CHICONY - AGM Information 2020 | FinancialReports.eu

Chicony Electronics CO., Ltd. Table of Contents

Page I. Meeting Procedure ........................................................................................................................ 1 II. Meeting Agenda ............................................................................................................................ 2 1. Management Presentation (Company Reports) (1) 2019 Operation Results .................................................................................................. 3 (2) The Audit Committee’s Review Report on 2019 Financial Statements ........................ 3 (3) Report on the Distribution of Employee Compensation and Remuneration to Directorsfor the 2019 Fiscal Year .................................................................................. 3 (4) The 2019 Earnings Distribution of Cash Dividends ...................................................... 3 (5) Other Report Item .......................................................................................................... 4 2. Acknowledgement Items (1) Proposals for acknowledgement of 2019 Business Report and Consolidated Financial Statements and Individual Financial Statements ........................................................... 5 (2) Acknowledgement on the Proposed Distribution of Earnings of the Company in the 2019 Fiscal Year ............................................................................................................. 5 3. Discussion Items (1) Proposal for amendment to the “Procedures for Loaning of Funds”…………………..6 4. Questions and Motions Ⅲ . Attachments 1. Business Report .................................................................................................................... 7 2. The Audit Committee’s Review Report .............................................................................. 14 3. Audit Report by Certified Public Accountants and 2019 Consolidated Financial Reports 15 Audit Report by Certified Public Accountants and 2019 Individual Financial Reports ..... 28 ※ For complete financial statements, please visit “Market Operation Post System” http://mops.twse.com.tw/mops/web/index and click the “Financial Statements” within “Electronic Statements” under “Basic Information” and enter inquiry terms 4. 2019 Earnings Distribution Table ....................................................................................... 42 5. Comparison Table for the original articles and amendments of “Procedures for Loaning of Funds” ................................................................................................................................. 43 6. Full text of the amended “Procedures for Loaning of Funds” ............................................ 45 IV. Appendices 1. Full text of the “Rules for Procedure for Shareholders Meetings” ................................... 50 2. Full text of the “Company’s Articles of Incorporation” ...................................................... 56 3. Shareholding of Directors .................................................................................................... 61 4. The Impact of Stock Dividend Issuance on Business Performance, EPS, and Shareholder Return Rate ......................................................................................................................... 62

Chicony Electronics CO., Ltd.

Procedure for the 2020 Annual Meeting of Shareholders

Report Equity Shares in Attendance
Call the Meeting to Order (call when the number of shares attended reaches statuary number of shares)
Chairperson Remarks
Management Presentations
Acknowledgement Items
Discussion Items
Questions and Motions
Adjournment

-1-

Chicony Electronics CO., Ltd.

2020 Agenda of Annual Meeting of Shareholders

Date and Time: 09:00 on June 10 (Wednesday), 2020

Address: No. 69, Sec.2, Guanfu Rd., Sanchong Dist., New Taipei City (Meeting Room)

Report Equity Shares in Attendance

Chairperson Calls the Meeting to Order

Chairperson Remarks

Management Presentations:

2019 Operation Results.
The Audit Committee’s Review Report on 2019 Financial Statements.
Report on the Distribution of Employee compensation and Remuneration to Directors for the 2019 Fiscal Year
The 2019 Earnings Distribution of cash dividends
Other Report Items.

Acknowledgement Items:

Proposals for Acknowledgement of 2019 Business Report and Consolidated Financial Statements and Individual Financial Statements.
Acknowledgement of the 2019 Earnings Distribution.

Discussion Items:

Proposal for amendment to the “Procedures for Loaning of Funds”.

Questions and Motions

Adjournment

-2-

Management Presentations

1. 2019 Operation Results

Description: Please refer to Attachment 1 on Page 7 to 13 of the Handbook for the 2019 Business Report.

2. The Audit Committee’s Review Report on 2019 Financial Statements.

Description: Please refer to Attachment 2 on Page 14 of the Handbook for the Audit Report by The Audit Committee.

3. Report on Distribution of Employee compensation and Remuneration to Directorsfor the 2019 Fiscal Year.

Explanation:

(1) The distribution was made in accordance with Article 18 of the Company’s Article of Incorporation: “The Company shall distribute no less than 11% of current pre-tax earnings before deducting the employee compensation and Directors remuneration as the employee compensation and no more than 1% of such earnings as the remuneration for Directors .”
(2) The Company’s earnings in 2019 was NTD$7,141,923,896. After the deliberation by the 3rd Remuneration Committee of the 4th Term and the approval of the 5th Directors’ Meeting of the 13th Term on March 10, 2020, NTD$838,112,364 is distributed as the employee compensation and NTD$52,069,960 is distributed as the remunerations for Directors.
(3) Remuneration for directors and will be distributed in cash, Parts of the Employee Compensation also will be distributed in cash, which totals are NTD$438,112,377. Employee compensation NTD$399,999,987 will be distributed in stock 4,962,779 shares shall be determined by the closing price NTD$80.6 of the day before the meeting date of the Board.
(4) The shareholder rights and obligations of the new shares are the same as those of issued shares.
(5) The differences between estimated and actual amount in Employee compensation and remuneration for directors will be listed by changing in accounting estimate as profit or loss in 2020.

4. Report on Earnings Distribution of cash dividends for the 2019 Fiscal Year.

Descriptions:

(1) The Board of Directors was authorized to decide the distribution of partial or full dividends in cash, and report the decision to the shareholders meeting in accordance with Article 18-1 of the Company’s Articles of Incorporation.
(2) After the approval of the 5th Directors’ Meeting of the 13th Term on March 10, 2020, cash dividends amounting to NT$4,362,815,770 were distributed to shareholders at NT$5.9 per share. The cash dividend will be rounded to dollar, and the odd amounts will be combined and added to the Other Revenues of the Company.
(3) The chairman was authorized by the board of directors to decide the ex-dividend

-3-

date, and date of issuance. In case of a change in the dividends rate in the wake of a change in the number of outstanding shares due to a repurchase of the Companye of a change in the dividends rate in the wake of a change in the number of outstandd to bestow powers upon it to carry out the changes as appropriate.

(4) The ex-dividend date is April 16, 2020, and the cash dividend issue date is May 12, 2020.

5. Other Report Item

N/A

-4-

Acknowledge Items

Item 1 : Proposals for Acknowledgement of 2019 Business Report and Consolidated Financial Statements and Individual Financial Statements. (Proposed by the Board)

Explanation:

(1) The 2019 Business Report and Consolidated Financial Statements and Individual Financial Statements of the Company had been approved by the resolution made in the 5th Board of Directors meeting of the 13th Term on March 10, 2020. We hereby propose them for acknowledgement in accordance with the regulations.
(2) The aforementioned Consolidated Financial Statements and Individual Statements have been audited by public accountant Jin-Chang Chen and Shi-Rong Wong from PwC Taiwan on March 10, 2020, and the context is consistent with the context approved by the Board of Directors meeting.
(3) Please refer to Attachment 1 between Page 7 and Page 13 of the Handbook for the 2019 Business Report and Attachment 3 between Page 15 and Page 41 of the Handbook for the Audit Report by certified public accountants, Consolidated Financial Statements and Individual Financial Statements.
(4) Please proceed to adopt.

Resolution:

Item 2: The distribution of earnings of the Company for the 2019 fiscal year is proposed for acknowledgment.(Proposed by the Board) Explanation:

(1) The Distribution of 2019 Earnings was approved by 5th board of directors meeting of the 13th Term on March 10, 2020 and the Audit Committee issued an Audit Rreport.
(2) For distribution of earnings in the 2019 fiscal year, please refer to Handbook, p.42, Attachment 4.
(3) Please proceed to adopt.

Resolution:

~5~

Discussion Item

Item1: Proposal for amendment to the “Procedures for Loaning of Funds”. (Proposed by the Board) Explanation:

(1) It is proposed that the “Procedures for Loaning of Funds” shall be amended in accordance with Article 11 of the Q&A on “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” released in July 2019 by the FSC.
(2) Please refer to Attachment 5 on Page 43 of the Handbook for the comparison table of articles to be amended.
(3) Please refer to Attachment 6 between Page 45 and Page 49 of the Handbook for the full text of the “Procedures for Loaning of Funds”.
(4) Please proceed to adopt.

Resolution:

Questions and Motions

Adjournment

~6~

Attachment 1

Chicony Electronics CO., Ltd. 2019 Business Report

1. 2019 performance

(1) 2019 Operational Result

With the joint efforts by our management team and employees, our 2019 Consolidated Revenue reached $92,552,325 thousands, which has an increase of 6% compared to 2018. Our Operating Profit amounted to $6,269,465 thousands, while the Net Profit amounted to $5,838,817 thousands, an increase of 35% and 63% respectively compared to 2018.

(1) Financial Highlights and Profitability Analysis
a. Financial Highlight

ompared to 2018. ancial Highlights and Profitability Analysis . Financial Highlight	ompared to 2018. ancial Highlights and Profitability Analysis . Financial Highlight	ompared to 2018. ancial Highlights and Profitability Analysis . Financial Highlight	ompared to 2018. ancial Highlights and Profitability Analysis . Financial Highlight
Units: NTD thousands Item 2019 2018 Increase (decrease) OperatingProfit 6,269,465 4,649,536 34.84% Net Profit 5,838,817 3,590,711 62.61% Average Total Assets 70,188,083 68,193,144 2.93% Average Shareholder Equity 25,673,265 23,935,896 7.26%
Item	2019	2018	Increase (decrease)
OperatingProfit	6,269,465	4,649,536	34.84%
Net Profit	5,838,817	3,590,711	62.61%
Average Total Assets	70,188,083	68,193,144	2.93%
Average Shareholder Equity	25,673,265	23,935,896	7.26%

b.Profitability

.Profitability
Item	2019	2018
Return on Average Assets(%)	8.32	5.27
Return on Average Shareholder Equity (%)	22.74	15.00
Operating Profit on End-of-Period Shareholder Equity (%)	85.36	63.66
Net Profit Margin(%)	6.31	4.11
Earnings Per Share (Note)	$8.45	$5.22

Note : Earnings per share is the amount of employee remuneration that is not distributed based on earnings and the number of new shares issued through capitalization of earnings before retroactive adjustment.

(3) Research and development

In 2019, the Company and its subsidiaries spent approximately $3,369,287 thousands on product development, automation production equipment, and process improvement. Solid R&D ability is Chicony’s crucial competitiveness to face fast-changing industry environment. To cultivate and attract more and more excellent R&D talents, Chicony has cooperated with National Taipei University of Technology by providing “Chicony R&D scholarship” and has created a “C&T laboratory” for potential R&D candidates. Aiming to innovative technology trend, Chicony will continuously develop cutting edge products

~7~

including keyboards, power supplies, smart home products (including smart speakers, smart doorbells, and IP cams, etc.) to attract more clients and win more business opportunities

2020 Business Project Summary (1) 2020 Business Target and Business Outlook

The economic growth rate of the Asia Pacific region used to be the highest in the world, accounting for more than two-thirds of the global growth. However, the continuing tense trade war between China and the United States and the recent new coronavirus epidemic have disrupted the global supply chain, and governments of various countries have adopted tourism bans which severely damaged the tourism industry; these have dragged down the economies of Asian countries. In addition, the anti-delivery to China struggle in Hong Kong and the tense relationship between Japan and South Korea have further deepened regional tensions and continued to raise geopolitical risks. All these factors have led to a decline in the overall GDP of Asia, and it is expected that the GDP of Asia outside China and India will decline by 0.5% in 2020. Research institutes estimate that the global economic growth rate in 2020 is about 2.53%, lower than 2.62% in 2019, which is the third consecutive year of slowdown since the peak of 3.42% in 2017. Although the annual growth rate of global commodity exports in 2020 has changed from a negative growth of 2.24% in 2019 to a positive growth of 1.65%, it is still significantly lower than 9.54% in 2018 and 10.78% in 2017.Economic growth of major economies in 2020: the U.S. forecast is 2.06% (lower than 2.31% in 2019), but the growth rate will rise quarter by quarter. The EU (excluding the U.K.) forecast is about 1.10%, lower than 1.42% in 2019. China's original forecast is 5.80%; however, affected by the new coronavirus epidemic, its economic growth will be impacted at least for one to two quarters, and in the worst-case scenario it is likely to be less than 5%, a record low since 1991. Only emerging market countries have an estimated economic growth rate of 4.22%, an increase of about 0.1% compared with that in 2019. In 2020, under the uncertainties of US trade policy, the change of financial situation in emerging markets, the economic and financial downturn in mainland China, and the "spillover effect" of the new coronavirus epidemic on other Asian markets, the world will be in a highly unstable situation where the financial environment may suddenly and severely tighten.

The scale of the PC market has been shrinking year by year and the purchase of consumer models has declined significantly. Fortunately, the support of the commercial market and the gaming field with a large increase in demand since 2013 have slowed down the decline of PC shipments. However, there was no debut of heavyweight PC games to spur the purchase in the gaming market in 2019 and other than that the existing gaming machine specifications are sufficient for PC games, the rapid improvement of mobile phone specifications and efficiency and the launch of new mobile phone games are the main reasons for the slowdown of gaming demand. Fortunately, the trend of machine

~8~

change in the commercial market due to the launch of Windows 10 and the Sino-US trade war urge manufacturers to store goods in advance and recently artificial intelligence (AI), Internet of Things (IOT), business intelligence, blockchain and big data have become the standard equipment of enterprises, enterprises are urged to accelerate their update of PC equipment responsible for data processing and analysis and give PCs a new wave of growth momentum.

NB products have been developed well; recently the production has been maintained at about 150 million units, and the growth momentum is mainly driven by the growth of gaming NB and the trend of PC upgrade due to business needs. In 2019, due to the Sino-US trade war, the NB market had an expected shipment growth of 1.6% due to vendors’ advance preparation of inventory and not-so-bad performance of Chromebook. However, the doubts about the Sino-US trade war in 2020 are not removed. Although most of the enterprises have arranged non-mainland China overseas production capacity, the cost will still significantly increase and the overall shipment is expected to decline in 2020. Looking forward to the design of the next generation of NB, after the mass production of flexible panels, the folding screen is bound to bring new topics, and new business opportunities are expected to be found in the NB industry which has been weak for many years.

As consumers have realized the functions and advantages of smart home solutions and the price of related devices and services has declined, research institutes estimate that the global sales of smart home devices, the number of households with smart home devices and the overall smart home spending including related hardware devices, software and services will continue to grow in the next few years. In 2019, the global overall smart home spending will continue to grow, and the annual increase of shipments is 26.9%. In terms of device types, video entertainment devices continue to rank the top of all devices. In 2023, it is expected to be surpassed by the safety devices for family monitoring, and among safety control products, monitoring cameras account for the highest proportion (20%). As the Company's main focus is on smart home monitoring products, the explosive growth of the products can be expected.

