Stock Code
5263

Brogent Technologies Inc.

2018
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, 2019
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: Yu-Chieh Lo, CPA
HuiPing Liu, 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................................................................................. - 15 1.

ORGANIZATIONAL SYSTEM ..................................................................................................... - 15 -2.

PROFILE OF DIRECTORS, SUPERVISORS, PRESIDENT, VICE PRESIDENTS, ASSISTANT
VICE PRESIDENTS, AND DEPARTMENT AND BRANCH DIRECTORS .................................... 17

4. IMPLEMENTATION OF CORPORATE GOVERNANCE ................................................................... 26
5. INFORMATION ON FEES TO CPA ...................................................................................................... 50
6.

CHANGES TO CPA INFORMATION ................................................................................................ 51

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 ........................................................................... 51

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............................................................ 52

9.

INFORMATION ON RELATIONSHIP BETWEEN ANY OF THE TOP TEN SHAREHOLDERS(RELATED PARTY, SPOUSE, OR KINSHIP WITHIN THE SECOND DEGREE).......................... 53

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: ................................................................................................................................... 54
IV. PLACEMENT SITUATION.............................................................................................................. 55
1.

COMPANY CAPITAL AND SHARE CAPITAL ................................................................................ 55

2.

CORPORATE BOND (INCLUDING OVERSEAS CORPORATE BOND) ...................................... 63

3.

ISSUANCE OF PREFERRED STOCKS............................................................................................. 63

4.

ISSUANCE OF GLOBAL DEPOSITARY RECEIPTS (GDR) ........................................................... 63

5.

EXERCISE OF EMPLOYEE STOCK OPTION PLAN (ESOP) ........................................................ 63

6.

RESTRICTED STOCK AWARDS....................................................................................................... 64

7.

MERGER AND ACQUISITION.......................................................................................................... 64

8.

ISSUANCE OF NEW SHARES FOR ACQUISITION OF SHARES OF OTHER COMPANIES .... 64

9.

IMPLEMENTATION OF CAPITAL ALLOCATION PLAN .............................................................. 64

V. BUSINESS OVERVIEW ................................................................................................................... 65
I.

BUSINESS ACTIVITIES..................................................................................................................... 65

II. MARKET, PRODUCTION AND SALES ........................................................................................... 78
III. EMPLOYEE INFORMATION IN THE PAST 2 YEARS TO THE DATE OF THE ANNUALREPORT ............................................................................................................................................... 92
IV. ENVIRONMENTAL PROTECTION EXPENDITURE INFORMATION ......................................... 92
V. LABOR RELATIONS .......................................................................................................................... 95
VI. IMPORTANT CONTRACTS ............................................................................................................... 98
VI. FINANCIAL OVERVIEW ................................................................................................................ 99
1. CONDENSED BALANCE SHEETS AND STATEMENT OF INCOME (2011 - 2015) ...................... 99
2.

FINANCIAL ANALYSIS ................................................................................................................... 104

3.

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

4. FINANCIAL REPORT AND CPA REVIEW REPORT........................................................................ 108
5. INDIVIDUAL FINANCIAL REPORT REVIEWED BY CPA (2011 - 2015) ...................................... 108
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. .................... 108
VII.PRECAUTIONS OF REVIEW AND ANALYSIS OF FINANCIAL STATUS AND BUSINESSPERFORMANCE ............................................................................................................................. 109
1.

FINANCIAL STATUS ....................................................................................................................... 109

2.

FINANCIAL PERFORMANCE ........................................................................................................ 110

3. CASH FLOWS ...................................................................................................................................... 111
4. EFFECT OF MAJOR CAPITAL SPENDING ON FINANCIAL POSITION AND BUSINESSOPERATION ...................................................................................................................................... 112
5. INVESTMENT POLICY IN THE PAST YEAR, PROFIT/LOSS ANALYSIS, IMPROVEMENT
PLAN, AND INVESTMENT PLAN FOR THE COMING YEAR ................................................... 112
6.ANALYSIS OF RISKS IN RECENT YEARS UP TO THE PUBLISHING DATE OF THE ANNUALREPORT ............................................................................................................................................. 113
I.

OTHER IMPORTANT EVENTS ....................................................................................................... 119

VIII.

IMPORTANT NOTICES ........................................................................................................ 120

1.

PROFILE ON AFFILIATES AND SUBSIDIARIES ......................................................................... 120

2.

PRIVATE PLACEMENT OF CORPORATE BONDS IN THE PAST YEARS TO THE DATE OF
THE ANNUAL REPORT ................................................................................................................... 125

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 2019
annual meeting of shareholders.
In 2018, Brogent Group’s consolidated revenue amounted to NT$1.637 billion, grossprofit NT$721 million, operating income NT$289 million, net income NT$258 million,
and earnings per share NT$4.84. The sales of equipment and the amount of the newcontracts signed last year reached another new height. In addition to the growth of thesales contracts, the number of the contacts for film production and equipment maintenancealso made considerable progress.
Brogent Group has become an emerging corporation in the motion simulationindustry since 2010. Our flagship product, i-Ride Flying Theater, has gained the biggest
market share in the world. In addition to i-Ride Flying Theater, Brogent Group has striven
to develop small and medium rides to expand the market share of these sorts. In 2018, thenewly-launched m-Ride Flying Theater in middle-and-low price segments improved theefficiency of passenger loading and satisfied the demands for performance at various
venues. This product successfully earned the contracts from well-known international
theme parks, such as LEGOLAND. The first facility already came out this year at the
LEGOLAND in Florida. This year, the number of the orders of m-Ride has increased
stably in the projects related to theme parks, city attractions and technology-oriented
pavilions. Brogent Group looks forward to seeing the growth of sales in m-Ride Flying
Theater. The sales of hardware equipment have become a necessary and stable income that
supports the company’s multi-dimensional development in the future.
In the company’s strategic layout, the video content authorization that comes with
Brogent Group’s exclusive specification will become an important source of thecompany’s gross profit margin and long-term revenue. Brogent Group has accumulated alarge quantity of original films, including the original and much-loved VR films on Attack
on Titan and Ghost in the Shell, licensed by Kodansha Ltd. With the increase of thecompany’s hardware equipment around the world, the demands for video content will also
proliferate. The capital invested in producing the films will lead to high gross profit
margin and high-return revenue in the end, and establish brand value and competition-6-

barriers. Brogent Group will continue to work with Kodansha Ltd to introduce more
popular original Japanese anime films and enhance the group’s strength in software
content.
With years of experience in the industry of theme parks, Brogent Group will expand
the scope of business and set foot in attractions design service by providing a turnkey
solution that incorporates rides design, videos content design and sites creative design
service. A turnkey solution will help Brogent Group increase the volume of business andreceive more orders. Brogent Group may also increase total gross profit margin throughdesign services, ride sales and video content authorization. The management team and theemployees 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, Chung-Ming Huang-7-1. Accomplishments in 2018
(1) Business Plan Implementation Outcomes in 2018
Unit: NT$1,000

Year

2017

2018

Change(amount)% Change

Sales revenue

1,514,469

1,637,438

122,969

8.12

Gross profit

725,335

721,242(4,093)(0.56)

Operating expenses

384,601

431,730

47,129

12.25

Operating income

340,734

289,512(51,222)15.03

Net income (loss)
before tax

327,563

321,127(6,436)

1.96

Net income(loss)

271,181258,418(12,763)

4.71

Item

(2) 2018 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
2018, and therefore this section is not disclosed.

(3) Analysis of Financial Gains and Losses and Profitability
Unit: NT1,000

Year
Item
Financial
structure (%)
Solvency (%)

Profitability

Debt-to-assets ratio
Long-term fund to property, plantand equipment (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$)

-8-

2017

2018

19.26

31.22

332.31345.35703.72451.845351.098.17
9.95

501.83334.463097.55
6.47
9.10

73.32

60.48

17.91
5.00

15.78
4.84

(4) Research and Development
To continuously enhance the Company’s competitiveness, the Company
has always actively invested in R&D efforts. In 2017 and 2018, it has
expended a total of NT$129,949 million and NT$118,370 million in R&D,
respectively accounting for 8.58% and 7.23% of the net operating income.
Despite an increase in research and development expenses in 2017, mostly
from purchasing necessary components of m-Ride. The company had
applied for government funding, in order to lower and control the researchand development expenses occurred. The Company shall continue toinnovate and remain committed to research and development because
these aspects of operation embody corporate competitiveness. The
Company shall continue to engage in advanced technological R&D andinnovative applications, and implement product-centric design andresearch as well as systematic management to maintain the leading
position of products and technologies, i.e. down-sized i-Ride, VR/AR
products and Q-Ride.

(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
2018, 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-9-businesses into the global market, thereby enhancing its overall revenue
performance.

2. Summary of Business Plan for 2019(1) 2019 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 2019, and therefore this section is notdisclosed.

3. Future Corporate Development Strategy(1) Product diversification: We will continue to extend our product linefrom the current 15 product types.
(2) Market internationalization: The North America and European markets
are growing rapidly, with the Chinese market will become the largest
single market.
(3) Diversification of revenue models: In addition to the outright selling of
our equipment, profit distribution, ventures, peripheral products,
themed IP, and content licensing will also be our stable source ofincome.
(4) Integration of strategic partner resources: Licensing of themed IPs will
be strengthened, and more business locations will be established.
- 10 -

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
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

Opening of 4D Theater at Formosan Aboriginal Culture Village.
Conversion of employee stock options to 1,744,000 ordinary shares; the paid-up
capital following capital increase totaled to NT$213,560,000.
Seasoned equity offering (SEO) of NT$12,700,000; following capital increase, thepaid-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 the Taipei Exchange.
Public underwriting of SEO prior to listing amounted to NT$28,290,000, and thepaid-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, Ch ina.
The new generation of i-Ride, Fly Over Canada, opened in Vancouver,
Canada.
Attended the National Palace Museum First New Media creative contest; theCompany'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

March 2014

amounting to NT$100 million, both represented record highs in Br ogent's
history.
- 11 -

April 2014
May 2014
June 2014
July 2014
July 2014
September 2014
October 2014
November 2014
January 2015
January 2015

The i-Ride received the 2014 Taiwan Excellence Reward for the category offashion, 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 capitalincrease totaled to NT$336,357,720.
Signed the "Attack on Titan" IP licensing contract with Kodansha Ltd.
Conversion of convertible corporate bond to ordinary bond totaled to NT$442,070; thepaid-up capital following capital increase totaled to NT$336,799,790.
Seasoned equity offering (SEO) of NT$60,000,000; following capital increase, thepaid-up capital totaled to NT$396,799,770.
Signed another MOU with Kodansha Ltd. to establish marketing companies
for peripheral products.
Awarded the Potential Mittelstand Enterprise for the 3rd Taiwan MittelstandMarch 2015

Award held by the Industrial Development Bureau, Ministry of Economic
Affairs (MOEA).

June 2015
July 2015
November 2015
December 2015
January 2016
March 2016
April 2016
May 2016

Seasoned equity offering (SEO) of NT$10,300,000, following capital increase, thepaid-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” washeld in Shan-Shun World, Toufen Township, Miaoli County, Taiwan.
Grand opening of the 2 nd 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 and- 12 -

July 2016
September 2016
December 2016
March 2017
March 2017
April 2017
June 2017
September 2017
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

National 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.
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 TÜ V SÜ D 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.
- 13 -

September 2018
September 2018
October 2018
November 2018
November 2018
December 2018
December 2018

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.

- 14 -

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.

- 15 -

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- 16 -

2. Profile of Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and Department andBranch Directors(1) Directors and Supervisors
1. Directors and Supervisors
March 31, 2019; Unit: Shares; %Title

Nationality
or place ofregistration

Name

Date
electedNumber of
Number of sharesshares held whencurrently held
Date firstelectedTermelectedSharesShare Number
Percentage of shares
holding

Shareholding

Percentage

Shares held by
Number of sharesspouse and minor held in the namechildrenof others
Numberof shares

Shareholding

Percentage

Chung-Ming
Huang

2017.05.31

3
2011.10.05 2,381,654 5.33% 2,857,984 5.38%
years

323,739

0.61%

－

－

Director

ROC

Chih-Hung
Ouyang2017.05.31

3
2011.10.05 2,822,581 6.32% 3,625,897 6.83%
years

96,369

0.18%

－

－

Director

ROC

Chin-Huo
3
2017.05.31
2011.10.05 912,256 2.04% 1,094,707 2.06%
years
Huang

240,925

0.45%

－

－

－

－

－

－

DirecorChang
chun
1,706,565 3.82% 2,047,878 3.86%
Investment
Co. Ltd.
3
2017.05.31
2016.05.31
ROC
years
Representa-tive:
0.00% 28,972 0.05%
Chih-Chuan Chen－- 17 -

Other positions

Number of Shareh
oldingshares Percentage

Chairman ROC－

Education/work experience－－

Other officer, director
or supervisor who isthe spouse or a
relative within thesecond degree
Title

1.Ph.D in Engineering Management, 1. Director, Fu Yi
University Of Missouri-Rolla
Investment Ltd.
2.Director, Business Administration 2. Professor,
Office; Dean, Engineering &Engineering &Management of Advanced
Management ofTechnology Dept; Dean,
Advanced
International Business Dept, Chang Technology Dept,
Jung Christian University
Chang Jung
3.Supervisor, Taiwan Water
ChristianCorporation
University
1.Electrical Engineering, National
1. President, Brogent
Sun Yat-sen University
Techonologies Inc.
2.R&D Engineer, Acer Incorporated 2. Chairman, Fu Wu
3.Project Manager, Ai West Co. Ltd.
Investment Ltd.
4.President, Micro Sova
3. Chairman, Brogent
Global Inc.
4. Chairman, Brogent
Mechanical Inc.
1.Chang Hua Industrial Vocational
1. Chairman, Fu Ying
High School
Metal Industrial
2.Director, SANFU Motors IndustrialCo., Ltd.
Corp.
2. Chairman, Fujing
3.Director, Chun Ying Metal
Co., Ltd.
Industrial Co., Ltd.
1. M.B.A., National Taiwan
Vice President,
University
Investment
2. Director, Mass Solutio
Administration
Technologies
Division, RT-Mart
3.Supervisor, RT-Mart International
International
4.Supervisor, Gogoro Taiwan Limited

Name

RelationshipNone. None. None.

None. None. None.

None. None. None.

None. None. None.

TitleNationality
or place ofregistration

Name

Date
electedNumber of
Number of sharesshares held whencurrently held
Date firstelectedTermelectedSharesShare Numberof shares

holding

Shareholding

Percentage

Percentage

Direcor

Chun-Hao2017.05.31
ROC
Cheng

Independent
Director

ROC

Independent
Director

ROC

Supervisor ROC

3
2016.05.31 125,781 0.28% 150,937
years

Chin-We3
2017.05.31
2016.05.31
years
n Chuang

Shun-Jen3
2017.05.31
2013.06.19
years
Cheng

－

－

－

－

－

－

Yung-Lia3
2017.05.31
2014.06.11 1,050,466 2.35% 1,260,559
years
ng Huang

Yi-Hsiang
Supervisor ROC
Huang

3
2017.05.31
2011.11.23
years

－

－

－

Shares held by
Number of sharesspouse and minor held in the namechildrenof others
Numberof shares

Shareholding

Percentage

－

－

－

－

－

2,749

0.01%

－

－

2.37%

－

－

－

－

－

－

－

- 18 -

Other positions

Number of Shareh
oldingshares Percentage

0.28%

－

Education/work experience

－

－

－

－

－

－

Other officer, director
or supervisor who isthe spouse or a
relative within thesecond degree
Title

1.Ph.D in Business Studies, Meiji
University
2.Supervisor, Taiwan Water
Corporation
3.Associate Professor, Department of
Finance, I-Shou University
4.Associate Professor, Graduate
Institute of Hospitality
Management, NKUHT
1. Ph D in Control System,
Department of ElectricalEngineering, National Sun
Yat-sen University (NSYSU)
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 University
2.Doctoral Seminar in Institute ofTechnology & Innovation
Management, Chung Hua
University
1.Masters in Business Management,
US International Asia Pacific
University
2.Continued education in Masters
Program at Dayeh University
3.Media advertisement agency
1.Ph.D, Financial Management,
National Central University
2.Department Chair, Department of
Finance, National University ofKaohsiung
3.Director, Extension Education
Center, National University ofKaohsiung

Name

RelationshipProfessor, Graduate
Institute of Hospitality
None. None. None.
Management,
NKUHT

－

1. Consultant at
Kaohsiung City
Government
2. Vice President,
Cheng Shiu
University

None. None. None.

None. None. None.

Director, Wing Yue
None. None. None.
Advertising Company

Professor, Departmentof Finance, National
None. None. None.
University ofKaohsiungTitleNationality
or place ofregistration

Name

Date
electedNumber of
Number of sharesshares held whencurrently held
Date firstelectedTermelectedSharesShare Numberof shares

holding

Shareholding

Percentage

Percentage

Supervisor

ROC

Ken-Hua3
2017.05.31
2017.05.31
years
ng Lin－－－－Shares held by
Number of sharesspouse and minor held in the namechildrenof others
Numberof shares

4,800

Shareholding

Percentage

0.01%- 19 -

Education/work experience

Other positions

Number of Shareh
oldingshares Percentage－－

Other officer, director
or supervisor who isthe spouse or a
relative within thesecond degree
Title

1.Ph.D., Department of ElectricalEngineering, University of Illinois,
Urbana-Champaign.
2. master of science, the Graduate
Institute of Electrical Engineering,
National Taiwan University.

Director of southern
taiwan industry
promotion center

Name

RelationshipNone. None. None.

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

Criteria
Name

An instructor or
higher position ina department ofcommerce, law,finance,accounting orother department
related to thebusiness needs of
the Company in a
public or private
junior college oruniversity

A judge, publicprosecutor, attorney,accountant, or otherprofessional or
technical specialist
related to the needs of
the Company who has
passed a national
examination andreceived a certificate
thereforHas work
experience incommerce,
law, finance,or accounting
or a professionnecessary forthe business of
the Company

Meet the independence criteria (Note 1)

2

3

4

5

6



 

-



-

    

None.

Chih-Hung Ouyang



-

-

-



-

    

None.

Chin-Huo Huang



 

-

      

None.

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



 

-

     

-

None.

Chung-Ming Huang



1

7

8

9

10

Number ofother publiccompaniesin whichthe Director
also serves
as an
Independent Director

Chun-Hao Cheng







       

None.

Chin-Wen ChuangShun-Jen Cheng







                  

None.
2



 

      

None.

Yung-Liang Huang--

Yi-Hsiang Huang         

None.

Ken-Huang Lin         

None.

Note 1: If a director or supervisor meets any of the following criteria in the two years before being elected or during theterm of office, a check "" is placed in the 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 unless the person is an Independent Director of
the Company or its parent company, or any subsidiary in which the Company holds, directly and indirectly, morethan 50% of the voting shares.
(3) Not a natural-person shareholder whose shareholding, together with those of his/her spouse, minor children, andshares held under others' names, exceed 1% of the total number of outstanding shares of the Company, or ranks the
person in the top ten shareholders of the Company.
(4) Not a spouse, relative within second degree of kinship, or lineal relative within third degree of kinship of any ofthe persons in the preceding three paragraphs.
(5) Not a director, supervisor or employee of a juristic-person shareholder that holds directly 5% or more of the total
number of outstanding shares of the Company or ranks in the top five shareholders.
(6) Not a director, supervisor, manager or shareholder holding 5% or more of the shares of a specified company or
institution that has a financial or business relationship with the Company.
(7) Not a professional or an owner, partner, director, supervisor, manager or a spouse of the abovementioned who
provides commercial, legal, financial, accounting services or consultation to the Company or an affiliate of theCompany. Excluding members of compensation committee who exercise power in accordance with Article 7 of theRegulations Governing the Appointment and Exercise of Powers by the Compensation committee of a Company
Whose Stock is Listed on the Stock Exchange or Traded Over the Counter.
(8) Not having a marital relationship or a relative within the second degree of kinship to any other director of theCompany.
(9) Not corresponding to any of the situations set forth in Article 30 of the Company Act of the R.O.C.
(10) Not a government agency, juristic person, or its representative set forth in Article 27 of the Company Act of the
R.O.C.

- 20 -

(2) Profile of President, Vice Presidents, Assistant Vice Presidents, and Department Directors

Title

Nationality

Name

Date
appointed

Shares held

SharesShareholding

Shares held by
spouse andchildrenSharesPercentage

President

Chief Financial
Officer

Vice Presidentof Technology
CenterChief Engineer& Director of
Project Center

Senior Manager
of Audit Office

ROC

ROC

ROC

ROC

ROC

Chih-Hung
OuyangSui-ChuanLin

Teng-Hung
Lai

Yi-Chung
Huang

Hui-Ping
Li

2001.102013.01

2010.112015.08

2008.033,625,897 6.83%

204,554 0.39%

26,530 0.05%

23,175 0.04%

36,092 0.07%

Shares heldin the nameof others

Shareholding

Shareholding

96,369 0.18%

27,102 0.05%-

Title Name Relationship

SharesPercentage-

Education/work experience

March 31, 2019; Unit: Shares; %Other officer, director orsupervisor who is the
spouse or a relative within
Other positions
second degree--

3,600 0.01%

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 Department of
Finance, National Sun Yat-sen University
Finance Office at Chienmei Construction
Development Corp.
Finance Department Manager at Brogent
Technology

Supervisor, Brogent
Global Inc.

