Stock Code
5263

Brogent

Technologies

Inc.

2019
Annual Report
Notice to readersThis English-version annual report is a summary translation of the Chinese version and is not an
official document of the shareholders’ meeting. If there is any discrepancy between the English andChinese versions, the Chinese version shall prevail.

Date Printed: 02 April, 2020
Taiwan Stock Exchange Market Observation Post System: http://newmops.twse.com.tw1. Name, Title, Contact No., and Email of the Company's spokesperson
Spokesperson name: Chih-Hung Ouyang
Title: President
Telephone:(07)537-2869
Email:stock@brogent.com
Representative spokesperson: Hui-Chuang Lin
Title: Chief Financial Officer
Telephone:(07)537-2869
Email:stock@brogent.com
2. Head office address and telephone no.
Head office: Number 9, Fuxing 4th Rd., Qianzhen District, Kaohsiung City (80661) Taiwan
Telephone:(07)537-2869
3. Name, address, website, and telephone no. of stock transfer agency
Stock transfer institute: Share Administration Agency, Taishin International Bank
Address: No.96, Sec. 1, Jianguo N. Rd., Jhongshan District, Taipei City 10489, Taiwan
Website:www.taishinbank.com.tw
Telephone:(02)2504-8125
4. External auditor for most recent financial statement
External auditor: Yao-Ting Li, CPA
Yi-Shum Chung, CPA
Accounting firm: Grant Thornton Taiwan
Address: 13F.-2&-3, No.91 Chung Shan 2nd Road, Kaohsiung, Taiwan
Website:www.gti.com.tw
Telephone:(07)537-2589
5. Name of overseas trading office of listed valuable securities and method of searching for
information of valuable overseas securities: None.
6. Company website:www.brogent.com

Table of Contents
Page
I.

LETTER TO SHAREHOLDERS .................................................................................................. - 6 -II. COMPANY PROFILE .................................................................................................................. - 11 1.

DATE OF ESTABLISHMENT ....................................................................................................... - 11 -2.

COMPANY HISTORY .................................................................................................................... - 11 -III. CORPORATE GOVERNANCE REPORT................................................................................. - 16 1.

ORGANIZATIONAL SYSTEM ..................................................................................................... - 16 -2.

PROFILE OF DIRECTORS, SUPERVISORS, PRESIDENT, VICE PRESIDENTS, ASSISTANT
VICE PRESIDENTS, AND DEPARTMENT AND BRANCH DIRECTORS .................................... 18

4. IMPLEMENTATION OF CORPORATE GOVERNANCE ................................................................... 24
5. INFORMATION ON FEES TO CPA ...................................................................................................... 51
6.

CHANGES TO CPA INFORMATION ................................................................................................ 53

7.

THE CHAIRMAN, PRESIDENT, FINANCIAL OR ACCOUNTING MANAGER OF THE
COMPANY WHO HAD WORKED FOR THE CERTIFYING ACCOUNTING FIRM OR ITSAFFILIATED ENTERPRISE IN THE PAST YEAR ........................................................................... 54

8.

SHARE TRANSFER BY DIRECTORS, SUPERVISORS, MANAGERS AND SHAREHOLDERSHOLDING MORE THAN 10% INTERESTS AND CHANGES TO SHARE PLEDGING BY THEM
IN THE PAST YEAR AND UP TO THE DATE OF REPORT............................................................ 54

9.

INFORMATION ON RELATIONSHIP BETWEEN ANY OF THE TOP TEN SHAREHOLDERS(RELATED PARTY, SPOUSE, OR KINSHIP WITHIN THE SECOND DEGREE).......................... 56

10. THE SHAREHOLDING OF THE COMPANY, DIRECTOR, SUPERVISOR, MANAGEMENT
AND AN ENTERPRISE THAT IS DIRECTLY OR INDIRECTLY CONTROLLED BY THE
COMPANY IN THE INVESTED COMPANY, AND CONSOLIDATE THE SHAREHOLDINGPERCENTAGE: ................................................................................................................................... 57
IV. PLACEMENT SITUATION.............................................................................................................. 58
1.

COMPANY CAPITAL AND SHARE CAPITAL ................................................................................ 58

2.

CORPORATE BOND (INCLUDING OVERSEAS CORPORATE BOND) ...................................... 66

3.

ISSUANCE OF PREFERRED STOCKS............................................................................................. 67

4.

ISSUANCE OF GLOBAL DEPOSITARY RECEIPTS (GDR) ........................................................... 675.

EXERCISE OF EMPLOYEE STOCK OPTION PLAN (ESOP) ........................................................ 67

6.

RESTRICTED STOCK AWARDS....................................................................................................... 67

7.

MERGER AND ACQUISITION.......................................................................................................... 67

8.

ISSUANCE OF NEW SHARES FOR ACQUISITION OF SHARES OF OTHER COMPANIES .... 67

9.

IMPLEMENTATION OF CAPITAL ALLOCATION PLAN .............................................................. 67

V. BUSINESS OVERVIEW ................................................................................................................... 68
I.

BUSINESS ACTIVITIES..................................................................................................................... 68

II. MARKET, PRODUCTION AND SALES ........................................................................................... 80
III. EMPLOYEE INFORMATION IN THE PAST 2 YEARS TO THE DATE OF THE ANNUALREPORT ............................................................................................................................................... 93
IV. ENVIRONMENTAL PROTECTION EXPENDITURE INFORMATION ......................................... 93
V. LABOR RELATIONS .......................................................................................................................... 96
VI. IMPORTANT CONTRACTS ............................................................................................................... 99
VI. FINANCIAL OVERVIEW .............................................................................................................. 101
1. CONDENSED BALANCE SHEETS AND STATEMENT OF INCOME (2011 - 2015) .................... 101
2.

FINANCIAL ANALYSIS ................................................................................................................... 106

3.

SUPERVISOR REVIEW REPORT.................................................................................................... 108

4. FINANCIAL REPORT AND CPA REVIEW REPORT........................................................................ 108
5. INDIVIDUAL FINANCIAL REPORT REVIEWED BY CPA (2011 - 2015) ...................................... 109
6. FINANCIAL DIFFICULTIES AND CORPORATE EVENTS ENCOUNTERED BY THE COMPANY
AND AFFILIATES IN THE PAST TWO YEARS AND UP TO THE DATE OF REPORT THATHAVE MATERIAL IMPACT ON THE FINANCIAL STATUS OF THE COMPANY. .................... 109
VII.PRECAUTIONS OF REVIEW AND ANALYSIS OF FINANCIAL STATUS AND BUSINESSPERFORMANCE ............................................................................................................................. 110
1.

FINANCIAL STATUS ....................................................................................................................... 110

2.

FINANCIAL PERFORMANCE ........................................................................................................ 111

3. CASH FLOWS ...................................................................................................................................... 113
4. EFFECT OF MAJOR CAPITAL SPENDING ON FINANCIAL POSITION AND BUSINESSOPERATION ...................................................................................................................................... 114
5. INVESTMENT POLICY IN THE PAST YEAR, PROFIT/LOSS ANALYSIS, IMPROVEMENT
PLAN, AND INVESTMENT PLAN FOR THE COMING YEAR ................................................... 114
6.ANALYSIS OF RISKS IN RECENT YEARS UP TO THE PUBLISHING DATE OF THE ANNUALREPORT ............................................................................................................................................. 114
I.

OTHER IMPORTANT EVENTS ....................................................................................................... 120

VIII.

IMPORTANT NOTICES ........................................................................................................ 121

1.

PROFILE ON AFFILIATES AND SUBSIDIARIES ......................................................................... 121

2.

PRIVATE PLACEMENT OF CORPORATE BONDS IN THE PAST YEARS TO THE DATE OF
THE ANNUAL REPORT ................................................................................................................... 126

3.

HOLDING OR DISPOSAL OF STOCKS OF THE COMPANY BY SUBSIDIARIES IN THE PASTYEAR AND UP TO THE DATE OF REPORT: NOT APPLICABLE............................................... 126

4.

OTHER SUPPLEMENTAL INFORMATION ................................................................................... 126

IX. ITEMS OF IMPACT OF INTERESTS OF SHAREHOLDERS OR STOCK PRICE .............. 126
APPENDIX ............................................................................................................................................... 127
APPENDIX 1：STATEMENT OF INTERNAL CONTROL SYSTEM .................................................. 127
APPENDIX 2：SUPERVISOR’S REVIEW REPORT ............................................................................ 128
APPENDIX 3：CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’REPORT ............................................................................................................................................. 129

I. Letter to Shareholders
Dear Shareholders,Thank you very much for supporting Brogent Group and taking time to attend 2020
annual meeting of shareholders.
In 2019, Brogent Group’s consolidated revenue amounted to NT$2.08 billion, which
increased 27.1% points from last year, net income NT$367 million, and earnings per share
NT$6.57, an increase of 42.5% points from last year. The increase of net income wasmainly due to the growth of the software content sales, which accounted for approximately
16% of the Brogent Group’s total revenue in 2019. A review of the performance of various
financial indicators in 2019 shows solid operating performance in each quarter, withrevenue and profit leaping forward to reach an all-time high. It is evident that as thediversified business has been developed successfully, Brogent Group has reached a newmilestone in the 10 years since the transformation of the motion simulation industry.
Since its listing in 2012, Brogent Group’s revenue has grown nearly tenfold, and thebusiness promotion of hardware equipment has successfully gained a foothold around theworld, with i-Ride simulation equipment and m-Ride Flying Theater even being
mainstream in the international market. Looking ahead to the next decade, Brogent Groupis targeting its strategy to challenge higher-end customers, expand market share in small
rides equipment devices, and expand content licensing and design revenues.
Brogent Group has become an emerging corporation in the motion simulationindustry since 2010. Flying Theater has gained the biggest market share in the world andsuccessfully won the hearts of customers worldwide. Partners for stable cooperation span
the five continents of the world; including well-known international theme parks, such as
LEGOLAND, Dreamworld, Europa-Park and Fuji-Q Highland. In the next decade,Brogent Group will target higher-end customers and consolidate its market advantage by
capturing customers at the top of the pyramid with its unique products.
At the same time, Brogent Group will also focus on increasing market share of small
personalized devices. The more flexibility in the mass distribution of smaller devices will
help increase the penetration of Brogent Group's devices in the market, allowing moremotion simulation devices to penetrate the consumer market and further enhance the-6-profitability of the content market. Brogent Group has successfully developed
miniaturized motion simulation equipment devices related to e-sports, racing, flight
simulation platforms and personalized VR cinemas. In the future, Brogent Group expects
to integrate content manufacturers through strategic alliances to expand equipment
benefits and revenue.
In recent years, Brogent Group's work on content licensing and design revenue has
been gradually fermented. Through Brogent Group's continuous deployment of motion
simulation equipment devices around the world, the royalty income from content videos
has gradually increased its overall share, making the multiplier effect between devices andcontent more obvious. In addition to selling the equipment to operators that have opened
up their businesses at Australia's Gold Coast, Brogent Group is also licensing the Flying
Theater videos to them and is also negotiating long-term licensing plans for other Flying
Theater videos. Other Brogent Group customers who already have facilities in placearound the world have also resumed discussions with Brogent Group for new video
content licensing. In the future, Brogent Group will also continue to promote the strategy
of expanding content licensing and design revenue, in order to increase revenue marginand become a turnkey solution provider for hardware amusement equipment, video
content design, venue planning and field operations.
The novel coronavirus (COVID-19) pandemic that has swept the world in the firsthalf of this year has had unprecedented effects. However, looking back at the developmentof the theme park and the entertainment market over the past 20 years, despite the impactof the SARS outbreak in 2003 and the financial tsunami crisis in 2008, long-term
observation shows that the attendance of the theme park has been growing steadily after
the global shock events, indicating that people's demand for entertainment experience isstill increasing. For example, despite the SARS outbreak in 2003, in the year following the
SARS outbreak, the number of visitors to the world's top 10 theme parks increased by 6%
against the trend, followed by a year-on-year increase in the number of visitors. In 2011,
the number of visitors to the world's top 10 theme parks increased by 19.4% compared to2003. This shows that the demand for entertainment experiences has increased in spite of
SARS and the 2008 financial tsunami, and the long term outlook for theme parks and theentertainment market remains positive.

-7-

The management team and the employees of Brogent Group will strive to reach all
the operational goals in order to return your long term encouragement and support!

Our best wishes for the health and prosperity of all our shareholders!

Chairman, Chih-Chuan Chen-8-

1. Accomplishments in 2019(1) Business Plan Implementation Outcomes in 2019
Unit: NT$1,000
Year

2018

2019

Change (amount)% Change

Sales revenue

1,637,438

2,080,441

443,003

27.05

Gross profit

721,242

1,002,360

281,118

38.98

Operating expenses

431,730

581,551

149,821

34.70

Operating income

289,512420,809131,297

45.35

Net income (loss) before
tax

321,127

471,901

150,774

46.95

Net income(loss)

258,418

383,810

125,392

48.52

Net income attributable toshareholders of the parent

257,168

366,525

109,537

42.52

Item

(2) 2019 Budget Execution
According to the Regulations Governing the Publication of Financial Forecastsof Public Companies, the Company did not need to compile a financial forecast for
2019, and therefore this section is not disclosed.

(3) Analysis of Financial Gains and Losses and Profitability
Unit: %Year

Item
Financial structure(%)
Solvency (%)

Profitability

Debt-to-assets ratio
Long-term fund to property, plant andequipment (fixed assets) ratio
Current ratio
Quick ratio
Times interest earned
Return on assets (%)
Return on equity (%)
Paid-in capital to income before tax (%)
Net profit margin (%)
Earnings per share (NT$)
-9-

2018

2019

31.22

40.93

345.35402.42501.83334.463097.55
6.47
9.21
60.48
15.78
4.84

324.08275.272088.88
8.60
12.63
84.65
18.45
6.57

(4) Research and Development
To continuously enhance the Company’s competitiveness, the Company
has always actively invested in R&D efforts. In 2018 and 2019, it has
expended a total of NT$118,370 million and NT$172,403 million in R&D,
respectively accounting for 7.23% and 8.29% of the net operating income.
The R&D expense is expected to be NT$225,164 million in 2020. The
Company shall continue to innovate and remain committed to research anddevelopment because these aspects of operation embody corporate
competitiveness. The Company shall continue to engage in advanced
technological R&D and innovative applications, and implement
product-centric design and research as well as systematic management tomaintain the leading position of products and technologies.

(5) Impacts of External Competitive Environment, Regulatory
Environment, and Overall Operation Environment
The Company operates its business in accordance with domestic andforeign laws and regulations and periodically notes any changes in domestic
and foreign policies and development trends, to facilitate immediate
response. The Company's employees also receive training regularly to
update them on current political and economic changes and trends; therefore,changes to laws and regulations will not exert a material impact on the
Company's business development.
Regarding external competition and the overall business environment,
because the Company has successfully expanded into overseas markets in
2019, we will continue to develop our businesses based on market
internationalization. By seeking high-quality customers, attaining productrecognition, raising product sales prices, and adopting a product composite
marketing model concurrent with mature technologies and scaled production,
the Company expects to accurately ascertain the pulse of the global market.
Thus, based on the economic recovery of European and American countries
as well as China’s entertainment market demand, Brogent will expand its
businesses into the global market, thereby enhancing its overall revenue
performance.

- 10 -

2. Summary of Business Plan for 2020
(1) 2020 Operational Goals and Crucial Product Marketing
Policies
1. Continue to optimize the quality of sensory simulation amusement park
facilities and diversify product category.
2. Actively extend into the international market and raise its global brandawareness.
3. Deepen the design and production of digital contents and heighten
product added value.
4. Engage in industry–academic cooperation to actively cultivate
high-quality specialists in digital content.

(2) Expected Sales Volume and Criteria
The Company's operational revenues mainly come from the sales of motion
simulation entertainment facilities. According to the Regulations Governing the
Publication of Financial Forecasts of Public Companies, the Company did notneed to compile a financial forecast for 2020, and therefore this section is notdisclosed.

3. Future Corporate Development Strategy(1) Product diversification(2) Market internationalization(3) Diversification of revenue models(4) Integration of strategic partner resources

II. Company Profile
1.

Date of Establishment
October 30, 2001.

2.

Company History
Company milestones up to the date of this report:

April 2011
June 2011
September 2011

Opening of 4D Theater at Formosan Aboriginal Culture Village.
Conversion of employee stock options to 1,744,000 ordinary shares; thepaid-up capital following capital increase totaled to NT$213,560,000.
Seasoned equity offering (SEO) of NT$12,700,000; following capital- 11 -

October 2011
December 2011
June 2012
September 2012
November 2012
December 2012
January 2013
February 2013
April 2013
July 2013
October 2013
October 2013
October 2013
February 2014

March 2014
April 2014
May 2014
June 2014
July 2014
July 2014
September 2014

increase, the paid-up capital totaled to NT$226,260,000.
Approved public offering of stock.
Registered on emerging stock market.
Constructed started on new research and test center at Kaohsiung Software
Park.
Passed the market listing application by the Board of Directors of theTaipei Exchange.
Public underwriting of SEO prior to listing amounted to NT$28,290,000,
and the paid-up capital following capital increase totaled to
NT$254,550,000.
Stock market launch.
Completion of the operational headquarters and R&D test center.
The i-Ride passed China’s A-grade large-scale amusement park facility
authentication and a commercial business license was received for it.
The i-Ride opened at an anime themed shopping center in Hangzhou,
China.
The new generation of i-Ride, Fly Over Canada, opened in Vancouver,
Canada.
Attended the National Palace Museum First New Media creative contest;
the Company's 3D interactive new media art gained honorable mention.
Signed a Memorandum of Understanding with Kodansha, Japan.
Surplus transfer of NT$12,727,500, and the paid-up capital following
capital increase totaled to NT$267,277,500.
Conversion of convertible corporate bond to ordinary bond totaled to
NT$7,422,770; the paid-up capital following capital increase totaled to
NT$274,700,270.
First-quarter revenue reached NT$312 million, with net profit after tax
amounting to NT$100 million, both represented record highs in Brogent's
history.
The i-Ride received the 2014 Taiwan Excellence Reward for the categoryof fashion, life, culture and creativity product.
Conversion of convertible corporate bond to ordinary bond totaled to
NT$15,433,990; the paid-up capital following capital increase totaled to
NT$290,134,260.
Held the Groundbreaking Ceremony for the 2nd stage of the R&D Center.
Fuji Q Highland held the Grand Opening of the i-Ride flight theater "Fuji
Airways" in Fujiyoshida, Japan.
Conversion of convertible corporate bond to ordinary bond totaled to
NT$18,753,440; the paid-up capital following capital increase totaled to
NT$308,887,700.
Capital reserve transfer of NT$27,470,020; the paid-up capital following
capital increase totaled to NT$336,357,720.
- 12 -

October 2014
November 2014
January 2015
January 2015
March 2015
June 2015
July 2015
November 2015
December 2015
January 2016
March 2016
April 2016
May 2016
July 2016
September 2016
December 2016
March 2017
March 2017
April 2017
June 2017
September 2017

Signed the "Attack on Titan" IP licensing contract with Kodansha Ltd.
Conversion of convertible corporate bond to ordinary bond totaled to
NT$442,070; the paid-up capital following capital increase totaled to
NT$336,799,790.
Seasoned equity offering (SEO) of NT$60,000,000; following capitalincrease, the paid-up capital totaled to NT$396,799,770.
Signed another MOU with Kodansha Ltd. to establish marketingcompanies for peripheral products.
Awarded the Potential Mittelstand Enterprise for the 3rd Taiwan
Mittelstand Award held by the Industrial Development Bureau, Ministry of
Economic Affairs (MOEA).
Seasoned equity offering (SEO) of NT$10,300,000, following capitalincrease, the paid-up capital totaled to NT$407,099,770.
Surplus transfer of NT$39,680,000, following capital increase, the paid-up
capital totaled to NT$446,779,770.
Awarded government subsidies under the international market
development program by the Bureau of Foreign Trade, Ministry of
Economic Affairs.
The grand opening of i-Ride flight theater themed “Attack on Titan”
was held in Shan-Shun World, Toufen Township, Miaoli County, Taiwan.
Grand opening of the 2nd stage Office Building.
Grand opening of the 4D motion simulating theater in the famous
European safari “Zoo Emmen”in Netherlands.
New launch of i-Ride flight theater “FlyOver America”in Mall of
America, Minnesota, U.S.A.
The Joint Research and Development Center between Brogent andNational Sun Yat-Sen University was established.
The Research and Development Center of Somatosensory Content
between Brogent and Southern Taiwan University of Science andTechnology was established.
The Lord Mayor of Brisbane, Australia, Graham Quirk, visited Brogent
with the Brisbane delegation and experienced i-Ride flight theater.
Awarded the Enterprise with Outstanding Contribution by Export
Processing Zone, M.O.E.
Feng Tang, Minister without Portfolio of Executive Yuan, came to Brogent
to experience i-Ride flight theater.
Activated the filming project “Flying Over Australia” with Cutting Edge, aleading Australian filmmaker.
The Flying Theater of Spain’s famous theme park officially opened
The Flying Theater “Voletarium” of Germany’s prestigious Europa Park
officially opened.
Won Europe’s Best New Ride of the European Star Awards 2017.
- 13 -

October 2017
November 2017
November 2017
December 2017
December 2017
January 2018
January 2018
May 2018
June 2018
July 2018
July 2018
July 2018
August 2018
August 2018
September 2018
September 2018
October 2018
November 2018
November 2018
December 2018
December 2018
January 2019

The Flying Theater “This is Holland” of Netherland officially opened in
Amsterdam.
Brognet’s i-Ride Experience Center officially opened in Kaohsiung
Software Park.
Brogent’s new VR product “Q-Ride” launched in IAAPA Attractions Expoin Orlando, Florida, U.S.A.
Dentsu Japan invested in Brogent’s subsidiary “Brogent JapanEntertainment.”
Vice President Chien-Jen Chen visited i-Ride Experience Center ofBrogent.
Brogent is the first TÜV SÜD client in Asia to have passed its challenging
test with i-Ride Flying Theater.
Taipei City Mayor Wen-Je Ko visited the Flying Theater “This is Holland”
in Amsterdam.
Brogent unveiled its new VR and motion simulation gaming product at the2018 Vision Get Wild Exhibition.
Brogent’s VR gaming products were presented at Computex Taipei 2018.
Brogent’s VR gaming tournament, Lightning Wings, kicked off its
regional preliminary contest at Kaohsiung Beer Rock Festival.
Brogent’s first carousel officially opened at KW2 (Kaohsiung Port
Warehouse No.2)
The Flying Theater of Abu Dhabi’s renowned theme park officiallyopened.
The Flying Theater “FLYOVER CHINA” of Beijing Shijingshan
Amusement Park officially opened.
Brogent’s VR gaming tournament, Lightning Wings, held its regional
preliminary contest in Taichung.
Tom Tate, Mayor of the City of Gold Coast, Australia, visited Brogent
with City of Gold Coast delegation and experienced i-Ride flight theater.
Won Media-based Attraction of the Year of the Park World ExcellenceAwards 2018 Europe.
Brogent’s VR gaming tournament, Lightning Wings, held its regional
preliminary contest in Taipei.
Brogent’s hexaRide VR and the first original VR film “Ghost in the Shell”
made its debut at Diver City Plaza in Odaiba, Tokyo.
Brogent’s VR gaming tournament, Lightning Wings, held its
championship game in Kaohsiung Arena.
Brogent introduced “Art-Zoo Inflatable Park” from Singapore opened at
Kaohsiung Harbor Pier 7.
hexaRide 's second original VR film “Attack on Titan” premiered at DiverCity Plaza in Odaiba, Tokyo.
The Flying Theater “i-Ride Taipei” of Taipei Nan Shan Plaza officiallyopened.
- 14 -

February 2019
March 2019
May 2019

July 2019
July 2019
August 2019
September 2019
September 2019
October 2019
December 2019

Brogent’s VR gaming simulation ride “Lightning Wings” was invited to2019 Mobile World Congress in Barcelona.
The Flying Theater “THE LEGO® MOVIE™ Masters of Flight”
officially opened in Legoland Florida Resort.
Brogent presented Q-Ride, VR gaming simulation ride “Lightning Wings”
and the newly developed racing simulator at the 2019 Vision Get Wild
Exhibition.
Brogent Group collaborated with American Institute in Taiwan (AIT) to
premiere “Discover America” in the celebration of US-Taiwan Travel
Year.
Brogent’s new racing simulator made its world debut at 2019 Asia Pacific
Cities Summit in Brisbane, Australia.
The Flying Theater “Sky Voyager” of Australia’s biggest theme park
Dreamworld officially opened on the Gold Coast.
The second Flying Theater of Beijing Shijingshan Amusement Park
officially opened.
Brogent’s flying theater won the ” Best Dark Rides” of the 2019 European
Star Award.
The Flying Theater “FlyOver Iceland” of Iceland officially opened inReykjavík .
Brogent received ” 2019 Chinese Outstanding 3D/Motion Theatre
Suppliers” of the Asia Attraction Gold Crown.

- 15 -

III. Corporate Governance Report
1. Organizational System(1) Organizational Profile(2) Business Activities of Each Major Division
Major Divisions

Primary Duties

Chairman's Office Supervise the execution of the corporate internal audit.

Audit Office

President's Office

A.Inspect and evaluate whether internal control systems are sound andprovide recommendations for analysis and evaluations.
B.Plan, implement, and improve internal auditing systems; requests
operational procedures to comply with laws, regulations, and articles ofincorporation and assist in increasing business performance.
A.Plan the corporate mid-term and long-term business strategy, as well as
the new business direction and market deployment.
B.Control and evaluate the operation results of subsidiaries.

- 16 -

Major Divisions

Primary Duties

A.Plan and implement marketing strategies.
B.Achieve company-defined business goals and join overseas exhibitions.
C.Handle general tasks (product presentation, proposal, quotation,
Sales & Marketing negotiation, payment collection, and payment notification) anddetermine customer's status in contract compliance.
Center
D.Coordinate and communicate with marketing business and technicalteams.
E.After sales service execute and management.
A.Design and develop new technology and products.
Product
B. Develop new interactive game.
Development

CenterProject Center

A.Supervise the construction projects.
B.Control product quality and communicate with customers when
implementing projects.

A.Design, develop and produce hardware structures such as six-axis
platforms, steel structures and dynamic structures such as elevators.
Technology Center B.Organize relative information for certification and prepare operating
maintenance handbook.
A.Formulate financial plans, business strategy, treasury and risk
management.
Finance Center
B.Manage and operate accounting, budgeting, tax, stock affairs andprovide analysis reports to assist decision-making.
A.Organization design and plan. Human resources management system
executing including recruiting, training and salaries management. Carryout performance evaluations and devise welfare policies
B.Assist Chinese and English contracts drafting and reviewing, providing
Administration
negotiation strategies and analysis of legal risks. Assist legal disputeconducting and discussing risk preventing strategies.
CenterC.Product/technology patent and trademark management.
D.Purchasing and supplier management.
E.Assist in executing and promoting general affairs and raw material
management.
A.Develop and maintain computer networks and application systems.
B.Maintain and manage computer hardware, peripheral equipment, andIT Department
information files.
C.Plan and execute system safety.
D.Hardware and software resources management.
International Business
A.Develop potential international business opportunities.
Development
B.Create future business models.
Department
China Business
A.Develop potential China area business opportunities.
Development
B.Develop China area potential customers.
Department- 17 -

2. Profile of Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and Department andBranch Directors(1) Directors and Supervisors
1. Directors and Supervisors
March 30, 2020; Unit: Shares; %Title

Nationality
or place ofregistration

Name

Date
electedTerm

Date firstelectedNumber of shares
held when elected
Numberof shares

Chairman

Director

ROC

ROC

Chang chun
Investment Co.
1,706,565Ltd.
3
2017.05.31
2016.05.31
years
Representative
Chih-Chuan
Chen

Chih-Hung
Ouyang2017.05.31

3
2011.10.05 2,822,581
years

Number of shares
currently held

Shares held by spouseand minor children

Number of shares held in
the name of others

Shareholding
Percentage

Number ofsharesShareholding
Percentage

Number ofsharesShareholding
Percentage

Number ofsharesShareholding
Percentage

3.82%

2,150,271

3.86%

－

－

－

－

0.00%

30,420

0.05%

－

－

－

－

6.32%

3,807,191

6.83%

101,187

0.18%

－

－

Direcor

ROC

Chung-Ming
Huang

2017.05.31

3
2011.10.05 2,381,654
years

5.33%

3,000,883

5.38%

81,237

0.15%

－

－

Director

ROC

Chin-Huo
Huang

2017.05.31

3
2011.10.05
years

912,256

2.04%

1,149,442

2.06%

252,971

0.45%

－

－

Direcor

ROC

Chun-HaoCheng

2017.05.31

3
2016.05.31
years

125,7810.28%

158,483

0.28%

－

－

－

－

Education/work experience

Title

Name

1. M.B.A., National Taiwan University
2. Director, Mass Solutio Technologies
3.Supervisor, RT-Mart International
4.Supervisor, Gogoro Taiwan Limited

Vice
President,
Investment
Administration Division, RT-Mart
International
None. None.

1.Electrical Engineering, National Sun
Yat-sen University
2.R&D Engineer, Acer Incorporated
3.Project Manager, Ai West Co. Ltd.
4.President, Micro Sova

1. President, Brogent Techonologies
Inc.
2. Chairman, Fu Wu Investment
None. None.
Ltd.
3. Chairman, Brogent Global Inc.
4. Chairman, Brogent MechanicalInc.

1.Ph.D in Engineering Management,
University Of Missouri-Rolla
1. Director, Fu Yi Investment Ltd.
2.Director, Business Administration
2. Professor, Engineering &Office; Dean, Engineering &None. None.
Management of Advanced
Management of Advanced Technology
Technology Dept, Chang Jung
Dept; Dean, International Business
Christian University
Dept, Chang Jung Christian University
3.Supervisor, Taiwan Water Corporation
1.Chang Hua Industrial Vocational High Chairman, Fu Ying Metal Industrial
SchoolCo., Ltd.
2.Director, SANFU Motors Industrial
None. None.
Corp.
3.Director, Chun Ying Metal IndustrialCo., Ltd.
1.Ph.D in Business Studies, Meiji
Professor, Graduate Institute of
University
Hospitality Management, NKUHT
2.Supervisor, Taiwan Water Corporation
None. None.
3.Associate Professor, Department of
Finance, I-Shou University
4.Associate Professor, Graduate Instituteof Hospitality Management, NKUHT- 18 -

Other positions

Other officer, director
or supervisor who isthe spouse or a relative
within the second
Note
degreeRelationship

None.

None.

None.

None.

None.

Nationality
or place ofregistration

Title

Name

Date
electedTerm

Date firstelectedNumber of shares
held when elected
Numberof shares

Shareholding
Percentage

Number of shares
currently held
Number ofsharesShareholding
Percentage

Shares held by spouseand minor children

Number of shares held in
the name of others

Number ofsharesNumber ofsharesShareholding
Percentage

Shareholding
Percentage

Independe
nt Director

ROC

Chin-Wen
Chuang2017.05.31

3
2016.05.31
years

－

－

－

－

2,886

0.01%

－

－

Independe
nt Director

ROC

Shun-Jen
Cheng

2017.05.31

3
2013.06.19
years

－

－

－

－

－

－

－

－

Supervisor

ROC

Yung-Liang
Huang

2017.05.31

3
2014.06.11
years

1,050,466

2.37%

7,560

0.01%

－

－

Supervisor

ROC

Yi-Hsiang
Huang

2017.05.31

3
2011.11.23
years

－

－

－

－

－

－

－

－

Supervisor

ROC

Ken-HuangLin

2017.05.31

3
2017.05.31
years

－

－

－

－

0.01%

－

－

2.35%

1,323,586

5,040

Education/work experience

Other positions

Other officer, director
or supervisor who isthe spouse or a relative
within the second
Note
degreeTitle

Name

1. Ph D in Control System,
Department of ElectricalEngineering, National Sun Yat-sen
University (NSYSU)－
None. None.
2.Professor of the Department ofElectrical Engineering, I Shou
University
3. Dean of College of Electrical andInformation Engineering
1.Ph.D in Business Studies, Manuel L.Q 1. Vice President, Cheng Shiu
University
University
2. Doctoral Seminar in Institute of 2. Independent Director, TOP
Technology&
Innovation HIGH IMAGE CORP.
None. None.
Management, Chung Hua University 3. Independent Director, NAN
REN LAKE LEISURE
AMUSEMENT CO., LTD.
4. Independent Director, S-Tech
Corp
1.Masters in Business Management, US
International Asia Pacific University
Director, Wing Yue Advertising
None. None.
2.Continued education in Masters
Company
Program at Dayeh University
3.Media advertisement agency
1.Ph.D, Financial Management, National
Central University
1.Professor, Department of Finance,
2.Department Chair, Department of
National University of Kaohsiung
Finance, National University ofNone. None.
2. Independent Director , MA
Kaohsiung
KUANG HEALTHCARE
3.Director, Extension Education
HOLDING LIMITED
Center, National University ofKaohsiung
1.Ph.D., Department of Electrical
Director of southern taiwan industry
Engineering, University of Illinois,
promotion center
Urbana-Champaign.
None. None.
2. master of science, the Graduate
Institute of Electrical Engineering,
National Taiwan University.

Relationship

None.

None.

None.

None.

None.

Note:If the chairperson also acts as the general manager or other equivalent position (highest managerial position) or the chairperson and general manager or other equivalent position(highest managerial position) are spouses or relatives within one degree of consanguinity, the Company shall elaborate the causes, reasonableness, necessity, estimated impact, and measures
to be taken.

- 19 -

2. Director and Supervisor Expertise and Independence
Has at least 5 years of work experience and meets one of the

Meet the independence criteria (Note 1)

Number offollowing professional qualifications

Criteria
Nameother public

An instructor or higher A judge, public

Has work

position in a department prosecutor, attorney,

experience inof commerce, law,accountant, or othercommerce, law,finance, accounting or

professional or

finance, orother department

technical specialist

accounting or a

related to the business

related to the needs ofprofession

needs of the Company

the Company who hasnecessary for thein a public or private

passed a national

business of thejunior college or

examination andCompany

university

received a certificatecompanies inwhich theDirector also
serves as an
Independent
1

2

3

4

5

6

7

8

9

10

11

12

Director

therefor
Chang chun Investment
Co. Ltd
Representative:
Chih-Chuan Chen

























-

None.

Chih-Hung Ouyang



























None.



























None.



























None.

Chung-Ming Huang

Chin-Huo Huang
Chun-Hao Cheng







-





















None.

Chin-Wen Chuang





























None.

Shun-Jen Cheng





























3



























None.

Yung-Liang Huang
Yi-Hsiang Huang





























1.

Ken-Huang Lin





























None.

Note : Directors, during the two years before being elected and during the term of office, meet any of the following situations, pleasetick the appropriate corresponding boxes:(1) Not an employee of the company or any of its affiliates;(2) Not a director or supervisor of the company or any of its affiliates;(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person underothers’ names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten
shareholders;(4) Not a spouse, relative within second degree of kinship, or lineal relative within third degree of kinship of any of the persons in the preceding
three paragraphs. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of theofficer in the preceding 1 subparagraph, or of any of the abovepersons in the preceding subparagraphs 2 and 3;(5) Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number ofissued shares of the company, ranks as of its top five shareholders, or has representative director(s) serving on the company’s board based on
Article 27 of the Company Law.

(6) Not a director, supervisor, or employee of a company of which the majority of board seats or voting shares is controlled by a company that also
controls the same of the company;(7) Not a director, supervisor, or employee of a company of which the chairman or CEO (or equivalent) themselves or their spouse also serve as thecompany’s chairman or CEO (or equivalent);(8) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares of a specified company or institution that has afinancial or business relationship with the company;(9) Other than serving as a compensation committee member of the company, not a professional individual who, or an owner, partner, director,
supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting
services or consultation to the company or to any affiliate of the company, or a spouse thereof, andthe service provided is an “audit service” or a “non-audit service which total compensation within the recent two years exceeds NTD500,000”;(10) Not having a marital relationship or a relative within the second degree of kinship to any other director of the company.
(11) Not been a person of any conditions defined in Article 30 of the Company Law; and(12) Not a governmental, juridical person or its representative as defined in Aticle 27 of the Companyt Law.

- 20 -

(2) Profile of President, Vice Presidents, Assistant Vice Presidents, and Department Directors
March 30, 2020; Unit: Shares; %Title

Nationality

Name

Date
appointed

Shares held

Shares held by
spouse and children

Shareholding
SharesShareholding
SharesPercentage

President

Chief Financial
Officer

Vice Presidentof Technology
CenterChief Engineer& Director of
Project Center

Director of
Audit Office

ROC

ROC

ROC

ROC

ROC

Chih-Hung
OuyangSui-ChuanLin

Teng-Hung
Lai

Yi-Chung
Huang

Hui-Ping Li

2001.10 3,807,191

2013.01

2010.112015.08

2008.03

27,856 0.05%

24,333 0.04%

37,896 0.07%

28,457--

Education/work experience

Other positions

Shareholding

0.18%

0.05%

-

-

3,780 0.01%

Other officer, director orsupervisor who is the
spouse or a relative within Notesecond degree
Title

SharesPercentage

6.83% 101,187

214,781 0.39%

Shares held in
the name ofothersName Relationship

Percentage

-

-

-

-

-

-

Electrical Engineering, National Sun
Yat-sen University
R&D Engineer, Acer Incorporated
Project Manager, Ai West Co. Ltd.
President, Micro Sova

Chairman, Fu Wu
Investment Ltd.
Chairman, Brogent Global
Inc.
Chairman, Brogent
Machanical Inc.

-

-

-

-

-

Master Graduate from the Departmentof Finance, National Sun Yat-sen
University
Supervisor, Brogent Global
Finance Office at Chienmei
Inc.
Construction Development Corp.
Finance Department Manager atBrogent Technology

-

-

-

-

-

Masters in the Department ofComputer Science and Engineering at
National Chung-Hsing University
Technical Chief Officer at Meihsing
Technology
President of Liang Chuan Co. Ltd.

Director, Brogent
Machanical Inc.

-

-

-

-

-

PhD, Electrical Engineering, National
Sun Yat-sen University
Chang Gu Construction Inc.
Manager, KungYuanInternational
Technology

Chairman,Tong Shun
Technology Inc.

-

-

-

-

-

Master Graduate from the Departmentof Finance, National Sun Yat-sen
University
Accounting Department in Taiflex
Scientific Co. Ltd.
Auditor at Ernst & Young Global
Limited

None.

-

-

-

-

Note: If the chairperson also acts as the general manager or other equivalent position (highest managerial position) or the chairperson and general manager or other equivalent position (highest managerial
position) are spouses or relatives within one degree of consanguinity, the Company shall elaborate the causes, rationality, necessity, estimated impact, and measures to be taken.

