INX - AGM Information 2021 | FinancialReports.eu

INNOLUX CORPORATION Minutes of 2021 Annual General Shareholders Meeting

Time & Date：9:00 a.m. on July 1, 2021

Location：No.160, Kexue Rd., Jhunan Township, Miaoli County

(The Company's conference room and outdoor alternate venue)

Total shares represented by shareholders present in person or by proxy: 7,138,476,537 shares (including 5,793,413,991 shares casted electronically), percentage of shares held by shareholders present in person or by proxy: 68.17%

Attendees: Jin-Yang Hung, Chairman of the Board of Directors

Chu-Hsiang Yang, Director

Jyh-Chau Wang, Director (Presented by visual communication network)
Chin-Lung Ting, Director (Presented by visual communication network)
Chi-Chia Hsieh, Independent Director (Presented by visual communication network) Zhen-Wei Wang, Independent Director (Presented by visual communication network) Chih-Huang Chang, Attorney
Sheng-Chung Hsu, Certified Public Accountant of PWC Taiwan (Presented by visual communication network)

Chair: Jin-Yang Hung, Chairman of the Board of Directors Recorder: Joyce Chen

Commencement (The aggregate shareholding of the shareholders present in person or by proxy constitutes a quorum. The Chair called the meeting to order.)

Chairperson Remarks (omitted) Reporting Items

Operating report of 2020 (omitted).
Audit Committee’s Review Report (omitted).
The report of employees’ profit sharing and directors’ compensation of 2020 (omitted).

Adopting Items

(Proposed by the Board of Directors)

Proposal 1 : 2020 Operating Report and the Financial Statement of the Company. Adoption is respectfully requested.
Explanation : 1. 2020 financial statements of the Company had been duly audited by CPA Hsu, Sheng Chung and CPA Liang, Hua-Ling of Pricewaterhousecoopers.
The Operating report and finance statements are attached hereto as Attachment 1&3.

Resolution : The above proposal is and hereby was approved as proposed.

Voting Results：7,138,476,537 shares were represented at the time of voting. (Including 5,793,413,991

shares casted electronically)

Voting Condition	Voting rights	% of the total represented share present
Votes in favor (electronicVotes)	5,925,336,979 (4,581,512,583)	83.00%
Votes against (electronicVotes)	22,595,918 (22,595,918)	0.31%
Invalid Votes (electronicVotes)	0 (0)	0.00%
Votes abstained (electronic Votes)	1,190,543,640 (1,189,305,490)	16.67%

(Proposed by the Board of Directors)

Proposal 2 : The Proposal for earnings distribution of 2020. Adoption is respectfully requested. Explanation : 1. The 2020 Earnings Distribution Table is attached hereto as Attachment 4.
Proposed cash dividend distributed to shareholders is NT$ 3,141,270,505 (NT$ 0.3 per share). In the event that, before the distribution record date, the cash dividend shall be calculated according to the distribution proportion under NT$ 1, for amount less than NT$ 1 shall be truncated. For the total add-up amount of distributed amount for less than NT$ 1, it is proposed that the Chairman be authorized to conduct adjustment.
The proposed dividend distribution ratio is affected and is required to be adjusted due to capital variations affecting the number of outstanding shares, it is proposed that the Chairman be fully authorized to handle such distribution.
Upon the approval of the shareholders’ meeting, it is proposed that the Chairman be authorized to resolve the distribution record date and other relevant matters.

Resolution : The above proposal is and hereby was approved as proposed.

Voting Results：7,138,476,537 shares were represented at the time of voting. (Including 5,793,413,991 shares casted electronically)

Voting Condition	Voting rights	% of the total represented share present
Votes in favor (electronic Votes)	5,939,455,365 (4,595,630,969)	83.20%
Votes against (electronic Votes)	27,767,884 (27,767,884)	0.38%
Invalid Votes (electronic Votes)	0 (0)	0.00%
Votes abstained (electronic Votes)	1,171,253,288 (1,170,015,138)	16.40%

Discussion Items

(Proposed by the Board of Directors)

Proposal 1 : Proposal of stock release plan of the subsidiary, InnoCare Optoelectronics Corporation. Approval is respectfuly requested.
Explanation : 1. In order to support the business development of the subsidiary, InnoCare Optoelectronics Corporation (hereinafter referred to as InnoCare), attracts and retains talents, integrates the Group's internal and external resources and introduces strategic investors or financial investors, as well as to plan for shareholding diversification for future stock listing on TWSE (TPEx), the Company is engaged in InnoCare's listing preparations.
In order to comply with Article 19-1-3 of the "Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings", the Company and its related parties shall not hold more than 70% of the total issued shares of InnoCare in total.
To share the results of the subsidiary's operation with the shareholders of the Company, after the approval of the Board of Directors, the shareholders' meeting will be requested to resolve to give priority to the shareholders of the Company to subscribe for the above stock release plan in proportion to their shareholdings. The shareholders who appear on the shareholder roster on the base date of share subscription, which is the latest date of suspension of stock transfer of the Company, are entitled to subscribe if the number of shares they can subscribe is at least one share (inclusive). If the Company's shareholders do not subscribe or under-subscribe, it is proposed that the Chairman be authorized to negotiate with specific persons to subscribe, with priority given to employees, financial or strategic investors of the Company and its affiliates.
After the above stock release plan is approved by the shareholders' meeting, it is intended to authorize the Board of Directors to set base date, actual number of shares
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to be released, actual release price and other related matters according to the market condition and profitability situation at the time of the release. However, the release price shall be no less than the net worth per share according to InnoCare's most recent audited or reviewed financial statements and self-assessed financial statements and the carrying cost per share of InnoCare by the Company at the time of the release, and an independent expert shall be appointed to issue an opinion on the reasonableness of the price; however, if the stock has been registered on the Emerging Market, the release price shall not be less than the aforementioned net worth per share and shall be determined based on the prevailing market price.

In the future, if InnoCare applies for registration on the Emerging Market or listing on TWSE (TPEx), the Company will allocate the shares for subscription and overallotment by securities firms in accordance with the relevant laws and the relevant regulations of the listing, and the number of shares to be allocated and the price will be determined jointly with the underwriter in accordance with the relevant laws and the relevant regulations of the listing, the prevailing market conditions and the operation performance of InnoCare.
After the completion of the above-mentioned stock release, the Company's direct or indirect consolidated shareholding should not be less than 50% when InnoCare is listed on TWSE (TPEx), in order to maintain control and give full play to the consolidated effect of the Group, and the number of shares of the Company after the stock release should not be less than one-half of the shareholding at the time of election, in order to avoid violating Article 197 of the Company Act.
In addition to the scope of the above authorization, it is proposed to request the shareholders' meeting to authorize the Chairman or his or her designee to sign, negotiate and change all matters related to the stock release of InnoCare on behalf of the Company.

Resolution : The above proposal is and hereby was approved as proposed.

Voting Results：7,138,476,537 shares were represented at the time of voting. (Including 5,793,413,991

shares casted electronically)

Voting Condition	Voting rights	% of the total represented share present
Votes in favor (electronicVotes)	5,698,618,661 (4,354,794,265)	79.82%
Votes against (electronic Votes)	275,120,836 (275,120,836)	3.85%
Invalid Votes (electronic Votes)	0 (0)	0.00%
Votes abstained (electronic Votes)	1,164,797,040 (1,163,498,890)	16.31%

(Proposed by the Board of Directors)

Proposal 2 : Proposal of cash distribution from capital surplus. Approval is respectfuly requested. Explanation : 1. Pursuant to Artice 241 of the Company Act, the Company will distribute the capital reserve of income derived from the issuance of new shares at a premium at the amount of NT$ 1,047,090,168. The distribution will be made according to shareholders and the shares held by the shareholders registered on the shareholders' roster on the distribution record date. Each share will receive the distribution in cash at the amount of NT$0.1.
The total cash distribution is NT$ 0.4 per share, which is plus cash dividend, NT$ 0.3 per share. The distribution by cash shall be calculated until NT$1. For the amount less than NT$1 shall be completely round down. It is proposed to authorize the Chairman to seek certain person to fully handle the remainder of the distribution less than NT$1.
In the event that there is change in capital of the Company affecting the outstanding shares of the Company, causing the distribution ratio shall be changed and adjusted, it is proposed that the Chairman be authorized to handle this situation.
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It is proposed that the Chairman be authorized to decide the distribution record date, the distribution date, and other related matters after this proposal is resovled by the shareholders’ meeting.

Resolution : The above proposal is and hereby was approved as proposed.

Voting Results：7,138,476,537 shares were represented at the time of voting. (Including 5,793,413,991 shares casted electronically)

Voting Condition	Voting rights	% of the total represented share present
Votes in favor (electronicVotes)	5,949,162,086 (4,605,337,690)	83.33%
Votes against (electronicVotes)	17,951,912 (17,951,912)	0.25%
Invalid Votes (electronicVotes)	0 (0)	0.00%
Votes abstained (electronicVotes)	1,171,362,539 (1,170,124,389)	16.40%

(Proposed by the Board of Directors)

Proposal 3 : Amendment to the Articles of Incorporation of the Company. Approval is respectfuly requested.
Explanation : 1. The Company will partly revise the Articles of Incorporation of the Company, pursuant to the amendment of laws and the operation plans.
The comparative table of the amendment is attached hereto as Attachment 5.

