Early Warning and Type Analysis	3
Idd
nepenent	Pei-Jun Hong			How to supervise the company to do fraud detection and prevention and
Director		2019/11/12	Securities and futures Institute		3
				implement the whistlingmechanismto strengthencorporate governance

		2019/11/21	Securities andfuturesInstitute	TheDisclosure of EnterpriseInformationand theFalseResponsibility	3
		2019/07/23	Securities andfuturesInstitute	Principles and applications ofartificial intelligence	3
				Discussing the Legal Risks and Countermeasures of Directors and
		2019/07/23	Securities and futures Institute		3
				Supervisors from the Case of Major Corporate Malpractice
Independent	Mei-chen
				How do directors and supervisors of listed (OTC) companies perform
Director	Zhuang	2019/07/30	Securities and futures Institute		3
				their duties

				New regulations and trends of corporate governance that must be known
		2019/08/13	Securities and futures Institute		3
				by directors and supervisorsin 2019

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviating from the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and the root cause
	Yes	No	Abstract Illustration
9. Please explain the improvement in the recent annual Corporate governance evaluation of the Corporate Governance center of the Taiwan Stock Exchange Co., Ltd., and propose priority enhancements and measures for those who have not yet improved.(Not required to be included in the Company under review) Label Question Improved Situation orpriorityenhancements and measures 1.7Has the company uploaded the shareholders 'meeting manual and supplementary materials 30 days before the shareholders'meeting? The company completed the declaration within the time limit prescribed by the law. For the Year 2020, the Company plans to prepare relevant materials in advance. The information needed should be completed within the time limit recommended by the corporate governance evaluation. 1.8Does the company upload its annual report 14 days before the shareholders' meeting? 1.9Does the company upload the English version of the meeting notice 30 days before the shareholders'meeting? 1.10Has the company uploaded the English version of the proceedings manual and meeting supplementary materials 30 days before the shareholders'meeting? 1.14Does the company's annual report disclose the implementation of the resolutions of the shareholders'meeting of the previous year? After inspection, all listed items are It is a request for the disclosure of content to strengthen the content or method of disclosure, the company has listed according to the table Request to strengthen the update of the information in the annual report, and to disclose the relevant information. The company has requested the structure of company website 2.2 Does the company formulate a policy for diversification of board members and expose the implementation of the diversity policy on the company's website and annual report? 2.15 Does the company disclose the communication of independent directors with internal audit supervisors and accountants (such as the methods, events and results of the company's financial reports and financial business status) on the company's website? 2.17 Does the company's board of directors regularly (at least once a year) evaluate the independence of CPAs and disclose the evaluation procedures in the annual report? 2.22 Has the company's board performance evaluation method been approved by the board of directors, and self-evaluation will be carried out at least once a year, and the evaluation results will be disclosed on the company's website or annual report? 3.16 Does the company's website and annual report disclose the list of major shareholders, including shareholders with a shareholding ratio of more than 5% or the shareholding ratio of the top ten shareholders, shareholding amount and proportion? 3.19 Does the company's website provide relevant information about the shareholders 'meeting, and at least include the latest annual report of the shareholders' meeting,notice of the meeting,meetingmanua?

AI assistant

SPC — Annual Report 2020

52126_rns_2020-07-01_c9d845da-6252-4909-81ff-3825d1938c2f.pdf

Stock Code: 2496

SUCCESS PRIME CORPORATION

2019 Annual Report

I. Company Spokesperson and Deputy:

II. Headquarters, branches, and factory addresses and phone number:

III. Name, address, and phone of the Stock Agency

IV. Name, Firm, address, and phone of the acting independent auditors:

V. Foreign securities exchange corporation listing: None

VI. Company Website: http://www.success-prime.com

I. Letter to Shareholders

I. 2019 Summary of Business Results:

(III) Financial Income and Expenditure and profit analysis

(IV) Research and Development Status

II. 2020 Business Plans

1. Education Business

III. Future company development strategy, affected by external competitive environment, regulatory environment and overall operating environment

II. Company Profile

I. Date of Incorporation: June 15, 1991 II. Company History

III. Corporate Governance Report

I. Organization

II. Directors, Supervisors, General Manager, Deputy General Manager, Departmental Manager, and Management Team (I) Directors and Supervisors

2. Professional knowledge and Independence of Directors and Supervisors

(II) General Manager, Deputy General Manager, Associate Manager, Managers of Departments and Branches

III. Information of Director (Including Independent Directors), Supervisors, General Manager and the Deputy General Manager.

(IV) Remuneration of the top five executives with the highest remuneration December 31, 2019 Unit: NT$; thousand shares

(V) Name and distributions of managers who allocate the employee compensations:

IV. Corporate Governance

(I) The operation of the Board of Directors

(II) Operation of the Board of Auditors:

Other matters to be documented:

(IV) Composition, responsibilities and operation of the remuneration committee

1. Remuneration Committee Member Information

2. Operations of Remunerations

(V) Fulfilment of social responsibility:

(VI) Companies to fulfill the integrity of the business situation and implementation measures:

4. Strengthening information disclosure

Success Prime Corporation Statement of Internal Control

V. Accountant Information

VI. Change of Accountants

1. Year 2018

(II) About the Successor Accountant

1. Year 2018

VIII. Changes in equity of directors, supervisors, managers and major shareholders

(I) Directors, supervisors, managers and major shareholders' equity changes

(II) Relative to the transfer of equity. Persons who are related: None

(III) Equity pledge Information:

X. The number of shares directly or indirectly controlled by the Company's directors, supervisors, managers investing towards same business, and combined to calculate the comprehensive shareholding ratio:

IV. Financing Information

I. Capital & Shares

(1) Sources of Capital Stock

(2) Shareholder Structure

(3) Shareholding Dispersion

(6) Dividend policy and implementation status of the Company

II. Company Debt: none.

III. Preferred Stock processing situation: none.

IV. Overseas Depository Certificate processing situation: none.

V. Procedures of Employee Stock Option Certificate : none.

VI. Restricted Stock Awards for Employees:

VII.Mergers and acquisitions or transfer of other companies' shares to issue new shares: none.

VIII. Implementation of the capital

(1) Plan Outline:

V. Operation Overview

I. Business Content

A. High School Department

B. Middle and Primary School Department

C. Digital services

2) Optical fiber Business

(2) Industry Profile

1. Current Industry status and development

1) Education Business

��������

2) Optical Fiber Business

4. Competition Overview

2) Optical fiber Business

2) Optical fiber Business

II. Overview of the market, production and sales (1) Market analysis

D. Long Duration

SPC Annual Report 2020

��