LHIHC - Annual Report 2019 | FinancialReports.eu

Stock code: 1229

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Lien Hwa Industrial Holdings Corporation

(Original name ： Lien Hwa Industrial Corporation)

2 020 Ann u al S h areho ld er s' Meetin g

Handbook

The original of this handbook is written in Chinese language. If there is any discrepancy between the Chinese version and this English translation, the Chinese version shall prevail.

June 23, 2020

Page No. Meeting Agenda ..................................................................................... 1 Report Items ......................................................................................... 2 Matters for Ratification ........................................................................... 4 Matters for Discussion ............................................................................. 6 Extemporary Motions .............................................................................. 7 Attachments I. 2019 Business Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 II. Audit Committee’s report on audit of 2019 closing statements. . . . . . . . . . . . . . 12 III. Audit Report by Certified Public Accountants and Financial Statement for Year 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 IV. Comparison Table for Amendment to the Articles of Incorporation . . . . . . . . . 34 V. Comparison Table for Amendment to the Rules of Procedures for Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Appendix I. Effect upon business performance and earnings per share of stock dividend distribution proposed or adopted at this shareholders' meeting .................................. 56 II. Articles of Incorporation (prior to amendment) ..................................................... 57 III. Rules of Procedures Governing Shareholders’ Meeting (prior to amendment) ... 60 IV. Shareholdings of all directors ............................................................................... 62

Lien Hwa Industrial Holdings Corporation

(Original name ： Lien Hwa Industrial Corporation)

Annual Shareholders' Meeting 2020

Meeting Agenda

Time: June 23 (Tuesday), 2020, at 9:00 a.m.

Venue: 1F, No. 12, Fufeng S. Road, Yangmei District, Taoyuan City

One. Opening speech to the meeting

Two. Call the Meeting to Order by the Chairperson

Three. Report Items
I. 2019 Business Report.
II. Audit Committee’s report on audit of 2019 closing statements.
III. 2019 distribution plan for remuneration of directors and employees’ compensation.
IV. Cash dividends for distribution of 2019 Profits.
Four. Matters for Ratification
I. 2019 business report and financial statements.
II. 2019 earnings distribution plan.
Five. Matters for Discussion
I. Issue new shares for capitalization of retained earnings.
II. Amendment to certain provisions of the Articles of Incorporation.
III. Amendment to certain provisions of the Rules of Procedure for Shareholders’ Meetings.

Six. Extemporary Motions

Seven. Adjournment

Three. Report Items

I. 2019 Business Report.
- Descriptions: Please refer to Attachment 1, Handbook, 2020 Annual Meeting of Shareholders.
II. Audit Committee’s report on audit of 2019 closing statements.
- Descriptions: Please refer to Attachment 2, Handbook, 2020 Annual Meeting of Shareholders.
III. 2019 distribution plan for remuneration of directors and employees’ compensation.
- Descriptions: I. As expressly provided for in Article 28 of the Company's Articles of Incorporation, with the profit earned by the Company in the current year, after deduction of the accumulated loss, a sum 1% maximum of the balance shall be appropriated as remuneration to directors (including independent directors) and a sum 0.1% minimum shall be appropriated into remuneration to employees.
  - II. With evaluation of business performance in Year 2019 and with reference to the rates prevalent in the same industry, as duly resolved in the Company's Remuneration Committee and Board of Directors, in Year 2019, the total remuneration to directors (including independent directors) shall be NT$8,400,000 and the remuneration to employees shall be NT$2,836,979, accounting for 0.3% and 0.1 % respectively of the profit earned in the year, to be granted in cash.
IV. Cash dividends for distribution of 2019 Profits.
- Descriptions: 1. According to the Article 28-1 of the Articles of Incorporation, the board of directors is authorized for the resolution to distribute all or part of the profits in cash and report to the shareholder’s meeting.
- The cash dividend amount of NTD1,767,583,746 was appropriated from the distributable profits in 2019. The distributed amount was NTD1.6 per share, rounded down to the nearest whole dollar. In the case of fractional shares to which the distributed amount was less than NTD 1 per share, the total amount distributed was recognized as "other income" of the Company.
- The motion was approved by the board of directors. The board of directors would determine the record date and

distribution date and make decisions for relevant matters. CTBC Bank was appointed as the stock transfer agent for the distribution. If the dividend payout ratio is changed for that the total number of the outstanding shares of the Company is changed, the board of directors is authorized to handle the matter.

Four. Matters for Ratification

No. 1 (Proposed by the Board of Directors)

Subject: Adoption of the 2019 Business Report and Financial Statements. Descriptions: I. 2019 Business Report and Financial Statements have been duly resolved and approved in the Board of Directors and further audited by the Audit Committee. For the related Business Report and Financial Statements, please refer to Attachments 1 to 3, Handbook, 2020 Annual Meeting of Shareholders.

II. Adoption is respectfully requested.

Resolution:

No. 2 (Proposed by the Board of Directors) Subject: Adoption of the Proposal for Distribution of 2019 Profits.

Descriptions: I. The allocation of the Company's earnings in Year 2019 is detailed below:

below:
Allocation of earnings Year 2019	Expressed in New Taiwan Dollars
I. Unappropriated retained earnings at beginning of the term	5,558,148,129
II. Netprofit after tax thisyear	2,766,816,284
III Aggregate total of other increase/decrease this year	1,349,739,940
Minus: Variable this term remeasured for the defined welfareplan	11,574,890
Plus: Changes in adjustment of contents of shareholders’ equityof investees and subsidiaries	1,338,165,050
IV Total earnings after-tax for the current period and other items adjusted to the undistributed earnings	4,116,556,224
Minus: 10% amortized as legal reserve	(411,655,622)
V .Earnings allocable thisyear	9,263,048,731
VI Allocation of earnings thisyear
Dividend to shareholders`－`Cash (NT$1.6 per share,NT$1,600per thousand shares)	1,767,583,746
Dividend to shareholders`－`Stocks (NT$1.6 per share,160 sharesper thousand shares)	1,767,583,740
VII. The unappropriated retained earnings of the currentyear carried down to the ensuing year	5,727,881,245
Note: I. Dividend to shareholders shall be allocated preferentially with earnings in Year 2019. The shortfall would be allocated with the unappropriated retained earnings of the preceding term. II. The dividend allocation rate toward shareholders shown through the present earnings allocation table is the figure estimated based on the Company's total outstanding shares as of April 25,2020,in the number of 1,104,739,841 shares.

II. For present allocation of earnings, the earnings of Year 2019 shall be allocated preferentially.
III. Adoption is respectfully requested.

Resolution:

Five. Matters for Discussion

No. 1 (Proposed by the Board of Directors)

Subject: Proposal for Issue of New Shares through Capitalization of Earnings. Descriptions: I. Given the need for the Company in business development in the future, it is proposed that with the allocable earnings as of December 31, 2019, a sum NT$1,767,583,740 shall be allocated with the dividend to shareholders into capital increase to issue 176,758,374 new shares, to be estimated based on the total outstanding shares, i.e., 1,104,739,841 shares as of the starting date of book closure period on April 25, 2020, with 160 bonus shares to be granted out of every one thousand shares. The actual ratio of allocation shall be counted based on the shareholding ratio as shown through the register of shareholders as of the base date for capital increase.
II. For any fraction part below one share among the new shares to be issued with the present capital increase, the shareholders may consolidate themselves to proceed with the consolidation procedures with the construction project shareholder services agent, i.e., Shares Registration Agency Service Department of CTBC Bank Co., Ltd. within five (5) days starting from the base date of capital increase. The odd shares not consolidated or still below one whole number of share after the consolidation process shall be granted in cash (to be counted to the whole number of New Taiwan Dollar). For such shares, the chairman is authorized with plenipotentiary power to approach specific people to purchase at the carrying amount.
III. The new shares in the present issuance bear the rights & obligations exactly same as the original shares. After the issuance is approved in the shareholders' regular meeting, reported to and approved by the competent authority, the Board of Directors is authorized with plenipotentiary power to fix base date for capital increase which shall be promulgated by then.
IV. Where the Company repurchases treasury stocks, transfers treasury stocks to employees or eliminates treasury stocks hereafter that adversely affects the quantity of the Company's total outstanding shares and, as a result, the ratio of share allocation to shareholders is changed, the shareholders’ meeting would be proposed to bestow the Board of Directors with plenipotentiary power for handle it as appropriate.
V. If this new bonus share issuance needs to be revised due to the regulation specifications or requirements from the authorities, the board of directors will be authorized by the annual meeting of shareholders to manage the changes in the issuance accordingly.
VI. Approval is respectfully requested.