-

-

-

-

Masters in the Department of Computer
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 Department of
Finance, National Sun Yat-sen University
Accounting Department in Taiflex
Scientific Co. Ltd.
Auditor at Ernst & Young Global Limited

None.

-

-

-

- 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 (2018)
Unit: NT$1,000
Director's remuneration

Remuneration
(A)

Title

Ratio of total A,
Sharessubscribable Shares obtained B, C, D, E, F,
and G toPension (F) Profit sharing & bonus (G)underthrough restrictedemployee stock stock award after-tax income
options (H)Brogent

statements

－

－

－

－

－

－

－

－

－

－

1.54

1.59

None.

－

－

996

996

48

48

0.94

0.98 3,071 3,071

－

－

－

－

－

－

－

－

－

－

2.09

2.17

None.

－

－

996

996

48

48

0.39

0.40

－

－

－

－

－

－

－

－

－

－

－

－

0.39

0.40

None.

Brogent

All companies in consolidated

All companies in consolidated－

statements

Brogent－

Cash Stock Cash Stockbonus bonus bonus bonus

statements

1.59

Brogent

All companies in consolidated

All companies in

1.54

statements

Brogent

consolidated

All companies in consolidated

48

statements

Brogent

All companies in consolidated

All companies in consolidated

48

statements

Brogent

996

statements

All companies in consolidated

996

statements

Brogent－

statements

All companies in consolidated－

statements

Brogent

Remuneration
received frominvestees otherthan subsidiaries

All companies in consolidated

Chung-Ming
3,071 3,071
Huang
Chih-Hung－ 1,486
OuyangChin-Huo－－
Huang

Brogent

statements

Director

All companies in consolidated

Director(C)

Ratio of total A,
B, C, and D to Salary, bonus
Business
after-tax income and special
expense (D)allowance (E)NameBrogent

ChairmanPension (B)Earnings
appropriation

Pay received as an employee

Director

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

－

－

－

－

996

996

42

42

0.39

0.40

－

－

－

－

－

－

－

－

－

－

－

－

0.39

0.40

None.

Director

Chun-Hao
Cheng

－

－

－

－

996

996

48

48

0.39

0.40

－

－

－

－

－

－

－

－

－

－

－

－

0.39

0.40

None.

Chin-Wen
Chuang

360

360

－

－

－

－

48

48

0.15

0.16

－

－

－

－

－

－

－

－

－

－

－

－

0.15

0.16

None.

Shun-Jen
Cheng

360

360

－

－

－

－

48

48

0.15

0.16

－

－

－

－

－

－

－

－

－

－

－

－

0.15

0.16

None.

Independent
Director
Independent
Director- 22 -Name of Directors
Total of (A+B+C+D)
Range of Remuneration
The company

Companies in the
consolidated financial
statements

Total of (A+B+C+D+E+F+G)
The company

Companies in the
consolidated financial
statements

Chin-Huo Huang
Chin-Huo Huang
Chin-Huo Huang
Chin-Huo Huang
Changchun Investment Changchun Investment Changchun Investment Changchun Investment

Under NT$ 2,000,000

NT$2,000,001 ~ NT$5,000,000
NT$5,000,001 ~ NT$10,000,000
NT$10,000,001 ~ NT$15,000,000
NT$15,000,001 ~ NT$30,000,000
NT$30,000,001~ NT$50,000,000
NT$50,000,001 ~ NT$100,000,000
Over NT$100,000,000
Total

Co. Ltd.

Co. Ltd.

Co. Ltd.

Co. Ltd.

Representative:

Representative:

Representative:

Representative:

Chih-Chuan Chen

Chih-Chuan Chen

Chih-Chuan Chen

Chih-Chuan Chen

Chun-Hao Cheng

Chun-Hao Cheng

Chun-Hao Cheng

Chun-Hao Cheng

Chin-Wen ChuangShun-Jen Cheng

Chin-Wen ChuangShun-Jen Cheng

Chin-Wen ChuangShun-Jen Cheng

Chin-Wen ChuangShun-Jen Cheng

Chung-Ming Huang
Chih-Hung Ouyang

Chung-Ming Huang
Chih-Hung Ouyang

Chung-Ming Huang

Chung-Ming Huang

Chih-Hung Ouyang

Chih-Hung Ouyang

7

7

7

7

.
＊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.

- 23 -

2. Remunerations to Supervisors in the most recent year (2018)
Unit: NT$1,000
Supervisor's Remuneration

Title

Ratio of total A, B, andRemuneration
C to after-tax income
Remuneration (A)Profit sharing (B)Business expense (C)received from
Investees
All companies
All companies
All companies
All companies
other thanBrogent in consolidated Brogent in consolidated Brogent in consolidated Brogent in consolidated
subsidiaries
statements
statements
statements
statements

Name

S u p e r v i s o r Yung-Liang Huang

－

－

996

996

48

48

0.39

0.40

None.

Supervisor

Yi-Hsiang Huang

360

360

－

－

48

48

0.15

0.16

None.

Supervisor

Ken-Huang Lin

360

360

－

－

48

48

0.15

0.16

None.

Name of Supervisors
Total of (A+B+C)
Companies in the consolidated
The company
financial statements
Yung-Liang Huang
Yung-Liang Huang
Yi-Hsiang Huang
Yi-Hsiang Huang
Ken-Huang Lin
Ken-Huang Lin

Range of Remuneration

Under NT$ 2,000,000
NT$2,000,001 ~ NT$5,000,000
NT$5,000,001 ~ NT$10,000,000
NT$10,000,001 ~ NT$15,000,000
NT$15,000,001 ~ NT$30,000,000
NT$30,000,001 ~ NT$50,000,000
NT$50,000,001 ~ NT$100,000,000
Over NT$100,000,000
Total

3

3

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

3. Remunerations to President, and Vice Presidents in the last year (2018)
Unit: NT$1,000
Pension(B)

Salary (A)

Title

Bonus and special
allowance (C)Name
All companies

All companies
All companies

inBrogent

inBrogent

Brogent in consolidated

consolidated

consolidated

statements

statements

statements

Chih-Hung
President

2,371

2.371

-

-

Ratio of total A,
SharesShares obtained
B, C, and D to
subscribablethrough
Employee bonus (D)Remuneratio
after-tax income under employee restricted stockn received(%)
stock options
award
from
All companies
InvesteesAll
All
Brogent
in consolidated
All companies
companies incompanies in other thanstatements Brogent in consolidated Brogent
Brogent
consolidated
consolidated subsidiaries
Cash

Stock

Cash

bonus

bonus

bonus bonus--

statements

Stockstatements

700

700

Ouyang- 24 -

-

-

1.15

1.19

-

-

statements

-

-

None.

Name of President
Companies in the consolidated
The company
financial statements-

Range of Remuneration
Under NT$ 2,000,000
NT$2,000,001 ~ NT$5,000,000

Chih-Hung Ouyang

Chih-Hung Ouyang

1

1

NT$5,000,001 ~ NT$10,000,000
NT$10,000,001 ~ NT$15,000,000
NT$15,000,001 ~ NT$30,000,000
NT$30,000,001 ~ NT$50,000,000
NT$50,000,001 ~ NT$100,000,000
Over NT$100,000,000
Total＊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 (2018):
Title

Name

Stock
bonus

Cash
bonus

Total

Total amount as a percentage of
earnings (%)

0

3,301

3,301

1.23

President

Chih-Hung
OuyangVice President of Teng-Hung Lai
Technology Center
Yi-Chung Huang
Chief Engineer &Managerial
Director of Project
officer
CenterChief Financial
Officer
Senior Manager ofAudit Office

Sui-Chuan Lin
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.

(4) Respectively compare and describe the analysis of remunerations to Directors, Supervisors,
President and Vice Presidents as a percentage of earnings in the last two years anddescription of the policy, standards and packages of remunerations, procedure for making
such decision and relation to business performance and future risks:
Unit: NT$1,000

Title

Brogent

2018
All companies in
consolidated
statements

Director
Supervisor
14,03218,002President
Note : The Company did not set up a Vice President position.
- 25 -

Brogent

13,7202017
All companies in
consolidated
statements

17,579

The total amount as a percentage of earnings in 2018 and 2017 were respectively
6.96% and 7.30%. The Company determines the aforementioned personnel
remunerations according to the Company's business performance, management
performance, and standards in the market. The paid remuneration also conforms to theCompany's salary-related management regulations and should be adequate for assuming
responsibilities and risks.

4. Implementation of corporate governance(1)Operations of the Board of Directors
In 2018, a total of 7 (A) meetings of the Board of Directors were held in the most recent
year. The attendance was as follows:
Title

Chairman
Director
Director

Director

Name

Attendance in(Note 1)

person (B)Chung-Ming
Huang
Chih-Hung
OuyangChin-Huo
Huang
Changchun
Investment Co.
Ltd.
Representative:
Chih-Chuan
Chen

Attendance rate (%)
By proxy

[B/A]

Note

(Note 2)

Reelected on
2017.05.31
Reelected on
2017.05.31
Reelected on
2017.05.31

70

100.007

0

100.007

0

100.007

0

100.00Reelected on
2017.05.31

Director

Chun-Hao
Cheng

7

0

100.00Reelected on
2017.05.31

Independent
Director

Yi-Hsiang
Huang

7

0

100.00

Removed on
2017.05.31

Independent
DirectorChin-Wen
Chuang70

100.00Elected on
2017.05.31

Independent
Director

Shun-Jen
Cheng

7

0

100.00Reelected on
2017.05.31

Other matters that require reporting:
1. Matters stipulated in Article 14-3 of the Securities and Exchange Act and resolutions adopted by
the Board of Directors, to which an Independent Director has a dissenting or qualified opinion
that is on record or stated 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 thecompany in response to the opinion of the Independent Directors: None.
- 26 -

Title
2.

3.

Name

Attendance in(Note 1)

person (B)Attendance rate (%)
By proxy

[B/A]

Note

(Note 2)
Regarding Directors who recuse themselves from discussion or voting on an agenda item inwhich 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 and immediately preceding fiscal years.
(1) The operation of the Board of the Company complies with laws and regulations, the Articles
of Incorporation, 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 theexpertise, skills, and literacy 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 soundsupervision function, and strengthened management mechanism, the Company formulated theBoard of Director Meeting Agenda Regulations in accordance with Article 26-3 of the
Securities and Exchange Act, including agenda items, execution of operations, matters thatshould be recorded in meeting minutes, announcements, and other matters that should be
adhered to, and the aforementioned shall be handled in accordance with the formulated
regulations.
(3) In addition to regularly conducting self-examination of the operation of the Board of
Directors and reinforcing the functions of the Board, the Company requires its internal
auditors to produce auditing reports that describe the Board operations in order to conformwith 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 ofcorporate shareholders and their representatives.
Note 2:(1) For Directors or Supervisors who resigned from their position prior to the end of thefinancial year, the date of their resignation shall be noted in the Note column. Theiractual attendance rate (%) shall be calculated according to the frequency they attended
meetings of the Board during their tenure and their 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 date of their reelection and changes shall be noted in the Notecolumn. Their actual attendance rate (%) shall be calculated according to thefrequency they attended meetings of the Board during their tenure and theirattendance in person.

- 27 -

(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 2018, a total of 7 (A) meetings of the Board of Directors were held in the mostrecent year. The Supervisor attendance was as follows:
Attendance in Attendance rate (%)
Title
Name
Note
person (B)(B/A) (Note)
Supervisor

Yung-Liang
Huang

7

100.00Supervisor

Yi-HsiangHuang

7100.00Supervisor

Ken-HuangLin7100.00Reelected 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 andbusiness conditions of the Company during the board meetings or designates the
Audit Manager to report the evaluation results of internal audits. All Supervisors
may express their opinions during the meetings. Moreover, the financial statements
approved by the CPA are submitted to the Supervisors for approval. If Supervisors
voice their opinion when reviewing the financial statements, such opinion shall beeither 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 theboard meeting, term of the board, agenda items, resolutions adopted by the board, andactions 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 thefinancial year, the date of their resignation shall be noted in the Note column. Theiractual attendance rate (%) shall be calculated according to the frequency they attended
meetings of the Board during their tenure and their attendance in person.
＊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 and changes shall be noted in the Note column. Theiractual attendance rate (%) shall be calculated according to the frequency they attended
meetings of the audit committee during their tenure and their attendance in person.

- 28 -

(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 inaccordance with the Corporate GovernanceBest-Practice Principles 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 the

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
Directors.

- 29 -

No discrepancy.

State of Operations (Note 1)
Assessed areas

Yes

composition of its members?
(2) Does the company voluntarily establish otherfunctional committees in addition to
remuneration committee and audit committee?
(3) Does the company establish standards andmethod for evaluating the performance of theBoard of Directors, and implemented it
annually?
(4) Does the company regularly evaluate theindependence of CPAs?

4. Does the Company established a full- (or part-)
time corporate governanceunit or personnel tobe in charge of corporate governance affairs(includingbut not limited to furnish information
required for business execution bydirectors,
handle matters relating to board meetings andshareholders’meetings according to laws,
handle corporate registration andamendmentregistration, produce (or record?)minutes of board meetings andshareholders
meetings, etc.

No

Summary

Deviations from Corporate
Governance Best-PracticePrinciples for TWSE/TPEx
Listed Companies andreasons(2) The Company has established a Remuneration
Committee and proposed recommendations
regarding the remunerations to its Directors,
Supervisors, and managerial officers.
(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- 30 -

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)?
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, the

Yes

V

V

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.

(1) Employee rights protection and employee care No discrepancy.
measures adopted by the Company:
The
Company
providesequal
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- 31 -

State of Operations (Note 1)
Assessed areas

implementation of customer relations policies,
and purchasing insurance for Directors andSupervisors)?

Yes

No

Summary
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
maintainsasmoothcommunication channel with its suppliers andstakeholders, 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 2018 and- 32 -

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

State of Operations (Note 1)
Assessed areas

Yes

No

Summary

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

2019 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 2018, the company’s corporate governance focus on improving the interests of shareholders, and the company achieved higher standard in the
Corporate Governance Evaluation than 2017. 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 2018 and 2019 to the date of this Annual Report
Title
Chairman
Chairman
Director
Director
Director
Director
Director

Director

Director
Director
Director

Name
Chung-Ming
Huang
Chung-Ming
Huang
Chih-Hung
OuyangChih-Hung
OuyangChin-Huo
Huang
Chin-Huo
Huang
Changchun
Investment Co. Ltd.
Representative:
Chih-Chuang Chen
Changchun
Investment Co. Ltd.
Representative:
Chih-Chuang Chen
Changchun
Investment Co. Ltd.
Representative:
Chih-Chuang Chen

Chun-Hao
Cheng
Chun-Hao
Cheng

Organizer
Chien Yeh Law Offices
Kaohsiung OfficeTaiwan Corporate Governance
Association
Chien Yeh Law Offices
Kaohsiung OfficeTaiwan Corporate Governance
Association
Chien Yeh Law Offices
Kaohsiung OfficeTaiwan Corporate Governance
Association

Course name

Hours

Trends and analysis of corporate law amendments

3 hours

How directors implement due diligence and loyalty

3 hours

Trends and analysis of corporate law amendments

3 hours

How directors implement due diligence and loyalty

3 hours

Trends and analysis of corporate law amendments

3 hours

How directors implement due diligence and loyalty

3 hours

Taiwan Corporate Governance Legal protection of trade secret act and business strife
Association
limitation clauses

3 hours

Taiwan Corporate Governance
Association
How directors implement due diligence

3 hours

Accounting Research and Practical case analysis of the latest corporate law
Development Foundation
amendments and impacts on listed companies

3 hours

Chien Yeh Law Offices
Trends and analysis of corporate law amendments
Kaohsiung OfficeTaiwan Corporate GovernanceHow directors implement due diligence and loyalty
Association- 34 -

3 hours
3 hours

Independent
Director
Independent
Director
Independent
Director
Independent
Director
Supervisor
Supervisor
Supervisor
Supervisor

Chin-Wen
ChuangChin-Wen
ChuangShun-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

Chien Yeh Law Offices
Kaohsiung OfficeTaiwan Corporate Governance
Association
Chien Yeh Law Offices
Kaohsiung OfficeTaiwan Corporate Governance
Association
Chien Yeh Law Offices
Kaohsiung OfficeTaiwan Corporate Governance
Association
Chien Yeh Law Offices
Kaohsiung OfficeTaiwan Corporate Governance
Association
Chien Yeh Law Offices
Kaohsiung OfficeTaiwan Corporate Governance
Association

Trends and analysis of corporate law amendments

3 hours

How directors implement due diligence and loyalty

3 hours

Trends and analysis of corporate law amendments

3 hours

How directors implement due diligence and loyalty

3 hours

Trends and analysis of corporate law amendments

3 hours

How directors implement due diligence and loyalty

3 hours

Trends and analysis of corporate law amendments

3 hours

How directors implement due diligence and loyalty

3 hours

Trends and analysis of corporate law amendments

3 hours

How directors implement due diligence and loyalty

3 hours- 35 -

(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
Independent
Director

ChingWen
ChuangExternal
Liang-C
committeehien Li
memberExternal
Rong-D
committee
a Liang
memberHas at least 5 years of work experienceand meets one of the following
professional qualifications

Meet the independence criteria(Note 1)An instructor A judge, public
Have workor higher
prosecutor,
experience inposition in
attorney,commerce,
the epartment accountant, orlaw, finance,of commerce, other professional orlaw, finance, or technicalaccounting
accounting or specialist related or aotherto the needs of the profession
department
Company who has necessary for 1
related to the passed a national the businessbusiness
examination and of theneeds of the received aCompany
Company in a certificate therefor
public orprivate juniorcollege oruniversity

2

3

4

5

6

7

Number ofother publiccompanies inwhich theNotemember also
(Note 2)serves as a
8 member of
theircompensation committee



-



       

-



-



       

2



-



       

-

None.

Note 1: If the committee member meets any of the following criteria in the two years before being appointed or during the term ofoffice, please check "" in the 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; The same does not apply, however, in cases where thecommittee member is an Independent Director of the Company, its parent company, or any subsidiary in which the Company
holds, directly or indirectly, more than 50 percent of the voting shares.
(3) Not a natural-person shareholder whose shareholding, together with those of his/her spouse, minor children, and shares held
under others’ names, exceed 1% of the total number of outstanding shares of the Company, or ranks the person in the top ten
shareholders of the Company.
(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.
(5) Not a Director, Supervisor or employee of an institutional shareholder that holds directly 5% or more of the total number ofoutstanding shares of the Company or ranks in the top five shareholders.
(6) Not a Director, Supervisor, manager or shareholder holding 5% or more of the shares of a specified company or institutionthat has a financial or business relationship with the Company.
(7) Not a professional or an owner, partner, Director, Supervisor, manager or a spouse of the above mentioned who provides
commercial, legal, financial, accounting services or consultation to the Company or an affiliate of the Company.
(8) Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.

Note 2: If the member is a Director, please describe whether it conforms to Article 6-5 of the Regulations Governing the Appointment
and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded
Over the Counter.

- 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
Committeemember-External
Liang-Chien Li
committee member
Committee
member-External
Rong-Da Liangcommittee member

Attendance inperson(B)

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

Note

3

0

100.00-30100.00-30100.00-

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 (CSR)
State of Operations (Note 1)
Assessed areas

Yes

1. Corporate governance implementation(1) Does the company establish corporate social
responsibility policy or system and examine its
implementation results?
(2) Does the company provide educational training on
corporate social responsibility on a regular basis?
(3) Does the company establish a dedicated or
concurrent unit in charge of promoting CSR withV
senior management authorized by the board to takecharge of proposing CSR policies and reporting to
the board?
(4) Does the company establish a reasonable salary
remuneration policy, and integrate the employee
performance evaluation system with its CSR
policy, and establish an effective reward anddisciplinary system?
2. Fostering a sustainable environment(1) Does the company endeavor to improve theefficiency of resource utilization and use recycledmaterials which have a low impact on theenvironment?
V(2) Does the company establish a proper environmental
management system based on the characteristics of
the industry?
(3) Does the company monitor the impact of climatechange on business operations, conduct

No

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 departments related to the social
responsibility of the Company all handle
relevant matters according to their duties.
(3) The Company has established the Ethical Codeof Conducts for Directors, Supervisors, andManagerial Officers.
(4) The Company has established Work Rules
Guideline for Salary Management andGuideline for Performance Management, whichclearly specifies relevant effective rewarding
and punishment systems.