In conjunction with the postponement of this Annual General Meeting, the revised date of the amended provisions of Article 26 of the Articles of Incorporation shall be changed to the actual meeting date of the shareholders' meeting on July 1, 2021.

Resolution : The above proposal is and hereby was approved as proposed.

Voting Results：7,138,476,537 shares were represented at the time of voting. (Including 5,793,413,991 shares casted electronically)

Voting Condition	Voting rights	% of the total represented share present
Votes in favor (electronicVotes)	5,969,477,896 (4,625,653,500)	83.62%
Votes against (electronic Votes)	3,524,381 (3,524,381)	0.04%
Invalid Votes (electronic Votes)	0 (0)	0.00%
Votes abstained (electronic Votes)	1,165,474,260 (1,164,236,110)	16.32%

(Proposed by the Board of Directors)

Proposal 4 : Amendments to “Rules of Shareholders’ Meeting” of the Company. Approval is respectfully requested.

Explanation : 1. In conformity with the amendments of laws & regulations, it is proposed to amend “Rules of Shareholders’ Meeting” of the Company.
The comparative table of the amended provisions is attached hereto as Attachment 6. Resolution : The above proposal is and hereby was approved as proposed.

Voting Results：7,138,476,537 shares were represented at the time of voting. (Including 5,793,413,991 shares casted electronically)

Voting Condition	Voting rights	% of the total represented share present
Votes in favor (electronic Votes)	5,967,843,921 (4,624,019,525)	83.60%
Votes against (electronic Votes)	3,878,829 (3,878,829)	0.05%
Invalid Votes (electronic Votes)	0 (0)	0.00%
Votes abstained (electronic Votes)	1,166,753,787 (1,165,515,637)	16.34%

(Proposed by the Board of Directors)

Proposal 5 : Amendments to “Election Rules of Directors of the Company.” Approval is respectfully requested.

Explanation : 1. In conformity with the amendments of laws & regulations, it is proposed to amend “Election Rules of Directors of the Company.”
The comparative table of the amended provisions is attached hereto as Attachment 7. In conjunction with the postponement of this Annual General Meeting, the revised date of the amended provisions of Article 13 of the Election Rules of Directors of the Company shall be changed to the actual meeting date of the shareholders' meeting on July 1, 2021. Resolution : The above proposal is and hereby was approved as proposed.

Voting Results：7,138,476,537 shares were represented at the time of voting. (Including 5,793,413,991 shares casted electronically)

Voting Condition	Voting rights	% of the total represented share present
Votes in favor (electronic Votes)	5,967,772,827 (4,623,948,431)	83.60%
Votes against (electronic Votes)	5,562,923 (5,562,923)	0.07%
Invalid Votes (electronic Votes)	0 (0)	0.00%
Votes abstained (electronic Votes)	1,165,140,787 (1,163,902,637)	16.32%

Extemporary Motion

Shareholder speech ：Shareholder Account No. 314538、577585

Adjourn Meeting: The meeting was adjourned at a.m. 09:40

Attachment 1

INNOLUX CORPORATION 2020 Operating Report

Report on the Company's operating results for 2020 as follows.

I. Report on operating results for 2020

The world experienced an unprecedented crisis in 2020, and governments around the world took decisive measures in response. According to the IMF (International Monetary Fund), the total amount of fiscal measures introduced by countries was nearly US$12 trillion, and the size of monetary policy measures reached about US$7.5 trillion. Despite the unprecedented actions taken by governments, the global outlook remains uncertain and countries are embarking on a long climb, full of difficult unevenness and uncertainty, and prone to reversals, making it all the more important for businesses to operate with caution and prudence.

After years of fierce competition in the display technology industry, the major trend in 2020 was to continue to consolidate the industry, with a number of plant closures and business mergers, including the withdrawal of major Korean companies and second-tier Chinese companies. The industry pattern tended to converge and stabilize, and the competition pattern changed from a capacity competition to a healthy competition pattern focusing on technology accumulation, product development and operational efficiency improvement. This was both a challenge and an opportunity for the company.

With the release of new energy vehicle plans in various countries, 5G and the Internet of Things becoming popular and driving demand for applications, as well as the easing of global trade conflicts, economic data is gradually showing an improving trend. The Company will continue to adjust its business strategies, refine new technologies, develop new applications, continuously increase the added value of its products, pursue high-end technology products, and develop emerging markets in order to create maximum benefits for the Company, its shareholders, customers and partners through the improvement of technology and overall product quality.

In light of the risks associated with the COVID-19 epidemic and the new variant of the virus, market uncertainty has increased and the global economy remains extremely affected. In this fastchanging and difficult time, enterprises, governments, schools, organizations and private institutions around the world are launching various countermeasures to prevent and control the epidemic, while also generating more business opportunities. to prevent and control the epidemic, while also stimulating more business opportunities. The Company will implement epidemic prevention procedures to the highest standards, promote top-notch technological innovation, implement profitoriented product strategies, maximize the value of production capacity, and actively strengthen its long-term competitiveness and financial strength to demonstrate the results of the "Transformation, Reengineering, and Value Advancement" strategy and create greater benefits for shareholders.

II. Results of business plan implementation and budget execution

For 2020, the Company consolidated sales revenue was NT$269,911,051 thousand, up NT$17,939,842 thousand, or 7.1%, compared with 2019 (2019’s consolidated net sales revenue was NT$251,971,209 thousand). For 2020, the net profit attributable to shareholders of parent company was NT$1,636,144 thousand, and the earnings per share was NT$0.17.

No financial forecast has been disclosed for 2020, therefore there is no need to disclose budget execution.

III. Financial receipts and expenditures and profitability analysis

	Items	2019	2020
Capital Structure (%)	Debts to assets ratio	37.23	37.41
	Long-term capital to property, plant, and equipment ratio	129.16	146.59
Solvency	Current ratio(%)	120.12	145.79
	Quick ratio(%)	88.51	114.66
	Interest coverage multiplier(times)	(15.02)	3.49
Profitability	Return on assets(%)	(4.25)	0.66
	Return on equity (%)	(7.16)	0.70
	Operating profits as a percentage of paid-in capital(%)	(20.53)	1.82
	Net profits before tax as a percentage of paid-in capital(%)	(17.02)	2.57
	Netprofit margin(%)	(6.92)	0.61
	Earningsper share(NT$)	(1.77)	0.17

IV. Research and development

TFT-LCD technology is rapidly expanding in both depth and breadth of application. In terms of breadth, the combination of TFT (Thin Film Transistor) and liquid crystal field effect technology on panels has resulted in a number of pioneering products that are gaining market attention and extending the value of panels into different fields.

In the field of communications, Innolux has developed the LC Meta-Surface Antenna products. Compared with traditional dish antennas, the LC Meta-Surface Antenna can track satellites without the need for a motor device, is lightweight and flat, and has the same broadband, high pointing and wide angle scanning performance with lower power consumption, so is very suitable for the future development of low-orbit communication.

In the field of architecture, Innolux's Smart LC Window technology will have an exhibition for the first time, covering applications such as smart dimming windows and smart projection windows, actively laying out new opportunities in the non-display field.

Others are in the medical field (X-Ray Detector), and semiconductor packaging (PLP, Panel Level Package) are also progressing rapidly.

In the core panel business, in response to the strong demand for panels for various applications, the Company has continued to cultivate and develop its value-added and differentiated products for various applications, and has continued to build up its leading technology and competitive advantage.

In terms of automotive display applications, it is expected that the automotive market will develop towards large displays in the future, developing a visual experience suitable for the cabin experience. The cutting technology and curved display technology that match the interior design of automobiles are already being studied and are entering mass production. In addition to the styling advancement of display panels, the high security protective glass required for automotive displays is also the focus of our vertical integration to achieve the stringent requirements of high uniformity, low reflection, and anti-glare for automotive regulations at various viewing angles.

TV panel products are also extended from the original OC (Open-Cell) and panel modules to the complete TV sets, covering 24"/32"/40"/43"/50"/65 "Compared with OC products of the same size, complete TV products can not only generate more than 2~2.5 times of revenue, but also extend the related technology to high-end large-size products, and at the same time drive the industry chain to upgrade together. In 2019, in response to the government's investment plan in Taiwan, we established a complete product assembly line with high value-added automated production to drive industrial

upgrading and play an important role in flexible adjustment at the critical moment of changing global trade conditions, providing irreplaceable value to the industry and customers.

At the same time, we are expanding the size of the public information display (PID) niche market, which is expected to generate high gross margins and has the potential for over 20% annual growth in the future, setting high growth targets.

In terms of Notebook panels, we have been working with major brand customers to introduce WQXGA 240Hz/FHD 480Hz (High Frame Rate) into LTPS (Low Temperature Polycrystalline Silicon) / IGZO advanced process technology and exclusively supply to the world's leading customers. In addition, we have developed High Contrast Ratio 3000:1 (compared to 800~1000:1 by other industry players) and Narrow Border 1.5mm products and ePrivacy Display to significantly improve the display quality, and combined with various advanced technological breakthroughs, we have also developed new Aspect Ratio 3:2∕16:10 products and miniLED Display, which have improved the performance of TFT-LCD panels over OLED panels in key factors such as cost structure and quality reliability.

