INVENTEC - AGM Information 2020 | FinancialReports.eu

INVENTEC CORPORATION Minutes of 2020 Annual General Shareholders' Meeting (Translation)

Time�Friday, June 12, 2020. 9:00 a.m.

Place�Ching-Kuo Memorial Hall at Chientan Youth Activity Center,

No.16, Sec. 4, Jhongshan N. Rd., Shilin District, Taipei City

Quorum�2,961,676,821 shares were represented by shareholders in person and by proxy (including by exercising voting rights electronically�1,595,872,349 shares), which are mounted to 82.55% of the Company’s 3,587,475,066 issued and outstanding shares.

Chairman�Cho,Tom-Hwar Recorder�Shih, Robert / Qin Amanda

Board Members Present�

Director�Cho, Tom-Hwar / Yeh, Kuo-I / Wen, Shih-Chih / Lee, Tsu-Chin / Huang, KuoChun / Chang, Ching-Sung
Independent Director�Chang, Chang-Pang / Chen, Ruey-Long

Attendance�Li, Nigel N. T, Attorney-at- Law / Lin, Wan-Wan, CPA

A. Call the Meeting to Order

The Chairman announced that the aggregate shareholding of the shareholders present in person or proxy constituted a quorum. The Chairman called the meeting to order.

B. Chairman Remarks: (Omitted)

C. Report Items

2019 Business Report (Please refer to Appendix 1)
2019 Audit Committee’s Review Report (Please refer to Appendix 2)
The Status of Distribution Remuneration of Employees and Directors of Board in 2019. Explanation:
(1) According to the Article 26 of Articles of Incorporation, if the Company has a profit of the year shall distribute not less than 3% of the balance as remuneration to Employees and not more than 3% to Board Directors of the Corporation.
(2) The Board of Directors and Remuneration Committee resolved to distribute NT$ 424,704,269 as remuneration to employees in cash and NT$ 77,753,550 as remuneration to Directors of Board. There is no difference between the amount of distribution and the expense which has been recognized in 2019.

The Status of Distribution of Profits in Cash Dividends to Shareholders in 2019 Explanation:
(1) According to article 27 of Articles of Incorporation, the Company authorize the Board of Directors to distribute dividends and bonuses in cash after resolution, and submitted such distribution to the shareholders’ meeting
(2) The distributable net profit for 2019 is NT$ 5,137,036,647 and the proposed cash dividend to shareholders is NT$1.3 per share (NT$ 4,663,717,586).
(3) The Board of Directors had resolved this profits distribution proposal and is authorized to set the ex-dividend date, payment date and arrange other related matters. In addition, the Board of directors is authorized to adjust the cash distribution ratio in case of change in the number of outstanding shares of the Company.

D. Ratification Items

Item 1 Proposed by the Board

Proposal: Ratification of the 2019 Business Report and Financial Statements.

Explanation: The Company’s 2019 Individual Financial Statements and Consolidated Financial Statements, including the balance sheet, comprehensive income statement, statements of cash flows, and statement of changes in equity, were audited by independent accountants, Lin, Wan-Wan and Yang, Liu-Fong of KPMG Certified Public Accountants. Also Business Report and Financial Statements have been approved by the Board and examined by the Audit Committee of Inventec Corporation. (Please refer to Appendix 1 for Business Report, Appendix 3 for Independent Accountants’ Audit Report and Individual Financial Statements, and Appendix 4 for Independent Accountants’ Audit Report and Consolidated Financial Statements.)
Resolution: Approved and acknowledged as proposed by voting (a total of 2,961,672,298 shares with voting rights were present when votes were cast; the number of voting rights for approval is 2,656,537,220, among which 1,290,885,944 was exercised by electronic transmission, or 89.69% of the total voting rights when votes were cast; the number of votes against is 429,824, among which 429,824 was exercised by electronic transmission; the number of votes abstained is 304,705,254, among which 304,556,581 was exercised by electronic transmission)

Item 2 Proposed by the Board

Proposal: Adoption of the Proposal for Distribution of 2019 Profits

Explanation: The 2019 Profit distribution table had been resolved by the Board of Directors and reviewed by the Audit Committee , please refer to Appendix 5.