(1) The Company generally endeavor to increase the No discrepancy.
efficiency of resource utilization and use
environmentally friendly materials as much as
possible to reduce the impact on theenvironment.
(2) The Company has established relevant
management regulations for the safety ofworking environment.
(3) The Company often holds internal promotional- 38 -

State of Operations (Note 1)
Assessed areasYesgreenhouse gas inventory and formulate strategies
for energy conservation and carbon andgreenhouse gas reduction?
3. Upholding public interests(1) Does the company formulate appropriate
management policies and procedures according torelevant regulations and the International Bill of
Human Rights?
(2) Has the company set up an employee hotline orgrievance mechanism to handle complaints
properly?
(3) Does the company provide a safe and healthy
working environment and provide employees withregular safety and health training?
(4) Does the company set up a channel forcommunicating with employees on a regular basis,V
and reasonably inform employees of any
significant changes in operations that may have an
impact on them?
(5) Does the company set up effective careerdevelopment and training programs for its
employees?
(6) Does the company establish any consumer
protection mechanisms and complaint procedures
regarding R&D, purchasing, production, operationand service?
(7) Does the company advertise and label its goods andservices according to relevant regulations andinternational standards?

No

Summary (Note 2)

Departure from Corporate Social
Responsibility Best PracticePrinciples for TWSE/GTSM
listed companies and reasonsactivity, reminds employees to switch off lights
when leaving a room and classify their trash, tofacilitate reducing the environmental impact of
the company's operation.
(1) The Company adheres to the labor regulations in No discrepancy.
the Labor Standards Act to protect employees' legal
rights. In addition, the Company disburses pension
fund and labor welfare fund in accordance with law.
Concurrently, the Company and its employees havealso established employee welfare committee andhold employer–employee meetings to implement
various welfare activities and coordinate employer–
employee relationship, thereby promoting mattersrelated to employer–employee cooperation.
(2) Yes, the Company has set up employee
grievance mailbox and has designatedpersonnel to handle relevant matters.
(3) The Company endeavors to provide a safe andhealthy working environment and provide
employees with regular safety and healthtraining.
(4) The Company regularly convenes meetings topresent and communicate the Company’sbusiness development direction and strategies
to its employees.
(5) The Company has two training programs,
namely Supervisors/regular training and generalemployee/occasional training. The content of- 39 -

State of Operations (Note 1)
Assessed areas

(8)

(9)

Yes

Does the company evaluate the records ofsuppliers’ impact on the environment andsociety before doing business with the supplier?
Do the contracts between the company and its
major suppliers include termination clauses
which come into force once the suppliers breachthe corporate social responsibility policy andcause significant impact on the environmentand society?

No

Summary (Note 2)

Departure from Corporate Social
Responsibility Best PracticePrinciples for TWSE/GTSM
listed companies and reasonstraining depends on the job position of theemployees.
(6) There are no relevant operations currently.

(7)

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)(8) No, a list of supplier evaluation standards wasadded.
(9) The Company upholds the principle of ethicalcorporate management and collectively
cooperate with the suppliers in development
projects to facilitate coexistence and collective
prosperity.

4. Enhancing information disclosure(1) Does the company disclose relevant and reliable
information regarding its corporate social V
responsibility on its website and the Market
Observation Post System?

The Company discloses relevant information No discrepancy.
regarding its corporate social responsibility on its
website, annual report, and the prospectuses.

- 40 -

State of Operations (Note 1)

Departure from Corporate Social
Responsibility Best PracticeAssessed areas
Principles for TWSE/GTSM
Yes NoSummary (Note 2)
listed companies and reasons
5. 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

6. Other important information to facilitate a better understanding of the company’s corporate social responsibility practices: None.
7. If the corporate social responsibility reports have received assurance from external institutions, they should state so below: Not applicable

Note 1: The operating condition shall be described in the Summary column regardless of whether "Yes" or "No" is selected.
Note 2: For companies that have compiled CSR reports, the summary may specify the CSR reporting method and page numbers.

- 41 -

(6) Implementation of ethical corporate management
State of Operations (Note 1)

Assessed areas

Yes

1. Establishment of ethical corporate management policy
and approaches(1) Does the company declare its ethical corporate
management policies and procedures in its rules andexternal documents, as well as the commitment of its
board and management to implementing themanagement policies?
(2) Does the company establish policies to prevent
unethical conduct with relevant procedures, guidelines
of conduct, punishment for violation, rules of appeal
clearly stated in the policies, and implement thepolicies?

(3) Does the company establish appropriate precautionary
measures for operating activities with higher risk ofunethical conducts provided in Paragraph 2, Article 7 of
the Ethical Corporate Management Best-PracticePrinciples for TWSE/TPEx Listed Companies or within
its scope of business?

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) Does the company establish a dedicated (concurrent)
unit under the Board of Directors to promote ethicalcorporate management, and report the status of
implementation to the board?
(3) Does the company establish policies to prevent conflictsof interest, provide appropriate channels for filingrelated complaints and implement the policies
accordingly?
(4) Does the company have effective accounting system andinternal control systems set up to facilitate ethicalcorporate management, and are those systems audited byeither internal auditors or CPAs on a regular basis?

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(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) Does the company establish standard operatingprocedures for investigating reported cases and related
confidentiality mechanism?
(3) Does the company provide proper whistleblower
protection?

No

Summary

Departure from "EthicalCorporate Management
Best Practice Principles for
TWSE/GTSM Listed
Companies" and reasons

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.
(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 reasons

4. Enhancing information disclosure(1) Does the company disclose information regarding the(1) The Company has set up a website for disclosing No discrepancy.
company's ethical corporate management principles and V
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

Outcome of resolution

2018.05.29 Reporting Items
All items passed and executed as(Share(1) 2017 Business Report scheduled.
holders’ (2) 2017 Supervisor’s Audit
regular Reportmeeting) (3) 2017 Report on
Remuneration Distributionof Employees, Directors,
and Supervisors.
(4) Report on Private
Placement Status- 46 -

Facts of implementation

Passed Items(1) 2017 Business Report
and Financial Statements

The balloting outcome including
votes exercised through electronic
voting: 25,655,119 pro votes ,accounting for 99.866% of theaggregate total votes; 223 con
votes, 0 invalid vote, abstention/
Non-voting votes: 34,216 votes.
The present issue is duly resolved
exactly as proposed.

Reports and statements
distributed to shareholders
according to relevant laws andregulations(2) 2017 Earnings
Distribution Proposal.

The balloting outcome including
votes exercised through electronic
voting: 25,655,119 pro votes ,accounting for 99.866% of theaggregate total votes; 223 con
votes, 0 invalid vote, abstention/
Non-voting votes: 34,216 votes.
The present issue is duly resolved
exactly as proposed.

Dividend base date scheduledon July 24, 2018, ex-dividend
date on July 18, 2018, the bookclosure date on July 19, 2018.
According to Article 165 of theCompany's Articles ofIncorporation, the book closure
period is from July 20, 2018 to
July 24, 2018. Cash dividend
payday is August 15, 2018

Matters for Discussion(1) Amendment of the
Article of Incorporation.

The balloting outcome including The issue had been duly
votes exercised through electronic completed in enforcement
voting: 25,655,119 pro votes ,exactly as amended.
accounting for 99.866% of theaggregate total votes; 223 con
votes, 0 invalid vote, abstention/
Non-voting votes: 34,216 votes.
The present issue is duly resolved
exactly as proposed.

(2) Proposal for a new share The balloting outcome including
issue through capitalization votes exercised through electronicof 2017 earnings.
voting: 25,655,119 pro votes ,accounting for 99.866% of theaggregate total votes; 223 con
votes, 0 invalid vote, abstention/
Non-voting votes: 34,216 votes.
The present issue is duly resolved
exactly as proposed.

Dividend base date scheduledon July 24, 2018, ex-dividend
date on July 18, 2018, the bookclosure date on July 19, 2018.
According to Article 165 of theCompany's Articles ofIncorporation, the book closure
period is from July 20, 2018 to
July 24, 2018.

2.Board of Directors’ MeetingDate2018.01.24

ProposalApproved the Year-End Bonus Disbursement Principle and Manager Year-End Bonus.
Approved the Eveluatio plan of the independence of CPAs.
Approved the Authorization of Grant Thorton as 2018 Auditor for the Company’s financial report.
Approved the change in use of the fund from the 2014 Private Placement
Approving the capital injection to Brogent Hong Kong Limited.
Approved to establish a wholly-owned offshore subsidiary.

- 47 -

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 2017 Statement on Internal Control.
Approved the 2017 Director and Employee Bonus Plan.
Approved the Evaluation of the result in adopting IFRS 16 「Leases 」of the company
Approved the 2017 Business Report and Financial Statements.
Approved the 2017 Earnings Distribution Plan.
Approved the Amendment of the Article of Incorporation.
2018.3.12
Approved the Proposal for a new share issue through capitalization of 2017 earnings.
Approved the application of listing on OTC and Public Issuance for the Ordinary Shares of the 2014
Private Placement No.1
Approved the Liability Insurance Renewal Plan for the Directors, Supervisors and Managers
Approved the Adjument of the Manager Remuberation.
Approved the Promotion of the Senior Manager
Approved the proposed calling of 2018 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
Approved the 2018 First Quarter Financial Report.
2018.05.10
Approved the Proposal of Organization Restructuring.
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
2018.06.15
Approved the Resolution on determining the ex-dividend date and payable date for year 2017.
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 Second Quarter Financial Report.
Approved the 2017 Director and Employee Remuneration Plan.
2018.08.13
Approved the proposal of applying for trading of stocks on the TPEx and supplemental public issuancefor the private placement of common shares issued 2015 first time.
Approved the Reduction Record Date of the Buyback Treasury Stocks Nullifing.
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

2018.11.08

Approved the 2018 Third Quarter Financial Report.
Approved the Proposal of Company Organization Restructuring.
Approved the Proposal of the Company capital increase to the subsidiaries and the establishment of theinvestment operation of the New York City Times Square Flying Theater.

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 Operation Budget Plan.
Approved the 2019 Audit Plan.
2018.12.28
Approved the Financing application plan.
Approved the Amendment of Internal Control System for the related operational procedures of fixed
assets.
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 -

2019.01.23

Approved 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(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: Not applicable.

- 49 -

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

CPA
Yu-Chieh Lo
HuiPing Liu

Grant Thornton Taiwan

Duration of audit

Note2018/1/1-2018/12/31-

Unit: NT$1,000
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:
Name ofaccounting
firm

CPA

Grant
Thornton
TaiwanYu-Chieh
Lo.
HuiPing
Liu

Audit fee

4,800

Non-audit fee
Systemdesign-BusinessHumanregistration Resources

182-

Audit period

Note

Others Subtotal
548

730

TP report and2018/1/1Consultation
2018/12/31
fee(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.

- 50 -

(4) If the audit fee is more than 15% less than that paid in the previous
year: N/A.
6. Changes to CPA information(1) Concerning former CPA: Not applicable(2) Concerning succeeding CPA : Not applicable.
(3) Previous CPA response to items in Article 10.5.1 and 10.5.2.3 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.

- 51 -

8. Share transfer by Directors, Supervisors, managers andshareholders holding more than 10% interests and changes to sharepledging 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
2018
Title

Name

Chung-Ming
Huang
Chih-Hung
Director (President)
OuyangChin-Huo
Director
Huang
Changchun
Director
Investment
Co. Ltd.
Chairman

Current year up to March 31

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

476,330－－－

803,316

3,479,000－－

182,451－－－

341,313

－

－

－

－

－

Director
Representative

Chih-Chuan
Chen

4,828

－

Director

Chun-HaoCheng

25,156－

Supervisor

Yi Chung
Huang

－

－

－

－

Supervisor

Yung-Liang
Huang

－

－

－

－

Teng-Hung
Lai

5,088

－

(4,000)－Yi Chung
Huang

3,862

20,000－－Independent Director

Ching-Wen
Chuang－－－－Independent Director

Shun-Jen
Cheng

－

－

－

－

Chief Financial Officer

Sui-Chuan
Lin34,09250,000－－

Audit Manager

Hui-Ping Li

6,015

－

－

－

Vice President ofTechnology Center
Chief Engineer &Director of ProjectCenter(2) Information on relative person of share transfer as related party: None.
(3) Information on relative person of share pledging as related party:None.

- 52 -

9.

Information on relationship between any of the top ten shareholders(related party, spouse, or kinship within the second degree)
March 31, 2019; Unit: Shares; %

NAME

TOTAL
SHARES HELD BYSHAREHOLDINSHAREHOLDING
SPOUSE AND
G BY NOMINEECHILDREN
ARRANGEMENT

SharesShareholdin
Shareholding
Shareholding
SharesSharesg Percentage
Percentage
Percentage

TITLES, NAMES AND
RELATIONSHIPSBETWEEN TOP 10
SHAREHOLDERS(RELATED PARTY,
SPOUSE, OR KINSHIPWITHIN THE SECOND
DEGREE).
Name

Relationship

NOTE

－

Chih-Hung Ouyang

3,625,897

6.83% 96,369

0.18% －－Fu Wu
Investment
Ltd.

Legal
representative－

Chung-Ming Huang

2,857,984

5.38% 323,739

0.61% －

－

－

－

－

2,758,854

5.20%

－

－

－

－

2,448,000

4.61%

－

－

－

－

－

－

－

2,370,534

4.46%

－

－

－

－

－

－

－

2,370,534

4.46%

－

－

－

－

－

－

－

Changchun Investment
Co. Ltd.
Representative:
Yin, Yen-Liang

2,047,878

3.86%

－

－

－

－

－

－

－

LIANG SHU HUEI

1,549,580

2.92%

－

－

－

－

－

－

－

1,260,559
Yung-Liang Huang
CHUN YEH Investment
Co. Ltd.
1,158,370
Representative:
Li, Pei-Kuan

2.37%

－

－

－

－

－

－

－

2.18%

－

－

－

－

－

－

－

Fu Wu Investment Ltd.
Representative:
Chih-Hung Ouyang
Profit PowerManagement
Consulting Limited
Ruentex Development
Co. Ltd.
Representative:
Chang-Cheng Chien
Ruentex Industries Ltd.
Representative:
Chih-Fan Wang

- 53 -

Chih-Hung
Legal
Ouyangrepresentative－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 theshareholding 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

900,000

60%--

900,000

60%

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- 54 -

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 31, 2019; Unit: Shares
Authorized capital
Type of stock

Shares issued and outstanding

Unissued shares

Total

53,092,772

36,907,228

90,000,000

Ordinary shares

Note
OTC shares

2. Sources of capital
March 31, 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

15,000 Cash 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- 55 -

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- 56 -

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

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

Amount- 57 -

(2) Shareholder structure
March 31, 2019

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

Otherjuristic
persons

Government Financial
institution institutions
1

18

Foreign
Individual institutions
investors
andforeigners

52

4,827

39

Total

4,937

3,000 2,021,382 14,992,363 30,696,334 5,379,693 53,092,772
0.01%

3.81%

28.24%

57.81%

10.13%

100.00%(3) Dispersion of equity ownership
Ordinary shares
Shares
1~ 9991,000~ 5,000
5,001~ 10,000
10,001~ 15,000
15,001~ 20,000
20,001~ 30,000
30,001~ 40,000
40,001~ 50,000
50,001~ 100,000
100,001~ 200,000
200,001~ 400,000
400,001~ 600,000
600,001~ 800,000
800,001~1,000,000>1,000,001
Total

Number ofshareholders
2,523
1,785
247
102
45
71
41
19
43
21
18
6
3
2
11
4,937

- 58 -March 31, 2019
Shareholding
Shares held
percentage (%)
186,298
0.35%
3,599,060
6.78%
1,795,519
3.38%
1,257,317
2.37%
779,655
1.47%
1,827,080
3.44%
1,423,543
2.68%
851,155
1.60%
3,127,121
5.89%
2,858,766
5.38%
4,974,800
9.37%
2,959,230
5.57%
2,075,569
3.91%
1,834,762
3.46%
23,542,897
44.35%
53,092,772
100.00%(4) List of major shareholder (shareholders holding more than 5%of shares or top ten shareholders)March 31, 2019
SharesShareholding percentage
No. of shares held
Name of major shareholder(%)
Chih-Hung Ouyang
3,625,897
6.83%
Chung-Ming Huang
2,857,984
5.38%
Fu Wu Investment Ltd.
2,758,854
5.20%
Profit Power Management Consulting
2,448,000
4.61%
Limited
Ruentex Development Co. Ltd.
2,370,534
4.46%
Ruentex Industries Ltd.
2,370,534
4.46%
Changchun Investment Co. Ltd.
2,047,878
3.86%
LIANG SHU HUEI
1,549,580
2.92%
Yung-Liang Huang
1,260,559
2.37%
CHUN YEH Investment Co. Ltd.
1,158,370
2.18%(5) Stock price, net worth, earnings, dividends and related
information (2017-2018)
Year

Unit: NT$
Current year
up to March
31, 2019

2017

2018

295.5

274

205

179

136

164

236.13186.86

183

52.85
47.27
53,093
5.0
4.0
2.0
-

54.61
(Not Resolved)
53,0934.84
4.0(Note 1)
0.5(Note 1)-(Note 2)
(Note 2)
(Note 2)
(Note 2)
-

-

-

-

47.23

38.61

(Note 2)Return analysis Price-dividend ratio

59.032546.715(Note 2)

Cash dividend yield

0.01690.0214(Note 2)Item
Maximum
Market price per
Minimum
share
Average
Net Value per
share
Earnings per
share
Dividends per
share

Basic
DilutedWeighted average shares
Earnings per share
Cash dividend
Stock grants
Accumulated unpaid
dividend
Price-earnings ratio

Note 1: The 2018 proposal of surplus distribution has not been resolved in theshareholders' meeting.
Note 2 : Earnings not yet calculated.

- 59 -

(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 2018 earnings distribution plan was approved by the
Board on March 12, 2019. Shareholders' meeting has not yet been held. The
2018 earnings distribution plan is as follows:(1) Each common share holder will be entitled to receive a cash dividend of
NT$4.0 per share. (cash dividend from retained earnings at NT$3.38 per share,
and cash distribution from capital surplus at NT$0.62 per share).
(2) For a new share issue through capital surplus transferred, dividends stocks of
2,654,638 shares will be issued. For share assignment, 50 shares will beassigned free of charge per 1,000 existing shares held shareholders as indicatedin the shareholders’ roster on the ex-right baseline date.

- 60 -

(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 2018 and hence it is notapplicable.

(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 annual net profit, legal
capital reserve, 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 shareholders' meeting, then it
shall be regarded as loss for the next year and shall not influence theratified financial report.
The Company was approved by the Board of Directors’ meeting on- 61 -

March

12,

2019.

The

distributed

employee

bonus

was

NT$28,267,000 and Director and Supervisor remuneration was
NT$5,975,000.

3. Earnings distribution proposal has passed the Boardof Directors but not the resolution of theshareholders' meeting:
The Company’s 2018 earnings distribution was approved by the
Board of Directors’ meeting on March 12, 2019. A cash dividend of
NT$4.0 per share. (cash dividend from retained earnings at NT$3.38
per share, and cash distribution from capital surplus at NT$0.62 pershare). per share and a stock dividend of NT$0.5 per share is
proposed,

the

total

cash

dividend

tobedistributedisNT$212,370,000 and total stock dividend amount is NT$26,546,000.

4. Earnings distribution proposal passed in the
resolution of the shareholders' meeting:
Not applicable. The Company’s 2018 earnings distribution plan wasapproved by the Board of Directors’ meeting on March 12, 2019.
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:
Not applicable.
These values did not differ from the recognized expense and theannual estimated amount.

- 62 -

(9) Buyback of Treasury Stock:
March 31, 2019
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. 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.
3. Issuance of preferred stocks
None.
4. Issuance of global depositary receipts (GDR)
None.
5. Exercise of employee stock option plan (ESOP)
None.
- 63 -

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 plan
Expected
Expand Expenditure
Operatio
Actualn
Expenses Accumulated Expected
0
implementati
on progress Actual
Expected
Expenditure
Other
expenses
0

Actual
Accumulated Expected
implementati
on progress Actual

NT$817,240,000 The total amount of 2015 seasoned
equity offering was
NT$1,098,926,328 NT$1,757,240,000. Among it,
NT$817,240,000 was used mainly for
100% operation expenses. The plan was
executed as scheduled; there were no134.46% major abnormal events.
NT$940,000,000 The total amount of 2015 seasoned
equity offering was
NT$697,973,990 NT$1,757,240,000. Among it,
NT$940,000,000 was used for
100% establishing affiliates. The fund wasused up as expected; there were no73.93% major abnormal events.

- 64 -

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

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

Arts performance activity
Wholesale of cultural
education, musicalinstrument, andeducational entertainment
necessities
Retailer of cultural
education, musicalinstrument, andeducational entertainment
necessities
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
Mobile device software
Others (Note)
Net revenue

2017
2018
Net revenue
Operating Net revenue Operating
weightweight1,436,045
94.82
1,588,776
97.03
78,424
5.18
48,6622.97
1,514,469
100.001,637,438
100.00No te : Ot her s p r i ma r il y r ef er to i nco me fro m rep air, ma i nt e na nc e, a nd la b o r a ffair s.

- 65 -

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 themeantime 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 inTokyo, Japan since 2018. Starting from 2015, 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 in planning and developing relevant peripheralproducts, thereby expanding the sources of income, the hexaRide and the new i-Ride Taipei
are the latest developments in this segment.