Small and medium-sized panels are being diversified in size, from 1.4" to 10", and are widely used in mobile devices and consumer electronics, including smartphones, tablet PCs, smart appliances, smart speakers, smart watches, VR head-mounted displays (HMDs), digital cameras, MFP multifunction printers, and entertainment game consoles. In terms of technology, LTPS and IPS are used to meet the market demand for high resolution and wide viewing angle. The development trend of small and medium-sized panels will move towards new specifications such as low power consumption, dynamic refresh rate, full screen, drilling and free form cutting to enhance product value. At the same time, we are committed to the full development of miniLED products in various applications, providing high contrast, high brightness, and ultra-low power consumption of the new generation of displays, effectively combining our advanced technology and mass production capabilities, and working closely with major customers worldwide for a win-win situation.

With the application of touch technology in various mobile devices, the Company has been actively developing integrated touch solutions to successfully improve the optical and integrated functions of touch panels. We were the first in the industry to introduce TOD (Touch On Display) touch solutions, widely used for cellphones, tablet PC, and notebooks. With the development of embedded integrated touch technology and mature supply chain, TID (Touch In Display) touch solutions have been developed to make the products more compact and slim. At this stage, we are injecting 3D touch DST (Deep sensing technology) technology and Active stylus solution under the existing TID (Touch In Display) framework, and continue to develop new technologies such as fingerprint recognition on LCD substrate and under-screen camera, and actively apply them to cellphones, tablets, consumer electronics, automotive and IT products to provide customers and consumers with better product experience. Our goal is to become a total touch integration solution provider covering displays, touch screens and protective glass.

V. The Company's digital transformation

As a key component in the display technology industry, "panel" has a wide range of products with high complexity, and the cost and quality requirements are becoming increasingly challenging. Through the introduction of Industry 4.0 intelligent technology, the Company is committed to speeding up time-to-market, responding quickly to customer needs, and reducing material risks on the management side, and focusing on solving recruitment management problems, improving production quality, and reducing production costs on the production side.

In response to the strategic needs of the market from end-to-end supply chain to design/manufacturing/quality/management, we are promoting digital transformation with two main themes of smart manufacturing and flexible decision making to optimize production processes and organizational management. And under the operation of dual transformation strategy, with the original advantage and flexible cross-field ability, we create new application fields and inject new vitality into

the industry. We continue to combine big data and artificial intelligence to link front and back-end intelligent factories and build decentralized decision-making systems to achieve technological improvement and productivity multiplier benefits.

Intelligent manufacturing:

Our intelligent manufacturing integrates three development axes: X-axis (automation), Y- axis (data), and Z-axis (intelligence), and closely combines three types of talents (field experts, data scientists, and data technology experts) to create the world's leading zero-touch light-off, manualfree factory.

After years of hard work, the Company has the following advanced 4.0 technologies, which are applied in various areas of the factory.

Precise design: Design combined with Digital Twin technology for high quality and faster product development cycle.

Smart Production: From pre-production intelligent scheduling, intelligent DOE, intelligent dispatching...etc. to in-production and post-production equipment health diagnosis, virtual measurement, intelligent parameter monitoring, intelligent feedback control, intelligent logistics, intelligent monitoring...etc., all 4.0 Solution technologies are integrated into a highly intelligent Zero Worry factory with self-awareness, memory, operation, response and learning.

Intelligent inspection: Develop AI technology to replace manual visual inspection with image big data, significantly reducing inspection manpower and improving overall inspection quality.

In addition, further facilitate intelligent energy saving/intelligent factory administration/intelligent storage/intelligent personnel management...etc. With overall increase in quality and efficiency and reduction in costs and inventory and other bright results.

Flexible decision-making advancement:

Promote intelligent management in all aspects, optimize the quality and efficiency of decision making, and enhance the value of the Company. Use BI (Business Intelligent) operation as the cornerstone to create transparent information for decision making; optimize the data and intelligent application of key processes such as industry analysis, star products, profitability menu, capacity scheduling, and revenue analysis. Effectively link various functional platforms & processes; It provides multi-dimensional, real-time, and accurate visual decision support information to assist decision makers in managing risks and creating opportunities from Top Down; It also extends to Bottom up to improve operational efficiency at all levels, interact, link, and substantiate the results of execution, to nurture our data-driven corporate culture, and to move toward the goal of zero-error decision-making.

As a leading manufacturer of display technology solutions, the Company values the rapid changes in customer needs and is committed to building an intelligent digital system to achieve information value chain integration from customers, suppliers to production, including rapid response to customer needs and use of intelligent material scanning engine for optimal material allocation. Combined with the out-of-materials risk management platform, we are able to accurately predict material shortages and improve the order fulfillment rate by 42%.

Through the implementation of Industry 4.0, we promote intelligent manufacturing and intelligent light-off factories and use DFA product design to develop competitive products. Combining expert knowledge and scheduling algorithms to achieve scheduling optimization, we use machine IoT information to monitor process parameters in real time and make corrections immediately, and develop AI inspection technology to improve product quality and increase production efficiency by 1.2 times.

The Company will continue to promote the concept of "Transformation, Reengineering, and Value Advancement" to create a new landscape for next-generation display applications through digital

transformation and to solidify its leading position in the display technology industry.

President:

Managerial Officer:

Chief Accountant:

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Attachment 2

Audit Committee Review Report

The Board of Directors has duly submitted the 2020 operating report, financial statements, and the proposal of earnings distribution. The financial statements has been duly reviewed and approved by CPAs of PwC Taiwan with the issuance of Auditor’s Report.

The Audit Committee of the Company, have completed the audit and review, and had found nothing inconsistent with any of the above operating report, financial statements, and the proposal of earnings distribution. Therefore, I issue this audit report for acknowledgment in accordance with the Securities and Exchange Act and the Company Act.

General Shareholders Meeting of the Company in 2021

Chairman of the Audit Committee Hsieh, Chi-Chia Date: May 11, 2021

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Attachment 3

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Shareholders of Innolux Corporation:

Opinion

We have audited the accompanying consolidated balance sheets of Innolux corporation and its subsidiaries (the “Group”) as at December 31, 2020 and 2019, 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, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2020 and 2019, 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. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of The Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountants in 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 for 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 Group’s 2020 consolidated financial statements. 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.

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The key audit matters in relation to the consolidated financial statements of the Group for the year ended December 31, 2020 are outlined as follows:

Inventory valuation

Description

The industry is characterized in its significant fluctuations closely in connection with the economic environment. As the technology evolves rapidly, the launch of new products may cause major changes in consumer demand or due to the update of production approach, the existing products may become obsolete or no longer meet market needs. The Group has evaluated the inventory by taking into account of allowance, obsoleteness or trivial sales amount and the cost has been written down to the net realizable value. The abovementioned allowance for inventory valuation losses mainly arose from the excess of the cost of inventory over the net realizable value of inventory. For details of inventory, please refer to Note 6(7). There is a risk of the excess of the cost of inventory over the net realizable value of inventory as a result of that the amounts of inventories are material and the sales prices of related products may have significant fluctuations because of market demand; we consider inventory valuation a key audit matter.

How our audit addressed the matter

We compared financial statements to ascertain the provision policy on allowance for inventory valuation losses has been consistently applied and assessed the reasonableness of the provision policy; obtained the net realizable value report of inventory used by management for evaluation and obtained an understanding of sales price basis adopted by management for abovementioned inventory along with the related supporting documents; sampled individual inventory item numbers and checked them against historical data on inventory clearance and discount to assess the reasonableness of net realizable value and the appropriateness of valuation basis.

Valuation and impairment of goodwill and property, plant and equipment

Description

For details of the impairment valuation of goodwill and property, plant and equipment, please refer to Notes 6(9) and 6(12).

The Group measures the recoverable amount of the cash generating unit to determine whether goodwill and property, plant and equipment may be impaired based on future cash flows with appropriate discount rates, and future cash flows are estimated based on how assets are utilized, duration years of assets and

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projected income and expenses in the future. As these estimates, which are uncertain and dependent upon significant judgement from management, involve several assumptions such as determination of discount rates, expected growth rate and future financial projections, we consider management’s assessment of impairment of goodwill and property, plant and equipment a key audit matter.

How our audit addressed the matter

We assessed the key assumptions used by management in estimating expected future cash flows, including the reasonableness of expected operating revenue, gross profit, changes in expenses, and the basic assumptions applied in expected future cash flows. We also examined the parameters of discount rates, including the risk-free rate of return on equity capital, the risk factor of the industry and the rate of return on similar investments in the market.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Innolux Corporation as at and for the years ended December 31, 2020 and 2019.

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 audit committee, are responsible for overseeing the Group’s financial reporting process.

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Auditors’ 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 the generally accepted auditing standards 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 consolidated financial statements.

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

A. 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 control.
B. 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 Group’s internal control.
C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
D. 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 auditor’s 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 auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
E. 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.
15 -
F. 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.

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 consolidated financial statements for the year ended December 31, 2020 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.