Resolution:

No. 2 (Proposed by the Board of Directors)
Subject: Proposal for Amendment to certain provisions of the Articles of Incorporation.
Descriptions: I. For that the Company might issue special shares in the future, the Company amended some articles of the “ Articles of Incorporation ” according to the regulations with respect to preferred stocks in the Company Act. A comparison table of amended articles and current articles of the above is provided in Attachments 4.
II. Approval is respectfully requested.

Resolution:

No. 3 (Proposed by the Board of Directors) Subject: Proposal for Amendment to certain provisions of the Rules of Procedure for Shareholders’ Meetings.
Descriptions: I. The Taiwan Stock Exchange issued the amended “Sample Template for XXX Co., Ltd. Rules of Procedure for Shareholders Meetings” on January 2, 2020. As a result, the Company amended some articles of the “Rules of Procedure for Shareholders Meetings” of the Company. A comparison table of amended articles and current articles of the above is provided in Attachments 5.
II. Approval is respectfully requested.

Resolution:

Six. Extemporary Motions

Seven. Adjournment

Attachment 1

Lien Hwa Industrial Holdings Corporation Business Report

The Lien Hwa Industrial Holdings Corporation demerged the original noodle business and rental business into 2 subsidiaries, Lien Hwa Milling Corporation and Lien Hwa Property Development Corporation in 2019. Besides, MiTAC Inc. and MiTAC Information Technology Corp. were merged. Therefore, the Company transformed and became the Lien Hwa Industrial Holdings Corporation. The resources within the Group can be allocated effectively. Besides, the operating efficiency of individual companies can be improved and the management effectiveness can be put into good use. Individual business entities can focus on their own fields and therefore the long-term competitiveness and development power of the Group can be improved and strengthened. Although the domestic and international economic growth was not significant due to the trade war between China and the USA in 2019, the Company still had great performance overall on the investment business.

I. 2019 Business Result Report

1. Consolidated operating revenue and profitability

With the effort of all employees, the Company maintained great operational performance in 2019. The consolidated operating revenue was NTD8.27 billion after the inclusion of MiTAC Inc. and MiTAC Information Technology Corp. in the second quarter, growing by NTD3.17 billion compared to 2018. The operating revenue of the noodle business was NTD4.42 billion. The operating revenue of the rental business was NTD340 million. The operating revenue of the retail and restaurant business was NTD340 million. The numbers were overall similar to the numbers in 2018. Except that the operating revenue of MiTAC Inc. (NTD640 million) and the operating revenue of MiTAC Information Technology Corp. (NTD2.53 billion) were included.

The net income attributable to the parent company shareholders was NTD2.77 billion. The number increased by 12% compared to 2018. The reason of the increase was the gain on disposal due to the merger of MiTAC Inc. and MiTAC Information Technology Corp. in 2019. The earnings per share (EPS) after tax was NTD2.51. Since the Company did not disclose the financial forecast information to the public in 2019, the achievement of forecast was not applicable.

The consolidated business performance and profitability analysis of the Company in 2019 and 2018 are as follow:

	2019	2018
Return on shareholders’ equity (%)	10.11	9.91%
Net operating profit(%)	11.55%	5.89%
Netprofit margin(%)	38.04%	48.52%
Earningsper share(EPS)after tax	NTD2.51	NTD2.35

Research and development status
(1) Noodle business: To improve food safety monitoring, develop new products, analyze features of the ingredient, strengthen key technology in the process and provide technical instructions for the customer, the research and

development center spent NTD2.38 million on purchasing testing equipment and NTD41.17 million on research and development in 2019.

(2) Technology business: The Company has created a MiAIOT platform for the smart city service and digital transformation for the business. In addition, the Company acquired several patents, including the patents for the RFID reader device, smart shelves in the library and self learning e-gate system.
Operating performance
(1) Our flour continued to enjoy the largest market share in Taiwan. The annual sales of flour in Taiwan reached 9.36 million bags.
(2) Our milling plant acquired the international SQF certification with the highest quality level.
(3) The Company continued to promote industry 4.0 on the manufacturing of flour. All kinds of data were transmitted and collected automatically during the manufacturing process. Therefore, the Company could optimize the production management process.
(4) The plant of MiTAC Information Technology Corp. in Longtan was open for operation. Therefore, the Company’s capacity to manufacture special vehicles increased.
(5) The Circular Line of Taipei MRT was complete and open for business. MiTAC Information Technology Corp. was responsible for the construction of its power system, central monitoring system, communication system and automatic toll collection system.
(6) Pizzeria Oggi Tianmu was remodeled. After the remodeling, the average monthly operating revenue increased by 18% compared to 2018.
(7) The own products of the organic Jian Mart, chicken essence and sergestid shrimp floss, won the “Eatender Award” from the Council of Agriculture, Executive Yuan. Jian Mart continues to open new stores. Currently it has 26 stores in Taiwan in total.
Realizing corporate social responsibility

We compiled a CSR report to communicate with stakeholders. Please refer to our website. In 2019, the Company participated in the “2019 New Taipei City Mountain Cleanup Event” held by the Gold Museum in the New Taipei City to do our part for the environment. The Company participated in the Christmas gift collecting event held by the Mustard Seed Mission, hoping to bring children a happy Christmas.We have been donating flours to Saint. Mary's Hospital Taitung for quite some while. The Company also helped raise the funds for poor seniors and provided meals for the elderly that lived alone. In addition, we donated flours to the Ande Special Education Center in Hualien and held baking classes. We hoped this would help the kids in the center to learn skills to earn for a living. Moreover, we held the “2019 Blood Donation” event and invited employees from all affiliated enterprises to donate blood to help people. The Company hoped to care for the disadvantaged groups in the society and helped those in need by taking actions and promoting social welfare events.

II. Business Plan and Development Strategy in 2020

Covid-19 affects all kinds of industries around the globe, including the manufacturing industry and tourism industry in 2020. Several companies have revised down the estimated profit. Currently, there are many uncertain factors to when the epidemic will slow down and when the industry will recover. Under the circumstances, the Company established the following development strategies in the hope of seizing the opportunity when the epidemic starts to slow.

Strategic alliance for the noodle business
Most of the flour produced by the domestic flour producing companies is sold inside the country. With a limited domestic market, the goal of business growth can only be reached by cooperation and business merger. After the noodle business in Taiwan was demerged into Lien Hwa Milling Corporation, the Company can now have strategic alliance with other companies in the field more easily.
Decrease in the wheat purchase price for the noodle business in China Besides earning for an increase on the quota of imported wheat, the Company cooperated with more local wheat suppliers to acquire first-hand harvest and quality information of the wheat. Moreover, the Company performed a fixed amount purchase based on the analyses of price change in the place of origin and the market supply and demand. Therefore, the Company could acquire domestic wheat with a lower price and increase the use amount of domestic wheat to lower the ingredient cost.
Exercise of food safety regulations Under the SQF, ISO22000, HACCP, TQF and other food safety and quality certifications, the Company performed source management and complied with regulations of the food safety laws. In addition, the Company applied for the Clean Label and reduced the use of food additives to provide the customer with better quality assurance.
Making good use of the land
The Company made good use of the idle land and learned about the local culture as well as the industry development status in the place where the idle land was located. Additionally, the Company cooperated with other enterprises or worked on its own to build the parking lot or logistics center or establish the solar power generation project.
Developmentof the “Cloud-Edge-Endpoint” software/hardware product and service Recently, the technology industry has been focusing on the fields of artificial intelligence, block chain, cloud computing, data technology, edge computing, financial technology and the 5th generation mobile networks. The Company developed the cloud service, Micloud2.0, the edge server, MiAION, and the IoT data exchange platform, MiAIOT and used them to construct the basis for AIoT solutions.
Strengthening the operating profitability of stores With the foundation in the food industry, the Company continued to expand food stores. The Company expanded stores in the good court and adjusted the store features to increase the profitability. In addition, the Company continued to bring more products of the self-owned brand to the market and attracted more franchisees to the business. As a result, we could boost our brand awareness and improve

customer approval.

III. Impacts from the External Competitive Environment, Legal Environment and Overall Business Environment

As to the noodle business, the domestic demand is weak and the dietary habits of people inside the country change. The market competition is without a doubt very intense. The Company will seek for all kinds of cooperation opportunities to expand our market share in order to overcome the challenge. With the CRM system, we can acquire customer information immediately. Moreover, the Company utilized the consultative selling approach. We have a variety of flour formulas and the database has been established; therefore, we can provide customers with suitable products.

As for the information technology business, 5G projects are established intensely around the globe. AIoT plus 5G will make the Internet use faster and wider. Besides, there are lots of business opportunities in the AIoT field. But with the impacts of the trade war and the epidemic, a break in the industry chain can happen any time. Thus, the project purchase will be affected undoubtedly. The Company will continue to pay attention to situation and plan for countermeasures in the hope of keeping the damage to a minimum.