- 21 -

3. Remunerations to Directors, Supervisors, President, and Vice Presidents in recent years
1. Remunerations to Directors (including Independent Directors) in the most recent year (2019)
Unit: NT$ thousands
Remuneration

Relevant Remuneration Received by Directors Who are Also Employees

Ratio of Total
Remuneration Salary, Bonuses,
Bonus toBase
Severance Pay(A+B+C+D) to Net
Severance Pay (B)Allowances (D)and Allowances
Directors (C)Income (%)
Compensation
(F)
(E)
(A)

Title

Profit Sharing- Employee
Bonus (G)Ratio of Total
Compensation
Exercisable
New Restricted (A+B+C+D+E+F+
Employee Stock Employee Shares G) to Net Income(%)
Options (H)
(I)

Name
Companies in the consolidated
financial statements

brogent

Companies in the consolidated
financial statements

brogent

Companies in the consolidated
financial statements

brogent

Companies in the consolidated
financial statements

brogent

brogent

Companies in the consolidated
financial statements

brogent

Companies in the consolidated
financial statements

brogent

Companies in the consolidated
financial statements

Companies in the
consolidated financial
statements

brogent

－

－

－

1,266

1,266

60

60

0.36170.3617

－

－

－

－

－

－

－

－

－

－

－

－

0.36170.3617

None.

Director

Chih-Hung
Ouyang

－

－

－

－

1,266

1,266

60

60

0.36170.3617

3,100

4,626

－

－

－

－

－

－

－

－

－

－

1.20751.6237

None.

Director

Chung-Ming
Huang

－

－

－

－

1,266

1,266

24

24

0.35190.3519

1,387

1,387

－

－

－

－

－

－

－

－

－

－

0.73020.7302

None.

DirectorChin-Huo Huang

－

－

－

－

1,266

1,266

54

54

0.36010.3601

－

－

－

－

－

－

－

－

－

－

－

－

0.36010.3601None.

brogent

Companies in the consolidated
financial statements－

Companies in the consolidated
financial statements

brogent

Chairman

Chang chun
Investment Co.
Ltd. Representative:
Chih-Chuan
Chen

brogent

All companies in the consolidated
financial statements

Compensation Paid to
Directors from an
Invested Company
Other than the
Company’s
Subsidiary

Cash Stock Cash Stockbonus bonus bonus bonus

Director

Chun-Hao Cheng

－

－

－

－

1,266

1,266

60

60

0.36170.3617

－

－

－

－

－

－

－

－

－

－

－

－

0.36170.3617

None.

Independent
DirectorChin-Wen
Chuang

360

360

－

－

－

－

60

60

0.1146

0.1146

－

－

－

－

－

－

－

－

－

－

－

－

0.1146

0.1146

None.

Independent
Director

Shun-Jen Cheng

360

360

－

－

－

－

54

54

0.11300.1130

－

－

－

－

－

－

－

－

－

－

－

－

0.11300.1130

None.

＊The compensation content disclosed in this table differs from the income concept of the Income Act; therefore, this table serves to disclose information rather than for tax purposes.

- 22 -

2. Remunerations to Supervisors in the most recent year (2019)
Unit: NT$ thousands
Ratio of Total
Compensation Paid
Remuneration
to Supervisors from
(A+B+C) to Net
an Invested
Income (%)

Remuneration

Title

Base Compensation
(A)

Name

Bonus to
Supervisors (B)Allowances (C)Company OtherAll companies
All companies
All companies
All companies
than the Company’s
Brogent in consolidated Brogent in consolidated Brogent in consolidated Brogent in consolidated
Subsidiarystatements
statements
statements
statements
S u p e r v i s o r Yung-Liang Huang

－

－

1,266

1,266

60

60

0.36170.3617None.

S u p e r v i s o r Yi-Hsiang Huang

360

360

－

－

54

54

0.11300.1130

None.

Supervisor

360

360

－

－

60

60

0.1146

0.1146None.

Ken-Huang Lin*The compensation content disclosed in this table differs from the income concept of the Income Act; therefore, this table serves
to disclose information rather than for tax purposes.

3. Remunerations to President, and Vice Presidents in the last year (2019)
Unit: NT$1,000
Pension(B)

Salary (A)

Title

Bonus and special
allowance (C)Employee bonus (D)Name

All companies
All companies

All companies
Brogent

All companies
inBrogent
statements

2,400

3,806

statements

Brogent in consolidated
consolidated
statements

Chih-Hungin consolidatedin
Brogent

consolidated

President

Ratio of total A,
SharesShares obtained
B, C, and D to
subscribablethroughRemuneratio
after-tax income under employee restricted stock n received(%)
stock options
award
from parent

Cash

Stock

Cash

bonus

bonus

bonus bonus

Stock

-

-

company or
Investeescompanies incompanies incompanies inother thanBrogent
Brogent
Brogent
consolidated
consolidated
consolidated
subsidiaries

statements

-

-

700

820

-

-

All

All

All

statements

statements

statements

0.8458 1.2620

-

-

-

-

None.

Ouyang＊The compensation content disclosed in this table differs from the income concept of the Income Act; therefore,
this table serves to disclose information rather than for tax purposes.

4. Manager name and distribution situation regarding employee bonus in the last year (2019):
Unit: NT$1,000
Title

Managerial
officerName

President

Chih-Hung Ouyang

Vice President ofTechnology Center

Teng-Hung Lai

Chief Engineer &Yi-Chung Huang
Director of Project Center
Chief Financial Officer

Stock
bonus

Cash
bonus

Total

0

4,073

4,073

Total amount as a percentage of earnings(%)

1.1113Sui-Chuan Lin

Director of Audit Office Hui-Ping Li

Note: As of the printing date of this Annual Report, the distribution list of employee profit sharing has not been fixed,
and shall be proposed as stipulated according to the actual distribution of last year.

- 23 -

4. Implementation of corporate governance(1)Operations of the Board of Directors
1. In 2019, a total of 9 (A) meetings of the Board of Directors were held in the mostrecent year. The attendance was as follows:
Title

Name

Attendance in(Note 1)

person (B)By proxyAttendance rate (%)[B/A](Note 2)

NoteChangchun
Chairman

Director
Director
Director

Investment Co. Ltd.
Representative:
Chih-Chuan Chen
Chih-Hung
OuyangChung-Ming
Huang
Chin-Huo
Huang

9

0

100.0090100.00

4

4

44.44

8

0

88.89

Reelected on
2017.05.31
Reelected on
2017.05.31
Reelected on
2017.05.31
Reelected on
2017.05.31
Reelected on
2017.05.31

Director

Chun-Hao Cheng

90

100.00Independent

Chin-Wen
Chuang90100.00Elected on
2017.05.31

Shun-J en Cheng

90

100.00Reelected on
2017.05.31

Director
Independent
Director

Other matters that require reporting:
1.

2.

3.

Matters stipulated in Article 14-3 of the Securities and Exchange Act and resolutions adopted by the Boardof Directors, to which an Independent Director has a dissenting or qualified opinion that is on record orstated in a written statement,shall describe the date of the board meeting, term of the board, agenda items,
opinions of Independent Directors, and actions taken by the company in response to the opinion of the
Independent Directors: Please see Important resolutions adopted in Board of Directors' meeting.
Regarding Directors who recuse themselves from discussion or voting on an agenda item in which they
have an interest, their names, agenda items, reason for recusal, and voting on an agenda item shall be
stated: Please refer to the Opinions from all the directors in the record of Board of Directors’ Meetings.
An evaluation of the goals set for strengthening the functions of the Board (e.g., setting up an auditing
committee and enhancing information transparency) and implementation status during the current andimmediately preceding fiscal years.
(1) The operation of the Board of the Company complies with laws and regulations, the Articles ofIncorporation, and the Exercise of Powers of the resolutions in shareholders' meetings. All Directors
adhere to the principle of good faith and duty of care in addition to possessing the expertise, skills, andliteracy required for exercising their powers, in order to maximize benefits for all of their shareholders.
(2) To establish a favorable governing system for the Company's Board of Directors, a sound supervisionfunction, and strengthened management mechanism, the Company formulated the Board of Director
Meeting Agenda Regulations in accordance with Article 26-3 of the Securities and Exchange Act,
including agenda items, execution of operations, matters that should be recorded in meeting minutes,
announcements, and other matters that should be adhered to, and the aforementioned shall be handled inaccordance with the formulated regulations.
(3) In addition to regularly conducting self-examination of the operation of the Board of Directors and- 24 -

TitleName

Attendance in(Note 1)

person (B)By proxyAttendance rate (%)[B/A](Note 2)Notereinforcing the functions of the Board, the Company requires its internal auditors to produce auditing
reports that describe the Board operations in order to conform with government regulations.
(4) Establish a Remuneration Committee to assist the Board of Directors in executing its duties.
Note 1: Directors and Supervisors who are also legal persons shall disclose the name of corporate shareholders
and their representatives.
Note 2:(1) For Directors or Supervisors who resigned from their position prior to the end of the financial year,
the date of their resignation shall be noted in the Note column. Their actual attendance rate (%) shallbe calculated according to the frequency they attended meetings of the Board during their tenure andtheir attendance in person.
(2) For changes to Directors or Supervisors before the end of the financial year, the new and old
Directors or Supervisors shall be listed and Directors or Supervisors who are old or new and the dateof their reelection and changes shall be noted in the Note column. Their actual attendance rate (%)
shall be calculated according to the frequency they attended meetings of the Board during their tenure
and their attendance in person.

- 25 -

2. Evaluation performance of Operations of the Board of Directors
Frequency of

Evaluation

Scope of

Method ofevaluation

periodevaluation

evaluation(Note 1)

(Note 2)

(Note 3)(Note 4)

Content of evaluation(Note 5)Once a year

2019.01.01~
2019.12.31

Board of Directors
and individual board Self-evaluation
menberIncluding the situation of attending
the board meeting, understanding
and articipating in the discussion of
the proposal before the meeting, thesituation of interacting with the
management team, the situation ofobserving laws and codes ofpractice, the improvement ofcorporate governance, thecontinuous study of courses related
to corporate governance, thesituation of understanding thecompany and the management teamand the industry , Other projects
designated by the competentauthority or the board of directors,
etc.

Note1: For example, once a year.
Note2: For example, the performance period during 1/1/2019~12/31/2019.
Note3: Performance of Board of Directors, individual member and functional committe.
Note4:Methods of evaluations: the internal evaluation of the board, self-evaluation by individualboard members, peer evaluation, and evaluation by appointed external professional
institutions, experts, or other appropriate methods.
Note5：Content of evaluation at least should include below following:(1) Performance of Board of Directors：Participation in the operation of the company, improvement of
the quality of the board of directors' decision making, composition and structure of the board of
directors, election and continuing education of the directors and internal control.
(2) The criteria for evaluating the performance of the board members：alignment of the goals andmissions of the company, awareness of the duties of a director, participation in the operation of thecompany, management of internal relationship and communication, the director's professionalism
and continuing education and internal control.
(3)

Performance of functional committees should cover：Awareness of the duties of the functional
committee, improvement of quality of decisions made by the functional committee, makeup of thefunctional committee and election of its members and internal control.

- 26 -

(2)State of operations of the audit committee or attendance ofSupervisors in board meetings: The Company does not have anaudit committee set up. Attendance of Supervisors in board
meetings:
In 2019, a total of 9 (A) meetings of the Board of Directors were held in the mostrecent year. The Supervisor attendance was as follows:
Title

Name

Attendance in Attendance rate (%)
person (B)(B/A) (Note)

Supervisor

Yung-Liang
Huang

9

100.00Supervisor

Yi-Hsiang
Huang

8

88.89

Supervisor

Ken-HuangLin9100.00Note
Reelected on
2017.05.31
Elected on
2017.05.31
Elected on
2017.05.31

1. Composition and responsibility of Supervisors:(1) Communication between Supervisors and Company's employees and shareholders:Supervisors communicate with employees and shareholders through the company
spokesperson. This communication channel has been effective in past years, thereby
facilitating supervisory functions.
(2) Communication between Supervisors and the Company's internal Audit Manager and
CPA (e.g., items, methods, and outcomes of communicating company financial status
and business conditions): The Company invites its Supervisors to attend board
meetings; therefore, the Company reports the financial statement and businessconditions of the Company during the board meetings or designates the Audit Manager
to report the evaluation results of internal audits. All Supervisors may express theiropinions during the meetings. Moreover, the financial statements approved by the CPA
are submitted to the Supervisors for approval. If Supervisors voice their opinion whenreviewing the financial statements, such opinion shall be either first explained by the
CPA or be communicated to the CPA.
2. If a Supervisor voices an opinion in the Board of Directors meeting, the date of the board
meeting, term of the board, agenda items, resolutions adopted by the board, and actions
taken by the company in response to the opinion of the Supervisor shall be described:
None.
Note:
＊For Independent Directors who resigned from their position prior to the end of the financial year, the date of
their resignation shall be noted in the Note column. Their actual attendance rate (%) shall be calculated
according to the frequency they attended meetings of the Board during their tenure and their attendance inperson.
＊For changes to Independent Directors before the end of the financial year, the new and old Independent
Directors shall be listed and Independent Directors who are old or new and the date of their reelection andchanges shall be noted in the Note column. Their actual attendance rate (%) shall be calculated according to
the frequency they attended meetings of the audit committee during their tenure and their attendance inperson.

- 27 -

(3)Corporate governance implementation status and deviations from Corporate Governance Best-PracticePrinciples for TWSE/TPEx Listed Companies and reasons
State of Operations (Note 1)
Assessed areas

1. Does the company establish and disclose its
corporate governance principles in accordancewith the Corporate Governance Best-PracticePrinciples for TWSE/TPEx Listed Companies?
2. Shareholding structure & shareholders' rights(1) Does the company establish internal operatingprocedures for handling shareholder
suggestions, questions, complaints orlitigation and handled related mattersaccordingly?
(2) Does the company have a list of major
shareholders that have actual control over theCompany and a list of ultimate owners of
those major shareholders?
(3) Does the company establish and implement
risk management and firewall systems
between the Company and its affiliates?
(4) Does the company establish internal rules
against insiders trading with undisclosed
information?
3. Composition and responsibilities of the Boardof Directors(1) Does the Board of Directors develop andimplement a diversified policy for thecomposition of its members?

Yes

V

No

Summary
Handled in accordance with Corporate GovernanceBest-Practice Principles for TWSE/GTSM Listed
Companies.

(1) The Company has stock affairs specialists and astock affairs proxy agency to assist withhandling such affairs.

V

V

Deviations from Corporate
Governance Best-PracticePrinciples for TWSE/TPEx
Listed Companies andreasons
No discrepancy.

No discrepancy.

(2) Yes, according to the shareholders' registry
provided by the stock affairs proxy agency, andwe regularly report changes to the stock rights of
our Directors, Supervisors, and managerial
officers.
(3) The Companyhas set up internal rules in the
Company’s Internal Control System and AffiliatedCorporations Management.
(4) The Company's operation is conducted according to
the extent of internal control.

(1) The Company has set up 2 seats for Independent No discrepancy.
Directors.
(2) The Company has established a Remuneration- 28 -

State of Operations (Note 1)
Assessed areas

Yes

Summary
Committee and proposed recommendations
regarding the remunerations to its Directors,
Supervisors, and managerial officers.

(2) Does the company voluntarily establish otherfunctional committees in addition to
remuneration committee and audit committee?
(3) Has the Company established methodology forevaluating the performance of its Board of
Directors, on an annual basis, reported theresults of performance to the Board of
Directors, and use the results as reference fordirectors’ remuneration and renewal?
(4) Does the company regularly evaluate theindependence of CPAs?
4. Does the Company appoint competent andappropriate corporate governance personnel andcorporate governance officer to be in charge ofcorporate governance affairs (including but notlimited to furnishing information required forbusiness execution by directors, assisting
directors’compliance of law, handling mattersrelated to board meetings and shareholders’meetings according to law, and recording
minutes of board meetings and shareholders’meetings)?

No

Deviations from Corporate
Governance Best-PracticePrinciples for TWSE/TPEx
Listed Companies andreasons(3) The Company currently has no method forevaluating the performance of the Board of
Directors.
(4) The Company regularly evaluates theindependence of CPAs. The Company's CPAs
are hired by the Board of Directors at least once
per year, and they have no interest relationshipwith the Company and are strictly independent.
We arrange specific officers in charge of corporate
No discrepancy.
governance affairsV- 29 -

State of Operations (Note 1)

Assessed areas

5. Does the company establish a communication
channel and build a designated section on its
website for stakeholders, and properly respondto corporate social responsibility issues ofconcern to the stakeholders?
6. Does the company designate a professional
shareholder service agency to deal withshareholder affairs?
7. Information disclosure(1) Does the company establish a corporatewebsite to disclose information regarding thecompany's financial, business and corporate
governance status?
(2) Does the company have other information
disclosure channels (e.g., maintaining an
English-language website, appointing
responsible people to handle informationcollection and disclosure, creating a
spokesperson system, webcasting investor
conference on the company website)?
(3) Does the Company announce and report theannual financial statements within two months
after the end of the fiscal year, and announce
and report the first, second, and third quarter
financial statements as well as the operating
status of each month before the prescribeddeadline?

Yes

V

V

Deviations from Corporate
Governance Best-PracticePrinciples for TWSE/TPEx
No
Summary
Listed Companies andreasons
The Company has a spokesperson and representative No discrepancy.
spokesperson who act as the communication channel
for the Company.

The Company commissions the stock affairs agency No discrepancy.
department of Taishin International Bank to handle
shareholder affairs.
(1) Web address: www.brogent.com; the Company No discrepancy.
has designated personnel to collect and disclose
Company information.
(2) Spokesperson: President Chih-Hung Ouyang;
investors can also access the Company's
information regarding the company's financial,business and corporate governance status from
the Market Observation Post System.
(3) Handle within the prescribed time limit.

V- 30 -

State of Operations (Note 1)
Assessed areas

Yes

8. Is there any other important information tofacilitate a better understanding of thecompany’s corporate governance practices(including but not limited to employee rights,
employee wellness, investor relations, supplier
relations, rights of stakeholders, continuing
education of Directors and Supervisors, theimplementation of risk management policies
and risk evaluation standards, theimplementation of customer relations policies,
and purchasing insurance for Directors andSupervisors)?

V

No

Summary(1) Employee rights protection and employee caremeasures adopted by the Company: The
Company provides equal employment
opportunities, offers employee group insurance,
arranges health check ups regularly, andestablishes legal employee welfare committee toprotect employee rights. Furthermore, we
comply with law in enrolling every employee inlabor and health insurance and disburse pension
reserve funds to them. The Company establishes
appropriate channels for employees to file theircomplaint and values the importance of
employee training.
(2) The Company's relationship with its investors:
The Company holds shareholder meetings
according to law every year and adequately gives
its shareholders the chance to raise questions andmake proposals. In addition, we also have set up
spokespersons and representative spokespersonin accordance with law and designate them tohandle matters between the Company and its
investors. Moreover, the Company announcesand reports any information that should be
disclosed as required by the competentauthorities. Thus, information that potentiallyinfluences investor decisions is provided inreal-time.
(3) The Company maintains a smoothcommunication channel with its suppliers and- 31 -

Deviations from Corporate
Governance Best-PracticePrinciples for TWSE/TPEx
Listed Companies andreasons
No discrepancy.

State of Operations (Note 1)
Assessed areas

Yes

No

Summary

Deviations from Corporate
Governance Best-PracticePrinciples for TWSE/TPEx
Listed Companies andreasons

stakeholders, including partner banks, othercreditors, employees, and clients.
(4) Continuing education of Directors andSupervisors: The members of the Company's
Board of Directors possess professional
backgrounds and practical experience in business
management; they occasionally attend relevant
educational courses. The continuing education
status of the Board of Directors in 2019 and2020 to the print date of the Prospectuses are
displayed in the following table.
(5) Implementation status of risk management
policies and standard risk measures: The
Company emphasizes the importance of risk
management, complies with relevant laws andregulations in executing various policies, andestablishes internal auditors who ensure that theexecution of relevant policies conforms toregulations.
(6) Accountability insurance for Directors andSupervisors: The Company has purchased
relevant accountability insurance for its
Directors, Supervisors, and managerial officers.
9.Please provide explanations for the improvement made according to the results of the corporate governance evaluation by the Corporate
Governance Center of Taiwan Stock Exchange during the most recent year, and details on the priority issues and measures for the areas yet to be
improved (not applicable to the companies not evaluated).
In 2019, the company’s corporate governance focus on improving the interests of shareholders, and the company achieved higher standard in the- 32 -

State of Operations (Note 1)

Deviations from Corporate
Governance Best-PracticeAssessed areas
Principles for TWSE/TPEx
Yes NoSummary
Listed Companies andreasons
Corporate Governance Evaluation than 2019. The company will continue to strengthen the structure and operation of the Board of Directors,
reinforce the function of the Board of Directors and enhance the quality of disclosure for non- financial information to strengthen the corporate
governance information.

- 33 -

The Continuing Education Status of Directors and Supervisors in 2019 and 2020 to the date of this Annual Report
Title
Chairman

Chairman
Director
Director
Director
Director
Director
Director
Director
Director
Independent
Director
Independent
Director

Name
Changchun
Investment Co. Ltd.
Representative:
Chih-Chuang Chen
Changchun
Investment Co. Ltd.
Representative:
Chih-Chuang Chen

Organizer

Course nameHours

The institute of Oniernal Saction and export control- the solution for US-China
Auditors-Chinese Taiwan
Trade Conflict

3 hours

Taiwan Corporate Governance Assessment of the Board of Directors'
Association
performance

3 hours

Chih-Hung
OuyangChih-Hung
OuyangTaiwan Corporate Governance
Association
Taiwan Corporate Governance
Association

Chung-Ming
Huang

Chien Yeh Law
Kaohsiung Office

Chung-Ming
Huang
Chin-Huo
Huang
Chin-Huo
Huang
Chun-Hao
Cheng
Chun-Hao
Cheng
Chin-Wen
ChuangChin-Wen
ChuangTaiwan Corporate Governance
Association
Taiwan Corporate Governance
Association
Taiwan Corporate Governance
Association
Taiwan Corporate Governance
Association
Taiwan Corporate Governance
Association
Taiwan Corporate Governance
Association
Taiwan Corporate Governance
Association

Offices

Exploring the responsibility of Directors and Supervisors
for illegal cases from securities market
How to oversee the establishment of internal control andcorporate governance by Directors and Supervisors
Corporate Governance Practices: Exploring theapplication trend and analyzing the practical issues of“Total Value Management”
Exploring the types and legal liabilities of “Employee
Fraud”
Exploring the responsibility of Directors and Supervisors
for illegal cases from securities market
How to oversee the establishment of internal control andcorporate governance by Directors and Supervisors
Exploring the responsibility of Directors and Supervisors
for illegal cases from securities market
How to oversee the establishment of internal control andcorporate governance by Directors and Supervisors
Exploring the responsibility of Directors and Supervisors
for illegal cases from securities market
How to oversee the establishment of internal control andcorporate governance by Directors and Supervisors- 34 -

3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours

Independent
Director
Independent
Director
Independent
Director
Supervisor
Supervisor
Supervisor
Supervisor

Shun-Jen Cheng
Shun-Jen Cheng
Shun-Jen Cheng
Yung-Liang
Huang
Yung-Liang
Huang
Yi-Hsiang
Huang
Yi-Hsiang
Huang

Supervisor

Gen-Huang Lin

Supervisor

Gen-Huang Lin

Taiwan Corporate Governance
Association
Taiwan Corporate Governance
Association
Taiwan Academy of Banking
and FinanceTaiwan Corporate Governance
Association
Taiwan Corporate Governance
Association
Taiwan Corporate Governance
Association
Taiwan Corporate Governance
Association
Taiwan Corporate Governance
Association
Taiwan Corporate Governance
Association

Exploring the responsibility of Directors and Supervisors
for illegal cases from securities market
How to oversee the establishment of internal control andcorporate governance by Directors and Supervisors
Corporate Governance Series Forum
Exploring the responsibility of Directors and Supervisors
for illegal cases from securities market
How to oversee the establishment of internal control andcorporate governance by Directors and Supervisors
Exploring the responsibility of Directors and Supervisors
for illegal cases from securities market
How to oversee the establishment of internal control andcorporate governance by Directors and Supervisors
Exploring the responsibility of Directors and Supervisors
for illegal cases from securities market
How to oversee the establishment of internal control andcorporate governance by Directors and Supervisors- 35 -

3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours

(4) If the company has established a remuneration committee, it shall disclose thecomposition, duties, and operation of the committee
1. Members of the Compensation Committee
Criteria

Position

Name

Has at least 5 years of work experience andmeets one of the following professional
qualifications

Meet the independence criteria (Note 1)

An instructor A judge,
Have workor higher
publicexperience inposition in the prosecutor,
commerce,epartment of attorney,law, finance,
commerce,
accountant, or or accounting
law, finance, otheror a profession
accounting or professional or necessary forothertechnical
the business ofdepartment
specialist
the Company
1
related to the related to thebusiness needs needs of theof theCompany who
Company in a has passed apublic ornational
private junior examinationcollege or
and received auniversity
certificate
therefor

2

3

4

5

6

7

8

Number ofother publiccompaniesin which thememberalso serves
as a
9 10 member of
theircompensati
oncommittee

Independent Ching-Wen
Director
Chuang-         -External
committee
memberRong-Da
Liang



-



         -

Independent
Director

Shun-Jen
Cheng



-



         

3External
committee
memberLiang-Chie
n Li



-



         

Note(Note 2)

2019.01
By-election
2019.01
Resignation

Note 1: Compensation Committee Members, during the two years before being elected or during the term of office, meet a any of thefollowing situations, please tick the appropriate corresponding boxes:
1. Not an employee of the company or any of its affiliates; 2. Not a director or supervisor of the company or any of its affiliates.;
3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children,or held by the person under others’ names, in an aggregate amount of one percent or more of the total number of issued
shares of the company or ranks as one of its top ten shareholders;
4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of
the officer in the preceding 1 subparagraph, or of any of the above persons in the preceding subparagraphs 2 and 3;
5. Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of
the total number of issued shares of the company, ranks as of its top five shareholders, or has representative director(s)serving on the company’s board based on Article 27 of the Company Law.
6. Not a director, supervisor, or employee of a company of which the majority of board seats or voting shares is controlled
by a company that also controls the same of the company;
7. Not a director, supervisor, or employee of a company of which the chairman or CEO (or equivalent) themselves or theirspouse also serve as the company’s chairman or CEO (or equivalent);
8. Not a director, supervisor, officer, or shareholder holding five percent or more of the shares of a specified company or
institution that has a financial or business relationship with the company;
9. Other than serving as a compensation committee member of the company, not a professional individual who, or an owner, partner,
director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial,accounting services or consultation to the company or to any affiliate of the company, or aspouse thereof, and the service provided is an“audit service” or a “non-audit service which total compensation within the recent two years exceeds NTD500,000”
10. Not been a person of any conditions defined in Article 30 of the Company Law.

- 36 -

2. State of operations of the compensation committee(A) The Compensation Committee comprises 3 members.
Current term of office: August 9, 2017–May 30, 2020; a total of 3 (A) meetings of theCompensation Committee were held in the most recent year. The members'
qualifications and attendance were as follows:
Title

Name

ConvenorChing-Wen
Independent Director,
ChuangBrogent
Committee
member-External
Rong-Da Liangcommittee member
Independent Director,
Shun-Jen Cheng
Brogent
Committeemember-External
Liang-Chien Li
committee member

Attendance inperson(B)

By proxy Attendance rate (%)
Frequency
(B/A)

Note

3

0

100.00-30100.00-30100.002019.01 By-election

0

0

0.00

2019.01 Resignation

Other matters that require reporting:
1. If the Board of Directors did not adopt or revised the recommendations of the compensation committee, describe thedate of the board meeting, term of the board, agenda item, resolutions adopted by the board, and actions taken by thecompany in response to the opinion of the compensation committee (if the remunerations approved by the Board of
Directors are better than those recommended by the compensation committee, describe the difference and reasons):
None.
2. If with respect to any resolution of the compensation committee, any member has a dissenting or qualified opinion
that is on record or stated in a written statement, describe the date of committee meeting, term of the committee,
agenda item, opinions of all members, and actions taken by the company in response to the opinion of members:None.

- 37 -

(5) Implementation of corporate social responsibility and deviations from corporate social responsibility
Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
State of Operations (Note 1)
Assessed areas

Yes

1. Does the Company follow materiality principle toconduct risk assessment for environmental, socialand corporate governance topics related to company
operation, and establish risk management related
policy or strategy?
V

2. Does the company establish a dedicated or
concurrent unit in charge of promoting CSR withsenior management authorized by the board to take V
charge of proposing CSR policies and reporting to
the board?
3. Environmental issue(1) Does the company establish a proper environmental
management system based on the characteristics of
the industry?
(2) Does the company endeavor to improve theVefficiency of resource utilization and use recycledmaterials which have a low impact on theenvironment?
(3) Does the Company evaluate current and futureNo

Summary (Note 2)

Departure from Corporate Social
Responsibility Best PracticePrinciples for TWSE/GTSM
listed companies and reasons(1) The Company has established Corporate Social No discrepancy.
Responsibility Best Practice Principles andexamined its implementation effectiveness.
(2) The Company has established the Ethical Codeof Conducts for Directors, Supervisors, andManagerial Officers.
(3) The Company has established Work Rules
Guideline for Salary Management andGuideline for Performance Management, whichclearly specifies relevant effective rewarding
and punishment systems.
The departments related to the social responsibility No discrepancy.
of the Company all handle relevant mattersaccording to their duties.

(1) Yes the company has set up environmental
No discrepancy.
management and discloses relevant information
on its website.
(2) The Company generally endeavor to increase theefficiency of resource utilization and use
environmentally friendly materials as much as
possible to reduce the impact on theenvironment.

- 38 -

State of Operations (Note 1)
Assessed areas

Yes

climate change potential risks and opportunities
and take measures related to climate related
topics?
(4) Does the Company collect data for greenhouse gas
emissions, water usage and waste quantity in thepast two years, and set energy conservation,
greenhouse gas emissions reduction, water usage
reduction and other waste management policies?

4. Social issue(1) Does the Company set policies and procedures incompliance with regulations and internationallyrecognized human rights principles?
(2) Has the Company established appropriately
managed employee welfare measures (include
salary and compensation, leave and others), andlink operational performance or achievements with
employee salary and compensation?
(3) Does the Company provide employees with a safeand healthy working environment, with regularsafety and health training?
(4) Has the Company established effective careerNo

Summary (Note 2)

Departure from Corporate Social
Responsibility Best PracticePrinciples for TWSE/GTSM
listed companies and reasons(3) For the potential risks and opportunities casuedby climate change from now on, Brogent has
especially isured to amortize the property
damage. We are aggressively devoted ourselves
to researching and developing the indoor
amusement (training) facilities and hopefully
we can create commercial opportunities under
the influence of extreme weather.
(4) The company regularly monitors the air qualityof the office environment, uses LED lighting
and solar power generation devices, and installs
energy-saving central air-conditioning control
systems and full heat exchangers to effectively
maintain air quality and energy-saving andcarbon-reduction purposes, and exposes energy
use on the company's website With an overview
of greenhouse gas emissions.

V(1) The company follows international principles, No discrepancy.
respects internationally recognized basic humanrights, including caring for vulnerable groups,
prohibiting child labor, eliminating employment
and employment discrimination, etc., andabides by labor-related laws and regulations
where the company is located.
(2) The Company adheres to the labor regulations in
the Labor Standards Act to protect employees'
legal rights. In addition, the Company disburses
pension fund and labor welfare fund inaccordance with law. Concurrently, the- 39 -

State of Operations (Note 1)
Assessed areas
development training plans?
(5) Does the Company’s product and service comply
with related regulations and international rules forcustomers’ health and safety, privacy, sales,
labelling and set polices to protect consumers’
rights and consumer appeal procedures?
(6) Does the Company set supplier management policy
and request suppliers to comply with related
standards on the topics of environmental,
occupational safety and health or labor right, andtheir implementation status?

Yes

No

Summary (Note 2)Company and its employees have alsoestablished employee welfare committee andhold employer–employee meetings to
implement various welfare activities andcoordinate employer–employee relationship,
thereby promoting matters related to employer–
employee cooperation.
(3) The Company endeavors to provide a safe andhealthy working environment and provide
employees with regular safety and healthtraining.
(4) The company's training plan is based onsupervisors / general employees, taking regulartraining / unscheduled training, and dependingon the content of each department, in order toeffectively train employees' related capabilities.
(5) The company has a customer service department
dedicated to handling consumer rights
protection and appeals.
Company products are designed andmanufactured in accordance with standard
regulations of various countries. These products
have also been certified by the following:
China: GB-8408 Amusement Device Safety
Code(Amusement device satety Cood)Europe: EN-13814(Fairground and amusementpark machinery and Structure-Safety)
USA and Canada: ASTM-F2291 (Standard
Practice for Design of Amusement and
Devices)- 40 -

Departure from Corporate Social
Responsibility Best PracticePrinciples for TWSE/GTSM
listed companies and reasons

State of Operations (Note 1)
Assessed areas

Yes

No

Summary (Note 2)

Departure from Corporate Social
Responsibility Best PracticePrinciples for TWSE/GTSM
listed companies and reasons(6) YES, a list of supplier evaluation standards wasadded. The Company upholds the principle ofethical corporate management and collectively
cooperate with the suppliers in development
projects to facilitate coexistence and collective
prosperity.
The company has prepared corporate social
responsibility reports with reference to
No discrepancy.
internationally-prepared reporting standards or
guidelines.

5. Does the Company refer to international reporting
rules or guidelines to publish CSR Report to disclose
non-financial information of the Company? Has theVsaid Report acquire 3rd certification party
verification or statement of assurance?
6. If the Company has established the corporate social responsibility principles based on "Corporate Social Responsibility Best Practice Principles for
TWSE/TPEx Listed Companies", please describe any discrepancy between the principles and their implementation: Not applicable
7. Other important information to facilitate a better understanding of the company’s corporate social responsibility practices:
The Company discloses relevant information regarding its corporate social responsibility on its website, annual report, and the prospectuses.
Note 1: If companies select "Yes" in the Summary column, please specify the relevant policy,strategy and the result of implementation, and if companies
select "No" in the Summary column, please explain the reason and describe future improvements or relevant management guidelines and goals.
Note 2: For companies that have compiled CSR reports, the summary may specify the CSR reporting method and page numbers.
Note 3: Principle of materiality may refer to the significant impact on the rights and interests of stakeholders while companies are advised to promulgate
their own corporate social responsibility principles in accordance with the Principles to manage their economic, environmental and social risks andimpact.

- 41 -

(6) Implementation of ethical corporate management and deviations from ethical corporate managemen
Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
State of Operations (Note 1)

Assessed areas

1. Establishment of ethical corporate management policy
and approaches(1) Does the company have a clear ethical corporate
management policy approved by its Board of Directors,
and bylaws and publicly available documents
addressing its corporate conduct and ethics policy andmeasures, and commitment regarding implementationof such policy from the Board of Directors and the top
management team?
(2) Whether the company has established an assessment
mechanism for the risk of unethical conduct; regularly
analyzes and evaluates within a business context, thebusiness activities with a higher risk of unethicalconduct; has formulated a program to prevent unethicalconduct with a scope no less than the activitiesprescribed in paragraph 2, Article 7 of the EthicalCorporate Management Best Practice Principles for
TWSE/GTSM Listed Companies?
(3) Whether the company has established relevant policies
that are duly enforced to prevent unethical conduct,
provided implementation procedures, guidelines,
consequences of violation and complaint procedures,and periodically reviews and revises such policies?

Yes

V

Departure from "EthicalCorporate Management
Best Practice Principles forNo
Summary
TWSE/GTSM Listed
Companies" and reasons(1) The Company strictly adheres to the laws and No discrepancy.
regulations stipulated in the Company Act,
Securities and Exchange Act, Business Entity
Accounting Act, and other regulations for listed
and OTC companies. The Company has
formulated internal control systems according
to regulations, established internal auditing
office,andensuredtheeffective
implementation of relevant operations, torealize the fundamental concepts of ethicalcorporate management.
(2) The Company has formulated Ethical Corporate
Management Principle according to the EthicalCorporate Management Best Practice Principles
for TWSE/GTSM Listed Companies andpromoted the importance of ethical code of
conduct, educating each employee on thecompany's core value and compliance systems.
The Company regularly offers training
programs.
(3) The Company requires its Directors,
Supervisors, managerial officers, andemployees to refrain from engaging in bribery
or providing illegal political donations during a- 42 -

State of Operations (Note 1)
Assessed areas

Yes

No

Summary

Departure from "EthicalCorporate Management
Best Practice Principles for
TWSE/GTSM Listed
Companies" and reasonsbusiness activity. The Company stipulates thatthey may not directly or indirectly provide orreceive unreasonable gifts, treatments, or otherimproper benefits to prevent employees frompursuing personal interests at the expense of
the company's rights and interests.
2. Implementation of ethical corporate management(1) Does the company evaluate the ethical records of parties
it does business with and stipulate ethical conduct
clauses in business contracts?
(2) Whether the company has set up a unit which isdedicated to promoting the company’s ethical standards
and regularly (at least once a year) reports directly to theBoard of Directors on its ethical corporate management
policy and relevant matters, and program to prevent
unethical conduct and monitor its implementation?
(3) Does the company establish policies to prevent conflictsof interest, provide appropriate channels for filingrelated complaints and implement the policies
accordingly?
(4) To implement relevant policies on ethical conducts, has
the company established effective accounting andinternal control systems, audit plans based on theassessment of unethical conduct, and have its ethicalconduct program audited by internal auditors or CPA

V(1) The Company's clients and suppliers are mostly No discrepancy.
well-known
companies
whose
ethicalmanagement information is easily accessible.
When signing a business contract, the contract
also incorporates regulations regarding ethicalmanagement.
(2) The Company invites Supervisors to attend themeeting of the Board of Directors, thereby
maximizing the supervisory functions ofSupervisors.
(3) The Company has an Internal Material
Information Processing Operating Procedure,
specifying
that
Directors,
Supervisors,
managerial offices, and employees may not leakinternal material information to others, inquire
the company's internal material informationfrom others, or collate unpublished internalmaterial information of companies that are
irrelevant to their job duties. They are also
prohibited from leaking the company's- 43 -

State of Operations (Note 1)
Assessed areas

Yes

periodically?

Summary
unpublished internal material information toothers.
(4) To implement ethical management, theCompany has established effective accounting
system and internal control system, and hasinternal auditors regularly check the situation
regarding compliance with the aforementioned
systems. To implement ethical management, theCompany has established effective accounting
system and internal control system, and hasinternal auditors regularly check the situation
regarding compliance with the aforementioned
systems.
(5) The Company promotes the concepts of
ethical management in Director andSupervisor training and managerial
meetings.

(5) Does the company hold internal and external
educational trainings on operational integrity regularly?

3. Operation of whistleblowing system(1) Does the company establish concrete whistleblowing
and reward system and have a convenient reporting
channel in place, and assign an appropriate person tocommunicate with the accused?
(2) Whether the company has established standard
operation procedures for investigating the complaints
received, follow-up measures after investigation arecompleted, and ensuring such complaints are handled ina confidential manner?
(3) Does the company provide proper whistleblower

No

Departure from "EthicalCorporate Management
Best Practice Principles for
TWSE/GTSM Listed
Companies" and reasons(1) The Company has established whistleblowing No discrepancy.
channels and developed relevant punishment
systems and reporting mechanisms.
V(2) Yes.
(3) The Company adopts an anonymous reporting
policy.