PricewaterhouseCoopers, Taiwan February 4, 2021

------------------------------------------------------------------------------------------------------------------------------------------------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. ]

16 -

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(4) 6(5) 7 6(2) 6(7) 8 6(2) 6(3) 6(8) 6(9), 7 and 8 6(10) 6(11) 6(12) and 8 6(30) 6(9) and 8	December 31, 2020 $ 26,532,083 706,299 42,687,746 49,897,758 2,224,157 2,980,756 30,865,270 3,119,861 148,377 159,162,307 3,480,182 4,887,681 1,246,234 178,901,675 5,547,909 499,444 17,506,984 7,121,962 1,205,459 220,397,530 $ 379,559,837	December 31, 2019
Current Assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Financial assets at amortized cost - current 1170 Accounts receivable, net 1180 Accounts receivable, net - related parties 1200 Other receivables 130X Inventory 1410 Prepayments 1479 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 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets			$ 34,732,975 283,906 19,704,149 39,889,807 2,488,519 848,402 30,439,076 4,597,608 133,807
			133,118,249
			3,044,756 4,268,485 1,333,570 194,382,436 6,095,351 527,232 17,577,644 7,349,810 2,066,813
			236,646,097
			$ 369,764,346

(Continued)

17 -

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes December 31, 2020 December 31, 2019 6(2) $ 3,222,134 $ 345,463 45,839,540 47,656,235 7 1,720,931 3,784,991 6(13) and 7 25,677,541 28,622,732 1,581,635 2,311,481 6(18) and 9 6,152,983 6,775,927 201,073 453,848 6(14)(15) 19,367,206 16,022,013 5,407,605 4,845,455 109,170,648 110,818,145 6(14) 5,374,293 97,018 6(15) 20,384,502 19,604,768 6(30) 1,608,990 1,465,526 4,894,091 4,977,024 6(16) 560,267 691,836 32,822,143 26,836,172 141,992,791 137,654,317 6(19) 97,110,720 97,110,720 2,293,612 - 6(20) 99,707,996 100,362,379 6(21) 7,870,713 7,870,713 7,325,437 4,663,463 29,120,853 29,864,446 6(22) ( 6,059,671) ( 7,325,437 ) 6(19) - ( 618,580 ) 237,369,660 231,927,704 197,386 182,325 237,567,046 232,110,029 $ 379,559,837 $ 369,764,346
Current Liabilities 2120 Financial liabilities at fair value through profit or loss - current 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2230 Current income tax liabilities 2250 Provisions - current 2280 Lease liabilities - current 2320 Long-term liabilities, current portion 2399 Other current liabilities 21XX Total current liabilities Non-current liabilities 2530 Corporate bonds payable 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Lease liabilities - non-current 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity attributable to owners of the parent Share capital 3110 Share capital - common stock 3130 Certificates of entitlement to new shares from convertible bonds 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other equity interest 3500 Treasury shares 31XX Equity attributable to owners of the parent 36XX Non-controlling interests 3XXX Total equity 3X2X Total liabilities and equity

Liabilities and Equity

Notes
December 31, 2020
December 31, 2019
6(2)
$ 3,222,134
$ 345,463
45,839,540
47,656,235
7
1,720,931
3,784,991
6(13) and 7
25,677,541
28,622,732
1,581,635
2,311,481
6(18) and 9
6,152,983
6,775,927
201,073
453,848
6(14)(15)
19,367,206
16,022,013
5,407,605
4,845,455
109,170,648
110,818,145
6(14)
5,374,293
97,018
6(15)
20,384,502
19,604,768
6(30)
1,608,990
1,465,526
4,894,091
4,977,024
6(16)
560,267
691,836
32,822,143
26,836,172
141,992,791
137,654,317
6(19)
97,110,720
97,110,720
2,293,612
-
6(20)
99,707,996
100,362,379
6(21)
7,870,713
7,870,713
7,325,437
4,663,463
29,120,853
29,864,446
6(22)
(
6,059,671) (
7,325,437 )
6(19)
- (
618,580 )
237,369,660
231,927,704
197,386
182,325
237,567,046
232,110,029
$ 379,559,837
$ 369,764,346

Current Liabilities
2120
Financial liabilities at fair value
through profit or loss - current
2170
Accounts payable
2180
Accounts payable - related parties
2200
Other payables
2230
Current income tax liabilities
2250
Provisions - current
2280
Lease liabilities - current
2320
Long-term liabilities, current portion
2399
Other current liabilities
21XX
Total current liabilities
Non-current liabilities
2530
Corporate bonds payable
2540
Long-term borrowings
2570
Deferred income tax liabilities
2580
Lease liabilities - non-current
2600
Other non-current liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Equity attributable to owners of the
parent
Share capital
3110
Share capital - common stock
3130
Certificates of entitlement to new shares
from convertible bonds
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained earnings
3400
Other equity interest
3500
Treasury shares
31XX
Equity attributable to owners of
the parent
36XX
Non-controlling interests
3XXX
Total equity
3X2X
Total liabilities and equity

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

18 -

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items	Notes 2020 2019 6(23) and 7 $ 269,911,051 $ 251,971,209 6(7)(28) and 7 ( 246,077,953) ( 248,957,129) 23,833,098 3,014,080 6(28) ( 3,383,316) ( 3,676,803) ( 6,488,472) ( 6,806,373) ( 12,149,513) ( 12,464,800) ( 22,021,301) ( 22,947,976) 1,811,797 ( 19,933,896) 6(24) 383,137 1,030,073 6(25) 2,714,290 2,226,786 6(26) ( 1,502,138) 876,046 6(27) ( 1,026,516) ( 1,031,733) 6(8) 176,561 307,296 745,334 3,408,468 2,557,131 ( 16,525,428) 6(30) ( 917,307) ( 914,844) $ 1,639,824 ( $ 17,440,272)
4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating profit (loss) Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit (loss) before income tax 7950 Income tax expense 8200 Profit (loss) for the year

Items

Notes
2020
2019
6(23) and 7
$ 269,911,051
$ 251,971,209
6(7)(28) and 7
(
246,077,953) (
248,957,129)
23,833,098
3,014,080
6(28)
(
3,383,316) (
3,676,803)
(
6,488,472) (
6,806,373)
(
12,149,513) (
12,464,800)
(
22,021,301) (
22,947,976)
1,811,797 (
19,933,896)
6(24)
383,137
1,030,073
6(25)
2,714,290
2,226,786
6(26)
(
1,502,138)
876,046
6(27)
(
1,026,516) (
1,031,733)
6(8)
176,561
307,296
745,334
3,408,468
2,557,131 (
16,525,428)
6(30)
(
917,307) (
914,844)
$ 1,639,824 ( $ 17,440,272)

4000
Sales revenue
5000
Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative
expenses
6300
Research and development
expenses
6000
Total operating expenses
6900
Operating profit (loss)
Non-operating income and
expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit of associates and
joint ventures accounted for
under equity method
7000
Total non-operating income
and expenses
7900
Profit (loss) before income tax
7950
Income tax expense
8200
Profit (loss) for the year

(Continued)

19 -

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items	Notes 6(16) 6(22) 6(30) ( 6(22) 6(8)(22) ( 6(31)	2020 2019 $ 57,639 ( $ 58,246) 881,733 299,431 9,886) 86,781 929,486 327,966 681,556 ( 2,951,930) 62,442) ( 85,365) 619,114 ( 3,037,295) $ 1,548,600 ($ 2,709,329) $ 3,188,424 ($ 20,149,601) $ 1,636,144 ($ 17,442,990) $ 3,680 $ 2,718 $ 3,184,147 ($ 20,151,561) $ 4,277 $ 1,960 $ 0.17 ($ 1.77) $ 0.17 ( $ 1.77)
Other comprehensive income (loss) (net) Components of other comprehensive income that will not be reclassified to profit or loss 8311 Remeasurement of defined benefit plans 8316 Unrealized gains on financial assets at fair value through other comprehensive income 8349 Income tax (expense) benefit related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive income 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 of associates and joint ventures accounted for under equity method 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8300 Other comprehensive income (loss) for the year, net of tax 8500 Total comprehensive income (loss) for the year Profit (loss) attributable to: 8610 Owners of the parent 8620 Non-controlling interest Other comprehensive income (loss) attributable to: 8710 Owners of the parent 8720 Non-controlling interest Earnings (loss) per share (in dollars) 9750 Basic earnings (loss) per share 9850 Diluted earnings (loss) per share