- 66 -

In addition to providing fun experiences, Brogent’s product development team proceeds
to put more stringent requirements to improve qualityand security. Moreover, Brogent’s flying
theater won “the Best New Ride of European Star Award 2017” and “European 2018 Annual
Media-Based Attraction”.

Our flying theaters have been formally adopted by the UnitedStates 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.

- 67 -

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- 68 -

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.

- 69 -

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.

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.

Images

4. The Company's new future products (services)
Furthermore, in response to the prevalence of online shopping activities, theconvenience of mobile devices, and the fact that people cannot visit large theme parks inremote areas whenever they desire, the Company has endeavored to build a CitiPark
indoor experience center in the city, where transport is convenient. Using the Company's
innovative imagination, we combined simulator ride technologies with a variety ofimages, music, apparatuses, special effects, and themes, enabling visitors to travel
through space and time. Thus, with this innovation, the benefits of edutainment inlearning geography and astronomy and experiencing foreign cultures can be achieved.
CitiPark is based on the operating model of Disneyland; however, unlike Disneyland andUniversal Studios Japan, which are located in a suburban areas, CitiPark will beestablished in an area easily accessible to tourists, who can then imagine themselves as astory character whenever, wherever they desire, thus creating an experience economy thatis just around the corner. The next CitiPark will open in China .

- 70 -

Regarding the development of simulator rides, in addition to continuing investing in
the R&D and product optimization based on existing hardware designs, the Company alsoendeavors to add different product lines in response to global customer demand,customizing products that are suitable for various types of customers.
The company has launched the compact simulator Q-Ride during the IAE trade
show in Orlando and has received very positive reviews by the international industry
press. The first installation has opened in 2018 in Tokyo and more installations areannounced for 2019.
Brogent also signed a contract for the first installation of the m-Ride compact flying
theatre in the US.

(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
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.
According to the 2015 global tourist attraction report published by the authoritative
Theme Entertainment Association (TEA), the global theme park industry has showed steady
growth in 2015. Particularly, the number of visitors to top 10 theme parks worldwide grew by
7.2% in from 2014 to 15, and the growth rate for the top 25 theme parks was 5.4%. The
growth in the number of visitors from Asian regions was the most significant, at 7.5%. In the
Middle East regions, construction for large-scale theme parks has commenced such as theWarner Bros in Abu Dhabi, which is scheduled to open in 2018. The overall growth rate forEurope remained steady, but United Kingdom, Germany, and Denmark all exhibited stronger
growth.
- 71 -

Current Asian theme parks are experiencing the same bottleneck. For example, China's
theme park exhibited overly high ratio of entrance fees to total revenue (80%) and low tourist
revisit rate (20%). To effectively solve the aforementioned problems, new amusement parks
must focus on product structures and customer services. While theme parks in Taiwan and
China had committed to raising their entrance price to increase their income, theme parks in
non-Asian countries such as the European and American regions have developed peripheralproducts, lowering the proportion of entrance fee income to 50%.
The further expansion of Disney through acquisition of Marvel earlier and Fox in 2017
has underlined the importance of intellectual property for the industry. . In collaboration with
Kodansha, Brogent was able to display the characters and storyline of the Attack on Titan IP
through its simulator ride devices. Concurrently, the Company develops fine cultural andcreative products, which can be promoted through tourists' word of mouth after thenexperienced. Thus, the popularity of these products can be increased, thereby elevating thetotal amount of spending per capita.
Asia has shown strong growth in recent years and neighboring countries in South East
Asia are following with with projects like Chimelong Ocean Kingdom in China that become
Asia’s biggest domestic operated theme park in it’s first year of operation. Similar projects by
local investors opened or will open in Vietnam and Indonesia and large investments are
flowing into Japan to gear the local attractions up for the 2020 Olympic games.

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 wireless- 72 -

embedded control system, spherical projector and playback control systems, anddigital contents. The Company designs and integrates various software andhardware 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 was able to increase it’s annual
attendance from 5.5 to 5.6 million visitors especially in the winter months of its
2017 season thanks to the opening of the Brogent delivered “Voletarium” attraction.
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
Simulator rides are a type of amusement facilities featuring sound, lighting,and realistic effects that are developed to satisfy the entertainment needs ofconsumers. Consumers are given the options of playing on either mechanicalfacilities (e.g., roller coaster, free fall, and pirate ships) or static activities such as
watching a film. However, the mechanical amusement facilities provide relatively- 73 -

monotonous entertainment effects, involve high construction cost, pose safetyconcerns, and are limited to certain age groups. In addition, the operation of thesefacilities is easily affected by weather conditions. Watching a film is a type ofleisure static activity, providing only visual entertainment effects and thus failing tosatisfy the needs for sound and light sensory stimulations pursued among theyounger generations. Therefore, such amusement facilities cannot yield satisfactory
entertainment effects or enhance the parks’ benefits. An overview of the current
domestic market reveals that the Company has no competitors involved in similarbusiness operations. Thus, there are no alternative or competing products on themarket.

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

2.

R&D investments in recent years to the date of the annual report
Year

2018

R&D expenses

118,370

Unit: NT$1,000
2019Q1-

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- 74 -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(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
the Company's product line, and satisfy customers' diversified needs.
B.Reinforce knowledge management and integrate existing data, so that- 75 -

technological resources can be shared to enhance technological capacities.

(3) Human resources and informatization plan
A.Strengthen training programs and enhance the quality of R&D personnel sothat employees can improve as the company develops.
B.Effectively integrate company's internal resources to enhance work
effectiveness.

(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, thereby 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.

(3)Human resources and informatization plan
A.Strengthen training to enhance employee skills.
- 76 -

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.

- 77 -

II.

Market, production and sales(1)Market analysis

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

2017
Net revenue

Unit: NT$1,000
2018
Net revenue%%

25,8151.71

41,3042.52

1,209,646
152,023
115,568
11,417
1,488,654
881,670

79.87
10.04
7.63
0.75
98.29
1,514,469

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

66.70
8.01
10.83
11.94
97.48
100.002. Market Share
An overview of the current domestic market reveals that the Company has nocompetitors; therefore, no information regarding market shares is currently available
for comparison. Regarding simulator rides in new media amusement industries, theCompany is the first to integrate precision machinery, spherical projectors,
audiovisual control, and wireless embedded system and became the company the
independently developed simulator ride technologies. In 2017 four flying theaters
opened in Europe, three of which are delivred by Brogent. We have once again
confirmed our strong position as global market leader in the flying theater market.
Internationally, in addition to Disney in the United States possessing threesimilar theaters that are expensive and not available for third party purchase,
Dynamic Attractions in Canada and Huss and Simtec from Germany both have also
introduced simulator rides. However, these three companies only adopt motion
platform-based hardware technologies and are not equipped with the ability tointegrate hardware and software technologies, rendering them incapable of offering acomprehensive solution regarding simulator rides to business operators. Furthermore,apart from the Simtec solution, their platform moves merely in a maximum of two
axial directions, yielding poor realistic effects. Therefore, after the Company entered
the simulator ride market, the Company will leverage its advantages (technology andcosts), cooperate with Vekoma Rides Manufacturing BV, and introduce simulator
rides to theme parks and tourist attractions around the world. Thus, tourists
worldwide can perceive the enjoyment generated from riding the simulator rides, and- 78 -

the Company's business scale can be enhanced.

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. CitiPark has become the Company's business demonstration site where a profit
distribution business model has been adopted. Taiwan's first standalone i-Ride is now
in operation at the Experience Center at Brogent’s headquarter in Kaohsiung,
providing Taiwanese citizens with diverse sensory experiences. 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
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.

- 79 -

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.

2017 European Star Award for Best New Ride2018 Park World Award for Best Indoor Ride

- 80 -

B. Premium Brand Equity
Theme parks, museums, and exhibition centers are generally a closed market.
The Company combines the marketing channels of internationally well-known theme
park facility suppliers, enabling the successful transition into the theme park supply
chain. This transition will be advantageous for expansion into the global market.
Furthermore, the Company possesses excellent professional technological know-how
and development experience; its products are strongly recognized by international
clients. From 2008 to 2017, product sales distribution has gradually extended into
international communities; Brogent’s products can be found in the following
locations:

Worldwide 30 flying theaters in operation or under installation- 81 -

In 2017 the main focus for openings was in Europe with a major mile stone
opening of a double i-Ride installation at Europa-Park, Germany’s leading theme
park. The attraction also received the European Star Award as best new ride in 2017.
We had two more openings with “This is Holland” in Amsterdam and at a major
theme park in Spain. Our future business development will continue to involve
market internationalization to expand our marketing scope of the global market,
thereby improving the overall revenue performance.
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
The Company holds a solid foundation for software technology development.
Brogent supports the software technology development required for simulator rides.
In 2013, the flying theater i-Ride received the attention of Kodansha. Through theassistance of the Institute for Information Industry Taiwan - Japan Industry
Promotion Center, the Company signed the first memorandum of understanding(MOU) with Kodansha in October 2013. Thereafter, frequent business meetings
were held with the Japanese company, with the hope of integrating Brogent's
product technologies with Kodansha's manga series to launch a highly entertaining
amusement facility. The manga of choice in this cooperation was the popular Attack
on Titan. With Kodansha's support, Brogent officially received authorization for the
manga series Attack on Titan, and began producing related films for the i-Ridefacility.

- 82 -

In 2015, both parties once again signed an MOU with the premise of
expanding their scope of cooperation to including all of Brogent's simulator ride
products. Thus, Kodansha's numerous, popular works can now be displayed throughBrogent's simulator rides and technologies, enabling passengers to immersethemselves in the story. Concurrently, the Company collaborates with suppliers ofperipheral products; sales channels for these products will be established while
theme-based entertainment activities are launched to allow passengers to receive
satisfactory services and products. Consequently, a new sales platform will becreated, elevating the value of cultural and creative products.

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- 83 -

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
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- 84 -

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 recognition for its
technological capability since the successful implementation of the FlyOver Taiwan
and FlyOver Canada projects. For example, the unique fish eye lens designed by theCompany can achieve the projection effects of a spherical screen simply by
installing them with a projector. Thus, the cost and space required for projector
installation are substantially reduced, and the stability and image quality of the
projector system are considerably 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 ofrealism. Furthermore, the Company also possesses the capacity to develop digitalcontent, and customize it according to customer needs, thereby providing multiple
choices to our customers. Therefore, the Company enhances the technologicalcapacity 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. In addition, theCompany adopts "experiencing in an urban setting" as a strategy to actively develop
miniature simulator rides and compete in the market.

- 85 -

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
making R&D talent recruitment and cultivation difficult.
Response measures:
Engage in industry-academia cooperation to cultivate high-quality experts ofdigital 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’ expertise andcharacteristics and provide employees with the opportunity to become a shareholderof the Company so that they could share business outcomes with the Company,
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.

- 86 -

(2) Major product usage and manufacturing processes
1. Main purposes
Theme park, museum, exhibition hall, shopping center, andindoor experience center afford entertainment and educational
functions, provide adventurous experiences, and elicit sense of
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- 87 -

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- 88 -

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 Company develops its own mobile device software instead of outsourcing it.
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$1,000
2017
Item

Name

1
2
3
4

CHN0005
CHN0006
CHN0014
Others
Total

2018

Percentage
Percentage
Relationship
Relationshipof netName
Amountof netwith issuer
with issuer
sales (%)
sales (%)
538,330
35.55%
None.
CHN0016
381,56223.30%
None.
320,163
21.14%
None.
CHN0014286,258
17.48%
None.
161,699
10.68%
None.
CHN0015284,385
17.37%None.
None.
AUS0001
195,435
11.94%
None.
其他494,277
32.63%
489,798
29.91%
合計
1,514,469
100.00%1,637,438
100.00%

AmountReasons for changes:
The Company's chief products are simulator rides. Customers who accounted
for more than 10% of the sales in 2018 are same buyers of the Company’s 2017
customer orders. The major projects were under construction and the revenues
were received according to the percentage of completion. In 2018, the Company
successfully extended its reach into the overseas market. The export amount andcustomer order have grown steadily.

- 89 -

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$1,000
2017
Item

Name

1
2
3

A0000419
A0000012
A0000008
OthersAmount2018

Percentage
of total Relationshippurchase with issuer(%)

110,139
44,45043,335
243,095
441,01924.97%
10.08%
9.83%
55.12%
100.00%

None.
None.
None.

Name
A0000012
A0000008-

Amount58,59839,720236,593334,911Percentage
of total Relationshippurchase with issuer(%)
17.88%
12.12%
70.64%
100.00

None.
None.

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.
A0000012 is the Company's second largest supplier of the spherical screen
manufacturer, from whom the Company made a total purchase of NT$58,598
thousand in 2018. A000008 is the Company's third largest supplier of steel
structures and push carriers from whom we made a total purchase of NT$39,720
thousand. 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.

- 90 --

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
2017

Year
Sales volume and value
Primary products

Domestic sales
Quantity

2018
Exports

Value

Quantity

Mobile device software-

Simulator rides--

Others (Note)

-

Total

-

Value

Domestic sales
Quantity

Exports

Value

Quantity

Value

-

-

-

-

- 1,436,045--- 1,588,776

20,277-

58,147-41,304-

20,277- 1,494,192-

41,304- 1,596,134

7,358

Note: Others refer to repair and maintenance and income generated sales (gaming machines) and laboraffairs

Reasons for changes:
The Company's adjustment to its sales strategy to reduce the number ofcustomized software projects accepted. Regarding the simulator ride, the amount andratio of exports are comparable to those of 2017, and there have been no majorchanges.

- 91 -

III. Employee Information in the Past 2 Years to the Date of theAnnual Report
End of 2017

End of 2018

Up to
March 31, 2019

Managerial officer

20

24

24

R&D personnel

78

64

65

General employee

46

68

70

Total

144

156

159

Average age

34.07

38.4

38.4

Average years of service (year)

3.10

4.25

4.34

Ph.D

2.1

1.9

1.9

Master's

51.3

53.2

55.3

University

38.2

39.7

37.7

College

6.3

4.5

4.4

Senior high school

2.1

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.

- 92 -

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- 93 -

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 technologies INC. is an executive and administrative office instead of
manufacturing industry in Kaohsiung Software Park. We are willing to be coordinate
with the government policy to promote every energy saving measures(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.

- 94 -

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 10% 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- 95 -

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.

- 96 -

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.

- 97 -

VI. Important contracts
Nature ofcontract

Contracting parties
Malaysia
MYS0002
Iceland
ISL0001

Date of contract start
Content
and end2018.1.19~May
Simulator rides
terminate the contract(t-Ride)according to agreement
2018.2.28~May
Simulator rides
terminate the contract(i-Ride)according to agreement

Restriction
clauses
None.

None.

2018.4.27~May
Simulator rides
terminate the contract(V-Ride)according to agreement
China
CHN0015

Sales
China
CHN0016
United States
GBR0001
United States
USA0008
China
CHN0017Oman
OMN0001Land
RentalLoan

2018.4.27~May
Simulator rides
terminate the contract(V-Ride)according to agreement
2018.4.27~May
Simulator rides
terminate the contract(V-Ride)according to agreement
2018.9.1~May terminate
Simulator rides
the contract according to(Q-Ride)agreement
2018.9.12~May
Simulator rides
terminate the contract(m-Ride)according to agreement
2018.10.9~May
Simulator rides
terminate the contract(m-Ride)according to agreement
2018.12.17~May
Simulator rides
terminate the contract(Storm Theatre)according to agreement
2018.12.30~ May
Simulator rides
terminate the contract(i-Ride)according to agreement

Export Processing
Renting of Kaohsiung
Zone Administration, 2012.3.14 - 2032.3.13
Software Park Land
MOEA
Long-term
Taiwan Cooperative
2016.04.11 - 2031.10.13 collateral-based loanBankapplication- 98 -

None.

None.

None.

None.
Exclusivity fordesignated area
None.

None.

None.

VI. Financial Overview
1. Condensed balance sheets and statement of income (2014 - 2018)(1) Condensed balance sheets
1. Condensed balance sheets- International Financial ReportingStandards (IFRS)- Consolidated
Unit: NT$1,000
Financial information: FY2014 - FY2018(Note 1)Year
Item
Current assets
Property, plant andequipment
Intangible assets
Other assets
Total Assets
Basic
Current
liabilities
DilutedNon-current liabilities
Basic
Total liabilities
DilutedEquity attributable toowners of parent
Share capital
Capital reserve
Basic
Retainedearnings
Diluted
Other interests
Treasury stock
Non-controllinginterests
Total
Basic
shareholders' Diluted
equityAs ofMarch 31,2019
2018
(Note 3)
2,673,862

2014

2015

2016

2017

-

2,341,930

2,238,894

2,203,637-

557,047804,714

951,441

1,066,459--

13,987
235,074
3,148,038
566,592
547,321
88,140654,732
635,461

149,155
98,0813,290,844
307,270
290,894
336,388643,658
627,282

120,157
199,6673,474,902
313,143
279,121356,039
669,182
635,160

166,597
308,893
4,215,811
532,823(Note 2)
783,516
1,316,339(Note 2)--

2,444,938

2,594,050

2,746,998

2,836,176--

446,780
2,043,087
220,459
109,849684
266,072

446,780
2,052,669
211,682
90,937(1,605)
115,476446,780
2,053,485
366,258
70,178(4,049)(115,476)

530,928
2,027,723
270,513(Note 2)
7,012
－

-

-

48,36853,13658,722

63,296--2,493,306

2,647,186

2,805,720

2,899,472--

2,382,696

2,526,441

2,509,640(Note 2)-

Note 1: Starting from 2015, the Company has consolidated financial reports.
Note 2: The 2018 proposal of surplus distribution has not been resolved in the shareholders'meeting.
Note 3: The year to date March 31. 2019 financial results has not yet been reviewed by a CPA.

- 99 -

2. Condensed balance sheets- International Financial Reporting Standards(IFRS)- Individual
Unit: NT$1,000
Financial information: FY2014 - FY2018(Note 1)Year
Item
Current assets
Property, plant andequipment
Intangible assets
Other assets
Total Assets
Basic
Current
liabilities
DilutedNon-current liabilities
Basic
Total liabilities
DilutedEquity attributable toowners of parent
Share capital
Capital reserve
Basic
Retainedearnings
Diluted
Other interests
Treasury stock
Non-controllinginterests
Total
Basic
shareholders'
DilutedequityAs ofMarch 31,2019
2018
(Note 3)
1,888,931
-

2014

2015

2016

2017

1,046,900

1,967,995

1,939,408

1,881,423

310,698

551,001

617,103704,900

852,130-

6,086
53,163
1,416,847
208,712
288,072
180,165
388,877
468,237

13,934
594,044
3,126,974
593,896
577,625
88,140682,036
665,765

146,666
437,806
3,140,983
322,545
306,169
224,388546,933
530,557

117,987
543,585
3,247,895
289,921
255,899
210,976
500,897
466,875

102,946
1,008,906
3,852,913
356,515(Note 2)660,222
1,016,737(Note 2)-

1,027,970

2,444,938

2,594,050

2,746,998

2,836,176-

341,294
459,496
227,180
147,820-446,780
2,043,087
220,459
109,849684
266,072

446,780
2,052,669
211,682
90,937(1,605)
115,476446,780
2,053,485
366,258
70,178(4,049)(115,476)

-

-

-

-

-

530,928
2,027,723
270,513(Note 2)
7,012-

1,027,970

2,444,938

2,594,050

2,746,998

2,836,176-

948,6102,334,328

2,473,305

2,450,918(Note 2)---

Note 1: The 2014 - 2018 financial reports have been certified by the CPA.
Note 2: The 2018 proposal of surplus distribution has not been resolved in the shareholders' meeting.
Note 3: The company does not have individual financial report as of March 31, 2019.

- 100 -

(2) Condensed statements of income
1. Condensed statements of income- International Financial ReportingStandards (IFRS)-Consolidated (Note 1)
Unit: NT$1,000
Year
Item

2014

Sales revenue
Gross profit
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)
Other comprehensive
income(net income)
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

As ofMarch 31,2019
2018
(Note 3)
1,637,438
721,242

Financial information: FY2014 - FY2018 (Note 2)
2015

2016

2017

-

705,424
333,961

881,670444,937

1,514,469
725,335-

130,412

108,508

340,734

289,512--21,81521,076(13,171)

31,615-

152,227

129,584

327,563

321,127-

119,769

106,112271,181258,418

-

-

-

-

-

-

-

-

119,769

106,112271,181258,418--619(1,810)(2,928)

10,899--120,388

104,302268,253

269,317--112,384

101,354

265,670

257,168

-

-

7,385

4,758

5,511

1,250

-

-

113,003

99,544

262,742

268,032

-

-

7,385

4,758

5,511

1,285

-

-

2.57

2.30

5.00

4.84

-

Note 1: Starting from 2015, the Company has consolidated financial reports..
Note 2: The 2015-2018 consolidate financial results has been verified by a CPA.
Note 3: The year to date March 31. 2019 financial results has not yet been reviewed by a CPA.