Due to the high level of client inventory, 2019 was a relatively sluggish year for the server industry, but the end of inventory digestion has come. Due to the continuous digital transformation of enterprises, the gradual fermentation of AI applications and the active promotion of hybrid cloud by cloud operators, the global server shipment volume is expected to grow by about 5% in 2020. In the medium and long term, the driving force above will continue, plus the explosive increase of 5G data transmission volume in 2023 which may drive calculation demands, it is estimated that the CAGR of global server shipments in 2019 ~ 2024 will reach 6.5%, which is a great help to the subsidiary Chicony Power which produces server power supply.

~9~

The Company continuously optimizes the product mix and actively improves the gross profit margin. Two major products: smart home products (including smart speakers, smart doorbells, wireless network cameras and other security control devices) and gaming related products (including keyboards and power supplies) are growing rapidly, of which the revenue of smart home related products accounts for 34%; the revenue of gaming keyboard products among PC products accounts for about 9%. The price of gaming keyboard is much higher than that of ordinary keyboard and is a big boost to the Company's revenue. Traditional PC keyboard products, benefiting from the market penetration of built-in backlight high unit-price keyboard, have grown from only 15% in 2015 to the present 37%, driving the growth of overall profits. The Company has also launched a global operation plan, and the production bases include China and Southeast Asia. At present, the new factory in Thailand of Southeast Asia is under construction, which is expected to be completed in the third quarter of 2020. In the future, the capacity of the new factory in Thailand will account for about 20% of the overall revenue. The subsidiary Chicony Power has been active in the server field, and its long-term layout of CRPS server power has received orders from major manufacturers one after another. In addition, driven by high-value products such as type-C laptops, game consoles and large wattage laptops, both the Company’s revenue and profit have grown. Moreover, the expansion plans for the Suzhou Wujiang plant and the Thailand plant have been launched; the Wujiang plant is expected to be put into production in the second quarter of 2020, and Thailand plant in the fourth quarter of 2020.

In 2020, the management team of the Company will remain highly confident to actively face the rapid changes in the industry and external challenges and to integrate resources of the group. In addition to the research, development and sales of niche products like original keyboards, digital image, and power supply, non-PC products, such as gaming, server, game console, smart home and IoT, are able to enter markets with potential and application areas with high value-added as these products have stable growth. With the support of these high value-added products, the revenues and profits of the Company also shares a stable growth simultaneously. In addition to the market analysis made by the aforementioned major research institutions, the Company also takes production planning and the operating performance in the past into consideration based on the estimated demands of customers. It is estimated that the number of product sale for PC peripheral devices, digital image, consumer electronic products, and other electronic products of the Company will be 195.6 million, and the number of PC peripheral devices, game consoles, and network communication and other electronic products of subsidiaries Chicony Power Technology and XAVi Technologies Corporation is 172.2 million and 4.5 million respectively.

(2) Business strategies

~10~

The Company will continue to uphold the faith of sustainable and integrity operation and the principle of “No Quality, No Sales,” provide customers with satisfying services, and continue to fulfill the growth in Company revenues and profits in order to give back to our shareholders, employees and society. The operating strategies for products, production, marketing, research and development, human resources, and finance perspectives are described as follows:

a. Products:
(1) Keep developing high gross-margin and differentiated products in keyboard, power supply, and smart home businesses.
(2) Integrate unique technology advantages including image, Wi-Fi, power control, and software to develop higher value-added products.
(3) Escalate Non-PC products revenue proportion including cloud computing and gaming power supply products, smart home products and smart building solution applications, and IOT-wearable devices.
b. Production:
(1) Expand economics of scale in keyboard, image, and power supply products, escalate efficiency of productivity, and strictly control the quality of products.
(2) Enhance the VMI (Vendor Managed Inventory) system with the information provided by EDI and ERP to react customer needs in time, so as to reduce storage cost and improve flexibility and efficiency of delivery and production.
(3) Enhance bargain power by integrating Chicony group procurement resources and integrating common materials of the Group.
(4) Purchase key components directly from the original suppliers to reduce raw material costs.
(5) Keep finding more appropriate suppliers of key components, to create strategic vertical integration to enhance complement and expand economics of scale.
(6) Accelerate the establishment of new manufacturing site in Thailand and continue to escalate the level of automationto effectively improve production efficiency.
c. Marketing:
(1) Provide customer “ONE STOP SHOPPING” menu by integrating Chicony group product lines so as to meet the product demands of customers and to create the greatest profits by the most efficient marketing resources.
(2) Continue to extend the customer base and market share of keyboard, digital image (DV, IPC CAM and lens module) and power supply products.
(3) Expand new products including smart home, IP CAM, IOT-wearable devices, and drones.
(4) Create CFT (Customer Focus Team) so as to integrate Chicony group marketing resources and deeply cultivate crucial customers.

~11~

d. Research and Development:
(1) Collaborate with crucial international hardware/software customers and suppliers so as to control key technologies and create valuable new products together.
(2) Create technology advantages by I.P. Know-How so as to set entry barriers.
(3) Keep developing VA/VE (value analysis/value engineering) and improve product design to increase productivity efficiency and reduce production cost.
(4) Provide “Chicony R&D scholarship” to encourage more excellent R&D talents for developing greater R&D ability and efficiency.
(5) New Product Business Division keeps developing new product opportunities so as to create more blue-ocean market for Chicony.
(6) Establish Intellectual Property Center to obtain and protect patents belongs to Chicony group as well as manage cross-licensing of patents.
e. Human Resources:
(1) Keep providing profession and management training courses to cultivate employees’ professional technique and self-development.
(2) Help employees develop stable self-career plan with position rotation and job deputy, and, there through, the work capacity and position experience can be continuously applied and inherited for eternal operation purpose.
(3) Promote corporate social responsibility activities and allocate certain ratio of the company’s profits to help disadvantaged minorities in the education and medical perspectives. Cooperate with known colleges to cultivate young talents for potential manpower cultivation to present the solid result of corporate social responsibility of the Company.
(4) Keep pace with HR development and policy trend globally and react in time to maintain mutual benefits for both employer and employee.
(5) Concern our employees thoroughly to inspire and keep excellent manpower with the profound retaining system and employee housing plans.
f. Finance
(1) Supervise budget control and carefully manage accounts receivable, inventory, and cash turnover.
(2) Strictly manage the tax-preserving materials and ensure the conduct of tax-preserving materials follow the legal regulation in other countries to make sure the company can benefit from the custom tax.
(3) Keep improve debt ratio, and enhance corporate governance, stock and finance affairs.
(4) Adequately hedge against fluctuations in exchange rates and raw material costs.
(5) Conduct the most appropriate tax planning for entire Chicony group by thorough study of relevant tax law and regulation in related countries.

~12~

  - (6) Minimize the interest cost and plan the middle and long term fund facility according to the trend of interest rate.

  - (7) Keep seeking companies with growth potential or complementary strengths as for investment object or future strategic alliance.

(3) Important production and marketing policies
- a. Focus on the top 10 global brands of manufacturers in personal computers, notebooks, image products, and smartphone. By increasing our business shares among these growing companies, we are able to expand our global market shares and strengthen our position.
- b. Integrate our competitive advantages of multiple product lines, cross-selling, and collaborate material procurement resources.
- c. Establish in-time warehouses logistic system to shorten product delivery time and gain advantages compare to our competitors.
- d. Review and adjust production process to the optimum status. Adopt automatic production to increase productivity efficiency.
- e. Establish VMI (Vendor Managed Inventory) system to enhance material delivery efficiency and reduce stocks of inventory.
- f. Enhance current ERP system and provide management index information. Establish Business Policy Making room with timely information for decision making.
- g. Accelerate the establishment of new manufacturing site in Thailand to satisfy customer demands and diversify risks.
Company development strategy and impact from external competition, laws and regulations, and the overall operating environment in the future:

These subjects are covered in the 2020 Business Plan summary. In addition, the operation of the Company is handled in accordance with laws and regulations. The Company operation has not been affected by the amendments of laws and regulations.

We wish our shareholders Health and Good Luck

Chairman: Kent Hsu

CEO: Roger Lu

CFO: Molly Lin

~13~

Attachment 2

Chicony Electronics CO., Ltd.

The Audit Committee’s Review Report

We hereby confirm

The Board of Directors of Chicony Electronics Co., Ltd prepared and presented the 2019 business report, consolidated financial statements and individual financial statements, and the statement of retained earnings. The financial statements were audited by the PwC Taiwan, appointed by Board, and an independent auditor's report was issued by it.

The Audit Committee has audited the above-mentioned reports that were composed and presented by the Board of Directors. They have been audited and it is concluded the reports are presented fairly according to Corporate Law and other related regulation; therefore, a Supervisor's Report is hereby issued in accordance with Article 14-4 of the Securities and Exchange Act and Company Law Article 219.

For your review

Shareholders’ Meeting 2020

Convener of the Audit Committee: Lee, Yen-Sung

March 10, 2020

~14~

Attachment 3

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of CHICONY ELECTRONICS CO., LTD.

Opinion

We have audited the accompanying consolidated balance sheets of Chicony Electronics Co., Ltd. and its subsidiaries (the “Group”) as at December 31, 2019 and 2018, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (refer to “Other matter” section of our report), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

~15~

Key audit matters

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

Key audit matters for the Group’s consolidated financial statements of the current period are stated as follows:

Appropriateness of warehouse operating revenue cut-off

Description

Refer to Notes 4(32) and 6(25) for policies on revenue recognition and details of revenue.

The Group’s revenue arises from sales of goods, consisting mainly of factory direct shipment and warehouse sales revenue. Warehouse sales revenue is recognised when the goods are dispatched from the warehouses (transfer of control of products) and it is based on the reports and other relevant information provided by the warehouse custodians. The Group’s warehouses are located in multiple countries, and the revenue recognition process involves several manual operations. Thus, we determine the warehouse sales revenue cut off as one of the key areas of focus for this fiscal year’s audit.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

Evaluated the internal controls for regular reconciliation between the Group and its warehouse custodians.
Performed the revenue recognition cut-off tests, including obtaining sufficient appropriate audit evidences from the warehouse custodians and reviewing the reconciliations of the Group’s accounting records.
Conducted warehouse inventory audit by using physical counts or using confirmation letters to validate inventory balances with the warehouse custodians.

~16~

Valuation of inventory

Description

Refer to Notes 4(12), 5(2) and 6(7) for the description of accounting policy, critical accounting estimates, uncertainty of assumptions and details of accounts.

The Group's main inventories are keyboard, power supplies, camera modules and other electronic products. The prices of such inventories are affected by market demand and the rapid technological changes. Therefore, there is higher risk of market decline. As the assessment of net realisable value of inventories is subject to management judgement, we consider the valuation of inventory as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

Assessed whether the Group's accounting policies comply with the relevant standards and the Group’s industry practice and the reasonableness of management’s evaluation process, including the determination of net realisable value of inventories, the sales expenses and the judgement of obsolete inventories. Checked whether the provision policies were consistently adopted in the reporting periods.
Obtained net realisable value statement of inventories to confirm whether the calculation logic was adopted consistently, and tested the data sources of selected samples which includes inventory price or purchase price to verify whether the net realisable value used by the management was in compliance with its policies, and recalculated the accuracy of allowance for inventory valuation losses.

Other matter - Audit of other independent accountants

We did not audit the financial statements of certain consolidated subsidiaries and investments accounted for under the equity method that are included in the consolidated financial statements. Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included in the financial statements and the information disclosed in Note 13 was based solely on the reports of other auditors. Total assets (including investments accounted for under the equity method) of NT$1,605,559 thousand and NT$1,450,280 thousand, constituted 2.25% and 2.10% of consolidated total assets as of December

~17~

31, 2019 and 2018, respectively. Total sales revenue of NT$2,763,206 thousand and NT$2,815,523 thousand, constituted 2.99% and 3.23% of consolidated total sales revenue for the years ended December 31, 2019 and 2018, respectively.

Other matter - Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only financial statements of Chicony Electronics Co., Ltd. as at and for the years ended December 31, 2019 and 2018.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audited committee, are responsible for overseeing the Group’s financial reporting process.

Independent accountant’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material

~18~

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

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

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

~19~

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

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

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

Chen, Chin-Chang Weng, Shih-Jung For and on behalf of PricewaterhouseCoopers, Taiwan March 10, 2020

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

~20~

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2019 Notes AMOUNT 6(1) `$` `4,136,522` 6(2) `3,922,064` 6(3) `2,983,854` 6(5) `153,736` 6(5) `20,184,038` 7 `332,350` `160,242` 6(7) `13,847,346` `1,453,360` 6(13) `-` `6,974` `47,180,486` 6(2) `1,658,144` 6(3) `523,618` 6(4) `482,573` 6(8) `205,522` 6(9) and 8 `12,821,680` 6(10) `891,285` 6(11) and 8 `6,447,876` 6(12) `142,341` 6(31) `152,339` 6(14) and 8 `938,393` `24,263,771` `$` `71,444,257` (Contin~~ued)~~	December 31, 2018
		AMOUNT
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1120 Financial assets at fair value through other comprehensive income - current 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 130X Inventories, net 1410 Prepayments 1460 Non-current assets classified as held for sale, net 1470 Other current assets 11XX Total current assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1517 Financial assets at fair value through other comprehensive income - non-current 1535 Financial assets at amortised cost - non-current 1550 Investments accounted for using equity method 1600 Property, plant and equipment, net 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets		`$` `1,952,439` `4,316,587` `2,920,108` `360,995` `17,615,816` `314,182` `314,508` `15,078,468` `1,591,001` `1,956,546` `1,493`
		`46,422,143`
		`1,993,760` `858,124` `-` `31,755` `12,371,429` `-` `5,537,730` `233,688` `97,958` `1,385,321`
		`22,509,765`
		`$` `68,931,908`

~21~

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity December 31, 2019
December 31, 2018
Notes
AMOUNT
AMOUNT
6(15) and 8
$
895,000
$
5,643,630
6(2)
550,620
70,777
6(25)
147,815
145,243
26,342
1,720
6(16)
23,736,390
22,713,760
7
415,577
300,503
6(17)
10,871,450
8,307,849
1,207,284
1,490,003
117,066
-
6(18)
275,194
508,717
38,242,738
39,182,202
6(18) and 8
100,000
1,006,224
6(31)
583,333
297,554
365,703
-
6(19)
258,456
264,404
1,307,492
1,568,182
39,550,230
40,750,384
6(21)
7,344,975
7,303,799
6(22)
6,114,005
5,633,933
6(23)
4,976,270
4,617,199
3,105,405
1,861,304
9,370,658
8,455,531
6(24)
(
3,331,661) (
3,065,027)
6(21) and 8
(
311,277) (
728,584)
27,268,375
24,078,155
4(3)
4,625,652
4,103,369
31,894,027
28,181,524
9
11
$
71,444,257
$
68,931,908