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

20 -

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Notes				Equityattributable to	Equityattributable to	owners of theparen	t	t		Total	Non-controlling interests	Total
	Share c	apital Certificate of entitlement to new shares from convertible bond	Capital surplus		Retained Earnings	Unappropriated earnings	Other EquityInterest Financial statements translation differences of foreign operations Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income		Treasuryshares $ - - - - - - - - - ( 2,299,624) 1,681,044 - - ( $ 618,580) ( $ 618,580) - - - - - - - - - 618,580 - - $ -
	Common stock $99,520,720 - - - - - - - - - ( 2,410,000) - - $97,110,720 $97,110,720 - - - - - - - - - - - - $97,110,720			Legal reserve	Special reserve		Financial statements translation differences of foreign operations
6(22) 6(21) 6(20) 6(20) 6(19) 6(19)(20) 6(32) 6(20) 6(22) 6(21) 6(20) 6(20) 6(19)(20) 6(20) 6(3) 6(19)(20) 6(20)		$ - - - - - - - - - - - - - $ - $ - - - - - - - 2,293,612 - - - - - $2,293,612	$99,648,115 - - - - - - ( 14,755 ) 24 - 728,956 - 39 $100,362,379 $100,362,379 - - - - ( 963,107 ) 21,005 243,805 38 - 42,182 - 1,694 $99,707,996	$7,648,437 - - - 222,276 - - - - - - - - $7,870,713 $7,870,713 - - - - - - - - - - - - $7,870,713	$1,090,721 - - - - 3,572,742 - - - - - - - $4,663,463 $4,663,463 - - - 2,661,974 - - - - - - - - $7,325,437	$51,746,175 ( 17,442,990) ( 46,597) ( 17,489,587) ( 222,276) ( 3,572,742) ( 597,124) - - - - - - $29,864,446 $29,864,446 1,636,144 46,111 1,682,255 ( 2,661,974) - - - - 236,126 - - - $29,120,853	($6,461,149 ) - ( 3,036,537 ) ( 3,036,537 ) - - - - - - - - - ($9,497,686 ) ($9,497,686 ) - 618,517 618,517 - - - - - - - - - ($8,879,169 )	$1,797,686 - 374,563 374,563 - - - - - - - - - $2,172,249 $2,172,249 - 883,375 883,375 - - - - - ( 236,126 ) - - - $2,819,498		$254,990,705 ( 17,442,990) ( 2,708,571) ( 20,151,561) - - ( 597,124) ( 14,755) 24 ( 2,299,624) - - 39 $231,927,704 $231,927,704 1,636,144 1,548,003 3,184,147 - ( 963,107) 21,005 2,537,417 38 - 660,762 - 1,694 $237,369,660	$ - 2,718 ( 758) 1,960 - - - - 14 - - 180,351 - $ 182,325 $ 182,325 3,680 597 4,277 - - - - 14,031 - - ( 3,247) - $ 197,386	$254,990,705 ( 17,440,272) ( 2,709,329) ( 20,149,601) - - ( 597,124) ( 14,755) 38 ( 2,299,624) - 180,351 39 $232,110,029 $232,110,029 1,639,824 1,548,600 3,188,424 - ( 963,107) 21,005 2,537,417 14,069 - 660,762 ( 3,247) 1,694 $237,567,046

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

21 -

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

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

Net gain on financial assets or liabilities at fair
value through profit or loss
Compensation cost of share-based payments

Share of profit of associates and joint ventures
accounted for under equity method

Gain from disposal of investments

(Gain) loss on disposal of property, plant and
equipment

Gain on lease modification
Interest expense

Interest income

Dividend income

Unrealized foreign exchange (gain) loss
Changes in operating assets and liabilities
Changes in operating assets
Financial assets /liabilities at fair value
through profit or loss
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Accounts payable
Accounts payable - related parties
Other payables
Provisions - current
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Cash paid for income tax
Net cash flows from operating activities

Notes
2020
2019
$ 2,557,131
($ 16,525,428 )
6(28)
35,568,103
35,129,951
(
267,827 ) (
1,340,458 )
6(17)
395,669
-
6(8)
(
176,561 ) (
307,296 )
6(26)
-
(
21,069 )
6(26)
(
7,709 )
219,607
-
(
951 )
6(27)
1,026,516
1,031,733
6(24)
(
383,137 ) (
1,030,073 )
6(25)
(
198,526 ) (
123,952 )
(
250,864 )
60,811
(
754,282 )
436,671
(
10,230,321 )
5,182,421
264,362
1,972,618
659,865
582,673
(
426,194 )
417,698
218,974 (
2,773,889 )
(
33,856 )
34,906
(
1,594,325 ) (
4,695,964 )
(
2,064,060 )
1,132,690
(
225,269 ) (
2,467,509 )
(
622,944 ) (
6,987 )
562,150
573,285
(
49,414 ) (
3,285 )
23,967,481
17,478,203
(
1,563,328 ) (
3,642,821 )
22,404,153
13,835,382

(Continued)

22 -

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets or liabilities at fair
value through profit or loss
Proceeds from disposal of financial assets at fair
value through profit or loss

Acquisition of investments in equity instruments
measured at fair value through other comprehensive
income
Proceeds from disposal of financial assets measured
at fair value through other comprehensive income

(Increase) decrease in financial assets at amortized
cost - current
(Increase) decrease in refundable deposits
Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and
equipment
Acquisition of intangible assets

Net cash inflows from business combination

Interest received
Dividends received
Net cash flows (used in) from investing
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds

Interest paid
Repayment of the principal portion of lease
liabilities
Cash paid from capital surplus

Cash dividends paid

Cash dividends paid to non-controlling interests
Treasury shares transferred to employees
Payments to acquire treasury shares

Others

Net cash flows from (used in) financing
activities
Effect of changes in foreign currency exchange
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2020
2019
($ 447,862 ) ($ 148,874 )
6(2)
1,307,261
35,585
(
7,328 ) (
147,364 )
6(3)
277,836
1,500
(
22,988,048 )
31,659,162
(
447,386 )
55,552
6(33)
(
20,673,368 ) (
24,804,629 )
258,342
38,597
6(12)
(
26,076 ) (
49,825 )
6(33)
-
330,546
391,537
1,095,236
420,986
693,976
(
41,934,106 )
8,759,462
20,000,000
500,000
(
16,046,000 ) (
16,227,000 )
6(34)
8,900,934
-
(
676,496 ) (
985,651 )
(
308,894 ) (
463,805 )
6(21)
(
963,107 )
-
6(21)
-
(
597,124 )
(
3,247 )
-
279,162
-
6(19)
-
(
2,299,624 )
6(20)
1,694
39
11,184,046
(
20,073,165 )
145,015
(
1,636,032 )
(
8,200,892 )
885,647
34,732,975
33,847,328
$ 26,532,083
$ 34,732,975

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

23 -

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Shareholders of Innolux Corporation:

Opinion

We have audited the accompanying parent company only balance sheets of Innolux Corporation (the “Company”) as at December 31, 2020 and 2019, 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, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as at December 31, 2020 and 2019, and its parent company only financial performance and its parent company only 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. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of Parent Company Only 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 for 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 Company’s 2020 parent company only financial statements. 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.

24 -

The key audit matters in relation to the financial statements for the year ended December 31, 2020 are outlined as follows:

Inventory valuation

Description

The industry is characterized in its significant fluctuations closely in connection with the economic environment. As the technology evolves rapidly, the launch of new products may cause major changes in consumer demand or due to the update of production approach, the existing products may become obsolete or no longer meet market needs. The Company has evaluated the inventory by taking into account of allowance, obsoleteness or trivial sales amount and the cost has been written down to the net realizable value. The abovementioned allowance for inventory valuation losses mainly arose from the excess of the cost of inventory over the net realizable value of inventory. For details of inventory, please refer to Note 6(7). There is a risk of the excess of the cost of inventory over the net realizable value of inventory as a result of that the amounts of inventories are material and the sales prices of related products may have significant fluctuations because of market demand; we consider inventory valuation a key audit matter.

How our audit addressed the matter

Valuation and impairment of goodwill and property, plant and equipment

Description

For details of the impairment valuation of goodwill and property, plant and equipment, please refer to Notes 6(9) and 6(12).

Innolux Corporation measures the recoverable amount of the cash generating unit to determine whether goodwill and property, plant and equipment may be impaired based on future cash flows with appropriate discount rates, and future cash flows are estimated based on how assets are utilized, duration years of

25 -

assets and projected income and expenses in the future. As these estimates, which are uncertain and dependent upon significant judgment from management, involve several assumptions such as determination of discount rates, expected growth rate and future financial projections, we consider management’s assessment of impairment of goodwill and property, plant and equipment a key audit matter.

How our audit addressed the matter

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 audit committee, are responsible for overseeing the Company’s financial reporting process.

Auditors’ 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 auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a

26 -

guarantee that an audit conducted in accordance with the generally accepted auditing standards 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 parent company only financial statements.

A. 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.
B. 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.
C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
D. 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 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 auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
E. 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.
F. 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.
27 -

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 for the year ended December 31,2020 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.