- 44 -

State of Operations (Note 1)
Assessed areas

Yes

No

Summary

Departure from "EthicalCorporate Management
Best Practice Principles for
TWSE/GTSM Listed
Companies" and reasonsprotection?
4. Enhancing information disclosure
Does the company disclose information regarding the
The Company has set up a website for disclosing
No discrepancy.
company's ethical corporate management principles andV
corporate governance information.
implementation status on its website and the Market
Observation Post System?
5. If the company has established Ethical Corporate Management Principles in accordance with the "Ethical Corporate Management Best PracticePrinciples for TWSE/TPEx Listed Companies", describe any discrepancy between the principles and their implementation: None.
6. Other important information to facilitate a better understanding of the company's implementation of ethical corporate management: (e.g., inspect andrevise existing ethical management principles) None

Note 1: The operating condition shall be described in the Summary column regardless of whether "Yes" or "No" is selected.

- 45 -

(7) If the company has established corporate governance principles andrelated guidelines, disclose the means of accessing this information:
The Company has not formulated corporate governance principles
but has disclosed rules pertaining to corporate governance on theMarket Observation Post System, such as: Ethical Corporate
Management Principles and Remuneration Committee Organization
Rules.
(8) Other significant information which may improve the understanding ofcorporate governance and operation: None.
(9) The following matters pertaining to the implementation status ofinternal control systems should be disclosed:
1. Statement on Internal Control: (Please refer to Appendix 1).
2.The Company engages an accountant to examine its internal control system, disclose the
CPA examination report: None.

(10) Penalty on the Company and its personnel or punishment imposed by
the Company on personnel in violation of internal control systemregulations, major deficiencies and improvement in the past year and
up to the date of report: None.
(11) Important resolutions adopted in shareholders meeting and Board of
Directors' meeting in the past year and up to the date of report.

1. Shareholder’s Meeting
Date of themeeting

Key issues in summary

2019.05.29 Reporting Items

Outcome of resolution
All items passed and executed as(Share holders’ (1) 2018 Business Report scheduled.
regular(2) 2018 Supervisor’s Audit
meeting) Report(3) 2018 Report on
Remuneration Distributionof Employees, Directors,
and Supervisors.
(4) Report on Private
Placement Status- 46 -

Facts of implementation

Date of themeeting

Key issues in summary

Outcome of resolution

Facts of implementation

Passed Items(1) 2018 Business Report
and Financial Statements

The balloting outcome including
votes exercised through electronic
voting: 31,362,153 pro votes ,accounting for 99.81% of theaggregate total votes; 227 con
votes, 0 invalid vote, abstention/
Non-voting votes: 57,737 votes.
The present issue is duly resolved
exactly as proposed.

Reports and statements
distributed to shareholders
according to relevant laws andregulations(2) 2018 Earnings
Distribution Proposal.

The balloting outcome including
votes exercised through electronic
voting: 31,362,154 pro votes ,accounting for 99.81% of theaggregate total votes; 226 con
votes, 0 invalid vote, abstention/
Non-voting votes:57,737 votes.
The present issue is duly resolved
exactly as proposed.

Dividend base date scheduledon July 26, 2019, ex-dividend
date on July 18, 2019, the bookclosure date on July 21, 2019.
According to Article 165 of theCompany's Articles ofIncorporation, the book closure
period is from July 22, 2019 toJuly 26, 2019. Cash dividend
payday is August 16, 2019.

Matters for Discussion
The balloting outcome including(1) Proposal for Stock
votes exercised through electronic
dividends distributed from a voting: 31,362,153 pro votes ,new share issue throughaccounting for 99.81% of thecapitalization of capitalaggregate total votes; 227 con
surplus.
votes, 0 invalid vote, abstention/
Non-voting votes:57,737 votes.
The present issue is duly resolved
exactly as proposed.

Dividend base date scheduledon July 26, 2019, ex-dividend
date on July 18, 2019, the bookclosure date on July 21, 2019.
According to Article 165 of theCompany's Articles ofIncorporation, the book closure
period is from July 22, 2019 toJuly 26, 2019. Cash dividend
payday is August 16, 2019.

(2) Proposal for Cashdistribution from Capital
SurplusThe balloting outcome including
votes exercised through electronic
voting: 31,362,154 pro votes ,accounting for 99.81% of theaggregate total votes; 228 con
votes, 0 invalid vote, abstention/
Non-voting votes:57,735 votes.
The present issue is duly resolved
exactly as proposed.

Dividend base date scheduledon July 26, 2019, ex-dividend
date on July 18, 2019, the bookclosure date on July 21, 2019.
According to Article 165 of theCompany's Articles ofIncorporation, the book closure
period is from July 22, 2019 toJuly 26, 2019. Cash dividend
payday is August 16, 2019.

(3) Amendment of the
Article of Incorporation.

The balloting outcome including The issue had been duly
votes exercised through electronic completed in enforcement
voting: 31,362,153 pro votes ,exactly as amended.
accounting for 99.81% of theaggregate total votes; 227 con
votes, 0 invalid vote, abstention/
Non-voting votes:58,737 votes.
The present issue is duly resolved
exactly as proposed.

- 47 -

Date of themeeting

Key issues in summary

Outcome of resolution

Facts of implementation

The balloting outcome including The issue had been duly
votes exercised through electronic completed in enforcement
clauses of thevoting: 31,361,150 pro votes ,exactly as amended.
“Procedures foraccounting for 99.81% of theAcquisition and Disposal aggregate total votes; 227 conof Assets”
votes, 0 invalid vote, abstention/
Non-voting votes:58,740 votes.
The present issue is duly resolved
exactly as proposed.
(4) The amendment ofThe balloting outcome including The issue had been duly
votes exercised through electronic completed in enforcement
clauses of theexactly as amended.
“Operational Procedures voting: 31,362,150 pro votes ,accounting for 99.81% of thefor Loaning of Company
aggregate total votes;230 con votes,
Funds” and “Operational 0 invalid vote, abstention/
Procedures for
Non-voting votes:58,737 votes.
Endorsements and
The present issue is duly resolved
Guarantees”
exactly as proposed.
(5) The amendment of

2.Board of Directors’ MeetingDate2019.01.23

ProposalApproved the Year-End Bonus Disbursement Principle and Manager Year-End Bonus.
Approved the Evaluation plan of the independence of CPAs.
Approved the Authorization of Grant Thorton as 2019 Auditor for the Company’s financial report.
Approved the Appointment of members of the Remuneration Committee.

Opinions from all theOpinion from independent directors: none
independent directors and
The company’s response to such opinions: none
the company’s response to
Resolution: unanimous consent from all the directors present
such opinions
Approved the 2018 Statement on Internal Control.
Approved the 2018 Director and Employee Bonus Plan.
Approved the 2018 Business Report and Financial Statements.
Approved the 2018 Earnings Distribution Plan.
Approved the Proposal for Stock Dividends Distribution from a new share issue through capitalizationof Capital Surplus.
Approved the Proposal for Cash Distribution from Capital Surplus.
Approved the Amendment to the Article of Incorporation.
Approved the Amendment to the clauses of the Procedures for Acquisition and Disposal of Assets.
2019.03.12
Approved the Proposal of Authorized amount of Loans by The Company to its Subsidiaries.
Approved the Standard Operational Procedures for Handling Directors Requirements.
Approved the Procedures for Self-Evaluation or Peer Evaluation of the Board of Directors.
Approved the Proposal of The Company to obtain 100% shares of BROGENT CREATIVE INC.
Approved to change Chartered Public Accountant due to the internal reorganization of the CPA firm.
Approved the Liability Insurance Renewal Plan for the Directors, Supervisors and Managers.
Approved the Adjument of the Manager Remuberation.
Approved the proposed calling of 2019 general shareholders' meeting.
Opinions from all theOpinion from independent directors: none
independent directors and
The company’s response to such opinions: none
the company’s response to
Resolution: unanimous consent from all the directors present
such opinions- 48 -

Date

Proposal

2019.04.23

Approved The amendment of clauses of the “Operational Procedures for Loaning of Company Funds”
and “Operational Procedures for Endorsements and Guarantees”

Opinions from all theOpinion from independent directors: none
independent directors and
The company’s response to such opinions: none
the company’s response to
Resolution: unanimous consent from all the directors present
such opinions
Approved the 2019 First Quarter Financial Report.
2019.05.13
Approved the Financing application plan.
Approved Chairman dismissal and election of new Chairman
Opinion from independent directors: An Independent Director - Shun-Jen Cheng objected to dismissal
Opinions from all theof Chairman and waived his voting power of election of new Chairman.
independent directors and
The company’s response to such opinions: Making a timely announcement of that material information
the company’s response to in accordance with the relevant laws and regulations.
such opinions
Resolution: Approval of a majority of the directors present at a directors meeting.
Approved the Resolution on determining the ex-dividend date and payable date for year 2019.
Approved the 2019 Proposal for Cash distribution from Capital Surplus.
2019.06.17
Approved the amendments to the Authorization Matrix.
Opinions from all theOpinion from independent directors: none
independent directors and
The company’s response to such opinions: none
the company’s response to
Resolution: unanimous consent from all the directors present
such opinions
Approved to change Chartered Public Accountant due to the internal reorganization of the CPA firm.
Approved the 2019 Second Quarter Financial Report2019.08.09
Approved the 2018 Director and Employee Remuneration Plan.
Approved the amendments to Handling Procedures for Self-Assessment.
Opinions from all theOpinion from independent directors: none
independent directors and
The company’s response to such opinions: none
the company’s response to
Resolution: unanimous consent from all the directors present
such opinions
Approved 2020 Business Plan and Strategy.
Approved the authorization of general manager, Chih-Hung Ouyang, and a designated person to
2019.10.18
process litigation with respect to the former Director of Chung-Ming Huang
Approved the Financing application plan.
Opinions from all theOpinion from independent directors: none
independent directors and
The company’s response to such opinions: none
the company’s response to
Resolution: unanimous consent from all the directors present
such opinions
Approved the 2019 Third Quarter Financial Report.
2019.11.11
Approved the Resolution on the Facility for Loaning of Company Funds.
Opinions from all theOpinion from independent directors: none
independent directors and
The company’s response to such opinions: none
the company’s response to
Resolution: unanimous consent from all the directors present
such opinions
Approved the 2020 Operation Budget Plan.
2019.12.16
Approved the 2020 Audit Plan.
Approved the amendments to Ethical Corporate Management Best Practice Principles.
Opinions from all theOpinion from independent directors: none
independent directors and
The company’s response to such opinions: none
the company’s response to
Resolution: unanimous consent from all the directors present
such opinions
Approved the Year-End Bonus Disbursement Principle and Manager Year-End Bonus.
Approved the Evaluation plan of the independence of CPAs.
2020.01.13
Approved the Authorization of Grant Thorton as 2020 Auditor for the Company’s financial report.
Approved the Financing application plan.
Opinions from all theOpinion from independent directors: none
independent directors and
The company’s response to such opinions: none
the company’s response to
Resolution: unanimous consent from all the directors present
such opinions
Approved the amended plan of the 3rd stage investment in the Kaoshsiung Software Park.
2020.02.10
Approved the Financing application plan.
Opinions from all theOpinion from independent directors: none

- 49 -

Date

Proposal

independent directors and The company’s response to such opinions: none
the company’s response to Resolution: unanimous consent from all the directors present
such opinions
Approved the 2019 Statement on Internal Control.
Approved the 2019 Director and Employee Bonus Plan.
Approved the 2019 Business Report and Financial Statements.
Approved the 2019 Earnings Distribution Plan.
Approved the Audit Committee Charter.
Approved the Amendments of the Article of Incorporation.
Approved the Amendments of Rules of Procedure for Shareholders Meetings.
Approved the Amendments of Election Procedure for Directors and Supervisors.

2020.03.09

Approved the Amendments to the clauses of the Procedures for Acquisition and Disposal of Assets.
Approved the Amendments to Operational Procedures for Endorsements and Guarantees.
Approved the Amendments to Operational Procedures for Loaning of Company Funds.
Approved the Amendments to Guidelines for the Adoption of Codes of Ethical Conduct for Directors
and Managers.
Approved the Amendment to the Rules and Procedures of Board of Directors Meetings.
Approved the Amendments to Ethical Corporate Management Best Practice Principles.
Approved the Proposal of Authorized amount of Loans by The Company to its Subsidiaries.
Approved the Liability Insurance Renewal Plan for the Directors, Supervisors and Managers.
Approved the manager promotion plan.
Approved the Dissolution of Business Strife Limitation Clause of Managers.
Approved the Adjument of the Manager Remuberation.
Passed the re-election of the Board of Directors.
Passed the Dissolution of Business Strife Limitation Clause of New Director and Its Representative.
Approved the proposed calling of 2020general shareholders' meeting.

Opinions from all theOpinion from independent directors: none
independent directors and
The company’s response to such opinions: none
the company’s response to
Resolution: unanimous consent from all the directors present
such opinions(12) Dissenting or qualified opinion of Directors or Supervisors against an
important resolution passed by the Board of Directors that is on
record or stated in a written statement in the past year and up to thedate of report: None.
(13) Resignation and dismissal of managerial officers related to thefinancial report (including Chairman, President, Chief Accounting
Officer, Chief Financial Officer, Chief R&D Officer and Audit
Manager) in the past year and up to the date of report:
Title

Name

Date ofappointment

Date ofdischarge

Cause

ChairmanChung-Ming
Huang

2017.05.31

2019.05.13

Board Resolution- 50 -

5. Information on fees to CPA(1) Information on fees to CPA classification table
Name of accounting firm
Grant Thornton Taiwan

CPA
HuiPing Liu
Yao Ting Li
Yi Shun Chang

Duration of audit
Note2019/1/1-2019/03/31 Cooperate withinternal rotation of

2019/1/1-2019/12/31 accounting firm

Unit: NT1,000$
Public fee item
Audit feeAmount classification
1
2
3
4
5
6

Non-audit fee

Total



<NT$2,000,000
NT$2,000,000 (incl.)–NT$4,000,000
NT$4,000,000 (incl.)–NT$6,000,000
NT$6,000,000 (incl.)–NT$8,000,000
NT$8,000,000 (incl.)–NT$10,000,000
NT$10,000,000 or above(2) When nonaudit fees paid to affiliates, CPA firm, and CPA
equal more than one-fourth of the audit fee, the audit andnonaudit fees amount and nonaudit service content shall be
disclosed.

The Company's nonaudit fees are less than one-fourth of the audit fee; however,
we voluntarily disclose the information as follows:
Unit: NT$1,000
Name ofaccounting
firm

Grant
Thornton
TaiwanNon-audit fee
CPA

Yao Ting Li
Yi-Shun Chang

Audit fee

4,694

Business Human
Systemregistratio Resourc
design
n
es

-

13

-

- 51 -

Audit period
Others

1,048

Note

Subtotal

1,061

TP report、Consultation
fee、Private
placement office
2019/1/1- development
2019/12/31 bank andTransfer ofcapital reserve toincrease capitaland issue newshares(3) If the company changes accounting firm and the amount of audit
fee paid in the year of change is less than that in the year before:
N/A.

(4) If the audit fee is more than 15% less than that paid in the previous
year: N/A.

- 52 -

6. Changes to CPA information(1) Concerning former CPA:
Date of Change

Approved by Board of Directors on March 12, 2019 & August 09, 2019

Reasons and Explanation of

Cooperate with internal rotation of accounting firm

ChangesState whether the Appointment is

ClientTerminated or Rejected by the

StatusConsignor or CPAs

Appointment terminated

CPA

Consignor

Not available

Not available

Not available

Not available

automaticallyAppointment rejected
The Opinions other than

(discontinued)
None

Unmodified Opinion Issued in theLast Two
Years and the Reasons for the Said
Opinions (Note)
Is there any disagreement inYes

Accounting principle or practice

opinion with the issuer

Disclosure of financial statements
Auditing scope or procedures
OthersNov

Explanation
Supplementary Disclosure

None(Disclosures Specified in Article
10.6.1.4~7 of the Standards)(2) Concerning succeeding CPA : Not applicable.
Accounting Firm

Grant Thornton Taiwan

CPA

Yao Ting Li
Yi-Shun Chang

Date of Engagement

Approved by Board of Directors
on March 12, 2019
Approved by Board of Directors
on August 09, 2019

Prior to the Formal Engagement, Any Inquiry or Consultation on theNone

Accounting Treatment or Accounting
Principles for Specific Transactions, and the Type of Audit Opinion that
Might be Rendered on the Financial
Written Opinions from the Successor CPAs that are Different from theFormer CPA’s Opinions- 53 -

None

(3) Previous CPA response to items in Article 10.6.1 and 10.6.2.3 of
the Criteria: Not applicable.
7. The Chairman, President, financial or accounting manager of thecompany who had worked for the certifying accounting firm or its
affiliated enterprise in the past year.
None.
8. Share transfer by Directors, Supervisors, managers and shareholders
holding more than 10% interests and changes to share pledging by
them in the past year and up to the date of report(1) Changes to the share rights of Directors, Supervisors, managerial
officers, and major shareholders
2019

Current year up to March 30

Title

Name

Director

Changchun
Investment Co.
Ltd.

102,393－－－

Chih-Chuan
Chen

1,448

－

－

－

Chih-Hung
OuyangChung-Ming
Huang
Chin-Huo
Huang

181,294(779,000)－(1,300,000)

142,899－－－

54,735－－－

Director

Chun-Hao
Cheng

7,546

－

Supervisor

Yung-Liang
Huang

63,027－－－

Supervisor

Yi Chung
Huang

－

－

－

－

Supervisor

Gen-Huang
Lin

－

－

－

－

Independent Director

Ching-Wen
Chuang－－－－Independent Director

Shun-Jen
Cheng

－

－

－

－

(2,674)

－

－

－

1,158

－

－

4,000

10,227(50,000)－－

Director
Representative(Chairman)
Director(President)
Director
Director

Vice President ofTeng-Hung Lai
Technology Center
Chief Engineer &Yi Chung
Director of Project
Huang
CenterChief Financial
Officer

Sui-Chuan Lin

Increase (decrease) Increase (decrease) Increase (decrease) Increase (decrease)in shares heldin pledged sharesin shares heldin pledged shares- 54 -

2019
Title

Name

Director of Audit
officeHui-Ping Li

Current year up to March 30

Increase (decrease) Increase (decrease) Increase (decrease) Increase (decrease)in shares heldin pledged sharesin shares heldin pledged shares

1,804

－

－

－

(2) Information on relative person of share transfer as related party: None.
(3) Information on relative person of share pledging as related party:None.

- 55 -

9. Information on relationship between any of the top ten shareholders(related party, spouse, or kinship within the second degree)
March 30, 2020; Unit: Shares; %NAME

TITLES, NAMES AND
RELATIONSHIPSTOTALBETWEEN TOP 10
SHARES HELD BYSHAREHOLDINGSHAREHOLDERSSHAREHOLDING
SPOUSE AND
BY NOMINEE(RELATED PARTY,
CHILDREN
ARRANGEMENT SPOUSE, OR KINSHIPWITHIN THE SECOND
DEGREE).
SharesChih-Hung
Ouyang3,807,191

Fu
Wu
Investment Ltd.
Representative: 3,235,246
Chih-Hung
OuyangChung-Ming
3,000,883
Huang
Profit PowerManagement
2,969,400
Consulting
Limited
Ruentex
Industries Ltd.
2,910,310
Representative:
Chih-Fan Wang
Ruentex
Development
Co. Ltd.
2,489,060
Representative:
Chang-Cheng
Chien
Changchun
Investment Co.
2,150,271
Ltd.
Representative:
Yin, Yen-Liang
LIANG
SHU
1,627,059
HUEI
Yung-Liang
1,323,586
Huang
CHUN
YEH
Investment Co.
1,258,288
Ltd.
Representative:
Li, Pei-Kuan

Shareholding
Percentage

SharesShareholding
Percentage

6.83% 101,187

0.18%

－

NOTE

－

SharesShareholding
Percentage

－

－

Fu Wu
Legal
Investment
representative
Ltd.

－

－

－

Chih-Hung
Legal
Ouyang representative

－

－

－

－

－

－

Name

Relationship

5.80%

－

5.38%

81,237

5.33%

－

－

－

－

－

－

－

5.22%

－

－

－

－

－

－

－

4.46%

－

－

－

－

－

－

－

3.86%

－

－

－

－

－

－

－

－

－

－

0.15%

2.92%
2.37% 7,560

2.26%

－

0.01%

－

－

－

－

－

－

－

－

－

－

－

- 56 -

10. The shareholding of the Company, Director, Supervisor, management
and an enterprise that is directly or indirectly controlled by theCompany in the invested company, and consolidate the shareholding
percentage:

Investee Company

Investor Company
SharesBrogent Creative
Inc.
Brogent
Mechanical Inc.
Brogent Hong
Kong Limited
Brogent Global
Inc.
Brogent Rides(Shanghai)
LimitedBrogent Creative(Shanghai)
Limited

Total
SharesShareholding
Percentage

1,500,000

100%

-

-

1,500,000

100%

7,696,266

61.11%--

7,696,266

61.11%

-

100%

-

-

-

100%

30,870,000

100%

-

-

30,870,000

100%

-

100%

-

-

-

100%

-

100%

-

-

-

100%

40%

-

-

-

100%

-

-

-

100%

-

100%

-

-

-

100%

-

100%

-

-

-

100%

-

86.67%---

86.67%

-

100%

-

-

-

100%

Brogent JapanEntertainment
Joint-Stock
Corporation

Dili Jie Holdings
LimitedJetway Holdings
LimitedGarlay Holdings
LimitedhexaRidethefirst LLP
Holey Holdings
LimitedShareholding
Percentage

Director, Supervisor,
Manger anddirector
indirect investment
Shareholding
SharesPercentage

700- 57 -

700

40%

IV. Placement Situation
1.

Company capital and share capital(1) Sources of capital property other than cash is paid by subscribers
1. Type of stock
March 30, 2019; Unit: Shares
Authorized capital
Type of stock

Shares issued and outstanding

55,747,410

Ordinary shares

Unissued shares

Total

34,252,590

90,000,000

Note

OTC shares

2. Sources of capital
March 30, 2019;
Authorized capital
Issue
Year/month priceAmount(NTD) Shares

Paid-in capital
SharesAmount

Unit: 1,000 shares; NT$1,000

Note
Sources of capital property Subscriptions paid
other than cash is paid by with property othersubscribers
than cash

2001.1010

5,000

50,0001,500

15,000Cash set up

2002.07

10

5,000

50,0005,000

50,0002003.1010

6,000

60,0006,000

2004.0910

12,000120,000

8,106

Capital increase of
NT$35,000,000
Capital increase of
60,000
NT$10,000,000
Capital increase of
81,060
NT$21,060,000- 58 -

None.
None.
None.
None.

OthersApproval by Kaoshifu Jianergongzi Letter No.
09007412400
Approval by Kaoshifu Jianergongzi Letter No.
09109112601
Approval by Kaoshifu Jianergongzi Letter No.
09205920530
Approval by Kaoshifu Jianergongzi Letter No.
09300940610

Authorized capital
Issue
Year/month priceAmount(NTD) Shares

Paid-in capital
Shares2005.03

10

12,000120,000

9,610

2005.0510

12,896

128,960

12,896

2006.0810

20,000200,000

17,442

2010.03

10

20,000200,000

19,612

2011.0610

30,000300,000

21,3562011.0910

30,000300,000

22,6262012.1010

30,000300,000

25,4552013.1010

30,000300,000

26,727.75

2014.0210

30,000300,000

27,470.02

2014.05

10

30,000300,000

29,013.43

2014.0710

50,000500,000

30,888.77

Note

Sources of capital property Subscriptions paid
other than cash is paid by with property other
Otherssubscribers
than cash
Capital increase of
Approval by Kaoshifu Jianergongzi Letter No.
96,100None.
NT$15,040,000
09400391490
Capital increase of
Approval by Kaoshifu Jianergongzi Letter No.
128,960
None.
NT$32,860,000
09400469250
Capital increase of
Approval by Kaoshifu Jianergongzi Letter No.
174,420
None.
NT$45,460,000
09500652270
Capital increase of
Approval by Kaoshifu Jianergongzi Letter No.
196,120
None.
NT$21,700,000
09900452210
Stock option conversion ofApproval by Kaoshifu Siweijingshanggongzi
213,560
None.
NT$17,440,000
Letter No. 10001224680
Capital increase of
Approval by Kaoshifu Siweijingshanggongzi
226,260
None.
NT$12,700,000
Letter No. 10001356410
Capital increase of
Approval by Jingguangzhengfazi Letter No.
254,550
None.
NT$28,290,000
1010048593
Dividends and bonuses ofApproval by Jingjiasanshangzi Letter No.
267,277.5
None.
NT$12,727,500
10200112100
First domestic conversion of
convertible corporate bond of
NT$1,274,400
Approval by Jingjiasanshangzi Letter No.
274,700.2
None.
Second domestic conversion
10300015650
of convertible corporate bondof NT$6,148,300
First domestic conversion of
convertible corporate bond of
NT$9,103,500
Approval by Jingjiasanshangzi Letter No.
290,134.3
None.
Second domestic conversion
10300054610
of convertible corporate bondof NT$6,660,500
First domestic conversion of
convertible corporate bond of
Approval by Jingjiasanshangzi Letter No.
308,887.7 NT$10,350,100
None.
10300090820
Second domestic conversionof convertible corporate bondAmount- 59 -

Authorized capital
Issue
Year/month priceAmount(NTD) Shares

Paid-in capital
Shares2014.0910

50,000500,000

33,635.77

2014.10

10

50,000500,000

33,679.98

2015.01

10

50,000500,000

39,679.98

2015.0610

50,000500,000

40,709.98

2015.0710

50,000500,000

44,677.98

2018.0810

90,000900,000

53,526.77

2018.0910

90,000900,000

53,092.77

2019.0810

90,000900,000

55,747.41

Note

Sources of capital property Subscriptions paid
other than cash is paid by with property other
Otherssubscribers
than cashof NT$8,403,400
Capital reserve transfer
Approval by Jingjiasanshangzi Letter No.
336,357.7
None.
increase NT$27,470,000
10300104170
First domestic conversion ofApproval by Jingjiasanshangzi Letter No.
336,799.8 convertible corporate bond ofNone.
10300137580
NT$442,100
Capital increase of
Approval by Jingjiasanshangzi Letter No.
396,799.8
None.
NT$60,000,000
10400008080
Capital increase of
Approval by Jingjiasanshangzi Letter No.
407,099.8
None
NT$10,300,000
10400066620
Stock dividends
Approval by Jingjiasanshangzi Letter No.
446,779.8
None
NT$39,702,000
10400074690
Stock dividends
Approval by Jingjiasanshangzi Letter No.
535,267.7
None
NT$88,487,000
1070008434
Retirement of treasury shares
Approval by Jingjiasanshangzi Letter No.
530,927.7
None
NT$4,340,000
1070009969
557,474.1 Capital reserve transfer
None
Approval by Jingjiasanshangzi Letter No.
increase NT$26,546,000
1080008464

Amount- 60 -

(2) Shareholder structure
March 30, 2020

Shareholder
structurequantity

Otherjuristic
persons

Government Financial
institution institutions

Number of
Shareholders
No. of shares
held
Shareholding
percentage (%)

112Foreign
Individual institutions
investors
andforeigners

117

6,792

Total

39

6,961

23,000825,370 15,705,613 33,464,172 5,729,255 55,747,410

0.04%

1.48%

28.17%

60.03%

10.28%

100.00%(3) Dispersion of equity ownership
Ordinary shares
March 30, 2020
Shareholding
percentage (%)

Number ofshareholders

Shares held

1~ 9993,778

228,304

0.41%

1,000~ 5,000

2,412

4,690,365

8.41%

5,001~ 10,000347

2,527,307

4.53%

10,001~ 15,000

134

1,656,814

2.97%

15,001~ 20,000

57

989,029

1.77%

20,001~ 30,000

67

1,654,781

2.97%

30,001~ 40,000

42

1,448,985

2.60%

40,001~ 50,000

21

949,138

1.70%

50,001~ 100,000

51

3,676,119

6.59%

100,001~ 200,000

18

2,445,359

4.39%

200,001~ 400,000

143,880,446

6.96%

400,001~ 600,000

52,582,895

4.63%

600,001~ 800,000

3

2,085,182

3.74%

800,001~1,000,000

0

0

0.00%

>1,000,001

12

26,932,686

48.31%

Total

6,961

55,747,410

100.00%Shares- 61 -

(4) List of major shareholder (shareholders holding more than 5%of shares or top ten shareholders)March 30, 2020
SharesShareholding percentage
No. of shares held
Name of major shareholder(%)
Chih-Hung Ouyang
3,807,191
6.83%
Fu Wu Investment Ltd.
3,235,246
5.80%
Chung-Ming Huang
3,000,883
5.38%
Profit Power Management Consulting
2,969,400
5.33%
Limited
Ruentex Industries Ltd.
2,910,310
5.22%
Ruentex Development Co. Ltd.
2,489,060
4.46%
Changchun Investment Co. Ltd.
2,150,271
3.86%
LIANG SHU HUEI
1,627,059
2.92%
Yung-Liang Huang
1,323,586
2.37%
CHUN YEH Investment Co. Ltd.
1,258,288
2.26%

(5)

Market Price, Net Worth, Earnings, and Dividends in the
Past Two Years
Year

Unit: NT1,000$
Current year
up to March
30, 2020

2018

2019

274

239

184

136

164

88.8

186.86

195

148

53.42
50.88
53,093
4.84

53.24
Note 155,747
6.57

Note 2
Note 2
Note 2
Note 2

4.61

Note 1-

4.0

5.6(Note 1)
-

-

0.5

-

-

-

-

-

40.53

29.68

-

Return analysis Price/dividend ratio

46.72

34.82

-

Cash dividend yield

0.02140.0287-Item
Maximum
Market price per
Minimum
share
Average
Net Value per
share
Earnings per
share

Dividends per
share

Befor distribution
After distribution
Weighted average shares
Earnings per share
Retroactive adjustment for
Earnings per share
Cash dividend
Stock grants
CapitalReserve
Accumulated unpaid
dividend
Price/earnings ratio

Note1: The 2019 proposal of surplus distribution has not been resolved in the shareholders' meeting.
Note2 : Earnings not yet calculated.

- 62 -

(6) Dividend policy and implementation status
1. Dividend policy
When allocating the net profits for each fiscal year, the Company shallfirst offset its losses in previous years and set aside a legal capital reserve at
10% of the profits left over, until the legal capital reserve has equaled thetotal capital of the Company; the remaining balance and unappropriatedearnings for the year shall be adjusted. Then, set aside special capital reservein accordance with relevant laws or regulations or as requested by theauthorities in charge and to satisfy business needs of the Company. And theBoard shall propose a distribution plan for any balance remaining, and suchbalance shall be distributed in accordance with the resolution of theshareholders’ meeting.
The Company is situated in a changing industrial environment, wherein
the company life cycle is at a stable growth stage. Considering the Company's
capital requirement for continuous expansion and business operations, as well
as long-term financial planning to satisfy shareholders’ needs for cash flow,
the Company's dividend policy was based on the residual dividend policy inthe relevant laws and regulations of the Company Act. The future capitalrequirement is measured according to the future capital budget plan of theCompany; then, set aside the capital required for earnings financing, and theremaining earnings shall be distributed by way of cash or stock dividend.
Particularly, cash dividend may not exceed 10% of the total dividend.

2. Dividend distribution to be proposed to the shareholders’meeting:
The Company's 2019 earnings distribution plan was approved by the
Board on March 9, 2020. Shareholders' meeting has not yet been held. The
2019 earnings distribution plan is as follows:
Each common share holder will be entitled to receive a cash dividend of NT$5.6
per share from retained earnings.

(7) Effect of the proposed stock dividends (to be adopted by the
Shareholders' Meeting) on the operating performance andearnings per share:
The Company did not release financial forecasts in 2019 and hence it is notapplicable.
- 63 -

(8) Employee bonus and remuneration to Directors andSupervisors
1. Dividend Policy for terms stated in the Articles ofIncorporation regarding employees' bonus and Directors'
and Supervisors' remuneration:
The Company shall pay dividends or bonuses when there is profit.
Any unappropriated earnings may be distributed as employee bonus
in the sum of 5% to 15%. The Director and Supervisor remuneration
may not exceed 2%. If there are accumulated losses of the company,
the earnings should be reserved in advance to make up the amount.
Employee bonus shall be paid by stock or cash; nevertheless, thecriteria of qualified employee should be determined by the Board of
Directors.

2. Basis for estimating the amount of employee bonuses
and remuneration to Directors/Supervisors, basis forcalculating the number of shares to be distributed as
stock bonuses, and the accounting treatment of thediscrepancy, if any, between the actual distributed
amount and the estimated amount, for the current
period:The Company estimates employee bonus and remunerations to
Directors and Supervisors according to the income before income tax
for the year, and the value specified in the Article of Incorporation.
The estimated values shall be recognized as the expense for thecurrent period. If thereafter, the actual distribution differs from theestimated values in the resolution of the Board of Directors’ meeting,then it shall be regarded as loss for the next year and shall not
influence the ratified financial report.
The Company was approved by the Board of Directors’ meetingon March 9, 2020. The distributed employee bonus was
NT$34,599,155 and Director and Supervisor remuneration was
NT$7,594,936, which accounted for 8.10% and 1.78% of the income
before income tax for the year, respectively; in compliance with thecompany's Articles of Incorporation.

- 64 -

3. Earnings distribution proposal has passed the Boardof Directors but not the resolution of theshareholders' meeting:
The Company’s 2019 earnings distribution was approved by the
Board of Directors’ meeting on March 9, 2020. A cash dividend of
NT$5.6 per share from retained earnings. The total cash dividend to
be distributed is NT$312,185,496 .

4. Earnings distribution proposal passed in the
resolution of the shareholders' meeting:
Not applicable. The Company’s 2019 earnings distribution plan wasapproved by the Board of Directors’ meeting on March 9, 2020.
Shareholders’ meeting has not yet been held.

5. Describe, where applicable, the reason and handlingapproach for the difference (including the number ofshares, the monetary amount, and the face value ofshares distributed) between the actual distribution of
employee bonus and remunerations to Directors andSupervisors and the approved employee bonus andremunerations to Directors and Supervisors:
Unit: NT$

Employees’ Profit
Sharing Bonus(Cash)

Directors’andSupervisors ’Com
pensation (Cash)BoardBook Value differences Description of
Resolutiondifferences(2019/03/12)
28,267,738 27,971,918
295,820 The differences
was recorded inthis year as achange inaccounting
estimate
5,975,840
6,140,178(164,338) The differences
was recorded inthis year as achange inaccounting
estimate- 65 -

(9) Buyback of Treasury Stock:
1. Execution of buyback is completed
March 30, 2020
Treasury stocks: Batch Order

1st Batch

Purpose of buy-backTransfer to employees

Timeframe of buy-back2015.07.22 to 2015.09.01

Price range

NTD 170.00 to NTD 488.00

Class, quantity of shares bought back
Value of shares bought-back (in NT$
thousands)
Shares sold/transferred
Accumulated number of company shares
held
Percentage of total company shares held(%)

1,000,000 Ordinary Shares
266,071,991-

2. Execution of buyback has not been completed：
Not applicable.

2. Corporate bond (including overseas corporate bond)(1) Issued corporate bond:First domestic secured corporate bond and second domestic unsecured corporatebond have all been converted into ordinary share by the end of December 31, 2014.

(2) Information of corporate bond conversion:
First domestic secured corporate bond and second domestic unsecured corporatebond have all been converted into ordinary share by the end of December 31, 2014(3) Issued exchanged corporate bond: None.
(4) Adopt shelf registration method to collect and issue ordinary
corporate bond: None.
(5) Issued subscribed corporate bond: None.
(6) Private placement of corporate bonds in the past three years to
the date of the annual report: None.

- 66 -

3. Issuance of preferred stocks
None.
4. Issuance of global depositary receipts (GDR)
None.
5. Exercise of employee stock option plan (ESOP)
None.
6. Restricted stock awards
None.
7. Merger and acquisition
None.
8. Issuance of new shares for acquisition of shares of othercompanies
None.
9. Implementation of capital allocation planNone.

- 67 -

V. Business Overview
I. Business Activities(1) Business Scope
1. Company's primary business activity
Information software
retailer

Electronic material retailer Computer installation

Information software
wholesaler

Electronic material
wholesaler

Information software
service

Information processing
serviceElectronic information
supply service

Arts service

General advertising service Sound publishing

Arts performance activity
Wholesale of cultural
education, musicalinstrument, andeducational entertainment
necessities
Retailer of cultural
education, musicalinstrument, andeducational entertainment
necessities

Automated control
equipment engineering

Machinery installation

Machinery wholesaler

Computer and businessmachinery wholesaler

Electronic retailer

Computer and businessmachinery retailer

Intellectual property

Product design

Machinery retailer

Other machinery retailer

International trade
Landscape and interior
designExcept for approved
business activities, may
engage in activities that are
not prohibited or restrictedby law

2. Company's primary products and their operating
weightU ni t: NT $ 1 ,0 0 0

Product Category
Simulator rides
Royalty income
repair, maintenance, andlabor affairs
Sales revenue
Profit sharing of ticketsales
Net revenue

2018
2019
Net revenue
Operating Net revenue Operating
weight(%)
weight(%)
1,588,776
97.03 1,975,221
94.94
0
0.00
1,194
0.06
16,5801.01
28,3981.36
10,406
21,6760.64
1.32

14,5580.7

61,0702.94

1,637,438

100.002,080,441

100- 68 -

3. The Company's products
Simulator Rides are the Company’s main product. Since moving to the Kaohsiung
Software Park in 2013, the Company has gradually placed its business focus on the
media-based attraction (MBA) industry, meaning that we combined our previously developed
3D real-time imaging and audiovisual multimedia technologies with the Stewart six-axis
motion platform and dynamic simulation techniques. Subsequently, the Company successfullycompleted the FlyOver Canada project in Vancouver, becoming the leader of the flyingtheater
industry. The Company's operating model has extended from selling hardware to digitalcontent development in recent years.
Since October 2013, we cooperate with Japan's Kodansha in integrating Kodansha's
comic characters into our simulator ride products. In the meantime we not only a flying
theater, the company also produced Attack on Titan and Ghost in the Shell movies for the new
Q-Ride platform, that is operational as hexaRide in Tokyo, Japan since 2018. Starting from2015, the Company has changed its management model, from once-off selling of simulator
rides to managing it with its customers. Moreover, the Company is working with customers inplanning and developing relevant peripheral products, thereby expanding the sources ofincome, the hexaRide and the new i-Ride Taipei are the latest developments in this segment.

Picture Source: hexaRide FB

Apart from that Brogent has entered a supplier relationship with Legoland parks around theworld. The very first m-Ride type flying theater ride opened last spring in Legoland Florida.
More installations will follow in 2020. The succesfull introduction of m-Ride flying theater
opened a new market segment for this popular attraction. It will help significantly to add tothe global installed base of flying theaters.