Current liabilities
2100
Short-term borrowings
2120
Financial liabilities at fair value
through profit or loss - current
2130
Contract liabilities - current
2150
Notes payable
2170
Accounts payable
2180
Accounts payable - related
parties
2200
Other payables
2230
Income tax liabilities
2280
Lease liabilities - current
2300
Other current liabilities
21XX
Totla current liabilities
Non-current liabilities
2540
Long-term borrowings
2570
Deferred income tax liabilities
2580
Lease liabilities - non-current
2600
Other non-current liabilities
25XX
Totla non-current liabilities
2XXX
Total liabilities
Equity attributable to owners of
parent
Share capital
3110
Share capital - common stock
Capital surplus
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained
earnings
Other equity interest
3400
Other equity interest
3500
Treasury stocks
31XX
Equity attributable to owners
of the parent
36XX
Non-controlling interest
3XXX
Total equity
Significant contingent liabilities
and unrecognised contract
commitments
Significant events after the
balance sheet date
3X2X
Total liabilities and equity

Liabilities and Equity	December 31, 2019 December 31, 2018 Notes AMOUNT AMOUNT 6(15) and 8 `$` `895,000` `$` `5,643,630` 6(2) `550,620` `70,777` 6(25) `147,815` `145,243` `26,342` `1,720` 6(16) `23,736,390` `22,713,760` 7 `415,577` `300,503` 6(17) `10,871,450` `8,307,849` `1,207,284` `1,490,003` `117,066` `-` 6(18) `275,194` `508,717` `38,242,738` `39,182,202` 6(18) and 8 `100,000` `1,006,224` 6(31) `583,333` `297,554` `365,703` `-` 6(19) `258,456` `264,404` `1,307,492` `1,568,182` `39,550,230` `40,750,384` 6(21) `7,344,975` `7,303,799` 6(22) `6,114,005` `5,633,933` 6(23) `4,976,270` `4,617,199` `3,105,405` `1,861,304` `9,370,658` `8,455,531` 6(24) `(` `3,331,661) (` `3,065,027)` 6(21) and 8 `(` `311,277) (` `728,584)` `27,268,375` `24,078,155` 4(3) `4,625,652` `4,103,369` `31,894,027` `28,181,524` 9 11 `$` `71,444,257` `$` `68,931,908`
Current liabilities 2100 Short-term borrowings 2120 Financial liabilities at fair value through profit or loss - current 2130 Contract liabilities - current 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2230 Income tax liabilities 2280 Lease liabilities - current 2300 Other current liabilities 21XX Totla current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Lease liabilities - non-current 2600 Other non-current liabilities 25XX Totla non-current liabilities 2XXX Total liabilities Equity attributable to owners of parent Share capital 3110 Share capital - common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3500 Treasury stocks 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognised contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity

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

~22~

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share)

Items YearendedDecember31
2019
2018
Notes
AMOUNT
AMOUNT
6(25) and 7
$
92,552,325
$
87,260,406
6(7)(29)(30)
and 7
(
76,270,837) (
74,643,642)
16,281,488
12,616,764
6(29)(30)
(
3,708,989) (
3,140,664)
(
2,970,822) (
2,162,176)
(
3,369,287) (
2,515,632)
12(2)
37,075 (
148,756)
(
10,012,023) (
7,967,228)
6,269,465
4,649,536
6(26)
706,268
799,617
6(27)
1,321,223 (
255,145)
6(28)
(
123,131) (
143,035)
6(8)
14,911 (
15,501)
1,919,271
385,936
8,188,736
5,035,472
6(31)
(
1,385,984) (
1,056,563)
$
6,802,752
$
3,978,909
(Continued)

4000Sales revenue
5000Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative
expenses
6300
Research and development
expenses
6450
Impairment gain (loss)
determined in accordance
with ifrs 9
6000
Total operating expenses
6900Operating profit
Non-operating income and
expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of loss of associates
and joint ventures
accounted for under equity
method
7000
Total non-operating
revenue and expenses
7900Profit before income tax
7950
Income tax expense
8200Profit for the year

Items	YearendedDecember31 2019 2018 Notes AMOUNT AMOUNT 6(25) and 7 `$` `92,552,325` `$` `87,260,406` 6(7)(29)(30) and 7 `(` `76,270,837) (` `74,643,642)` `16,281,488` `12,616,764` 6(29)(30) `(` `3,708,989) (` `3,140,664)` `(` `2,970,822) (` `2,162,176)` `(` `3,369,287) (` `2,515,632)` 12(2) `37,075 (` `148,756)` `(` `10,012,023) (` `7,967,228)` `6,269,465` `4,649,536` 6(26) `706,268` `799,617` 6(27) `1,321,223 (` `255,145)` 6(28) `(` `123,131) (` `143,035)` 6(8) `14,911 (` `15,501)` `1,919,271` `385,936` `8,188,736` `5,035,472` 6(31) `(` `1,385,984) (` `1,056,563)` `$` `6,802,752` `$` `3,978,909` (Continued)
4000Sales revenue 5000Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Impairment gain (loss) determined in accordance with ifrs 9 6000 Total operating expenses 6900Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of loss of associates and joint ventures accounted for under equity method 7000 Total non-operating revenue and expenses 7900Profit before income tax 7950 Income tax expense 8200Profit for the year

~23~

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share)

Items YearendedDecember31
2019
2018
Notes
AMOUNT
AMOUNT
6(19)
( $
15,311) ($
13,253)
6(9)
-
155,281
6(3)
368,798 (
493,547)
- (
161,893)
353,487 (
513,412)
(
1,232,704) (
5,217)
6(8)
(
7,726)
1,537
(
1,240,430) (
3,680)
($
886,943) ($
517,092)
$
5,915,809
$
3,461,817
$
5,838,817
$
3,590,711
$
963,935
$
388,198
$
5,018,523
$
3,203,987
$
897,286
$
257,830
6(32)
$
8.45
$
5.22
$
8.33
$
5.15

Other comprehensive income
Components of other
comprehensive income (loss)
that will not be reclassified to
profit or loss
8311
Actuarial loss on defined
benefit plan
8312
Gains on revaluation
8316
Unrealised gain (loss) on
equity instruments at fair
value through other
comprehensive income
8349
Income tax related to
components of other
comprehensive income that
will not be reclassified to
profit or loss
8310
Other comprehensive
income (loss) that will not
be reclassified to profit or
loss
Components of other
comprehensive income (loss)
that will be reclassified to
profit or loss
8361
Financial statements
translation differences of
foreign operations
8370
Share of other
comprehensive (loss)
income of associates and
joint ventures accounted for
using equity method
8360
Other comprehensive loss
that will be reclassified to
profit or loss
8300Total other comprehensive
loss for the year
8500Total comprehensive income
for the year
Profit attributable to:
8610
Owners of the parent
8620
Non-controlling interest
Comprehensive income
attributable to:
8710
Owners of the parent
8720
Non-controlling interest
Earnings per share (in NT
dollars)
9750
Basic earnings per share
9850
Diluted earnings per share

Items	YearendedDecember31 2019 2018 Notes AMOUNT AMOUNT 6(19) `( $` `15,311) ($` `13,253)` 6(9) `-` `155,281` 6(3) `368,798 (` `493,547)` `- (` `161,893)` `353,487 (` `513,412)` `(` `1,232,704) (` `5,217)` 6(8) `(` `7,726)` `1,537` `(` `1,240,430) (` `3,680)` `($` `886,943) ($` `517,092)` `$` `5,915,809` `$` `3,461,817` `$` `5,838,817` `$` `3,590,711` `$` `963,935` `$` `388,198` `$` `5,018,523` `$` `3,203,987` `$` `897,286` `$` `257,830` 6(32) `$` `8.45` `$` `5.22` `$` `8.33` `$` `5.15`
Other comprehensive income Components of other comprehensive income (loss) that will not be reclassified to profit or loss 8311 Actuarial loss on defined benefit plan 8312 Gains on revaluation 8316 Unrealised gain (loss) on equity instruments at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Other comprehensive income (loss) that will not be reclassified to profit or loss Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8370 Share of other comprehensive (loss) income of associates and joint ventures accounted for using equity method 8360 Other comprehensive loss that will be reclassified to profit or loss 8300Total other comprehensive loss for the year 8500Total comprehensive income for the year Profit attributable to: 8610 Owners of the parent 8620 Non-controlling interest Comprehensive income attributable to: 8710 Owners of the parent 8720 Non-controlling interest Earnings per share (in NT dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

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

~24~

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

Notes				Equity attributable to	Equity attributable to	owners ofthe parent				Total	Non-controlling interest	Total equity
	Share capital - common stock `$ 7,206,051` `-` `7,206,051` `-` `-` `-` `-` `-` `36,199` `-` `61,549` `-` `-` `-` `-` `-` `-` `-` `-` `$ 7,303,799` `$ 7,303,799` `-` `-` `-` `-` `-` `-` `41,176` `-` `-` `-` `-` `-` `-` `-` `$ 7,344,975`	Capital surplus		Retained Earnings	Total unappropriated retained earnings	O	ther equityinterest	Asset revaluation increment	Treasurystocks `($` `517,165)` `-` `(` `517,165)` `-` `-` `-` `-` `-` `-` `-` `-` `(` `211,419)` `-` `-` `-` `-` `-` `-` `-` `($` `728,584)` `($` `728,584)` `-` `-` `-` `-` `-` `-` `-` `417,307` `-` `-` `-` `-` `-` `-` `($` `311,277)`
			Legal reserve	Special reserve `$` `433,524` `-` `433,524` `-` `-` `-` `-` `1,427,780` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 1,861,304` `$ 1,861,304` `-` `-` `-` `-` `1,244,101` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 3,105,405`		Financial statements translation differences of foreign operations `($ 1,009,474)` `-` `(` `1,009,474)` `-` `23,660` `23,660` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `($` `985,814)` `($` `985,814)` `-` `(` `1,129,577)` `(` `1,129,577)` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `($ 2,115,391)`	Total unrealised gains (losses) from financial assets measured at fair value through other comprehensive income
6(24) 6(23) 6(3) 6(24) 6(23) 6(3)		`$ 5,136,660` `-` `5,136,660` `-` `-` `-` `-` `-` `-` `-` `391,451` `-` `165,439` `(` `134,690` `)` `73,905` `-` `-` `-` `1,168` `$ 5,633,933` `$ 5,633,933` `-` `-` `-` `-` `-` `-` `238,824` `164,322` `141,980` `46,544` `(` `111,598` `)` `-` `-` `-` `$ 6,114,005`	`$ 4,215,046` `-` `4,215,046` `-` `-` `-` `402,153` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 4,617,199` `$ 4,617,199` `-` `-` `-` `359,071` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 4,976,270`		`$ 9,144,208` `860,203` `10,004,411` `3,590,711` `(` `8,143` `)` `3,582,568` `(` `402,153` `)` `(` `1,427,780` `)` `(` `36,199` `)` `(` `3,221,684` `)` `-` `-` `-` `-` `-` `-` `(` `43,632` `)` `-` `-` `$ 8,455,531` `$ 8,455,531` `5,838,817` `(` `13,143` `)` `5,825,674` `(` `359,071` `)` `(` `1,244,101` `)` `(` `2,766,858` `)` `-` `-` `-` `-` `-` `-` `(` `540,517` `)` `-` `$ 9,370,658`		`($ 2,203,492` `)` `(` `905,391` `)` `(` `3,108,883` `)` `-` `(` `395,629` `)` `(` `395,629` `)` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `43,632` `-` `-` `($ 3,460,880` `)` `($ 3,460,880` `)` `-` `322,426` `322,426` `-` `-` `-` `-` `-` `-` `-` `-` `-` `540,517` `-` `($ 2,597,937` `)`	`$ 1,388,279` `-` `1,388,279` `-` `(` `6,612` `)` `(` `6,612` `)` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 1,381,667` `$ 1,381,667` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 1,381,667`		`$ 23,793,637` `(` `45,188)` `23,748,449` `3,590,711` `(` `386,724)` `3,203,987` `-` `-` `-` `(` `3,221,684)` `453,000` `(` `211,419)` `165,439` `(` `134,690)` `73,905` `-` `-` `-` `1,168` `$ 24,078,155` `$ 24,078,155` `5,838,817` `(` `820,294)` `5,018,523` `-` `-` `(` `2,766,858)` `280,000` `581,629` `141,980` `46,544` `(` `111,598)` `-` `-` `-` `$ 27,268,375`	`$ 4,481,758` `(` `8,690` `)` `4,473,068` `388,198` `(` `130,368` `)` `257,830` `-` `-` `-` `-` `-` `-` `-` `134,690` `56,433` `(` `630,314` `)` `(` `7,675` `)` `(` `180,663` `)` `-` `$ 4,103,369` `$ 4,103,369` `963,935` `(` `66,649` `)` `897,286` `-` `-` `-` `-` `-` `-` `136,805` `111,598` `(` `389,496` `)` `-` `(` `233,910` `)` `$ 4,625,652`	`$ 28,275,395` `(` `53,878)` `28,221,517` `3,978,909` `(` `517,092)` `3,461,817` `-` `-` `-` `(` `3,221,684)` `453,000` `(` `211,419)` `165,439` `-` `130,338` `(` `630,314)` `(` `7,675)` `(` `180,663)` `1,168` `$ 28,181,524` `$ 28,181,524` `6,802,752` `(` `886,943)` `5,915,809` `-` `-` `(` `2,766,858)` `280,000` `581,629` `141,980` `183,349` `-` `(` `389,496)` `-` `(` `233,910)` `$ 31,894,027`

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

~25~

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation expense

Amortisation expense

Other non-current assets recognised as expenses

Long-term prepaid rent expense

Impairment (gain) loss determined in accordance with IFRS 9
Share-based payments

Interest income

Dividend income

Interest expense

Net loss (gain) on financial assets and liabilities at fair value -
derivative instruments