Food safety laws and regulations are the matters that food companies must pay attention to. Besides following the existing legislations, the Company designates responsible personnel to follow up the laws and regulations that are being amended. Moreover, a food safety lab with the ISO17025 certification was established to ensure the compliance with rules in the laws and regulations. As a result, customers will have confidence in our products and approve our products.

The Company will be faced with lots of challenges in the overall business environment in 2020. Affected by the extreme weather, wheat prices are constantly experiencing a period of excessive volatility. The Company will maintain a good relationship with the wheat supplier to be aware of harvest information in the place or origin. In addition, the Company will adopt the R&D technology for quality maintenance. This way, the purchase of ingredients for the noodle business will become more flexible. Due to the trade war between China and the USA and the spread of Covid-19, we will experience economic volatility in the next year. The Company will continue to invest and expand the business scale. Meanwhile, we will strengthen our R&D capacity to improve the competitiveness in order to face all kinds of challenges. The Company will integrate resources within the Group and pursue sustainable growth in performance and profitability.

Best

Regards,

Chairman: Matthew Feng-Chiang Miau President: Roger Lin Chief Accounting: Vincent Lee

Lien Hwa Industrial Holdings Corporation Audit Committee’s Report

Attachment 2

The board of directors prepared the 2019 financial report and hired KPMG for the

audit. CPAs Linda Chiang and Liu-Feng Yang of KPMG were appointed as the auditors and the audit was complete. The aforementioned report, 2019 business report, and the profit distribution proposal were audited by the Audit Committee to be in compliance

with the Company Act and other relative laws. We hereby issue the above Report in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of The

Company Act.

For

2020 Annual Shareholder’s Meeting of Lien Hwa Industrial Holdings Corporation

Lien Hwa Industrial Holdings Corporation

Chairman of the Audit Committee: Lo-Hou Chew

March 30, 2020

Auditor’s Report

Board of Directors of Lien Hwa Industrial Holdings Corporation

Audit opinion

We have audited the consolidated balance sheet of Lien Hwa Industrial Holdings Corporation (Original name: Lien Hwa Industrial Corporation) and its subsidiaries (LHHC Group) as at 31 December 2018 and 2019, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement, and the notes to consolidated financial statements (including the summary of significant accounting policies) for periods 1 January to 31 December 2018 and 2019.

In our opinion, all material disclosures of the consolidated financial statements mentioned above were prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Firms, international financial reporting standards approved by the Financial Supervisory Commission, the International Accounting Standards and interpretations thereof, and presented a fair view of the consolidated financial position of LHHC Group as at December 31, 2018 and 2019, and consolidated business performance and cash flow for the periods January 1 to December 31, 2018 and 2019.

Basis for the audit opinion

We have conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the generally accepted auditing standards. Our responsibility to the standards will be explained in the paragraph of auditor’s responsibilities when auditing the consolidated financial statements. All relevant independent personnel subject to the CPA professional ethics within the firm remain independent from the LHHC Group and implement responsibilities regulated in the ethics. We believe we have obtained sufficient appropriate audit evidence to serve as the basis for the audit opinion.

Key audit matters

Key audit matters are the most important matters that we audit in the 2019 consolidated financial statements of the LHHC Group based on our professional judgment. All relevant matters were audited during the audit of the consolidated financial statements and the formulation of the audit opinions. We will not express our opinions on those matters separately. The key audit matters that we determine shall be listed on the audit report include:

I. Recognition of revenue

Regarding the accounting policies for the recognition of revenue, please see note 4(16) to the Consolidated Financial Statements; for the important accounting estimate and the uncertainty assumed, please see note 6(23) to the Consolidated Financial Statements.

Description of the key audit matters:

LHHC Group- The main product of the noodle business is flour made from wheat. The product is sold by distributors and chained stores. In addition, the food company will purchase the product to make food and sells it to the consumer. Since the main customers of the Group are distributors, chained stores and food companies, whether LHHC Group gives the sales discount correctly is important to the recognition of revenue of the company. As a result, it is a matter we need to highly focus on when auditing the financial statements. Corresponding audit process:

The audit process we perform for the above key audit matters includes: We lean the reason of the sales discount and evaluate the accounting policies for recognition; We evaluate whether the management performs the recognition of the sales discount pursuant to the existing accounting policies of the Company; We perform sampling inspection to verify relative forms along with vouchers and check the if the calculation is correct.

LHHC Group- It is a business group of integrated system service with the main business including information engineering projects and intelligent projects. The completion percentage is estimated pursuant to the accounting standards and the income of the engineering project is calculated based on that percentage and the total contract price. We have to refer to the internal and external vouchers and certain estimated information to calculate the completion percentage; as a result, the calculation is more complex. The income amount is a major item and, therefore, a matter of high focus during the auditing of the financial statements.

Corresponding audit process:

Our main audit process for the above key audit matters include: We learn and examine whether the design and implementation of the internal control mechanism is effective. The mechanism is related to the correctness of the estimated completion percentage and the project income recognition. In addition, we evaluate whether the use of the accounting policies in the calculation of the completion percentage are consistent. We also perform substantive tests on the project contract details that are not complete at the end of the period. This way, we can ensure the estimated completion percentage and the project income recognition are correct.

II. Inventory Valuation

Regarding the accounting policies for the inventory valuation, please see note 4(8) to the Consolidated Financial Statements; for the description of the inventory valuation, please see note 6(8) to the Consolidated Financial Statements.

Description of the key audit matters:

LHHC Group- The main product of the noodle business is flour made from wheat. The inventories are measures at the lower of cost and net realizable value. The material is mainly wheat purchased from foreign suppliers to produce flour and other products. The product is sold by distributors and chained stores. In addition, the food company will purchase the product to

make food and sells it to the consumer. The product price can be easily impacted by the international exchange rate and the material price fluctuation. Furthermore, the company is faced with the competition of similar products in the same trade. Also, the consumers become more concerned about food safety in recent years. All above factors result in the risk for the price of the company’s product to drop or expire. Therefore, the cost of inventories might exceed the net realizable value, and the allowance for inventory devaluation and obsolescence loss shall be set aside. Subjective major judgment of the management is pertained in the amount set aside; therefore, the matter is a high focus during the financial statements audit. Corresponding audit process:

The audit process we perform for the above key audit matters includes: We lean the accounting policies for setting aside the inventory decrease; evaluate whether the management sets aside the allowance for inventory devaluation and obsolescence loss pursuant to the existing accounting policies of the company; and perform sampling inspection to verify relative forms along with vouchers and check if the calculation is correct. Moreover, we evaluate whether the allowance for inventory devaluation and obsolescence loss set aside is appropriate. We also evaluate whether the management that sets aside the allowance for inventory devaluation and obsolescence loss has disclosed it as appropriate.

Other matters

We hereby express an unqualified opinion in favor of Lien Hwa Industrial Holdings Corporation on the financial statements of the parent company only so prepared for 2018 and 2019.

The responsibility of the management and the governing body for the consolidated financial statements

The management is responsible for preparing the appropriate consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Firms, international financial reporting standards approved by the Financial Supervisory Commission, the International Accounting Standards and interpretations thereof. Additionally, it is responsible for maintaining the internal control mechanism that is related to and necessary for the preparation of the consolidated financial statements. As a result, it can ensure material misstatement due to fraud or error is not pertained in the consolidated financial statements.

Other than the situation that the management intends to liquidate LHHC Group or stop the business, or no other approaches can be used except for these two measures, during the preparation of the consolidated financial statements, the responsibility of the management also includes evaluating the going concern capacity of the LHHC Group, disclosure of relative matters, and adoption of the going concern accounting basis.

The governing body of the LHHC Group (including the Audit Committee) has the responsibility to supervise the financial reporting procedures.

Our responsibility for the audit of the consolidated financial statements

The purpose for us to audit the consolidated financial statements is to obtain reasonable assurance

that there is no material misstatement due to fraud or error in the consolidated financial statements, and we issue the audit report afterwards. Reasonable assurance means high assurance. Only that the audit work implemented in accordance with the generally accepted auditing standards cannot give the promise that every material misstatement in the consolidated financial statements are found. Misstatement might result from fraud or error. If we can reasonably expect the individual amounts or the total amount in the misstatement would influence the financial decision made by the user of the consolidated financial statements, the misstatement is considered material.