PricewaterhouseCoopers, Taiwan February 4, 2021

------------------------------------------------------------------------------------------------------------------------------------------------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. ]

28 -

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(4) 6(5) 7 6(2) 7 6(7) 6(2) 6(3) 6(8) 6(9), 7 and 8 6(10) 6(11) 6(12) and 8 6(30) 6(9) and 8	December 31, 2020 $ 15,501,787 706,299 37,812,579 42,376,926 9,229,916 2,417,099 681,454 25,828,702 1,656,248 53,063 136,264,073 2,350,833 957,222 86,617,745 147,618,538 4,824,282 499,444 17,365,850 7,105,972 1,143,729 268,483,615 $ 404,747,688	December 31, 2019
Current Assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Financial assets at amortized cost - current 1170 Accounts receivable, net 1180 Accounts receivable, net - related parties 1200 Other receivables 1210 Other receivables - related parties 130X Inventory 1410 Prepayments 1479 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 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets			$ 23,892,085 7,660 17,793,800 31,348,610 8,274,534 620,723 660,155 26,359,099 3,344,555 20,558
			112,321,779
			2,651,408 965,431 83,068,937 164,083,562 5,350,404 527,232 17,446,858 7,339,101 2,011,704
			283,444,637
			$ 395,766,416

(Continued)

29 -

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes December 31, 2020 December 31, 2019 6(2) $ 3,214,013 $ 345,003 22,957,390 25,060,763 7 49,617,908 61,151,192 6(13) and 7 26,755,991 23,314,297 6(18) and 9 6,144,295 6,772,357 191,985 430,143 6(15) 19,217,495 15,956,013 7 6,667,652 4,297,573 134,766,729 137,327,341 6(14) 5,374,293 - 6(15) 20,381,002 19,550,268 6(30) 1,602,283 1,465,526 4,881,214 4,959,354 6(16) 372,507 536,223 32,611,299 26,511,371 167,378,028 163,838,712 6(19) 97,110,720 97,110,720 2,293,612 - 6(20) 99,707,996 100,362,379 6(21) 7,870,713 7,870,713 7,325,437 4,663,463 29,120,853 29,864,446 6(22) ( 6,059,671) ( 7,325,437 ) 6(19) - ( 618,580 ) 237,369,660 231,927,704 $ 404,747,688 $ 395,766,416
Current Liabilities 2120 Financial liabilities at fair value through profit or loss - current 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2250 Provisions - current 2280 Lease liabilities - current 2320 Long-term liabilities, current portion 2399 Other current liabilities 21XX Total current liabilities Non-current liabilities 2530 Corporate bonds payable 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Lease liabilities - non-current 2670 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Share capital - common stock 3130 Certificates of entitlement to new shares from convertible bonds 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other equity interest 3500 Treasury shares 3XXX Total equity 3X2X Total liabilities and equity

Liabilities and Equity

Notes
December 31, 2020
December 31, 2019
6(2)
$ 3,214,013
$ 345,003
22,957,390
25,060,763
7
49,617,908
61,151,192
6(13) and 7
26,755,991
23,314,297
6(18) and 9
6,144,295
6,772,357
191,985
430,143
6(15)
19,217,495
15,956,013
7
6,667,652
4,297,573
134,766,729
137,327,341
6(14)
5,374,293
-
6(15)
20,381,002
19,550,268
6(30)
1,602,283
1,465,526
4,881,214
4,959,354
6(16)
372,507
536,223
32,611,299
26,511,371
167,378,028
163,838,712
6(19)
97,110,720
97,110,720
2,293,612
-
6(20)
99,707,996
100,362,379
6(21)
7,870,713
7,870,713
7,325,437
4,663,463
29,120,853
29,864,446
6(22)
(
6,059,671) (
7,325,437 )
6(19)
- (
618,580 )
237,369,660
231,927,704
$ 404,747,688
$ 395,766,416

Current Liabilities
2120
Financial liabilities at fair value
through profit or loss - current
2170
Accounts payable
2180
Accounts payable - related parties
2200
Other payables
2250
Provisions - current
2280
Lease liabilities - current
2320
Long-term liabilities, current portion
2399
Other current liabilities
21XX
Total current liabilities
Non-current liabilities
2530
Corporate bonds payable
2540
Long-term borrowings
2570
Deferred income tax liabilities
2580
Lease liabilities - non-current
2670
Other non-current liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Equity
Share capital
3110
Share capital - common stock
3130
Certificates of entitlement to new
shares from convertible bonds
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained earnings
3400
Other equity interest
3500
Treasury shares
3XXX
Total equity
3X2X
Total liabilities and equity

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

30 -

INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items	Notes 2020 2019 6(23) and 7 $ 265,436,103 $ 249,384,126 6(7)(28) and 7 ( 250,452,241) ( 254,797,481) 14,983,862 ( 5,413,355) 6(28) and 7 ( 1,149,193) ( 1,226,054) ( 4,427,271) ( 4,708,808) ( 11,035,969) ( 11,543,290) ( 16,612,433) ( 17,478,152) ( 1,628,571) ( 22,891,507) 6(24) 271,839 683,012 6(25) and 7 1,874,672 1,418,328 6(26) 68,086 1,344,637 6(27) ( 1,025,357) ( 1,027,787) 2,441,668 2,658,336 3,630,908 5,076,526 2,002,337 ( 17,814,981) 6(30) ( 366,193) 371,991 $ 1,636,144 ($ 17,442,990) 6(16) $ 57,639 ( $ 58,246) 6(22) ( 8,209) ( 145,957) 6(22) 889,942 445,388 6(30) ( 9,886) 86,781 929,486 327,966 6(22) 680,959 ( 2,951,172) 6(22) ( 62,442) ( 85,365) 618,517 ( 3,036,537) $ 1,548,003 ($ 2,708,571) $ 3,184,147 ($ 20,151,561) 6(31) $ 0.17 ($ 1.77) $ 0.17 ( $ 1.77)
4000 Sales revenue 5000 Operating costs 5900 Net operating margin (loss) Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating loss Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of subsidiaries, associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit (loss)before income tax 7950 Income tax (expense) benefit 8200 Profit (loss) for the year Other comprehensive income (loss) (net) Components of other comprehensive income that will not be reclassified to profit or loss 8311 Remeasurement of defined benefit plans 8316 Unrealized losses on financial assets at fair value through other comprehensive income 8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for under equity method 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive income 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 8380 Share of other comprehensive loss of subsidiaries, associates and joint ventures accounted for under equity method 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8300 Other comprehensive income (loss) for the year, net of tax 8500 Total comprehensive income (loss) for the year Earnings (loss) per share (in dollars) 9750 Basic earnings (loss) per share 9850 Diluted earnings (loss) per share

Items

Notes
2020
2019
6(23) and 7
$ 265,436,103
$ 249,384,126
6(7)(28) and 7
(
250,452,241) (
254,797,481)
14,983,862
(
5,413,355)
6(28) and 7
(
1,149,193) (
1,226,054)
(
4,427,271) (
4,708,808)
(
11,035,969) (
11,543,290)
(
16,612,433) (
17,478,152)
(
1,628,571) (
22,891,507)
6(24)
271,839
683,012
6(25) and 7
1,874,672
1,418,328
6(26)
68,086
1,344,637
6(27)
(
1,025,357) (
1,027,787)
2,441,668
2,658,336
3,630,908
5,076,526
2,002,337
(
17,814,981)
6(30)
(
366,193)
371,991
$ 1,636,144
($ 17,442,990)
6(16)
$ 57,639
( $ 58,246)
6(22)
(
8,209) (
145,957)
6(22)
889,942
445,388
6(30)
(
9,886)
86,781
929,486
327,966
6(22)
680,959
(
2,951,172)
6(22)
(
62,442) (
85,365)
618,517
(
3,036,537)
$ 1,548,003
($ 2,708,571)
$ 3,184,147
($ 20,151,561)
6(31)
$ 0.17
($ 1.77)
$ 0.17
( $ 1.77)

4000
Sales revenue
5000
Operating costs
5900
Net operating margin (loss)
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6000
Total operating expenses
6900
Operating loss
Non-operating income and expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7070
Share of profit of subsidiaries, associates
and joint ventures accounted for under
equity method
7000
Total non-operating income and
expenses
7900
Profit (loss)before income tax
7950
Income tax (expense) benefit
8200
Profit (loss) for the year
Other comprehensive income (loss) (net)
Components of other comprehensive
income that will not be reclassified to
profit or loss
8311
Remeasurement of defined benefit plans
8316
Unrealized losses on financial assets at
fair value through other comprehensive
income
8330
Share of other comprehensive income of
subsidiaries, associates and joint ventures
accounted for under equity method
8349
Income tax related to components of
other comprehensive income that will not
be reclassified to profit or loss
8310
Components of other comprehensive
income 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
8380
Share of other comprehensive loss of
subsidiaries, associates and joint ventures
accounted for under equity method
8360
Components of other comprehensive
income (loss) that will be reclassified
to profit or loss
8300
Other comprehensive income (loss) for
the year, net of tax
8500
Total comprehensive income (loss) for the
year
Earnings (loss) per share (in dollars)
9750
Basic earnings (loss) per share
9850
Diluted earnings (loss) per share