Resolution: Approved and acknowledged as proposed by voting (a total of 2,961,672,298 shares with voting rights were present when votes were cast; the number of voting rights for approval is 2,663,374,307, among which 1,297,723,031 was exercised by electronic transmission, or 89.92 % of the total voting rights when votes were cast; the number of votes against is 3,305,052, among which 3,305,052 was exercised by electronic transmission�the number of votes abstained is 294,992,939, among which 294,844,266 was exercised by electronic transmission)

E. Discussion Items

Item 1 Proposed by the Board

Proposal: Discussion of Amendments to the “Rules of Procedure for Shareholders Meetings”.

Explanation: Propose to amend Article 2, Article 6, Article 11 and Article 15 of “Rules of Procedure for Shareholders Meetings” according to the Sample Template for “XXX Co., Ltd. Rules of Procedure for Shareholders Meetings” amended per January 2, 2020 Letter No. Taiwan-Stock-Governance-10800242211. Please refer to the comparison chart of amendments below.

Comparison Chart of Amendments to “Rules of Procedure for Shareholders Meetings”

	Original Version		Amendment Version	Reason
Article 2	The Company’s shareholders meeting shall be convened by the board of directors unless applicable laws and regulations provide otherwise. (The following content omitted.) The election or discharge of directors, the amendment of this Company’s Articles of Incorporation, reduction of capital, application for the approval of ceasing its status as a public company, approval of competing with the company by directors, surplus profit distributed in the form of new shares, reserve distributed in the form of new shares, the dissolution, merger, or spin-off the Company,or the	Article 2	The Company’s shareholders meeting shall be convened by the board of directors unless applicable laws and regulations provide otherwise. (The following content omitted.) The election or discharge of directors, the amendment of this Company’s Articles of Incorporation, reduction of capital, application for the approval of ceasing its status as a public company, approval of competing with the company by directors, surplus profit distributed in the form of new shares, reserve distributed in the form of new shares, the dissolution,merger,or spin-off	Revise listed to the reason for shareholders’ meeting to be convened

	matters specified in Article 185, paragraph 1 of the Company Law, orArticle 26-1or Article 43-6 of the Securities and Exchange Law, or Article 56-1 or Article 60-2 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be listed and the essential contents shall be explained among the reasons for the meeting, and may not be proposed as extraordinary motions.		the Company, or the matters specified in Article 185, paragraph 1 of the Company Law, or Article 43-6 of the Securities and Exchange Law, or Article 56- 1 or Article 60-2 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be listed and the essential contents shall be explained among the reasons for the meeting, and may not be proposed as extraordinary motions.
Article 6	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 following content omitted.)	Article 6	If a shareholders meeting is convened by the board of directors, the meeting agenda shall be set by the board of directors, relevant proposals (including extraordinary motions and amendments to the original proposals) shall be voted case-by- case.The meeting shall proceed in the order set by the agenda, which may not be changed without a resolution of the shareholders meeting. (The following content omitted.)	Revise the wording to cooperate with electronic voting and implement the spirit of passing the resolution on a one agenda by one agenda basis.
Article 11	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. 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 this Corporation. (The following content omitted.)	Article 11	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 voteand arrange adequate polling hours. 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 this Corporation. (The following content omitted.)	Revise the wording of shareholders’ polling hours
Article 15	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 pursuant to Article 183 of the Company Act. The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chair's full name,the methods by	Article 15	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 pursuant to Article 183 of the Company Act. The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chair's full name,the methods by	Amend required content of meeting minutes to implement the spirit of passing the resolution on a one agenda by one agenda basis.

	which resolutions were adopted, and a summary of the deliberations and their results, and shall be retained for the duration of the existence of this Corporation.			which resolutions were adopted, and a summary of the deliberations andvotingresults, (including the statistical tallies of the numbers of votes). Where there is an election of directors, the statistical tallies of the numbers of votes for each candidate shall be disclosedand shall be retained for the duration of the existence of this Corporation.

Resolution: Approved as proposed by voting (a total of 2,961,672,298 shares with voting rights were present when votes were cast; the number of voting rights for approval is 2,649,252,050, among which 1,283,600,774 was exercised by electronic transmission, or 89.45% of the total voting rights when votes were cast; the number of votes against is 309,814, among which 309,814 was exercised by electronic transmission; the number of votes abstained is 312,110,434, among which 311,961,761 was exercised by electronic transmission)

Item 2 Proposed by the Board

Proposal: Discussion of Amendments to the “Procedures for Acquisition or Disposal of Assets s”.