- 101 -

2. Condensed statements of income- International Financial ReportingStandards (IFRS)-Individual
Unit: NT$1,000
Year
Item
Sales revenue
Gross profit
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)
Other comprehensive
income(net income)
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

As ofMarch 31,2019
2018
(Note 2)
1,325,599
551,358
214,768-

Financial information: FY2014 - FY2018 (Note 1)
2014

2015

2016

2017

829,511
426,915

690,617304,396865,220
390,441

231,250

110,586

110,972

1,202,199
540,111
219,061

38,49230,73010,463

269,742

141,316

121,435

224,432

112,384-

81,036

86,841300,097

301,609

101,354

265,670

257,168

-

-

-

-

-

-

224,432

112,384

101,354

265,670

257,168

-

(686)

619

(1,810)(2,928)

10,864-

223,746

113,003

99,544

262,742

268,032

224,432

112,384

101,354

265,670

257,168

-

-

-

-

-

-

-

223,746

113,003

99,544

262,742

268,032

-

-

-

-

-

-

-

6.83

2.57

2.30

5.00

Note 1: The 2014 - 201 8 financial reports have been certified by the CPA.
Note 2: The company does not have individual financial report as of March 31, 2019.

- 102 -

4.84

-

-

-

3. The 2014 - 2018 Names of auditors and audit opinions
Year

Name of accounting firm

CPA

Audit opinion

2014

Grant Thornton Taiwan

Yi-Shun Chang,
Yu-Chieh Lo

Unqualified 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)

2017

2018

- 103 -

2. Financial Analysis(1) Financial analysis (2014 - 2018)
1. Financial Analysis- International Financial Reporting Standards(IFRSs)-Consolidated (Note 1)
Financial analysis (2014 - 2018) (Note2)

Year (Note 1)
Item (Note 3)

2014

2015

2016

2017

2018

As of
March
31, 2019(Note 3)Debt-to-assets ratio

-

20.80

19.56

19.26

31.22

-

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

463.42370.76332.31345.35-Current ratio-

413.34728.64703.72501.83-

Solvency
Quick ratio(%)-

361.30537.88451.84334.46-

Times interest earned-

31,358.11

2,615.71

5351.093,097.55-

Receivables turnover ratio (times)
Average days of collection
Inventory turnover ratio (times)(Note 2)
Operating Payables turnover ratio (times)
ability
Average days of sales

-

4.05
90.12

3.29
110.94

5.37
67.97

4.85
75.25

-

-

-

Property, plant and equipment (fixed
assets) turnover ratio (times)
Total assets turnover ratio (times)
Return on assets (%)
Return on equity (%)
Paid-in capital to income before tax
Profitability(%) (Note 8)
Net profit margin (%)
Earnings per share (NT$)

-

1.36

1.10

-

0.23
3.89
4.82

-

Cash flow ratio (%)-

Cash flows Cash flow adequacy ratio (%)

Financial
structure
(%)

-

-

-

1.72

1.58

-

0.28
3.45
4.08

0.45
8.17
9.95

0.40
6.47
9.10

-

34.07

29.00

73.32

60.48

-

16.98
2.57

12.04
2.3

17.91
5.00

15.78
4.84

(52.84)(44.9)

55.05

9.50

-

-

24.42

23.47

11.59

49.40

-

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

2.00(3.65)-

Operating leverage

-

1.27

1.75

1.29

1.75

-

-

-

3.52
-

7.33

3.52

Leverage

3.74

-

-

-

1.00
1.05
1.02
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. Solvency ability was worsen mainly because of the growth of 2017 bank loan and interest expense.
2. Cash flow ratio decreased by the net cash generated from operating activities in 2018.

Note 1: Starting from 2015, the Company has consolidated financial reports..
Note 2: The 2015-2018 consolidate financial results has been verified by a CPA.
Note 3: The year to date March 31. 2019 financial results has not yet been reviewed by a CPA.

- 104 -

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

Item (Note 3)

2015

2016

2017

2018

21.81

17.41

15.42

26.39

-

386.42459.72456.72419.63410.31-

Current ratio

501.60331.37601.28648.94529.83-

Quick ratio

445.08280.17509.64563.3

455.67-

Times interest earned

85.32 29,117.66

4202.538020.22

4,110.22-

Receivables turnover ratio(times)Average days of collection

5.46

4.03

2.78

3.22

3.23

-

66.8

90.57

131.29113.35113.00

-

-

-

-

-

-

4.17

8.26

-

-

-

-

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 (%)

7.37
-

3.55
-

3.09
-

3.51

1.33

1.48

1.82

1.70

-

0.69

0.22

0.28

37.63

37.34

-

18.88
30.03

3.66
4.60

3.31
4.02

8.42
9.95

7.42
9.21

-

80.09

31.63

27.18

67.17

56.18

-

27.06
6.83
28.21

16.27
2.57
(50.73)11.71
2.30(7.61)

22.1
5.00
11.83

19.40
4.84
36.86

-

(25.39)

25.92

15.78

16.15

11.89

-

Cash reinvestment ratio (%)

4.79(17.96)(5.80)(3.1)(1.80)-

Operating leverage

1.12

1.37

1.66

1.41

1.46

-

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

2014
27.45

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

As of
March
31, 2019(Note 3)Financial analysis (2014 - 2018)Year (Note 1)

Cash flow adequacy ratio(%)

Leverage

1.01
1.00
1.03
1.02
1.04
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. Solvency ability was worsen mainly because of the growth of 2018 bank loan and interest expense.
2. Cash flow ratio decreased by the net cash generated from operating activities in 2018.

- 105 -

Note 1: The 2014-2018 Financial Reports of the Company have been reviewed by the CPA.
Note 2: 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
differs from general manufacturing industries in that the Company manufactures and sells physicalproducts. Therefore, inventory turnover ratio is not calculated.
Note 3: The company does not have individual financial report as of March 31, 2019
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).
Note 5: Precautions shall be taken when measuring the aforementioned earnings per share:
1. Based on the weighted average number of ordinary shares, rather than on the year-end number ofissued shares.
2. Weighted average number of shares shall be based on the flow period during capital increase ortreasury stock transactions.
3. For earnings transfer or capital reserve transfer, annual and semiannual earnings per share shall be
tracked and adjusted according to the proportion of capital increase without considering theissuance period when capital increased.
4. If the preferred stocks are nonconvertible cumulative preferred stocks, the annual stock dividend(issued or not issued) shall exclude after-tax income or include after-tax loss. If the preferredstocks are noncumulative, then when there is after-tax income, preferred stocks shall exclude
after-tax income, and no adjustment to preferred stocks is required when there are losses.
Note 6: The following precautions shall be taken when measuring cash flow:- 106 -

1. Net cash flow of business activities refer to the net cash inflow in the company's business activity.
2. Capital expenditure refers to the cash outflow for annual capital investments.
3. Increase in inventory is calculated only when the balance at the end of a period exceeds the balance at
the initial period; if the year-end inventory is reduced, then it shall be zeroed.
4. Cash dividend includes the cash dividend from holding ordinary and preferred stocks.
5. Gross property, plant, and equipment refer to the total property, plant, and equipment values before
cumulative depreciation.
Note 7: Issuer shall categorize operating costs and expenditures into fixed or variable costs and expenditures
according to their characteristics; when costs and expenditures are estimated or subjectively determined,
their rationality and consistency shall be ensured.
Note 8: When company stocks have no face value or the face value per share is not NT$10, face value to paid-in
capital shall be calculated according to the equity ratio that is based on the balance sheets of the ownerof the parent.

- 107 -

3. Supervisor Review Report
Refer to Appendix 2.

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

5. Individual financial report reviewed by CPA
Refer to Appendix 3 of the company’s Chinese version 2018 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.

- 108 -

Precautions of Review and Analysis of Financial
Status and Business Performance

VII.
1.

Financial status(1) Consolidated
Year

Item
Current assets
Property,plant
equipment
Other assets
Total Assets

2017

2018

2,203,637
951,441

2,673,862
1,066,459

319,824
3,474,902

Current liabilities

andUnit: NT$1,000
Variation
Amount%470,225
21.34
115,018

12.09

475,490
4,215,811

155,666
740,909

48.67
21.32

313,143532,823

219,680

70.15

Non-current liabilities

356,039

783,516

427,477

120.06

Total liabilities

669,182

1,316,339

647,157

96.71

Share capital

446,780

530,928

84,14818.83

Capital reserve

2,053,485

2,027,723(25,762)(1.25)

Undistributed earnings

366,258

270,513(95,745)(26.14)

Total shareholders' equity

2,805,720

2,899,472

93,752

3.34

Analysis and explanation of changes:(1) Increase in other assets in 2018 was attributed to the reclassifying the current assets.
(2) Increase in current liabilities and non-current liabilities in 2018 was because of the bank loan growth.

(2) Induvidual
Year
Item
Current assets
Property, plant andequipment
Other assets
Total Assets
Current liabilities

2017

2018

1,881,423
704,900

1,888,931
852,130

661,572
3,247,895

1,111,852
3,852,913

289,921

Non-current liabilities

Unit: NT$1,000
Variation
Amount%7,508
0.40
147,230

20.89

356,515450,280
605,018
66,594

68.06
18.63
22.97

210,976

660,222449,246212.94

Total liabilities

500,897

1,016,737

515,840102.98

Share capital

446,780

530,928

84,14818.83

Capital reserve

2,053,485

2,027,723(25,762)(1.25)

Undistributed earnings

366,258

270,513(95,745)(26.14)

Total shareholders' equity

2,746,998

2,836,176(89,178)(3.25)

Analysis and explanation of changes:(1) Increase in other assets in 2018 was attributed to the reclassifying the current assets.
(2) Increase in current liabilities and non-current liabilities in 2018 was because of the bank loan growth.

- 109 -

2. Financial performance(1) Comparative analysis of business performance- Consolidate
Year
Item
Sales revenue
Less: Returns and Allowances
Net revenue
Operating cost
Gross profit
Operating expenses
Operating income
Non-operating income andgain
Non-operating expense andloss
Income (loss) before tax
Income tax benefits (expenses)
Net profit (loss)

Unit: NT$1,000
ChangeVariation as a(amount)
percentage (%)
122,969
8.12
122,969
8.12
127,061
16.10(4,093)
0.56

2017

2018

1,514,469
1,514,469
789,135
725,335

1,637,438
1,637,438
916,196
721,242384,601
340,734

431,730
289,51247,129(51,222)

12.25
15.03

45,88146,509628

1.37

59,052

14,894(44,158)(74.78)327,563(56,382)
271,181

321,127(62,709)258,418

6,436(6,327)(12,763)

1.96
11.22
4.71

Analysis and explanation of changes:(1) Decrease in non-operating expense and loss is due to the reduction of the company’s foreign exchange
loss in 2018.

(2)

Comparative analysis of business performance- Individual
Year

Item
Sales revenue
Less: Returns and Allowances
Net revenue
Operating cost
Gross profit
Operating expenses
Operating income
Non-operating income andgain
Non-operating expense andloss
Income (loss) before tax
Income tax benefits (expenses)
Net profit (loss)

Unit: NT$1,000
ChangeVariation as a(amount)
percentage (%)
123,400
10.26
123,400
10.26
112,153
16.94

2017

2018

1,202,199
1,202,199
662,088

1,325,599
1,325,599
774,241

540,111
321,050
219,061

551,279
336,511
214,768

11,16815,461(4,293)2.07
4.82(1.96)

131,941

102,059(29,882)(22.65)50,905

15,218(35,687)(70.11)300,097(34,427)
265,670

301,609(44,441)
257,1681,512(10,014)
8,502

0.50
29.09
3.20

Analysis and explanation of changes:(1) Decrease in non-operating income and gain is caused by the recognition of investment income
recognized under equity method.
(2) Decrease in non-operating expense and loss is due to the reduction of the company’s foreign exchange
loss in 2018.

- 110 -

(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 2018.

3. Cash flows(1) Analysis on the cash flow changes - Consolidated
Item

2017

2018

Unit: NT$1,000
Changes(increase/decrease)

Net cash inflow (outflow) from operating activities

172,465

50,600(121,865)

Net cash inflow (outflow) from investing activities

165,023(415,587)(580,610)

Net cash inflow (outflow) from financing activities(106,647)

302,915

409,562

Analysis and explanation of changes:(1) In 2018, net business cash intflow increased primarily because of the change of net income and related
assets and liabilities.
(2)In 2018, net investment cash inflow increased primarily because of Acquisition of property, plant andequipment.
(3) In 2018, the net financing cash outflow increased because of the bank loan growth.

(2) Analysis on the cash flow changes - Individual
Unit: NT$1,000
Changes(increase/decrease)

Item

2017

2018

Net cash inflow (outflow) from operating activities

34,291

131,407

97,116

Net cash inflow (outflow) from investing activities

242,388(667,853)(910,241)

Net cash inflow (outflow) from financing activities(128,259)

301,600

429,859

Analysis on the cash flow changes of in these two years:(1) In 2018, net business cash intflow increased primarily because of net income and the change of related
assets and liabilities.
(2)In 2018, net investment cash intflow increased primarily because of Acquisition of long-term
investments at equity.
(3) In 2018, the net financing cash outflow increased because of the bank loan growth.

(3) Improvement plan for inadequate liquidity: None.

- 111 -

(4) Cash flow analysis for the coming year
Unit: NT$1,000
Expected cash
Remedial measures for expected cash deficit
flow from
Expected cash
Cash balance,
investment and surplus (deficit)
beginningfinancing+ Investment plan
Financing plan
activities
660,349
518,715
631,995
1,811,059(1) Expected cash flow from operating activities: Cash inflow will be attribute to net income and the change of related
assets and liabilities.
(2) Remedial measures for expected cash deficit: None
Expected cash
flow fromoperatingactivities

4. Effect of major capital spending on financial position and business operation(1) Major capital spending and sources of funds
Unit: NT$1,000
Project

Actual or
expected sourceof funds

Actual or
estimatedcompletion date

Total funding need

-

-

-

-

Actual or expected status ofspending
2017
2018
-

-

(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.

- 112 -

(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 ~ 2018.
In 2018, 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 2017 and 2018 were respectively
NT$7,216 thousand and 11,368 thousand. The bank loan interest expenses were respectively
NT$6,238thousand and NT$10,713 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$46,404) thousand accounting for (3.06%) and (14.17%) of the operating
income and net profit margin before tax of 2017 ; he net foreign exchange gain was NT$11,047
thousand accounting for 0.67% and 3.44% of the operating income and net profit margin before taxof 2018. Because exchange rate changes influence the profits of the Company, the Company's- 113 -

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 andbalances 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 practical- 114 -

principle 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 2017 to 2018 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 2017 and 2018, it has expended a total of NT$129,949 thousand andNT$118,370 thousand in R&D, respectively accounting for 8.58% and 7.23% of the net operating
income. It is expected that a total of NT$174,463 thousand will be expended in R&D in 2019, andthe Company's future R&D projects are as follows:
Unit
Product
Development
CenterTechnical center

New products under development
A.Games(1).Interactive game combining motion simulation and technology(2).Sensory interactive game combining augmented reality and related 3D
imaging technologies(3).d-Ride interactive shooting game
B.Digital content production (including cooperative development)
C.Theme planning and renovation design
D.Applied equipment combined with wearable device
E.Novel projector technical development
F.Theme-based peripheral product development
A.Group interactive motion theater development
B.Novel simulator ride product development

C.Platform-controlled technological optimization
D.Mechanical design optimization
E.Arts design refinement
F.Equipment miniaturization(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.

- 115 -

(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
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- 116 -

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
in year 2018. 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,- 117 -

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 2017 and 2018 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
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: None.
(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 2017 and 2018of 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.

- 118 -

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

7.Other important events: None.

- 119 -

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

B. Business Scope of each subsidiary

InvesteeCompany
Brogent
Mechanical Inc.

Date of
Location
Establishment

Investment
AmountMay, 2015

Taoyuan,TaiwanNTD 55,000,000

Brogent
Creative Inc.

April, 2015

Kaohsiung, Taiwan

NTD 9,000,000

Brogent Global
Inc.

September,
2015

Kaohsiung, Taiwan

NTD
300,000,000

Brogent Hong
Kong Limited

June, 2015

Kowloon,Hong
Kong

USD 6,700,000- 120 -

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

Investment
AmountBusiness Scope

July, 2015

Shanghai,
China

September,
2015

Shanghai,
China

Development and
RMB 13,000,000 management business of
self-operated outlets

Tokyo,Japan

Management businessand development and
JPY 35,000,000 sales of the peripheralproducts of simulator
rides in Japan

Brogent JapanEntertainment
Joint-Stock
Corporation

August,2016

Dili Jie Holdings
LimitedJanuary,2018

Jetway Holdings
LimitedMarch,
2018

Garlay Holdings
LimitedMarch,
2018

hexaRide the first
LLP

September,
2018

Holey Holdings
LimitedNovember,
2018

BritishVirginIslands
CaymanIslands.
BritishVirginIslands
Tokyo,
Japan
BritishVirginIslands

USD 7,300,000

Import and export
business

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

C. Shareholders in Common of Brogent and Its Subsidiaries with Deemed Control andSubordination: None.
D. Rosters of Directors, Supervisors, and Presidents of Brogent’s Subsidiaries
Investee

Title
Chairman
Director

Brogent
Creative Inc. Director
Director
Director

Name or Representative
Brogent Technologies Inc.
Representative：Chun-Hao Cheng
Brogent Technologies Inc.
Representative：Pei-Chi HoBrogent Technologies Inc
Representative：Shohei Yoshida
Brogent Technologies Inc
Representative：Tsuyoshi ItoMuse- 121 -

Shares Held
SharesPercentatge
900,000

60 %

900,000

60 %

900,000

60 %

900,000

60 %

75,0005%Investee

Title

Name or Representative

Communication Co., Ltd.
Representative：Kuo-Hsiang Yang
Supervisor
Pei-Kuan Lee
Brogent Technologies Inc.
Chairman
Representative：Chih-Hung Ouyang
Sunny Enterprises Co., Ltd.
Brogent
Director
Representative：Wen-Hsiang Kao
MechanicalBrogent Technologies Inc.
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.
Supervisor
LimitedRepresentative：Pei-Kuan Lee

Brogent
ChairmanCreative(Shanghai)Supervisor
LimitedShares Held
SharesPercentatge--

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%

250

14.29%

800

45.71%

Brogent Technologies Inc.
Representative：Chih-Hung Ouyang
Brogent Technologies Inc.
Director
Representative：Pei-Chi
HoBrogent
Brogent Technologies Inc.
Global 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 Hong Kong Limited
Director
Representative：Chih-Hung Ouyang
Brogent Japan
Brogent Hong Kong Limited
Entertainment Director
Representative：Chun-Hao Cheng
Joint-Stock Director
DAISAKU SONODA
Corporation
Kodansha Company, Limited
Director
Representative：Hiroshi Nakada
DENTSU INC.
Director
Representative：Toru Kimpara
Kodansha Company, Limited
Supervisor
Representative：Mitusyuki Shiraishi
Chairman- 122 -

Investee

Title
Supervisor

Dili Jie Holdings
Chairman
LimitedJetway Holdings
Chairman
LimitedGarlay Holdings
Chairman
LimitedChairmanhexaRide thefirst LLP

Director
Director

Holey Holdings
Chairman
LimitedShares Held
SharesPercentatge

Name or Representative
Brogent Hong Kong Limited
Representative：Sen-Hao Cheng
Brogent Technologies Inc.
Representative：Pei-Chi HoBrogent Technologies Inc.
Representative：Pei-Chi HoBrogent Technologies Inc.
Representative：Pei-Chi HoBrogent Hong Kong Limited
Representative：Chun-Hao Cheng
Movic Co. Ltd.
Representative：Gonohe Kota
Brogent Japan Entertainment
Joint-Stock Corporation
Representative：Daisaku Sonoda
Brogent Technologies Inc.
Representative：Pei-Chi Ho

700

40%

-

100%

-

100%

-

100%

-

86.67%-

10.00%

-

3.33%

-

100%

(2) Operational Highlights of Subsidiaries

Investee
Brogent
Creative Inc
Brogent
Mechanical Inc.
Brogent Global
Inc.
Brogent Hong
Kong Limited
Brogent Rides(Shanghai)
LimitedBrogent
Creative(Shanghai)
LimitedBrogent JapanEntertainment
Joint-Stock
Corporation

Capital

Total
Asset

Total
Liabilities

Net
Value

Unit: NT$1,000 As of Dec. 31, 2018
Net
IncomeEPS
Revenue
Profit(After(NTD)
Tax)

15,00014,168321

13,847

1,337

(981)

(918)

(0.60)

125,939

353,841

216,184

137,657

91,970

7,891

6,615

0.53

308,700

556,146

208,241

347,905

248,058

41,99937,191

1.23

200,338

491,414259,835

231,579

25,040(3,567)

3,294-

222,712596,488

304,906

291,582

26,562

24,127

27,605-59,397362,868

266,656

96,212393,243

7,937

9,070

-

25,403

17,116

2,687

14,4292,174(6,269)(6,269)-hexaRide thefirst LLP

41,32852,552

18,12034,432

2,823(7,033)(7,173)-

Dili Jie
Holdings
Limited

267,955

312,218-

312,218--

10,564-

Jetway Holdings
Limited

270,020

312,161-

312,161--

12,028-- 123 -

Investee

Capital

Total
Asset

Total
Liabilities

Net
Value

Revenue

ProfitNet
Income(After
Tax)

EPS
(NTD)

Garlay Holdings
Limited131,258

170,833-

170,833-(2)

11,989-

Holey Holdings
Limited139,753

139,753-

139,753

-

-

-

-

(3) Consolidated Financial Statements: Please refer to Appendix 3.
(4) Consolidated Report: None.