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

31 -

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

2019 Balance at January 1 Loss for the year Other comprehensive (loss) income for the year Total comprehensive (loss) income Appropriation of 2018 earnings: Legal reserve Special reserve Cash dividends Recognition of change in equity of associates in proportion to the Company's ownership Recognition of changes in ownership interests in subsidiaries Purchase of treasury shares Cancellation of treasury shares Others Balance at December 31 2020 Balance at January 1 Profit for the year Other comprehensive income for the year Total comprehensive income Appropriation of 2019 earnings: Special reserve Cash dividends from capital surplus Recognition of change in equity of associates in proportion to the Company's ownership Conversion of convertible bonds Recognition of changes in ownership interests in subsidiaries Disposal of investments in equity instruments measured at fair value through other comprehensive income Treasury shares transferred to employees Others Balance at December 31	Notes		Share	capital	capital		Capital surplus				Retained Earnings				Other EquityInterest	Other EquityInterest	Other EquityInterest		Treasuryshares		Total
			Common stock		Certificate of entitlement to new shares from convertible bond				Legal reserve		Special reserve		Unappropriated retained earnings		Financial statements translation differences of foreign operations		Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income
	6(22) 6(21) 6(20) 6(20) 6(19) 6(19)(20) 6(20) 6(22) 6(21) 6(20) 6(20) 6(19)(20) 6(20) 6(19)(20) 6(20)		$ 99,520,720 - - - - - - - - - ( 2,410,000 ) - $97,110,720 $97,110,720 - - - - - - - - - - - $97,110,720		$ - - - - - - - - - - - - $ - $ - - - - - - - 2,293,612 - - - - $ 2,293,612		$ 99,648,115 - - - - - - ( 14,755 ) 24 - 728,956 39 $100,362,379 $100,362,379 - - - - ( 963,107 ) 21,005 243,805 38 - 42,182 1,694 $ 99,707,996		$ 7,648,437 - - - 222,276 - - - - - - - $7,870,713 $7,870,713 - - - - - - - - - - - $7,870,713		$ 1,090,721 - - - - 3,572,742 - - - - - - $4,663,463 $4,663,463 - - - 2,661,974 - - - - - - - $7,325,437		$ 51,746,175 ( 17,442,990 ) ( 46,597 ) ( 17,489,587 ) ( 222,276 ) ( 3,572,742 ) ( 597,124 ) - - - - - $29,864,446 $29,864,446 1,636,144 46,111 1,682,255 ( 2,661,974 ) - - - - 236,126 - - $29,120,853		( $ 6,461,149 ) - ( 3,036,537 ) ( 3,036,537 ) - - - - - - - - ( $9,497,686 ) ( $9,497,686 ) - 618,517 618,517 - - - - - - - - ( $8,879,169 )		$ 1,797,686 - 374,563 374,563 - - - - - - - - $ 2,172,249 $ 2,172,249 - 883,375 883,375 - - - - - ( 236,126 ) - - $ 2,819,498		$ - - - - - - - - - ( 2,299,624 ) 1,681,044 - ($ 618,580 ) ($ 618,580 ) - - - - - - - - - 618,580 - $ -		$ 254,990,705 ( 17,442,990 ) ( 2,708,571 ) ( 20,151,561 ) - - ( 597,124 ) ( 14,755 ) 24 ( 2,299,624 ) - 39 $231,927,704 $231,927,704 1,636,144 1,548,003 3,184,147 - ( 963,107 ) 21,005 2,537,417 38 - 660,762 1,694 $237,369,660

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

32 -

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

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

Net loss (gain) on financial assets or liabilities at
fair value through profit or loss
Compensation cost of share-based payments

Share of profit of subsidiaries and associates
accounted for under equity method
Gain on disposal of investments
(Gain) loss on disposal of property, plant and
equipment
Gain on lease modification
Interest income

Dividend income

Interest expense

Foreign exchange (gain) loss
Changes in operating assets and liabilities
Changes in operating assets
Financial assets /liabilities at fair value
through profit or loss
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Accounts payable
Accounts payable - related parties
Other payables
Provisions - current
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Cash paid for income tax
Net cash flows from operating activities

Notes
2020
2019
$ 2,002,337
($ 17,814,981 )
6(28)
30,901,299
30,888,735
276,999
(
1,343,327 )
6(17)
378,311
-
(
2,441,668 ) (
2,658,336 )
-
(
19,001 )
(
176,611 )
1,965
-
(
951 )
6(24)
(
271,839 ) (
683,012 )
6(25)
(
103,079 ) (
13,301 )
6(27)
1,025,357
1,027,787
(
389,832 )
60,811
(
1,038,189 )
477,616
(
11,028,316 )
7,827,927
(
955,382 )
173,440
701,784 (
87,150 )
530,397
446,546
429,534 (
2,821,526 )
(
1,252 )
1,714
(
2,103,373 ) (
1,716,365 )
(
11,533,284 ) (
1,314,316 )
113,941
(
3,801,853 )
(
628,062 ) (
10,557 )
2,370,079
1,113,902
(
81,561 ) (
19,085 )
7,977,590
9,716,682
(
6,193 ) (
1,762,721 )
7,971,397
7,953,961

(Continued)

33 -

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in other receivables - related parties
Acquisition of financial assets at fair value through
profit or loss
Proceeds from disposal of financial assets at fair
value through profit or loss

(Increase) decrease in financial assets at amortized
cost - current
Increase in investment accounted for under equity
method
Proceeds from capital reduction of investments
accounted for under equity method
Proceeds from disposal of investments accounted
for under equity method

Increase in refundable deposits
Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and
equipment
Acquisition of intangible assets

Interest received
Dividends received
Net cash flows (used in) from investing
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings
Repayment of long-term borrowings
Proceeds from issuance of bonds

Increase in other payables - related parties

Cash paid from capital surplus

Cash dividends paid

Interest paid
Repayment of the principal portion of lease
liabilities
Treasury shares transferred to employees
Payments to acquire treasury shares

Others

Net cash flows from (used in) financing
activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2020
2019
($ 21,299 ) ($ 266,637 )
(
199,705 ) (
145,249 )
6(2)
1,277,031
35,585
(
19,988,472 )
31,933,350
-
(
592,405 )
-
27,397
7
197,629
-
(
496,326 ) (
20,344 )
6(33)
(
16,438,552 ) (
19,876,808 )
1,378,528
276,715
6(12)
-
(
480 )
291,321
744,541
331,101
583,310
(
33,668,744 )
12,698,975
20,000,000
500,000
(
15,980,000 ) (
16,210,000 )
6(34)
8,900,934
-
6(13) and 7
6,026,890
-
6(21)
(
963,107 )
-
6(21)
-
(
597,124 )
(
674,003 ) (
982,242 )
(
284,521 ) (
441,822 )
279,162
-
6(19)
-
(
2,299,624 )
6(20)
1,694
39
17,307,049
(
20,030,773 )
(
8,390,298 )
622,163
23,892,085
23,269,922
$ 15,501,787
$ 23,892,085

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

34 -

Attachment 4

INNOLUX CORPORATION 2020 Earnings Distribution Table

Unit: NT$

	Unit: NT$
Item	Amount
Net income after tax of 2020 Add: Remeasurements of the net defined benefit plan of 2020 Disposal of equity instruments of measured at fair value through other comprehensive income Reversal of special reserve (Note 1) Deduct: Legal reserve Retained earnings available for distribution as of 2020 Add: Unappropriated retained earnings of previous years Unappropriated retained earnings as of December 31, 2020 Distribution Item (Note 2): Cash dividends of common stock (NT$ 0.3 per share) Unappropriated retained earnings	1,636,144,012 46,110,937 236,126,705 1,265,766,014 191,838,165 2,992,309,503 27,202,471,351 30,194,780,854 3,141,270,505 27,053,510,349

Item

Amount

Net income after tax of 2020
Add:
Remeasurements of the net defined benefit plan of 2020
Disposal of equity instruments of measured at fair value through
other comprehensive income
Reversal of special reserve (Note 1)
Deduct:
Legal reserve
Retained earnings available for distribution as of 2020
Add:
Unappropriated retained earnings of previous years
Unappropriated retained earnings as of December 31, 2020
Distribution Item (Note 2):
Cash dividends of common stock (NT$ 0.3 per share)
Unappropriated retained earnings

1,636,144,012
46,110,937
236,126,705
1,265,766,014
191,838,165
2,992,309,503
27,202,471,351
30,194,780,854
3,141,270,505
27,053,510,349

Note 1: The Company shall set aside a special reserve from the reversal of deduction from shareholders’ equity (including exchange differences from the translation of financial statements of foreign operations, unrealized financial assets profits at fair value through other comprehensive income) for the current fiscal year

Note 2: The retained earnings of 2020 are distributed first, in accordance with the Articles of Incorporation of the Company and the resolution of shareholders’ meeting.

Chairman:

General Manager:

Accountant:

35 -

Attachment 5

Comparative table for Amendments to Articles of Incorporation of the Company

Article No.	The current Article	The Amended Article	Reasons for Amendment
Article 3	The Company's head office is located in the Hsinchu Science ~~Industrial~~Park. If necessary, the Company may establish branch offices in Taiwan and abroad by resolution of the Board of Directors and approval of the competent authorities.	The Company's head office is located in the Hsinchu Science Park. If necessary, the Company may establish branch offices in Taiwan and abroad by resolution of the Board of Directors and approval of the competent authorities.	Amended in accordance with the Act for Establishment and Administration of Science Parks
Article 21-1	(Omitted) The Compan~~y is an emerging~~ ~~company of growing rapidly,~~ ~~capital intensive business, and is at~~ ~~the stage of stable growth, in order~~ ~~to match up~~the long-term financial plan of the Company in the future, investment environment and business competition situation,~~the~~ ~~allocation of dividends shall~~ ~~consider the future~~capital expenditure budget~~and~~capital requirement of the Company, and ~~allocation proposal shall be~~ ~~prepared by the board of director,~~ ~~and then shall be allocated after a~~ ~~resolution adopted by~~ ~~shareholders’ meeting.~~ ~~However,~~ ~~for the allocation of shareholders’~~ ~~dividends, the stock dividends~~ ~~shall not exceed two-thirds of~~ ~~distributable dividends in that~~ ~~current year.~~	(Omitted) The Company shall set aside to special reserve, from prior period’s undistributed earnings, an amount equal to net deductions from other equity". If the amount is not sufficient, the Company should further set aside from the current period's net profits plus other items to be included in the current period's undistributed earnings. Depending on the Company's long-term financial planning, investment environment, industry competition, capital expenditure budget,funding requirementsand protection of shareholders'equity, dividends should be paid at a rate of no less than 20% of the current year's distributable earnings; however, if the distributable earnings are less than 2% of the paid-in capital, the Company may resolve to transfer the entire amount to retained earnings without distribution. For earnings distribution, cash dividends are preferred but it may also be in the form of stock dividends, with no less than 50% of the earnings to be distributed with cash dividends. The aforementioned dividend distribution percentage may be	Provide better clarity to the Company's dividend policy