Explanation: Propose to amend Article 4 of “Procedures for Acquisition or Disposal of Assets” Please refer to the comparison chart of amendments below.

Comparison Chart of Amendments to “Procedures for Acquisition or Disposal of Assets”

	Original Version		Amendment Version	Reason
Article 4	Procedures of Evaluation and Operation for the Acquisition or Disposal of Assets: 1. The case-handling units shall submit items such as the reasons for the proposed acquisition or disposal, targeted assets, counterparties, price of transfer, receipt and payment terms, and price reference, etc. to the responsible department for the decision and executed by the asset management department. (The following content omitted.) (2) Level of authority: Transaction amount reaches 5% or more of the Company’s net worth of latest financial report shall be subject to the consent of audit committee and be submitted to board of	Article 4	Procedures of Evaluation and Operation for the Acquisition or Disposal of Assets: 1. The case-handling units shall submit items such as the reasons for the proposed acquisition or disposal, targeted assets, counterparties, price of transfer, receipt and payment terms, and price reference, etc. to the responsible department for the decision and executed by the asset management department. (The following content omitted.) (2) Level of authority: Transaction amount reaches 5% or more of the Company’s net worth of latest financial report shall be subject to the consent of audit committee and be submitted to board of	Amend authority level of securities

	director for a resolution. (a) Acquisition or disposal of long-term securities shall be evaluated by finance department and be approved by the board of directors. (The following content omitted.)		director for a resolution. (a) Acquisition or disposal of long-term securities, which the cumulative transaction amount of the same security within the preceding year reaches NT$300 million or more, shall be approved by the board of directors. (The following content omitted.)

Resolution: Approved as proposed by voting (a total of 2,961,672,298 shares with voting rights were present when votes were cast; the number of voting rights for approval is 2,327,693,756, among which 962,042,480 was exercised by electronic transmission, or 78.59% of the total voting rights when votes were cast; the number of votes against is 308,989,539, among which 308,989,539 was exercised by electronic transmission; the number of votes abstained is 324,989,003, among which 324,840,330 was exercised by electronic transmission)

F. Election Matters Proposed by the Board

Proposal: Proposes to Elect New Directors .

Explanation: (1) The present directors (15[th] ) of the Company were elected at shareholders’ meeting on June 16, 2017 for a term of office of three years and the term of office will expire in June 15, 2020.
(2) According to Article of Incorporation, The Company shall elect new directors at shareholders’ meeting of this year. The 16[th] nine directors (including three independent directors) shall be elected and their three-year term will start from June 12, 2020 and conclude on June 11, 2023. The term of present directors will end until the shareholders’ meeting is completed. According to Article of Incorporation, the election adopts the candidate nomination system. The list of nominees had been resolved by the Board of Directors as the list of candidates for directors on March 24, 2020 and the shareholders shall elect the directors from the list. For the “Procedures for Election of Directors” of the Company, please refer to appendix 9 in the Meeting Agenda.
(3) Please refer to relevant information of the list of candidates for directors and independent directors below:

Type	Name of nomine e	Educations	Experiences	Current Positions	Concurrent position in another company	Shareholdin g (shares)
Director	Cho, Tom- Hwar	Electrical Engineering , National Taiwan University	Chairman, Inventec Corporation. Chairman, Inventec Solar Energy Corporation.	Chairman, Inventec Corporation. Chairman, Inventec Investments Co., Ltd. Director, Inventec Corporation (Hong Kong), Ltd. Director, Inventec (Cayman) Corp.	None	1,004,311