- 124 -

2. Private placement of corporate bonds in the past years to the date of theannual report
Item

Private Placement No. 1
Date of Issue: July 06, 2015

Types of Privately
Ordinary shares
Placed Securities
Date and number of
On June 11, 2014, the Shareholders' meeting passed the private placement of 3,300
shares passed in theordinary shares, which shall take place once or twice in a year starting from the dateshareholders' meeting of resolution.
The pricing criterion for the issuance of privately placed ordinary share resolved intheshareholders' meeting on June 11, 2014, was no less than 6 80% of the private
Pricing criteria andplacement
reference price. This conforms to the regulation of public issuing
rationality
companies regarding the terms and condition of private placement securities;
therefore, the price should be reasonable.
Method of selecting
Not applicable.
designated party
The current private placement is aimed to recruit strategic investors through which
theCompany can strengthen its customer structure, product combination, andNecessary reason for marketing
abilities. Compared with publicly placed securities, privately placed
private placement
securities may not be transferred freely within three years, and such regulation ensuresthe long-term cooperation between the Company and placement subscribers.
Date of Payment
2015.06.03
Completion
Number Relation Participation
Private placement subject
Criteriaof shares within corporate
subscribed company management
Kodasha Custody Account
250,000 Nonein Taipei Fubon Financial
None
Bank
Gains Investment
500,000 None
None
Subscriber information Corporation
Conforms to Article
Shang Yang Investment
43-6 of the Securities
100,000 None
None
Corporationand Exchange Act
Chao Yang Investment
100,000 None
None
Corporation
50,000 None
Cheng-Chien Pu
None
30,000 None
Ming-Chu Kuo
None
Actual subscription (or NT$308
conversion) price
Actual subscription (orconversion) price andNo difference
difference withreference priceEffect of private
The current private placement funds are utilized as operational funds to strengthen
placement on
financial structure, facilitate operation promotion, attract long-term partners, andshareholder's equity
promote stable business growth, thus benefiting the shareholders' rights and interests.
Status of private
placement fundfunds have been received and will be successively utilized following planningspending and project Allcompletion.
implementation
progress
Manifestation ofprivate placement
Not applicable.
benefits- 125 -

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 overthe counter.

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 12, 2019
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 2018：
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, 2018, 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 2018 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 12,
2019, with the seven attending directors all affirming the content of this Statement.
Brogent Technologies Inc.
Chairman：Chung-Ming Huang
President： Chih-Hung Ouyang- 127 -

Appendix 2：Supervisor’s Review ReportSupervisor’s Review Report
The Board of Directors has prepared the Company’s 2018 Business Report, Financial
Statements, and proposal for allocation of profits. The CPA firm of Grant Thornton was retained toaudit the Company’s Financial Statements and has issued an audit report relating to the Financial
Statements. The Business Report, Financial Statements and Profit Allocation Proposal have beenreviewed and determined to be correct and accurate by the Audit Committee members of Brogent
Technologies Inc. According to Article 219 of the Company Law, we hereby submit the report.
To the 2019 Annual General Meeting

Brogent Technologies Inc.

Supervisor：Yi-Hsiang Huang

Supervisor：Yung-Liang Huang

Supervisor：Ken-Huang Lin

March 12, 2019128

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, 2018 AND 2017
(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 12, 2019.

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 9 “Financial Instruments” and related amendment
IFRS 9 supersedes IAS 39 “Financial Instruments: Recognition and Measurement”, withconsequential amendments to IFRS 7 “Financial Instruments: Disclosures” and otherstandards. IFRS 9 sets out the requirements for classification, measurement andimpairment of financial assets and hedge accounting. Refer to Note 4 for information to therelevant accounting policies.

- 141 -

Classification, measurement and impairment of financial assets
Basis on the facts and circumstances on January 1, 2018, the Group has performed anassessment of the classification of recognized financial assets and has elected not to restateprior reporting periods.
The impact on measurement categories, carrying amount and related reconciliation foreach class of the Group’s financial assets when applying IAS 39 and retrospectively
applying IFRS 9 on January 1, 2018 is detailed below:
Carrying
Amount as ofDecember 31,
2017 (IAS 39)

Financial Assets
Debt investments withno active
market-current
Financial assets at
amortized
cost-current
Other financial
assets-current
Held-to-maturity
financial assetsnoncurrent$

196,066

Adjustments
Arising from
Initial Application

Retained Earnings
Effect on
January 1,2018

Adjusted Carrying
Amount as ofJanuary 1, 2018
(IFRS 9)

Note

$

$

$

-

(1)

(196,066)--

230,891-

230,891(1)

34,825(34,825)

-

-

(1)

35,570(35,570)

-

-

(1)

-

56,728-56,728(1)

Other financial
assets-noncurrent

21,158(21,158)

-

-

(1)

Financial assets carriedat cost - noncurrent

17,856(17,856)

-

-

(2)

Financial assets at fairvalue through profit
or loss-noncurrent-

17,856(2,248)15,608(2)

Financial assets at
amortized
cost-noncurrent

Total effect on assets$

305,475$-$(2,248)$303,227

a. Financial assets previously classified as debt investments with no active market,
held-to-maturity financial assets and other financial assets under IAS 39 areclassified as measured at amortized cost under IFRS 9, since these investments areheld within a business model whose objective is to collect the contractual cash flow.
b. Non-publicly traded stocks previously measured at cost under IAS 39 are
re-measured at fair value under IFRS 9 and the adjustments would result a decrease
in retained earnings of NT$2,248 thousand on January 1, 2018.
B. IFRS 15, “Revenue from Contracts with Customers” and related amendments
IFRS 15 establishes principles for recognizing revenue that apply to all contracts withcustomers and will supersede IAS 18, “Revenue”, IAS 11, “Construction Contracts”, and anumber of revenue-related interpretations. Refer to Note 4 for information relating to the- 142 -

relevant accounting policies.
C. IFRIC 22 “Foreign Currency Transactions and Advance Consideration”
IAS 21 stipulated that a foreign currency transaction shall be recorded initial in thefunctional currency by applying to the foreign currency amount at the spot exchange rateon the date of the transaction. IFRIC 22 further explains that the date of the transaction isthe date on which an entity recognizes a non-monetary asset or non-monetary liability frompayment or receipt of advance consideration. If there are multiple payments or receipts inadvance, the entity shall determine the date of the transaction for each payment or receiptof advance consideration.
As of January 1, 2018, the group defer adoption of IFRIC 22.
(2) The IFRSs endorsed by FSC with effective date starting 2019
New, Revised or Amended Standards and Interpretations

Effective Date Issued by
IASB

Annual Improvements to IFRSs 2015-2017 Cycle
Amendments to IFRS 9 “Prepayment Features with Negative
Compensation”

January 1, 2019

IFRS 16 “Leases”

January 1, 2019

Amendments to IAS 19 “Plan Amendment, Curtailment or
Settlement”

January 1, 2019

Amendments to IAS 28 “Long-term Interests in Associates and Joint
Ventures”

January 1, 2019

IFRIC 23 “Uncertainty Over Income Tax Treatments”

January 1, 2019

January 1, 2019

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 16 “Leases”
IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and anumber of related interpretations.
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.

- 143 -

When IFRS 16 becomes effective, it is expected that there will be no significant impact on
the accounting treatment of the Group as lessor. For leases that are lessees, the Group may
elect to apply this Standard either retrospectively to each prior reporting period presented
or retrospectively with the cumulative effect of the initial application of this Standard
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 date of 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 thepresent value of the remaining lease payments (the discounted borrower’s borrowinginterest rate on the initial application date), and the right-of-use asset is measured by theamount of the lease liability. There is no material impact on the rights at the date of initial
application.
The Group expects to apply 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.
Impact on assets, liabilities and equity on January 1, 2019
Carrying Amount asof December 31,
2018

Adjustments
Arising from
Initial Application

Adjusted Carrying
Amount as ofJanuary 1, 2019

Right-of-use
asset-noncurrent

$

-

$

378,410$

378,410

Total effect on assets

$

-

$

378,410$

378,410

Lease liability-current

$

-

$

38,990$38,990

Lease liability-noncurrent
Total effect on liabilities$-

339,420$

378,410

339,420$

378,410

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 adoption- 144 -

of 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 3 “Definition of a Business”

January 1, 2020

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

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 9 and IFRS 15 for the first time on January 1, 2018, and theretroactive conversation difference was recognized as a retained earnings on January 1, 2018,
and didn’t restate the financial statements and notes of 2017, which were prepared inaccordance with IAS 39, IAS 11, IAS 18 and its interpretations.

- 145 -

(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.

- 146 -

B. Subsidiaries included in the consolidated financial statements
The detail information of the subsidiaries at the end of reporting period was as follows:
Percentage of Ownership
Name ofInvestor

Name ofInvestee

Brogent
Technologies
Inc.

Brogent Mechanical
Inc.
Brogent Creative
Inc.

Brogent Hong Kong
LimitedDecember31, 2018

December31, 2017

NoteMay, 2015
Taoyuan City

61.11%

61.11%

1April, 2015
Kaohsiung City

60.00%

60.00%

June, 2015
Hong Kong

100%

100%

Business Scope

Location

Manufacture and sales ofthe simulator rides andrelated key components
Development and sales ofsimulator rides andrelated peripheralproducts
Reinvestment and tradingbusiness

Brogent Global Inc.

Development andmanagement business of
self-operated outlets

September, 2015
Kaohsiung City

100%

100%

Dili Jie Holdings
LimitedReinvestment and tradingbusiness

100%-

Dili Jie
Holdings
LimitedJetway Holdings
LimitedReinvestment and tradingbusiness

March, 2018
British Virgin
Islands
May, 2018
Cayman Islands

100%

-

JetwayHoldings
LimitedGarley Holdings
LimitedReinvestment and tradingbusinessJuly, 2018
British Virgin
Islands

100%-

Holey Holdings
LimitedReinvestment and tradingbusiness

November, 2018
British Virgin
Islands

100%-

GarleyHoldings
LimitedBrogent Rides
Import and export(Shanghai) Limited business

July, 2015
Shanghai

57.53%-

2

Brogent Hong
Kong
LimitedBrogent Rides
Import and export(Shanghai) Limited business

July, 2015
Shanghai

42.47%

100%2

hexaRide the first Development and
LLP
management business of
self-operated outlets

September, 2018Tokyo

86.67%-

Brogent Creative
Development and(Shanghai) Limited management business of
self-operated outlets

September, 2015
Shanghai

100%

100%

Brogent
Rides(Shanghai)
LimitedNote 1: The 2018 and 2017 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- 147 -

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,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- 148 -

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
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- 149 -

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 tohave 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; transportation- 150 -

equipment – 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.
(11) 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. The exchange of simulation entertainment equipment for profit-sharing right ofticket sales is amortized on an average basis over its estimated useful life of 5 to 10 years. If
the fair value of the asset received cannot be measured reliably, its cost is measured at thecarrying 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.
(12) 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 a
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 a

- 151 -

cash-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.
(13) 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.
(14) 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.
(15) Financial Instruments
2018
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 of- 152 -

financial 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 atamortized 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- 153 -

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
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.

2017- 154 -

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

Financial Assets
Ordinary purchases or sales of financial assets are recognized and derecognized on asettlement date basis.
Financial assets are classified as “Financial assets at fair value through profit or loss,”“Debt investments with no active market,” or “Loans and receivables” by nature.
a. Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are stated at fair value at the endof the reporting period, with any gains or losses arising on re-measurement
recognized in profit or loss. Such gains or losses include any dividends and interest
received.
b. Debt investments with no active market
Debt investments with no active market are bond investments with fixed ordeterminable payments that are not quoted in an active market. Such financial assets
are initially recognized at cost, and subsequently measured at amortized cost using
the effective interest method, less any impairment.
c. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Financial assets, other than (a)financial assets at fair value through profit or loss; (b) available-for-sale financial
assets; (c) financial assets of which the holder may not recover substantially all of its
initial investment for reasons other than credit deterioration, are measured atamortized cost using the effective interest method less any impairment, except for
those loans and receivables with immaterial discounted effect. The effective interest
rate calculation includes discounts or premiums and transaction costs.
d. Impairment of financial assets
Financial assets, other than those carried at fair value through profit or loss, areassessed for indicators of impairment at the end of the reporting period. Thosefinancial assets are considered to be impaired when there is objective evidence that,as a result of one or more events that occurred after the initial recognition of thefinancial assets, their estimated future cash flows have been negatively affected.
The amount of the impairment loss is measured as the difference between the asset’s
carrying amount and the present value of the estimated future cash flows (including- 155 -

collateral and guarantee) discounted at the financial asset’s original effective interest
rate.
The carrying amount of the financial asset is reduced by the impairment loss directly
for all financial assets with the exception of loans and receivables, where thecarrying amount is reduced through the use of an allowance account. When loans andreceivables are considered uncollectible, the allowance account is written off .
Recoveries of amounts previously written off are credited against the allowanceaccount when loans and receivables are subsequently collected.
If, in a subsequent period, the amount of the impairment loss decreases and thedecrease can be related objectively to an event occurring after the impairment loss
was recognized, the previously recognized impairment loss is reversed through profit
or loss to the extent that the carrying amount of the financial assets at the date theimpairment loss is reversed does not exceed the amortized cost were the impairment
loss had not been recognized.
e. 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 financial asset’s
carrying amount and the consideration received (or receivable) is recognized in profit
or loss.
B.

Financial Liabilities and Equity Instruments
a. Classification as debt or equity
Debt and equity instruments issued by the Group are classified as either financial
liabilities or as equity in accordance with 1) the substance of the contractual
arrangements, and 2) the definitions of a financial liability and an equity instrument.
b. Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of
the Group after deducting all of its liabilities. Equity instruments issued by the Groupare recognized at the balance of proceeds received, net of direct issue costs.
c. Financial liabilities
Financial liabilities other than those held for trading purposes and designated as atfair value through profit or loss are subsequently measured at amortized cost at theend of each reporting period.
Financial liabilities at fair value through profit or loss are stated at fair value at theend of the reporting period, with any gains or losses arising on re-measurement being
recognized in profit or loss.
d. Derecognition of financial liabilities- 156 -

The Group derecognizes financial liabilities only when the obligations are discharged,
cancelled, or expired. The difference between the carrying amount of the financial
liability derecognized and the consideration paid (or payable) is recognized in profit
or loss.
(16) 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.
(17) 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.
(18) 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 arising
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.

- 157 -

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.
(19) 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.
(20) Revenue Recognition
2018
A. Revenue from Contracts with Customers
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- 158 -

profit or loss.
2017
Income and expenses are recognized in the consolidated statements of comprehensive
income when an increase or decrease in economic benefits can be measured reliably. Income
includes revenues and gains, while expenses include costs, losses and other expenses. If theexpenditures cannot generate future economic benefits, or if the future economic benefits do
not meet the criteria for recognition as an asset, the expenditures should be recognized as
expenses in the consolidated statements of comprehensive income.
Revenues is recognized when it is realized or realizable and earned, that is, when the earning
process is complete or virtually complete. Expense is recognized when it is incurred.
The Group provides customized software development services. When the outcome of thetransaction involving the rendering of services can be estimated reliably, revenue associatedwith the transaction shall be recognized by reference to the stage of completion of thetransaction at the end of the reporting period. When the outcome of the transaction involving
the rendering of services cannot be estimated reliably, revenue shall be recognized only tothe extent of the costs incurred that are recoverable. If it is not probable that the costs
incurred will be recovered, revenue is not recognized and the costs incurred are recognized
as expenses.
If the outcome of the transaction involving the rendering of services is estimated to bear aloss, the loss should be recognized immediately. However, if the loss is estimated to besmaller in future years, the difference should be reversed and recognized as a gain in thatyear.
(21) 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.

- 159 -

(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.

(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)

Share-based Payment
Equity-settled share-based payments are measured at the fair value of equity instruments inaccordance with the given terms to determine the best pricing model. Parameters used for theestimation of the pricing model including stock options’ expected duration, expectedvolatility, expected dividend yield, and other assumptions.

(6)

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 and- 160 -

expenses 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
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.
(7) Changed The Useful Life of Depreciation Assets
The Company’s buildings are structured with a steel-reinforced concrete construction. Afterconsidering the main structure and actual usage of the buildings, the buildings were assessed
to have a longer than expected useful life. Therefore, to be in compliance with theconsumption of the future economic benefits of the buildings, the Company has
re-considered the estimated useful life of these buildings. In response to the buildings’
current status and future economic benefits, the Board of Directors resolved to change theuseful life from 20 years to 50 years on December 30, 2015, which was effective in 2016.
The change of the estimated useful life decreased depreciation expenses by NT$3,622
thousand in 2016, with the effect of changes in estimates accounted for on a prospective
basis.

6. DETAILS OF SIGNIFICANT ACCOUNTS(1) Cash and Cash Equivalents

Cash
Checking accounts
Demand deposits
Foreign currency demand deposits
Cash equivalents

December 31, 2018
$
974
5,608

$

905
53
296,82154,844
358,024$710,647

399,887
121,663132,217$

Total

December 31, 2017

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

- 161 -

(2)Financial Assets at Fair Value through Profit or Loss-Current

Beneficiary certificates
Publicly traded stocks
Non-publicly traded stocks

Current portion
Noncurrent portion

December 31, 2018$454,631
138,955$
593,586

December 31, 2017$
226,7274,240$
230,967$

459,056
134,530$

230,967-$

593,586$

230,967

A. As of December 31, 2017, financial assets were classified as financial assets carried atcost-noncurrent under IAS 39. Please refer to Note 3 and Note 6(9) for information relating
to their reclassification and comparative information for 2017..
B. The Group adopted IFRS 9 on January 1, 2018 and elected not to restate prior reporting
periods in accordance with transition provision(3)

Financial Assets at Amortized Cost
December 31, 2018
Time deposits
Pledged time deposits
Restricted assets-reserve accountNon-publicly traded stock-preferred shares$$
Current portion
Noncurrent portion

190,788
134,051
4,000
35,200364,039$304,864
59,175$364,039

A. As of December 31, 2017, financial assets were classified as debt investments with noactive market, held-to-maturity financial assets-noncurrent and other financial assets under
IAS 39. Please refer to Note 3 and Notes 6(4), 6(8), 6(13) and Note 8 for information
relating to their reclassification and comparative information for 2017..
B. The Group adopted IFRS 9 on January 1, 2018 and elected not to restate prior reporting
periods in accordance with transition provision.
(4) Debt Investments with No Active Market
December 31, 2017$
196,066

Time deposits- 162 -

A. Time deposits represent deposits with maturities more than three months.
B. As of December 31, 2017, none of the financial assets were classified as debt investmentswith no active market under IAS 39 were pledged.