When performing the audit according to the generally accepted auditing standards, we exercise professional judgment and remain skeptical professionally. We also perform the following work:

We identify the material misstatement resulting from fraud or error in the consolidated financial statement and assess its risk. We design and implement appropriate corresponding measures for the assessed risk. We acquire sufficient and appropriate audit evidence to serve as the basis for the audit opinion. Due to the fact that fraud might include collusion, forgery, intended omission, misstatement and violation of internal control, the risk of the misstatement resulting from fraud is higher than that resulting from error.
We acquire necessary understanding of the internal control mechanism that is related to the audit to design appropriate audit process for the situation at the time. The purpose of the knowledge is not expressing opinions to the effectiveness of the internal control mechanism of the LHHC Group.
We evaluate whether the accounting policies adopted by the management are suitable and whether the accounting estimation as well as relative disclosures are appropriate.
Based on the acquired audit evidence, we decide whether the going concern accounting basis adopted by the management is suitable, whether events that might affect the going concern capacity of Lien Hwa exist, and whether there is major uncertainty. A conclusion will be made afterwards. We believe under the circumstances that there is major uncertainty, a reminder shall be included in the audit report to inform the consolidated financial statements user to pay attention to relative disclosures in the statements. We shall modify the audit opinion when the disclosure is considered improper. Our conclusion is based on the audit evidence acquired as of the date of the audit report. Future events or circumstances might still result in the fact that LHHC Group no longer has the going concern capacity.
We evaluate the overall statements, structures and contents of the consolidated financial statements (including relative notes) and see whether the statements appropriately state relevant transactions and events.
We examine the financial information of individual companies within the Group to acquire sufficient and appropriate audit evidence for expressing opinions in the consolidated financial statements. We are responsible to guide, supervise and implement the audit for the Company. In addition, we are responsible for the formulation of opinions for the company.

We communicate with the governing body on the scope and time of the audit as well as the

significant findings (including significant deficiencies of the internal control mechanism identified during the audit process).

We have issued a declaration of independence to the governing body, which assured that all relevant personnel within the CPA firm had complied with ethical rules of the CPA profession. Besides, we mention the relation or situation that may compromise the CPA’s independence (including relevant preventive measures) to the governing body.

After communicating the above matters with the governing body, we decide the key audit matters in the 2019 consolidated financial report of LHHC Group. We clearly state all above matters in the audit report, unless the law prohibits us to publicly disclose certain matters, or under rare circumstances we decide not to include certain matters in the audit report since we can reasonably expect the resulting negative impact is greater than the public interest they bring.

The engagement partners on the audit resulting in this independent auditors’report are Linda Chiang and Liu-Fong Yang

KPMG

Taipei, Taiwan (Republic of China) March 30, 2020

Notes to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation) and Subsidiaries

Consolidated Balance Sheet

31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

12.31.2019 Amount % $ 1,758,023 4 285,264 1 440,588 1 1,781,951 4 174,615 - 1,241,682 3 29,153 - 48,460 - 1,155,720 2 313,896 1	12.31.2019 Amount % $ 5,050,000 11 1,039,800 2 101,787 - 22,648 - 810,459 2 445,511 1 107,671 - 34,030 - 20,426 -	12.31.2018 Amount % 3,750,000 12 499,900 2 - - - - 94,977 - 209,984 1 58 - - - 30,897 -
	7,632,332 16	4,585,816 15
	900,000 2 148,013 - 58,969 - 13,293 - 63,956 - 98,189 -	900,000 3 101,874 - - - 45,181 - 57,534 - 78,297 -
7,229,352 16
19,376,709 42 13,020,127 28 4,440,149 10 158,649 - 1,894,733 4 98,650 - 124,301 - 152,995 - 20,830 - - - 28,448 -
	1,282,420 2	1,182,886 3
	8,914,752 18	5,768,702 18
	11,047,399 24 765,121 2 12,875,954 28 2,494,677 5 (184,763) -	10,521,332 35 766,253 3 10,968,877 36 2,296,024 8 (2,393) -
	26,998,388 59 10,631,803 23	24,550,093 82 70,509 -
39,315,591 84	37,630,191 82	24,620,602 82
	$ 46,544,943 100	30,389,304 100

$ 46,544,943 100

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

Lien Hwa Industrial Holdings Corporation

(original name: Lien Hwa Industrial Corporation) and Subsidiaries

Consolidated comprehensive income statement

1 January to 31 December in 2018 and 2019

(Expressed in thousands of New Taiwan Dollars , except for earnings per common share)

2019	% 100 77	2018	% 100 83
Amount $ 8,271,293 6,401,664		Amount 5,097,818 4,265,761
1,869,629	23	832,057	17
516,260 361,734 41,172 (4,907)	6 4 - -	299,474 192,844 38,513 1,053	6 4 1 -
914,259	10	531,884	11
955,370	13	300,173	6
262,315 567,198 (60,063) 1,556,253	3 7 (1) 18	230,242 (963) (32,289) 1,973,581	5 - (1) 39
2,325,703	27	2,170,571	43
3,281,073 134,977	40 2	2,470,744 (2,696)	49 -
3,146,096	38	2,473,440	49
11,067 987,607 895,461 -	- 12 11 -	(2,581) (612,274) (1,045,631) -	- (12) (21) -
1,894,135	23	(1,660,486)	(33)
67,971 (291,542) -	1 (4) -	(28,284) (68,797) -	(1) (1) -
(223,571)	(3)	(97,081)	(2)
1,670,564	20	(1,757,567)	(35)
$ 4,816,660	58	715,873	14
$ 2,766,816 379,280	33 5	2,476,292 (2,852)	49 -
$ 3,146,096	38	2,473,440	49
$ 4,307,156 509,504	52 6	720,349 (4,476)	14 -
$ 4,816,660	58	715,873	14
$	2.51		2.24
$	2.51		2.24

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

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation) and Subsidiaries

Consolidated Statement of Changes in Shareholders’ Equity

1 January to 31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

			Equity	attributable to the ow	ners of the parent company	ners of the parent company				Non-controlling interests	Total equities 25,285,915 309,709
Share capital	Additional paid-in capital		Retained earnings			Other equities		Treasury stocks	Total equity attributed to parent company shareholders
					Exchange difference in the financial statements of foreign operations	Unrealized loss and profit of financial assets at fair value calculated through other comprehensive income	Unrealized loss and profit of available-for-sale financialproducts
Common stock share capital		Legal reserve	Special reserve	Undistributed earnings
$ 9,564,847 -	747,487 -	2,514,375 -	141,843 -	7,919,360 594,990	(99,739) (129)	- 4,148,532	4,433,684 (4,433,684)	(2,393) -	25,219,464 309,709	66,451 -
9,564,847	747,487	2,514,375	141,843	8,514,350	(99,868)	4,148,532	-	(2,393)	25,529,173	66,451	25,595,624
- -	- -	- -	- -	2,476,292 (3,303)	- (95,457)	- (1,657,183)	- -	- -	2,476,292 (1,755,943)	(2,852) (1,624)	2,473,440 (1,757,567)
-	-	-	-	2,472,989	(95,457)	(1,657,183)	-	-	720,349	(4,476)	715,873
- - 956,485 - -	- - - 18,766 -	297,402 - - - -	- - - - -	(297,402) (1,721,672) (956,485) 3,477 -	- - - - -	- - - - -	- - - - -	- - - - -	- (1,721,672) - 22,243 -	- - - - 8,534	- (1,721,672) - 22,243 8,534
10,521,332 - -	766,253 - -	2,811,777 - -	141,843 - -	8,015,257 2,766,816 14,649	(195,325) - (206,410)	2,491,349 - 1,732,101	- - -	(2,393) - -	24,550,093 2,766,816 1,540,340	70,509 379,280 130,224	24,620,602 3,146,096 1,670,564
-	-	-	-	2,781,465	(206,410)	1,732,101	-	-	4,307,156	509,504	4,816,660
- - 526,067 - - - - - -	- - - (10,195) - 9,063 - - -	247,629 - - - - - - - -	- - - - - - - - -	(247,629) (1,683,413) (526,067) (8,748) - - 1,278,836 65,004 -	- - - - - - 16,802 - -	- - - - - - (1,278,836) (65,004) -	- - - - - - - - -	- - - - (182,370) - - - -	- (1,683,413) - (18,943) (182,370) 9,063 16,802 - -	- - - - - - - - 10,051,790	- (1,683,413) - (18,943) (182,370) 9,063 16,802 - 10,051,790
$ 11,047,399	765,121	3,059,406	141,843	9,674,705	(384,933)	2,879,610	-	(184,763)	26,998,388	10,631,803	37,630,191