			Director, Inventec Appliances Corporation. Director, Simplo	Director, IEC (Cayman) Corporation Director, Inventec Holding (North America) Corp. Director, Inventec (USA) Corp. Director, Inventec Manufacturing (North America) Corp. Director, Inventec Configuration (North America) Corp. Director, IEC Technologies,S.de R.L.de C.V. Director,Inventec Development Japan Corporation Director,Inventec Japan Corporation
			Technology Co.,
			Ltd.
Director	Yeh, Kuo-I	Taipei Municipal Shilin High School of Commerce.	Chairman, Inventec Corporation.	Director, Inventec Group Charity Foundation. Director, Inventec Corporation (Hong Kong),Ltd. Director, WK Technology Fund VIII Director, Royal Base Corporation Director, PK Venture Capital Corp., Director, Kuo Hsieh Investment Co. Ltd., Director, Fu Tai Investment Co. Ltd., Director, WK Technology Fund Director, WK Technology Fund IV Director, WK Technology Fund V Director, WK Technology Fund VI Supervisor, WK Technology Fund VII	Director, WK Technology Fund VIII. Director, Royal Base Corporation Director, PK Venture Capital Corp., Director, Kuo Hsieh Investment Co. Ltd., Director, Fu Tai Investment Co. Ltd., Director, WK Technology Fund Director, WK Technology Fund IV Director, WK Technology Fund V Director, WK Technology Fund VI Supervisor, WK Technology Fund VII	226,361,330
Director	Wen, Shih- Chih	Xihu Vocational High School of Industry and Commerce	Chairman, Shyh	Chairman, Shyh Shiunn	Chairman, Shyh Shiunn Investment Corp.	35,685,590
			Shiunn	Investment Corp.
			Investment	Director, Inventec Huan Hsin (Zhejiang) Technology Co., Ltd.
			Corp.

Director	Lee, Tsu- Chin	Bachelor of Economics, Tunghai University	Chairman,	Chairman, Inventec Group	Chairman, Esther Investment Co., Ltd.	115,833,835
			Inventec	Charity Foundation.
			Corporation.	Chairman, Esther Investment Co.,Ltd.

Director	Chang, Ching- Sung	Master of Electrical Engineering , National Taiwan University	Chairman,	Chairman, Inventec Appliances Corporation. Chairman, Inventec Appliances (Shanghai) Co. Ltd. Chairman, Inventec Appliances (Pudong) Corp. Chairman, Inventec Appliances (Jiangning) Corp. Chairman, Inventec Appliances (Nanjing) Corp. Chairman, Inventec Appliances (XI'AN) Corporation Chairman, Inventec Appliances (Nanchang)Corporation	Director, Jinlife Biotech Corporation	788,644
			Inventec
			Appliances
			Corporation.

				Chairman, Inventec Appliances (Shanghai) Enterprise Co., Ltd. Chairman, APEX Business Management & Consulting (Shanghai) Co., Ltd. Director, Inventec Appliances (Cayman) Holding Corp. Director, Inventec Appliances (USA) Distribution Corp. Director, Inventec Appliances USA Inc. Director, Inventec Appliances (Nanchang) Intelligent Manufacturing Co., Ltd. Director, Jinlife Biotech Corporation Representative, Inventec Appliances (Malaysia) SDN. BHD.
Director	Yeh, Li- Cheng	Master of Information Engineering , Pace University	Chairman, Fu Tai. Investment Co. Ltd., Chairman, Kuo Hsieh Investment Co. Ltd.,	Chairman, Fu Tai. Investment Co. Ltd., Chairman, Kuo Hsieh Investment Co. Ltd., Chairman, Quan Cheng Asset Management Co., Ltd. Vice Chairman, Royal Base Corporation. Director, Win Semiconductors Corp. Director, AIMobile Co. Ltd., Director, Inventec Appliances Corporation. Director, Inventec Solar Energy Corporation. Director, Inventec Group Charity Foundation. Supervisor, Inventec Besta Co., Ltd.	Chairman, Fu Tai. Investment Co. Ltd., Chairman, Kuo Hsieh Investment Co. Ltd., Chairman, Quan Cheng Asset Management Co., Ltd. Vice Chairman, Royal Base Corporation. Director, Win Semiconductors Corp. Director, AIMobile Co. Ltd., Director, Inventec Solar Energy Corporation. Supervisor, Inventec Besta Co., Ltd.	67,412,472


Independ ent Director	Chen, Ruey- Long	Bachelor of Economics, National Chung- Hsing University	Chairman, Sinocon Industrial Standards Foundation. Chairman, Institute for Information Industry Minister, Ministry of Economic Affairs.	Chairman, Sinocon Industrial Standards Foundation. Chairman, China Petrochemical Development Corporation. Chairman, Powerchip Technology Corporation. Independent Director, Formosa Chemicals & Fibre Corporation. Independent Director, Walsin Lihwa Corporation. Director, HannStar Board Corporation. Director, Asia Cement Corporation Director, Teknowledge Development Corp. Director, Powerchip Semiconductor Manufacturing Corporation.	Chairman, China Petrochemical Development Corporation. Chairman, Powerchip	0
					Technology Corporation.
					Independent Director, Formosa Chemicals & Fibre Corporation. Independent Director, Walsin Lihwa Corporation. Director, HannStar Board Corporation. Director, Asia Cement Corporation Director, Teknowledge Development Corp.

