INVENTEC - AGM Information 2024 | FinancialReports.eu

Stock Code: 2356

Inventec Corporation

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2024 Annual General Shareholders’ Meeting

Meeting Agenda

Time: Wednesday, June 12, 2024. 9:00 a.m. Venue: No.1, Sec. 4, Zhongshan N. Rd., Zhongshan District., Taipei City. International Reception Room of Grand Hotel Taipei. Physical conference held.

This English version is a translation based on the original Chinese version. Where any discrepancy arises between the two versions, the Chinese version shall prevail.

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able of Contents
A. Meeting Agenda………………………………………………………………	01
B. Report Items…………………………………………………………………..	02
C. Ratification Items……………………………………………………………..	03
D. Discussion Items……………………………………………………………...	04

Appendix

1.	2023 Business Report………….…………..…………………………………..	05
2.	2023 Audit Committee’s Review Report……………………………………...	08
3.	Independent Auditors’ report and Individual Financial Statements for Year
	2023………………………..…………………………………………………..	09
4.	Independent Auditors’ report and Consolidated Financial Statements for Year
	2023..…………………………………………………………………………..	18
5.	Profit Distribution Table for Year 2023………………………………………..	27
6.	Articles of Incorporation…...………………….…..…………………………..	28
7.	Rules of Procedures for Shareholders Meetings…...…………………………	37
8.	Shareholdings of Directors ………………..………………..............................	48

A. Meeting Agenda

Time: Wednesday, June 12, 2024. 9:00 a.m.

Venue: No.1, Sec. 4, Zhongshan N. Rd., Zhongshan District., Taipei City. International Reception Room of Grand Hotel Taipei.

Physical conference held.

A. Call the Meeting to Order

B. Chairman’s Address

C. Report Items:
(1) 2023 Business Report
(2) 2023 Audit Committee’s Review Report
(3) The Status of Distribution Remuneration of Employees and Directors in 2023
(4) The Status of Distribution of Profits in Cash Dividends to Shareholders in 2023

D. Ratification Items:

(1) Ratification of the 2023 Business Report and Financial Statements
(2) Adoption of the Proposal for Distribution of 2023 Profits

E. Discussion Items:

Proposal for releasing the prohibition on Director Chang, Ching-Sung and Chang, Chang-Pang from participation in competitive business.

F. Extraordinary Motions
G. Adjournment

B. Report Items

2023 Business Report (Please refer to Appendix 1)
2023 Audit Committee’s Review Report (Please refer to Appendix 2)
The Status of Distribution Remuneration of Employees and Directors in 2023 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 Directors of the Corporation.
(2) The board of directors and remuneration committee resolved to distribute NT $ 501,594,752 to remuneration of employees in cash and NT$ 65,425,402 to remuneration of directors. There is no difference between the amount of distribution and the expense which is recognized in 2023.
The Status of Distribution of Profits in Cash Dividends to Shareholders in 2023 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 2023 is NT$ 8,349,632,108 and the proposed cash dividend to shareholders is NT$ 1.5 per share (NT$ 5,381,212,599).

(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.

C. Ratification Items

Item 1 Proposed by the Board

Proposal: Ratification of the 2023 Business Report and Financial Statements.

Explanation: The Company’s 2023 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, Rou-Lan Kuo and Ying Ju Chen 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 Finance Statements, and Appendix 4 for Independent Accountants’ Audit Report and Consolidated Finance Statements.)

Resolution:

Item2 Proposed by the Board

Proposal: Adoption of the Proposal for Distribution of 2023 Profits

Explanation: The 2023 Profit distribution table had been resolved by the Board of Directors and reviewed by the Audit Committee, please refer to Appendix 5.

Resolution:

E. Discussion Items

Item 1 Proposed by the Board

Proposal: Proposal for Releasing the Prohibition on Director Chang, Ching-Sung and Chang, Chang-Pang from Participation in Competitive Business.

Explanation: (1) According to provisions of Company Act Article 209 Item 1, a director who

of the company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.
(2) The meeting of shareholders on June 13, 2023, approved that the prohibition of business strife on current directors were lifted from the on-board date. Proposal for release the prohibition on current director from participation in competitive business. Please refer the list of current director’s new position in other companies below.