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

Lien Hwa Industrial Holdings Corporation

(original name: Lien Hwa Industrial Corporation) and Subsidiaries

Consolidated Statement of Cash Flow

1 January to 31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flow from operating activities: Net income before tax Adjustments: Income/expenses Depreciation expense Amortization expense Estimate credit (reversal gain) loss Net earnings of financial assets and liabilities measured at fair value through profit or loss Interest expense Interest income Dividend income Shareholding in the profit of the affiliated companies and joint ventures under the equity method Loss from the disposal and scrap of property, plants and equipment Disposal of investment gain Impairment of non-financial assets Others Income/expenses Changes in operating activities related assets and liabilities: Net changes in assets relating to operating activities: Contract assets Receivable notes Accounts receivable Other receivable Inventory Other current assets Net changes in assets relating to operating activities Net changes in liabilities relating to operating activities: Contract liabilities Notes payable Accounts payable Other payable Reserve for liabilities Net defined benefit liability Other current liabilities Net changes in liabilities relating to operating activities Changes in operating activities related assets and liabilities Adjustments Cash flow from operating activities Interest received Dividend received Interest paid Returned income tax (paid) Net cash inflow from operating activities	2019 $ 3,281,073 308,454 25,209 (4,907) (2,214) 60,063 (16,366) (871,987) (1,565,904) 570 (582,634) 42,964 (128)	2018 2,470,744 207,578 13,998 1,052 - 32,289 (10,715) (218,475) (1,973,581) 1,203 - - -
	(2,606,880)	(1,946,651)
	32,849 83,995 (132,484) 77,782 (75,653) (48,679)	- (37,472) 27,972 49,368 59,641 (10,582)
	(62,190)	88,927
	(110,248) 17,730 114,746 109,727 965 (36,962) (24,277)	- - (64,502) (4,905) 1,727 (4,997) 14,406
	71,681	(58,271)
	9,491	30,656
	(2,597,389)	(1,915,995)
	683,684 16,336 2,166,913 (57,607) 12,065	554,749 10,715 1,783,413 (31,391) (97,780)
	2,821,391	2,219,706

(Continued)

Lien Hwa Industrial Holdings Corporation

(original name: Lien Hwa Industrial Corporation) and Subsidiaries

Consolidated Statement of Cash Flow

1 January to 31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flow from investing activities: Acquisition of financial assets measured at fair values through other comprehensive profit or loss Refunds from decapitalization of financial assets measured at fair values through other comprehensive profit or loss Acquisition of financial assets measured at fair values through profit or loss Disposal of financial assets measured at fair values through profit or loss Acquisition of investments under the equity method Disposal of investments under the equity method Acquisition of property, plant, and equipment Disposal of property, plant, and equipment Increase in guaranteed deposits paid Acquisition of intangible assets Acquisition of investment property Increase of other non-current assets Cash inflow from mergers Net cash outflow from investing activities Cash flow from financing activities: Increase in short-term loans Decrease in short-term notes payable Borrowing of long-term loan Retirement of long-term loans Increase of guaranteed deposits and margins received Lease principal payment Cash dividend distribution Uncontrolled equity Net cash outflow from financing activities Effect of foreign exchange rate change Current cash and cash equivalents increase (decrease) Opening balance of cash and cash equivalents Closing balance of cash and cash equivalents	2019 $ (789,933) 64,630 (685,133) 552,040 - 477,796 (141,037) 353 (30,005) (3,948) (1,562) (13,727) 218,865	2018 (1,119,240) 7,939 - - (658,079) - (234,976) 653 (388) - (1,757) (22,237) -
	(351,661)	(2,028,085)
	650,000 (142,772) 900,000 (900,000) 2,935 (40,335) (1,674,350) (183,471)	2,278,464 (800,000) 900,000 (900,000) 3,100 - (1,721,672) -
	(1,387,993)	(240,108)
	(30,812) 1,050,925 707,098	5,592 (42,895) 749,993
	$ 1,758,023	707,098

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

Auditor's Report

Board of Directors of Lien Hwa Industrial Holdings Corporation

Audit opinion

We have audited the balance sheet of Lien Hwa Industrial Holdings Corporation (Original name: Lien Hwa Industrial Corporation) as at 31 December 2018 and 2019, and the comprehensive income statement, the statement of changes in equity and the cash flow statement, and the notes to parent company only financial statements (including the summary of significant accounting policies) for periods 1 January to 31 December 2018 and 2019.

In our opinion, all material disclosures of the parent company only financial statements mentioned above were prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Firms, and presented a fair view of the financial position of Lien Hwa Industrial Holdings Corporation as at December 31, 2018 and 2019, and the business performance and cash flow for the periods January 1 to December 31, 2018 and 2019.

Basis for the audit opinion

We have conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the generally accepted auditing standards. Our responsibility to the standards will be explained in the paragraph of auditor’s responsibilities when auditing the parent company only financial statements. All relevant independent personnel subject to the CPA professional ethics within the firm remain independent from the Lien Hwa Industrial Holdings Corporation and implement responsibilities regulated in the ethics. We believe we have obtained sufficient appropriate audit evidence to serve as the basis for the audit opinion.

Key audit matters

Key audit matters are the most important matters that we audit in the 2019 parent company only financial statements of Lien Hwa Industrial Holdings Corporation based on our professional judgment. All relevant matters were audited during the audit of the parent company only financial statements and the formulation of the audit opinions. We will not express our opinions on those matters separately. The key audit matters that we determine shall be listed on the audit report include:

I. Recognition of revenue

Regarding the accounting policies for the recognition of the sales discount, please see note 4(15) to the Parent Company Only Financial Statements; for the accounting estimates for the recognition of the sales discount and the uncertainty assumed, please see note 5(1) to the Parent Company Only Financial Statements; for the contents of the revenue, please see note 6(20) to the Parent Company Only Financial Statements.

Description of the key audit matters:

Before the demerger and transformation of Lien Hwa Industrial Holdings Corporation, the main product is flour made from wheat. The product is sold by distributors and chained stores. In addition, the food company will purchase the product to make food and sells it to the consumer. Since the main customers of the Company are distributors, chained stores and food companies, whether Lien Hwa Industrial Holdings Corporation gives the sales discount correctly is important to the recognition of revenue of the company. As a result, it is a matter we need to highly focus on when auditing the financial statements.

Corresponding audit process:

II. Assessment of investment under equity method

Regarding the accounting policies for the investment assessment under equity method, please see note 4(8) and (9) to the Parent Company Only Financial Statements; for the shareholding in the profit of the affiliated companies and joint ventures under the equity method, please see see note 6(6) to the Parent Company Only Financial Statements. Description of the key audit matters:

After the demerger and transformation of Lien Hwa Industrial Holdings Corporation, the main business became general investment. The recognized investment amount under equity method totaled NTD27,507,438 thousand, occupying 82% of Lien Hwa Industrial Holdings Corporation’s total assets. Therefore, the investment under equity method is listed as a matter we need to highly focus on when auditing.

Corresponding audit process:

The audit process we perform for the above key audit matters includes: provide audit instructions to and communicate with the audit staff of other component entities; acquire the financial statements of the component entities, perform a check calculation for the correctness of the recognized investment amount under equity method and attributable period and assess whether the management has properly discoursed the investment under equity method.

The responsibility of the management and the governing body for the parent company only financial statements

The management is responsible for preparing the appropriate parent company only financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Firms. Additionally, it is responsible for maintaining the internal control mechanism that is related to and necessary for the preparation of the parent company only financial statements. As a result, it can ensure material misstatement due to fraud or error is not pertained in the parent company only

financial statements.

Other than the situation that the management intends to liquidate Lien Hwa Industrial Holdings Corporation or stop the business, or no other approaches can be used except for these two measures, during the preparation of the parent company only financial statements, the responsibility of the management also includes evaluating the going concern capacity of the Lien Hwa Industrial Holdings Corporation, disclosure of relative matters, and adoption of the going concern accounting basis.

The governing body of the Lien Hwa Industrial Holdings Corporation (including the Audit Committee) has the responsibility to supervise the financial reporting procedures.

Our responsibility for the audit of the parent company only financial statements

The purpose for us to audit the parent company only financial statements is to obtain reasonable assurance that there is no material misstatement due to fraud or error in the parent company only financial statements, and we issue the audit report afterwards. Reasonable assurance means high assurance. Only that the audit work implemented in accordance with the generally accepted auditing standards cannot give the promise that every material misstatement in the parent company only financial statements are found. Misstatement might result from fraud or error. If we can reasonably expect the individual amounts or the total amount in the misstatement would influence the financial decision made by the user of the parent company only financial statements, the misstatement is considered material.