Net (gain) loss on financial assets and liabilities at fair value -
other

Share of (gain) loss of associates accounted for using equity
method

Gain on disposal of investments

Loss on disposal of property, plant and equipment

Gain on disposal of non-current assets held for sale

Impairment loss of non-financial assets

Gain on fair value adjustment of investment property

Changes in operating assets and liabilities
Changes in operating assets
Financial assets and liabilities at fair value through profit or
loss - current
Notes receivable
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Contract liabilities - current
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest received
Dividend received
Interest paid
Income tax paid
Net cash flows from operating activities Years ended December 31,
Notes
2019
2018
$
8,188,736 $
5,035,472
6(9)(10)(29)
2,251,870
2,043,512
6(12)(29)
74,166
78,488
6(29)
106,070
57,839
6(29)
-
10,119
12(2)
(
34,119 )
148,756
6(20)
173,052
16,077
6(26)
(
62,299 ) (
50,882 )
6(26)
(
214,688 ) (
231,228 )
6(28)
123,131
143,035
6(2)(27)
529,054 (
449,292 )
6(27)
(
1,181,949 )
530,390
6(8)
(
14,911 )
15,501
6(27)
(
73,665 )
-
6(27)
39,982
15,161
6(27)
(
645,713 )
-
6(12)(27)
71,299
-
6(10)(27)
(
64,552 ) (
31,930 )
237,721
93,580
207,260
481,821
(
2,534,104 )
295,904
(
18,168 )
11,815
156,949
197,006
1,231,122 (
2,620,207 )
137,641 (
189,175 )
5,481
50,230
2,572 (
21,746 )
24,622 (
467 )
1,022,630
1,976,193
115,074 (
181,916 )
2,520,751 (
78,501 )
(
9,369 )
32,572
(
5,948 )
20,983
12,359,698
7,399,110
59,616
50,905
214,688
231,228
(
137,890 ) (
137,734 )
(
1,437,305 ) (
1,011,559 )
11,058,807
6,531,950

(Continued)

~26~

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets and liabilities at fair value through
profit or loss - other
Disposal of financial assets and liabilities at fair value through
profit or loss - other
Acquisition of financial assets through other comprehensive
income
Disposal of financial assets at fair value through other
comprehensive income
Acquisition of financial assets at amortised cost
Acquisition of investments accounted for using equity method
Acquisition of property, plant and equipment

Acquisition of investment property
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of non-current assets held for sale

Acquisition of intangible assets

Increase in other non-current assets
Increase in refundable deposits
Proceeds from disposal of investment property received in
advance
Net cash flows from (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings
Increase in long-term borrowings
Decrease in long-term borrowings
Treasury stock transferred to employees
Change in non-controlling interests
Cash dividends distributed by subsidiaries
Repayment of lease liabilities
Payment of cash dividends
Payments to acquire treasury shares
Overdue stock dividends
Net cash flows used in financing activities
Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year Years ended December 31,
Notes
2019
2018
( $
771,302 ) ( $
4,082,081 )
2,367,268
3,018,862
(
71,867 )
-
721,025
67,341
(
498,303 )
-
(
166,582 )
-
6(33)
(
2,981,326 ) (
2,214,556 )
(
376,095 ) (
33,763 )
220,953
128,909
6(13)
2,605,512
-
6(12)
(
64,363 ) (
62,267 )
(
312,045 ) (
756,838 )
(
15,145 ) (
40,305 )
192,802
-
850,532 (
3,974,698 )
(
4,752,915 )
1,397,247
100,000
-
(
1,443,449 ) (
480,000 )
408,578
29,119
(
233,910 ) (
296,568 )
(
389,496 ) (
630,314 )
(
93,320 )
-
(
2,624,878 ) (
3,056,245 )
- (
211,419 )
-
1,168
(
9,029,390 ) (
3,247,012 )
(
695,866 ) (
37,742 )
2,184,083 (
727,502 )
6(1)
1,952,439
2,679,941
6(1)
$
4,136,522 $
1,952,439

Theacc notes are an integral part of these consolidated financial statements.

~27~

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of CHICONY ELECTRONICS CO., LTD.

`Opinion`

We have audited the accompanying parent company only balance sheets of Chicony
Electronics Co., Ltd. (the “Company”) as at December 31, 2019 and 2018, and the related
parent company only statements of comprehensive income, of changes in equity and of
cash flows for the years then ended, and notes to the parent company only financial
statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other independent accountants
(refer to “Other matter”), the accompanying parent company only financial statements
present fairly, in all material respects, the financial position of the Company as at
December 31, 2019 and 2018 and its financial performance and its cash flows for the
years then ended in accordance with the “Regulations Governing the Preparation of
Financial Reports by Securities Issuers”.

`Basis for opinion`

We conducted our audits in accordance with the “Regulations Governing Auditing
and Attestation of Financial Statements by Certified Public Accountants” and generally
accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the
Audit of Parent Company Only Financial Statements section of our report. We are
independent of the Company in accordance with the Code of Professional Ethics for
Certified Public Accountants in the Republic of China (the “Code”), and we have
fulfilled our other ethical responsibilities in accordance with the Code. Based on our
audits and the reports of other auditors, we believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.

~28~

`Key audit matters`

Key audit matters are those matters that, in our professional judgment, were of
most significance in our audit of the parent company only financial statements of the
current period. These matters were addressed in the context of our audit of the parent
company only financial statements as a whole and, in forming our opinion thereon, we
do not provide a separate opinion on these matters.

Key audit matters for the Company’s parent company only financial statements of the current period are stated as follows:

Valuation of inventory

Description

Refer to Notes 4(10), 5(2) and 6(6) for the description of accounting policy, critical accounting estimates, uncertainty of assumptions and details of accounts.

The Company's main inventories are keyboard, camera modules and other electronic products. The prices of such inventories are affected by market demand and the rapid technological changes. Therefore, there is a higher risk of market decline. As the assessment of net realisable value of inventories is subject to management judgement, we consider the valuation of inventory as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

Assessed whether the Company's accounting policies comply with the relevant standards and the Company’s industry practice and the reasonableness of management’s evaluation process, including the determination of net realisable value of inventories, the sales expenses and the judgement of obsolete inventories. Checked whether the provision policies were consistently adopted in the reporting periods.

~29~

Obtained net realisable value statement of inventories to confirm whether the calculation logic is adopted consistently, and tested the data sources of selected samples which includes inventory price or purchase price to verify the net realisable value used by the management was comply with its policies, and recalculated the accuracy of allowance for inventory valuation losses.

`Appropriateness of warehouse operating revenue cut-off`

Description

For the accounting policies on revenue recognition, critical accounting assumptions and the － content of revenue for the investments accounted for under the equity method of the Company Chicony Power Technology Co., Ltd., and its subsidiaries (the “CP Group”), refer to Notes 4(32) and 6(25) of consolidated financial report.

The CP Group’s revenue arises from sales of goods, consisting mainly of factory direct shipment and warehouse sales income. Warehouse sales revenue is recognised when the goods are dispatched from the warehouses (transfer of control of products) and it is based on the reports and other relevant information provided by the warehouse custodians. The CP Group’s warehouses are located in multiple countries, and the revenue recognition process involves several manual operations. Thus, we determine the warehouse sales income cut-off as one of the key areas of focus for this fiscal year’s audit.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

We evaluated the internal controls for regular reconciliation between the CP Group and its warehouse custodians.
We performed the revenue recognition cut-off tests, including obtaining sufficient appropriate audit evidences from the warehouse custodians and reviewing the reconciliations of the Group’s accounting records.
We conducted warehouse inventory audit by using physical counts or using confirmation letters to validate inventory balances with the warehouse custodians.

~30~

Other matter - Scope of the audit

We did not audit the investment profit or loss and disclosed information in Note 13 of certain investments accounted for under the equity method that are included in the parent company only financial statements. The balances of there investments accounted for under the equity method were NT$391,199 thousand and NT$389,899 thousand, constituting 0.68% and 0.74% of total assets as of December 31, 2019 and 2018, respectively. Total comprehensive income (including the share of profit (loss) of subsidiaries, associates and joint ventures accounted for under the equity method and share of other comprehensive income (loss) of subsidiaries, associates and joint ventures accounted for under the equity method) were NT$1,300 thousand and NT$1,551 thousand, constituting 0.03% and 0.05% of total comprehensive income for the years ended December 31, 2019 and 2018, respectively. Investment profit or loss and disclosed information in Note 13 were based on the financial statement of said subsidiaries which were audited by other auditors, whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the reports of other auditors.

~31~

Responsibilities of management and those charged with governance for the parent company
only financial statements

Management is responsible for the preparation and fair presentation of the parent
company only financial statements in accordance with the “Regulations Governing the
Preparation of Financial Reports by Securities Issuers”, and for such internal control
as management determines is necessary to enable the preparation of parent company only
financial statements that are free from material misstatement, whether due to fraud
or error.

In preparing the parent company only financial statements, management is
responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so.

Those charged with governance, including supervisors, are responsible for
overseeing the Company’s financial reporting process.

`Auditor’s responsibilities for the audit of the parent company only financial statements`

Our objectives are to obtain reasonable assurance about whether the parent company
only financial statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ROC GAAS will always detect a material misstatement when
it exists. Misstatements can arise from error or fraud and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these parent company only financial
statements.

~32~

As part of an audit in accordance with ROC GAAS, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:

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

~33~

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

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

~34~

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

Chen, Ching Chang [Weng, Shih-Jung ]

For and on behalf of PricewaterhouseCoopers, Taiwan
March 10, 2020

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

~35~

CHICONY ELECTRONICS CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Assets	Notes 6(1) 6(2) 6(3) 6(4) 6(4)(5) 7 7 6(6) 6(2) 6(3) 6(7) 6(8) and 8 6(9) 6(10) and 8 8	December 31,2019 AMOUNT `$` `731,671` `562,837` `955,070` `11,312` `4,767,780` `207,537` `19,447` `3,042,035` `1,481,580` `145,101` `11,924,370` `630,998` `93,252` `33,448,710` `1,930,484` `118,350` `8,961,010` `14,676` `63,967` `45,261,447` `$` `57,185,817`	December 31,2018
			AMOUNT
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1120 Financial assets at fair value through other comprehensive income - current 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 1210 Other receivables - related parties 130X Inventories, net 1410 Prepayments 11XX Total current assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1517 Financial assets at fair value through other comprehensive income - non-current 1550 Investments accounted for using equity method 1600 Property, plant and equipment, net 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets			`$` `121,874` `986,614` `893,492` `51,882` `2,525,669` `317,910` `38,828` `4,059,442` `1,479,927` `136,392`
			`10,612,030`
			`1,020,365` `114,809` `30,603,858` `1,968,170` `-` `8,047,823` `18,179` `32,882`
			`41,806,086`
			`$` `52,418,116`

(Continued)

~36~

CHICONY ELECTRONICS CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Liabilities and Equity December 31,2019
December 31,2018
Notes
AMOUNT
AMOUNT
6(11)
$
600,000
$
3,130,000
6(20)
-
2,696
3,663
-
339,224
233,468
7
22,764,220
20,322,425
6(12)
2,871,159
1,947,829
7
1,483,765
1,201,425
423,460
498,551
19,058
-
205,568
11,764
28,710,117
27,348,158
6(26)
600,137
376,130
99,878
-
6(14)
167,496
151,675
6(7)
339,814
463,998
1,207,325
991,803
29,917,442
28,339,961
6(16)
7,344,975
7,303,799
6(17)
6,114,005
5,633,933
6(18)
4,976,270
4,617,199
3,105,405
1,861,304
9,370,658
8,455,531
6(19)
(
3,331,661) (
3,065,027)
6(16)
(
311,277) (
728,584)
27,268,375
24,078,155
9
11
$
57,185,817
$
52,418,116

Current liabilities
2100
Short-term borrowings
2130
Contract liabilities
2150
Notes payable
2170
Accounts payable
2180
Accounts payable - related
parties
2200
Other payables
2220
Other payables - related parties
2230
Income tax liabilities
2280
Lease liabilities - current
2300
Other current liabilities
21XX
Current Liabilities
Non-current liabilities
2570
Deferred income tax liabilities
2580
Lease liabilities - non-current
2640
Accrued pension liabilities
2670
Other non-current liabilities
25XX
Total non-current liabilities
2XXX
Total Liabilities
Equity
Share capital
3110
Share capital - common stock
Capital surplus
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained
earnings
Other equity interest
3400
Other equity interest
3500
Treasury stocks
3XXX
Total equity
Significant contingent liabilities
and unrecognised contract
commitment
Significant events after the
balance sheet date
3X2X
Total liabilities and equity

Liabilities and Equity	December 31,2019 December 31,2018 Notes AMOUNT AMOUNT 6(11) `$` `600,000` `$` `3,130,000` 6(20) `-` `2,696` `3,663` `-` `339,224` `233,468` 7 `22,764,220` `20,322,425` 6(12) `2,871,159` `1,947,829` 7 `1,483,765` `1,201,425` `423,460` `498,551` `19,058` `-` `205,568` `11,764` `28,710,117` `27,348,158` 6(26) `600,137` `376,130` `99,878` `-` 6(14) `167,496` `151,675` 6(7) `339,814` `463,998` `1,207,325` `991,803` `29,917,442` `28,339,961` 6(16) `7,344,975` `7,303,799` 6(17) `6,114,005` `5,633,933` 6(18) `4,976,270` `4,617,199` `3,105,405` `1,861,304` `9,370,658` `8,455,531` 6(19) `(` `3,331,661) (` `3,065,027)` 6(16) `(` `311,277) (` `728,584)` `27,268,375` `24,078,155` 9 11 `$` `57,185,817` `$` `52,418,116`
Current liabilities 2100 Short-term borrowings 2130 Contract liabilities 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Income tax liabilities 2280 Lease liabilities - current 2300 Other current liabilities 21XX Current Liabilities Non-current liabilities 2570 Deferred income tax liabilities 2580 Lease liabilities - non-current 2640 Accrued pension liabilities 2670 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total Liabilities Equity Share capital 3110 Share capital - common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3500 Treasury stocks 3XXX Total equity Significant contingent liabilities and unrecognised contract commitment Significant events after the balance sheet date 3X2X Total liabilities and equity

The accompanying notes are an integral part of these parent company only financial statements.