- 69 -

Picture Source: Legoland Florida Website

In addition to providing fun experiences, Brogent’s product development team proceeds
to put more stringent requirements to improve qualityand safety. Our flying theaters have beenformally adopted by the United States UL certification and the TUV SOUTH. An introduction
to our products :Product name

Description

i-Ride

The i-Ride, featuring a suspended
seat platform, is the only dynamic
flyingtheater on the market built ona six degrees of freedom (6DOF)
motion platform. It not only
delivers super realism and fantastic
entertainment effects, but is also
the most representative device
among all extant indoor gaming
devices.

ImagesRiders' feet hang freely, to deliver
the true sensation of flying throughthe air. The sweeping bird’s eye
perspective delivers unobstructed
realism with no blind spots. Wind,
sound, light, water, and aromasheightenthesensationofconquering the air.

- 70 -

Product name

Description

m-Ridem-Ride is Brogent’s new compact
flying theater and the first flying
theater system that offers a 180
degree turn of the seats with aspectacular reveal.

Images1) Unlimited story topics
2) Trackless or track bound andnoiseless design for self-driving
cars
d-Ride3) Flexible plan scenes according
to actual needs onsite4) Combined with interactive gamedesign, with touch, shoot, and hand
gesture control operating methods

1) The 360° massive cylinder
screen delivers heightened realism
and an unobstructed panoramicview with no blind spots
v-Ride 360

2) Passengers can walk safely andfreely, selecting their favorite
perspective3) Suitable for various themes;
with special 4D effects, users canimmerse into the video content- 71 -

Product name

Description

ImagesThe modern version of the classic
4D cinema. The electrical motion
base together with a wide range of
special effects delivers a great
experience.
v-Ride basic

1) High G-Force: Uses large-scale
motion platform that creates effects
that simulate high g-forces
2) 16:9 screen suitable for adiversity of video topics; withspecial 4D effects, a realistic
experience is created

The most advanced immersive
tunnel experience in the market
with a vehicle that can move with
six degrees of freedom.

t-Ride1) Two-sided curved screen
design, increasing visual sense ofrealism and excitement
2) Vehicle can be changed
depending on the theme, such as
traveling on the same car, and withspecial 4D effects, it's as if you're
there in person

The next step in advanced
interactivity: Gesture based 3D
GestureMagicexperience that let’s guests fightvirtual monsters.

- 72 -

Product name

Description

Q-RideBrogent’s product for the compact
indoor market and a breakthroughfor the VR market. The first
product from Brogent that uses VR
glasses instead of a traditional
screen. It comes with preinstalledride content, simulating an
underwater experience and a tour
around the world.

Esports“Lightning
Wings”Taking eSports to the next level,
Lightning Wings is a full-body
motion virtual reality gaming
system, six-degree of freedom
motion base; coupled withspecially-designed VR helmets andpilot consoles. Once the gamestarts, players in their virtual
cockpits heave feel every
maneuver in the combat. All
players commented the experienceis “so real” and “beyond their
imagination”.
Lightning Wings is a multiplayer
battle game that players can enjoy
with friends. Not only that: withlive broadcasting the audience canfeel the intensity of the game andcheer for their teams.

ImagesThis new product introduced at
IAAPA Expo 2019 in Orlando
brings the competitiveness ofEsports
realtime control to the car racing“Speed Racers”
arena. A premium entertainment
experience where everyone canbecome a race track pilot.

(2) Industry overview
1.

Industry's current trends and future outlook

Since moving to the Kaohsiung Software Park in 2013, the Company has graduallyplaced its business focus on the media-based attraction (MBA) industry. The following section
presents an overview of the new media entertainment industries:
In the early days, theme parks were mainly equipped with mechanical and simple electronic
facilities such as the Ferris wheel, bumper cars, carousels, and roller coasters. However, as- 73 -

new technologies emerged, consumers gradually started to entertain themselves by engaging
in experience-based consumption activities. Thus, these facilitates can no longer attract
consumers, leading to the gradual decline of the once thriving theme parks. In replace of suchtheme parks is the simulator ride equipment that combines digital contents and fantasies
well-known to adolescents. Moreover, simulator ride equipment is not only entertaining but
also educational. This trend of the experience economy is increasing in the Asian market.
In 2017 Disney bought Fox and Marvel and leveraged the IP not only for the media businessbut also for it’s theme parks. Brogent in its partnership with Kodansha uses Intellectual
property like “Atack on Titan” and “Ghost in the Shell” to create experiences by leveraging
world famous characters and stories that drive not only content but also ride hardware
revenue.
According to the 2019 global tourist attraction report published by the authoritative
Theme Entertainment Association (TEA), the global theme park industry has showed steady
growth in 2018. Particularly, the number of visitors to top 10 theme parks worldwide grew by
5.4% in from 2017. The annual attendace of the top 10 global theme park chains, whichequals 7% of the world population. Brogent is proceeding to use high technology and IP to tap
into this market.

2.

Relationship between up-, mid-, and down-stream suppliers in theindustry's supply chain
Upstream industry
Midstream industry
Integrated hardware
Hardware:
1.Precision machineryand software
industry
technologies
2.Spherical screen
3.Projector
Software:
1.Wireless embedded control
system2.Spherical projector andplayback control system
3.High-definition digitalcontent

Downstream industry
Global theme parks
Exhibition
Shopping mall
Tourist attractions
Urban experience
center

The upstream industries associated with the simulator ride equipment comprisethe hardware section, including precision machinery industry and manufacturers of
spherical screens and projectors, and the software section, including wirelessembedded control system, spherical projector and playback control systems, anddigital contents. The Company designs and integrates various software and- 74 -

hardware technologies according to customer needs, and then sells the products todownstream industries such as theme parks, museums, shopping mall, and urban
experience centers.

3.

Product development trends
Previous theme parks: Mainly equipped with mechanical and simple electronic

facilities such as the Ferris wheel, bumper cars, carousels, and roller coasters.
Generally, in bad weather, these theme parks must cease their operation,
substantially impacting business operations. By comparison, multimedia simulator
ride facilities can be installed indoors free from environmental influences; thus, theusage rate of theme park equipment can be enhanced, increasing the economic
benefits of theme parks. Europa-Park in Germany celebrated the opening of Brogent
i-Ride “Voletarium” attraction in June 2017, which welcomed an estimated 8
million riders until end of the 2019 season.
Moreover, simulator ride facilities have become the options for updating themeparks in European and American countries and for planning and constructing themeparks in emerging countries. In recent years, under the influence of mature digital
video technologies and Hollywood films, traditional mechanical amusement
facilities are no longer effective for attracting new-generation tourists. To satisfy
tourists' entertainment needs and novelty, new amusement parks have successively
incorporated digital video technologies with electromechanical equipment. Thus,
tourists can not only enjoy the excitement of conventional outdoor facilities, butalso experience indoor facilities with excellent sound and lighting effects without
being influenced by weather conditions. Furthermore, the Company's simulator
rides that stimulate both sensory experiences and thrilling sensations, which are inline with the current trend of experience economy.

4.

Product competition
Media based simulator attractions deliver an immersive experience that fulfills

guests needs of all senses, that’s why they are generally preferred over roller
coasters, free fall towers, swinging ships etc. by the general public. Because thetraditional mechanical rides are comparably simple in their experience quality andoften have physical limits for riders, setup costs are high and the climate is a big
impact factor.
- 75 -

Traditional cinemas on the other side are not exciting enough to catch the full
attention of younger crowds. Media based simulator attractions like the flying
theater are situated in the midle between those offerings: Like in a cinema content
can be switched easily, while still offering the physical excitement of a mechanicalride in a weatherproof environment. This approach makes Brogent products
succesfull and the installed base of attractions worldwide is growing every year.
The market share in the flying theater market is an est. 85% in the premium
segment. Brogent is not simply offering the product, we are providing IP licensing,content production. Operation consultiong and can provide one stop shopping forthis kind of complex attraction, if the clients need help.

(3) Overview of Technology and R&D
1.

R&D investments in recent years to the date of the annual reportYear
R&D expenses

2019
172,403

Unit: NT$1,000
2020Q1
Note

Note:The year to date March 31. 2020 financial results has not yet been reviewed by a CPA.

2.

Successfully developed technologies and products in recent years
Year

2011

2012

2013

2014

R&D Accomplishments
Novel modularized suspension spherical theater based on a vertical
six-axis actuating platform
Ski simulator
Tablet 3D man-machine interface (Android 3.2)
9s series software downloading tool (Android platform)
Commercial electronic games－The Legend of a Golden City
Novel special drive method
Web-shaped seat design mold
Seat cover design and production
Actuator cantilever turning gate
Suspension two-axis actuator platform stress analysis
Smart TV man-machine interface (Android 2.3)
Tablet 3D man-machine interface (Android 4.0)
9s series software downloading tool (iOS platform)
Smart TV software
Electrical gas six-axis platform design
Suspension two-axis actuator platform design and production
Completely dark ride (d-Ride) design
Balloon Ride design
Media Free Fall Design
Interactive walking theater
Joey's Aquarium (sketch-type aquarium)
Track d-Ride system- 76 -Year

R&D Accomplishments

2015“Attack on Titan” i-Ride Film
Car Racing simulator ride

2016

Q-Ridei-FUN HUB

2017

m-Ride2018

Lightning Wings

2019

V-Ride dome 304s

(4) Business plan - long-term and short-term
1.Short-term development plan
(1) Marketing and product plan
A.Commit to on-going projects because successful performance is the best
marketing tool for a company; strengthen digital content development capacity
to satisfy future market demands for videos.
B.Design and plan highly modularized projects, provide affordable modularized
system, and improve competitive advantage.
C. regulate outsourced vendors' production operation so that the products meetinternational standards; and continue to design products conforming tointernational environmental regulations to become a benchmark of green
enterprises. Our flying theater is already EN and ASTM certified.
D.Sales channels are relatively closed; considering the ecological layout of local
markets of various regions, the Company will adopt a cooperative model inwhich it forms a strategic alliance with its agents.
E.Participate in international exhibitions (e.g., IAAPA), keep increasing thevisibility of the company's product, and expand the range of regional buyers.

(2) R&D plan
A.Apply the ability to integrate six-axis actuator platform with multimedia
technologies, optimize d-Ride and innovative Media Free Fall Ride to expand- 77 -

the Company's product line, and satisfy customers' diversified needs.
B.Reinforce knowledge management and integrate existing data, so thattechnological resources can be shared to enhance technological capacities.

(3) Human resources and informatization plan
A.Strengthen training to enhance emplo yee skills.
B.Recruit professional managers to improve business performance.
C.Purchase professional collaborative operating software to provide
emplo yees around the world with a joint operating platform.

(4) Financial Plan
A.Use appropriate financial instruments and formulate contract-based sales plan
to avoid risk of currency fluctuations.
B.Strengthen project management and reduce receivables to increase theturnover rate of receivables.

2.Mid- and Long-term development plan
(1)Marketing and product plan
A.Target the future demand market of Asian regions where
economic growth is high and then advance toward the global
market, thereb y becoming internationall y recognized primary
supplier of simulator rides.
B.Seize business opportunities in replacing, renewing, or adding
construction projects in the future European and US markets
and jointl y work with strategic alliance partners in market
expansion.

(2)R&D plan
A.Cooperate with domestic research institutes and academic units
to acquire leading technologies.
B.Continue to develop new technologies and acquire patents.

- 78 -

(3)Human resources and informatization plan
A.Strengthen training to enhance employee skills.
B.Recruit professional managers to improve business performance.
C.Purchase professional collaborative operating software to provide
employees around the world with a joint operating platform.

(4)Financial Plan
A.Use various fund-sourcing channels to create optimal financial structuresthat maximize company value.
B.Issue financial instruments in a timely manner for the company to acquire
minimum capital cost.
C.Properly use financial instruments to reduce currency risks.

- 79 -

II.

Market, production and sales(1)Market analysis

1. Product sales region
Year
Sales Region
Domestic
Taiwansales
Asia
Americas
Exports
EuropeAustralia
Subtotal
Total

2018
Net revenue

Unit: NT$1,000
2019
Net revenue%%

41,304

2.52

63,4503.05

1,092,079
131,226
177,394
195,435
1,596,134
1,637,438

66.7
8.01
10.83
11.94
97.48
100.001,366,913
356,333
292,253
1,492
2,016,991
2,080,441

65.70
17.13
14.05
0.07
96.95
100.002. Market ShareIn the market for premium flying theater solutions Brogent has a market shareof over 80%. Internationally Disney operates four similar theaters, but doesn’t sell thesolution to interested operators. Canadian supplier Dynamic Attractions offers flying
theaters as well, but is only approaching the market as a mechanical ride supplier.
They are not in the position to act as a system integrator and provide the complete
package that a real media based attraction consists of. Apart from that the platformmovement is limited to two degrees of freedom (compared to 6 DOF for the i-Ride).

3. Future market demand and supply and growth potential
The Company implemented the Content–Channel (CC) Strategy in recent years,transforming from being merely a supplier of amusement facilities to an operator ofentertainment businesses. To achieve this goal, the Company recruited strategic
investors over the past year, while adopting diversified management strategies that
integrate profit distribution models to replace the model where devices are just soldonce. The “i-Ride Experience Center” that opened in Kaohsiung in 2017 was the very
first standalone flying theater in Taiwan and in 2019 Brogent opened a second
standalone flying theater in Taipei Breeze Nanshan shopping center. In addition to
outright selling its equipment, Brogent has not only delivered technology but also
creatively planned an experience center exhibit, in the hopes of educating children
through fun, thereby bringing parents and children closer together. In fact that people
cannot visit large theme parks in remote areas whenever they desire, the Company- 80 -

has endeavored to build the experience center in the city where transport isconvenient. The goal was to make fun more accessible.
Regarding the Company's main product—i-Ride—beginning with its Fly Overthe World project in Taiwan, Brogent is no longer merely a slogan. Within years, it
has exploited its technological advantages with its hardware design integrated withcreative software technologies. Brogent has extended its arm into the global sales
channel with its hardware and software products, acquiring a solid status in themultimedia industry. Regardless of product safety or technological stability, Brogent
has become increasingly mature with the globalization of the sales market, achieving
the industry leader status. After flying across the world, the Company has also beganplanning the locations for the FlyOver project that are most representative of Taiwan;
thus, tourists visiting Taiwan will be given an additional must-see tourist attraction.

4. Competitive Niches
A. Globally Recognized Technology
The Company's management teams are relatively experienced in the industrial
sector, making them capable of launching new products to customers at the right timeand rapidly responding to customer demand. In addition, our service quality is trusted
by our clients, and the quality of our products is ensured during the softwaredevelopment process (including the design, implementation, and testing stages). Thus
through enriched project management experiences, the Company offers customers
excellent quality software services, contributing to the value of our software
products.
In contrast to Disney's simulator rides, which feature a two-axis arm lift
platform with two motion directions (heave and pitch), the Company's products adopt
a six motion direction side-standing suspended six-axis platform. Our platform not
only enables riders to fully experience realism and enjoyment but also facilitatessaving space in the theater. Thus, business benefits could be maximized byadequately utilizing the space in the theaters. The Company has applied for patentsfrom Taiwan, China, the United States, and the European Union for the side-standing
suspension framework of the six-axis platform to protect our technology and increase
the threshold for other vendors to enter the market.

- 81 -

2017 European Star Award for Best New Ride2018 Park World Award for Best Indoor Ride2019 European Star Award Best Dark Ride2019 Best Flying Theater Supplier in China

B. Premium Brand Equity
Theme Parks, Museums, Exhibitions Centers and Zoos are markets with highentry barriers. Brogent works with established partners in the amusement industry
to create multiple distribution channels. All those partners rely on the technologicalknow how in system integration and certified technology that Brogent is steadily
advancing based on ongoing projects. Currently Brogent rides can be found fourcontinents.

- 82 -

Worldwide 30 flying theaters in operation or under installation

C. Product modularization lowers cost and increases competitiveness
Simulator ride facilities involve a wide range of technical aspects, covering
hardware systems (suspension, spherical screen with audiovisual systems) andsoftware technologies (projector, playback, wireless embedded control, andhigh-definition digital content). Therefore, the technical teams of the Company
performed high modularization engineering analysis and planning of large complex
system frameworks based on the existing six-axis platform technologies. In addition,
our design, production, transportation, and assembly processes are all designed andmodularized in accordance with international standard regulations. Suchmodularization enables saving large amount of construction time and manpower,
which considerably lowers construction cost and raises the Company's
competitiveness.
D. Collaboration with international strategic partners in digital content
development
Brogent is working with several partners to supply the best solutions andtechnology in the media based simulator attractions field. For content development
the company started a cooperation with Japanese publisher Kodansha back in 2015and has already developed ride films based on Kodansha IP like “Attack on Titan”
and “Ghost in the Shell”- 83 -

5. Competitive Edge, Favorable and Adverse Factors forLong-term Growth and Response Strategy(1) Favorable factors
A. Needs of emerging countries and reconstruction business opportunities in
Europe and the US
As the economy of emerging countries develop, these countries have graduallyfocused on the construction and development of leisure entertainment industries,
specifically large theme parks, the existence of which can not only create domestic
demand and employment opportunities, but also promote urban tourism
development. Low income level in emerging countries render the entrance fees totheme parks in these countries incomparable to those in developed countries (e.g.,
European countries, North America, and Japan). To effectively increase theeconomic benefits of amusement parks, governments of emerging countries strictly
regulated the benefits generated by amusement facilities. In addition, becauseindoor amusement facilities allow customers to still enjoy themselves during bad
weather, and because of the rapid development of digital audiovisual technologies
in recent years, traditional mechanical amusement facilities are no longer effective
for attracting the attention of new-generation tourists. Therefore, when planning andconstructing theme parks, emerging countries typically prioritized their focus onindoor amusement facilities that feature 3D sound and lighting effects and stimulatea sense of excitement in users. To reconstruct their tourism industries and boost
their economy, European countries and the US have successively initiated tourist
attraction reform projects, building leisure facilities by restricting existing buildings
and movie theaters. These leisure facilities are based on a composite business modelcomprising department stores and hotels to attract visitors. Because simulator rides
are built according to the height restrictions of existing buildings to provide
consumers with an all-new entertainment experience, this type of facility became
the primary focus of Europe and the US in reconstructing amusement facilities.

B. Construction and formation of industry supply chain
Before the Company entered the simulator ride market, there were no vendors
investing in similar products in Taiwan. Since undertaking the “Taiwan Formosa”
project for E-DA Theme Park, the Company has adequately leveraged Taiwan'
strong R&D and production capabilities of information hardware and precision
machinery industries. With the efforts devoted by the Company's R&D personnel- 84 -

and domestic vendors, Taiwan has become one of the few countries worldwide
capable of constructing simulator ride bases. Not only were the production costs ofamusement facilities lowered, but the quality of these facilities reached international
standard. Subsequently, a complete and tight supply chain in the simulator rideindustry was established. Because simulator rides are completely customized
according to customer needs, the Company's supply chain system enable the design,
motion control, or digital content of such rides to be adjusted whenever required
depending on customer needs. Thus, customer demand can be satisfied, thereby
increasing the overall competitiveness of the Company.
C. Establishing word of mouth facilitates business promotion
Distinct from general consumer electronic products, simulator rides featurelong life cycle, high degree of customization, high technical threshold, and highcost; therefore, customer repurchase and loyalty increased after establishing theword of mouth for the technology and quality of this product. Since completing“Taiwan Formosa” and “FlyOver Canada” projects, the Company has accumulated
considerable experience, word of mouth, and popularity in the simulator ride market.
The 2016 opening of “FlyOver America” created additional buzz. In addition, by
forming strategic alliance with internationally well-known amusement facility
suppliers, the Company will acquire more competitive advantage in businessexpansion.
D. Supported by strong technology
Since its inception in 2001, the Company has endeavored to develop
audiovisual multimedia technologies, accumulating considerable experiences intechnological development. Thus, the Company has established partnership withmultiple international mobile phone factories, and received Small Business
Innovation Research (SBIR) subsidies from the Ministry of Economic Affairs(MOEA) multiple times. In 2007, the Company was honored with the award of
excellence in SBIR from the Department of Industrial Technology, MOEA.
Regarding simulator ride facilities, the Company has received the European StarAward three years in a row starting 2017 a recognition not only for its technologicalcapability but also for the experience value that it prove to provide since thesuccessful implementation of the “Beautiful Formosa” and “FlyOver Canada“projects. For example, the unique fish eye lens designed by the Company canachieve the projection effects of a spherical screen simply by installing them with aprojector. Thus, the cost and space required for projector installation are- 85 -

substantially reduced, and the stability and image quality of the projector system areconsiderably enhanced. The Company's self-developed automated control
technology can integrate motion platforms with video systems with increased
precision. This way, riders can perceive the flow experience of realism. Furthermore,
the Company also possesses the capacity to develop digital content, and customize
it according to customer needs, thereby providing multiple choices to our customers.
Therefore, the Company enhances the technological capacity of its research team,and therefore has substantial room for improvement.
(2) Unfavorable factors and their response strategies
A. Closed sales channel for simulator rides, impeding business expansion
Simulator rides are primarily built in theme parks, museums, and exhibition
halls. Unlike general daily necessities, the sales channel of simulator rides isrelatively closed, and suppliers specializing in this market are mostly business
operators who have established their status for a long time. Thus, new vendors
cannot easily directly enter this supply chain system and expand their businesses.
Response strategies:
The Company fully understands the characteristics of this industry. To expand
its market and increase its market share, the Company formed a strategic alliancewith internationally known suppliers of amusement facilities who have had ahistory of more than 40 years in the industry. These suppliers assist the Company inexpanding its market channel to successfully enter the supply chain of the theme
park industry and facilitate its expansion into the global market. As a consequence
Brogent has already entered the international theme park market (i.e. Europa-Parkin Germany and Legoland Florida in the US). Products are well received by thegeneral public and the positive feedback creates good references and a strong brandreputation.
B. Shortage of professional talent, hindering talent recruitment
Because information electronic related industries remain the dominant of thedomestic market, and domestic vendors have already established a complete supply
chain in the information hardware industry, general graduates still prefer to enter
industries relevant to information electronics. Furthermore, domestic universities
and colleges have established faculty departments associated with software design
or amusement facilities in recent years. However, talent still require additional
training, and simulator ride technologies encompass a wide variety of aspects, thus
- 86 -

making R&D talent recruitment and cultivation difficult.
Response measures:
Engage in industry-academia cooperation with Sun Yat Sen University andSouthern Taiwan University of Science and Technology to cultivate high-quality
experts of digital content development and foster technological talent that industries
require; provide employees with favorable working environment, perfect employee
welfare systems, and formulate reward/punishment systems as well as employee
training programs; and establish job positions according to employees’ expertiseand characteristics and provide employees with the opportunity to become ashareholder of the Company so that they could share business outcomes with theCompany, thereby cohering their efforts and reducing turnover rate.
C. Raw material price and supply stability
The hardware system of the Company's simulator rides comprises thefollowing: The raw materials of carriers, six-axis platform, and steel structures aremostly steel and iron. The prices of these raw materials may vary according tomarket supply and demand, causing price fluctuations, thereby influencing theCompany's purchasing cost and profitability.
Response strategies:
In addition to having maintained a positive and long-term cooperative
relationship with its suppliers, the Company appropriately adjusts its sources ofprocurement and disperses different purchasing vendors to seek the most optimal
price quotation. Thus, over-concentration in purchasing, thereby increasing
operating risks can be avoided.

- 87 -

(2) Major product usage and manufacturing processes
1. Main purposes
Theme park, museum, exhibition hall, shopping center, and indoor professional
experience center afford entertainment and educational training functions todiversify Brogent’s client base, provide adventurous experiences, and elicit senseof excitement.

2.

Manufacturing process
A. Small-sized Rides :Independent new product development and improvement plan

Client demand

Conduct market research, newproduct creative collection,competitors' product analysis,
technical patents and otherfeasibility studies, and produce
new product plans

Proposal and Project Approved

Integration

Motionplatform
systemInteractive
Technology
Integration

Ergonomic
systemDesignExperience
Journey
DesignConducted integration, troubleshooting, testing, and modification of pilot
machines

Operation and Market Acceptance Tests- 88 -

Digital Content
Production

B. Simulator rides:

Customer demand(simulator rides)

Convened productproject meeting andapproved forexecution

Hardwaretechnologies

Motionplatform
systemSoftwaretechnologies

Verticalspherical
screen system

Spherical projector
andplayback control
systemWireless
embedded control
systemConducted integration, troubleshooting, testing, and modification of pilot
machines

Machine operation test and product delivery- 89 -

High-definition
digital content

3. State of supply of chief raw materials
Primary spare parts

Supply condition

1.Stewart six-axis platform

Good, stable

2.Structure of ride carriers

Good, stable

3.Spherical screen

Good, stable

4.Servo valve, motor

Good, stable

5.Projector

Good, stable

6.Acoustic equipment

Good, stable

7.Digital content contractor

Good, stable

The hardware and software systems of the simulator rides are designed anddeveloped by the Company. Regarding the mechanical hardware parts, the Company
cooperates with its vendor and commissions contractors for assistance. The Company
and its suppliers have a stable cooperative relationship, facilitating the stable material
supply. Therefore, there were no incidences of supply interruption.
4. Major buying and selling vendors/customer information(1) Names of customers who accounted for more than 10% of the sales in the last two
years, sales as a percentage of total sales, and reasons of change.
Unit: NT$ thousands
2019

2018
Item

Name

1
2
3
4

CHN0016
CHN0014
CHN0015
AUS0001
Others
Total

Percentage
Percentage
Relationship
Relationshipof netName
Amountof netwith issuer
with issuer
sales (%)
sales (%)
381,56223.30
None.
CHN0016
511,067
24.57
None.
286,258
17.48
None.
CHN0014
247,752
11.91
None.
284,385
17.37
None.
CHN0005
237,608
11.42
None.
195,435
11.94
None.
None.
489,798
29.91
1,084,014
52.10
Others1,637,438
100.002,080,441
100.00
Total

AmountNote:The year to date March 31. 2020 financial results has not yet been reviewed by a CPA.

Reasons for changes:
The Company's chief products are simulator rides. Customers who accounted
for more than 10% of the sales in 2019 are same buyers of the Company’s 2018
customer orders. The major projects were under construction and the revenues
were received according to the percentage of completion. In 2019, the Company
successfully extended its reach into the overseas market. The export amount andcustomer order have grown steadily.

- 90 -

To increase its market share in the global market, the Company continues towork with international vendors and Taiwanese vendors, actively vie for theircooperation, and devoted to seeking new client base to disperse sources ofcustomer order and maintain robust growth.

(2) Names vendors who accounted for more than 10% of the purchases in the last
two years, purchases as a percentage of total purchase, and reasons of change
Unit: NT$ thousands
2019

2018
Item

Name

1
2
3

A0000012
A0000008
OthersAmount58,59839,720236,593334,911Percentage
of total Relationshippurchase with issuer
(%)
17.50
11.86
70.64
100.00

None.
None.
None.

Name
A0000008
OthersAmount70,233392,998
463,231

Percentage
of total Relationshippurchase with issuer
(%)
15.16
84.84
100.00None.

Note:The year to date March 31. 2020 financial results has not yet been reviewed by a CPA.

Reasons for changes:
To develop simulator rides, the Company adequately uses the technicalstrength, flexibility, and willingness of small and medium enterprises to cooperate.
In addition, the Company plans, designs, and collects the various technical andproduction information of international companies, commissioning contractors to
manufacture our products. Furthermore, the Company cooperates with small andmedium enterprises to construct the supply chain system of simulator ride facilities.
The Company primarily procures six-axis platform, ride carriers, spherical screens,
servo valve, and projector and acoustic equipment. Except for when customers
designate their preferred suppliers, the Company's suppliers are selected according
to their quality, stability, delivery date, and price.
A000008 is the Company's first largest supplier of steel structures and push
carriers from whom we made a total purchase of NT$70,223 thousand.A0000012
is the Company's second largest supplier of the spherical screen manufacturer,
from whom the Company made a total purchase of NT$44,152 thousand in 2019.
Overall, the changes in the primary suppliers of the Company in the past two years
were based on the project scale and job completion progression. There were no
major abnormalities.

- 91 --

5. Output volume and value during the most recent two years
The Company's primary business involved the R&D and sales of simulator rides.
Since 2008 when the Company started the development and selling of simulator ridefacilities, these facilities, including their hardware and software systems andautomated control system, were designed and developed by the Company. The
mechanical body engineering part was commissioned to external contractors, and theCompany purchases the final product from the supplier and therefore is not a
manufacturing industry. Thus, the Company is not associated with output volume andvalue.

6. Sales volume and value during most recent two years
Unit: NT$1,000
2018
Primary products

Domestic sales
Quantity

2019
Exports

Value

Quantity

Simulator rides--

Others (Note)

-

Total

-

Value

Domestic sales
Quantity

Exports

Value

QuantityValue- 1,588,776--- 1,975,221

41,304

-

7,358

-

63,450-41,304- 1,596,134-

63,450- 2,016,991

41,770Note: Others refer to repair and maintenance and income generated sales (gaming machines) andlabor affairs.

Reasons for changes:
The primary products simulator ride, the amount and ratio of exports arecomparable to those of 2019, and there have been no major changes. All of them aremainly for export, and there have been no major changes.

- 92 -

III. Employee Information in the Past 2 Years to the Date of theAnnual Report
End of 2018

End of 2019

Up toMarch 31, 2020

Managerial officer

24

23

23

R&D personnel

64

77

74

General employee

68

73

72

Total

156

173

169

Average age

38.4

38.1

38.1

Average years of service (year)

4.25

4.2

4.3

Ph.D

1.9

1.7

1.2

Master's

53.2

55.5

55

University

39.7

38.2

39.1

College

4.5

4

4.1

Senior high school

0.6

0.6

0.6

Year

Number of
employees

Education
distribution (%)

IV. Environmental protection expenditure information(1) The Company primarily engages digital content development and selling of simulator
rides, the production of which is entirely outsourced to external contractors.
Therefore, the Company is not associated with pollution concerns.
1. According to laws and regulations if it is required to apply for a permit for installing
anti-pollution facilities, or permit of pollution drainage, or to pay anti-pollution fees,or to organize and set up an exclusively responsible unit/office for environmental
issues, the description of the status of such applications, payment or establishment
shall be made: Not applicable.
2. Setting forth the company's investment in the major anti-pollution facilities, the use
purpose of such facilities and the possible effects to be produced: None.
3. Describe the process undertaken by the company on environmental pollution
improvement for the most recent 2 fiscal years and up to the publishing date of theannual report. If there had been any pollution dispute, its handling process shall also
be described: None.

- 93 -

4. Describe the loss (including damage compensations paid) suffered by the company
due to environmental pollution incidents occurred in the most recent 2 fiscal years
and up to the annual report publishing date, the total penalty/fine amount, as well as
disclosing its future preventive policies (including improvement measures) andpossible expenses to be incurred (including possible loss if no preventive measures
are taken, and the penalties and estimated damage compensation amount; if
reasonable estimation cannot be made, explanation on the facts why it cannot bemade shall be stated): None.
5. Explain the current condition of pollution and the impact of its improvement to the
profits, competitive position and capital expenditures of the company, as well as the
projected major environment-related capital expenses to be made for the coming 2
fiscal years: None.
(2) The 2nd stage of R&D and experience center was completed in 2016 and awared thegreen building certificate issued by Ministry of the Interior (Certification No.
GB-BC-01-00164 on 105.12.16) The related green power arrangement is explained
as followings:

1.Installation of solar power-Using the roof space to install solar electric
power generation can output electricity without any pollution, noise anddanger ; Besides, the solar panels are able to beautify the roof, resist theirradiatioh of sun, and reduce indoor temperature in summer for energy
saving and carbon reduction
2.

Installation of central air-conditioning control system-The
air-conditioning is operated by the central air-conditioning control system.
It can monitor the situation of all air-conditionings for avoiding
unnecessary waste

3. Installation of all heat exchangers-All heat exchangers, as a part of thecentral air-conditioning control system, it achieves increasing the air
convection, improving indoor air quality(reduce CO2 concentration),decreasing the electricity fee and energy loss made by air exchange

4. Build up rain storage and recycle irrigation systems-We recycle rain and- 94 -

store it after filtering, in order to irrigate the plants. In this way, we canreuse the resource and cut down the waste of water resource
5.Use LED lightening system-All of office area and the test area of factorybuilding are equipped with LED lighting. Additionally, we have theswitch schedule to every illumination area for energy saving and carbon
reduction
6.Set up indoor air quality supervisory system-We regularly supervise theindoor pollutants, and ensure air quality with the current National andInternational Standards.
(3) Brogent is a general office building instead of the manufacturing industry in Kaohsiung
Software Technology Park. We collaborated with government policy in promoting theenergy saving measures in 2019. We were awarded a certificate of appreciation.
(4) We make effort to develop every energy saving measures aggressively. We takemeasures to use the office supplies with energy saving mark, increase the usage rate bymanaging the classification of waste, and strengthen indoor greening to improve air
quality(5) Brogent technologies INC. belongs to cultural and creative industry and our producs aremostly made by subcontractors. We enact the safe policy and irregularly execute thetraining of labor safety. Our secuity system and environment maintenance are both
responsible by the professional subcontractors. All of the fire equipments are regurly
maintained and declared by the related departments; In addition, the access control isrestricted by the identification card. For safety, everyone has to swipe the identification
card to get in each entrance.

- 95 -

V. Labor Relations
1. Set forth all employee benefits, continuing education, training, retirement systems, andthe status of their implementation, as well as the status of agreements between laborand management, and all measures aimed at preserving the rights and interests of
employees:(1) Employee welfare measures and implementation status
The Company offers the following welfare to its employees: labor and healthinsurance, employee group insurance, business travel accident insurance, employee
health examination, holiday bonus, year-end bonus, employee stock option bonus, andallowances for marriage, bereavement, and maternity as well as year-end party.
In addition, the Company has also set up an Employee Welfare Committee that
handles employees' various welfare affairs, including employee marriage, funeral, sickleave, and maternal leave subsidies, annual employee travel benefit, three-festival
bonuses (Dragon Boat Festival, Moon Festival, and Chinese New Year), birthday bonus,
seasonal gatherings and family days.
(2) Employee continuing education, training, and status of their implementation
To enhance employee quality and their work efficiency and quality, theCompany requires all its new recruits to receive immediate training and guidance on
their job content. During their period of employment, employees must regularly
undergo professional training, both internal and external, on employee job duties.
Internal training courses entail exchanging internal professional technologies andimproving employee productivity; external courses depend on company requirements.
Employees may be dispatched to attend external seminars and courses. Thus, theCompany's employees are provided with opportunities to receive professional
training. Actual training attendance is registered and managed with the hope of
fostering professional talent and effectively nurture and utilize talent.
(3) Employee pension system and status of implementation
The Company regulates employee pension system according to the Labor
Standard Act, formulates Employee Retirement Regulation, and establishes laborpension account with the Central Trust of China to which a labor pension reserve
equivalent to 2%~15% of employees' monthly salary is contributed. As of July 1,
2005, when the new labor pension system was implemented by the government, theCompany asks its employees whether they wish to adopt the new or old labor- 96 -

pension systems. Employees who prefer the new pension system shall have 6% of
their monthly salary contributed to their personal pension account and shall retain
their seniority status as required by the Labor Standard Act, to ensure their living
needs after they retire. No employees have retired since the Company's
establishment.
(4) Labor negotiations
The Company is subject to the Labor Standard Act, operating its business inaccordance with the Labor Standard Act. Generally, the Company emphasizes theimportance of employee welfares and communication with its employees; therefore,
it has maintained a harmonious relation with its employees. In addition, to maintainpositive labor relation, the Company attaches increased importance on employee
opinions, which can be communicated by the employees via email. Since its
establishment, the Company has not been involved in labor disputes. However, theCompany will still strengthen its labor communication protocols and endeavor toformulate effective welfare measures for its employees so that a more harmonious
labor relationship can be sustained to prevent any possibilities of labor disputes fromoccurring.
(5) Measures for protecting employee rights and interests
The Company has a complete document management system that specifies
various management regulations, employee rights and obligations and their welfares,
to protect employee rights and interests.
(6) Preventive measures taken to ensure a safe working environment and maintainemployees' personal safety:
The Company hires designated personnel to plant flowers and trees invacant spaces surrounding the Company. By applying the practice of landscapegreening, the Company creates a comfortable, safe working environment and plans
an effective parking space. The Company constructs a safe, healthy working
environment and regularly provides employee health examination to maintainemployee physical and mental health. In addition, a Labor Safety and HealthCommittee is established to engage in promotion efforts for environmental protection
and labor safety and health. The Company also offers employee safety and healthtraining programs to help employees enhance their health and safety related
knowledge and skills.

- 97 -

2. Describe the loss suffered by the company due to labor disputes occurring in the mostrecent 2 fiscal years and up to the annual report publishing date, and disclose theestimated amount expected to be incurred for the present and future as well as thepreventive measures:
The Company maintains a harmonious relationship with its employees. There
were no losses incurred from incidences of labor disputes during the most recent 2
years up to the publishing date of the annual report. The Company upholds theprinciple of maintaining a reciprocal relationship and sharing profits with its
employees. There is minimum likelihood of losses due to labor disputes occurring in
the future.