- 163 -

(5) Accounts Receivables and Long-term Accounts Receivables

Accounts receivable-current
Less：Allowance for doubtful receivables

December 31, 2018326,577$-

December 31, 2017$
225,968-

Accounts receivable, net$$

Long-term accounts receivable
Less：Allowance for doubtful receivables

December 31, 2018
18,599$(18,599)

Long-term accounts receivable, net$

326,577

225,968

December 31, 2017$28,215(18,559)

-

$

9,656

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. Accounts
receivable include amounts that are past due but for which the no allowance for doubtfulreceivable is recognized. As of the date of balance sheets, the Group does not hold any
collateral for accounts receivable.
Aging analysis of accounts receivable
December 31, 2018
126,349

December 31, 2017$
125,173

within 30 days
31-90 days
91-180 days

301
15,64629,092

704
2,313
2,040

over 181 days

155,189

105,394$

Neither past due nor impaired
Past due but not impaired

$

Total

326,577$

Movements of the allowance for doubtful receivables
2018
Balance at January 1
Amount written off during the year
Balance transfer to revenue during theyear$

Balance at December 31$- 164 -

235,6242017(18,559)-$900(18,559)(19,544)85$(18,559)(6) Construction Receipts Receivable (Payable)
December 31, 2018
Aggregate costs incurred plus
recognized profits
Less：Progress billings$

December 31, 2017

1,839,233$(1,119,801)(1,384,174)

Net balance sheet position for
construction in progress

1,466,281$

455,059$

346,480$

529,353$

440,021

Presented as:
Construction Receipts Receivable
Construction Receipts Payable(93,541)(74,294)$

455,059$

346,480(7) Inventories
December 31, 2018$

Raw materials

December 31, 2017

264

$

260

Supplies

90,72659,392Work in process

8,903

13,626

Finished goods

5,373

2,558

Simulator ride materials

91,500110,809

Merchandise

3,250

2,470

-

-

Less：Allowance for losses
$

Total

200,016$

189,115(8) Held-to-maturity Financial Assets-noncurrent
Held-to-maturity Financial Assets-noncurrent
Non-publicly traded stocks - Preferred shares

December 31, 2017$35,570A. Preferred shares are financial assets with fixed or determinable payments and fixedmaturity dates, and that the Group has the positive intent and ability to hold to maturity.
B. As of December 31, 2017, none of the financial assets were classified as held-to-maturity
financial assets under IAS 39 were pledged.
(9)

Financial Assets Carried at Cost-noncurrent
Financial Assets Carried at Cost
Non-publicly traded equity instruments- 165 -

December 31, 2017$

17,856

A. Equity instruments are not traded in an active markets, and the Group cannot obtainsufficient information about the industry and the relevant financial information of theinvestee company. Therefore, it is not possible to reasonably and reliably measure the fairvalue of equity instruments.
B. As of December 31, 2017, none of the financial assets were classified as financial assets
carried at cost under IAS 39 were pledged.
(10) Investments Accounted for Using Equity Method
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 the operating
results are summarized below :% of Ownership and Voting
Rights Held by the Group

Carrying Amount
Name of
AssociatePrincipal
Activities

Brogent JapanEntertainment
Corporation

Development and salesof simulator rides andrelated peripheralproducts in Japan

Place of
Incorporation
and Operation
August 2016
Tokyo, Japan

December31, 2018

December31, 2017

$

$

5,772

8,061

December31, 2018

December31, 2017

40%

40%

2018
Net Income (Loss)
Other comprehensive income (loss) for
the year, net of income tax
Total Comprehensive Income (Loss)
For The Year- 166 -

2017$

(2,697)$(1,238)

$

21

$

81

$

(2,676)$(1,157)(11)Property, Plant and Equipment
2018
Equipment Under
MachineryLand

Buildings

Transportation

OfficeOther

Installation andEquipment

Equipment

Equipment

Construction in

and

Total

Equipment
Progress
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

2017
Equipment Under
MachineryLand

Buildings

Transportation

OfficeOther

Installation andEquipment

Equipment

Equipment

Construction in

and

Total

Equipment
Progress
Cost
Balance at January 1$139,868$632,213$11,620$1,140$37,158$67,023$48$889,070

Additions

-

1,377

7,334

59

3,834

4,135

60,57777,316

Disposals

-

-

-

-

-

(200)

-

(200)

Reclassifications

-

-

-

-

-

1,463

114,718

116,181

139,868

633,590

18,954

1,199

40,992

72,421

175,343

1,082,367

Balance at January 1-

45,0697,594

284

17,87013,539-84,356

Depreciation-

24,123

3,093

241

8,814

10,455-46,726

Disposals

-

-

-

-

-

(156)

-

(156)

Balance at December 31-

69,192

10,687525

26,684

23,838-130,926

Balance at December 31, net$139,868$564,398$8,267$674$14,308$48,583$175,343$951,441

Balance at January 1, net$139,868$587,144$4,026$856$19,288$53,484$48$804,714

Balance at December 31

Accumulated Depreciation
and Impairment

A. As of December 31, 2018, the company has reclassified equipment under installation andconstruction in progress from prepayment for the amount of NT$114,470 thousand. And the- 167 -

Group 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, 2018, 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 andequipment.
(12) Intangible Assets
2018
Computer
SoftwarePatentProfit sharing
right

Franchise

Total

Cost
Balance at January 1$

66,518$627$

14,600$113,037$

194,782

Additions

81,218

2,655

960

-

84,833

Disposals(13,137)

(8)

-

-

(13,145)

Balance at December 31

134,599

3,274

15,560113,037

266,470

Balance at January 1

43,595160

9,205

21,66574,625

Amortization

22,111

165

4,813

11,30438,393

Disposals(13,137)

(8)

-

-

(13,145)

Balance at December 31

52,569317

14,01832,96999,873

Balance at December 31, net $82,030

$

2,957

$

1,542

$

80,068$

166,597

Balance at January 1, net

22,923

$

467

$

5,395

$

91,372$

120,157

Accumulated amortizationand impairment$

2017
Computer
SoftwarePatentFranchise

Profit sharing
right

Total

Cost
Balance at January 1$

60,105- 168 -$

325$

14,600$113,037$

188,067

Additions

6,413

302

-

-

6,715

Balance at December 31

66,518627

14,600113,037

194,782

Balance at January 1

24,10652

4,392

10,362

38,912

Amortization

19,489108

4,813

11,30335,713

Balance at December 31

43,595160

9,205

21,66574,625

Balance at December 31, net $22,923

$

467

$

5,395

$

91,372$

120,157

Balance at January 1, net

35,999$273$

10,208$102,675$

149,155

Accumulated amortizationand impairment$

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(5) and 9(6) for details note
disclosure in relation to the related contract commitments.
(13) Other Current and Noncurrent Assets
December 31, 2018
Other financial assets
Tax refund receivable
Other prepayment-noncurrent
Others
Total

Current portion
Noncurrent portion
Total

$

$

$
$

9,142
85,07922,006116,227
December 31, 2018
31,14885,079116,227$$

December 31, 2017
55,983356
91,1806,426
153,945

December 31, 2017
41,607$112,338
153,945$

As of December 31, 2017, please refer to Note 8 for details disclosure for topics of pledged
financial assets were classified as other current and noncurrent assets under IAS 39.
(14) Other Payables
December 31, 2018
Accrued payroll$

December 31, 201778,306$

69,289

Payables on equipment

7,309

805

Accrued insurance

2,981

2,337

Accrued professional fee

2,031

1,388

908

1,159

Accrued pension- 169 -

Others
Total

21,123

18,545$110,080$

96,101(15) Long-term Bank Loans
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.
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.
CTBC Bank：
Loan period from January 2016 to January2032; monthly payment of interest at anannual rate of 1.94% ~2.00% 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.
JihSun Bank：
Loan period from April 2018 to April 2020;
monthly payment of interest at an annual
rate of 1.89% effective in July 2018, withquarterly repayment of principal.

$

Less：Current portion$

Noncurrent liabilities

202,984

December 31, 2017$

217,050

500,000-

106,000

114,000

45,00050,00014,286868,270(108,927)
759,343

381,050(38,576)
342,474$

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

- 170 -

(16)Pensions
2018
Defined benefit pension costs
Defined contribution pensions
Total

$

2017
322
8,100
8,422

$

$

319
7,714
8,033

$

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, 2018 and 2017,
the Company’s pension account balance was NT$1,783 thousand and NT$1,487 thousand,respectively.
B. Reconciliation on the present value of defined benefit obligation and the fair value of plan
assets were as follows:
December 31, 2018
December 31, 2017
Present value of defined benefit obligation$
9,959 $
9,331
Fair value of plan assets(1,794)(1,496)
Accrued pension liabilities$
8,165 $
7,835
C. Movements in net defined benefit liability (asset) were as follows:

Balance at January 1, 2018

Present Valueof the Defined
Benefit Obligation

Fair Value ofthe Plan Assets

Net Defined
BenefitLiability(Asset)

$

$

$

Service cost

9,331
206

(1,496)
-

7,835
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)

$

(1,794)

$

8,165

$

(1,244)$

7,172

Re-measurement

assumptions
Actuarial loss (gain) from experience
adjustments
Recognized in other comprehensive income
Contributions by the Company
Balance at December 31, 2018

$

9,959

Balance at January 1, 2017

$

8,416

Service cost196

- 171 --

196

Present Valueof the Defined
Benefit Obligation

Fair Value ofthe Plan Assets

Net Defined
BenefitLiability(Asset)

Net interest expense (income)

147

(23)

124

Recognized in profit or loss

343

(23)

320

-

11

11

332

-

332

240

-

240

572

11

583

-

(240)

(240)

Re-measurement
Actuarial loss (gain) of return on plan assets
Actuarial loss (gain) from changes in financial
assumptions
Actuarial loss (gain) from experience
adjustments
Recognized in other comprehensive income
Contributions by the Company
Balance at December 31, 2017

$

9,331

$

(1,496)$

7,835

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, 2018
1.25%
2.00%

Discount rate
Future salary increase rate

December 31, 2017
1.50%
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:- 172 -

December 31, 2018

December 31, 2017

Discount rate
0.25% increase
0.25% decrease

$
$

(343)
358

$
$

(332)
346

Future salary increase rate
1% increase

$

1,501

$

1,452

$

(1,300)$(1,255)1% decrease

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, 2018
December 31, 2017
The expected contributions to the planfor the next year
$
240
$
240
The average duration
16.5years
17years
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, 2018
900,000$
530,928$

Authorized capital
Issued capital

December 31, 2017$
500,000$
446,780

As of December 31, 2018, 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 53,093 thousand shares as of the date of the consolidated financial statements.
To fulfill the needs of future operation and enhancing the working capital, the issuance of not
more than 3,300 thousand shares by private placement had been resolved at the generalshareholders’ meeting on June 11, 2014. The privately placed shares may be issued in one orseveral installments (not more than two times) within one year after the resolution of theshareholders’ meeting. The shareholders’ meeting authorized the Board of Directors with fullpower and authority to handle private placement related matters. The record date determinedby the resolution of the Board of Directors was June 4, 2015, with 1,030 thousand shares being- 173 -

issued by private placement at a premium of NT$308 per share, and the aforementioned
issuance of new shares had already been registered. As of the date of the consolidated financial
statements, 1,030 thousand shares are issued by private placement. All of the rights andobligations for the privately placed shares are consistent with those for the issued commonshares of the Company. However, except for being transferred to a transferee meeting therequirement under Article 43-8 of the Securities and Exchange Act, the privately placed sharescannot be sold within three years after delivery of shares.
On May 29, 2018, the general shareholders’ meeting resolved to increase the capital withretained earnings of NT$88,488 thousand, including NT$14,060 thousand for the private
placement. The aforementioned issuance of new shares had already been registered on July 3,
2018, and the record date determined by the resolution of the Board of Directors whichauthorized by the shareholder’s meeting was July 18, 2018.
(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 capital reserve shall not be used for any other purpose.
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.
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.

- 174 -

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 2017 had been resolved at the shareholders’ meeting on
May 29, 2018. The appropriations were as follows:
2017
Dividends Per Share
(NT$)

Amount$Legal reserve

26,567

Special reserve

4,049

Cash dividends

176,976

Stock dividend

88,488
$

Total

$

4.00
2.00

296,080

E. The appropriations of earnings for 2018 had been approved in the meeting of the Board of
Directors held on March 12, 2019 and are to be presented for approval in the shareholders’meeting. The appropriations were as follows:
2018
Amount$Legal reserve

Dividends Per Share (NT$)
16,992

Cash dividends

179,454

Cash dividends of Pain-in capital

32,9180.62

Stock dividends of Pain-in capital

26,546

0.50

$

Total

- 175 -

255,910$

3.38

(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$85,004
thousand. The aforementioned retirement of treasury shares had already been registered on
September 20, 2018.
No treasury shares transactions were occurred for the years ended December 31, 2018 and2017.
(21) Non-controlling Interests
2018
Beginning balance
Attributable-to non-controlling interests :Net income in 2018
Other comprehensive income (loss) in 2018
The consideration paid from acquiring subsidiaries
Cash dividends received by non-controlling interests
Share-based payment transactions$

Ending balance

$

2017

58,722

$

1,250
35
5,511
(2,291)
69
63,29653,136
5,511
75$

58,722(22) Share-based Payment
A.Brogent Global Inc.
(1) As of 31 December, 2018, 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, 2018 and 2017 at NT$361 and NT$310
thousand, respectively.

- 176 -

(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, 2018, 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, 2018 and 2017 at NT$178 andNT$194 thousand, respectively.
(3) Brogent Mechanical Inc. estimated the fair value of employee stock option using
Binomial Option Pricing Model with the follows assumptions:2016 Employee share option plan
Dividend ratio-%
Expected volatility
38.17%
Risk-free interest rate
1.0692%
Expected life
10 years
Fair value at grant date
NT$ 1.97(23) Net Revenue
Items
Construction contract revenue
Service and maintenance revenue
Sales revenue
Profit sharing of ticket sales
Total- 177 -$$

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

$

$

2017
1,436,045
56,074
3,889
18,461
1,514,469

(24) Other Gains and Losses
2018
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

$

2017

2,408
11,047
21,686(1,484)33,657$$$(2,400)(46,404)(44)
36,445(508)(12,911)(25) Additional Information of Expenses by Nature
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$$

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

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

41,87813,345$$55,33838,3932017
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

$

Total

$

$

31,681
3,312
1,762
1,827
38,582$$

7,017
23,744

Total$$

170,890
11,2496,271
7,879
196,289$

202,571
14,561
8,033
9,706
234,871$$

39,709
11,969$$46,72635,713As of December 31, 2018 and 2017, the number of the Company’s employees was 314 and
217, 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 2018 and 2017 based on income before employees’ compensation anddirectors’ and supervisors’ were estimated by a pre-determined ratio. The board of directors- 178 -

has decided to issue compensation of employees and remuneration of directors andsupervisors amounting to NT$28,268 thousand and NT$5,976 thousand on March 12, 2019,
and NT$28,115 thousand and NT$5,907 thousand on March 12, 2018, for year ended
December 31, 2018 and 2017, 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 shareholders’ meeting 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.
(26) Income Tax
A. Income tax expense recognized in profit or loss consisted of the following:
2018

2017

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

Total current tax

61,900$52,975-49(3,562)(1,186)58,33851,838Deferred tax:
The origination and reversal of temporary
differences
Effect of tax rate changes

7,787

4,544

(3,410)-

Unused income tax credits carryforwards

(6)

-

4,371

4,544

Total deferred tax
Income tax expense$- 179 -

62,709$56,382

A reconciliation of income before income tax and income tax expense recognized in
profit or loss was as follows:
2018

2017

Income before income tax$

321,127$

327,563

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

67,161$

62,202789(1,342)

2,323

300

(2,835)(320)

Unrecognized loss carryforwards

184

141

Loss carryforwards(50)(3,462)(3,512)(1,186)236

49(1,126)

-

(461)

-

Non- exempt expense
Movement of unrecognized temporary differences

Income tax adjustments on prior years
Additional income tax on unappropriated earnings
Effect of tax rate changes
Other income tax adjustments
Income tax expense recognized in profit or loss$

62,709$56,382

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:
2018

2017

Deferred income tax expense (benefit)
Re-measurement of defined benefit plans
Exchange differences arising on translation offoreign operations
Effect of tax rate changes

$

$

-

(99)
329

(2)
$

- 180 -

(50)

(52)

$

230

A. Changes in deferred income tax assets or liabilities due to temporary
differences and loss carryforwards:
2018
January
1,2018

Recognize in
profit or loss

Recognize in othercomprehensive
profit or loss

Foreignexchange
adjustments

December
31,2018

Temporary differences
Unrealized defined benefit$
pensions
Loss on valuation of
accounts receivable
Unrealized exchange loss
(gains)
Unrealized gain on
financial instruments
Unrealized depreciation
expenseUnrealized gain from sale
Unrealized warranty
expenseRe-measurement of defined
benefit plans
Non-leaving pay
Deferred revenue
Allowance for doubtful
accounts
OthersLoss carryforward

$

508

$

106

$

-

-

$

614

926

(926)

-

-

-

2,446

(1,474)

-

-

972

-

343

-

-

343

1,642

260

-

-

1,902

-

16

-

-

16

855

(36)

-

-

819

14

-

52

-

66

-

26

-

-

26

-

2,561

-

-

2,561

-

2,855

-

-

2,855

1

(1)

-

-

-

-

2,492

-

(48)

2,444

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)

Deferred income tax
liabilities

-

(18)

-

-

(18)

-

(376)

-

-

(376)

315 $

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

$

-

2017

- 181 -$

January
1,2017

Recognize in
Recognize in otherprofit or loss comprehensive profit orloss

Foreign exchange
adjustments$$

December
31,2017

Temporary differences
Unrealized defined$
benefit pensions
Loss on valuation of
accounts receivable
Unrealized exchange loss
(gains)Depreciation expense
Loss (gain) on
investment using
equity method
Unrealized warranty
expenseRe-measurement ofdefined benefit plans
Exchange differences
arising on translationof foreign operations
Others

495

13

$

-

-

$

508

689

237

-

-

926

1,032

1,414

-

-

2,446

1,666

(24)

-

-

1,642

444

(444)

-

-

-

943

(88)

-

-

855

(85)

-

99

-

14

329

-

(329)

-

-

-

1

-

-

1

Deferred income tax assets $

5,513

$

1,109

$

(230)

$

-

$

6,392

Deferred net profit

$

-

$

(5,653)

$

-

$

(77)

$

(5,730)

Deferred income tax
liabilities

$

-

$

(5,653)

$

-

$

(77)

$

(5,730)B. Unrecognized deductible temporary difference amount of deferred income tax assets:
December
31,2018
Deductible temporary difference from investment using theequity method
Other deductible temporary difference

$
$

1,235
1,235

December
31,2017$$

4,197
14,174
18,371

C. Unused loss carryforwards as follow:
In Taiwan area:
December 31,2018
Year Incurred Audited/Declared amount Unused Creditable Amount Usable Until Year
Estimated amount
$
2028
2018
793

December 31,2017
Year Incurred Audited/Declared amount Unused Creditable Amount Usable Until Year
Declared amount
$
830
2027
2017

- 182 -

D. Unrecognized deductible temporary difference amount of deferred income tax liabilities:
December 31,2018
December 31,2017
Taxable temporary difference from investmentusing the equity method$
75,385$52,997
E. The Company’s income tax returns through 2016 have been assessed and approved by
the Tax Authority.
(27) Earnings per Share
2018

2017

Basic earnings per share

$

4.84

$

5.00

Diluted earnings per share

$

4.84

$

5.00

Number of Shares(In Thousands)

Earnings Per Share(NT$)

Earnings per share is computed as follows:
Amount(In Thousands)
2018
Basic earnings per share
Net income attributable to commonshareholders of the parent$

257,168

53,093--$

257,168$

Effect of dilutive potential common shares

$

4.84

53,093$

4.84

265,670

53,093

$

5.00

-

-

265,670

53,093$

5.00

Diluted earnings per share
Net income attributable to commonshareholders of the parent (including effectof dilutive potential common shares)

2017
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 effectof dilutive potential common shares)$- 183 -

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.
KODANSHA LTD.

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

Type of Related Parties
2018

Entities withsignificant influence
over the subsidiary
Administrative expenses Entities withsignificant influence
over the subsidiary

2017

$

144

$

144

$

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:
2018

2017

Short-term employee benefits
Post-employment benefits$

17,273538$

19,274
535

Total

$

17,811$

19,809- 184 -

8、PLEDGED ASSETS
Pledged Assets
Financial assets at amortizedcost-current (Pledged time
deposits)
Other financial assets-current(Pledged time deposits)

December 31, 2018$

110,076

December 31, 2017$-

Financial assets at amortizedcost-noncurrent (Pledged time
deposits)
Financial assets at amortizedcost-noncurrent (Restrictedassets-reserve account)
Other financial assets-noncurrent(Pledged time deposits)

34,82523,975

-

4,000

-

Construction performance
guarantee and warranty
Construction performance
guarantee and warranty
Lease development
guarantee
Long-term loans

Other financial assets-current(Restricted assets-reserve
account)
Land
Buildings
Total book value-

Purpose15,000139,868
532,443$

9. SIGNIFICANT CONTINGENTCONTRACT COMMITMENTS

810,362

6,158
139,868
433,379$

LIABILITIES

Lease development
guarantee and construction
performance guarantee
Construction performance
guarantee
Long-term loans
Long-term loans

629,230

AND

UNRECOGNIZED(1) As of December 31, 2018 and 2017, the Group had outstanding notes payable for the purpose of
construction performance guarantee and warranty amounting to NT$15,468 thousand.
(2) As of December 31, 2018 and 2017, the Group had outstanding notes payable for the purpose of
research and development guarantee amounting to NT$36,000 thousand.
(3) As of December 31, 2018 and 2017, the Group had outstanding refundable deposits for the
purpose of construction performance guarantee and warranty amounting to NT$290,313
thousand and NT$66,519 thousand, respectively.
(4) Significant Operating Lease Arrangements
In order to raise up the technical level, corporate image, and focus on research anddevelopment resources in response to future continual growth, the Company has increased its
capacity to achieve the goal of sustainable management. The Company leased 1.85 hectaresof land from the Kaohsiung Software Technology Park to establish the Operations Researchand Development Center on February 29, 2012. The lease has a period of 20 years, beginningfrom March 14, 2012 to March 13, 2032, and the lease agreements can be renewed upon
expiration. As of December 31, 2018, the Company had pledged time deposits for the purposeof lease development guarantee amounting to NT$15,000 thousand. The lease payments
recognized in 2018 and 2017 were NT$9,549 thousand and NT$8,805 thousand, respectively.
Notified by Kaohsiung City Government, the monthly lease fee for land has been adjusted- 185 -

from NT$ 50 to NT$ 68.75 per square meter starting on February 1, 2016. However, in orderto improve the investment in Export Processing Zone, to create high-quality industrial
environment and to reduce the impact from the increase of assessed present value of the landannounced in 2016, the Zone Administration has introduced a lease fee relief program for theperiod from January 1 to December 31, 2017. Accordingly, the monthly lease fee of land has
been adjusted from NT$ 68.75 to NT$ 53.76 per square meter. Since 2018, the land rent has
been reviewed with the announcement of the land price which had increased according to thelong-term land rent calculation plan of Export Processing Zoned and the monthly lease fee ofland remain NT$ 53.76 per square meter in 2018 and 2019.
The future aggregated minimum lease payments are as follows:
Years Range on the Lease
Within 1 year
Over 1 year and not later than 5 years
Later than 5 years
Total

December 31, 2018$$

48,570193,252
183,385
425,207

December 31, 2017$$12,21160,441
140,455
213,107(5) The Company has entered into a construction contract for indoor playground equipment of
the theme 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 the remaining NT$225,000 thousand to be paid off from proceeds from the profit sharingof ticket sales. Upon completion of full payments of $375,000, the buyer is obligated tocontinue to share the profit generated from ticket sales.
(6) The Company 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 theseller in October 2014. The Company shall continue to remitting royalties payments based on
the contract provision even through the guaranteed royalties are insufficient during the
copyright period.