				Director, Inventec Group Charity Foundation�	Director, Powerchip Semiconductor Manufacturing Corporation.
Independ ent Director	Chang, Chang- Pang	Master of Laws, National Cheng-Chi University Bachelor of Law, Fu Jen Catholic University	Chief Executive Officer, Lien Chan Foundation for Peace and Development. Chairman, Fuhwa Financial Holding Co., LTD. Deputy Minister, Ministry of Economic Affairs. Deputy Secretary- General, Executive Yuan. Administrative Deputy Minister, Ministry of Finance. Chairperson, Securities and Futures Commission, Ministry of Finance	Chief Executive Officer, Lien Chan Foundation for Peace and Development Independent Director, Formosa Petrochemical Corp. Independent Director, Silitech Technology Corporation.	Independent Director, Formosa Petrochemical Corp. Independent Director, Silitech Technology Corporation. Independent Director, Powerchip Technology Corporation. Director, Maxigen Biotech Inc.	0
				Independent Director, Powerchip
				Technology Corporation. Director, Maxigen Biotech Inc. Director, Inventec Group Charity Foundation�
Independ ent Director	Wea, Chi-Lin	Doctor of Economics, University of Paris.	Chairman, Land Bank of Taiwan. Secretary- General, Executive Yuan Administrative Deputy. Chairperson, International Business, National Taiwan University.	Adjunct Professor, Business Administration, National Taiwan University. Chairman, IBF Financial Holdings Co., Ltd. Chairman, International Bills Finance Corporation. Chairman, Chi Ding Venture Capital Co., Ltd. Chairman, Hua Ding International Venture Capital Co., Ltd. Chairman, Yuan Ding Venture Capital Co., Ltd. Independent Director, Formosa Plastics Corporation. Independent Director, SINBON Electronics Co., Ltd. Independent Director, Inventec Besta Co., Ltd. Director, Taiwan Secom Co., Ltd. Director, He Ding Venture Capital Co., Ltd. Director, Fu Ding Venture Capital Co., Ltd. Director, AcBel Polytech Inc.	Chairman, IBF Financial Holdings Co., Ltd. Chairman, International Bills Finance Corporation. Chairman, Chi Ding Venture Capital Co., Ltd. Chairman, Hua Ding International Venture Capital Co., Ltd. Chairman, Yuan Ding Venture Capital Co., Ltd. Independent Director, Formosa Plastics Corporation. Independent Director, SINBON Electronics Co., Ltd. Independent Director, Inventec Besta Co., Ltd. Director, Taiwan Secom Co., Ltd. Director, He Ding Venture Capital Co., Ltd.	0

Director, Nuvoton Technology Director, Fu Ding Corp. Venture Capital Co., Director, Elan Microelectronics Ltd. Corp. Director, AcBel Polytech Supervisor, ACES Electronics Inc. Co., Ltd. Director, Nuvoton Supervisor, Breeze Technology Corp. Comprehensive Development. Director, Elan Microelectronics Corp. Supervisor, ACES Electronics Co., Ltd. Supervisor, Breeze Comprehensive Development.

Election Results:

Election Results:
Director	Cho, Tom-Hwar	2,615,696,450
Director	Yeh, Kuo-I	2,519,084,778
Director	Wen, Shih-Chih	2,465,286,268
Director	Lee, Tsu-Chin	2,401,423,466
Director	Chang, Ching-Sung	2,339,144,887
Director	Yeh, Li-Cheng	2,274,326,233
Independent Director	Chang, Chang-Pang	2,243,170,136
Independent Director	Chen, Ruey-Long	2,212,672,561
Independent Director	Wea, Chi-Lin	2,179,825,324

G. Other Proposals Proposed by the Board

Proposal: Proposal for Release the Prohibition on New Directors and Their Representatives from Participation in Competitive Business.