List of Current Director’s New Position in Other Companies

Position	Name	Serve in another Company	Position in other company
Director	Chang, Ching-Sung	CARDIO RING TECHNOLOGIES,INC.	Director
Independent director	Chang, Chang-Pang	Asia Cement Corporation	Independent director

Resolution:

F. Extraordinary Motions

G. Adjournment

Appendix 1 Business Report

In recent years, global economic stability has been disrupted by a series of significant events, including the COVID-19 pandemic, the ongoing conflict between Russia and Ukraine, and persistent prolong period of higher inflation . These events have hindered the expected economic recovery, and in 2023, additional challenges emerged due to the tightening monetary policies in various countries and impact of extreme weather and climate change. Consequently, the global economic growth slowed even further. Facing the complex challenges posed by the external business environment, the management team at Inventec has taken proactive and effective measures, focusing on bolstering the development of core business operations to maintain a competitive edge and continuing to explore opportunities in emerging markets. Additionally, efforts have been made to enhance production automation and strengthen supply chain resilience. Adhering to a philosophy of innovation and sustainable business practices, Inventec has actively invested in new ventures, such as automotive electronics, Internet of Things (IoT) products, and 5G technology applications. Furthermore, the company has expanded its presence by establishing production facilities overseas. These strategic approaches aim to ensure stable revenue streams and mitigate the adverse impacts of external factors. In expressing gratitude to shareholders for the steadfast support, Inventec hereby proceeds to outline the company's performance in 2023, provides an overview of its operational plan for 2024, and details its strategic direction for the future.

Operational Performance and Financial Results in 2023

In 2023, Inventec's consolidated operating revenue amounted to over NT$514.7 billion, a decrease of 4.98% compared to 2022 (consolidated operating revenue stood at over NT$541.7 billion). The consolidated operating profit exceeded NT$7.4 billion, marking a significant growth of 11.91% from 2022. Consolidated pre-tax net profit reached over NT$7.2 billion, showing a slight increase of 0.81% compared to 2022. The net profit after tax attributable to owners of the parent company amounted to over NT$6.1 billion, representing another slight increase of 0.03% from the previous year. The consolidated earnings per share after tax stood at NT$1.71.

In 2023, the laptop market experienced weaker shipment momentum due to a slower than expected recovery in the consumer laptop segment and inventory adjustments. However, revenue remained flat compared to last year, driven by contributions from gaming laptop projects. In the server segment, AI server shipments exerted strong momentum, squeezing out budgets of traditional servers and driving robust shipments of AI products for cloud customers. Nonetheless, the reduction in traditional servers and a shortage of AI computing chips in the latter half of the year resulted in deferred AI orders, leading to a year-on-year decline in server revenue. Smart device products were affected by a more conservative spending on consumer’s disposable income, resulting in a double-digit downward

revision in 2023.

Business Plan and Future Outlook in 2024

Going into 2024, analysts from leading research institutions anticipate a global economic growth rate slightly lower than that observed in 2023. This projection suggests a move towards a gradual but sluggish recovery in economic growth over the medium to long term. Despite the overall positive outlook, there are several challenges that the global economy is expected to face in the coming year. The significant debt issue during the periods of economic prosperity would face a formidable challenge with looming soaring interest rate; Furthermore, the real estate market is expected to remain a source of concern due to ongoing confidence crisis, which could continue to hinder the performance of major economies. Although there may be signs of improvement in certain regions such as Europe, emerging markets, and developing economies, this may not be sufficient to offset the weakness observed in the two largest economies.

The business plan and future outlook for 2024 :

In 2024, driven by industry dynamics under the major influence of geopolitical factors and the net-zero transition, sectors such as generative artificial intelligence and carbon footprint verification have been brought into the spotlight. In alignment with our enduring commitment to innovation, Inventec continues to prioritize substantial investments in research and development, as well as market expansion, particularly in the field of AI server development. Notably, our efforts remain concentrated on advancing AI deep learning and inference servers to meet the evolving demands of our clients. Equipped with cutting-edge specifications tailored for the cloud clients , we anticipate a robust double-digit growth trajectory in server shipments this year. Furthermore, our laptop division exhibits a promising single-digit recovery trajectory compared to the previous year, driven by the proliferation of AI-enabled personal computers and expanding application on commercial PC . Leveraging the synergies of 5G advanced application and the introduction of innovative gaming products, we anticipate significant growth in the smart device segment, projecting high single-digit expansion for the year ahead.
In its strategic diversification efforts, Inventec is prioritizing the expansion of its new business portfolio into sectors such as automotive electronics, 5G factory network deployment, smart healthcare, and Silicon intellectual property licensing. With these initiatives, Inventec aims to drive transformation in creating, managing, and leveraging intellectual property rights within its new ventures.
The strategic establishment of a resilient supply chain on a global scale involves ongoing development in manufacturing facilities across Mexico, Thailand, Vietnam, and the Czech Republic. This approach, with proximity to markets and risk diversification strategies, strengthens the global production framework, thereby aligning with the demands and preferences of our clients.
ESG sustainability topics :