- 98 -

VI. Important contracts
Nature ofcontract

Contracting parties

Content

Malaysia
MYS00022019.01.08~May terminate theSimulator rides (Q-Ride)
contract according to agreement

United States

2019.01.30~May terminate theSimulator rides (i-Ride)
contract according to agreement

USA0007

Restriction
clauses
None
Not
Applicable

Vietnam
VNM001

2019.02.27~May terminate theSimulator rides (v-Ride)
contract according to agreement

None

China

2019.04.15~May terminate theSimulator rides (v-Ride)
contract according to agreement

None2019.04.19~May terminate theSimulator rides (v-Ride)
contract according to agreement

None2019.05.20~May terminate thecontract according to agreement

Simulator rides (m-Ride)

None

2019.05.20~May terminate thecontract according to agreement

Simulator rides (m-Ride)

None

2019.05.20~May terminate thecontract according to agreement

Simulator rides (m-Ride)

None

Simulator rides (m-Ride)

Not
Applicable

Simulator rides (m-Ride)

Not
Applicable

CHN0015China
CHN0015China
CHN0015

Sales

Date of contract start and end

Denmark
DNK0001

2019.06.28~May terminate thecontract according to agreement

United States

2019.07.31~May terminate the

GBR0001

contract according to agreement

China2019.08.10~May terminate the Simulator rides (m-Ride

CNH0019

contract according to agreement & v-Ride)

Japan

2019.09.06~May terminate the

JPN0008

contract according to agreement

Canada2019.12.20~May terminate the

CAN0005

contract according to agreement

Netherlands

2019.12.27~May terminate the Simulator rides (i-Ride

NLD0005

contract according to agreement Ma’anshan)

Hong Kong

2019.12.31~May terminate the

CHN0022

contract according to agreement

Equipment
Brogent Global Inc.
Rental2019.01.10~2029.01.09- 99 -

Simulator rides (i-Ride)

Simulator rides (m-Ride)

None

None
Not
Applicable
None

Simulator rides (m-Ride)

None

Simulator rides (i-Ride)

NoneNature ofcontract
Land
RentalLoan

Contracting parties
Export Processing
Zone Administration,
MOEA
Taiwan CooperativeBank

Date of contract start and end

Content

Restriction
clauses2012.3.14 - 2032.3.13

Renting of Kaohsiung
Software Park Land

None

2016.04.11 - 2031.10.13

Long-term collateral-basedloan application

None- 100 -

VI. Financial Overview
1. Condensed balance sheets and statement of income (2015 - 2019)(1) Condensed balance sheets
1. Condensed balance sheets- International Financial ReportingStandards (IFRS)- Consolidated
Unit: NT$ thousandsYear2,341,930

2,238,894

2,203,637

2,673,862

As ofMarch 31,2020
2019
(Note 3)
3,056,839

Property, plant andequipment
Intangible assets

557,047804,714

951,441

1,066,459

1,045,007-

13,987

149,155

120,157

166,597

232,299-

Other assets

235,074

98,081

199,667

308,893

814,435-

Total Assets

3,148,038

3,290,844

3,474,902

4,215,811

5,148,580-

566,592

307,270

313,143532,823

943,231-

677,202417,880490,119

745,194(Note 2)-

88,140336,388356,039

783,516

1,164,219-

654,732

643,658

669,182

1,316,339

2,107,450-

765,342754,268

846,158

1,528,710(Note 2)-

2,444,938

2,594,050

2,746,998

2,836,176

2,967,957-

446,780446,780446,780

530,928

557,474-446,780446,780535,268

557,474(Note 2)

2,043,087

2,052,669

2,053,485

2,027,723

1,968,156

Distribution

2,043,087

2,052,669

2,053,485

1,968,259(Note 2)

BeforeDistribution

220,459

211,682

366,258

270,513457,184-

109,849

101,072

100,794

91,060(Note 2)-684

(1,605)(4,049)7,012(14,857)-(266,072)(115,476)(115,476)－－-

48,36853,13658,722

63,29673,173-

2,493,306

2,647,186

2,805,720

2,899,472

3,041,130-

2,382,696

2,536,576

2,628,744

2,687,101(Note 2)-Financial information: FY2015 - FY2019

Item
Current assets

BeforeCurrent
liabilities

Distribution
After
Distribution

Non-current liabilities
BeforeDistribution

Total liabilities After
Distribution

Equity attributable toowners of parent
Capital Stock Before
Distribution
After

CapitalSurplusRetainedearnings

Distribution
BeforeDistribution
After

After
Distribution

Other equity
Treasury shares
Non-controllinginterests
BeforeTotal Equity
Distribution
After
Distribution

2015

2016

2017

2018

Note 1: Financial information from 2015 to 2019 was audited by CPA.
Note 2: The 2019 Earnings distribution proposal has not been resolved in the shareholders' meeting
Note 3: The year to date March 31. 2020 financial results has not yet been reviewed by CPA.

- 101 --

2. Condensed balance sheets- International Financial Reporting Standards(IFRS)- Individual
Unit: NT$ thousands

Year
Item

Financial information: FY2015 - FY2019

As ofMarch 31,2020
2019
(Note 3)
2,832,402

2015

2016

2017

2018

1,967,995

1,939,408

1,881,423

1,888,931

Property, plant andequipment
Intangible assets

551,001

617,103704,900

852,130

831,525-

13,934

146,666

117,987

102,946

85,303-

Other assets

594,044437,806

543,585

1,008,906

755,674-

3,126,974

3,140,983

3,247,895

3,852,913

4,504,904-

593,896322,545289,921356,515

747,403-

704,506

433,155

466,897568,886(Note 2)

88,140224,388

210,976

660,222789,544-

682,036546,933

500,897

1,016,737

1,536,947-

792,646

657,543

677,873

1,229,108(Note 2)

2,444,938

2,594,050

2,746,998

2,836,176

2,967,957

446,780446,780446,780

530,928

557,474

Distribution

446,780446,780535,268

557,474(Note 2)

BeforeDistribution

2,043,087

2,052,669

2,053,485

2,027,723

1,968,156-

Distribution

2,043,087

2,052,669

2,053,485

1,968,259(Note 2)-

BeforeDistribution

220,459

211,682

366,258

270,513457,184-

109,849

101,072

100,794

91,060(Note 2)684

(1,605)(4,049)7,012(14,857)-(266,072)(115,476)(115,476)

-

-

-

-

-

-

-

-

-

2,444,938

2,594,050

2,746,998

2,836,176

2,967,957-

2,334,328

2,483,440

2,570,022

2,623,805(Note 2)-Current assets

Total Assets
BeforeCurrent
liabilities

Distribution
After
Distribution

Non-current liabilities
BeforeDistribution

Total liabilities After
Distribution

Equity attributable toowners of parent
Capital Stock Before
Distribution
After

CapitalSurplusRetainedearnings

After

After
Distribution

Other equity
Treasury shares
Non-controllinginterests
Total Equity Before
Distribution
After
Distribution

Note 1: Financial information from 2015 to 2019 was audited by CPA.
Note 2: The 2019 Earnings distribution proposal has not been resolved in the shareholders' meeting
Note 3: The year to date March 31. 2020 financial results has not yet been reviewed by CPA.

- 102 --

(2) Condensed statements of income
1. Condensed statements of income- International Financial ReportingStandards (IFRS)-Consolidated (Note 1)
Unit: NT$ thousands

Year

Financial information: FY2015 - FY2019

As ofMarch 31,2020
2019
(Note 2)2,080,441

Item

2015

2016

2017

2018

Sales revenue

705,424881,670

1,514,469

1,637,438

Gross profit

333,961444,937

725,335

721,242

1,002,360-

Operating income(loss)
Non-operating
income and expense
Net income (loss)
before tax
Continuing
operations
Net income
Profit and loss of
discontinuing
operations
Net income (loss)

130,412

108,508

340,734

289,512420,809-21,81521,076(13,171)

31,61551,092-

152,227

129,584

327,563

321,127

471,901

119,769

106,112271,181258,418

383,810

-

-

-

-

-

-

-

119,769

106,112271,181258,418

383,810-619(1,810)(2,928)

10,899(22,242)-

120,388

104,302268,253

269,317361,568-

112,384

101,354

265,670

257,168

366,525

-

7,385

4,758

5,511

1,250

17,285-

113,003

99,544

262,742

268,032

344,255

-

7,385

4,758

5,511

1,285

17,313

-

2.57

2.30

6.00

4.84

6.57

-

Other comprehensive
income(net of income Tax)
Total comprehensive
incomeNet income belongs to
the parent company
Net income belongs to
non-controllinginterests
Total comprehensive
income belongs to theparent company
Total comprehensive
income belongs to thenon-controllinginterests
Earnings per share

Note 1: Financial information from 2015 to 2019 was audited by CPA.
Note 2: The year to date March 31. 2020 financial results has not yet been reviewed by CPA.

- 103 -

2. Condensed statements of income- International Financial ReportingStandards (IFRS)-Individual
Unit: NT$ thousands

Year
Item

Financial information: FY2015 - FY2019

As ofMarch 31,2020
2019
(Note 2)1,550,841

2015

2016

2017

2018

Sales revenue

690,617865,220

1,202,199

1,325,599

Gross profit

304,396

390,441

540,111551,358

757,606-

Operating income(loss)
Non-operating
income and expense
Net income (loss)
before tax
Continuing
operations
Net income
Profit and loss of
discontinuing
operations
Net income (loss)

110,586

110,972

219,061

214,768

323,710-30,73010,463

81,036

86,841

103,576-

141,316

121,435

300,097

301,609427,286-

112,384

101,354

265,670

257,168

366,525

-

-

-

-

-

-

-

112,384

101,354

265,670

257,168

366,525-619(1,810)(2,928)

10,864(22,270)-

113,003

99,544

262,742

268,032

344,255-

112,384

101,354

265,670

257,168

366,525

-

-

-

-

-

-

-

113,003

99,544

262,742

268,032

344,255

-

-

-

-

-

-

-

Other comprehensive
income(net of income Tax)
Total comprehensive
incomeNet income belongs to
the parent company
Net income belongs to
non-controllinginterests
Total comprehensive
income belongs to theparent company
Total comprehensive
income belongs to thenon-controllinginterests
Earnings per share

2.57

2.30

6.00

4.84

Note 1: Financial information from 2015 to 2019 was audited by CPA.
Note 2: The year to date March 31. 2020 financial results has not yet been reviewed by CPA- 104 -

6.57-

3. The 2015 - 2019 Names of auditors and audit opinions
Year

Name of accounting firm

CPA

Audit opinion

2015

Grant Thornton Taiwan

Yi-Shun Chang,
Yu-Chieh Lo

Unqualified opinion

2016

Grant Thornton Taiwan

Yi-Shun Chang,
Yu-Chieh Lo

Unqualified opinion

Grant Thornton Taiwan

Yu-Chieh Lo
HuiPing Liu

Unqualified Opionoin(Emphasis of Matter orOther Matters)

Grant Thornton Taiwan

Yu-Chieh Lo
HuiPing Liu

Unqualified Opionoin(Emphasis of Matter orOther Matters)

Grant Thornton Taiwan

Yao-Ting Li
Yi-Shun Chang

Unqualified Opionoin(Emphasis of Matter orOther Matters)

2017

2018

2019

- 105 -

2. Financial Analysis(1) Financial analysis (2015 - 2019)
1. Financial Analysis- International Financial Reporting Standards(IFRSs)-Consolidated (Note 1)
Financial analysis (2015 - 2019)

Year
Item

2015

2016

2017

2018

2019

As of
March
31, 2020(Note 2)

Debt-to-assets ratio

20.80

19.56

19.26

31.22

40.93

-

Long-term fund to property, plant andequipment (fixed assets) ratio

463.42370.76332.31345.35402.42-Current ratio

413.34728.64703.72501.83324.08-

Solvency Quick ratio(%)

361.30537.88451.84334.46275.27-

5,351.09 3,097.55 2,088.88-

Financial
structure(%)

Times interest earned
Receivables turnover ratio (times)
Average days of collection
Inventory turnover ratio (times)(Note 2)
Operating Payables turnover ratio (times)
ability
Average days of sales
Property, plant and equipment (fixed
assets) turnover ratio (times)
Total assets turnover ratio (times)

31,358.1
1
4.05
90.12

2,615.71-

3.29
110.94

5.37
67.97

4.85
75.25

7.76
47.04

-

-

-

-

-

-

3.74
-

3.52
-

7.33
-

3.52
-

9.81

-

-

1.36

1.10

1.72

1.58

1.97

-

0.23
3.89
6.47

0.28
3.45
4.02

0.45
8.17
9.95

0.40
6.47
9.21

0.44
8.60
12.63

-

34.07

29.00

73.32

60.48

84.65

-

Cash flow ratio (%)

16.98
2.57
(52.84)12.04
2.3(44.9)

17.91
6.00
55.05

15.78
4.84
9.50

18.45
6.57
31.12

-

Cash flows Cash flow adequacy ratio (%)

24.42

23.47

11.59

49.40

4.40

-

Cash reinvestment ratio (%)(14.91)(8.74)

2.00(3.65)

2.34

-

1.27

1.75

1.29

1.75

1.40

-

Return on assets (%)
Return on equity (%)
Paid-in capital to income before tax
Profitability(%) (Note 8)
Net profit margin (%)
Earnings per share (NT$)

Operating leverage
Leverage

1.00
1.05
1.02
1.05
1.06
Reasons for changes in financial ratios in the most recent 2 years. (Can be left blank of the increase or
decrease is less than 20%)
Financial leverage

1. Financial structure: Mainly due to the increase in long-term borrowings.
2. Solvency : This is mainly due to the increase in long-term borrowings resulting in increased interest expenses.
3. Operating ability: Mainly to recover multiple project accounts.
4. Profitability : Products continue to improve and profitability keeps improving.
5. Cash flows: The previous period is negative, so it will not be analyzed.
6. Leverage: The increase was mainly due to the increase in production capacity, which dilutes the impact of fixed costs.
Note 1: Financial information from 2015 to 2019 was audited by CPA.
Note 2: The year to date March 31. 2020 financial results has not yet been reviewed by CPA- 106 -

2. Financial Analysis- International Financial Reporting Standards(IFRSs)-Individual (Note 1)

Item

2015

2017

2018

2019

17.41

15.42

26.39

34.12

-

459.72456.72419.63410.31451.88-Current ratio

331.37601.28648.94529.83318.76-

Quick ratio

280.17509.64563.3

455.67273.83-29,117.66

4202.538020.22

4,110.22

2,901.88

-

4.03

2.78

3.22

3.23

3.97

-

90.57

131.29113.35113.00

91.94

-

-

-

-

-

-

-

3.55

3.09

4.17

8.26

10.14

-

-

-

-

-

-

-

1.33

1.48

1.82

1.70

1.84

-

0.22

0.28

37.63

37.34

37.11

-

3.66
6.47

3.31
4.02

8.42
9.95

7.42
9.21

9.06
12.63

-

31.63

27.18

67.17

56.18

76.65

-

16.27
2.57
(50.73)11.71
2.30(7.61)

22.1
6.00
11.83

19.40
4.84
36.86

23.63
6.57
24.66

-

Cash flow adequacy ratio
(%)

25.92

15.78

16.15

11.89

0.79

-

Cash reinvestment ratio (%)(17.96)(5.80)(3.10)(1.80)(0.76)

-

1.37

1.66

1.41

1.46

1.43

-

Times interest earned
Receivables turnover ratio(times)Average days of collection
Inventory turnover ratio(times) (Note 2)
Payables turnover ratio
Operating (times)
ability
Average days of sales
Property, plant andequipment (fixed assets)turnover ratio (times)
Total assets turnover ratio(times)Return on assets (%)
Return on equity (%)
Paid-in capital to income
Profitability
before tax (%) (Note 8)
Net profit margin (%)
Earnings per share (NT$)
Cash flow ratio (%)
Cash flows

2016

21.81

Debt-to-assets ratio
Financial
structure (%) Long-term fund to property,
plant and equipment (fixed
assets) ratio
Solvency
(%)

As of
March
31, 2020(Note2)Financial analysis (2015-2019 )Year

Operating leverage
Leverage

1.00
1.03
1.02
1.04
1.05
Reasons for changes in financial ratios in the most recent 2 years. (Can be left blank of the increase or
decrease is less than 20%)
Financial leverage

1. Financial structure: Mainly due to the increase in long-term borrowings.
2. Solvency : This is mainly due to the increase in long-term borrowings resulting in increased interest expenses.
3. Operating ability: Mainly to recover multiple project accounts.
4. Profitability : Products continue to improve and profitability keeps improving.
5. Cash flows: The previous period is negative, so it will not be analyzed.

- 107 -

Note 1: The 2015-2019 Financial Reports of the Company have been reviewed by the CPA.
Note 2: The year to date March 31. 2020 financial results has not yet been reviewed by CPA
Note 3: The Company primarily focuses on the R&D and design of simulator rides by using its design, R&D, andsystem integration capabilities as well as the hardware equipment of outsourced vendors. Because theCompany's core value is its design, R&D, and system integration capabilities, its business characteristic differsfrom general manufacturing industries in that the Company manufactures and sells physical products.
Therefore, inventory turnover ratio is not calculated.
Note 4: The following calculation formulas shall be displayed at the end of the tables of the annual report.
1. Financial structure(1) Debt-to-asset ratio = total liabilities / total assets.
(2) Long-term fund to property, plant and equipment ratio = (total equity + non-current liabilities) / netproperty, plant and equipment.
2. Solvency(1) Current ratio = current assets / current liabilities.
(2) Quick ratio = (current assets - inventory - prepaid expense) / current liabilities.
(3) Times interest earned = net income before income tax and interest expense / current interest expense.
3. Operating ability(1) Receivable (including accounts receivable and business-related notes receivable) turnover ratio = net
operating revenue / average balance of receivable of the period (including accounts receivable andbusiness-related notes receivable).
(2) Average days of collection = 365 / receivables turnover ratio.
(3) Inventory turnover ratio = cost of goods sold / average amount of inventory.
(4) Payable (including accounts payable and business-related notes payable) turnover ratio = cost of goods
sold / average balance of payable of the period (including accounts payable and business-related notes
payable).
(5) Average days of sales = 365 / inventory turnover ratio.
(6) Property, plant and equipment turnover ratio = net sales / net average property, plant and equipment.
(7) Total assets turnover ratio = net sales / total average assets.
4. Profitability(1) Return on assets ＝ [net income + interest expense (1 - tax rate)] / average total assets.
(2) Return on equity = after-tax profit /total average equity.
(3) Net profit margin = net income / net sales.
(4) Earnings per share = (income attributable to owners of parent - dividend to preferred stock) / weighted
average of shares issued. (Note 4)
5. Cash flows(1) Cash flow ratio = new cash flows from operating activities / current liabilities.
(2) Cash flow adequacy ratio = net cash flows from operating activities in the past five years / (capital
expenditure + increase in inventory + cash dividend) in the past five years.
(3) Cash reinvestment ratio = (net cash flows from operating activities - cash dividend) / (gross margin of
property, plant and equipment + long-term investment + other non-current assets + working capital).
(Note 5)
6. Leverage:(1) Operating leverage = (net operating income - variable operating cost and expenses) / operating income(Note 6).
(2) Financial leverage = operating income / (operating income - interest expense).

3. Supervisor Review Report
Refer to Appendix 2.

4. Financial Report and CPA Review Report
Refer to Appendix 3.

- 108 -

5. Individual financial report reviewed by CPA
Refer to Appendix 3 of the company’s Chinese version 2019 annual report.

6. Financial difficulties and corporate events encountered by the Company andaffiliates in the past two years and up to the date of report that have material
impact on the financial status of the Company: None.

- 109 -

Precautions of Review and Analysis of Financial
Status and Business Performance

VII.
1.

Financial status(1) Consolidated
Unit: NT$ thousands

Year
Item
Current assets
Property,plantand
equipment
Other assets
Total Assets

2018

2019

2,673,862
1,066,459

3,056,839
1,045,007

475,490
4,215,811

814,435
5,148,580

Current liabilities

532,823

Non-current liabilities

Variation
Amount382,977%
14(21,452)(2)

943,231

338,945932,769
410,40871
22
77

783,516

1,164,219

380,70349

Total liabilities

1,316,339

2,107,450

791,11160

Capital Stock

530,928

557,474

26,546

5

Capital Surplus

2,027,723

1,968,156(59,567)(3)

Retained earnings

270,513457,184

186,671

69

Other equity

7,012(14,857)(21,869)(312)

Non-controlling interests

63,29673,1739,877

16

2,899,472

3,041,130

141,658

5

Total Euity

Analysis and explanation of changes:(1)The increase in other assets was mainly due to the increase in the right-of-use assets applicable to IFRS16
this year.
(2)The increase in current liabilities was mainly due to the increase in short-term borrowings.
(3)The increase in non-current liabilities was mainly due to the increase in lease liabilities applicable to
IFRS16 during the year.
(4)The increase in retained earnings was mainly due to the increase in profit for the period.
(5)The decrease in other equity was mainly due to the exchange differences arising on translation of foreign
operating.

(2) Induvidual
Unit: NT$ thousands

1,888,931

2,382,402

Variation
Amount493,471852,130

831,525(20,605)(2)

1,111,852
3,852,913
356,515

1,290,977
4,504,904
747,403179,125
651,991
390,88816
17
110

660,222789,544

129,322

20

Total liabilities

1,016,737

1,536,947

520,21051

Capital Stock

530,928

557,474

26,546

5

Capital Surplus

2,027,723

1,968,156(59,567)

(3)

Year
Item
Current assets
Property,plantand
equipment
Other assets
Total Assets
Current liabilities
Non-current liabilities

2018

2019

- 110 -%
26

Retained earnings
Other equity

270,513457,184

186,671

69

7,012(14,857)(21,869)

(312)

0

0

0

0

2,836,176

2,967,957

131,7815

Non-controlling interests
Total Euity

Analysis and explanation of changes:(1)The increase in other assets was mainly due to the increase in the right-of-use assets applicable to IFRS16
this year(2)The increase in current liabilities was mainly due to the increase in short-term borrowings.
(3)The increase in non-current liabilities was mainly due to the increase in lease liabilities applicable to
IFRS16 during the year.
(4)The increase in retained earnings was mainly due to the increase in profit for the period.
(5)The decrease in other equity was mainly due to the exchange differences arising on translation of foreign
operating.

2. Financial performance(1) Comparative analysis of business performance- Consolidate
Unit: NT$ thousands

Year
Item
Sales revenue
Operating cost
Unrealized Gross Profit on
Sales to Associates
Gross profit
Operating expenses
Operating income
Non-operating income andexpenseIncome (loss) before tax
Income tax expenses
Continuing operations
Net income
Other comprehensive income(net of income Tax)
Total comprehensive income
Net income belongs to theparent company
Total comprehensive income
belongs to the parent company

ChangeVariation as a(amount)
percentage (%)
443,00327
161,885
18
0
0

2018

2019

1,637,438
916,19602,080,441
1,078,081
0721,242431,730
289,51231,615

1,002,360
581,551
420,809
51,092

281,118
149,821
131,297
19,477

39
35
45
62

321,127
62,709258,418

471,901
88,091
383,810

150,774
25,382
125,392

47
40
49

10,899(22,242)(33,141)(304)

269,317257,168

361,568
366,525

92,251
109,357

34
43

268,032

344,255

76,22328

Analysis and explanation of changes:(1)The increase in sales revenue was mainly due to the increase in revenue contribution of more intermediate
products.
(2)The increase in operating expenses was mainly due to the increase in revenue and the increase in related
expenses.
(3)The increase in non-operating income and expense was mainly due to increased interest in financial asset
evaluation.
(4)The increase in Income tax expense was mainly due to the increase in profits in the current period.
(5)The decrease in other comprehensive income was mainly due to the exchange differences arising on translationof foreign operating.

- 111 -

(2)Comparative analysis of business performance- Individual
Unit: NT$ thousands

Year
Item
Sales revenue
Operating cost
Unrealized Gross Profit on
Sales to Associates
Gross profit
Operating expenses
Operating income
Non-operating income andexpenseIncome (loss) before tax
Income tax expenses
Continuing operations
Net income
Other comprehensive income(net of income Tax)
Total comprehensive income
Net income belongs to theparent company
Total comprehensive income
belongs to the parent company

ChangeVariation as a(amount)
percentage (%)
225,24217
18,994
2
97
(123)

2018

2019

1,325,599
774,241(79)

1,550,841
793,235
18

551,279
336,511
214,768
86,841

757,624
433,914323,710
103,576

206,345
97,403
108,942
16,735

37
29
51
19

301,60944,441
257,168

427,286
60,761
366,525

125,677
16,320109,3574237
43

10,864(22,270)(33,134)(305)

268,032
257,168

344,255
366,525

76,223
109,35728
43

268,032

344,255

76,22328

Analysis and explanation of changes:(1)The increase in sales revenue was mainly due to the increase in revenue contribution of more intermediate
products.
(2)The increase in operating expenses was mainly due to the increase in revenue and the increase in related
expenses.
(3)The increase in Income tax expense was mainly due to the increase in profits in the current period.
(4)The decrease in other comprehensive income was mainly due to the exchange differences arising on translationof foreign operating.

(3) Expected Sales Volume and Criteria
On the basis of current industrial environment and future market supply and demand, as well as
information relevant to R&D schedule and business development, the Company expects its
business to growth steadily in 2020.

- 112 -

3. Cash flows(1) Analysis on the cash flow changes - Consolidated
Unit: NT$ thousands

Changes(increase/decrease)
293,572
242,972

2018

Item

2019

Net cash inflow (outflow) from operating activities

50,600Net cash inflow (outflow) from investing activities(415,587)(274,393)

141,194

Net cash inflow (outflow) from financing activities

302,915

116,963(185,952)

Analysis and explanation of changes:(1) In 2019, net business cash intflow increased primarily because of the change of net income and depreciation andamortization expenses do not affect cash flow income expenses.
(2)In 2019, net investment cash outflow increased primarily because of capital expenditures and net purchases offinancial instruments.
(3) In 2019, the net financing cash intflow increased because of the borrowing.

(2) Analysis on the cash flow changes - Individual
Unit: NT$ thousands

Net cash inflow (outflow) from operating activities

131,407

Changes(increase/decrease)
184,315
52,908Net cash inflow (outflow) from investing activities(667,853)

14,066

681,919

Net cash inflow (outflow) from financing activities

301,600

47,710(253,890)

Item

2018

2019

Analysis on the cash flow changes of in these two years:(1) In 2019, net business cash intflow increased primarily because of the change of net income and depreciation andamortization expenses do not affect cash flow income expenses.
(2)In 2019, net investment cash intflow increased primarily because of selling financial instruments.
(3) In 2019, the net financing cash intflow increased because of the borrowing..

(3) Improvement plan for inadequate liquidity: None.
(4) Cash flow analysis for the coming year
Unit: NT$ thousands
Cash balance,
beginning

774,817

Expected cash
flow fromoperatingactivities

298,845

Expected cash
flow frominvestment andfinancing
activities

Expected cash
surplus (deficit)
+-

(273,421)

800,241

Remedial measures for expected cash deficit
Investment plan-

Financing plan-

Analysis on the cash flow for the coming year:(1) operating activities: Cash inflow increased primarily because of the change of net income and depreciation andamortization expenses do not affect cash flow income expenses.
(2) investment and financing activities: Cash outflow increased primarily because of the net purchases of financial
instruments.
(3) Remedial measures for expected cash deficit: Not applicable- 113 -

4. Effect of major capital spending on financial position and business operation(1) Major capital spending and sources of funds
None(2) Anticipated benefit(1) Enhance R&D testing capacity to increase corporate competitiveness(2) Integrate office and plant to raise operational efficiency(3) Improve working environment to increase employee commitment

5. Investment policy in the past year, profit/loss analysis, improvement plan,and investment plan for the coming year
(1) Investment transfer policy
The Company currently focuses its investment transfer policy on business investment related targets
and does not invest in other businesses. Related executing department handles affairs according to
the Investment Circulation regulations of its internal control system and Procedure for Processing
the Acquisition and Disposal of Assets, both of which have been reviewed and approved by the
Board of Directors.

(2) Reasons for investment profit or loss in recent years
In accordance with the Company’s business expansion and future development, Brogent’s
subsidiaries were set up in 2015 ~ 2019.
In 2019, the Company’s Operational Highlights of Subsidiaries, please item VIII. Important Notices(2) Operational Highlights of Subsidiaries.

(3) Investment plan for the next year
The Company will review and evaluate our investment plant from a long-term strategic perspective
to strengthen the channel-content management strategy and continue to strengthen our global
competitiveness.

6. Analysis of risks in recent years up to the publishing date of the annual report(1) Impact of interest rate and exchange rate changes and inflation on
Company’s profit and response measures:(A) Impact of interest rate on Company's profit and response measures
The Company uses its funds conservatively and steadily; the operation-generated funds are stored
as time deposits and current deposits. The interests earned in 2018 and 2019 were respectively- 114 -

NT$11,368 thousand and 10,331 thousand. The bank loan interest expenses were respectively
NT$10,713thousand and NT$23,727 thousand. The interest earned and ratio of expenditure as apercentage of operating income and net income before tax was low. Because the Company isincreasing its business scale and building the R&D Testing and Experience Center, it is expectedthat the Company will need more loans in NTD. The Company will remain vigilant at changes inthe banks' interest rate and maintain a good relationship with its cooperating banks so that theCompany can acquire preferential interest rate to reduce the effects of interest rate variations on the
Company operation.
(B) During recent years up to the annual report publishing date, the effects of exchange rate variations
on the Company's profit and its future response measures
The business focus of the Company is simulator rides; the downstream customers are major as well
as developers of theme parks. The simulator rides are priced in either NTD or foreign currency
depending on the region of sale. Therefore, foreign currency assets are generated. The net foreignexchange gain was NT$11,047 thousand accounting for 0.67% and 3.44% of the operating income
and net profit margin before tax of 2018 ; he net foreign exchange loss was (NT$28,733) thousandaccounting for (1.38%) and (6.09%) of the operating income and net profit margin before tax of2019. Because exchange rate changes influence the profits of the Company, the Company's
management authorities pay close attention to the exchange rate trends and reinforce themanagement of risks in exchange rate fluctuations. The corresponding measures adopted are as
follows:
Because of the gradual increase in export sales, the Company attempts to mitigate the effects of
exchange rate changes by setting up a foreign currency savings account to manage foreign
currencies. The Company assigns designated personnel from the finance department to sell excess
foreign currencies under optimal conditions according to the daily foreign currency balance andmonthly fund estimates, to reduce the impact of exchange rate changes on the profit.
When giving quotes to foreign customers, the business department considers the effects of
exchange rate variations on product prices and refers to the prices adjusted according to thechanging exchange rates, or negotiates a new price in NTD with the customer, thereby mitigating
the effects of exchange rate variations on the profit of the Company.
Our finance department personnel maintains a close contact with the foreign exchange departmentsof frequent interacting banks to adequately acquire market information and use such information toforecast the long- and short-term trends of the exchange rage and sell or buy in foreign currencies
in a timely manner. Thus, the effects of exchange rate variations on the profitability of theCompany can be reduced.
At the appropriate timing, the Company will have its finance department personnel to review thechanges in the foreign exchange market and consider foreign exchange fund requirements and- 115 -

balances to determine whether hedging derivative financial instrument operating strategies should
be used in accordance with the Procedure for Processing the Acquisition and Disposal of Assets,such as buying forwards in advance to avert exchange rate risks, thereby minimizing the effects of
exchange rate variations on the profit of the Company.
(C) During recent years up to the annual report publishing date, the effects of inflation on the Company's
profit and its future response measures:
The Company profits have not experienced material influence from inflation; it is predicted thatsuch effect remains limited on the Company's profits. The Company will continue to monitor the
inflation situation and adequately adjust its product prices accordingly.

(2) Policies of engaging in high-risk, high-leverage investments, lending toothers, providing endorsement and guarantee, and derivatives transactions,profit/loss analysis, and future response measures:(A) The Company has always focused on its main business activities and upheld the practicalprinciple of managing a business. Our financial policy is based on the principle of robustness
and conservativeness, and thus the Company does not engage in high-risk, high-leveraging
investment as well as derivative instrument transactions.
(B) From 2018 to 2019 and up to the annual report publishing date, the Company has not engaged
in providing endorsement and guarantee, lending to others, and derivatives transactions. If
such engagements are required in the future, it shall be executed in accordance with the"Operating Procedure for Endorsements and Guarantees," "Operating Procedure for Fund
Lending," and "Procedure for Acquisition or Disposal of Assets" and relevant transaction
information shall be announced in accordance with laws and regulations.

(3) Future R&D projects and estimated R&D expenditure:
To continuously enhance the Company’s competitiveness, the Company has always actively
invested in R&D efforts. In 2018 and 2019, it has expended a total of NT$118,370 thousand andNT$172,403 thousand in R&D, respectively accounting for 7.23% and 8.29% of the net operating
income. It is expected that a total of NT$225,164 thousand will be expended in R&D in 2020, andthe Company's future R&D projects are as follows:
Unit
Product
Development
CenterNew products under development
A.The Integration of Interactive Games(1).Interactive game combining motion simulation and technology(2).Sensory interactive game combining augmented reality and related 3D
imaging technologies- 116 -

Unit

Technical center

New products under development(3).d-Ride interactive shooting game
B.Diversified Application(1).Motion simulation reality combing 5G technology and remotecontrol server(2).Digital content and real-time motion simulation intergration(3).Virtual motion simulation application
C.Product design(1).Small rides platform-carrier technological model design(2).Virtual and real-time motion simulation research(3).Appearance optimization
A.Verticle platform product design
B.Rotating simulation carrier producing and optimization

C.Platform-controlled technological optimization
D.Mechanical design optimization
E.Arts appearance design refinement
F.Equipment miniaturization
G.LED screen development(4) Major changes in government policies and laws at home and broad andthe impact on Company finance and business and response measures:
During recent years up to the annual report publishing date, major changes in government
policies and laws at home and broad exerted no material effect on Company finance and business.
The Company will acquire relevant information in a timely manner and formulate necessary
response measures to meet company operation requirements.

(5) Impact of recent technological and market changes during recent years up
to the annual report publishing date on the Company's finance andbusiness, and response measures:
The Company has constantly paid attention to technological and market changes anddesignated personnel to search for information regarding industry-related technologies and trend
variations to provide a reference for decision-making at the management level. The information
can facilitate adjusting operational strategies and devise response measures. Therefore, there were
no impact of recent technological and market changes on the Company's finance and business.

(6) Impact of corporate image change on risk management and response
measures:
Since its inception, the Company actively strengthens its internal management, focusing on
the management of its main business activities. In addition, it endeavors to maintain corporate
image and compliance with relevant laws and regulations. To date, there have been no changes to
the Company's image that would cause risks to company operation. In future, the Company willcontinue to comply with and implement corporate governance requirement, and consult relevant- 117 -

experts in a timely manner, to reduce the effects of such risk on the Company's finance andbusiness.

(7) Expected benefits and potential risks of merger and acquisition andresponse measures:
During recent years up to the annual report publishing date, the Company has not undertaken
merger and acquisition plans. In the future, when evaluating and implementing relevant plans, theCompany shall handle related matters according to laws and regulations and the Company's
internal management regulations.

(8) Expected benefits and potential risks of capacity expansion and response
measures:
The Company has relocated to the newly constructed R&D Testing Center in January 2013,as a response to prepare for the Company's future expansion, increase its R&D and testing
capacities, and raise its operational efficiency requirements. After relocating to the new plant, theCompany's image, ability to receive orders, and management efficiency have improved, which is
conducive to its business expansion. Because of the currently accepted and expected projects, theCompany's R&D testing capacity is inadequate. The Company has started the construction of a
R&D Testing and Experience Center in the lower half of 2014 and completed construction in 2016.
The R&D Testing and Experience Center not only facilitates determining consumers'
entertainment needs regarding simulator rides, but also improves product development, testing andproduction capacity, increases the capacity to receive more orders and market share, and magnify
the gap between the Company and its competitors in competitive advantage.

The Company has

carefully evaluated the funding requirement for business expansion and properly planned the useof the funds. The Company will raise funds in a capital market to support the construction works.
However, if market fund-raising fails, the Company has a low credit limit remaining in bank loans
and thus it will apply for construction financing loans from the bank. In addition, the Company's
cash flow from operating activities should be enough to support the expansion requirement;
therefore, the Company is not subject to the risk of shortage of funds caused by the construction of
the R&D Testing and Experience Center.

(9) Risks associated with over-concentration in purchase or sale and response
measures:(A) Purchases
The Company is a professional manufacturer of simulator rides, purchasing stocks according
to the project designs of various simulator rides. The Company also commissions manufacturers
to undergo hardware processing. In the past 2 years, purchases exceeding 15% of a single
manufacturer were made for precision mechanical products, in addition to the intensive shipments- 118 -

in year 2019. Therefore, the Company is not associated with risks of overly concentrating stock
purchases.
(B) Sales
Because simulator rides involve high manufacturing cost, the Company primarily receives
income from selling simulator rides since our entry into the simulator ride market. The proportionof sales to simulator ride customers is also demonstrating an increasing trend annually. Following
the successful operation of the FlyOver Taiwan project, the Company has attracted the attention of
global amusement park and tourist attraction operators, and these operators have visited theCompany to engage in negotiations and experience the products themselves. According tocustomer demand, the Company designs and integrates upstream software and hardware systems
and technologies, selling them to downstream operators, including theme parks, museums,
shopping malls, and urban experience center. With the increasing popularity and word of mouth of
the Company as well as partnering with internationally well-known companies, the Company has
expanded from the domestic market to China, North American regions, and Euroasian regions,effectively reducing its reliance on a single customer, thereby mitigating the risk of sales
concentration.The upstream industries associated with the simulator ride equipment comprise thehardware section, including precision machinery industry and manufacturers of spherical screensand projectors, and the software section, including wireless embedded control system, sphericalprojector and playback control systems, and digital contents.

(10) Impact of mass transfer of equity by or change of directors, supervisors,or shareholders holding more than 10% interests on the Company,
associated risks and response measures:
During recent years up to the annual report publishing date, there were no mass transfers ofequity by or change of directors, supervisors, or shareholders holding more than 10% interests on
the Company.

(11) Impact of change of management rights on the Company, associatedrisk and response measures:
In 2018 and 2019 up to the annual report publishing date, there were no negative impacts
from changes in management rights.

(12) Litigation or non-litigation events(A) Disclose the litigation facts, target amount, litigation start date, main parties involved, andcurrent progress regarding concluded or pending litigious, non-litigious, or administrative
litigation events, the potential effects of the outcomes on shareholder equity or security
prices during the recent two years up to the annual report publishing date: None.
(B) The outcome of concluded or pending litigious, non-litigious, or administrative litigation- 119 -

events involving the director, supervisor, president, de facto responsible person, major
shareholders holding more than 10% interest, or subsidiary of the Company during therecent two years up to the annual report publishing date: Refer to the company’s Chineseversion 2019 annual report.
(C) The involvement of the director, supervisor, president, and major shareholders holding morethan 10% interest in events regulated in Article 157 of the Securities and Exchange Act
during the recent two years up to the annual report publishing date, and the Company's
current progress in handling such events: None.

(13) Risks Associated with IT Security:
The Company has not found any significant information security incidents in the 2018 and 2019of the annual report. It has or may have a material adverse effect on the company's business andoperations, and has not been involved in any legal cases or supervision related to this. survey. In
the future, we will continue to review and evaluate its information security regulations andprocedures annually to ensure its appropriateness and effectiveness to control or maintain thefunctions of important business operations such as the company's operations and accounting.

(14) Other significant risks and response measures: None.

7.Other important events: None.

- 120 -

VIII. Important Notices
1. Profile on affiliates and subsidiaries(1) Subsidiaries Iperation Report
A. Subsidiary Chart

Brogent Technologies Inc.

Brogent Hong
Kong Limited
100.00％Dili Jie Holdings
Limited
100.00％57.53%

Jetway Holdings
Limited
100.00％

Holey Holdings
Limited
100.00％Brogent Creative Inc.
100.00％42.47%

Brogent
Rides(Shanghai)Limit
ed100.00％

Garley Holdings
Limited
100.00％Brogent MechanicalInc.
61.11％

Brogent Global Inc.
100.00％Brogent JapanEntertainment
40.00％

HexaRide LLP
86.67％

Brogent
Creative(Shanghai)Limited100.00％Jetmay Holdings
Limited
100.00％Ou Wei Limited
100.00％Hai Wei Culture
Creative andDevelopment(Shanghai)
Limited
100.00％

StarLite Design& Planning
Limited
100.00％B. Business Scope of each subsidiary

InvesteeCompany

Date of
Location
Establishment

Brogent
Mechanical Inc.

May, 2015

Taoyuan,TaiwanNTD 55,000,000

Brogent
Inc.