~37~

CHICONY ELECTRONICS CO., LTD. PARENT COMPANY ONLY STATEMENTS OF INCOME

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Items Years endedDecember31,
2019
2018
Notes
AMOUNT
AMOUNT
6(20) and 7
$
28,369,842
$
24,501,048
6(6) and 7
(
23,025,149) (
20,328,397)
5,344,693
4,172,651
6(23)(24) and 7
(
1,474,127) (
1,475,396)
(
1,011,759) (
786,790)
(
1,260,835) (
897,476)
2,956
(
1,637)
(
3,743,765) (
3,161,299)
1,600,928
1,011,352
6(21)
342,988
311,224
6(22)
593,035
(
861,999)
6(25)
(
38,995) (
42,750)
6(7)
3,753,786
3,323,140
4,650,814
2,729,615
6,251,742
3,740,967
6(26)
(
412,925) (
150,256)
$
5,838,817
$
3,590,711
6(14)
( $
10,988) ($
3,128)
6(8)
-
155,281
(
403,682) (
262,624)
723,953
(
138,020)
-
(
161,893)
309,283
(
410,384)
(
1,121,851)
22,123
(
7,726)
1,537
(
1,129,577)
23,660
( $
820,294) ($
386,724)
$
5,018,523
$
3,203,987
6(27)
$
8.45
$
5.22
$
8.33
$
5.15

4000
Sales revenue
5000
Operating costs
5950
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative
expenses
6300
Research and development
6450
Impairment loss determined in
accordance with IFRS 9
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7070
Share of profit of associates and
joint ventures accounted for using
equity method
7000
Total non-operating revenue
and expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year
Other comprehensive income
Components of other
comprehensive income that will not
be reclassified to profit or loss
8311
Losses on remeasurements of
defined benefit plans
8312
Gains on revaluation
8316
Unrealised losses from investments
in equity instruments measured at
fair value through other
comprehensive income
8330
Share of other comprehensive
income of associates and joint
ventures accounted for using
equity method
8349
Income tax related to components
of other comprehensive income
that will not be reclassified to profit
or loss
8310
Other comprehensive loss that
will not be reclassified to profit
or loss
Components of other
comprehensive income that will be
reclassified to profit or loss
8361
Exchange differences on translation
of foreign operations
8380
Share of other comprehensive
income of associates and joint
ventures accounted for using
equity method
8360
Other comprehensive (loss)
income that will be reclassified
to profit or loss
8300
Other comprehensive loss for the
year
8500
Total comprehensive income for the
year
Earnings per share (In NT dollars)
9750
Basic earnings per share
9850
Diluted earnings per share

Items	Years endedDecember31, 2019 2018 Notes AMOUNT AMOUNT 6(20) and 7 `$` `28,369,842` `$` `24,501,048` 6(6) and 7 `(` `23,025,149) (` `20,328,397)` `5,344,693` `4,172,651` 6(23)(24) and 7 `(` `1,474,127) (` `1,475,396)` `(` `1,011,759) (` `786,790)` `(` `1,260,835) (` `897,476)` `2,956` `(` `1,637)` `(` `3,743,765) (` `3,161,299)` `1,600,928` `1,011,352` 6(21) `342,988` `311,224` 6(22) `593,035` `(` `861,999)` 6(25) `(` `38,995) (` `42,750)` 6(7) `3,753,786` `3,323,140` `4,650,814` `2,729,615` `6,251,742` `3,740,967` 6(26) `(` `412,925) (` `150,256)` `$` `5,838,817` `$` `3,590,711` 6(14) `( $` `10,988) ($` `3,128)` 6(8) `-` `155,281` `(` `403,682) (` `262,624)` `723,953` `(` `138,020)` `-` `(` `161,893)` `309,283` `(` `410,384)` `(` `1,121,851)` `22,123` `(` `7,726)` `1,537` `(` `1,129,577)` `23,660` `( $` `820,294) ($` `386,724)` `$` `5,018,523` `$` `3,203,987` 6(27) `$` `8.45` `$` `5.22` `$` `8.33` `$` `5.15`
4000 Sales revenue 5000 Operating costs 5950 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development 6450 Impairment loss determined in accordance with IFRS 9 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of associates and joint ventures accounted for using equity method 7000 Total non-operating revenue and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 8311 Losses on remeasurements of defined benefit plans 8312 Gains on revaluation 8316 Unrealised losses from investments in equity instruments measured at fair value through other comprehensive income 8330 Share of other comprehensive income of associates and joint ventures accounted for using equity method 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Other comprehensive loss that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign operations 8380 Share of other comprehensive income of associates and joint ventures accounted for using equity method 8360 Other comprehensive (loss) income that will be reclassified to profit or loss 8300 Other comprehensive loss for the year 8500 Total comprehensive income for the year Earnings per share (In NT dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

The accompanying notes are an integral part of these parent company only financial statements.

~38~

CHICONY ELECTRONICS CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Year ended December 31, 2018 Balance at January 1, 2018 Effect of retrospective application and restatement Balance at January 1 after adjustments Profit for 2018 Other comprehensive income(loss) for 2018 Total comprehensive income(loss) for 2018 Distribution of 2017 earnings Legal reserve Special reserve Stock dividends Cash dividends Employees’ stock dividends Purchase of treasury share Cash dividends paid to the subsidiaries Difference between proceeds from addition and disposal of subsidiary and book value Adjustments to share of changes in equity of associates and joint ventures Disposal of financial assets at fair value through other comprehensive income Other (overdue dividends) Balance at December 31, 2018 Year ended December 31, 2019 Balance at January 1, 2019 Profit for 2019 Other comprehensive income(loss) for 2019 Total comprehensive income(loss) for 2019 Distribution of 2018 earnings Legal reserve Special reserve Cash dividends Employees’ stock dividends Transfer treasury shares to employees Cash dividends paid to the subsidiaries Adjustments to share of changes in equity of associates and joint ventures Difference between proceeds from addition and disposal of subsidiary and book value Disposal of financial assets at fair value through other comprehensive income Balance at December 31, 2019	Notes		Share capital - common stock		Capital surplus				RetainedEarnings						Otherequityinterest				Treasurystocks		Total equity
							Legal reserve		Special reserve		Total unappropriated retained earnings	d	Financial statements translation ifferences of foreign operations		Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income		Asset revaluation increment
	3 6(19) 6(18) 6(19) 6(18) 6(16)		`$` `7,206,051` `-` `7,206,051` `-` `-` `-` `-` `-` `36,199` `-` `61,549` `-` `-` `-` `-` `-` `-` `$` `7,303,799` `$` `7,303,799` `-` `-` `-` `-` `-` `-` `41,176` `-` `-` `-` `-` `-` `$` `7,344,975`		`$` `5,136,660` `-` `5,136,660` `-` `-` `-` `-` `-` `-` `-` `391,451` `-` `165,439` `(` `134,690 )` `73,905` `-` `1,168` `$` `5,633,933` `$` `5,633,933` `-` `-` `-` `-` `-` `-` `238,824` `164,322` `141,980` `46,544` `(` `111,598 )` `-` `$` `6,114,005`		`$` `4,215,046` `-` `4,215,046` `-` `-` `-` `402,153` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `4,617,199` `$` `4,617,199` `-` `-` `-` `359,071` `-` `-` `-` `-` `-` `-` `-` `-` `$` `4,976,270`		`$` `433,524` `-` `433,524` `-` `-` `-` `-` `1,427,780` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `1,861,304` `$` `1,861,304` `-` `-` `-` `-` `1,244,101` `-` `-` `-` `-` `-` `-` `-` `$` `3,105,405`		`$` `9,144,208` `860,203` `10,004,411` `3,590,711` `(` `8,143 )` `3,582,568` `(` `402,153 )` `(` `1,427,780 )` `(` `36,199 )` `(` `3,221,684 )` `-` `-` `-` `-` `-` `(` `43,632 )` `-` `$` `8,455,531` `$` `8,455,531` `5,838,817` `(` `13,143 )` `5,825,674` `(` `359,071 )` `(` `1,244,101 )` `(` `2,766,858 )` `-` `-` `-` `-` `-` `(` `540,517 )` `$` `9,370,658`		`($` `1,009,474 )` `-` `(` `1,009,474 )` `-` `23,660` `23,660` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `($` `985,814 )` `($` `985,814 )` `-` `(` `1,129,577 )` `(` `1,129,577 )` `-` `-` `-` `-` `-` `-` `-` `-` `-` `($` `2,115,391 )`		`($` `2,203,492 )` `(` `905,391 )` `(` `3,108,883 )` `-` `(` `395,629 )` `(` `395,629 )` `-` `-` `-` `-` `-` `-` `-` `-` `-` `43,632` `-` `($` `3,460,880 )` `($` `3,460,880 )` `-` `322,426` `322,426` `-` `-` `-` `-` `-` `-` `-` `-` `540,517` `($` `2,597,937 )`		`$` `1,388,279` `-` `1,388,279` `-` `(` `6,612 )` `(` `6,612 )` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `1,381,667` `$` `1,381,667` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `1,381,667`		`($` `517,165 )` `-` `(` `517,165 )` `-` `-` `-` `-` `-` `-` `-` `-` `(` `211,419 )` `-` `-` `-` `-` `-` `($` `728,584 )` `($` `728,584 )` `-` `-` `-` `-` `-` `-` `-` `417,307` `-` `-` `-` `-` `($` `311,277 )`		`$` `23,793,637` `(` `45,188 )` `23,748,449` `3,590,711` `(` `386,724 )` `3,203,987` `-` `-` `-` `(` `3,221,684 )` `453,000` `(` `211,419 )` `165,439` `(` `134,690 )` `73,905` `-` `1,168` `$` `24,078,155` `$` `24,078,155` `5,838,817` `(` `820,294 )` `5,018,523` `-` `-` `(` `2,766,858 )` `280,000` `581,629` `141,980` `46,544` `(` `111,598 )` `-` `$` `27,268,375`

The accompanying notes are an integral part of these parent company only financial statements.

~39~

CHICONY ELECTRONICS CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation expense

Amortisation expense

Impairment loss determined in accordance with
IFRS 9

Share-based payments

Interest income

Dividend income

Interest expense

Net (gain) loss on financial assets and liabilities
at fair value through profit or loss - other

Share of profit of associates accounted for using
equity method

Gain on disposal of property, plant and
equipment

(Loss) gain on fair value adjustment of
investment property

Changes in operating assets and liabilities
Changes in operating assets
Notes receivable, net
Accounts receivable
Accounts receivable - related parties
Other receivables
Other receivables - related party
Inventories, net
Prepayments
Changes in operating liabilities
Notes payable
Accounts payable
Accounts payable - related parties
Contract liabilities - current
Other payables
Other payables - related parties
Other current liabilities
Defined benefit obligation - non-current
Cash inflow generated from operations
Interest received
Dividend received
Interest paid
Income tax paid
Net cash flows from operating activities Years endedDecember31,
Notes
2019
2018
$
6,251,742 $
3,740,967
6(8)(9)(23)
78,081
44,695
6(23)
13,123
17,937
12(2)
(
2,956 )
1,637
6(15)
173,052
-
6(21)
(
22,771 ) (
18,894 )
6(21)
(
59,378 ) (
68,536 )
6(25)
38,995
42,750
6(22)
(
134,595 )
494,292
6(7)
(
3,753,786 ) (
3,323,140 )
6(22)
(
105 ) (
1,004 )
6(22)
(
67,593 )
23,854
40,570
8,799
(
2,239,155 )
2,402,310
110,373 (
96,707 )
19,381 (
3,928 )
1,269,427 (
1,686,765 )
(
1,653 ) (
328,893 )
(
8,709 ) (
53,707 )
3,663 (
1,225 )
105,756 (
80,677 )
2,441,795
3,646,012
(
2,696 ) (
13,276 )
855,556
226,286
(
89,073 ) (
35,110 )
1,003
5,357
4,833 (
10 )
5,024,880
4,943,024
22,771
18,894
702,915
708,913
(
43,249 ) (
40,606 )
(
264,009 ) (
413,377 )
5,443,308
5,216,848

(Continued)

~40~

CHICONY ELECTRONICS CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets and liabilities at fair
value through profit or loss - other
Proceeds from disposal of financial assets and
liabilities at fair value through profit or loss - other
Acquisition of financial assets through other
comprehensive income
Proceeds from disposal of financial assets and
liabilities at fair value through other comprehensive
income
Acquisition of investments accounted for using
equity method
Return of capital from investments accounted for
using equity method
Increase in other receivables - related party
Acquisition of property, plant and equipment

Disposal of property, plant and equipment
Acquisition of investment property
Proceeds from disposal of investment property
received in advance
Acquisition of intangible assets
(Increase) decrease in refundable deposits
Acquisition of investments accounted for using
equity method
Decrease (increase) in other non-current assets
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings
Decrease in other payables - related parties
Decrease in long-term borrowings
Payment of cash dividends

Increase in guarantee deposits received
Repayment of lease liabilities
Payments to acquire treasury shares

Overdue stock dividends
Treasury stock transferred to employees
Net cash flows used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year Years endedDecember31,
Notes
2019
2018
($
175,984 ) ($
1,601,092 )
1,123,722
1,099,893
(
71,867 )
-
64,152
4,859
(
625,574 ) (
237,697 )
-
4,903
(
252,020 ) (
155,530 )
6(28)
(
135,865 ) (
372,613 )
309
2,476
(
376,095 ) (
83,249 )
192,801
-
(
9,620 ) (
15,089 )
(
38,493 )
410
-
19,539
2,932 (
1,233 )
(
301,602 ) (
1,334,423 )
(
2,530,000 ) (
15,000 )
371,413
-
- (
380,000 )
6(18)
(
2,766,858 ) (
3,221,684 )
3,827
10,809
(
18,869 )
-
6(16)
- (
211,419 )
-
1,168
408,578
-
(
4,531,909 ) (
3,816,126 )
609,797
66,299
6(1)
121,874
55,575
6(1)
$
731,671 $
121,874

The accompanying notes are an integral part of these parent company only financial statements.

~41~

Attachment 4

Chicony Electronics CO., Ltd. 2019 Earnings Distribution Table

ttachment 4 Chicony Electronics CO., Ltd. 2019 Earnings Distribution Table	ttachment 4 Chicony Electronics CO., Ltd. 2019 Earnings Distribution Table
Unit: NTD$
Item	Amount
Retained earnings after adjustment at the beginning of the period	$3,531,840,847
Retained earnings at the beginning of the period (note 1) Less: 2019 retained earnings adjustment (note 2)	4,085,500,587 (553,659,740)
Distributable earnings of the fiscal year 2019 net profits after tax Less: Legal reserves set aside Less: Special reserve set aside	$5,069,511,590 5,838,816,879 (583,881,688) (185,423,601)
Distributable retained earnings as of December 31 of the year	$8,601,352,437
Distributed dividends Cash dividends for shareholders NT$5.9 (note 3)	($4,362,815,770) (4,362,815,770)
Undistributed earnings by the end ofthe period	4,238,536,667
Note: 1. It refers to the retained earnings after the 2018 earnings distribution approved by the 2019 Shareholders’ Meeting. 2. It refers to the items of adjusted retained earnings after accounting treatment, which includes the following items: (1) Actuarial loss of $10,988,357 of defined benefit plan. (2) Retained earnings of $2,154,238 adjusted by investment adopting equity method (3) Loss of $540,517,145 by adopting other equity method 3. Total number outstandingshares is 739,460,300 shares

Chairman:Kent Hsu Manager:Roger Lu Accounting Officer:Molly Lin

~42~

Attachment 5

Amended by 2019 Shareholders’ Meeting on June 5, 2019 Chicony Electronics CO., Ltd.