The Inventec Sustainability Committee formulates the Group's overarching sustainability strategy and meticulously evaluates its execution. With a firm commitment to achieving net zero emissions by 2050, the company is actively pursuing a suite of low-carbon transformation initiatives, conscientiously aligned with our net-zero pathway and strategic imperatives, to safeguard environmental integrity and biodiversity. In managing operational risks, Inventec scrupulously references the environmental risk governance frameworks outlined in the Task Force on Climaterelated Financial Disclosures (TCFD) and the Taskforce on Nature-related Financial Disclosures (TNFD). This comprehensive approach encompasses rigorous protocols of risk assessment and strategic realignments, empowering the organization to capitalize on emerging opportunities, mitigate operational risks, and fortify its long-term competitive position. Furthermore, Inventec is steadfast in its commitment to fostering a diverse and inclusive work environment, prioritizing the holistic wellbeing of its workforce, and ensuring the provision of an open, secure channel for communication to uphold fundamental human rights. The company also remains stalwart in its dedication to supporting disadvantaged groups, actively engaging in emergency relief aids, and fulfilling its corporate social responsibility.

As Inventec approaches its 50th year, it aims to solidify its corporate culture foundation built upon the principles of 「 Innovation,Quality , Open Mind , Execution 」 . Furthermore, it will advance its commitment to this mission with the mantra "Inventing Today, Inspiring Tomorrow", which resonates deeply with all members of the Inventec group. Additionally, in response to both of the physical risks and transition risks arising from adverse climate change actively, Inventec places significant emphasis on fostering mutual prosperity among stakeholders across the sustainable value chain—suppliers and customers alike to enhance the industry's transformative competitiveness and corporate value. With its accumulated experiences in the industry of information and communication technology , Inventec aspires to develop new, forward-looking business domains, continually injecting fresh growth momentum into the group, and thereby fostering higher corporate value and realizing the corporate vision for the benefit of both the company and its shareholders.

We wish all of you good health and all the best.

Chairman: Yeh, Li-Cheng

President: Tsai, Chih-An

Accounting Officer: Yu, Chin-Pao

Appendix 2

Audit Committee’s Review Report

Date: Mar.12, 2024

The Board of Directors has prepared and submitted to us the Company’s 2023 Business Report, Financial Statements and proposal for profit distribution. The Financial Statements have been audited, certified and issued an audit report by Rou-Lan Kuo and Ying Ju Chen 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 2023

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, 2023 and 2022, the statement of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of material 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, 2023 and 2022, and its financial performance and its cash flows for the years then ended December 31, 2023 and 2022 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 Financial Statement Audit and Attestation Engagements of Certified Public Accountants and Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis 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 Notes (4)(g), (5)(a) and (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 one of the key audit matters.

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.

2. Revenue recognition

Please refer to Note (4)(o) and (6)(r) for accounting policies and related disclosure information for revenue recognition, respectively.

Description of the key audit matter:

To fulfill the delivery requirements of certain products, the Company has established several hubs to meet customer demand. The Company recognizes sales revenue when the customers pick up the products (transfer of control over products), primarily relying on statements or information provided by hub custodians. Since the hubs are located around the world with numerous custodians and the formats provided by custodians vary, the process of revenue recognition typically involves manual procedures. This may lead to inappropriate timing of sales revenue recognition or discrepancies between the physical inventory and accounting records.

As there are numerous transactions from hubs, and the transactions amount prior to and after the balance sheet date are significant to the financial statements, the cut-off of hub sales revenue has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matter above, we have performed certain key audit procedures, including conducting a cut-off test for hub sales revenue for a specific period prior to and after the balance sheet date, and inspecting relevant documents to assess the reasonableness of management's timing of sales revenue recognition from hubs. For shipments during that period, we sampled and inspected supporting document provided by hub custodians, checked inventory movement records, and verified the transfer of cost of goods sold had been recorded in the appropriate period. For inventory quantities held at hubs at the end of the period, we randomly performed confirmation procedures or conducted physical counts to reconcile with accounting records.

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 Standards on Auditing of 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 the Standards on Auditing of the Republic of China, we exercise professional judgment and 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 Rou-Lan Kuo and Ying-Ju Chen.

KPMG

Taipei, Taiwan (Republic of China) March 12, 2024

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