When performing the audit according to the generally accepted auditing standards, we exercise professional judgment and remain skeptical professionally. We also perform the following work:

We identify the material misstatement resulting from fraud or error in the parent company only financial statement and assess its risk. We design and implement appropriate corresponding measures for the assessed risk. We acquire sufficient and appropriate audit evidence to serve as the basis for the audit opinion. Due to the fact that fraud might include collusion, forgery, intended omission, misstatement and violation of internal control, the risk of the misstatement resulting from fraud is higher than that resulting from error.
We acquire necessary understanding of the internal control mechanism that is related to the audit to design appropriate audit process for the situation at the time. The purpose of the knowledge is not expressing opinions to the effectiveness of the internal control mechanism of the Lien Hwa Industrial Holdings Corporation.
We evaluate whether the accounting policies adopted by the management are suitable and whether the accounting estimation as well as relative disclosures are appropriate.
Based on the acquired audit evidence, we decide whether the going concern accounting basis adopted by the management is suitable, whether events that might affect the going concern capacity of Lien Hwa Industrial Holdings Corporation exist, and whether there is major uncertainty. A conclusion will be made afterwards. We believe under the circumstances that there is major uncertainty, a reminder shall be included in the audit report to inform the parent company only financial statements user to pay attention to relative disclosures in the statements. We shall modify the audit opinion when the disclosure is considered improper. Our conclusion is based on the audit evidence acquired as of the date of the audit report. Future events or circumstances might still result in the fact that Lien Hwa Industrial Holdings Corporation no longer has the going concern capacity.
We evaluate the overall statements, structures and contents of the parent company only financial statements (including relative notes) and see whether the statements appropriately state relevant transactions and events.
We examine the financial information of invested company under the equity method to acquire

sufficient and appropriate audit evidence for expressing opinions in the parent company only financial statements. We are responsible to guide, supervise and implement the audit. In addition, we are responsible for the formulation of opinions for Lien Hwa Industrial Holdings Corporation. We communicate with the governing body on the scope and time of the audit as well as the significant findings (including significant deficiencies of the internal control mechanism identified during the audit process).

We have issued a declaration of independence to the governing body, which assured that all relevant personnel within the CPA firm had complied with ethical rules of the CPA profession. Besides, we mention the relation or situation that may compromise the CPA's independence (including relevant preventive measures) to the governing body.

After communicating the above matters with the governing body, we decide the key audit matters in the 2019 parent company only financial report of Lien Hwa Industrial Holdings Corporation. We clearly state all above matters in the audit report, unless the law prohibits us to publicly disclose certain matters, or under rare circumstances we decide not to include certain matters in the audit report since we can reasonably expect the resulting negative impact is greater than the public interest they bring.

The engagement partners on the audit resulting in this independent auditors’report are Linda Chiang and Liu-Fong Yang

KPMG

Taipei, Taiwan (Republic of China) March 30, 2020

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China.If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Balance Sheet

31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

12.31.2019 Amount % $ 4,250,000 13 599,942 2 8,558 - 561,574 2 61,398 - 56 -	12.31.2019 Amount % $ 4,250,000 13 599,942 2 8,558 - 561,574 2 61,398 - 56 -	12.31.2018 Amount % 3,750,000 12 499,900 2 37,897 - 188,415 1 - - 18,885 -
Amount $ 4,250,000 599,942 8,558 561,574 61,398 56
5,481,528	17	4,495,097 15
900,000 764 - - - 71,934	3 - - - - -	900,000 4 6,363 - 100,770 - 45,181 - 49,363 - 71,934 -
972,698	3	1,173,611 4
6,454,226	20	5,668,708 19
11,047,399 765,121 12,875,954 2,494,677 (184,763)	33 3 38 7 (1)	10,521,332 35 766,253 3 10,968,877 36 2,296,024 7 (2,393) -
26,998,388	80	24,550,093 81
$ 33,452,614	100	30,218,801 100

Total assets

$ 33,452,614 100 30,218,801 100

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

Lien Hwa Industrial Holdings Corporation

(original name: Lien Hwa Industrial Corporation)

Comprehensive Income Statement

1 January to 31 December in 2018 and 2019

(Expressed in thousands of New Taiwan Dollars , except for earnings per common share)

2019	% 100 74	2018	% 100 83
Amount $ 3,012,535 2,229,177		Amount 3,995,942 3,300,660
783,358	26	695,282	17
74,312 117,147 28,851 (198)	2 4 1 -	99,839 130,722 38,513 (1)	2 3 1 -
220,112	7	269,073	6
563,246	19	426,209	11
252,979 533,534 (50,635) 1,535,017	8 18 (2) 51	204,617 25,889 (32,012) 1,848,835	5 1 (1) 46
2,270,895	75	2,047,329	51
2,834,141 67,325	94 2	2,473,538 (2,754)	62 -
2,766,816	92	2,476,292	62
11,575 758,031 977,144 -	- 25 32 -	(2,581) (593,961) (1,063,944) -	- (15) (27) -
1,746,750	57	(1,660,486)	(42)
85,132 (291,542) -	3 (10) -	(26,660) (68,797) -	(1) (2) -
(206,410)	(7)	(95,457)	(3)
1,540,340	50	(1,755,943)	(45)
$ 4,307,156	142	720,349	17
$	2.51		2.24
$	2.51		2.24

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

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Statement of Changes in Equity

1 January to 31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Share capital	Additional paid-in capital		Retained earnings	Exchange difference in the financial statements Undistributed earnings of foreign operations 7,919,360 (99,739) 594,990 (129)		Other equities		Treasury stocks	Total equities
						Unrealized profit (loss) of the financial assets measured at fair values through other comprehensive profit or loss	Unrealized loss and profit of available-for-sale financial products
Common stock share capital		Legal reserve	Special reserve	Undistributed earnings
$ 9,564,847 -	747,487 -	2,514,375 -	141,843 -	7,919,360 594,990	(99,739) (129)	- 4,148,532	4,433,684 (4,433,684)	(2,393) -	25,219,464 309,709
9,564,847	747,487	2,514,375	141,843	8,514,350	(99,868)	4,148,532	-	(2,393)	25,529,173
- -	- -	- -	- -	2,476,292 (3,303)	- (95,457)	- (1,657,183)	- -	- -	2,476,292 (1,755,943)
-	-	-	-	2,472,989	(95,457)	(1,657,183)	-	-	720,349
- - 956,485 -	- - - 18,766	297,402 - - -	- - - -	(297,402) (1,721,672) (956,485) 3,477	- - - -	- - - -	- - - -	- - - -	- (1,721,672) - 22,243
10,521,332 - -	766,253 - -	2,811,777 - -	141,843 - -	8,015,257 2,766,816 14,649	(195,325) - (206,410)	2,491,349 - 1,732,101	- - -	(2,393) - -	24,550,093 2,766,816 1,540,340
-	-	-	-	2,781,465	(206,410)	1,732,101	-	-	4,307,156
	- - - (10,195) - 9,063 - -	247,629 - - - - - - -	- - - - - - - -	(247,629) (1,683,413) (526,067) (8,748) - - 1,278,836 65,004	- - - - - - 16,802 -	- - - - - - (1,278,836) (65,004)	- - - - - - - -	- - - - (182,370) - - -	- (1,683,413) - (18,943) (182,370) 9,063 16,802 -
$ 11,047,399	765,121	3,059,406	141,843	9,674,705	(384,933)	2,879,610	-	(184,763)	26,998,388

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

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Statement of Cash Flow

1 January to 31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flow from operating activities: Net income before tax Adjustments: Income/expenses Depreciation expense Amortization expense Reversal gain from estimate credit loss Interest expense Interest income Dividend income Shareholding in the profit of the subsidiaries, affiliated companies and joint ventures under the equity method Profit from the disposal and scrap of property, plants and equipment Disposal of investment gain Income/expenses Changes in operating activities related assets and liabilities: Net changes in assets relating to operating activities: Receivable notes Accounts receivable Other receivable Inventory Other current assets Net changes in assets relating to operating activities Net changes in liabilities relating to operating activities: Accounts payable Other payable Reserve for liabilities Other current liabilities Net defined benefit liability Net changes in liabilities relating to operating activities Changes in operating activities related assets and liabilities Adjustments Cash flow from operating activities Interest received Dividend received Interest paid Returned income tax (paid) Net cash inflow from operating activities	2019 $ 2,834,141 122,099 3,810 (198) 50,635 (10,146) (241,685) (1,831,968) - (505,859)	2018 2,473,538 164,833 6,617 (1) 32,012 (12,984) (190,584) (1,848,835) (193) -
	(2,413,312)	(1,849,135)
	237,998 359,658 489 130,878 (7,924)	(37,472) 4,917 56,111 107,547 (3,699)
	721,099	127,404
	(26,716) (6,069) (5,599) (15,442) (36,884)	5,315 2,454 1,727 6,903 (4,997)
	(90,710)	11,402
	630,389	138,806
	(1,782,923)	(1,710,329)
	1,051,218 10,146 1,281,077 (50,623) 14,288	763,209 12,984 1,778,180 (31,113) (97,984)
	2,306,106	2,425,276