Comparison Table for the original articles and amendments of “Procedures for Loaning of Funds”

Article Number	Original Article	Amended Article	Descriptio n
4	Loan amount limit [Omitted] (3) For loaning of funds between the Company and its 100 percent directly or indirectly owned offshore companies, the loan amount is not subject to the 40% of the net worth on the most current financial statements certified or audited by CPAs of the lending company. However, the total loan amount shall not exceed 40% of the net worth on the most current financial statements certified or audited by CPAs of the Company. The loan tenure shall not exceed three years. Loans to any single entity shall be subject to the following limits: 1. The total amount for lending to a company having business relationship with the Company shall not exceed the total transaction amount between the parties during the period of 12 months prior to the time of lending or30% ofthe net worth on the most current financial statements certified or audited by CPAs of the Company, whichever is higher. 2. The total amount for lending to a company for funding for a short-term period shall not exceed30 percent ofthe net worth on the most current financial statements certified or audited by CPAs of the Company.	Loan amount limit [Omitted] (3) For loaning of funds between the Company and its 100 percent directly or indirectly owned offshore companies, the loan amount is not subject to the 40% of the net worth on the most current financial statements certified or audited by CPAs of the lending company. However, the total loan amount shall not exceed the lender’s net worth on the most current financial statements certified or audited by CPAs- . The loan tenure shall not exceed three years. Loans to any single entity shall be subject to the following limits: 1. The total amount for lending to a company having business relationship with the Company shall not exceed the total transaction amount between the parties during the period of 12 months prior to the time of lending or thelender’s net worth on the most current financial statements certified or audited by CPAs, whichever is higher. 2. The total amount for lending to a company for funding for a short-term period shall not exceedthe lender’s net worth on the most current financial statements certified or audited by CPAs.	1. Amend ed in accorda nce with Article 11 of the Q&A on” Regulat ions Govern ing Loanin g of Funds and Making of Endors ements/ Guaran tees by Public Compa nies” release d in. July 2019 by the FSC.

~43~

Article Number	Original Article	Amended Article	Descriptio n
10	Interest accrual: (1) The interests for loaning fund to borrowers by the Company or subsidiary shall be accrued based on thecost of short-term funds of the Company or subsidiarywith additional fees. Where circumstances set forth in Article 15 occur, the Company or subsidiary may, in addition to dispose the collateral and request for repayment of the debt, charge additional 10 percent default penalty based on the agreed interest rate.	Interest accrual: (1) The interests for loaning fund to borrowers by the Company or subsidiary shall be accrued based on thecapital costs for the Company’s total short-term loans with additional fees. Where circumstances set forth in Article 15 occur, the Company or subsidiary may, in addition to dispose the collateral and request for repayment of the debt, charge additional 10 percent default penalty based on the agreed interest rate.	Some texts amended

~44~

Attachment 6

Amended by 2019 Shareholders’ Meeting on June 5, 2019 Chicony Electronics CO., Ltd. Procedures for Loaning of Funds

The targets and terms for the loaning of funds from the Company or subsidiaries defined in IFRSs (hereinafter referred to as subsidiaries) are limited to:
(1) Between the Company and its subsidiary
(2) Among subsidiaries of the Company
(3) Subsidiaries and their subsidiaries
The term “loaning of funds” set forth in preceding paragraph refer to companies having business relationship with the Company or companies in need of funds for a short-term period.
Application::
(1) For loaning of funds matters of the Company or subsidiaries, the applicants shall fill in “Application Form for Loaning of Funds” and attach required financial documents and shall make the application to the financial department of the Company or subsidiaries for the loan.
(2) Where the financial department of the Company or subsidiaries reviews the loan application form and the purpose of lending on its necessity, reasonableness, and risk, conduct risk assessment and credit check, as well as the impact on the operating risks, financial status, and shareholder equities of the Company, and determines the maximum loan amount, loan tenure, interest accrual means, collateral terms, reason of loaning, the loan application along with the assessment result shall be submitted to the Board of Directors for approval.
(3) For loans of funds for the Company or subsidiaries, in addition to the procedures set forth in preceding 2 paragraphs, the Chairman may be authorized, for a specific borrowing counterparty, within a certain monetary limit resolved by the Board of Directors, and within a period not to exceed one year, to give loans in installments or to make a revolving credit line available for the counterparty to draw down.
(4) The "certain monetary limit" mentioned in the preceding paragraph on authorization for loans extended by the Company or subsidiaries to any single entity shall not exceed 10% of the net worth on the most current financial statements certified or audited by CPAs of the lending company, except in cases of companies in compliance with paragraph 3, Article 4.
Credit check investigation:
(1) When applying loans, the borrower shall provide the most recent financial statements that have been audited and certified by CPAs for the purpose of credit check.
(2) Since the spending of loans, the borrowers shall provide their self-assessed financial statements of the previous month to the Financial Department of the Company or subsidiaries by the 20th day of each month. Where irregular circumstances are found, the Financial Department shall submit a report and response measures subject to approval before implementation.
Loan amount:
(1) The loaning of funds by the Company shall not exceed 40% of the net worth on the most current financial statements of the Company certified or audited by CPAs. and:
1. The total amount for lending to a company having business relationship with the Company shall not exceed the total transaction amount between the parties during the period of 12 months prior to the time of lending or 30% of the net worth on the most current financial statements certified or audited by CPAs of the Company, whichever is higher.

~45~

  2. The total amount for lending to any single entity for funding for a short-term period shall not exceed 30 percent of the net worth of the Company.

(2) The loaning of funds by the subsidiaries of the Company shall not exceed the net worth on the most current financial statements of the Company certified or audited by CPAs. and:
1. The total amount for lending to any single entity for funding for a short-term period shall not exceed 40 percent of the net worth of the subsidiary. The total amount for lending to any single entity for funding for a short-term period shall not exceed 40 percent of the net worth of the subsidiary.
2. The total amount for lending to a company having business relationship with the subsidiary shall not exceed the total transaction amount between the parties during the period of 12 months prior to the time of lending or 50% of the net worth on the most current financial statements certified or audited by CPAs of the subsidiary, whichever is higher.
(3) For loaning of funds between the Company and its 100 percent directly or indirectly owned offshore companies, the loan amount is not subject to the 40% of the net worth on the most current financial statements certified or audited by CPAs of the lending company. However, the total loan amount shall not exceed the lender’s net worth on the most current financial statements certified or audited by CPAs- . The loan tenure shall not exceed three years. Loans to any single entity shall be subject to the following limits:
1. The total amount for lending to a company having business relationship with the Company shall not exceed the total transaction amount between the parties during the period of 12 months prior to the time of lending or the lender’s net worth on the most current financial statements certified or audited by CPAs, whichever is higher.
2. The total amount for lending to a company for funding for a short-term period shall not exceed the lender’s net worth on the most current financial statements certified or audited by CPAs.
(4) In addition to the paragraph 3 herein, the term of each loan lent by the Company or subsidiaries to a borrower shall not exceed 1 year.
(5) The term “net worth” in these Procedures refers to the rights and interests that belong to the parent company on the balance sheet prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers.
Notifying the borrowers: Once the loan has been approved, the associated personnel shall notify the borrower in shortest time possible via mails or phone calls, describing the terms of the loan, including the loan amount, tenure, interest rate, collateral and guarantor, and request the borrower to sign the contract before the deadline. Funds will be then allotted after completing the collateral quality pledge setting and guarantor confirmation procedures.
Signing and confirmation:
(1) Legal office shall draft the financing contract for loans, and the financial department shall confirm whether the context complies with the approved terms of loan before initiating signing procedure.
(2) When signing financing contract, borrower shall bring the seal of the juristic person or group registered at competent authority and the seal of the responsible person, and the financial department shall verify the seals and signature of the debtor and joint guarantor. However, when signing financing contracts with an offshore subsidiary, the Company may entrust the highest financial supervisor to conduct guarantee confirmation procedure.
Collateral pledge setting: Where a loan requires financial collateral, the borrower shall provide collateral and conduct pledge setting procedure to ensure the obligation of the Company.

~46~

Insurance:
(1) Apart from land and securities, all collaterals shall be insured with fire insurance, vessels and vehicles shall be insured against all risks, and the insurance amount shall not be lower than the pledge value of the collateral. The Company or subsidiary shall be specified as the beneficiary on the policy, and the name of the insured target, amount, deposit location, insurance terms, endorsement specified on the policy shall match the original terms of loan approved. Where the building does not have house number during the pledge setting, the address shall be indicated by the lot and land number of its location.
(2) Associated personnel shall notify the borrower to renew insurance policy before the policy expires.
Allotment: Where the loan has been approved and the legal procedures of the contract signed by the borrower has been completed and verified, the borrower may fill in the allotment application form to the financial department of the Company or subsidiary for one-time or installment payments within the amount and time limit set forth in paragraph 3 and 4, Article 2.
Interest accrual:
(1) The interests for loaning fund to borrowers by the Company or subsidiary shall be accrued based on the capital costs for the Company’s total short-term loans with additional fees. Where circumstances set forth in Article 15 occur, the Company or subsidiary may, in addition to dispose the collateral and request for repayment of the debt, charge additional 10 percent default penalty based on the agreed interest rate.
(2) Unless otherwise provided, the interest of the loan shall be paid once per month. The Company shall notify the borrower to pay the interest within a week starting from the agreed interest payment day.
Repayment:
(1) After allotment, the Company shall pay attention to the financial, business and credit condition of the borrower and guarantor. Where the collateral is pledged, the Company shall pay attention that whether the collateral value has any changes. The Company shall notify the borrower to repay the remaining principles and interests 2 months prior to the loan tenure expires.
(2) Where the borrower repays loan by the expiration of loan tenure, the borrower shall calculate the interest payables and repay the interest payables along with the remaining principles before the Company voids and returns debt certificate, such as cashier’s cheque and acknowledgement of debt.
(3) Where the borrower applies for cancellation of pledge, the Company shall verify that the loan balance is zero before agreeing to proceed the cancellation of pledge.
Public announcement and regulatory filing: The financial department of the Company or subsidiaries shall make public announcement and regulatory filing in accordance with the regulations by competent authority.
Safekeeping of Reference Book for Loans and Debt Certificate::
(1) The financial department of the Company or its subsidiaries shall establish a log book in which details of the borrower and amounts of loans, Board of Directors approval dates, loan allotment date, and the matters required to be carefully evaluated under paragraph 2, Article 2 shall be recorded in detail in the log book.
(2) The financial department of the Company and subsidiaries shall store the loan contract and related certificates, casher’s cheques, collateral identification, and insurance policy in saves and shall prepare a custody registration book.
(3) The Company shall evaluate the status of its loans of funds and reserve sufficient allowance for bad debts, and shall adequately disclose relevant information in its

~47~

financial reports and provide certified public accountants with relevant information for implementation of necessary auditing procedures.

Procedures for handling delinquent creditor's rights: (1) Where a borrower is unable to fulfill the loan contract due to any reason, the associated unit of the Company or subsidiaries shall prepare a report for the irregular circumstances and submit it to the legal office, and the Company or subsidiaries shall dispose the collateral pledged or recover the debt from the guarantor in accordance with the laws.
Where the borrower no longer meets the requirement or the loan amount exceeds limits due to changes in circumstances, the Company or subsidiaries shall draft the improvement plan, submit it to the Board of Directors for approval, make improvement in accordance with the timeframe, and submit it to the Audit Committee of the Company.
Where managers and associated personnel of the Company or subsidiaries engaging in loaning of funds are in violation of “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” promulgated by the FSC and these Procedures, such personnel shall be reported to the Board of Directors for disciplinary actions. Where the severe violation results in the significant losses of the Company, such personnel shall also bear the legal liabilities.
The Company's internal auditors shall audit these Procedures and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify all the Audit Committee in writing of any material violation found.
Where a subsidiary of the Company intends to make loans to others, the Company shall instruct it to formulate its own Procedures for Loaning Funds in compliance with “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” and these Regulations and submit it to the Audit Committee/or Board of Directors and report to the shareholders’ meeting for approval. The same shall apply when making amendments.
When loaning funds to others, subsidiaries shall provide related data to the Company and proceed loaning of funds after taking the opinions from the highest supervisor of the Financial Management Department of the Company. Subsidiaries shall report the status of loaning of funds to the Company on a regular basis.
With respect to the enactment or amendment to these Procedures by the Company or a subsidiary that is subject to the approval of the Board of Directors, if a director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the director's dissenting opinion to the Audit Committee of the Company. Where the position of independent director has been created, when the enactment or amendment to these Procedures, a transaction involving the derivatives trading is submitted for discussion by the Board of Directors, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the Board of Directors meeting.
Where an audit committee has been established by the Company or a subsidiary, any major derivatives transaction, which shall be approved by the audit committee, shall be approved by more than half of all audit committee members and submitted to the Board of Directors for a resolution in accordance with these Procedures or other laws and regulations. If approval of more than half of all audit committee members is not obtained, the procedures may be implemented if approved by more than two-thirds of all directors, and the resolution of the audit committee shall be recorded in the minutes of the Board of Directors meeting.
These Procedures shall be implemented after approved by Audit Committee and Board of Directors and reported to the shareholders meeting for approval. The same applies when the procedures are amended.

~48~

If approval of more than half of all audit committee members as required in the preceding paragraph is not obtained, the procedures may be implemented if approved by more than two-thirds of all directors, and the resolution of the audit committee shall be recorded in the minutes of the Board of Directors meeting.

The term “all members of Audit Committee” and “all directors” referred to in these Procedures shall be calculated by the number of audit committee members and directors who are actually in office.

~49~

Appendix 1

Amended by 2019 Shareholders’ Meeting on June 5, 2019

Chicony Electronics CO., Ltd.

Rules for Procedure for Shareholders Meetings

These rules of procedures for the Company’s shareholders meetings, except as otherwise provided by law, regulation, or the Articles of Incorporation, shall be conducted as provided in these Rules.
Unless otherwise provided by law or regulation, the Company’s shareholders meetings shall be convened by the Board of Directors.
The Company shall prepare electronic versions of the shareholders meeting notice and proxy forms, and the origins of and explanatory materials relating to all proposals, including proposals for ratification, matters for deliberation, or the election or dismissal of directors, and upload them to the Market Observation Post System (MOPS) before 30 days before the date of a regular shareholders meeting or before 15 days before the date of a special shareholders meeting. The Company shall prepare electronic versions of the shareholders meeting agenda and supplemental meeting materials and upload them to the MOPS before 21 days before the date of the regular shareholders meeting or before 15 days before the date of the special shareholders meeting. In addition, 15 days prior to the date of the shareholders meeting, the Company shall also have prepared the shareholders meeting agenda and supplemental meeting materials and made them available for review by shareholders at any time. The meeting agenda and supplemental materials shall also be displayed at the Company and the professional shareholder services agent designated thereby as well as being distributed on-site at the meeting place.

The reasons for convening a shareholders meeting shall be specified in the meeting notice and public announcement. With the consent of the addressee, the meeting notice may be given in electronic form.

Election or dismissal of directors, amendments to the Articles of Incorporation, the dissolution, merger, or demerger of the corporation, or any matter under Paragraph 1, Article 185 of the Company Act, Articles 26-1 and 43-6 of the Securities and Exchange Act, or Articles 56-1 and 60-2 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be set out in the notice of the reasons for convening the shareholders meeting. None of the above matters may be raised by an extraordinary motion.