Explanation: (1) According to provisions of Company Act Article 209, a director who does anything for himself or on behalf of another person that is within the scope of the Company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.
(2) Propose to the shareholders’ meeting to approve that the prohibition of business strife on current re-elected directors were lifted from the onboard date. For the scope of the new directors to lift the competitive behavior restrictions, please refer to the concurrent position in another company of the list of candidates for directors and independent directors of the meeting agenda.
Resolution: Approved as proposed by voting (deducted 447,086,182 shares due to the conflict of interest, a total of 2,514,590,639 shares with voting rights were present when votes were cast; the number of voting rights for approval is 2,119,614,354, among which 1,201,049,260 was exercised by electronic transmission, or 84.29% of the total voting rights when votes were cast; the number of votes against is 4,371,420 among which 4,371,420 was exercised by electronic transmission; the number of votes abstained is 390,604,865, among which 390,451,669 was exercised by electronic transmission)

H . Extraordinary Motions �None

I. Adjournment

Meeting adjourned: 9:34 am.

**In case of any discrepancy between the English version and the Chinese version of the minute of 2020 Annual General Shareholders’ Meeting of Inventec Corporation, the Chinese version shall prevail.

Appendix 1 Business Report

Honorable ladies and gentlemen, welcome to the Shareholders' Meeting of Inventec Corporation. Due to the impacts of the current trade protectionism, the ongoing trade war between China and the United States, and the stalled decision of Brexit, the global economy experienced a synchronized slowdown in 2019. Facing the challenge of diversified customer orders, Inventec persists in professional thinking of business innovation and strategic production planning to strive for the company’s competitive advantages in the long term. Thanks to the efforts of all our employees, we achieved a TWD 500 billion turnover for two consecutive years. The business performance of 2019 and the business plan/outlook of 2020 are described as follows:

Business performance report for 2019:

The consolidated revenue reached more than TWD 500.9 billion, a slight 1.17% lower than in 2018 (consolidated revenue of TWD 506.8 billion). The consolidated pre-tax operating profit was TWD 6.5 billion, which was mainly affected by a change in product combination and non-operating income and expenses, indicating a decline of 19.97% as compared with 2018. The after-tax net profit attributable to the parent company's shareholders was more than TWD 5.5 billion, a decrease of 15.26% as compared with the previous year. The consolidated after-tax earnings per share was TWD 1.54.

Overall, the revenue of the notebook computers was about TWD 246.7 billion, increased by 6.3%, as compared with the same period last year, benefited by the adjustment of the portfolios of the high-end models and aggressive market demand to correspond with the tariff trade war. Meanwhile, the revenue of server products was about TWD 166.8 billion, decreased by 7.85%, as compared with the same period last year due to the successive generations of the product layout and the effects of global production line adjustment. As for the smart device products, the revenue contributed TWD 83.2 billion, decreased by 2.81% as compared with the same period last year due to the capacity adjustment and change of customer demands. The solar energy company of the group responded to reduce the scale

Corporate governance and corporate social responsibility

Integrity and sustainability are always the prime directives of Inventec Corporation. Through the effective operation of functional committees under the board of directors and corporate governance organization, Inventec Corporation is able to perfect the corporate governance and improve both quality and competitiveness of business operation. With its high regard for corporate governance and various forms of implementation, Inventec was ranked among the top 5% of the most excellent corporate-governance companies for five consecutive years through Corporate Governance Assessment. We will continuously collaborate closely with “Inventec Group Charity Foundation” to fulfill our corporate social responsibility in the spirit of implementing the concept of social welfare and environmental sustainability.

Impact of external competition, the regulatory environment, and the overall operating environment and countermeasures

2019 was a year full of changes and opportunities. Although the demand side was initially prosperous by the effect of order transfer due to the US-China trade war and the knock-on effect of prompting a massive wave of Taiwanese firms to leave China and bring their manufacturing home. The consuming ability in the US seems promising at the beginning, however, the global economy was heavily affected by the outbreak of COVID-19. Furthermore, the supply chain faces such adverse factors as a shortage of key components, strategic material preparation, and fluctuation of exchange rate, and the profitability was thus affected by cross effects. By appropriately adjusting operational strategies, accelerating global capacity arrangement, and reducing uncertain non-operating interferences, we expect to satisfy the need of end customers via innovative products and content of services.