(Continued)

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Statement of Cash Flow

1 January to 31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flow from investing activities: Acquisition of financial assets measured at fair values through other comprehensive profit or loss Refunds from decapitalization of financial assets measured at fair values through other comprehensive profit or loss Acquisition of investments under the equity method Acquisition of property, plant, and equipment Disposal of property, plant, and equipment Decrease in guarantee deposits paid Decrease (increase) in other receivable Acquisition of investment property Increase of other non-current assets Increase in prepaid equipment purchase Net cash outflow from investing activities Cash flow from financing activities: Increase in short-term loans Increase (decrease) in short-term notes payable Borrowing of long-term loan Retirement of long-term loans Increase (decrease) in deposits received Increase in other payable Lease principal payment Cash dividend distribution Demerger decrease Net cash outflow from financing activities Current cash and cash equivalents increase (decrease) Opening balance of cash and cash equivalents Closing balance of cash and cash equivalents	2019 (323,692) 10,157 (820,021) (46,894) - 600 381,887 (82) (1,889) (13,078)	2018 (513,301) 7,939 (1,251,860) (166,593) 574 128 (203,755) (1,757) (12,062) -
	(813,012)	(2,140,687)
	500,000 100,000 900,000 (900,000) (628) 500,000 (2,210) (1,683,413) (1,211,257)	2,280,000 (800,000) 900,000 (900,000) 2,564 - - (1,721,672) -
	(1,797,508)	(239,108)
	(304,414) 422,980	45,481 377,499
	$ 118,566	422,980

The accompanying notes are an integral part of the parent company only financial statements. (Concluded)

Lien Hwa Industrial Holdings Corporation Attachment 4 Comparison Table of Amendment to the Articles of Incorporation


After amendment	Before amendment	Description

Article 1 The Company was organized in compliance with the Company Act of Republic of China.The name of the Company is Lien Hwa Industrial Holdings Corporation.	Article 1 The Company was organized in compliance with theBusiness Mergers and Acquisitions Act, regulations regarding the company limited by shares in the Company Act and relative legislations. The name of the Company is Lien Hwa Industrial Holdings Corporation.	The amendment was made following the regulations in the Company Act of Republic of China.
Article 6 The authorized capital of the Company is New Taiwan Dollars (“NTD”) 15 billion divided into 1.5 billion ordinary shares of a nominal or par value of NTD 10 each. 60 million shares are reserved for the transfer of employee stock warrants and the board of directors is authorized to issue the shares in installments. Other remaining shares will be issued in installments by the board of directors based on the business operation need andpart of the shares can be designated as special shares.	Article 6 The authorized capital of the Company is New Taiwan Dollars (“NTD”) 15 billion divided into 1.5 billion ordinary shares of a nominal or par value of NTD 10 each. 60 million shares are reserved for the transfer of employee stock warrants and the board of directors is authorized to issue the shares in installments. Other remaining shares will be issued in installments by the board of directors based on the business operation need.	For the practical need and long-term development plan of the Company, the Articles of Incorporation was amended for the issuance of special shares.
Article 6-1 The rights and obligations covered by special share and other important terms of issue are as follow: I. The maximum dividend of the special share shall be no more than 8% of the annual rate. The calculation is based on the issue price per share. The dividend will be distributed in cash once a year. After the financial statements are recognized in the		1. The Article was added. 2. The rights and obligations covered by special share and other important terms of issue were established in line with the amendments to the issuance of special shares of Article 6.


	After amendment	Before amendment	Description

II. III. IV.	shareholders meeting, the board of directors will establish a base date to distribute the dividend of the previous year. The issuance and collection of the special share dividend is calculated based on actual issuance days of the year. The distribution of the special share dividend at the Company's discretion. The annual account of the Company shows no profit or the profit is not enough for special share dividend distribution, or the Company has other matters to take into account, the special share dividend may not be distributed by the resolution of the shareholders meeting, and it is considered a breach of contract. If the issued special share is non-cumulative, the dividend unallocated or deficit thereof shall not be accumulated for a deferred payment in any following year in which there is profit. Except for collecting the dividend described in paragraph 1 of this Article, the special share shareholder shall not participate in the allocation of earnings of common shares and the allocation of the additional paid-in capital in cash or that is capitalized. In terms of the Company's residual property allocation, the


	After amendment	Before amendment	Description

V. VI. VII.	allocating order of a special share shareholder is prior to common share shareholder. The compensation order of a special share shareholder is the same as other shareholders of all types of special shares issued by the Company, which general creditors shall prevail, provided that the allocation shall be no more than the issued amount of the total outstanding special share price. Special share shareholders have no voting and election rights at the shareholders meetings. But for the special share shareholders meeting and shareholders meeting regarding the rights and obligations covered by special share, they hold the voting right. Special shares shall not be converted to common shares. Special shares have not expiry date. The shareholder of special shares shall not ask the Company to redeem the special shares he/she owns. The Company may redeem all or some of the special shares with the actual issuance price on any day after 5 years of the issuance. The rights and obligations of the special share that is not redeemed are in compliance with the above rights and obligations. If the Company decides to distribute dividends,


	After amendment	Before amendment	Description

the dividend that shall be distributed as of the collection date shall be calculated based on actual issuance days of the year. VIII. The additional paid-in capital of special shares issued at premium shall not be capitalized except for covering the loss during the issuance of special shares. The board of directors is authorized to decide the name, issuance date and terms and conditions of special shares based on the capital market status and whether the investor is willing to acquire the special share in compliance with the Articles of Incorporation and relative laws and regulations.
Article 10: The Company has two types of shareholders meetings, regular meeting of shareholders and special meeting of shareholders. The regular shareholders meeting shall convened by the board of directors within six months after close of each fiscal year. The special shareholders meeting shall be held when necessary.Unless otherwise provided for in the Company Act, the shareholders meeting shall be convened by the board of directors. The special shareholders meeting shall be held when necessary according to relative laws and regulations.		Article 10: The Company has two types of shareholders meetings, regular meeting of shareholders and special meeting of shareholders. The regular shareholders meeting shall convened by the board of directors within six months after close of each fiscal year. The special shareholders meeting shall be held when necessary.	Regulations regarding the issuance of special shared were added.
Article 14: Except in the circumstances otherwise provided for in the laws or Articles of		Article 14: Except in the circumstances otherwise provided for in the laws or Articles of	Regulations regarding the issuance of special shared were added.


After amendment	Before amendment	Description

Incorporation, a common share shareholder shall have one voting power in respect of each share in his/her/its possession. Butthe special shares without voting right issued by the Companyor the shares held by the Company itselfin accordance with the laws have no voting right.	Incorporation, a common share shareholder shall have one voting power in respect of each share in his/her/its possession. But the sharesheld by the Company itself in accordance with the laws have no voting right.
Article 28: If the Company has surplus earnings after settlement, it shall set aside more than 0.1% of the earnings in the current year as the remuneration of the employee. And it shall set aside no more than 1% of the earnings in the current year as the remuneration of the director. However, the company’s accumulated losses shall have been covered. The earnings in the current year referred above means the profit before tax in the current year deducting the remunerations for employees and directors. The Company may, by a resolution adopted by a majority vote at a meeting of board of directors attended by two-thirds of the total number of directors, have the profit distributable as remunerations for employees and directors. The directors’ remuneration shall be distributed in cash. Employees that meet the qualification requirements, including the employees of parents or subsidiaries of the company meeting certain specific requirements, are entitled to receive shares or cash. The chairman is authorized to establish the certain specific requirements.	Article 28: If the Company has surplus earnings after settlement, it shall set aside more than 0.1% of the earnings in the current year as the remuneration of the employee. And it shall set aside no more than 1% of the earnings in the current year as the remuneration of the director. However, the company’s accumulated losses shall have been covered. The earnings in the current year referred above means the profit before tax in the current year deducting the remunerations for employees and directors. The Company may, by a resolution adopted by a majority vote at a meeting of board of directors attended by two-thirds of the total number of directors, have the profit distributable as remunerations for employees and directors. The directors’ remuneration shall be distributed in cash. Employees that meet the qualification requirements, including the employees of parents or subsidiaries of the company meeting certain specific requirements, are entitled to receive shares or cash. The chairman is authorized to establish the certain specific requirements.	Regulations regarding the issuance of special shared were added.