A shareholder holding 1 percent or more of the total number of issued shares may submit to this Corporation a written proposal for discussion at a regular shareholders meeting. Such proposals, however, are limited to one item only, and no proposal containing more than one item will be included in the meeting agenda. In addition, when the circumstances of any subparagraph of Article 172-1, paragraph 4 of the Company Act apply to a proposal put forward by a shareholder, the Board of Directors may exclude it from the agenda.

Prior to the book closure date before a regular shareholders meeting is held, the Company shall publicly announce that it will receive shareholder proposals, and the location and time period for their submission; the period for submission of shareholder proposals may not be less than 10 days.

Shareholder-submitted proposals are limited to 300 words, and no proposal containing more than 300 words will be included in the meeting agenda. The shareholder making the proposal shall be present in person or by proxy at the regular shareholders meeting and take part in discussion of the proposal.

~50~

Prior to the date for issuance of notice of a shareholders meeting, this Corporation shall inform the shareholders who submitted proposals of the proposal screening results, and shall list in the meeting notice the proposals that conform to the provisions of this article. At the shareholders meeting the Board of Directors shall explain the reasons for exclusion of any shareholder proposals not included in the agenda.

For each shareholders meeting, a shareholder may appoint a proxy to attend the meeting by providing the proxy form issued by this Corporation and stating the scope of the proxy's authorization.

A shareholder may issue only one proxy form and appoint only one proxy for any given shareholders meeting, and shall deliver the proxy form to the Company 5 days prior to the date of the shareholders meeting. When duplicate proxy forms are delivered, the one received earliest shall prevail, unless a declaration is made to cancel the previous proxy appointment. After a proxy form has been delivered to this Corporation, if the shareholder intends to attend the meeting in person or to exercise voting rights by correspondence or electronically, a written notice of proxy cancellation shall be submitted to the Company 2 business days prior to the meeting date. If the cancellation notice is submitted after that time, votes cast at the meeting by the proxy shall prevail.

The venue for a shareholders meeting shall be the premises of the Company, or a place easily accessible to shareholders and suitable for a shareholders meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m.
If a shareholders meeting is convened by the Board of Directors, the meeting shall be chaired by the Chairman of the Company. When the Chairman is on leave or for any reason unable to exercise the powers of the chairperson, the proxy shall be conducted in accordance with Paragraph 3, Article 208 of the Company Act.

When a managing director or a director serves as chair, as referred to in the preceding paragraph, the managing director or director shall be one who has held that position for six months or more and who understands the financial and business conditions of the company. The same shall be true for a representative of a juristic person director that serves as chair. It is advisable that shareholders meetings convened by the Board of Directors be chaired by the Chairman of the Company in person and attended by a majority of the directors and at least one supervisor in person. The attendance shall be recorded in the meeting minutes.

If a shareholders meeting is convened by a party with power to convene but other than the Board of Directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chair from among themselves.

The Company may appoint its attorneys, certified public accountants, or related persons retained by it to attend a shareholders meeting in a non-voting capacity.

The time during which shareholder attendance registrations will be accepted shall be at least 30 minutes prior to the time the meeting commences. The place at which attendance registrations are accepted shall be clearly marked and a sufficient number of suitable personnel assigned to handle the registrations.
Shareholders and their proxies (collectively, "shareholders") shall attend shareholders meetings based on attendance cards, sign-in cards, or other certificates of attendance. This Corporation may not arbitrarily add requirements for other documents beyond those showing eligibility to attend presented by shareholders. Solicitors soliciting proxy forms shall also bring identification documents for verification.

The Company shall furnish the attending shareholders with an attendance book to sign, or attending shareholders may hand in a sign-in card in lieu of signing in.

The Company shall furnish attending shareholders with the meeting agenda book, annual

~51~

report, attendance card, speaker's slips, voting slips, and other meeting materials. Where there is an election of directors , pre-printed ballots shall also be furnished.

When the government or a juristic person is a shareholder, it may be represented by more than one representative at a shareholders meeting. When a juristic person is appointed to attend as proxy, it may designate only one person to represent it in the meeting.

The Company shall make an uninterrupted audio and video recording of the whole proceeding of the meeting, and the recorded materials shall be retained for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the recording shall be retained until the conclusion of the litigation.
Attendance at shareholders meetings shall be calculated based on numbers of shares. The number of shares in attendance shall be calculated according to the shares indicated by the attendance book and sign-in cards handed in plus the number of shares whose voting rights are exercised by correspondence or electronically.
The chair shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chair may announce a postponement, provided that no more than two such postponements, for a combined total of no more than 1 hour, may be made. If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, the chair shall declare the meeting adjourned.

If the quorum is not met after two postponements as referred to in the preceding paragraph, but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Article 175, paragraph 1 of the Company Act; all shareholders shall be notified of the tentative resolution and another shareholders meeting shall be convened within 1 month.

When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chair may resubmit the tentative resolution for a vote by the shareholders meeting pursuant to Article 174 of the Company Act.

If a shareholders meeting is convened by the Board of Directors, the meeting agenda shall be set by the Board of Directors. The meeting shall proceed in the order set by the agenda, which may not be changed without a resolution of the shareholders meeting.
The provisions of the preceding paragraph apply mutatis mutandis to a shareholders meeting convened by a party with the power to convene that is not the Board of Directors. The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda of the preceding two paragraphs (including extraordinary motions), except by a resolution of the shareholders meeting. If the chair declares the meeting adjourned in violation of the rules of procedure, the other members of the Board of Directors shall promptly assist the attending shareholders in electing a new chair in accordance with statutory procedures, by agreement of a majority of the votes represented by the attending shareholders, and then continue the meeting.
The chair shall allow ample opportunity during the meeting for explanation and discussion of proposals and of amendments or extraordinary motions put forward by the shareholders; when the chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announce the discussion closed and call for a vote.
Before speaking, an attending shareholder must specify on a speaker's slip the subject of the speech, his/her shareholder account number (or attendance card number), and account name. The order in which shareholders speak will be set by the chair.
A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the

~52~

subject given on the speaker's slip, the spoken content shall prevail.

Except with the consent of the chair, a shareholder may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes. If the shareholder's speech violates the rules or exceeds the scope of the agenda item, the chair may terminate the speech.

(1) When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder that has the floor; the chair shall stop any violation.

When a juristic person shareholder appoints two or more representatives to attend a shareholders meeting, only one of the representatives so appointed may speak on the same proposal.

After an attending shareholder has spoken, the chair may respond in person or direct relevant personnel to respond.

Voting at a shareholders meeting shall be calculated based the number of shares. With respect to resolutions of shareholders meetings, the number of shares held by a shareholder with no voting rights shall not be calculated as part of the total number of issued shares.

When a shareholder is an interested party in relation to an agenda item, and there is the likelihood that such a relationship would prejudice the interests of this Corporation, that shareholder may not vote on that item, and may not exercise voting rights as proxy for any other shareholder.

The number of shares for which voting rights may not be exercised under the preceding paragraph shall not be calculated as part of the voting rights represented by attending shareholders.

With the exception of a trust enterprise or a shareholder services agent approved by the competent securities authority, when one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed 3 percent of the voting rights represented by the total number of issued shares. If that percentage is exceeded, the voting rights in excess of that percentage shall not be included in the calculation.

A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares under Paragraph 2, Article 179 of the Company Act.

When the Company holds a shareholders meeting, it may allow the shareholders to exercise voting rights by electronic means, and the method of exercise shall be specified in the shareholders meeting notice. A shareholder exercising voting rights by electronic means will be deemed to have attended the meeting in person, but to have waived his/her rights with respect to the extraordinary motions and amendments to original proposals of that meeting.

A shareholder intending to exercise voting rights by electronic means under the preceding paragraph shall deliver a declaration of intent to the Company 2 days prior to the date of the shareholders meeting. When duplicate declarations of intent are delivered, the one received earliest shall prevail, except when a declaration is made to cancel the earlier declaration of intent.

After a shareholder has exercised voting rights by electronic means, in the event the shareholder intends to attend the shareholders meeting in person, a written declaration of intent to retract the voting rights already exercised under the preceding paragraph shall be made known to the Company, by the same means by which the voting rights were exercised, 2 business days prior to the date of the shareholders meeting. If the notice of retraction is submitted after that time, the voting rights already exercised by electronic means shall prevail.

~53~

When a shareholder has exercised voting rights by electronic means and by appointing a proxy to attend a shareholders meeting, the voting rights exercised by the proxy in the meeting shall prevail.

Except as otherwise provided in the Company Act and in the Company’s Articles of Incorporation, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. At the time of a vote, for each proposal, the chair or a person designated by the chair shall first announce the total number of voting rights represented by the attending shareholders, followed by a poll of the shareholders. After the conclusion of the meeting, on the same day it is held, the results for each proposal, based on the numbers of votes for and against and the number of abstentions, shall be entered into the MOPS.

When there is an amendment or an alternative to a proposal, the chair shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When any one among them is passed, the other proposals will then be deemed rejected, and no further voting shall be required.

Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of the Company. Vote counting for shareholders meeting proposals or elections shall be conducted in public at the place of the shareholders meeting. Immediately after vote counting has been completed, the results of the voting, including the statistical tallies of the numbers of votes, shall be announced on-site at the meeting, and a record made of the vote.

When a meeting is in progress, the chair may announce a break based on time considerations. If a force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed. If the meeting venue is no longer available for continued use and not all of the items (including extraordinary motions) on the meeting agenda have been addressed, the shareholders meeting may adopt a resolution to resume the meeting at another venue.
A resolution may be adopted at a shareholders meeting to defer or resume the meeting within 5 days in accordance with Article 182 of the Company Act.
The election of directors at a shareholders meeting shall be held in accordance with the applicable election and appointment rules adopted by the Company, and the voting results shall be announced on-site immediately, including the names of those elected as directors and supervisors and the numbers of votes with which they were elected.
The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.
Matters relating to the resolutions of a shareholders meeting shall be recorded in the meeting minutes. The meeting minutes shall be signed or sealed by the chair of the meeting and a copy distributed to each shareholder within 20 days after the conclusion of the meeting. The meeting minutes may be produced and distributed in electronic form.
The Company may distribute the meeting minutes of the preceding paragraph by means of a public announcement made through the MOPS. The meeting minutes shall be retained for the duration of the existence of the Company.

Where the resolutions made in preceding paragraph are required to be publicly announced in accordance with laws and regulations, such announcement shall be made in accordance with laws and regulations.

Other matters of meeting minutes shall be conducted in accordance with Article 183 of the

~54~

Company Act and laws and regulations concerned.

The chair may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word "Proctor." At the place of a shareholders meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by the Company, the chair may prevent the shareholder from so doing.
When a shareholder violates the rules of procedure and defies the chair's correction, obstructing the proceedings and refusing to heed calls to stop, the chair may direct the proctors or security personnel to escort the shareholder from the meeting.
On the day of a shareholders meeting, the Company shall collect and compile in the prescribed format a statistical statement and shall make an express disclosure of the same at the place of the shareholders meeting in accordance with Article 12 and Article 13 of Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies.
In regard to all matters not provided for in these Rules, the Company Act and regulations by competent authority shall govern.
These Rules, and any amendments hereto, shall be implemented after adoption by shareholders meetings.

~55~

Appendix 2 Amended by 2019 Shareholder’s Meeting on June 5, 2019

Articles of Incorporation of Chicony Electronics Co., Ltd.

Chapter 1 General Provisions

Article 1: The Company shall be incorporated as a company limited by shares under the Company Act and its name shall be “Chicony Electronics Co., Ltd.”.
Article 2: The scope of business of the Company is as follows:
CC01080 Electronic Parts and Components Manufacturing.
CC01101 Restrained Telecom Radio Frequency Equipments and Materials Manufacturing.
CC01110 Manufacture of Computers and Peripheral Equipment.
F108031 Wholesale of Drugs, Medical Goods.
F113070 Wholesale of Telecom Instruments.
F118010 Wholesale of Computer Software.
F119010 Wholesale of Electronic Materials.
F208031 Retail sale of Medical Equipments.
F213060 Retail sale of Telecom Instruments.
F218010 Retail sale of Computer Software.
F219010 Retail sale of Electronic Materials.
F401010 International Trade.
F401021 Restrained Telecom Radio Frequency Equipments and Materials Import.
I301010 Software Design Services.
I301020 Data Processing Services.
I301030 Digital Information Supply Services.
ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Article 3: The Company may engage in guarantee business in accordance with the “Regulations Governing Endorsement and Guarantees”.
Article 4: The Head Office of the Company locates at New Taipei City. The Company may, by the resolution of the Board of Directors when necessary, establish branch offices or subsidiaries domestically or overseas.
- Chapter 2 Shares
Article 5: The total capital amount of the Company shall be NTD$8 billion, divided into 800 million shares, at a par value of NTD$10 per share, and the Company may authorized the Board of Directors to issue shares separately.
An amount of NTD$200 million out of the aforesaid capital amount is reserved to serve as subscription warrants for employees, divided into 20 million shares at a par value of NTD$10 per share and may be issued separately according to the resolution of the Board of Directors.
Article 5-1: The target of share transfer, subscription and distribution, in circumstances that the treasury stocks of the Company are transferred to employees, shares retained for subscription for employees when issuing new shares, as well as employee subscription certificate and restricted shares of employee, may include employees provided by the Company Act.
Article 6: The share certificates of the Company shall be in name-bearing form, printed and signed by, or affixed with the seals of directors representing the Company, and authenticated in accordance with laws upon issuance. Shares issued by the Company need not be in certificate form, but they shall be registered in the securities

~56~

depository institutions.
Article 7: The transfer of shares shall be ceased 60 days prior to the meeting of the Shareholders’ Meeting, 30 days prior to the interim Shareholders’ Meeting, or 5 days prior to the base date that the Company determines to distribute dividends and bonus or other benefits.
Article 7-1: Shareholders shall leave their seal cards with the Company for collecting dividends, distributing bonus and exercise shareholders’ rights. The transfer of shares and the establishment, termination and renewal of seal cards shall be conducted in accordance with the regulations provided by the competent authority. Chapter 3 Shareholders’ Meeting
Article 8: Shareholders’ meeting shall be of two types, namely general and interim shareholders’ meeting. The former shall be convened once a year within 6 months after the close of each fiscal year and the latter shall be convened whenever necessary. Notices which clearly state the purpose(s) for convening meeting shall be sent to each shareholder at least 30 days in advance, in case of general meetings, and at least fifteen (15) days in advance, in case of interim meetings. For shareholders holding less than 1,000 shares, the notice shall be in the form of announcement. The Notice for convening meeting, where the respondents agree, may be in electronic form. The resolutions by the Shareholders’ Meeting shall be recorded in the Meeting Minutes and shall be conducted in accordance with Article 183 of the Company Act.
Article 8-1: A Shareholders’ Meeting called by the Board of Directors shall be chaired by the Chairman. When the Chairman of the board is on leave or for any reason is unable to exercise the powers of the Chairman, the Chairman shall designate a Director to chair the meeting. If the Chairman does not make such designation, the meeting shall be chaired by the director elected by and from among themselves. Where a Shareholders’ Meeting is called by Directors outside of the Board of Directors, the meeting shall be chaired by such Director. In the event that there is more than one Director who has the power to convene such meeting, such Directors shall agree among themselves as to who shall act as the chairperson of the meeting.
Article 9: In case a shareholder is unable to attend a shareholders’ meeting in person, such shareholder may issue proxy in the form printed by the Company, setting forth the scope of authorization for the representative to be present on his/her/its behalf after signing or stamping on the proxy. The proxy attendance by a shareholder, in addition to the Company Act, shall be conducted in compliance with “Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies” promulgated by the competent authority.
Article 10: Each share of the shareholders of the Company has one voting right. Where partial or whole of shares do not have voting rights in accordance with laws and regulations (including but not limited to circumstances listed in Paragraph 2, Article 179 and Paragraph 2, Article 197-1 of the Company Act), such shares are not subject to this provision.
Article 11: Unless otherwise provided in related laws and regulations, a resolution shall be made at the meeting attended by shareholders, either in person or by proxy, holding and representing majority of the total number of issued and outstanding shares and at which meeting a majority of the shareholders shall vote in favor of the resolution. The voting rights of the proposals in Shareholders’ Meeting may be exercised in writing or electronic form in accordance with related laws and regulations. Chapter 4 Directors and Audit Committee
Article 12: The Company shall have 7 to 9 Directors to be elected at a shareholders’ meeting through candidates nominating system from the nominees listed to serve a term of

~57~

three years. A director may be re-elected.