Business plan and future prospects for 2020

Such international institutions as IMF and OECD have lowered the 2020 global economic growth forecast. Inventec conducts group resource integration with the goal of providing comprehensive product design and resolutions, incorporated with global operational services and supply chain management, creating a win-win situation among customers, suppliers, and Inventec. The specific implementation policy is divided into the following aspects:

(1) Product business: With a global industrial chain affected by COVID-19, the notebook and server businesses are still the main product focus while their demands are relatively stable because the majority of clients are enterprises customers. The subsequent COVID-19 effects on consumer smart devices need to be observed, and the view of demand is of more conservative estimate. Inventec will make quick operational adjustments along with the development of the COVID-19 pandemic and market changes in order to carefully and conscientiously correspond with the change of the market.
(2) Product technology: AI research, 5G communications technology and industry 4.0 software designs are still our major technological orientation. Through mutual cooperation and support, Inventec will focus on such new trends, technologies, and applications as 5G mobile communications, AI, and edge computing in the future.
(3) Establishment of global smart manufacturing factory: The benefits of a smart factory integrating industry 4.0 and 5G application experiments will be gradually emerged starting in 2020, and a higher production efficiency will be generated in the future.
(4) Diversification of group strategy: Seek the next operational momentum and aim to the target of high-niche and high-margin products such as automotive electronics and smart medical devices under continuous development of cross-product integration.

"Innovation, quality, open mind, and execution" are the core concepts of Inventec’s operation. During the era of industrial transformation, the rise of new technological applications, and rapid changes in international politics and economics, Inventec will use our competitive advantages to continue value innovation, potential talent training, and cutting-edge decision-making to promote our core competitiveness. It is hoped that all shareholders and employees will give recognition and support on our efforts and share the splendid results of our successful businesses.

Best wishes to all of you!

Chairman: Cho, Tom-Hwar President: Wu, Yung-Tsai

Accounting Officer: Yu, Chin-Pao

Appendix 2

Audit Committee’s Review Report

Date: Mar.24, 2020

The Board of Directors has prepared and submitted to us the Company’s 2019 Business Report, Financial Statements and proposal for profit distribution. The Financial Statements have been audited, certified and issued an audit report by Wan-Wan Lin and Liu-Fong Yang of KPMG Certified Public Accountants. The Business Report, Financial Statements and profit distribution proposal have been reviewed and determined to be correct and accurate by the Audit Committee members. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report.

Inventec Corporation

Convener of the Audit Committee: Chang, Chang-Pang

Appendix 3-Independent Auditors’ Report and Individual Financial Statements for Year 2018 Independent Auditors’ Report

To the Board of Directors of Inventec Corporation:

Opinion

We have audited the financial statements of Inventec Corporation(“the Company”), which comprise the balance sheet as of December 31, 2019 and 2018, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2019 and 2018, and its financial performance and its cash flows for the years ended December 31, 2019 and 2018 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 Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

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

1. Inventory Valuation

Please refer to Note 4(g), Note 5(a), and Note 6(e) for accounting policies, significant accounting assumptions and judgments, major sources of estimation uncertainty, and related disclosure information for inventory, respectively.

Description of the key audit matter:

The Company’s materials may be obsolescence or slow-moving due to the risk of price decline in inventory, the material prepared for designing products and forecast orders may be canceled or changed, or changed on components and quantities. Therefore, the valuation of inventories has been identified as a key audit matter.

How the matter was addressed in our audit:

In relation to the key audit matter above, we have performed certain key audit procedures that included assessing the appropriateness of inventories valuation policies; ensuring the process of inventory valuation is in conformity with the accounting policies; inspecting the inventory aging report; recalculating estimation of inventory valuation based on the Company’s policies.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the 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 financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the 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 the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditor ’ s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the 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 financial statements, including the disclosures, and whether the 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 investment in other entities accounted for using the equity method to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain soley responsible for our audit opinion

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

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

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

The engagement partners on the audit resulting in this independent auditors’ report are Wan-Wan Lin and Liu-Fong Yang.

KPMG

Taipei, Taiwan (Republic of China) March 24, 2020

Notes to Readers

The accompanying parent company only financial statements are intended only to present the financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such parent company only financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and parent company only financial statements, the Chinese version shall prevail.

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) INVENTEC CORPORATION