April, 2015

Kaohsiung, Taiwan

NTD 9,000,000

September,
2015

Kaohsiung, Taiwan

NTD
300,000,000

June, 2015

Kowloon,Hong
Kong

USD 6,700,000

Creative

Brogent Global
Inc.
Brogent Hong
Kong Limited

Investment
Amount- 121 -

Business Scope
Manufacture and salesof the simulator rides
and its key components
Development and salesof the peripheralproducts of simulator
rides
Development andmanagement business of
self-operated outlets
Reinvestment andtrading businessInvestee
Company
Brogent Rides(Shanghai)
LimitedBrogent Creative(Shanghai)
LimitedDate of
Location
Establishment

July, 2015

Shanghai,
China

September,
2015

Shanghai,
China

Brogent JapanEntertainment
Joint-Stock
Corporation

August,2016

Tokyo,
Japan

Dili Jie Holdings
LimitedJanuary,2018

Jetway Holdings
LimitedMarch,
2018

Garlay Holdings
LimitedMarch,
2018

hexaRide the first
LLP

September,
2018

Holey Holdings
LimitedNovember,
2018

Jetmay Holdings
LimitedNovember,
2018

Starlite Design &Planning Limited
Hai Wei Culture
Creative andDevelopment(Shanghai)
LimitedOu Wei Limited

December,
2018

BritishVirginIslands
CaymanIslands.
BritishVirginIslands
Tokyo,
Japan
BritishVirginIslands
BritishVirginIslands
Richmond,
CanadaJanuary,
2019

Shanghai,
China

May,
2019

Hong
Kong

Investment
AmountUSD 7,300,000

Business Scope

Import and export
business

Development and
RMB 13,000,000 management business of
self-operated outlets
Management businessand development and
JPY 35,000,000 sales of the peripheralproducts of simulator
rides in Japan
USD 8,900,000

Reinvestment andtrading business

USD 8,900,000

Reinvestment andtrading business

USD 4,300,000

Reinvestment andtrading business

JPY 130,000,000

Management businessof self-operated outlets

USD 4,550,000

Reinvestment andtrading business

USD1,986,780

Reinvestment andtrading business

CAD650,000

Management businessof self-operated outlets

RMB 10,000,000

Management businessof self-operated outlets

USD600,000

Reinvestment andtrading business

C. Shareholders in Common of Brogent and Its Subsidiaries with Deemed Control andSubordination: None.

- 122 -

D. Rosters of Directors, Supervisors, and Presidents of Brogent’s Subsidiaries

Investee

Title

Name or Representative

Brogent Technologies Inc.
Representative：Chun-Hao Cheng
Fei-Hsiu Hsu
Brogent Technologies Inc.
Chairman
Representative：Chih-Hung Ouyang
Sunny Enterprises Co., Ltd.
Director
Brogent
Representative：Wen-Hsiang Kao
Mechanical Inc.
Brogent Technologies Inc.
Director
Representative：Teng-Hung Lai
Supervisor
Fei-Hsiu Hsu
Brogent Technologies Inc.
Chairman
Representative：Pei-Chi HoBrogent Technologies Inc.
Brogent HongDirector
Representative：Chih-Hung Ouyang
Kong Limited
Brogent Technologies Inc.
Director
Representative：Chun-Hao Cheng
Brogent Technologies Inc.
Brogent Rides Chairman
Representative：Pei-Chi Ho(Shanghai)
Brogent Technologies Inc.
LimitedSupervisor
Representative：Pei-Kuan Lee

1,500,000

100 %

-

-

7,696,266

61.11%

4,897,623

38.89%

7,696,266

61.11%

-

-

-

100%

-

100%

-

100%

-

100%

-

100%

Brogent Technologies Inc.
Representative：Pei-Chi Ho

-

100%

Brogent Technologies Inc.
Representative：Pei-Kuan Lee

-

100%

30,870,000

100%

30,870,000

100%

30,870,000

100%

30,870,000

100%

800

45.71%

800

45.71%

700

40%

700

40%

-

-

800

45.71%

Brogent Creative Chairman
Inc.
Supervisor

Brogent Creative Chairman(Shanghai)
LimitedSupervisor

Shares Held
SharesPercentatge

Brogent Technologies Inc.
Representative：Chih-Hung Ouyang
Brogent Technologies Inc.
Director
Representative：Pei-Chi HoBrogent Global
Inc.
Brogent Technologies Inc.
Director
Representative：Ming-Chi Chang
Brogent Technologies Inc.
Supervisor
Representative：Sui-Chuan Lin
Kodansha Company, Limited
Chairman
Representative：Kohei Furukawa
Kodansha Company, Limited
Director
Representative：Shohei Yoshida
Brogent Japan
Brogent Hong Kong Limited
Entertainment Director
Representative：Chih-Hung Ouyang
Joint-Stock
Brogent Hong Kong Limited
Corporation Director
Representative：Chun-Hao Cheng
Director
DAISAKU SONODA
Kodansha Company, Limited
Director
Representative：Hiroshi Nakada
Chairman- 123 -

Investee

Title

Shares Held
SharesPercentatge

Name or Representative

DENTSU INC.
Representative：Toru Kimpara
Kodansha Company, Limited
Supervisor
Representative：Mitusyuki Shiraishi
Brogent Hong Kong Limited
Supervisor
Representative：Sen-Hao Cheng
Brogent Technologies Inc.
Dili Jie Holdings
Chairman
Representative：Pei-Chi Ho
LimitedBrogent Technologies Inc.
Jetway Holdings
Chairman
Representative：Pei-Chi Ho
LimitedBrogent Technologies Inc.
Garlay Holdings
Chairman
Representative：Pei-Chi Ho
LimitedBrogent Hong Kong Limited
Chairman
Representative：Chun-Hao Cheng
Movic Co. Ltd.
hexaRide the
Director
Representative：Gonohe Kota
first LLP
Brogent Japan Entertainment
Joint-Stock Corporation
Director
Representative：Daisaku Sonoda
Brogent Technologies Inc.
Holey Holdings
Chairman
Representative：Pei-Chi Ho
LimitedBrogent Global Inc.
Jetmay Holdings
Chairman
Representative：Pei-Kuan
Lee
LimitedStarlite Design
Jetmay Holdings Limited& Planning
Chairman
Representative：Pei-Kuan Lee
LimitedHai Wei Culture
Creative andJetmay Holdings Limited
Development
Chairman
Representative：Pei-Kuan Lee(Shanghai)
LimitedBrogent Global Inc.
Ou Wei Limited Chairman
Representative：Pei-Chi Ho
Director

250

14.29%

800

45.71%

700

40%

-

100%

-

100%

-

100%

-

86.67%-

10.00%

-

3.33%

-

100%

-

100%

-

100%

-

100%

-

100%

(2) Operational Highlights of Subsidiaries

Investee
Brogent
Creative Inc
Brogent
Mechanical Inc.
Brogent Global
Inc.
Brogent Hong
Kong Limited
BrogentRides

Capital

Total
Asset

Total
Liabilities

Net
Value

15,00013,07869

13,639125,939376236

194,928

181,308

308,700

897,435

526,738

200,338

446,042

222,712506,554

Unit: NT$1,000 As of Dec. 31, 2019
Net
IncomeEPS
Revenue
Profit(After
(NTD)
Tax)
(209)

(208)

(0.14)

230,82163,09749,485

3.93

370,697

281,923(22,398)

27,6550.81

238,478

207,564

55,756(3,543)

18,636-219,616

286,938

308,958

25,0765,390-- 124 -

Investee

Capital

Total
Asset

Total
Liabilities

Net
Value

Revenue

ProfitNet
Income(After
Tax)

EPS
(NTD)

Limited(Shanghai)

Brogent
Creative(Shanghai)
LimitedBrogent JapanEntertainment
Joint-Stock
Corporation

59,397

255,872

182,451

73,421(278,552)(27,522)(20,245)-

25,403

9,079

1,507

7,572

4,787

(6,637)(6,964)-hexaRide thefirst LLP

41,32828,642

8,659

19,983(14,956)(14,013)(14,660)-

Dili Jie
Holdings
Limited

267,955

334,619-334,619-(29)

31,950-Jetway Holdings
Limited

270,020334,587-

334,587-(399)

31,975-Garlay Holdings
Limited131,258

168,024-

168,024

-

(92)

3,026

-

Holey Holdings
Limited139,753

165,400-

165,400-(91)

29,340-Jetmay Holdings
Limited

61,489107,610-

107,610-(87)

50,665-

Ou Wei Limited

18,635

14,419-14,419-(3,734)(3,731)-

46,226

202,417

98,310104,107525,031

79,98863,089-15,054

12,735

9,326

3,409

3,605

(11,755)(11,706)-

Hai Wei Culture
Creative andDevelopment(Shanghai)
LimitedStarlite Design& Planning
Limited(3) Consolidated Financial Statements: Please refer to Appendix 3.
(4) Consolidated Report: Not applicable.

- 125 -

2. Private placement of corporate bonds in the past years to the date of theannual report:
Not applicable.
3. Holding or disposal of stocks of the Company by subsidiaries in the past year
and up to the date of report:
Not applicable.
4. Other supplemental information
Items of Commitment: The Company has executed or signed letter ofunderstanding regarding items of commitment to listing and trading over thecounter.

IX. Items of impact of interests of shareholders or
stock priceNone.

- 126 -

Appendix
Appendix 1：Statement of Internal Control System
Brogent Technologies Inc.
Statement of Internal Control System

Date: March 9, 2020
Based on the findings of a self-assessment, Brogent Technologies Inc. (Brogent) states the following
with regard to its internal control system during the year of 2019：
1. Brogent’s Board of Directors and Management are responsible for establishing, implementing,and maintaining an adequate internal control system. Our internal control is a process designed
to provide reasonable assurance over the effectiveness and efficiency of our operations(including profitability, performance, and safeguarding of assets), reliability, timeliness,transparency of our reporting, and compliance with applicable rulings, laws and regulations.
2. An internal control system has inherent limitations. No matter how perfectly designed, aneffective internal control system can provide only reasonable assurance of accomplishing its
stated objectives. Moreover, the effectiveness of internal control system may be subject tochanges due to extenuating circumstances beyond our control. Nevertheless, our internal control
system contains self-monitoring mechanisms, and Brogent takes immediate remedial actions in
response to any identified deficiencies.
3. Brogent evaluates the design and operating effectiveness of its internal control system based on
the criteria provided in the Regulations Governing the Establishment of Internal Control
Systems by Public Companies (herein below, the “Regulations”). The criteria adopted by theRegulations identify five key components of managerial internal control: (1) control
environment, (2) risk assessment, (3) control activities, (4) information and communication, and(5) monitoring activities.
4. Brogent has evaluated the design and operating effectiveness of its internal control system
according to the aforesaid Regulations.
5. Based on the findings of such evaluation, Brogent believes that, on December 31, 2019, it has
maintained, in all material respects, an effective internal control system (that includes thesupervision and management of our subsidiaries), to provide reasonable assurance over ouroperational effectiveness and efficiency, reliability, timeliness, transparency of reporting, andcompliance with applicable rulings, laws and regulations.
6. This Statement will be an integral part of Brogent’s Annual Report for the year 2019 andProspectus, and will be made public. Any falsehood, concealment, or other illegality in thecontent made public will entail legal liability under Articles 20, 32, 171, and 174 of the
Securities and Exchange Law.
7. This Statement has been passed by the Board of Directors in their meeting held on March 9,2020, with the six attending directors all affirming the content of this Statement.
Brogent Technologies Inc.
Chairman：Chih-Chuan Chen
President： Chih-Hung Ouyang- 127 -

Appendix 2：Supervisor’s Review Report

Brogent Technologies Inc.
Supervisors' Audit Report
The 2019 Financial Statements compiled and delivered by the Board of Directors havebeen audited by Hui-Ping Liu and Jay Lo, certified public accountants practicing at Grant
Thornton Taiwan. The Financial Statements, along with the Business Report and Earnings
Distribution Table, have been reviewed by the Supervisors who have found them to becompliant with regulations. The Audit Report is therefore provided in accordance with theprovisions stipulated in Article 219 of the Company Act and filed for approval.
To2020 Annual Shareholders Meeting of Brogent Technologies Inc.

Brogent Technologies Inc.
Supervisor: Yi-Hsiang Huang

Supervisor: Yung-Liang Huang

Supervisor: Gen-Huang Lin

March 09, 2020

128

Appendix 3：Consolidated Financial Statements and Independent Auditors’ Report

129

130

131

132

133

134

135

136

137

138

139

140

BROGENT TECHNOLOGIES INC. AND SUBSIDIARIESNOTES 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
Brogent Technologies Inc. (the “Brogent” or the “Company”) was incorporated under theCompany Law of Taiwan, the Republic of China (R.O.C.) in October, 2001. On December 18,
2012, the Company’s shares were traded on the Taipei Exchange (TPEx). The Company and its
subsidiaries (collectively as the “Group”) are primarily engaged in the research, development,
design, production and sales of the simulation entertainment equipment and its key components
and peripheral products, embedded/mobile software, streaming media/video, real-time rendering(3D above), interactive multimedia network, and multi-screen seamless integration systems.
The address of the Group’s registered office and principal place of business is No.9, Fuxing 4th
Rd., Qianzhen Dist., Kaohsiung City, Taiwan.

2. THE AUTHORIZATION OF FINANCIAL STATEMENTS
The accompanying consolidated financial statements were approved and authorized for issue by
the Board of Directors on March 9, 2020.

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIALREPORTING STANDARDS(1) Initial application of the amendments to the Regulations Governing the Preparation of
Financial Reports by Securities Issuers and the International Financial ReportingStandards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations(IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into
effect by the Financial Supervisory Commission (FSC)
Except for the following, the initial application of the amendments to the Regulations
Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed
and issued into effect by the FSC would not have a significant effect on the Group’s
accounting policies:
A. IFRS 16 “Leases”
IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and anumber of related interpretations.

141

Under IFRS 16, if the Group is a lessee, it shall recognize right-of-use assets and leaseliabilities for all leases on the consolidated balance sheets except for low-value andshort-term leases. The Group may elect to apply the accounting method similar to theaccounting for operating lease under IAS 17 to the low-value and short-term leases. On the
consolidated statements of comprehensive income, the Company should present the
depreciation expense charged on the right-of-use asset separately from interest expense
accrued on the lease liability; interest is computed by using effective interest method. On
the consolidated statements of cash flows, cash payments for both the principal and interest
portion of the lease liability are classified within financing activities.
When IFRS 16 becomes effective, it is expected that there will be no significant impact on
the accounting treatment of the Group as a lessor. For leases that are lessees, the Groupmay elect to apply this Standard either retrospectively to each prior reporting period
presented or retrospectively with the cumulative effect of the initial application of thisStandard recognized at the date of initial application. The Group chooses to retrospectively
with the cumulative effect of the initial application of this Standard recognized at the dateof initial application, and it applies consistently to all leases of the Group that are lessees,and does not retroactively re-compile comparative information from previous reporting
periods. For leases previously classified as operating leases, the lease liability is measured
based on the present value of the remaining lease payments (discounted by the lessee’s
incremental borrowing rate of interest on the initial application date), and the right-of-use
asset is measured by the amount of the lease liability. There is no material impact on therights at the date of initial application.
The Group applies the following practical expedients:
a. The Group will apply a single discount rate to a portfolio of leases with reasonably
similar characteristics to measure lease liabilities.
b. The Group will account for those leases for which the lease term ends on or before
December 31, 2019 as short-term leases.
Adjustment of assets, liabilities and equity for initial application on January 1, 2019 as
follows
Carrying Amount as

Adjustments

Adjusted Carryingof December 31,

Arising fromAmount as of2018

Initial Application

January 1, 2019

Right-of-use
asset-noncurrent

$

-

$

370,352$

370,352

Total effect on assets

$

-

$

370,352$

370,352

142

Lease liability-current$-

Lease liability-noncurrent
Total effect on liabilities

$

$

-

38,098$337,254$

370,352

38,098337,254$

370,352(2) The IFRSs endorsed by FSC with effective date starting 2020
New, Revised or Amended Standards and Interpretations

Effective Date Issued by
IASB

Amendments to IFRS 3 “Definition of a Business”

January 1, 2020

Amendments to IAS 1 and IAS 8 “Definition of Material”

January 1, 2020

Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark
Reform”

January 1, 2020

Except for the following items, the Group believes that the adoption of aforementioned
standards or interpretations will not have a significant effect on the Group’s accounting
policies.
A. IFRS 3 “Definition of a Business”
The amendments clarify that to be considered a business, an acquired set of activities andassets must include, at a minimum, an input and a substantive process that together
significantly contribute to the ability to create outputs. The definitions of outputs focus on
goods and services provided to customers and by removing the reference to an ability to
reduce costs. Simultaneously, removing the assessment of whether market participants arecapable of replacing any missing inputs or processes and continuing to produce outputs.
The amendments add an optional concentration test that permits a simplified assessment of
whether an acquired set of activities and assets is not a business.
B. IAS 1 and IAS 8 “Definition of Material”
The main amendment is to clarify new definition of material. It states that“information ismaterial if omitting, misstating or obscuring it could reasonably be expected to influence
decisions that the primary users of general purpose financial statements make on the basisof those financial statements, which provide financial information about a specificreporting entity.” The amendments clarify that materiality will depend on the nature or
magnitude of information. An entity will need to assess whether the information, either
individually or in combination with other information, is material in the context of thefinancial statements.
C. IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”
The amendments include a number of exceptions, which apply to all hedging relationshipsthat are directly affected by interest rate benchmark reform. A hedging relationship is143

directly affected if the interest rate benchmark reform gives rise to uncertainties about thetiming and or amount of benchmark-based cash flows of the hedged item or the hedging
instrument. Hence, the entity shall apply the exceptions to all hedging relationships directly
affected by the interest rate benchmark reform.
Except for the aforementioned impact, as of the date the accompanying consolidated
financial statements were authorized for issue, the Group continues in evaluating theimpact on its financial position and financial performance as a result of the initial adoptionof the other standards or interpretations. The related impact will be disclosed when theGroup completes the evaluation.
(3) The IFRSs issued by IASB but not yet endorsed and issued into effect by FSC
Effective Date Issued by
IASB

New, Revised or Amended Standards and Interpretations
Amendments to IFRS 10 and IAS 28 “Sale or Contribution ofAssets between an Investor and its Associate or Joint Venture”

To be determined by IASBIFRS 17 “Insurance Contracts”

January 1, 2021

Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”

January 1, 2022

The Group believes that the adoption of aforementioned standards or interpretations will nothave a significant effect on the Group’s accounting policies in the future.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(1)Statement of Compliance
The accompanying consolidated financial statements have been prepared in conformity with
the Regulations Governing the Preparation of Financial Reports by Securities Issuers, andthe International Financial Reporting Standards, International Accounting Standards, IFRICInterpretations endorsed and issued into effect by the FSC.

(2)

Basis of Preparation
The accompanying consolidated financial statements have been prepared on the historicalcost basis except for financial instruments measured at fair value and defined benefit assets
or liabilities. Historical cost is generally based on the fair value of the consideration given in
exchange for the assets.
The Group applied the IFRS 16 for the first time on January 1, 2019, and didn’t restate the144financial statements and notes of 2018, which were prepared in accordance with IAS 17 andits interpretations.
(3)

Basis of Consolidation
A. Basis for preparation of consolidated financial statements
The consolidated financial statements incorporate the financial statements of theCompany and entities controlled by the Company (its subsidiaries). Control is achieved
where Brogent has the power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities. Subsidiaries are fully consolidated from thedate on which control is transferred to the Group; and they are de-consolidated from thedate when control ceases.
Total comprehensive income of subsidiaries is attributed to the shareholders of the parent
and to the non-controlling interests even if this results in a deficit balance in
non-controlling interests. When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies in line with those used by theCompany.
All significant intra-group transactions, balances, income and expenses are eliminated infull upon consolidation.
Changes in the Company’s ownership interests in subsidiaries that do not result in the
Company losing control over the subsidiaries are accounted for as equity transactions.
The carrying amounts of the Company’s interests and the non-controlling interests areadjusted to reflect the changes in their relative interests in the subsidiaries. Any
difference between the amount of which the non-controlling interests are adjusted andthe fair value of the consideration paid or received is recognized directly in equity andattributed to shareholders of the parent.
When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss,
and is calculated as the difference of: (a) the aggregate fair value of consideration
received and the fair value of any retained interest at the date when control is lost; and (b)the previous carrying amount of the assets (including goodwill), less liabilities of thesubsidiary and any non-controlling interest. The fair value of any investment retained in
the former subsidiary at the date when control is lost is regarded as the cost on initialrecognition of an investment in an associate. The Group shall account for all amounts
recognized in other comprehensive income in relation to the subsidiary on the same basis
as if the Group had directly disposed of the related assets and liabilities. That is, when
the Group loses control of a subsidiary, all gains or losses previously recognized in othercomprehensive income in relation to the subsidiary should be reclassified from equity to
profit or loss.
B. Subsidiaries included in the consolidated financial statements
The detail information of the subsidiaries at the end of reporting period was as follows:145Percentage of Ownership
Name of

Name ofInvestor

InvesteeBusiness Scope

Location

Brogent

Brogent Mechanical

Manufacture and sales ofMay, 2015

Technologies

Inc.

the simulator rides andTaoyuan City

Inc.

December

December31, 2019

31, 2018

61.11%

61.11%

1

100%

60.00%

-

100%

100%

-

100%

100%

-

100%

100%

-

100%

100%

-

100%

100%

-

100%

100%

-

57.53%

57.53%

2

42.47%

42.47%

2

86.67%

86.67%-

Note

related key components
Brogent Creative

Development and sales ofInc.

simulator rides andApril, 2015
Kaohsiung City

related peripheralproducts
Brogent Hong Kong

Reinvestment and trading

June, 2015

LimitedbusinessHong Kong

Brogent Global Inc.

Development and

September, 2015

management business ofKaohsiung City

self-operated outlets
Dili Jie Holdings
LimitedReinvestment and trading

March, 2018business

British Virgin
Islands

Dili Jie
Holdings

Jetway Holdings
LimitedReinvestment and tradingbusiness

May, 2018
Cayman Islands

LimitedJetwayHoldings

Garley Holdings
LimitedReinvestment and trading

July, 2018business

British Virgin

LimitedIslands
Holey Holdings
LimitedReinvestment and trading

November, 2018business

British Virgin
Islands

GarleyBrogent Rides

Import and export

July, 2015

Holdings(Shanghai) Limited

business

ShanghaiBrogent HongBrogent Rides

Import and export

July, 2015

Kong

(Shanghai) Limited

business

Shanghai

LimitedLimitedhexaRide the first Development and
LLP

September, 2018

management business of
self-operated outlets

146

Tokyo

Brogent

Brogent Creative

Development andRides(Shanghai) Limited

management business of(Shanghai)

September, 2015

100%

100%

-

100%

-

-

100%

-

-

100%

-

-

100%

-

-

Shanghaiself-operated outlets

LimitedBrogent

Jetmay Holdings

Reinvestment and trading

November, 2018

Global Inc.

Limitedbusiness

British Virgin
Islands

Ou Wei Limited

Reinvestment and trading

May, 2019businessHong Kong
January, 2019

JetmayHai Wei Culture

Development andHoldings

Creative andmanagement business ofLimitedDevelopment

self-operated outlets

Shanghai(Shanghai) Limited
StarLite Design &Development andDecember, 2018

Planning Limited

management business ofRichmond

self-operated outlets

Note 1: The 2019 and 2018 financial statements of Brogent Mechanical Inc. are audited by the otherauditors.
Note2:The group reorganized on July 18, 2018. Garley Holdings Limited invest USD4,200 thousand in
Brogent Rides (Shanghai) Limited with 57.53% ownership in July 2018.
C. Subsidiaries not included in the consolidated financial statements: None.
(4)

Foreign Currency Translation
Foreign currency transactions of each of the Group’s entities are expressed in the functional
currency. Monetary assets and liabilities denominated in foreign currencies are recognizedusing the exchange rates at the dates of the transactions. Exchange differences arise whenmonetary items are settled or when monetary items are translated at rates different fromthose at which they were translated on initial recognition during the period or in previous
financial statements shall be recognized in profit or loss in the period in which they arise.
Financial statements for all foreign subsidiaries are translated into the functional currency as
follows: assets and liabilities are translated using the closing exchange rate at the balance
sheet date; income and expenses are translated at the average exchange rates of that period;
opening retained earnings carryforward from prior period are translated using the historicalexchange rates; dividends are translated using the exchange rates at the declaration date; anditems in other comprehensive income are translated using the rate at the balance sheet date.
Cumulative amount of the exchange differences relating to a suspending foreign operation
are recognized in other comprehensive income and accumulated in a separate component ofequity. Such amount is reclassified from equity to profit or loss when the gain or loss on
disposal is recognized.
When a gain or loss on a non-monetary item is recognized in other comprehensive income,147

any exchange component of that gain or loss shall be recognized in other comprehensive
income. Conversely, when a gain or loss on a non-monetary item is recognized in profit orloss, any exchange component of that gain or loss shall be recognized in profit or loss.
(5)

Classification of Current and Noncurrent Assets and Liabilities
Current assets include: (a) unrestricted cash or cash equivalents; (b) assets held mainly fortrading purposes; (c) assets that are expected to be realized within twelve months from thebalance sheet date; and (d) assets arising from operating activities that are expected to berealized, or are intended to be sold or consumed within the normal operating cycle. Current
liabilities include: (a) liabilities that are to be paid off within twelve months from the balance
sheet date; and (b) liabilities that are expected to be paid off within the normal operating
cycle. Assets and liabilities that are not classified as current are noncurrent assets andliabilities, respectively.
As the operating cycle for construction contracts usually exceeds one year, the Group uses
the operating cycle as its criteria for classifying current and noncurrent assets and liabilities
related to construction contracts. For other assets and liabilities, the criterion is one year.

(6)

Cash Equivalents
Cash equivalents refer to short-term, highly liquid investments that are readily convertible to
known amounts of cash and are subject to an insignificant risk of changes in value. Timedeposits that meet the above criteria and are held for the purpose of meeting short-term cash
commitment in operations are classified as cash equivalents.

(7)

Inventories
Inventories mainly include materials of simulation entertainment equipment. Inventories areaccounted for on a perpetual basis, and are stated at cost at the time of acquisition or initial
measurement. Cost is determined using the weighted average method. Except for allowancefor obsolescence, inventories are subsequently measured at the lower of cost and net
realizable value. The item by item approach is used in applying the lower of cost and net
realizable value. Write-downs of inventories and any reversal of write-downs are recorded ascost of goods sold for the period.

(8)Construction Contracts
If the outcome of a construction contract can be estimated reliably and it is probable that thiscontract would make a profit, contract revenue and costs should be recognized by reference
to the stage of completion of the contract activity at the end of the reporting period. The
stage of completion of a contract is measured by the percentage-of-completion method.
Contract revenue should include the revenue arising from variations in contract work, claims
and incentive payments as long as it is probable that they will result in revenue and can bemeasured reliably.
If the outcome of a construction contract cannot be estimated reliably, contract revenue

148

should be recognized only to the extent of which the related contract costs incurred arerecognized
If it is probable that total contract costs will exceed total contract revenue, the expected loss
should be recognized as an expense immediately.
The excess of the cumulative costs incurred plus recognized profits (less recognized losses)
over the progress billings on each construction contract is presented as an asset as“Construction receipts receivable”. While, the excess of the progress billings over the
cumulative costs incurred plus recognized profits (less recognized losses) on eachconstruction contract is presented as a liability as “Construction receipts payable”.
(9)

Investments Accounted for Using Equity Method
Investments accounted for using the equity method include investments in associates andinterests in joint ventures.
An associate is an entity over which the Group has significant influence. It is neither asubsidiary nor a joint venture. Significant influence is the power to participate in thefinancial and operating policy decisions of the investee but does not control or joint control
over those policies.
A joint venture is a joint arrangement established between the Group and other parties tohave joint control over the net assets of the joint arrangement. The operating results andassets and liabilities of associates and joint venture are incorporated in these consolidated
financial statements using the equity method of accounting. Under the equity method, an
investment in an associate or a joint venture is initially recognized in the consolidated
statement of financial position at cost and adjusted thereafter to recognize the Group’s shareof profit or loss and other comprehensive income of the associate and joint venture as well as
the distribution received. The Group also recognizes its share in the changes in the equities
of associates and joint venture.
Any excess of the cost of acquisition over the Group’s share of the net fair value of theidentifiable assets, liabilities and contingent liabilities of an associate or a joint venture
recognized at the date of acquisition is recognized as goodwill, which is included within the
carrying amount of the investment. Any excess of the Group’s share of the net fair value ofthe identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after
reassessment, is recognized immediately in profit or loss.
When necessary, the entire carrying amount of the investment (including goodwill) is tested
for impairment as a single asset by comparing its recoverable amount (higher of the value in
use or the fair value less costs to sell) with its carrying amount. Impairment loss isrecognized when the recoverable amount exceeds the carrying amount of the investment.
Any reversal of that impairment loss is recognized to the extent that the recoverable amountof the investment subsequently increases.
The Group discontinues the use of the equity method from the date when the Group ceases to149have significant influence over an associate. When the Group retains an interest in the former
associate, the Group measures the retained interest at fair value. The difference between the
carrying amount of the associate at the date the equity method was discontinued and the fairvalue of any retained interest and any proceeds from disposing of a part interest in theassociate is included in the determination of the gain or loss on disposal of the associate. In
addition, the Group shall account for all amounts recognized in other comprehensive income
in relation to that associate on the same basis as would be required if the associate had
directly disposed of the related assets or liabilities. If the Group’s ownership interest in an
associate is reduced as a result of disposal, but the investment continues to be an associate,
the Group should reclassify only a proportionate amount of the gain or loss previously
recognized in other comprehensive income to profit or loss.
When the Group subscribes to additional shares in an associate or a joint venture at apercentage different from its existing ownership percentage, the resulting carrying amount of
the investment differs from the amount of the Group’s proportionate interest in the net assetsof the associate or joint venture. The Group records such a difference as an adjustment toinvestments with the corresponding amount charged or credited to capital surplus. If theGroup’s ownership interest is reduced due to the additional subscription to the shares ofassociate or joint venture by other investors, the proportionate amount of the gains or losses
previously recognized in other comprehensive income in relation to that associate or joint
venture shall be reclassified to profit or loss on the same basis as would be required if theassociate or joint venture had directly disposed of the related assets or liabilities.
When a consolidated entity transacts with an associate or a joint venture, profits and losses
resulting from the transactions with the associate or joint venture are recognized in theGroup’s consolidated financial statements only to the extent of interests in the associate or
joint venture that are not owned by the Group.
(10) Property, Plant and Equipment
Property, plant and equipment are measured at cost less accumulated depreciation andaccumulated impairment losses. Costs include any incremental costs that are directly
attributable to the construction or acquisition of property, plant and equipment.
Depreciation is computed using the straight-line method over the following estimated useful
lives: buildings – 5 to 50 years; machinery and equipment – 3 to 10 years; transportationequipment – 5 years; office equipment – 3 to 6 years; and other equipment – 3 to 15 years.
The estimated useful lives, residual values and depreciation method are reviewed at the endof each financial year, with the effect of any changes in estimates accounted for on aprospective basis.
Any gain or loss arising on the disposal or retirement of property, plant and equipment isdetermined as the difference between the sales proceeds and the carrying amount of the asset;
and is recognized in profit or loss.

150

(11) Leases
2019
At the inception of a contract, the Group assesses whether the contract is, or contains, alease.
A.

The Group as lessor
Lease payments from operating leases are recognized as income on a straight-line basis
over the terms of the relevant leases.

B.

The Group as lessee
The Group recognizes right-of-use assets and lease liabilities for all leases at thecommencement 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 on or before thecommencement 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 depreciationand 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.
With respect to the recognition and measurement of right-of-use assets that meet thedefinition of investment properties.
Right-of-use assets are depreciated using the straight-line method from thecommencement 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. The
lease payments are discounted using the interest rate implicit in a lease, if that rate canbe readily determined. If that rate cannot be readily determined, the Group uses thelessee’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, a change in the amounts expected to be payable under a residual value
guarantee, a change in the assessment of an option to purchase an underlying asset, or achange in future lease payments resulting from a change in an index or a rate used todetermine those payments, the Group remeasures the lease liabilities with acorresponding 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.

151

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.
A.

The Group as lessor
Rental income from operating leases is recognized on a straight-line basis over the termof the relevant lease.

B.

The Group as lessee
Operating lease payments are recognized as expenses on a straight-line basis over thelease term.

(12) Intangible Assets
Intangible assets are carried at cost less accumulated amortization and accumulated
impairment losses. Cost is the amount of cash or cash equivalents paid or the fair value ofother consideration given to acquire an asset at the time of its acquisition or construction.
Computer software and franchise is amortized on an average basis over its estimated usefullife of 3 to 5 years. Patents is amortized on an average basis over its estimated useful life of
20 years. A film is amortized on an average basis over its estimated useful life of 5 to 10
years. The exchange of simulation entertainment equipment for profit-sharing right of ticket
sales is amortized on an average basis over its estimated useful life of 5 to 10 years. The
trade-in asset is measured at fair value. If the fair value of the asset received cannot bemeasured reliably, its cost is measured at the carrying amount of the asset given up.
The estimated useful life and amortization method are reviewed at the end of each financial
year, with the effect of any changes in estimate being accounted for on a prospective basis.
(13) Impairment of Tangible and Intangible Assets
At the end of each reporting period, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets havesuffered an impairment loss. If any such indication exists, the recoverable amount of theasset is estimated in order to determine the extent of the impairment loss. When it is notpossible to estimate the recoverable amount of an individual asset, the Group estimates therecoverable amount of the cash-generating unit to which the asset belongs. When areasonable and consistent basis of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise they are allocated to the smallest
group of cash-generating units for which a reasonable and consistent allocation basis can be
identified.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a152

pre-tax discount rate which reflects the current market assessments of (a) the time value ofmoney, and (b) the risks specific to the asset for which the estimates of future cash flows
have not been adjusted.
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. An impairment loss is recognized immediately in profit or loss.
When an impairment loss is subsequently reversed, the carrying amount of the asset or acash-generating unit is increased to the revised estimate of its recoverable amount; however,
the increased carrying amount shall not exceed the carrying amount that would have been
determined had no impairment loss been recognized for the asset or cash-generating unit inprior years. Any reversal of an impairment loss is recognized immediately in profit or loss.
(14) Provisions
Provisions are recognized when: (a) the Group has a present legal or constructive obligation
as a result of a past event; (b) it is probable that the Group will be required to settle theobligation; and (c) a reliable estimate can be made on the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required tosettle 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, its carrying amount is the present value of
those cash flows.
(15) Employee Benefits
Short-term employee benefits are measured at the undiscounted amount of the benefits
expected to be paid in respect of service rendered by employees in a period and should berecognized as expenses in that period when service is rendered.
For defined contribution plan, payments to the benefit plan are recognized as an expense
when the employees have rendered service that entitling them to the contribution. For
defined benefit plan, the cost of providing benefit is recognized based on actuarial
calculations.
Net obligation under a defined benefit plan is defined as the present value of an amount ofpension benefits that employees will receive upon retirement for services provided to theGroup in current period or prior periods. The liability recognized in the balance sheet inrespect of defined benefit plans is the present value of the defined benefit obligation at thebalance sheet date less the fair value of plan assets. The net defined benefit obligation is
calculated annually by independent actuaries using the projected unit credit method. The
discount rate is referencing to government bonds interest rates (at the balance sheet date).
Re-measurement under a defined benefit plan recognized in other comprehensive income isreflected immediately in retained earnings. Past service costs are recognized immediately in
profit or loss.

153

(16) Financial Instruments
Financial assets and liabilities shall be recognized when the Group becomes a party to thecontractual provisions of the instruments.
Financial assets and liabilities are initially recognized the transaction costs that are fair value
added 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 orloss). The transaction costs that are directly attributable to the acquisition or issue offinancial assets and financial liabilities at fair value through profit or loss is recognized
immediately in profit or loss.
Financial assets are classified as “Financial assets at fair value through profit or loss,”“Investment in debt instruments and equity instruments at fair value through othercomprehensive income” and “Financial assets at amortized cost”:
A.

Financial Assets
Ordinary purchases or sales of financial assets are recognized and derecognized on asettlement date basis.
a. Measurement category
Financial asset that the group hold are financial assets at fair value through profit orloss and financial assets at amortized cost.
i.

Financial assets at fair value through profit or loss
For certain financial assets which include debt instrument that do not meet thecriteria of amortized cost or fair value through other comprehensive income, it ismandatorily required to measure them at fair value through profit and loss.
Financial assets at fair value through profit and loss are measured at fair value,with any gains or losses arising on re-measurement recognized in profit or loss.
Please refer to Note 12(1) for the method of determining the fair value.

ii.

Financial assets at amortized cost
Financial assets are measured at amortized cost if both of the following conditions
are met.
i) The financial asset is held within a business model whose objective is to holdfinancial assets in order to collect contractual cash flows; andii) The contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amountoutstanding
Subsequent to initial recognition, financial assets measured at amortized cost,
including cash and cash equivalents, notes and accounts receivable (including
related parties) and other receivables (including related parties) are measured at154amortized cost, which equals to carrying amount determined by the effective
interest method less any impairment loss. Exchange differences are recognizedin profit or loss.
Cash equivalents including the time deposits which are meeting short-time cash
commitments highly liquid and readily convertible to known amounts of cashthat are subject to an insignificant risk of changes in value.
b. Impairment of financial assets
At the end of each reporting period, the Group recognizes a loss allowance for
expected credit losses on financial assets at amortized cost (including accounts
receivable).
The loss allowance for accounts receivable is measured at an amount equal tolifetime expected credit losses. For all other financial assets, the Group evaluates
whether the credit risk has increased significantly since initial recognition. When thecredit risk has not increased significantly, a loss allowance is recognized at an
amount equal to expected credit loss within 12 months. If, on the other hand, there
has been a significant increase in credit risk, a loss allowance is recognized at an
amount equal to lifetime expected credit loss.
The expected credit loss is the weighted average credit loss weighted by the risk ofdefault. The expected credit loss within 12 months is the expected credit loss
resulting from possible default events of a financial instrument within 12 months
after reporting date. The lifetime expected credit loss is the expected credit loss
resulting from all possible default events over the expected life of a financial
instrument.
The Group recognizes an impairment loss in profit or loss for all financial assets witha corresponding adjustment to their carrying amount through a loss allowanceaccount.
c. Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual rights to the cash
flows from the financial asset expire, or when it transfers the financial asset andsubstantially all the risks and rewards of ownership of the financial asset to anotherentity.
When derecognizing a financial asset, the difference between the asset’s carrying
amount and the sum of the consideration received, receivable and the cumulative
gain or loss that had been recognized in other comprehensive income is recognized in
profit or loss.
B.