The aforesaid Board of Directors must have at least 3 or 1/5 of all directors, whichever is higher, independent directors. The professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, method of nomination, and other matters for compliance with respect to independent directors shall be complied with in accordance with the laws and regulations of the Competent Authority.

The total shares of nominal stock held by Directors shall be in compliance with “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies” promulgated by the Financial Supervisory Commission.

Article 12-1: The Company establishes the Audit Committee in accordance with Article 14-4 of the Securities and Exchange Act. The Audit Committee shall be composed of all independent directors. The provisions regarding supervisors in the Company Act, Securities and Exchange Act, and other laws and regulations shall apply mutatis mutandis to the audit committee.
Article 13: The Board of Directors is organized by Directors. A Chairman of the Board of Directors shall be elected from among the Directors by majority of directors present at a meeting attended by more than two thirds of directors. The Chairman shall externally represent the Company.

Article 13-1: The duties of the Board of Directors are as follows:

  1. Determination of business goal and strategy.

  2. Approval of all systems and operational rules.

  3. Drafting of earnings distribution.

  4. Drafting of increase or decrease of capital.

  5. Approval of important contracts.

  6. Approval of establishment or abolishment of branches.

  7. Approval of appointment of assistant vice presidents or above.

  8. Approval of external investments.

  9. Approval of the lending amount.

  10. Approval of endorsement/guarantee amount.

  11. Approval of purchase and disposal of material properties.

  12. Convene Shareholders’ Meeting and execute its resolutions.

  13. Proposal of enactment or amendment of the Company’s Article of Incorporation.

  14. Approval of the dividend distribution and ex-right base date.

  15. Approval of other important cases.

Article 14: The Board of Directors shall be chaired by the Chairman. When the Chairman of the board is on leave or for any reason is unable to exercise the powers of the Chairman, a managing director designated by the Chairman shall chair the Board, or, if the Chairman does not make such a designation, by a managing director or director elected by and from among themselves.
In case a director is on leave for any reason and appoints another director to attend a meeting of the Board of Directors in his/her behalf, the proxy shall be conducted in accordance with Article 205 of the Company Act.
Article 15: The Board of Directors meeting shall be held once every quarter and may be convened at any time if necessary.
Before convening a meeting of the Board of Directors, a notice shall be given to each director no later than 7 days prior to the scheduled meeting date. However, the meeting may be convened at any time in case of urgency.

The aforesaid notice shall indicate the purpose in writing or via E-mail or fax.

~58~

Article 15-1 : The traveling expenses for Directors of the Company shall be determined by the resolution of the Board of Directors.
Article 15-2 : The Company may obtain liability insurance for Directors and important employees by the resolution of the Board of Directors.
Article 15-3 : The remuneration of all Directors shall be determined by the Board of Directors based on the Director’s participation level in the Company operation and the contribution value and on the remuneration level of the industry after the approval by the Remuneration Committee.

Chapter 5 Managers

Article 16: The Company may have one President and several vice presidents and assistant vice presidents. The appointment, dismissal and remuneration shall be determined by the resolution of the Board of Directors.

Chapter 6 Accounting

Article 17: The fiscal year of the Company starts from January 1 as of December 31 of the year. By the end of the fiscal year, the Board of Directors shall prepare following books and statements and report to the Shareholders’ Meeting for approval in compliance with legal procedures.
1. Business Report
2. Financial Statements
3. Proposals for earnings distribution or making-up losses
Article 18: The Company shall distribute no less than 11% of current pre-tax earnings before deducting the employee compensation and Directors’ remuneration as the employee compensation and no more than 1% of such earnings as the remuneration for Directors. When the Company has accumulated losses (including adjusted retained earnings), the profits shall be used to offset accumulated losses first, and then the balance of which may be allocated to employees and directors in accordance with the aforesaid percentage.
The employee compensation described in the preceding paragraph may be distributed in stocks or cash, and the receiver may include employees of subsidiaries provided in the Company Act. The remuneration for Directors shall only be distributed in cash.
Remuneration distribution for employees and Directors shall be determined by the Board of Directors and reported to the Shareholders’ Meeting.
Article 18-1: The current year’s net profit after tax of the Company, if any, shall first be used to offset prior years’ accumulated losses (including adjusted retained earnings) and then set aside 10% as legal reserve. When such legal reserve amounts to the total paid-in capital, the Company shall not be exempted from this requirement. The Company may then appropriate or reverse a certain amount as special reserve according to the relevant regulations or requirements by competent authority. The remaining earnings, plus the accumulated retained earnings (including adjusted retained earnings), may be appropriated to shareholders as dividends or bonuses according to the distribution plan proposed by the Board of Directors in compliance with Article 19 of the Articles of Incorporation to the Shareholders’ Meeting.
The Board of Directors of the Company may determine to distribute all or part of dividends, bonus, legal reserve or additional paid-in capital in cash by the resolution of the Board of Directors Meeting attended by 2/3 of Directors and approved by 1/2 of the attended Directors and may report to the Shareholders’ Meeting. This paragraph is exempted from the provision that shall be approved by the Shareholders’ Meeting in the preceding paragraph.
Article 19: The Company is currently at the development period of the electronic industry, so the dividend policy shall meet the goals of meeting the fund demand for new products

~59~

and increasing the return on investment of shareholders. Therefore, the total dividend distributed shall not be higher than 90% of total earnings that is distributable as shareholders’ dividends, and the cash dividend shall not be less than 10% of total amount of distributed dividends.

Where the par value of distributable dividends is less than $0.5 per share, it shall be exempted from the preceding paragraph.

Article 20: The reinvestment amount of the Company in all businesses shall not be subject to Article 13 of the Company, providing that the investment amount shall not exceed 40% of paid-in capital.

Chapter 7 Supplementary Provisions

Article 21: In regard to all matters not provided for in these Company’s Articles of Incorporation, the Company Act shall govern.

Article 22: This Company’s Articles of Incorporation was enacted on February 5, 1983. First amendment on April 20, 1983. Second amendment on July 28, 1983. Third amendment on March 4, 1985. Fourth amendment on June 22, 1987. Fifth amendment on July 15, 1988. Sixth amendment on July 8, 1989. Seventh amendment on April 30, 1990. Eighth amendment on June 22, 1991. Ninth amendment on May 30, 1992. Tenth amendment on June 10, 1993. Eleventh amendment on June 24, 1994. Twelfth amendment on June 9, 1995. Thirteenth amendment on June 24, 1996. Fourteenth amendment on June 24, 1996. Fifteenth amendment on October 17, 1997. Sixteenth amendment on April 24, 1998. Seventeenth amendment on September 25, 1998. Eighteenth amendment on May 24, 1999. Nineteenth amendment on May 15, 2000. Twentieth amendment on May 30, 2001. Twenty first amendment on May 30, 2002. Twenty second amendment on June 9, 2003. Twenty third amendment on May 18, 2004. Twenty fourth amendment on June 10, 2005. Twenty fifth amendment on June 9, 2006. Twenty sixth amendment on June 13, 2007. Twenty seventh amendment on June 13, 2008. Twenty eighth amendment on June 10, 2009. Twenty ninth amendment on June 9, 2010. Thirtieth amendment on June 10, 2011. Thirty first amendment on June 12, 2012. Thirty second amendment on May 30, 2014. Thirty third amendment on June 17, 2015. Thirty fourth amendment on June 8, 2016. Thirty fifth amendment on June 5, 2018. Thirty sixth amendment on June 5, 2019.

~60~

Appendix 3 Chicony Electronics CO., Ltd. Shareholding Status of Directors

The paid-in capital of the Company is NTD$7,394,603,000. Article 26 of Securities and Exchange Act and Article 2 of “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies” provide that:
(1) The total registered shares owned by all directors shall not be less than 4%.
(2) The shareholdings of independent directors elected by the Company shall not be counted in the total referred to in the preceding paragraph; if a public company has elected two or more independent directors, the share ownership figures calculated at the rates set forth in the preceding paragraph for all directors other than the independent directors and shall be decreased to 80 percent of original shareholding number.
(3) Where the Company has duly set up the Audit Committee, the terms for number of shares held by the supervisors are, therefore, not applicable
The total number of shares issued by the Company is 739,460,300 share. The minimum shareholding number for all directors (excluding independent directors) is (3.2%): 23,662,730 shares
The statement of shareholding number of individual and all directors as of the book closure date of this Shareholders’ Meeting on April 12, 2020 is disclosed as follows in accordance with Article 3 of “Regulations Governing Content and Compliance Requirements for Shareholders' Meeting Agenda Handbooks of Public Companies.” The detail information is as follows:

~61~

Title	Name	Elected Date	Shareholding number	Retained discretion over use of trust shares	Total shareholding number	Shareholding Ratio%
Chairman	Hsu,Kun-Tai	2019/6/5	61,615,782	0	61,615,782	8.33
Director and General Manager	Lu, Chin-Chung	2019/6/5	3,191,042	63,900	3,254,942	0.44
Director	Tsai, Ming-Hsien	2019/6/5	29,355	0	29,355	0.00
Director	Li,Cih-Jing	2019/6/5	828,037	0	828,037	0.11
Director	Dong Ling Investment Co., Ltd. Legal Representati ve: Liu, Chia-Sheng	2019/6/5	11,171,329	0	11,171,329	1.51
Independent Director	Lee, Yen-Sung	2019/6/5	0	0	0	0
Independent Director	Lin, Ming-Chieh	2019/6/5	21,433	0	21,433	0.00
Independent Drector	Chu, Jia-Siang	2019/6/5	0	0	0	0
Total shares of all Directors			76,856,978	63,900	76,920,878	10.40

Note: The total shareholding number of directors (excluding independent directors) exceeds the statuary minimum shareholding number.

Appendix 4

The Impact of Stock Dividend Issuance on Business Performance, EPS, and Shareholder Return Rate: N/A

~62~

AI assistant

CHICONY — AGM Information 2020

52047_rns_2020-06-10_dc434f8f-d69a-4490-9295-5773c0a2c092.pdf

Chicony Electronics CO., Ltd. Table of Contents

Chicony Electronics CO., Ltd.

Procedure for the 2020 Annual Meeting of Shareholders

Chicony Electronics CO., Ltd.

2020 Agenda of Annual Meeting of Shareholders

Report Equity Shares in Attendance

Discussion Items:

Management Presentations

1. 2019 Operation Results

2. The Audit Committee’s Review Report on 2019 Financial Statements.

3. Report on Distribution of Employee compensation and Remuneration to Directorsfor the 2019 Fiscal Year.

4. Report on Earnings Distribution of cash dividends for the 2019 Fiscal Year.

5. Other Report Item

Acknowledge Items

Item 1 : Proposals for Acknowledgement of 2019 Business Report and Consolidated Financial Statements and Individual Financial Statements. (Proposed by the Board)

Item 2: The distribution of earnings of the Company for the 2019 fiscal year is proposed for acknowledgment.(Proposed by the Board) Explanation:

Discussion Item

Item1: Proposal for amendment to the “Procedures for Loaning of Funds”. (Proposed by the Board) Explanation:

Questions and Motions

Adjournment

Attachment 1

Chicony Electronics CO., Ltd. 2019 Business Report

1. 2019 performance

(1) 2019 Operational Result

b.Profitability

(3) Research and development

Attachment 2

Chicony Electronics CO., Ltd.

The Audit Committee’s Review Report

Shareholders’ Meeting 2020

Attachment 3

Opinion

Basis for opinion

Key audit matters

Appropriateness of warehouse operating revenue cut-off

Description

How our audit addressed the matter

Valuation of inventory

Description

How our audit addressed the matter

Other matter - Audit of other independent accountants

Other matter - Parent company only financial reports

Responsibilities of management and those charged with governance for the consolidated financial statements

Independent accountant’s responsibilities for the audit of the consolidated financial statements

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

CHICONY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

Opinion

Basis for opinion

Key audit matters

Valuation of inventory

Description

How our audit addressed the matter

Appropriateness of warehouse operating revenue cut-off

Description

How our audit addressed the matter

Other matter - Scope of the audit

Auditor’s responsibilities for the audit of the parent company only financial statements

CHICONY ELECTRONICS CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS

CHICONY ELECTRONICS CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS

CHICONY ELECTRONICS CO., LTD. PARENT COMPANY ONLY STATEMENTS OF INCOME

CHICONY ELECTRONICS CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

CHICONY ELECTRONICS CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

CHICONY ELECTRONICS CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

Attachment 4

Chicony Electronics CO., Ltd. 2019 Earnings Distribution Table

Attachment 5

Amended by 2019 Shareholders’ Meeting on June 5, 2019 Chicony Electronics CO., Ltd.

Comparison Table for the original articles and amendments of “Procedures for Loaning of Funds”

Attachment 6

Amended by 2019 Shareholders’ Meeting on June 5, 2019 Chicony Electronics CO., Ltd. Procedures for Loaning of Funds

CHICONY AGM Information 2020

`Opinion`

`Basis for opinion`

`Key audit matters`

`Appropriateness of warehouse operating revenue cut-off`

`Auditor’s responsibilities for the audit of the parent company only financial statements`