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Article No.	The current Article	The Amended Article	Reasons for Amendment
		adjusted based on financial, business and operating factors.
Article 26	The Articles of Incorporation were established on November 21, 2002 with the consent of all the founders. The 1st amendment was made on March 21, 2003 ...... (omitted) The 19th amendment was made on June 20, 2019.	The Articles of Incorporation were established on November 21, 2002 with the consent of all the founders. The 1st amendment was made on March 21, 2003 ...... (omitted) The 19th amendment was made on June 20, 2019.The 20th amendment was made on July 1, 2021.	Explain the history of the amendments of the Articles of Incorporation

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Attachment 6

Comparative table for Amendments to Rules of Shareholders’ Meeting

Article No.	The current Article	The Amended Article	Reasons for Amendment
Article 3	(The convening and notice of shareholders’ meeting) Paragraph 1, 2, and 3 are omitted. Matters related to election or dismissal of directors, changes in the Article of Incorporation, capital reduction, application for suspension of public offering, director non-compete clause, capital increase from earnings, capital increase from surplus, company dissolution, merger, split or the clauses in Paragraph 1, Article 185 of the Company Act, should be listed in the purposes for convening the meeting, and shall not proposed by an extempore motion. The content may be posted on websites designated by the competent securities authority or the Company, and the website should be clearly stated in the notice.	(The convening and notice of shareholders’ meeting) Paragraph 1, 2, and 3 are omitted. Matters related to election or dismissal of directors, changes in the Article of Incorporation, capital reduction, application for suspension of public offering, director non-compete clause, capita increase from earnings, capital increase from surplus, company dissolution, merger, split or the clauses in Paragraph 1, Article 185 of the Company Act,Article 26-1, Article 43-6 of the Securities and Exchange Act, Article 56-1 and Article 60-2 of the Regulations Governing the Offering and Issuance of Securities by Securities	In order to avoid the misunderstanding that all matters other than those set forth in Paragraph 1 of Article 185 of the Company Act can be proposed by an extempore motion, it is proposed to include the provisions of laws and regulations other than the Company Law listed in the original Article before the amendment shall be incorporated for matters that may not be proposed by way of an extempore motion.
		Issuers,should be listed in the purposes for convening the meeting, and shall not proposed by an extempore motion. The content may be posted on websites designated by the competent securities authority or the Company, and the website should be clearly stated in the notice.

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Article No.	The current Article	The Amended Article	Reasons for Amendment
	Paragraph 5 is omitted. A shareholder holding at least one percent of the total number of issued shares may propose in writing to the Company a motion for the regular shareholders’ meeting, but limited to one motion only, and any proposal exceeding one motion shall not be included in the agenda. ~~However, the Board of Directors~~ ~~may include the shareholder's~~ ~~proposed motion in the agenda~~if the purpose of the motion is to urge the Company to promote the public interest or fulfill its social responsibility. In addition, the Board of Directors must not include the motion proposed by the shareholder under any of the circumstances set forth in Article 172-1-4 of the Company Act.	Paragraph 5 is omitted. A shareholder holding at least one percent of the total number of issued shares may propose in writing to the Company a motion for the regular shareholders’ meeting, but limited to one motion only, and any proposal exceeding one motion shall not be included in the agenda. In addition, the Board of Directors must not include the motion proposed by the shareholder under any of the circumstances set forth in Article 172-1-4 of the Company Act.A shareholder may proposea motion to urge the Company to promote public interest or fulfill its social responsibility, but shall be limited to one motion only in accordance with Article 172-1 of the Company Act and any	In accordance with the amendment of Article 172-5 of the Company Act and the letter of Jing- Shang-Zi No. 10700105410, the sixth Paragraph of this Article was amended.
		proposal exceeding one motion shall not be included in the agenda.

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Attachment 7

Comparative table for Amendment to Election Rules of Directors of the Company

Article No.	The current Article	The Amended Article	Reasons for Amendment
Article 8	~~If a candidate is a shareholder,~~ voters~~must indicate the candidate's~~ ~~account name and shareholder~~ ~~account number~~in the "candidate" column of the ballot;~~for a non-~~ ~~shareholder, the candidate's name~~ ~~d idtifiti b hld b~~	Voters may choose from the "candidate"lists compiled by the Company and make the choicein the "Candidate" column ofeach ballot.	In accordance with real practice, make appropriate editorial amendment
		the "Candidate" column of ballot.
	~~an encaon numer sou e~~ ~~indicated.~~ ~~However, when the candidate is a~~ ~~governmental or a corporation, the~~ ~~name of the governmental or the~~ ~~corporation should be indicated in~~ ~~the column for the candidate's~~ ~~t th bllt bth~~
	~~accoun name on e ao, or o~~ ~~the name of the government or the~~ ~~corporation and the name of its~~ ~~representative can be indicated.~~ ~~When there are several~~ ~~representatives, the name of each~~ ~~representative should be indicated~~ ~~respectively.~~

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Article No.	The current Article	The Amended Article	Reasons for Amendment
Article 9	A ballot is invalid if one of the following is true: (1) Do not use ballots as stipulated in Article 7. (2) Ballot not put in the ballot box. (3) Blank ballots not filled in by voters. (4) Two or more candidates are selected. (5) The handwriting is blurred and unrecognizable. (6) In addition to~~the account name~~ ~~(individual name) and shareholder~~ ~~account number of the candidate,~~ other words are included. ~~(7) The account name (individual~~ ~~name) of the candidate is the same~~ ~~as the account name (individual~~ ~~) f th hhld d th~~	A ballot is invalid if one of the following is true: (1) Do not use ballots as stipulated in Article 7. (2) Ballot not put in the ballot box. (3) Blank ballots not filled in by voters. (4) Two or more candidates are selected. (5) The handwriting is blurred and unrecognizable. (6) In addition tothose on the "candidates"lists compiled by the Company,other words are included.	In accordance with real practice, make appropriate editorial amendment
	~~name o oer sareoer, an e~~ ~~shareholder account number~~ ~~(identification number) is not~~ ~~entered for distinguishing.~~ ~~(8) The account name and account~~ ~~number of the candidate, if the~~ ~~didt i hhld d t~~
	~~canae s a sareoer, oes no~~ ~~match with the shareholder roster;~~ ~~the individual name and identity~~ ~~number of the candidate, if the~~ ~~candidate is not a shareholder, do~~ ~~not match after verification.~~
Article 13	The Procedures were established on May 19, 2004. The 1st amendment was made on June 13, 2007. The 2nd amendment was made on June 29, 2012. The 3rd amendment was made on June 8, 2015. The 4th amendment was made on June 24, 2016.	The Procedures were established on May 19, 2004. The 1st amendment was made on June 13, 2007. The 2nd amendment was made on June 29, 2012. The 3rd amendment was made on June 8, 2015. The 4th amendment was made on June 24, 2016.The 5th amendment was made on July 1, 2021.	Explain the history of the amendments

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AI assistant

INX — AGM Information 2021

52330_rns_2021-07-14_3e51f6bc-047e-49db-b892-8501e2b668ae.pdf

INNOLUX CORPORATION Minutes of 2021 Annual General Shareholders Meeting

Chairperson Remarks (omitted) Reporting Items

Adopting Items

Discussion Items

Extemporary Motion

Adjourn Meeting: The meeting was adjourned at a.m. 09:40

Attachment 1

INNOLUX CORPORATION 2020 Operating Report

II. Results of business plan implementation and budget execution

III. Financial receipts and expenditures and profitability analysis

IV. Research and development

Attachment 2

Audit Committee Review Report

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for opinion

Key audit matters

Inventory valuation

Description

How our audit addressed the matter

Valuation and impairment of goodwill and property, plant and equipment

How our audit addressed the matter

Other matter – Parent company only financial reports

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

Auditors’ responsibilities for the audit of the consolidated financial statements

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2020 AND 2019

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2020 AND 2019

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for opinion

Key audit matters

Inventory valuation

Description

How our audit addressed the matter

Valuation and impairment of goodwill and property, plant and equipment

How our audit addressed the matter

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

Auditors’ responsibilities for the audit of the parent company only financial statements

PricewaterhouseCoopers, Taiwan February 4, 2021

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

Attachment 4

INNOLUX CORPORATION 2020 Earnings Distribution Table

Attachment 5

Comparative table for Amendments to Articles of Incorporation of the Company

Comparative table for Amendments to Rules of Shareholders’ Meeting

Comparative table for Amendment to Election Rules of Directors of the Company

More from INX

INX AGM Information 2021