Financial Liabilities and Equity Instruments
Debt and equity instruments issued by the Group are classified as either financial

155

liabilities or as equity in accordance with the substance of the contractual arrangements
and the definitions of a financial liability and an equity instrument.
Equity instruments issued by the Group are recognized at the proceeds received, net of
direct issue costs.
Repurchase of the Group’s own equity instruments is recognized in and deducted
directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale,issue or cancellation of the Group’s own equity instruments.
Financial liabilities are measured at amortized cost using the effective interest method
except that financial liabilities at fair value through profit or loss are stated at fair value,with any gains or losses arising on re-measurement recognized in profit or loss.
(17) Share-based Payment
For the equity-settled share-based payment arrangements, the equity instruments aremeasured at the fair value on the grant date, and are recognized as compensation cost overthe vesting period with a corresponding adjustment to equity. The fair value of the equity
instruments is measured by an appropriate pricing model.
(18) Employees’ Compensation and Directors’ and Supervisors’ Remuneration
Employees’ compensation and directors’ and supervisors’ remuneration are recognized as
expenses and liabilities, provided that such recognition is required under legal obligation orconstructive obligation and those amounts can be estimated reliably. However, if the accrued
amounts for employees’ compensation and directors’ and supervisors’ remuneration are
different from the actual distributed amounts as resolved subsequently by the board of
directors, the differences shall be recognized based on the accounting for changes in
estimates.
(19) Income Tax
Income tax expense (benefit) for the period comprises current and deferred tax.
A. Current tax
The tax expense for the period comprises current and deferred tax. Income tax is recognizedin profit or loss, except to the extent that it relates to items recognized in othercomprehensive income or items recognized directly in equity, in which cases the tax isrecognized in other comprehensive income or equity.
The current tax expense is calculated on the basis of the tax laws enacted or substantively
enacted at the balance sheet date in the countries where the Group operates and generates
taxable income. An additional 10% tax is levied on the unappropriated retained earnings
and is recorded as income tax expense in the year the stockholders resolve to retain theearnings.
B. Deferred tax
Deferred tax is recognized, using the liability method, on temporary differences arising156

between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. Deferred tax is determined using tax rate (and laws) that have been enacted or
substantially enacted by the balance sheet date and are expected to apply when the related
deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that futuretaxable profit will be available to offset against which the temporary differences can beutilized. At each balance sheet date, unrecognized and recognized deferred income tax assets
are reassessed.
C. Others
Income tax is recognized in profit or loss, except to the extent that it relates to items
recognized in other comprehensive income or directly in equity, where the tax is also
recognized in other comprehensive income or directly in equity, respectively.
Research and development expenses are recognized as income tax credits, which lead to a
tax privilege for the Group.

(20) Government Grants
Government grants are recognized at the fair value only when there is reasonable assurance
that (a) the Group will comply with any conditions attached to the grants and (b) the grants
will be received.
Government grants related to income should be recognized as revenue in a rational andsystematic way over the periods when the related costs are expected to be incurred. However,
the government grants that are not yet realized should be presented as deferred revenue. If norational evaluating approach is available to recognize such government grants, then theamount of government grants should be recognized in full when received.
Government grants related to assets should be recognized as deferred revenue. If thegovernment grants are related to depreciable assets, they should be recognized as revenue
over the useful lives in proportions to which depreciation expenses on those assets arecharged. If the government grants are not related to depreciable assets and if the government
grants require certain obligations to be fulfilled, the enterprise should recognize suchgovernment grants over the periods in proportions to which the related costs are incurred by
the enterprise to fulfill these obligations.
If the government grants are intended to compensate for expenses or losses that have alreadyincurred, or are intended to give immediate financial support with no future related costs, theamount of government grants should be recognized in full when there is reasonableassurance that the grants will be received.
(21) Revenue Recognition
A. Revenue from Contracts with Customers
157

The Company recognizes revenue from contracts with customers by applying thefollowing steps of IFRS 15:(1) Identify the contract with the customer;(2) Identify the performance obligations in the contract;(3) Determine the transaction price;(4) Allocate the transaction price to the performance obligations in the contract; and(5) Recognize revenue when or as the entity satisfies a performance obligation.
B. Interest Income
For financial asset at amortized cost and financial assets at fair value through profit orloss, interest income is recorded using the effective interest method and is recognized in
profit or loss.
(22) Earnings Per Share
Basic earnings per share are calculated as net income divided by the weighted average
number of common shares outstanding. Basic earnings per share are retrospectively adjusted
to reflect the effect of the capitalization of stock dividends from capital reserve and retained
earnings. For the purpose of calculating the diluted earnings per share, potentially dilutive
common shares are deemed to have been converted into common stock at the beginning of
the period, and the effect on the net income attributable to additional common shares
outstanding is considered accordingly.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF
ESTIMATION AND UNCERTAINTY
The preparation of these consolidated financial statements requires management to make critical
judgments in applying International Financial Reporting Standards endorsed by the FSC and makecritical assumptions and estimates concerning future events. Judgments and estimates arecontinually evaluated and adjusted based on historical experience and other factors that areconsidered to be relevant. Actual results may differ from these estimates.
The following are information on key assumptions about the future and other key sources of
estimation and uncertainty at the end of the reporting period. Such assumptions and estimates may
have a significant risk of causing a material adjustment to the carrying amounts of assets andliabilities within the next financial year.
(1)

Allowance for bad debts on receivables
The Group assesses the recoverable receivables and estimates its allowance for bad debts
based on the credit quality of customers, the collectivity of accounts, and the past history on
actual bad debt incurred. When there is an indication for potential uncollectible, anallowance for bad debts will be made. The identification of allowance for doubtful debts
requires an estimate. If the expected future cash flow is differs from the original estimate, thedifference will create a change in the carrying amount of accounts receivable and bad debts
expenses for the year when change in estimate is made.

158

(2)

Valuation of Inventory
Inventories are stated at the lower of cost or net realizable value, and the Group uses
judgments and estimates to determine the net realizable value of inventory at the end of thereporting period.
Due to the rapid technological changes, the Group estimates the net realizable value of
inventory for obsolescence and unmarketable items at the end of each reporting period.
Impairment is recognized when cost of inventories is lower than its net realizable value. The
net realizable value of the inventory is mainly determined based on assumptions of future
demand within a specific time horizon.

(3)

Impairment of Tangible and Intangible Assets
In the process of evaluating the potential impairment of tangible and intangible assets otherthan goodwill, the Group is required to make subjective judgments in determining theindependent cash flows, useful lives, expected future revenue and expenses related to thespecific asset groups with the consideration of the nature of industry. Any changes in theseestimates based on changed in economic conditions or business strategies could result insignificant impairment charges or reversal in future years.

(4)

Realization of Deferred Income Tax Assets
Deferred tax assets are recognized to the extent that it is probable that future taxable profits
will be available against which those deferred tax assets can be utilized. Assessment of therealization of the deferred tax assets requires the Group’s subjective judgments and estimates,
including the future revenue growth and profitability, tax holidays, the amount of tax credits
can be utilized and feasible tax planning strategies. Any changes in the global economic
environment, the industry trends and relevant laws and regulations could result in significant
adjustments to the deferred tax assets.

(5)

Recognition of profits and losses from construction contract project
When the outcome of a construction contract can be reliably estimated, the contract revenue
and costs associated with the construction contract should be recognized as income andexpenses at the end of the reporting period using the percentage of completion method.
Transactions can be reliably estimated only when all of the following criteria is met:
A. The amount of income can be reliably measured.
B. It is probably that the economic benefits associated with the transaction will flow into theGroup.
C. The cost and the project completion percentage can be reliably estimated at the end of thereporting period.
D. The costs attributable to the contract can be clearly identified and reliably measured.
Most of the construction contracts entered by the Group are fixed in contract prices.
However, depending on customer’s request, change in scope and prices may be required.
Any changes in project scope or prices will affect the determination of the revenue, contract
159

cost attribution, and the estimated cost expected to complete, including changes in software,equipment, testing and labor costs, and estimates of total number of workweeks calculated
based on the percentage of completion. All these factors will affect the Group’s recognitionof the profit or loss of a construction contract project.
(6) Lease Liabilities
A. The term of the lease
When the Group determined the term of the lease, consider relevant all facts andcircumstances that will obtain economics benefits to exercise the option, including the
expected changes from the start of the lease to the date of the exercise . When asignificant event or change occurs out of the Group’s control range, the lease period will
be reassessed.
B. Lessees’ incremental borrowing rates
When the Group determined the discounting rate of lease payment, used the risk-freeinterest rate of appropriate duration and currency as basic and considered estimates forlessee’s credit risk premium and specific adjustment in lease the lease.

(7) The Fair Value of Level 3 Financial Instruments
Where the fair values of the level 3 financial assets and financial liabilities recorded on thebalance sheet cannot be derived from active markets, they are determined by the applicationof an appropriate valuation method including the income approach and market approach. The
valuation of these financial assets involves significant judgment in the preparation of cash
flow forecasts, a selection of comparable companies or equity transaction prices, as well as
the application of assumptions such as discount rates, discounts for lack of marketability, andvaluation multiples, etc. Changes in assumptions about these factors could affect the reported
fair value of the financial assets.

6. DETAILS OF SIGNIFICANT ACCOUNTS(1) Cash and Cash Equivalents
December 31, 2019
Cash$

December 31, 2018
973

$

974

Checking accounts

2,174

5,608

Demand deposits

275,212399,887

Foreign currency demand deposits

174,949

121,663

Cash equivalents

321,509132,217

Total$

774,817$660,349

Cash equivalents, for the purpose of meeting short-term cash commitments, consist of highly
liquid time deposits and short-term investments that are readily convertible to known
160

amounts of cash that are subject to an insignificant risk of changes in value.
(2)

Financial Assets at Fair Value through Profit or Loss-Current
December 31, 2019
Beneficiary certificates$

248,751

Non-publicly traded stocks

Current portion$

454,631302,389

138,955$

551,140$

593,586$

253,176$

459,056

Noncurrent portion

297,964$(3)

December 31, 2018551,140

134,530$

593,586

Financial Assets at Amortized Cost
December 31, 2019

December 31, 2018$
Time deposits
Pledged time deposits
Restricted assets-reserve accountNon-publicly traded stock-preferredshares$

6,317
302,940-$

342,797$364,039

Current portion
Noncurrent portion

277,637
65,160342,797$

304,864
59,175364,039

190,788
134,051
4,000

33,540$$35,200$The condition of guarantee to Financial Assets at Amortized Cost refer to Note 8.
(4) Bonds Receivables, Accounts Receivables and Long-term Accounts Receivables
December 31, 2019
Bonds receivables and accounts
receivable-current
Less：Allowance for doubtful receivables$

310,299

December 31, 2018$-

Bonds receivables and accounts receivable, net $310,299

December 31, 201918,559$Long-term accounts receivable161

326,625-$

326,625

December 31, 2018
18,559$(18,559)

Less：Allowance for doubtful receivables
Long-term accounts receivable, net(18,559)

-

$

-

$

In principle, the payment term granted to customers is normally 60 days from the invoicedate. The allowance for bad debts is assessed by reference to the collectability of receivables,
taking into account of account aging analysis, historical collection experience and current
financial condition of customers.
Except for the impaired balances, for the rest of accounts receivable, the account aging
analysis at the end of the reporting period is summarized in the following table. For thoseaccounts receivable that are past due but no allowance for doubtful receivable wasrecognized, there is no doubt that the receivable can still be collected after the evaluation ofcustomer’s credit. As of the date of balance sheets, the Group does not hold any collateral foraccounts receivable.

Aging analysis of accounts receivable
December 31, 2019
Neither past due nor impaired$

December 31, 2018109,642$

126,397

Past due but not impaired
within 30 days

540

301

31-90 days

3,566

15,64691-180 days

42,52929,092over 181 days

154,022

155,189

Total$

310,299$

326,625

Movements of the allowance for doubtful receivables
2019
Balance at January 1$

2018(18,559)$(18,559)

Amount written off during the year--

Balance transfer to revenue during the
year

-

-

Balance at December 31$

162(18,559)$(18,559)(5) Construction Receipts Receivable (Payable)
December 31, 2019
Aggregate costs incurred plus
recognized profits
Less：Progress billings$

2,979,617$

1,839,233(2,161,060)(1,384,174)(9,302)-

Less：Loss allowance
Net balance sheet position for
construction in progress

December 31, 2018$809,255$

455,059$

943,550$

529,353

Presented as:
Construction Receipts Receivable
Construction Receipts Payable(134,295)$

809,255(74,294)$

455,059(6) Inventories
December 31, 2019
Raw materials
Supplies
Work in process
Finished goods
Simulator ride materials
Merchandise
Less：Allowance for valuation loss
Total

$

352
67,286
41,3748,889
111,894
3,163
232,958$

December 31, 2018$

264
90,726
8,903
5,373
91,5003,250
200,016$(7) Investments Accounted for Using Equity Method
A. There is no material joint venture and associate of the Group. The carrying amount of theGroup’s interests in all individually immaterial associates and related share of theoperating results are summarized below :Carrying Amount
Name of
AssociatePrincipal
Activities

Brogent JapanEntertainment
Corporation

Development and salesof simulator rides andrelated peripheral

Place of
Incorporation
and Operation
August 2016
Tokyo, Japan

163

December31, 2019

December31, 2018

$

$

3,029

5,772

% of Ownership and Voting
Rights Held by the Group
December31, 2019

December31, 2018

40%

40%

products in Japan2019
Net Income (Loss)
Other comprehensive income (loss) for
the year, net of income tax
Total Comprehensive Income (Loss)
For The Year

2018

$

(5,535)$(2,697)

$

42

$

21

$

(5,493)$(2,676)

B. The Group increased the investment to Discover NY Project Company, LLC by using
equity method which percentage of ownership is 21.43% in the three month periods ended
June 30, 2019. Discover NY Project Company, LLC increased Registered capital in
September, 2019, so that the Group’s percentage of ownership decreased to 19.44%. The
Company transferred the amount which is recognized in investments accounted for using
equity method to financial assets at fair value through profit or loss-noncurrent since lostthe significant influence.
(8)

Property, Plant and Equipment
2019

Land

Buildings

MachineryandEquipment

Transportation
Equipment

OfficeEquipment

Other
Equipment

Equipment Under
Installation andConstruction in
Progress

Total

Cost
Balance at January 1$139,868$667,506$13,301$1,878$34,054$161,037$211,966$1,229,610

Additions

-

2,976

1,695

283

8,707

26,182

14,24054,083

Disposals

-

-

-

(280)

-

(838)

(48)

(1,166)

Reclassifications-

15,682--545

77,593(97,448)(3,628)

Effect of exchange ratechanges

-

(67)

-

-

(1)

(169)

-

(237)

Balance at December 31

139,868

686,097

14,996

1,881

43,305

263,805

128,710

1,278,662

Balance at January 1-

94,7497,576

795

19,24340,788-163,151

Depreciation-

29,097

1,508

389

7,830

32,224-

71,048

Disposals

-

-

-

(229)

-

(194)

-

(423)

Reclassifications

-

-

-

-

-

-

-

-

Effect of exchange rate

-

(43)

-

-

(5)

(73)

-

(121)

-

123,803

9,084

955

27,06872,745-

233,655

Balance at December 31, net$139,868$562,294$5,912$926$16,237$191,060$128,710$1,045,007

Balance at January 1, net$139,868$572,757$5,725$1,083$14,811$120,249$211,966$1,066,459

Accumulated Depreciation
and Impairment

changes
Balance at December 31

164

2018

Land

Buildings

MachineryandEquipment

Transportation
Equipment

OfficeEquipment

Other
Equipment

Equipment Under
Installation andConstruction in
Progress

Total

Cost
Balance at January 1$139,868$633,590$18,954$1,199$40,992$72,421$175,343$1,082,367

Additions-

22,540

170

679

8,791

50,17488,002

170,356

Disposals

-

(400)

(5,823)-(15,729)(1,161)-(23,113)

Reclassifications-

11,776---

39,603(51,379)-

139,868

667,506

13,301

1,878

34,054

161,037

211,966

1,229,610

Balance at January 1-

69,192

10,687525

26,684

23,838-130,926

Depreciation-

25,957

2,712

270

8,288

18,111-

55,338

Disposals

-

(400)

(5,823)-(15,729)(1,161)-(23,113)

Balance at December 31-

94,7497,576

795

19,24340,788-163,151

Balance at December 31, net$139,868$572,757$5,725$1,083$14,811$120,249$211,966$1,066,459

Balance at January 1, net$139,868$564,398$8,267$674$14,308$48,583$175,343$951,441

Balance at December 31
Accumulated Depreciation
and Impairment

A. As of December 31, 2019, the company has reclassified equipment under installation andconstruction in progress from prepayment for the amount of NT$127,242 thousand. And theGroup has decided to transfer the materials for self-use after assembly test at the right place.
B. The significant components of the Group’s buildings include main plants, electricity,
decoration, plumbing and drainage, extinguishing protection and air conditioning
equipment. The related depreciation for Group’s building components is calculated using
the estimated useful lives of 50 years, 20 years,10 years, 10 years and 8 years, respectively.
C. Part of the land owns by Brogent Mechanical Inc. which locates in Zhongshan Rd., Xinwu
Dist., Taoyuan City is used solely for farming purpose. In accordance with the regulations,the farmland is owned and registered in the name of an individual. However, Brogent
Mechanical Inc. has obtained the agreement of the counterparty that at any time as therequest of Brogent Mechanical Inc., the counterparty shall change the registration of theland to Brogent Mechanical Inc. or other person designated by Brogent Mechanical Inc.,
without any consideration. As of December 31, 2019, the farmland amounting to NT$2,202
thousand was mainly used for plants, was accounted for 1.6% of the total land areas of theGroup.
D. Please refer to Note 8 for details note disclosure for topics of pledged property, plant and165equipment.
(9) Leasing Arrangements－Lessee
Effective 2019
A. The Group leases various assets including land, buildings, machinery and equipment, etc..
Rental contracts are typically made for periods of 1 to 20 years. Lease terms arenegotiated on an individual basis and contain a wide range of different terms andconditions. The lease agreements do not impose covenants, but leased assets may not be
used as security for borrowing purposes.

B. Right-of-use assets as follows:
2019
Land

Transportation

Buildings

Total

Equipment

Cost
Balance at January 1$

138,156$

222,079$

10,117$370,352

Additions

2,367

-

7,409

9,776

Disposals

-

-

-

-

Effect of exchange rate changes

-

(16)

-

(16)

140,523

222,063

17,526

380,112

-

-

-

-

10,57824,111

5,424

40,113

Disposals

-

-

-

-

Effect of exchange rate changes

-

(52)

-

(52)

10,57824,0595,424

40,061

Balance at December 31
Accumulated Depreciation
and Impairment
Balance at January 1
Depreciation

Balance at December 31
Balance at December 31, net$

129,945$

198,004$

12,102$340,051

Balance at January 1, net$

138,156$

222,079$

10,117$370,352

166

C. The information on income and expense accounts relating to lease contracts is as follows:.
2019
Items affecting profit or loss
Interest expense on lease liabilities

$

6,484

Expenses relating to short-term leases andlow-value asset leases

23,705$30,189D. For the year ended December 31, 2019, the Group’s total cash outflow for leases was
NT$66,980 thousand.
E. Some of the Group’s lease contracts contain variable lease payment terms that are linked
to sales generated from a department store counter or announced land values. For theabove-mentioned stores, up to 96% of lease payments are on the basis of variable payment
terms and are accrued based on the sales amount. Variable payment terms are used for avariety of reasons. Various lease payments that depend on sales are recognized in profit orloss in the period in which the event or condition that triggers those payments occurs.

(10) Intangible Assets
2019
Computer

ProfitSoftwarePatentFranchisesharing right

Film

Total

Cost
Balance at January 1$

74,602

$

3,274

$

15,735$

113,037$

59,822$

266,470

Additions

7,825

1,076

-

-

98,957

107,858

Disposals

-

-

-

-

-

-

(147)

-

(3)

-

(14)

(164)

82,2804,350

15,732

113,037

158,765

374,164

Balance at January 1

49,659317

14,20932,9692,719

99,873

Amortization

12,843272

520

11,304

17,231

42,170

-

-

-

-

-

-

(57)

-

(2)

-

(119)

(178)

62,445589

14,72744,273

19,831

141,865

Effect of exchange ratechangeBalance at December 31

Accumulated amortizationand impairment

Disposals
Effect of exchange ratechangeBalance at December 31

167

Balance at December 31, net$

19,835

$

3,761

$

1,005

$

68,764$

138,934$

232,299

Balance at January 1, net$

24,943

$

2,957

$

1,526

$

80,068$

57,103$

166,5972018
Computer

ProfitSoftwarePatentFranchisesharing right

Film

Total

Cost
Balance at January 1$

66,343$627$

14,775$

113,037$-$

194,782

Additions21,396

2,655

960

-

59,822

84,833

Disposals(13,137)

(8)

-

-

-

(13,145)---

74,602

3,274

15,735

113,037

59,822

266,470

Balance at January 1

43,420160

9,380

21,665-74,625

Amortization

19,376

165

4,829

11,304

2,719

38,393

Disposals(13,137)

(8)

-

-

-

(13,145)

-

-

-

-

-

-

49,659317

14,20932,9692,719

99,873

Effect of exchange rate--changeBalance at December 31

Accumulated amortizationand impairment

Effect of exchange ratechangeBalance at December 31
Balance at December 31, net$

24,943

$

2,957

$

1,526

$

80,068$

57,103$

166,597

Balance at January 1, net$

22,923

$

$467

$

5,395

$

91,372$-$

120,157

The Company has entered into a construction contract for indoor playground equipment of atheme park. As stated in the contract, the Company has agreed to exchange the simulationentertainment equipment for the right to share profits generated from sales of the theme
part tickets (“profit sharing right”). The cost of profit sharing right was measured at thecarrying amount of the simulation entertainment equipment given up.
Since February 2016, profit sharing right was amortized on an average basis over simulationentertainment equipment’s estimated useful life of 10 years. Refer to Note 6(23) for thedetails note disclosure on profit sharing right, and Notes 9(4) and 9(5) for details note
disclosure in relation to the related contract commitments.
(11)

Prepayments for Long-Term Investments in Stocks
For expanding the market of Mainland China, the Group increased investment throughBrogent Rides (Shanghai) Limited to Beijing Huaway Global Cultural Development Co. at

168

January, 2019. According to the Article of incorporation, the Group subscribed the amount ofcontribution of CNY$3,500 thousand and obtained 35% ownership by three times. The
Group have subscribed the first amount of contribution of CNY$1,050 thousand(NT$4,537 thousand) and capital verification doesn’t be finished.
(12) Other Current and Noncurrent Assets
December 31, 2019
Tax refund receivable$

20,108December 31, 2018
$

9,142

Other prepayment-noncurrent

10,79785,079Others76,20322,006

Total$

107,108$

December 31, 2019
Current portion

$

Total

December 31, 2018

36,953

Noncurrent portion$

70,155$

107,108

116,227

31,14885,079$116,227(13) Short-Term Loans

Unsecured loans
Secured loans
Total

$
$

December 31, 201975,000116,340
191,340

Annual interest rate

December 31, 2018$-$

1.05%~1.77%-

Short term loans are used to short term working capital need of the Group, details are
summarized in Note 8.
(14) Other Payables
December 31, 2019
Accrued payroll$

93,479December 31, 2018$78,306

Payables on equipment

4,385

7,309

Accrued insurance

3,547

2,981

Accrued professional fee

1,602

2,031

Accrued pension

1,437

908

Others40,606

18,545

Total$

145,056

169$

110,080

(15) Long-term Bank Loans
December 31, 2019

December 31, 2018

Secured Loans
Taiwan Cooperative Bank：
Loan period from April 2016 to October 2031;
monthly repayment of interest at an annual
rate of 1.57%~1.82% effective in April$

2016, with monthly repayment of principal.

188,697$

202,984

Loan period from March 2018 to March 2025;
monthly repayment of interest at an annual
rate of 1.68%~1.80% effective in April
2019, with monthly repayment of principal.

576,470

500,000

98,000106,000

35,00045,00070,000--14,286

CTBC Bank：
Loan period from January 2016 to January2032; monthly payment of interest at anannual rate of 1.81% ~1.87% effective in
April 2017, with quarterly repayment ofprincipal.
Loan period from November 2017 toNovember 2020; monthly payment ofinterest at an annual rate of 1.908% effective
in September 2018, with half-yearly
repayment of principal.
Loan period from March 2019 to March 2022;
monthly payment of interest at an annual
rate of 1.914% effective in January 2020,
with monthly repayment of principal.
JihSun Bank：
Loan period from April 2018 to April 2022;
monthly payment of interest at an annual
rate of 1.89% effective in July 2018, withquarterly repayment of principal.
(continue)(continue)

170

December 31, 2019

December 31, 2018

Unsecured Loans
Yuanta Commercial Bank：
Loan period from November 2019 to February
2020; monthly payment of interest at anannual rate of 1.05% effective in November

100,000-

1,068,167

868,270(252,626)(108,927)

2019, with quarterly repayment of principal.

Less：Current portion$

Noncurrent liabilities

815,541$

759,343

The Group’s land and buildings were used as first-priority mortgage collateral is securing
the loans. Details are summarized in Note 8.
(16)

Pensions
2019

2018

Defined benefit pension costs
Defined contribution pensions

$

6,509
3,557

$

322
8,100

Total

$

10,066$

8,422

A. The Company has a defined benefit plan under the Labor Standards Law that provides
benefits based on an employee’s length of service and average monthly salary for thesix-month period prior to retirement. The Company makes monthly contributions to theretirement fund deposited with Bank of Taiwan, the trustee, under the name of the
independent retirement fund committee. Before the end of each year, the Company
assesses the balance in the Funds. If the amount of the balance in the Funds is insufficient
to pay-off retirement benefits for employees who conform to retirement requirements inthe next year, the Company is required to fund the difference in one appropriation thatshould be made before the end of March of the next year. The Funds are operated andmanaged by the government’s designated authorities; as such, the Company does not have
any right to intervene in the investments of the Funds. As of December 31, 2019 and 2018,
the Company’s pension account balance was NT$2,099 thousand and NT$1,783 thousand,respectively.
B. Reconciliation on the present value of defined benefit obligation and the fair value of plan
assets were as follows:

171

Present value of defined benefit obligation

December 31, 2019

December 31, 2018$$

10,851

Fair value of plan assets

9,959(2,112)

Accrued pension liabilities

$

8,739

(1,794)$8,165

C. Movements in net defined benefit liability (asset) were as follows:
Present ValueNet Definedof the Defined

Balance at January 1, 2019

Fair Value ofBenefit

Benefit Obligation the Plan Assets

Liability(Asset)

$

$

9,959

$

(1,794)8,165

Service cost

213

-

213

Net interest expense (income)

124

(24)

100

Recognized in profit or loss

337

(24)

313

Actuarial loss (gain) of return on plan assets

-

(54)

(54)

Actuarial loss (gain) from changes in financial

700

-

700

(145)

-

(145)

555

(54)

501

-

(240)

(240)

Re-measurement

assumptions
Actuarial loss (gain) from experience
adjustments
Recognized in other comprehensive income
Contributions by the Company
Balance at December 31, 2019$10,851$(2,112)$

8,739

Balance at January 1, 2018

$

9,331

$

(1,496)$

7,835

Service cost

206

-

206

Net interest expense (income)

140

(25)

115

Recognized in profit or loss

346

(25)

321

Actuarial loss (gain) of return on plan assets

-

(33)

(33)

Actuarial loss (gain) from changes in financial

343

-

343

(61)

-

(61)

282

(33)

249

-

(240)

(240)

Re-measurement

assumptions
Actuarial loss (gain) from experience
adjustments
Recognized in other comprehensive income
Contributions by the Company

172

Present ValueNet Definedof the Defined

Fair Value ofBenefit

Benefit Obligation the Plan Assets

Liability(Asset)$$

Balance at December 31, 2018

9,959

$

(1,794)

8,165

Through the defined benefit plans under the Labor Standards Law, the Company is exposedto the following risks:(1) Investment risk: The pension funds are invested in equity and debt securities, bankdeposits, and etc. The investment is conducted at the discretion of the government’s
designated authorities or under the mandated management. However, under the Labor
Standards Law, the rate of return on assets shall not be less than the average interest rate
on a two-year time deposit published by the local banks; the government is responsible
for any shortfall in the event that the rate of return is less than the required rate of
return.
(2) Interest risk: A decrease in the government bond interest rate will increase the present
value of the defined benefit obligation; however, this will be partially offset by anincrease in the return on the debt investments of the plan assets.
(3) Salary risk: The present value of the defined benefit obligation is calculated byreference 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.
D. Actuarial assumptions:
December 31, 2019

December 31, 2018

Discount rate

1.00%

1.25%

Future salary increase rate

2.25%

2.00%

In scenario where a reasonable fluctuation in each of the significant actuarial assumptions
occur, considering all other assumptions remain constant, the present value of the defined
benefit obligation would increase (decrease) as follows:
December 31, 2019

December 31, 2018

0.25% increase

$

$

(343)

0.25% decrease

$

$

358

Discount rate
(357)
370

Future salary increase rate
1% increase

$

1,551

$

1,501

1% decrease$(1,354)$(1,300)173

The sensitivity analysis presented above may not be a representative of the actual change inthe present value of the defined benefit obligation as it is unlikely that the change inassumptions would occur in isolation of one another and the assumptions may becorrelated.
December 31, 2019
December 31, 2018
The expected contributions to the planfor the next year$

The average duration

240$

15.8years

240
16.5years

E. The new pension plan under the Labor Pension Act which became effective on July 1,
2005, is deemed a defined contribution plan. The employees with R.O.C. nationality canchoose to continue to use the Labor Standards Law’s pension regulations, or be subject tothe pension mechanism under the Labor Pension Act, and their seniority prior to theenforcement of this Act shall be maintained. The Company and its domestic subsidiaries
have made monthly contributions equal to 6% of each employee’s monthly salaries andwages to the employees’ individual pension accounts at the Bureau of Labor Insurance. For
defined contribution plan, payments to the benefit plan are recognized as an expense.
(17) Capital Stock
December 31, 2019

December 31, 2018

Authorized capital$

900,000$

900,000

Issued capital$

557,474$

530,928

As of December 31, 2019, the authorized shares were 90,000 thousand shares, including 2,000
thousand shares reserved for employee stock options. A holder of issued shares with par valueof NT$10 per share is entitled to vote and to receive dividends. The issued and paid shareswere 55,747 thousand shares as of the date of the consolidated financial statements.
On May 29, 2019, the general shareholders’ meeting resolved to increase the capital withcapital surplus of NT$26,546 thousand. The aforementioned issuance of new shares had
already been registered on July 2, 2019, and the record date determined by the resolution of theBoard of Directors which authorized by the shareholder’s meeting was July 26, 2019.
(18) Additional Paid-in Capital
Under the R.O.C. Company Law, except for covering accumulated deficit or issuing newshares or cash to shareholders, the additional capital reserve shall not be used for any otherpurpose. Unless the legal reserve is insufficient, the capital reserve should not be used to coveraccumulated deficit.
The capital reserve arising from paid-in capital in excess of par value on issuance of common
stocks and donations can be used to issue new shares or cash to shareholders by the special
resolution of the shareholders’ meeting, provided that the Company has no accumulated deficit.

174

Further, the amount of capital reserve to be capitalized mentioned above should not exceed
10% of the paid-in capital each year.
(19) Retained Earnings and Dividend Policy
A. If there are net profits of each fiscal year, the Company shall set aside 5% to15% of the
profits as employees’ compensations and no more than 2% as directors’ and supervisors’
remuneration; however, the Company shall first offset the accumulated deficits, if any. The
employees’ compensations referred above are able be paid in stocks or cash, and theemployees include the employees of affiliated companies, who are qualified for certain
conditions set by Board of Directors.
When allocating the net profits for each fiscal year, the Company shall first pay all taxes,
offset its losses in previous years, and set aside a legal capital reserve at 10% of the profits
left over, until the accumulated legal capital reserve has equaled the total capital of theCompany. The remainder together with undistributed earnings accrued from prior years(“Accumulated Distributable Earnings”) shall be set aside or reverse special capital reservein accordance with relevant laws or regulations, or reserve for specific business purpose.
And the remaining is distributed as dividends and the appropriation proposed by the Boardof Directors and to be approved by the shareholders’ meeting.
As the Company operates in a volatile business environment and is in the stable growthstage, the residual dividend policy is adopted taking into consideration the Company’s
operation expansion, working capital and long-term financial planning. The Company
measures future capital needs through future capital budgeting, then use retained earnings tofund its capital needs. The remainder will be distributed by way of cash dividend or stock
dividend, and the cash dividend shall not be less than 10% of total dividends.
B. Under the R.O.C. Company Law, the Company shall not pay dividends or bonuses when
there is no profit. Except for covering accumulated deficit or issuing new shares or cash toshareholders, the legal reserve shall not be used for any other purpose. The use of legal
reserve for the issuance of stocks or cash to shareholders is permitted, provided that thebalance of the reserve exceeds 25% of the Company’s paid-in capital.
C. Pursuant to existing regulations, the Company is required to set aside additional special
capital reserve equivalent to the net debit balance of the other components of stockholders’equity. For the subsequent decrease in the deduction amount to stockholders’ equity, any
special reserve appropriated may be reversed to the extent that the net debit balance reverses.
D. The appropriations of earnings for 2018 had been resolved at the shareholders’ meeting on
May 29, 2019. The appropriations were as follows:
2018
Dividends Per Share

Amount$Legal reserve(NT$)
16,992

Special reserve

179,454

Cash dividends

32,918

175

$

3.38
0.62

26,546

Stock dividend
$

Total

0.50

255,910

E. The appropriations of earnings for 2019 had been approved in the meeting of the Board of
Directors held on March 09, 2020 and are to be presented for approval in the shareholders’meeting. The appropriations were as follows:
2019
Amount$Legal reserve

Dividends Per Share (NT$)
36,612

Cash dividends

312,186

Special reserve

14,857
$

Total

$

5.6

363,655(20) Treasury Shares
In order to retain and recruit talents, motivate employees and enhance their centripetal force,
the Company has repurchased 1,000 thousand shares at the price of NT$249.5 to NT$283 pershare during the period from July 23 to September 1, 2015 for the total amount of NT$266,072
thousand.
Since the company held 434 thousand shares for three years without transfer to employees till
September 1, 2018, the Board of Directors resolved to retire all of them according to the
R.O.C. Company Law. The Board of Directors determined the reduction date as at September
1, 2018. The company reduce NT$4,340 thousand of common stock by per value NT$10 per
share, and by the proportion of capital reduction, the capital surplus-additional paid-in capital,
capital surplus-from convertible bonds and capital surplus-from treasury shares had decreasedby NT$14,545 thousand, NT$2,021 thousand and NT$9,566 thousand, respectively. Besides,
the difference amounts between the aforementioned decrease amounts and the purchase cost of
the treasury shares of NT$115,476 thousand was offset by the retained earnings of NT$85,004
thousand. The aforementioned retirement of treasury shares had already been registered on
September 20, 2018.
No treasury shares transactions were occurred for the years ended December 31, 2019 and2018.
(21) Non-controlling Interests
2019
Beginning balance
Attributable-to non-controlling interests :Net income
Other comprehensive income (loss)
The consideration paid from acquiring subsidiaries

176$

63,296
17,28528(5,167)

2018$

58,722
1,250
35
5,511

Cash dividends received by non-controlling interests
Share-based payment transactions
Ending balance(2,335)(2,291)
69

66$

73,173$63,296(22) Share-based Payment
A.Brogent Global Inc.
(1) As of 31 December, 2019, Brogent Global Inc. has issued the following employee shareoptions:
OptionExercise
Items
Grant Date
Units
lifetime
price2017.02.20~
2017 Employee stock option 2017.02.20
500
NT $102027.02.20(2) Due to the above issued employee stock option, Brogent Global Inc. has recognized its
employee share options as an operating expense, with related additional paid-in capitalamounting for the ended December 31, 2019 and 2018 at NT$165 thousand andNT$361 thousand, respectively.

(3) Brogent Global Inc. estimated the fair value of employee stock option using Binomial
Option Pricing Model with the follows assumptions:2017 Employee share option plan
Dividend ratio-%
Expected volatility
38.06%
Risk-free interest rate
1.1214%
Expected life
10 years
Fair value at grant date
NT$ 1.82
B. Brogent Mechanical Inc.
(1) As of 31 December, 2019, Brogent Mechanical Inc. has issued the following employee
share option:
OptionExercise
Items
Grant Date
Units
lifetime
price2016.11.10~
2016 Employee stock option 2016.11.10
250
NT $102026.11.10(2) Due to the above issued employee stock option, Brogent Mechanical Inc. hasrecognized its employee share options as an operating expense, with related additional
paid-in capital amounting for the ended December 31, 2019 and 2018 at NT$170
thousand and NT$178 thousand, respectively.
(3) Brogent Mechanical Inc. estimated the fair value of employee stock option using
Binomial Option Pricing Model with the follows assumptions:1772016 Employee share option plan-%
38.17%
1.0692%10 years
NT$ 1.97

Dividend ratio
Expected volatility
Risk-free interest rate
Expected life
Fair value at grant date(23) Net Revenue
Items
Construction contract revenue
Royalty revenue
Service and maintenance revenue
Sales revenue
Profit sharing of ticket sales
Total

2019
1,975,221
1,194
28,39814,55861,0702,080,441

$

$

2018
1,588,776
16,58010,406
21,676
1,637,438$$(24) Other Gains and Losses
2019
Gain (loss) on financial assets at fair value throughprofit or loss
Net currency exchange gain (loss)
Loss on disposal of property, plant and equipment
Other gains
Other losses
Total

$

2018

55,727(28,733)554
43,178(703)
70,023

$

$

$

2,408
11,047
21,686(1,484)33,657(25) Additional Information of Expenses by Nature
2019
OperatingExpenses

Cost of
Revenue

Items
Employee benefit expense
Salaries and wages
Labor/Health insurance expenses
Pension costs
Other employee benefit expenses
Total

$

Depreciation expense
Amortization expense

178

$

$

47,629
5,234
2,752
2,283
57,898$$40,41012,339

Total$$

217,197
14,584
7,342
14,177
253,300$

264,826
19,818
10,094
16,460311,198$$

70,751
29,831$$

111,161
42,1702018
OperatingExpenses

Cost of
Revenue

Items
Employee benefit expense
Salaries and wages
Labor/Health insurance expenses
Pension costs
Other employee benefit expenses
Total

$

Depreciation expense
Amortization expense$$

36,422
3,810
2,074
1,991
44,297$$

13,46025,048

Total$$

178,417
11,846
6,348
10,782
207,393$

214,839
15,656
8,422
12,773
251,690$$

41,87813,345$$55,33838,393As of December 31, 2019 and 2018, the number of the Company’s employees was 289 and
314, respectively. The headcount is consistent with the calculation basis of employee benefit
expense recognized above.

The accrued amounts of employees’ compensation and directors’ and supervisors’
remuneration for 2019 and 2018 based on income before employees’ compensation anddirectors’ and supervisors’ were estimated by a pre-determined ratio. The Board of Directors
has decided to issue compensation of employees and remuneration of directors andsupervisors amounting to NT$34,599 thousand and NT$7,595 thousand on March 9, 2020,
and NT$28,268 thousand and NT$5,976 thousand on March 12, 2019, for year ended
December 31, 2019 and 2018, respectively. There is no material difference between the
aforesaid amounts to be allocated and the amount has been respectively recognized as
expenses in the year incurred.
The accrued amounts of employees’ compensation and directors’ and supervisors’
remuneration were recognized as expenses. If the actual distribution amounts that aresubsequently resolved by the Board of Directors differ from the accrued amounts, thedifferences should be recognized in profit or loss in next year. The information about theappropriations of employees’ compensation and directors’ and supervisors’ remuneration as
proposed by the Board of Directors and resolved by the shareholders’ meeting will be posted
in the “Market Observation Post System” at the website of Taiwan Stock Exchange.