10. SIGNIFICANT DISASTER LOSS
None

11. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
None- 186 -

12.OTHERS(1)

Financial Instruments
A. Categories of financial instruments
December 31, 2018 December 31, 2017
Financial Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
-current
Financial assets at amortized cost-current
Debt investments with no active market-current
Accounts and notes receivable
Other receivables
Financial assets at fair value through profit or loss
-noncurrent
Held-to-maturity financial assets-noncurrent
Financial assets at amortized cost-noncurrent
Financial assets carried at cost-noncurrent
Refundable deposits
Other financial assets
Long-term receivables
Total
Financial Liabilities
Accounts and notes payable
Other payables
Long-term bank loans (including current portion)
Total

$

$

$

$

660,349$

710,647

459,056
304,864
326,6259,142

230,967
196,066
225,968
2,721

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

35,57017,856
9,794
55,983
9,656
1,495,228

121,018
110,080
868,270$

50,923

1,099,368$

96,101
381,050
528,074

B. Financial risk management objectives
The Group manages its exposure to market risk (including foreign currency risk, interest
rate risk and price risk), credit risk and liquidity risk with the objective to reduce thepotentially adverse effects the market uncertainties may have on its financial
performance.
The plans for material treasury 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 treasury
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.
- 187 -

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,
2018 and 2017 would have decreased (or increased) by NT$216,614 thousand andNT$210,139 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, 2018 and 2017 would have decreased (orincreased) by NT$3,025 thousand and NT$3,065 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, 2018 and 2017
would have decreased (or increased) by NT$7,329 thousand and NT$7,103 thousand,respectively. Assuming an unfavorable (or favorable) 10% movement in the levels of
the Chinese Yuan against the New Taiwan dollar, the net income for the years ended
December 31, 2017 and 2018 would have decreased (or increased) by NT$73,860
thousand and NT$54,100 thousand, 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 ininterest rates of fixed-income investments and fixed-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, 2018 and 2017 would havedecreased (or increased) by NT$783 thousand and NT$119 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,
2018 and 2017 would have increased (or decreased) by NT$45,551 thousand andNT$16,168 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,- 188 -

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, 2018 and 2017, the Group’s top three largest customers
accounted for 50.96% and 69.91% 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.
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, 2018
Accounts and notes
payableOther payables
Long-term bank loans

$

Total

$

121,018

2-3 years

$

$

-

$

Over 5 years

- $

-

Total

$

121,018

110,080---

110,080

123,655

255,141

242,810316,243

937,849

242,810 $316,243354,753$

Less than
1 yearDecember 31, 2017
Accounts and notes
payableOther payables

4-5 years

50,923
96,101- 189 -

255,141$2-3 years$

4-5 years-$$

Over 5 years

- $

-

-

-

1,168,947

Total

$

50,923
96,101Less than
1 yearLong-term bank loans
Total

2-3 years

45,090$

192,11488,973$

88,973$4-5 years

Over 5 years

54,391

237,960

54,391 $237,960

Total
426,414$573,438

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
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.

- 190 -

(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).
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, 2018
Level 1
Financial Assets at
Fair Value ThroughProfit or Loss
Beneficiary
certificates
Non-publicly tradedstocks$Level 2

Level 3454,631 $

- $

$

Total

454,631 $- $454,631-

138,955

138,955- $138,955 $593,586

December 31, 2017
Level 1
Financial Assets at
Fair Value ThroughProfit or Loss
Beneficiary
certificates
Publicly traded stocks

Level 2

Level 3

Total

719,955$

226,727
4,240

$

-

$

-

$

226,7274,240$

230,967

$

-

$

-

$

230,967

There were no transfers between Level 1 and Level 3 of the fair value hierarchy orassets and liabilities held on December 31, 2018 and 2017 that are measured at fairvalue on a recurring basis except that non-publicly traded stocks which wereclassified as financial assets carried at cost under IAS 39 as of December 31,2017 are
now reclassified as financial assets at fair value through profit or loss under IFRS 9
and the non- publicly traded stocks which were converted from publicly traded stocks- 191 -

are measured at level 3 fair value.
Financial assets at fair value through profit or loss which have quoted prices in active
markets are classified as level 1 fair value. If there are no active markets, thecompany uses evaluation techniques (including income method and market method)
to consider cash flow forecast, recent fundraising activities, evaluation of similar
companies, individual company development, market conditions and other economic
indicators as the basis for the evaluation of fair value. If the financial assets have arestriction on the transfer or sale, the fair value is determined based on the price of asimilar and unrestricted financial assets in the active market. If the significant impact
values used are observable, the assets are classified to the level 2, otherwise they areat level 3.
(2)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, 2018

December 31, 2017

Foreign
Currencies

ExchangeRate

70,51830.72$ 2,166,313

1,283

23.91

2,082

TWD

Foreign
Currencies

Exchange
Rate

TWD

Financial Assets
Monetary items
USD
CAD
EUR
CNY
JPY

$

$

$71,177

29.76$ 2,118,228

30,677

1,282

23.91

30,65335.20

73,286

1,997

35.57

71,033

165,269

4.47

738,752

125,044

4.57

571,451

2,686

0.28

752

180

0.26

47

6

30.72

566

29.76

36

4.47

6,664

4.57

Financial Liabilities
Monetary items
USD
CNY

$

- 192 -

$

184
161

$

$

16,84430,454ADDITIONAL DISCLOSURES(1)

Related Information on Significant Transactions
No.
1
2
3

4
5
6
7
8
9
10
(2)

Items
Financings provided
Endorsement/guarantee provided
Marketable securities held at the end of the period (excluding
investments in subsidiaries, associates and jointly controlled
entities)
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
Total purchases from or sales to related parties reaching NT$100
million or 20% of the paid-in capital or more
Receivables from related parties reaching NT$100 million or 20%of the paid-in capital or more
Derivative financial instruments undertaken during the reporting
periodOthers: The business relationship between the parent and thesubsidiaries and significant transactions between them

Table
1
2
3

4
None
None
5
6
None
7

Information on Investees
Please see Table 8 attached (excluding the investee in Mainland China).

(3)

Information on Investments in Mainland China
A. Please see Table 9 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.

- 193 -

Table 1: Financings provided as of December 31, 2018
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)No.

0

FinancingCompanyCounterparty

Brogent
Technologies
Inc.

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
Drawn (Foreign
Currencies inThousands)

Interest
Rate

Nature forFinancing(Note 4)

Transaction
Amounts

Reason for
FinancingYes$264,352$264,352

$-

-

2

$-

OperatingcapitalYes

264,352

264,352

-

-

2

-

Yes

264,352

264,352

-

-

2

-

Allowance
for Bad
Debt

Value

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

$283,618$1,134,470

Operatingcapital--283,618

1,134,470

Operatingcapital--283,618

1,134,470$-

Collateral
Item

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. Business2. The need for short-term financing

Table 2: Endorsement/guarantee provided as of December 31, 2018
(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)$850,853

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

AmountActually
Drawn(Foreign
Currents inThousands)

Amount ofEndorsement/
Guarantee
Collateralized
by Properties$210,180$210,180$-

850,853
140,120140,120
Brogent Creative
Investee of(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.

- 194 -

Maximum
Endorsement/
Guarantee
AmountAllowable(Note 2)

Guarantee
Provided byParentCompany

Guarantee
Provided bya Subsidiary

Guarantee
Provided to
Subsidiaries in
Mainland
China$-

Ratio ofAccumulated
Endorsement/
Guarantee to
Net Equity per
Latest Financial
Statements
7.41%$1,418,088

Yes

No

Yes

-

4.94%

1,418,088

Yes

No

Yes

Table 3: Marketable Securities Held as of December 31, 2018 (Excluding Investments in Subsidiaries, Associates and Jointly
Controlled Entities)(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
December 31, 2018

Held Company
Name
Brogent
Technologies
Inc.

Type and Name of Marketable
Securities (Note 1)
Fund
Prudential Financial RMB Money
Market Fund RMB
Nomura Asia Pacific Bond Fund-Acc.

Relationship with
the Securities Issuer(Note 2)
None
None

Eastspring Investments Umbrella Fund
- Global Bond Fund of Fund A TWD

None

M&G Optimal Income Fund - M&G
Optimal Income Fund
Yuanta Emerging Asia USD Bond
Fund A TWD
Cathay Senior Secured High Yield
Bond Fund A USD
Taishin Ta-Chong Money Market
FundFranklin Templeton Sinoam Money
Market Fund
JPMorgan Investment Funds - Global
Income Fund - USD
JPMorgan Investment Funds - Global
Macro Opportunities Fund (acc.) USD (hedged)
Fuh Hwa Global Thematic USD

None

Fuh Hwa Olympic II Fund of Funds

None

Fuh Hwa Global Strategic Allocation
Fund of Funds USD

None

None
None
None
None
None
None

None

- 195 -

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

Shares/Units(In Thousands)

Carrying Value(Foreign
Currencies inThousands)(Note 3)

Percentage ofOwnership (%)

957

RMB 10,842-

RMB 10,842

483

RMB 4,763

-

RMB

363

4,800

-

4,800

50

USD 498-

USD 498

954

9,479

-

9,479

2,974

USD 975-

USD 975

3,527

50,036-50,036

4,848

50,035-50,03511

USD 1,918-

USD 1,918

7

USD 997-

USD 99728

USD 312-

USD 31268

USD 721-

USD 72181

USD 743-

USD 743

Fair Value(Foreign
Currencies inThousands)

4,763

Remark( Note 4)

December 31, 2018

Held Company
Name
Brogent Global
Inc.

Type and Name of Marketable
Securities (Note 1)
Common Stock

Relationship with
the Securities Issuer(Note 2)

Jump Media International Co., LTD.

None

This is Holland B.V.

None

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 orloss-noncurrent

264

4,425

0.93%

4,425

100

19,732

10%

19,732Financial Statement AccountFair Value(Foreign
Currencies inThousands)

Remark( Note 4)

Preferred Stock

Brogent Rides(Shanghai)
LimitedBrogent Creative(Shanghai)
LimitedThis is Holland B.V.

None

Financial assets at amortizedcost-noncurrent

200

35,200-35,200Fund
ICBC-Net Asset Value Fund

None

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

15,000

RMB 15,280-

RMB 15,280

RMB 2,000- RMB

NBCB-Net Asset Value Fund
(Redeemable)
Common Stock

None

Fly Over The World Cultural
Development Co. Ltd

None

Financial assets at fair value
through profit orloss-noncurrent

20,000

RMB 25,670

5.71%

RMB 25,670

None

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

500

RMB 511-

RMB 511455

RMB 503-

RMB 503

Fund
ICBC-Net Asset Value Fund
NBCB--Net Asset Value Fund
(Redeemable)

None

1,820 1

2,011,

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.

- 196 -

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)
Purchases/SalesCompany

Type and Nameof Marketable
Securities

Brogent Rides(Shanghai)
LimitedFly Over The
World Cultural
Development
Co. Ltd.

Beginning Balance
Financial Statement
Account

Nature ofCounter-party
Relationship

Financial assets at fairvalue through profit
or loss-noncurrent-

Acquisition

Disposal

Shares/Units(In Thousands)

AmountShares/Units(In Thousands)

Amount-$-20,000$111,450-

Ending Balance

Shares/Units
Carrying Gain/Loss
Amount(In Thousands)
Value on Disposal

-

$-

$-

$-

Shares/Units(In Thousands)

Amount(Note)

20,000$111,450

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
Conditions and General
Transactions

Transaction Details
Purchases/SalesCompany
Brogent Global
Inc.

Name of transactions
Brogent Creative(Shanghai) Limited

Nature ofRelationship

Purchases/Sales

Amounts

Ratio of Total
Purchases/Sales

Payment
Terms

Associate

Sales$204,629

82%

OA 60 Days

Notes/Accounts Receivables or Payables
Ratio of Total
Notes/Accounts
Ending Balance
Receivables or Payables

Payment
Terms

Unit Price
$-

$-

$-

Note

-

Table 6: Receivable from Related Parties Amounting to at least NT$100 million or 20% of the Paid-in Capital(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Company Name
Brogent
Technologies Inc.

Related Party
Brogent Rides (Shanghai) Limited

Nature ofRelationships
Investee of
SubsidiaryEnding Balance (Foreign
Currencies in Thousands)
Account$89,440
Receivable
Other$32,809
Receivable

Note: The calculation of turnover days excludes other receivables from related parties.

- 197 -

TurnoverDay

Overdue
ActionAmountTaken

Amounts Received in
Subsequent Period

Allowance for Bad Debts

Note

-

$-

-

$-

$-

-

-

-

-

-

Table 7: Intercompany Relationships and Significant Intercompany Transactions(Amounts in Thousands of New Taiwan Dollars/Foreign Currencies in Thousands)

Numbers0

Name oftransactions
Brogent

Counterparty
Brogent Mechanical Inc.

Percentage ofConsolidated Net
Revenue or Total Assets-

Prepayments

74,840

-

2%

Inc.

Purchases

80,170-5%Construction receipts payable

60,000-1%

Construction contract revenue

10,603-

1%

Ticket cost

24,180-

1%

Other unearned revenue

28,571-

1%

Construction receipts payable

191,429-5%

Construction contract revenue

23,609-1%

Receivables to related parties

122,249-

3%

Construction receipts payable

89,440-2%

Construction contract revenue

9,867

-

1%

1

Brogent Hong Kong Limited

Brogent Rides (Shanghai) Limited

Brogent Hong
Kong

1

1

Brogent Creative (Shanghai) Limited

1

Construction contract revenue

88,812-

5%

Brogent Global Inc.

2

Prepayments

43,528-

1%

Brogent Creative (Shanghai) Limited

2

Construction receipts payable

207,503-

5%

Advance by projects

44,561-

1%

Construction contract revenue

25,076-1%

Limited2

Financial Statements Items
Payables to related parties

Transaction situations
Transaction Terms
Amounts(Note2)$14,820-

Technologies

Brogent Global Inc.

1

Nature ofRelationship(Note1)
1

Brogent Global
Inc.

Brogent Hong Kong Limited

2

Advance by projects

43,528-

1%

Brogent Creative (Shanghai) Limited

2

Construction contract revenue

204,629-

12%

Brogent Rides (Shanghai) Limited

2

Other receivables

55,471-1%

Note1: “1” represents the transactions from parent company to subsidiary.
“2” represents the transactions from subsidiary to subsidiary.
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.

- 198 -

Table 8: Information on Investees (Excluding the Investee in Mainland China)(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investor
Company
Brogent
Technologies
Inc.

InvesteeCompany
Brogent
Mechanical
Inc.
Brogent Creative
Inc.

Location
Taoyuan City

Kaohsiung
City

Brogent Hong
Kong Limited

Hong Kong

Brogent Global
Inc.

KaohsiungCity

Dili Jie Holdings British Virgin
LimitedIslands
Brogent Hong
Kong
Limited

Dili Jie
Holdings
LimitedJetwayHoldings
LimitedBusiness Scope
Manufacture and sales ofthe simulator rides andits key components
Development and salesof the peripheralproducts of simulator
rides
Reinvestment andtrading business
Development andmanagement businessof self-operated outlets
Reinvestment andtrading businessBrogent JapanEntertainment
Joint-Stock
Corporation

Tokyo

Management businessdevelopment and salesof the peripheralproducts of simulator
rides in Japan

hexaRide thefirst LLPTokyo

Development andmanagement businessof self-operated outlets

Jetway Holdings
LimitedCaymanIslands

Galey Holdings
LimitedBritish Virgin
Islands

Reinvestment andtrading business

Balance as of December 31, 2018

Carrying
Value(Foreign
Currencies inThousands)

Net Income(Loss) of theInvestee

Share of
Profits/Lossesof Investee(Note 1)

$84,123$6,615$4,043

Shares (InThousands)
7,696

Percentage
ofOwnership
61.11%

9,000

900

60.00%

7,781

(918)

(551)

200,338
54,063(USD 6,700) (USD 1,700)-

100.00%231,638(USD 7,689)

3,294(USD 109)

3,294(USD 109)

9,000

Reinvestment andtrading business- 199 -

Note
Subsidiary

Subsidiary

Subsidiary

300,000

300,000

30,870100.00%342,489

39,46539,465

267,955--

100.00%312,329(USD 10,165)

12,083(USD 400)

12,083(USD 400)

10,161
10,161(JPY 35,000) (JPY 35,000)--

40.00%

5,772(JPY 20,748)(6,679)(JPY 24,409)

Note 2-86.67%

29,842(7,168)Note 2

Subsidiary(JPY 107,275)(JPY 26,226)

Note 2

Subsidiary

Note 2

Subsidiary

Note 2

Subsidiary(USD 8,900)

35,818-(JPY 130,000)
270,020--100.00%(USD 8,900)
131,258(USD 4,300)--

100.00%312,161

12,028(USD 10,163)(USD 399)

170,833

11,989(USD 5,562)(USD 397)

139,753
139,753
100.00%(USD 4,550)(USD 4,550)
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.
Holey Holdings
LimitedBritish Virgin
Islands

Reinvestment andtrading business

Original Investment Amount
December 31,
2018(Foreign
Currencies in
DecemberThousands)
31, 2017$55,000$55,000

Subsidiary

Subsidiary
Joint
VentureTable 9: 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

Accumulated
Outflow of
Total Amount Method of Investment fromof Paid-in
Investment Taiwan as of
Capital(Note 1) January 1, 2018
$222,712(USD 7,300)

2

59,397(RMB 13,000)

3

Accumulated
Accumulated
Outflow of
InwardInvestment from Net Income
Carrying
Remittance of
Taiwan as of(Loss) of the Percentage
Amount as of Earnings as
December 31,
InvesteeofShare ofDecember 31, of December
Inflow
2018
Company Ownership Profits/Losses
201831, 2018

Investment Flows

Outflow$22,690$200,022(USD 700) (USD6,600)
-

-

$-

$222,712(USD 7,300)$27,605(USD 915)

100%$27,605$291,583(USD 9,493)(Note2)

$-

-

-

9,070
(RMB1,989)

100%

9,070

96,212(RMB 21,514)(Note2)-

Accumulated Investment in Mainland China asof December 31, 2018

Investment Amounts Authorized by
Investment Commission, MOEA

Upper Limit on Investment$222,712(USD 7,300)$222,712(USD 7,300)$1,701,706

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 and Garley Holdings Limited), which then invested in the investee
in Mainland China.
(3) Others.
Note 2：Amount was recognized based on the audited financial statements.

- 200 -

14. OPERATING SEGMENTS INFORMATION(1) Operating Segments
The Group’s revenues are principally from the research, development, design, production andsales of the media-based attraction (MBA). The Group upholds the concept of sustainable
development, and achieve the objective of making profits for the shareholders 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 the cooperators 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 the sites of global sales and optimize the product content
and value.
The Group’s operating decision maker reviews the Groups’ overall operating results to makedecisions about resource allocation and assess the Groups’ overall performance. Therefore, theGroup has a single operating segment.
(2) Geographic Information
Revenue
2018
TaiwanAsia
EuropeUnited States
Australia
Total

Noncurrent Assets
2017$

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

25,815
1,209,646
115,568
152,023
11,417$ 1,514,469

December 31, 2018

December 31, 2017

$

$

$

1,086,321
32,265
114,470
1,233,056

957,128
114,470
1,071,598$

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

2018

2017

Construction contract revenue
Profit sharing of ticket sales
Service and maintenance revenue
Sales revenue$

1,588,776
21,676
16,58010,406$

1,436,045
18,461
56,074
3,889

Total

$

1,637,438$

1,514,469- 201 -

(4) Major Customer’s Information
2018

2017

Percentage of Net

AmountCustomer R$ 195,435

11.94$ 432,527

28.56

Customer T

277,701

16.96

320,163

21.14

Customer A

122,078

7.46

161,699

10.68

Customer B

48,6842.97

131,082

8.66

Customer C

37,3112.28

105,803

6.99

Customer D

20,8891.28

77,771

5.14

Customer S

11,8607.24

51,781

3.42

Customer Q

22,1611.35

45,071

2.98

Customer O

16,6091.01

28,892

3.45

Customer P

11,212

6.85

10,7950.71

Revenue- 202 -

AmountPercentage of Net

Customer

Revenue