179

(26) Income Tax
A. Income tax expense recognized in profit or loss consisted of the following:
2019

2018

Current tax:
Current tax on profits for the period
Additional income tax on unappropriatedearnings
Current adjustments on prior years tax
estimation$

80,960$61,9007-(2,779)(3,562)

Total current tax

78,18858,338Deferred tax:
The origination and reversal of temporary
differences
Effect of tax rate changes

13,247

7,787-(3,410)

Unused income tax credits carryforwards(4,015)

(6)

671

-

9,903

4,371

Use loss carry-forward
Total deferred tax
Income tax expense$

88,091$62,709A reconciliation of income before income tax and income tax expense recognized in
profit or loss was as follows:
2019

2018

Income before income tax$

471,902$

321,127

Income tax expense at the statutory rate
Tax-exempt income and non- exempt expense intaxable purposes
Tax-exempt income$

96,247$

67,161(2,514)

789

796

2,323

Movement of unrecognized temporary differences-(2,835)

Unrecognized loss carryforwards

41

184

Loss carryforwards

1

(50)

Non- exempt expense

180

Income tax adjustments on prior years(2,779)(3,512)

Additional income tax on unappropriated earnings

7236

Effect of tax rate changes-(1,126)(3,708)(461)

Other income tax adjustments
Income tax expense recognized in profit or loss$

88,09162,709$

According to the Income Tax Act revised in January 2018, income tax ratio for
profit-seeking enterprise has been adjusted from 17% to 20%. In addition, additional
income tax ratio on unappropriated earnings has been adjusted from 10% to 5%.
B. Income tax expense recognized in other comprehensive income:
2019

2018

Deferred income tax expense (benefit)
Re-measurement of defined benefit plans
Effect of tax rate changes

$

$

$

181

(100)
(100)

(50)
(2)

$

(52)

C. Changes in deferred income tax assets or liabilities due to temporary differences and loss
carryforwards:
2019
January

Recognize in

Recognize in otherForeign

December

1,2019profit or loss

comprehensive

exchange

31,2019

profit or loss

adjustments

Temporary differences
Unrealized defined benefit
pensions

$

614

$

15

$

-

$

-

$

629

Unrealized exchange loss
(gains)

972

4,839

-

-

5,811

343

(343)

-

-

-

1,902

(28)

-

-

1,874

16

(1)

-

-

15

819

(354)

-

-

465

benefit plans

66

-

100

-

166

Non-leaving pay

26

12

-

-

38

Deferred revenue

2,561(1,612)

-

-

949

2,855

75

-

-

2,930

Expected credit losses

-

1,860

-

-

1,860

Others

-

-

-

-

-

2,444

3,705

-

(72)

6,077

(72) $

20,814$(31,833)

Unrealized gain on
financial instruments
Unrealized depreciation
expenseUnrealized gain from sale
Unrealized warranty
expenseRe-measurement of defined

Allowance for doubtful
accounts

Loss carryforward
Deferred income tax assets
Deferred net profit
Unrealized exchange loss
(gains)
Unrealized gain on
financial instruments
Deferred income tax
liabilities$ 12,618

$

8,168

$

100

$

$ (15,614) $(17,349)

$

-

$

1,130

(18)

18

-

-

-

(376)

(740)

-

-

(1,116)$ (16,008) $(18,071)

182

$

-

$

1,130

$

(32,949)

2018
January

Recognize in

Recognize in other

1,2018

profit or loss comprehensive profit or

Foreign exchange

Decemberadjustments

31,2018

loss
Temporary differences
Unrealized defined
benefit pensions

$

$

508

$

106

-

$

-

$

614

Loss on valuation of
accounts receivable

926

(926)

-

-

-

2,446

(1,474)

-

-

972

-

343

-

-

343

1,642

260

-

-

1,902

-

16

-

-

16

855

(36)

-

-

819

14

-

52

-

66

Non-leaving pay

-

26

-

-

26

Deferred revenue

-

2,561

-

-

2,561

-

2,855

-

-

2,855

Others

1

(1)

-

-

-

Loss carryforward

-

2,492

-

(48)

2,444

Unrealized exchange loss
(gains)
Unrealized gain on
financial instruments
Unrealized depreciation
expenseUnrealized gain fromsale
Unrealized warranty
expenseRe-measurement ofdefined benefit plans

Allowance for doubtful
accounts

Total Deferred income tax
assets

$

6,392

$

6,222

$

52

$

(48)

$

12,618Deferred net profit$
Unrealized exchange loss
(gains)
Unrealized gain on
financial instruments(5,730)$(10,199)

$

-

$

315 $

(15,614)

Total Deferred income tax
liabilities

$

-

(18)

-

-

(18)

-

(376)

-

-

(376)

315 $

(16,008)(5,730)$(10,593)

$

183

-

$

D. Unrecognized deductible temporary difference amount of deferred income tax assets:
December
31,2019
Deductible temporary difference frominvestment using the equity method

December
31,2018
288

$

1,235

$

Unrecognized taxable temporary difference amount of deferred income tax liabilities:
December 31,2019
December 31,2018
Taxable temporary difference from investmentusing the equity method$

128,657$

75,385

E. Unused loss carryforwards as follow
In Taiwan area:
December 31,2019Year Incurred Audited/Declared amount Unused Creditable Amount Usable Until Year2019

Estimated amount

$

208

2029

December 31,2018
Year Incurred Audited/Declared amount Unused Creditable Amount Usable Until Year2018

Declared amount

$

793

2028

F. The Company’s income tax returns through 2017 have been assessed and approved by
the Tax Authority.
(27) Earnings per Share
2019

2018

Basic earnings per share

$

6.57

$

4.61

Diluted earnings per share

$

6.57

$

4.61

Number of Shares(In Thousands)

Earnings Per Share(NT$)

Earnings per share is computed as follows:
Amount(In Thousands)
2019
Basic earnings per share
Net income attributable to commonshareholders of the parent$

366,525

55,747--

Effect of dilutive potential common shares
Diluted earnings per share

184

$

6.57

Net income attributable to commonshareholders of the parent (including effectof dilutive potential common shares)$

366,525

53,747$

6.57$

257,168

55,747

$

4.61

-

-

257,168

53,747

$

4.61

2018
Basic earnings per share
Net income attributable to commonshareholders of the parent
Effect of dilutive potential common shares
Diluted earnings per share
Net income attributable to commonshareholders of the parent (including effect$of dilutive potential common shares)

7. RELATED PARTY TRANSACTIONS(1) In preparing the consolidated financial statements, the transaction amounts and balances
between the Company and its subsidiaries (the Company’s related parties) had been eliminatedand were not disclosed in this Note. The significant transactions between the Group and otherrelated parties were as follows:(2) Related party name and categories:
Related Party Name
KODANSHA TAIWAN MEDIA GROUP CO., LTD.

Related Party Categories
Associates(3) Significant transactions with related parties
A. Other related parties transactions
Financial Statement
Items
Lease revenue

Type of Related Parties
2019

2018

Entities withsignificant influence
over the subsidiary

$

144

$

144

Administrative expenses Entities withsignificant influence
over the subsidiary

$

-

$

829

The transaction prices and collection conditions between the Group and its related parties are
subject to the usual market level. But the transactions without similar classification, prices
and terms are determined independently in accordance with terms mutually agreed by bothparties.
(4) Key management compensation was as follows:

185

2019

2018

Short-term employee benefits
Post-employment benefits$

21,280529$

17,273
538

Total

$

21,809$17,811

December 31, 2019

December 31, 2018

8、PLEDGED ASSETS
Pledged Assets

PurposeFinancial assets at amortizedConstruction performancecost-current (Pledged time

guarantee, warranty anddeposits)$

271,320$

110,076

Financial assets at amortizedshort-term loans
Lease development

cost-noncurrent (Pledged time
deposits)

31,62023,975

guarantee

Financial assets at amortizedcost-noncurrent (RestrictedLong-term loans

assets-reserve account)

-

4,000

Land

139,868

139,868

Long-term loans

Buildings

509,516

532,443

Long-term loans

Total book value$

9. SIGNIFICANT CONTINGENTCONTRACT COMMITMENTS

952,324$

LIABILITIES

810,362

AND

UNRECOGNIZED(1) As of December 31, 2019 and 2018, the Group had outstanding notes payable for the purpose of
construction performance guarantee and warranty amounting to NT$15,639 thousand andNT$15,468 thousand, respectively.
(2) As of December 31, 2019 and 2018, the Group had outstanding notes payable for the purpose of
research and development guarantee amounting to NT$33,600 thousand and NT$36,000
thousand, respectively.
(3) As of December 31, 2019 and 2018, the Group had outstanding refundable deposits for the
purpose of construction performance guarantee and warranty amounting to NT$102,598
thousand and NT$290,313 thousand, respectively.
(4) The Group has entered into a construction contract for indoor playground equipment of thetheme park amounting to NT$375,000 thousand in July 2014. The buyer shall made an initial
payment of NT$150,000 thousand for construction work incurred by the Company ; with theremaining NT$225,000 thousand to be paid off from proceeds from the profit sharing of186

ticket sales. Upon completion of full payments of $375,000, the buyer is obligated to continue
to share the profit generated from ticket sales.
(5) The Group has entered into a copyright contract including franchise fees amounting to 6,250
thousand yen and guaranteed royalties amounting to 48,000 thousand yen, with the seller in
October 2014. The Company shall continue to remitting royalties payments based on thecontract provision even through the guaranteed royalties are insufficient during the copyrightperiod.

10. SIGNIFICANT DISASTER LOSS
None

11. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
None

12. OTHERS(1)

Financial Instruments
A. Categories of financial instruments
December 31, 2019 December 31, 2018
Financial Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
-current
Financial assets at amortized cost-current
Accounts and notes receivable
Other receivables
Financial assets at fair value through profit or loss
-noncurrent
Financial assets at amortized cost-noncurrent
Refundable deposits
Total
Financial Liabilities
Short-term loans
Accounts and notes payable
Other payables
Long-term bank loans (including current portion)
Total

$

$

774,817$660,349

253,176
277,637
310,299
34,680459,056
304,864
326,6259,142

297,964
65,16012,7252,026,458

134,530
59,175
11,7191,965,460$$

191,340
98,712145,056
1,068,167$

121,018
110,080
868,270$

1,503,275$

1,099,368

B. Financial risk management objectives
The Group manages its exposure to market risk (including exchange rate risk, interest raterisk and price risk), credit risk and liquidity risk with the objective to reduce the187potentially adverse effects the market uncertainties may have on its financial
performance.
The plans for material financial activities are reviewed by the Board of Directors inaccordance with procedures required by relevant regulations and internal controls. During
the implementation of such plans, the Group must comply with certain financial
procedures that provide guides for overall financial risk management and segregation ofduties.

C. Market risk
The Group is exposed to the market risks arising from changes in foreign exchange rates
and interest rates.
(a) Foreign currency risk
Majority of the Group’s operating activities are denominated in foreign currencies.
Consequently, the Group is exposed to foreign currency risk.
The Group’s sensitivity analysis to foreign currency risk is mainly focused on theforeign currency monetary items at the end of the reporting period. Assuming an
unfavorable (or favorable) 10% movement in the levels of the United States dollar
against the New Taiwan dollar, the net income for the years ended December 31,
2019 and 2018 would have decreased (or increased) by NT$283,227 thousand andNT$216,614 thousand, respectively. Assuming an unfavorable (or favorable) 10%
movement in the levels of the Canadian dollar against the New Taiwan dollar, the net
income for the years ended December 31, 2019 and 2018 would have decreased (orincreased) by NT$2,749 thousand and NT$3,025 thousand, respectively. Assuming an
unfavorable (or favorable) 10% movement in the levels of the Euro against the New
Taiwan dollar, the net income for the years ended December 31, 2019 and 2018
would have decreased (or increased) by NT$26,619 thousand and NT$7,329
thousand, respectively. Assuming an unfavorable (or favorable) 10% movement in thelevels of the Chinese Yuan against the New Taiwan dollar, the net income for theyears ended December 31, 2019 and 2018 would have decreased (or increased) by
NT$109,604 thousand and NT$73,860thousand, respectively.
(b) Interest rate risk
Interest rate risk refers to the changes in market interest rates. Some of the Group’s
financial assets at amortized cost has fixed interest rates and changes in interest rates
would not affect the future cash flows. Interest rate risk arises from bank loans,financial assets at amortized cost at floating interest rates and changes in interest rates
would affect the future cash flows but not the value. Please refer to Note 6(15) for therange of interest rates of the bank loans.
The Group’s sensitivity analysis to interest rate risk is mainly focused on changes in188interest rates of floating-income investments and floating-rate loans at the end of thereporting period. Assuming an increase (or decrease) in interest rates of 10 basis point(0.1%), the net income for the years ended December 31, 2019 and 2018 would havedecreased (or increased) by NT$991 thousand and NT$783 thousand, respectively.
(c) Other price risk
The Group is exposed to price risk arising from financial assets and liabilities at fairvalue through profit or loss.
The Group’s sensitivity analysis to price risk is mainly focused on changes in fairvalue at the end of the reporting period. Assuming an increase (or decrease) of 7% inprices of financial instruments, the net income for the years ended December 31,
2019 and 2018 would have increased (or decreased) by NT$38,580 thousand andNT$45,551 thousand, respectively.
D. Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations
resulting in financial loss to the Group. The Group is exposed to credit risk fromoperating activities, primarily accounts receivables, and from financing activities,
primarily bank deposits, fixed-income investments and other financial instruments. Credit
risk is managed separately for business related and financial related exposures.
(a) Business related credit risk
The Group has set the procedures for business related credit risk to maintain thequality of accounts receivable. The Group assesses the credit quality of the customers
by taking into account their financial position, the credit rating agencies’ rating, theGroup’s internal credit rating, historical trading records, current economic situationand other factors. The Group also uses some credit enhancement instruments such as
prepayment for purchases and credit insurance to reduce certain customers’ creditrisk.
As of December 31, 2019 and 2018, the Group’s top three largest customers
accounted for 53% and 51% of accounts receivable, respectively. The Group believes
the concentration of credit risk is insignificant for the remaining accounts receivable.
(b) Financial credit risk
The Group monitors and reviews credit risk of bank deposits, fixed-income
investments and other financial instruments. The counterparties are banks with good
credit quality, financial institutions with investment grade or above, corporations andgovernment agencies, so there is no significant compliance concerns and credit risk.

189

E. Liquidity risk management
The objective of liquidity risk management is to ensure the Group has sufficient cash andcash equivalents, highly liquid securities and adequate bank lines to maintain financial
flexibility.
The table below summarizes the maturity profile of the Group’s financial liabilities basedon contractual undiscounted payments, including principal and interest.
Less than
1 yearDecember 31, 2019
Short-term loans
Accounts and notes
payableOther payables
Lease liabilities
Long-term bank loans
Total

$

$

191,340

2-3 years

$

Total

$

-

$

$

Over 5 years
- $

-

Total
$

191,340

98,712---

98,712145,056---

145,056

42,942

76,62972,369183,385

375,325

268,452

355,347

295,474

211,4021,130,675

367,843 $394,787746,502$

Less than
1 yearDecember 31, 2018
Accounts and notes
payableOther payables
Long-term bank loans

4-5 years

121,018

431,976$

2-3 years$

4-5 years-$$

Over 5 years- $-1,941,108

Total

$

121,018

110,080---

110,080

123,655

255,141

242,810316,243

937,849

242,810 $316,243354,753$

255,141$$

1,168,947

F. Fair value of financial instruments
Fair value is the price that would be received to sell an asset or paid to transfer a liability inan orderly transaction between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer
the liability takes place either in the principal market for the asset or liability, or in theabsence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market participants

190

act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s
ability to generate economic benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and forwhich sufficient data are available to measure fair value, maximizing the use of relevant
observable inputs and minimizing the use of unobservable inputs.
(a) Valuation techniques and assumptions used in fair value measurement are as follows:
I. The fair values of cash and cash equivalents, accounts receivable, financial assets at
amortized cost, short-term loans and accounts payable are approximately equal to thecarry amounts due to their short maturity.
II. The fair values of financial assets and financial liabilities with standard terms andtrading in active liquid markets are determined with reference to quoted market
prices (includes publicly traded stocks and beneficiary certificates).
III. The fair values of other financial assets and financial liabilities are determined inaccordance with generally accepted pricing models based on discounted cash flow
analysis.

(b)Fair value measurements recognized in the consolidated balance sheets
The following table provides an analysis of financial instruments that are measured
subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the
degree to which the fair value is observable:
I. Level 1 fair value measurements are those derived from quoted prices (unadjusted) in
active markets for identical assets or liabilities;
II. Level 2 fair value measurements are those derived from inputs other than quoted
prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices); andIII. Level 3 fair value measurements are those derived from valuation techniques that
include inputs for the asset or liability that are not based on observable market data
(unobservable inputs).

191

Financial assets and liabilities measured at fair value on a recurring basis
The following table presents the Group’s financial assets and liabilities measured at fairvalue on a recurring basis:
December 31, 2019
Level 1
Financial Assets at
Fair Value ThroughProfit or Loss
Beneficiary
certificates
Non-publicly tradedstocks$Level 2

248,751$

248,751$-$

Level 3

$

Total

-

$

248,751

302,389$-

302,389

302,389$

551,140

December 31, 2018
Level 1
Financial Assets at
Fair Value ThroughProfit or Loss
Beneficiary
certificates
Non-publicly tradedstocksLevel 2

Level 3

Total

719,955$454,631$$454,631

$

-

$

-

$

138,955$-

138,955454,631
138,955$

593,586

There were no transfers between Level 1 and Level 2 of the fair value hierarchy orassets and liabilities held on December 31, 2019 and 2018 that are measured at fairvalue on a recurring basis.
Reconciliations for fair value measurement in Level 3 fair value hierarchy were as follows:.
2019
2018
Common stock
Balance at January 1$

Common stock

138,955$-

Recognized in profit (loss)

24,7448,207

Acquisition

138,690

110,900-

15,608Transfer by IFRS9192

Transfer to Level 3-

Balance at December 31(2)$

302,389

4,240$

138,955

Capital Risk Management
The Group’s objective of capital management is to maintain robust credit rating and good
capital ratio to support business operations and maximize shareholders’ interests. In order tomaintain and adjust the capital structure, the Group may adjust the amount of dividends paid
to shareholders, return capital to shareholders or issue new shares.

(3) Information about Foreign Currency Financial Assets and Liabilities with a Significant
Impact on the Group
December 31, 2019

December 31, 2018

Foreign
Currencies

Exchange
Rate

Foreign
Currencies

94,27430.08$ 2,835,762

1,191

23.08

8,831

TWD

Exchange
Rate

TWD

Financial Assets
Monetary items
USD
CAD
EUR
CNY
JPY

$

$

70,51830.72$ 2,166,313

27,488

1,283

23.91

30,67733.54

296,191

2,082

35.20

73,286

253,7144.32

1,096,045

165,269

4.47

738,752

10,116

0.28

2,832

2,686

0.28

752

116

30.08

6

30.72

2

4.32

36

4.47

Financial Liabilities
Monetary items
USD
CNY

$

$

3,489
9

$

$

184
161

13. ADDITIONAL DISCLOSURES(1)

Related Information on Significant Transactions
No.

Items

Table

1
2
3

Financings provided
Endorsement/guarantee provided
Marketable securities held at the end of the period (excluding
investments in subsidiaries, associates and jointly controlled
entities)

1
2
3

193

4
5
6

(2)

Market securities acquired and disposed of at costs or prices of atleast NT$300 million or 20% of the paid-in capital
Acquisition of individual real estate reaching NT$300 million or
20% of the paid-in capital or more
Disposal of individual real estate reaching NT$300 million or 20%of the paid-in capital or more

4
None
None

7

Total purchases from or sales to related parties reaching NT$100
million or 20% of the paid-in capital or more

58Receivables from related parties reaching NT$100 million or 20%of the paid-in capital or more

None

9

Derivative financial instruments undertaken during the reporting
periodNone

10

Others: The business relationship between the parent and thesubsidiaries and significant transactions between them

6

Information on Investees
Please see Table 7 attached (excluding the investee in Mainland China).

(3)

Information on Investments in Mainland China
A. Please see Table 8 attached.
B. Directly or indirectly significant transactions through third regions with the investees in
Mainland China: Please refer to Notes 5 and 6 for the Group’s directly significant
transactions with the investees in Mainland China and indirectly significant transactions
through third regions, including purchases, sales, receivables and payables between
Brogent Hong Kong Limited and the investees in Mainland China.

194

Table 1: Financings provided as of December 31, 2019
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)No.

0

FinancingCompany

Brogent
Technologies
Inc.

Counterparty

Brogent
GlobalInc.
Brogent
Hong
Kong
LimitedBrogent
Mechanical Inc.

Financial
Statement
Account

Other
receivablesfrom relatedparties
Other
receivablesfrom relatedparties
Other
receivablesfrom relatedparties

RelatedParty

Maximum
Balance for the
Period (Foreign
Currencies inThousands)(Note 3)Ending Balance(Foreign
Currencies inThousands)(Note 3)

Amount Actually Interest Rate
Drawn (Foreign
Currencies inThousands)

Nature forFinancing(Note 4)Yes

$283,617

Yes

YesTransaction
Amounts

Reason for
Financing

Allowance
for Bad
Debt

Collateral

Financing
Limitsfor Each
Borrowing
Company(Note 2)FinancingCompany’s
Total
FinancingAmount Limits(Note 1)$150,000

$-

-

2

$-

Operatingcapital$--$-$296,795$1,187,182

283,617150,000

46,6502.5745%2-

Operatingcapital---296,795

1,187,182

283,617150,000

-

-

2

-

Operatingcapital---296,795

1,187,182

Item

Value

Note 1: The total amount available for lending purpose shall not exceed forty percent (40%) of Brogent Technologies Inc.’s net equity.
Note 2：Subsidy to individual subsidiaries is limited to 10% of its net equity.
Note 3：The amount was determined by the Board of Directors.
Note 4：The nature of the loan, such as: 1. Business 2. The need for short-term financing

Table 2: Endorsement/guarantee provided as of December 31, 2019
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
No.

Endorsement/
Guarantee
Provider0Brogent
Technologies
Inc.

Guaranteed Party
Name
Nature ofRelationshipBrogent Rides(Shanghai) Limited

Investee of
Subsidiary

Limits onEndorsement/
Guarantee
Amount Provided
to EachGuaranteed Party(Note 1 and 2)$890,387

Maximum
Balance for
the Period(Note 3)EndingBalance(Note 3)

AmountActually
Drawn(Foreign
Currents inThousands)

Amount ofEndorsement/
Guarantee
Collateralized
by Properties$210,180

$-

$-

$-

Ratio ofAccumulated
Endorsement/
Guarantee to
Net Equity per
Latest Financial
Statements
7.08%

-

4.72%

Brogent Creative
Investee of
890,387
140,120(Shanghai) Limited
Subsidiary
Note 1：The amount provided to each guaranteed party shall not exceed thirty percent (30%) of Brogent Technologies Inc.’s net equity.
Note 2：The total amount of guarantee provided shall not exceed fifty percent (50%) of Brogent Technologies Inc.’s net equity.
Note 3：The amount was determined by the Board of Directors before and removed at August 9, 2019.

195

Maximum
Endorsement/
Guarantee
AmountAllowable(Note 2)
$1,483,979

1,483,979

Guarantee
Provided byParentCompany

Guarantee
Provided bya Subsidiary

Guarantee
Provided to
Subsidiaries in
Mainland
China

Yes

No

Yes

Yes

No

Yes

Table 3: Marketable Securities Held as of December 31, 2019 (Excluding Investments in Subsidiaries, Associates and Jointly
Controlled Entities)(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
December 31, 2019

Held Company
Name
Brogent
Technologies
Inc.

Brogent Global
Inc.

Type and Name of Marketable
Securities (Note 1)
Fund
Cathay Senior Secured High Yield
Bond Fund A USD
JPMorgan Investment Funds - Global
Income Fund - USD
JPMorgan Investment Funds - Global
Macro Opportunities Fund (acc.) USD (hedged)
Fuh Hwa Olympic II Fund of Funds

Shares/Units(In Thousands)

Carrying Value(Foreign
Currencies inThousands)(Note 3)

Percentage ofOwnership (%)

Financial assets at fair value
through profit or loss-current
Financial assets at fair value
through profit or loss-current
Financial assets at fair value
through profit or loss-current

3,720

USD 1,360-

USD 1,360

11

USD 2,189-

USD 2,189

7

USD 1,025-

USD 1,025

Financial assets at fair value
through profit or loss-current
Financial assets at fair value
through profit or loss-current
Financial assets at fair value
through profit or loss-current
Financial assets at fair value
through profit or loss-current

68

USD 835-

USD 835

556

RMB 6,447-

RMB 6,447

424

RMB 5,052

RMB 5,052

550

RMB 5,577

RMB 5,577

Financial assets at fair value
through profit or loss-current
Financial assets at fair value
through profit orloss-noncurrent

264

4,425

0.93%

4,425

100

19,732

10%

19,789None

Financial assets at amortizedcost-noncurrent

200

33,540-33,540None

Financial assets at amortizedcost-noncurrent2

USD 5,443

19.44%USD 5,443

Relationship with
the Securities Issuer(Note 2)
None
None
None

None

Capital RMB Money Market
Fund-CNY
Cathay RMB Money Market
Fund-RMB
Prudential Financial US Investment
Grade Corporate Bond Fund-CNY(E)
Common Stock
Jump Media International Co., LTD.

None

This is Holland B.V.

None

None
None

None

Financial Statement AccountFair Value(Foreign
Currencies inThousands)

Preferred Stock
This is Holland B.V.
Holey
Holdings
LimitedCommon Stock
Discover NY Project
Company, LLC

196

Remark( Note 4)

December 31, 2019

Held Company
Name

Brogent Rides(Shanghai)
LimitedType and Name of Marketable
Securities (Note 1)

Fund
ICBC-Net Asset Value Fund

Relationship with
the Securities Issuer(Note 2)Financial Statement AccountShares/Units(In Thousands)

Carrying Value(Foreign
Currencies inThousands)(Note 3)

Fair Value(Foreign
Currencies inThousands)

Percentage ofOwnership (%)

None

Financial assets at fair value
through profit or loss-current

1,000

RMB 1,444

NoneFinancial assets at fair value
through profit orloss-noncurrent

20,000

RMB 26,500

None

Financial assets at fair value
through profit or loss-current
Financial assets at fair value
through profit or loss-current
Financial assets at fair value
through profit or loss-current

500

RMB 528-

RMB 528455

RMB 524-

RMB 524500

RMB 500-

RMB 500-

Remark( Note 4)

RMB 1,444

Common Stock
Fly Over The World Cultural
Development Co. Ltd
Brogent Creative(Shanghai)
LimitedFund
ICBC-Net Asset Value Fund
NBCB-Net Asset Value Fund
(Redeemable)
NBCB-Financial Fund (capital
protected)

None
None

5.00% RMB 26,500

Note 1：Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities within the scope of IFRS 9, “Financial instruments.”
Note 2：Leave the column blank if the issuer of marketable securities is non-related party.
Note 3：For items measured at fair value, the carrying value represents fair value adjustments less accumulated impairment. For items that are not measured at fair value, the carrying value represents
original cost or amortized cost less accumulated impairment.
Note 4：The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the
securities presented herein have such conditions.

197

Table 4: Market Securities Acquired and Disposed of at Costs or Prices of at least NT$300 million or 20% of the Paid-in
Capital(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Beginning Balance

Purchases/SalesCompany

Type and Nameof Marketable
Securities

Financial Statement
Account

Holey
Holding
LimitedDiscover NY
Project
Company, LLC

Financial assets at fair
Discover NY Projectvalue through profit
Company, LLC
or loss-noncurrent

Counter-party

Nature ofRelationship

Acquisition

Shares/Units
Amount(In Thousands)--

Disposal

Shares/Units(In Thousands)

AmountShares/Units
Amount(In Thousands)

2$138,690

-

$-

$-

Ending Balance

Carrying Gain/Loss
Value on Disposal$-$-

Shares/Units(In Thousands)
2

Amount(Note)$138,690

Note: Original cost excluding evaluation amount

Table 5: Total Purchases from or Sales to Related Parties Reaching NT$100 million or 20% of the Paid-in Capital or More(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Reasons and Situations ofDifferent of Trading Conditionsand General Transactions

Transaction Details
Purchases/SalesCompany
Brogent
Technologies
Inc.

Name of transactions

Nature ofRelationshipBrogent Mechanical
Inc.

Investee of
Subsidiary

Purchases/Sales

Amounts

Ratio of Total
Purchases/Sales

Payment
Terms

Purchases$229,809

46%

OA 60 Days

198

Unit Price$-

Payment
Terms$-

Notes/Accounts Receivables or (Payables)
Ratio of Total
Notes/Accounts
Ending Balance
Receivables or Payables($22,230)

28%

Note

Table 6: Intercompany Relationships and Significant Intercompany Transactions(Amounts in Thousands of New Taiwan Dollars/Foreign Currencies in Thousands)

Numbers0

1

2

Name oftransactions
Brogent
Technologies
Inc.

Brogent Hong
Kong
LimitedBrogent Global
Inc.

Counterparty
Brogent Mechanical Inc.

Nature ofRelationship(Note1)
1

Brogent Global Inc.

1

Brogent Hong Kong Limited

1

Brogent Rides (Shanghai) Limited

1

Brogent Creative (Shanghai) Limited

2

Hai Wei Culture Creative andDevelopment (Shanghai) Limited
Brogent Hong Kong Limited

1

Brogent Technologies Inc.

3

2

Financial Statements Items
Payables to related parties
Prepayments
Purchases
Advance construction receipt
Other unearned revenue
Construction contract revenue
Receivables to related parties
Advance construction receipt
Construction contract revenue
Receivables to related parties
Advance construction receipt
Construction contract revenue
Advance construction receipt
Construction contract revenue
Construction contract revenue
Advance construction receipt
Advance construction receipt
Construction contract revenue
Lease liabilities

Transaction situations
Transaction Terms
Amounts(Note2)$22,230
47,833229,80960,00023,417
96,39054,139133,711
11,84765,74887,98382,495
185,989
55,60070,11051,38043,52842,03563,953-

Percentage ofConsolidated Net
Revenue or Total Assets
1%
11%
1%
5%
1%
3%
1%
1%
2%
4%
4%
3%
3%
1%
1%
2%
1%

Note1: “1” represents the transactions from parent company to subsidiary.
“2” represents the transactions from subsidiary to subsidiary.
“3” represents the transactions from subsidiary to parent company.
Note2: The sales prices and payment terms of intercompany sales are not significantly different from those to third parties. For other intercompany transactions, prices andterms are determined in accordance with mutual agreements.

199

Table 7: Information on Investees (Excluding the Investee in Mainland China)(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investor
Company
Brogent
Technologies
Inc.

Brogent Hong
Kong
Limited

Dili Jie
Holdings
LimitedJetwayHoldings
LimitedBrogent
Global Inc.

InvesteeCompany
Brogent
Mechanical Inc.

Location
Taoyuan City

Brogent Creative
Inc.

Kaohsiung
City

Brogent Hong
Kong Limited

Hong Kong

Brogent Global
Inc.

KaohsiungCity

Dili Jie Holdings
LimitedBritish Virgin
Islands

Brogent JapanEntertainment
Joint-Stock
CorporationTokyo

hexaRide thefirst LLP

Tokyo

Jetway Holdings
LimitedCaymanIslands

Galey Holdings
LimitedBritish Virgin
Islands

Holey Holdings
LimitedBritish Virgin
Islands

Reinvestment andtrading business

Jetmay Holdings
LimitedOu Wei Limited

British Virgin
Islands
Hong Kong

Reinvestment andtrading businessBusiness Scope
Manufacture and sales ofthe simulator rides andits key components
Development and salesof the peripheralproducts of simulator
rides
Reinvestment andtrading business

Original Investment Amount
December 31,
2019(Foreign
Currencies in December 31,
Thousands)
2018$55,000$55,000

Balance as of December 31, 2019

Shares (InThousands)
7,696

Percentage
ofOwnership
61.11%

Carrying
Value(Foreign
Currencies inThousands)

Net Income(Loss) of theInvestee

Share of
Profits/Lossesof Investee(Note 1)$110,798$49,485$4,043

Note
Subsidiary

14,539

9,000

1,500

100.00%12,745

(208)

(203)

Subsidiary

200,338(USD 6,700)

200,338(USD 6,700)-

100.00%205,934(USD 6,900)(18,636)(USD (603))(18,601)(USD (603))

Subsidiary

300,000

300,000

30,870100.00%371,017

27,65533,392

Subsidiary

267,955(USD 8,900)

267,955(USD 8,900)-

100.00%334,542(USD 11,124)

31,950(USD 1,033)

31,950(USD 1,033)

Subsidiary

Management businessdevelopment and salesof the peripheralproducts of simulator
rides in Japan

10,161(JPY 35,000)

10,161(JPY 35,000)-

40.00%

3,029(JPY 11,124)(6,964)(JPY (24,549))

Note 2

Joint
VentureDevelopment andmanagement businessof self-operated outlets

35,81835,818-86.67%

17,319(14,660)

Note 2

Subsidiary(JPY 62,489)(JPY (51,674))

334,587

31,975Note 2

Subsidiary(USD 11,123)(USD 1,034)

168,024

3,026

Note 2

Subsidiary(USD 5,586)(USD 98)

165,400(USD 5,499)
107,610(USD 3,577)
14,419(USD 479)

29,340(USD 949)
50,665(USD 1,638)(3,731)(USD (120))

Note 2

Subsidiary

Note 2

Subsidiary

Note 2

Subsidiary

Development andmanagement businessof self-operated outlets
Reinvestment andtrading business

Reinvestment andtrading business
Reinvestment andtrading business

Reinvestment andtrading business(JPY 130,000) (JPY 130,000)-

100.00%270,020

270,020(USD 8,900)(USD 8,900)

131,258

131,258(USD 4,300)(USD 4,300)

139,753(USD 4,550)
61,489(USD 1,987)
18,635(USD 600)

139,753(USD 4,550)--

100.00%-100.00%--100.00%200-

100.00%Investor
Company
JetmayHoldings
LimitedInvesteeCompany
Location
StarLite Design & Richmond
Planning Limited

Business Scope
Development andmanagement businessof self-operated outlets

Original Investment Amount
December 31,
2019(Foreign
Currencies in December 31,
Thousands)
2018

15,054(CAD 650)-

Balance as of December 31, 2019

Shares (InThousands)-

Percentage
ofOwnership
100.00%Carrying
Value(Foreign
Currencies inThousands)

Net Income(Loss) of theInvestee

3,409(CAD 148)(11,706)(CAD (502))

Note 1: The share of profits (losses) of investee recognized in current period concludes the components of unrealized profit or loss from intercompany transactions.
Note 2: The share of profits/losses of the investee company is not reflected herein as such amount is already included in the share of profits/losses of the investor company.

201

Share of
Profits/Lossesof Investee(Note 1)
Note 2

Note
SubsidiaryTable 8: Information on Investments in Mainland China(Amounts in Thousands of New Taiwan Dollars/Foreign Currencies in Thousands)

Investee Company
Brogent Rides(Shanghai) Limited

Main Businesses
Import and export
business

Brogent Creative(Shanghai) Limited

Development andmanagementbusiness of
self-operated
outlets
Hai Wei Culture
Development andCreative andmanagement
Development
business of(Shanghai) Limited
self-operated
outlets
Beijing Huaway Global Development andCulturalmanagement
Development Co.
business of
self-operated
outlets

Accumulated
Outflow of
Total Amount Method of Investment fromof Paid-in
Investment Taiwan as of
Capital(Note 1) January 1, 2019

Accumulated
Outflow ofInvestment
Net Income
from Taiwan as (Loss) of theof December
Investee
31, 2019
Company

Investment Flows

Outflow

Inflow

Accumulated
InwardCarrying
Remittance ofPercentage
Amount as of Earnings as ofof
Share ofDecember 31, December 31,
Ownership Profits/Losses
2019
2019

$222,712(USD 7,300)

2$222,712(USD 7,300)$-$-$222,712(USD 7,300)$5,390(USD 174)

100%$5,390$286,938(USD 9,539)(Note2)$-59,397(RMB 13,000)

3

-

-

-

-

(20,245)(RMB (4,522))

100%(20,245)

73,421(RMB 16,992)(Note2)-

46,226(USD 1,500)

2-

46,226(USD1,500)-

46,226(USD1,500)

63,089(USD 2,040)

100%

68,089104,107(RMB 3,461)(Note2)

-

-

3

-

-

-

-

-

35%

-

4,537
(RMB 1,050)-

Accumulated Investment in Mainland China asof December 31, 2019

Investment Amounts Authorized by
Investment Commission, MOEA

Upper Limit on Investment$268,938(USD 8,800)$268,938(USD 8,800)$1,780,774

Note 1：Investment methods are classified into the following three categories; fill in the number of category each case belongs to:(1) Directly invest in a company in Mainland China.
(2) Through investing in an existing company in the third area (Brogent Hong Kong Limited, Garley Holdings Limited and Jetmay Holdings Limited), which then invested in the investee in
Mainland China.
(3) Others
Note 2：Amount was recognized based on the audited financial statements.
Note 3：Capital verification report haven’t been finished, accounting at prepayments for Long-Term Investments in Stocks, please refer to 6(11).

202

14. OPERATING SEGMENTS INFORMATION(1) Operating Segments
The Group’s revenues are principally from the research, development, design,
production and sales of the media-based attraction (MBA). The Group upholds theconcept of sustainable development, and achieve the objective of making profits for theshareholders in the coming years. The Group executes the operating strategy of double
C by taking a two-pronged approach (“channel” and “content”) to transform into thecooperators of the entertainment industry from a supplier of amusement park facilities.
In the meantime, the Group implements the diversification strategy, the profit sharing
model, and the integration of the one-time outright sale of equipment to expand thesites of global sales and optimize the product content and value.
The Group’s operating decision maker reviews the Groups’ overall operating results tomake decisions about resource allocation and assess the Groups’ overall performance.
Therefore, the Group has a single operating segment.
(2) Geographic Information
RevenueTaiwanAsia
EuropeUnited States
Australia
Total

2019
$
63,4501,366,913
292,253
356,333
1,492$ 2,080,441

2018$
41,304
1,092,079
177,394
131,226
195,435$ 1,637,438

Noncurrent Assets
December 31, 2019 December 31, 2018$
1,451,160 $
1,086,321
97,191
32,265
67,143
114,470
1,863$
1,617,357 $
1,233,056

The Group categorized the revenues mainly by region. Noncurrent assets include
property, plant and equipment, intangible assets and other assets, except for financial
instruments, deferred tax assets and pension assets.
(3) Production and Service Information
Production/Service
Construction contract revenue$
Profit sharing of ticket sales
Service and maintenance revenue
Sales revenue
Royalty revenue
Total
$

2019
1,975,221
61,07028,39814,5581,194
2,080,441

203

$

$

2018
1,588,776
21,676
16,58010,406
1,637,438

(4) Major Customer’s Information
2019

2018

Percentage of Net

CustomerAmountCustomer R$ 237,608

11.42

Customer A

247,752

Customer I

AmountRevenue

Revenue

46,629

2.97

11.91

286,278

17.48

511,067

24.57

381,562

23.30

Customer B

153,2227.36

284,385

17.37

Customer F

16,0840.77

122,078

7.46

Customer J

16,3330.97

80,752

4.93

Customer K

39,2171.89

30,227

1.85

204

$

Percentage of Net