Description

After amendment

Before amendment

After amendment	Before amendment	Description
The Company is now at the stable growth stage and most of the earnings are from the investees recognized under the equity method. For the sustainable operation and long-term development of the Company, if the Company has surplus earnings after settlement, the Company shall, after all accumulated losses have been covered and all taxes and dues have been paid, appropriate 10% of the earnings concluded at year-end as legal reserve and appropriate or reverse the special reserve according to the laws and regulations. If there are still earnings, the Companymay first distribute the dividend distributable of special shares in the current year andthe board of directors may plan to propose the distribution of the remaining earnings with the accumulated earnings undistributed in the form of new shares. The proposal shall be submitted to the shareholders meeting and the distribution shall be performed after the resolution of the meeting. And when distributing in cash, according to Article 240, paragraph 5 of the Company Act, the Company authorize the distributable dividends to be paid in cash after a resolution has been adopted by a majority vote at a meeting of the board of directors attended by two-thirds of the total number of directors; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting. The directors' meeting shall consider the financial structure of the Company,	The Company is now at the stable growth stage and most of the earnings are from the investees recognized under the equity method. For the sustainable operation and long-term development of the Company, if the Company has surplus earnings after settlement, the Company shall, after all accumulated losses have been covered and all taxes and dues have been paid, appropriate 10% of the earnings concluded at year-end as legal reserve and appropriate or reverse the special reserve according to the laws and regulations. If there are still earnings, the board of directors may plan to propose the distribution of the remaining earnings with the accumulated earnings undistributed in the form of new shares. The proposal shall be submitted to the shareholders meeting and the distribution shall be performed after the resolution of the meeting. And when distributing in cash, according to Article 240, paragraph 5 of the Company Act, the Company authorize the distributable dividends to be paid in cash after a resolution has been adopted by a majority vote at a meeting of the board of directors attended by two-thirds of the total number of directors; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting. The directors' meeting shall consider the financial structure of the Company, future funding demand and profit-seeking conditions to plan the


After amendment	Before amendment	Description

future funding demand and profit-seeking conditions to plan the ratio of the earning distribution and shareholder’s cash dividends and the cash dividends shall not be less than 10% of the total dividends.	ratio of the earning distribution and shareholder’s cash dividends and the cash dividends shall not be less than 10% of the total dividends.
Article 31: The Articles of Incorporation was established on June 29, 1955. The first amendment was made on March 10, 1956... The 53rd amendment was made on June 25, 2019 and became effective after the approval of the shareholders meeting. (The Company name and Articles 1, 2 and 4 became effective on the base date of Company demerger.) The 54th amendment was made on June 23, 2020.	Article 31: The Articles of Incorporation was established on June 29, 1955. The first amendment was made on March 10, 1956... The 53rd amendment was made on June 25, 2019. The amendmentand any amendments hereto shall become effective after the approval of the shareholders meeting. (The Company name and Articles 1, 2 and 4 became effective on the base date of Company demerger.)	The amended time and date were added.

Lien Hwa Industrial Holdings Corporation Attachment 5 Comparison Table of Amendment to the Rules of Procedures for Shareholders' Meeting


After amendment	Before amendment	Description

Article 1 To establish a strong governance system and sound supervisory capabilities for this Company's shareholders meetings, and to strengthen management capabilities, these Rules are adopted pursuant to Article 5 of the Corporate Governance		1. The article is an additional article. 2. Pursuant to the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company added the purpose and basis for adoption.
Best-Practice Principles for TWSE/GTSM Listed Companies.

Article 2 The rulesof procedures forLien Hwa Industrial Holdings Corporation's (hereinafter referred to as the “Company”) shareholders meetings, except as otherwise provided by law, regulation,or the articles of incorporation, shall be as provided in these Rules.	Article 1 The procedures for shareholders meetings of Lien Hwa Industrial Co., Ltd. (hereinafter referred to as the “Company”), except as otherwise provided by law or regulation, should be as provided in these Rules.	1. The article number was changed. 2. The Company name and text were amended.
Article 3 (Convening shareholders meetings and shareholders meeting notices) Unless otherwise provided by law or regulation, this Company's shareholders meetings shall be convened by the board of directors. This Company shall prepare electronic		1. The article is an additional article. 2. Pursuant to Article 172-1 of the Company Act and the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company added the article.
versions of the shareholders meeting notice and proxy forms, and the origins of, and explanatory materials relating to all proposals, including proposals for ratification, matters for deliberation, or the election or dismissal of directors or supervisors, and upload them to the Market Observation Post System (MOPS) before 30 days before the date of a regular shareholders meeting or before
15 days before the date of a special shareholders meeting. In addition, the company shall also prepare the parliamentary procedure handbook and supplementary materials for the meeting in electronic version and


After amendment	Before amendment	Description

upload the information to MOPS at least 21 days before a regular session or 15 days before a special session is scheduled, and prepare the hard copies of parliamentary procedure handbook and supplementary materials for the meeting and make these materials available at the offices of the Company and the professional share registration agent commissioned
by the Company, or release the materials on the site of the meeting. The aforementioned notice and announcement shall contain information on the cause of the session, and may be made in electronic
form at the consent of the respondents.
Election or dismissal of directors or supervisors, amendments to the articles of incorporation, reduction of capital, application for the approval of
ceasing its status as a public company, approval of competing with the company by directors, surplus profit distributed in the form of new shares, reserve distributed in the form of new shares, the dissolution, merger, or demerger of the corporation, or any matter under Article 185, paragraph 1
of the Company Act shall be set out in the notice of the reasons for convening
the shareholders meeting. None of the above matters may be raised by an extraordinary motion. The essential contents may be posted on the website designated by the competent authority
in charge of securities affairs or the company, and such website shall be indicated in the above notice. The matter that all directors of a company are re-elected and the effective date are stated in the notice of
the reasons for convening the shareholders meeting. After the reelection of the shareholders meeting,
the effective date may not be changed by raising an extraordinary motion or in any other way in the same meeting. A shareholder holding 1 percent or more of the total number of issued shares may submit to this Company a


After amendment	Before amendment	Description

written proposal for discussion at a regular shareholders meeting. Such proposals, however, are limited to one item only, and no proposal containing more than one item will be included in
the meeting agenda. A shareholder proposal proposed under Paragraph One for urging a company to promote public interests or fulfill its social responsibilities may still be included in
the list of proposals to be discussed at a regular meeting of shareholders by the board of directors. In addition, when the circumstances of any subparagraph of Article 172-1, paragraph 4 of the Company Act apply to a proposal put forward by a shareholder, the board of directors may exclude it from the agenda. Prior to the date on which share transfer registration is suspended before the convention of a regular shareholders’ meeting, the company shall give a public notice announcing acceptance of proposal in writing or by
way of electronic transmission, the place and the period for shareholders to submit proposals to be discussed at the meeting; and the period for accepting such proposals shall not be less than ten (10) days. Shareholder-submitted proposals are limited to 300 words, and no proposal containing more than 300 words will be included in the meeting agenda. The shareholder making the proposal shall be present in person or by proxy at the regular shareholders meeting and take part in discussion of the proposal. The Company shall, prior to preparing
and delivering the shareholders’ meeting notice, inform, by a notice, all
the proposal submitting shareholders of the proposal screening results, and shall list in the shareholders’ meeting notice the proposals conforming to the
requirements set out in this Article. At the shareholders meeting the board of directors shall explain the reasons for exclusion of any shareholder proposals


After amendment	Before amendment	Description

not included in the agenda.
Article 4 For each shareholders meeting, a shareholder may appoint a proxy to attend the meeting by providing the proxy form issued by this Company and stating the scope of the proxy's authorization. One shareholder may appoint one proxy and present one authorization of		1. The article is an additional article. 2. Pursuant to Article 177 of the Company Act and the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company added the article.
agent only and such document shall be
delivered to the company no later than
five (5) days prior to the scheduled date of the General Meeting. For repeated authorization of agent, the initial authorization shall prevail unless otherwise the previous authorization has been declared for revocation. After a proxy form has been delivered to this Company, if the shareholder intends to attend the meeting in person
or to exercise voting rights by correspondence or electronically, a written notice of proxy cancellation shall be submitted to this Company before 2 business days before the meeting date. If the cancellation notice
is submitted after that time, votes cast at the meeting by the proxy shall prevail.
Article 5 (Discussion of proposals) If a shareholders meeting is convened by the board of directors, the meeting agenda shall be set by the board of directors. The meeting shall proceed in the order set by the agenda,which may not be changed without a resolution of	Article 4 The meeting agenda ofthe shareholders meetingshall be set by the board of directors. The meeting shall proceed in the order set by the agenda. The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda (including extraordinary motions), except by a resolution of the shareholders meeting. When the meeting is adjourned by a resolution of the shareholders meeting, the shareholder(or proxy)may not elect another chair and continue the meeting at the original place or find another place to continue the meeting. If the chair declares the meeting adjourned in violation of the rules of procedure,byagreement of a majorityof	1. The article number was changed. 2. Item 4 is an amendment to the previous Article 7. 3. Pursuant to the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company amended the article.
the shareholders meeting. If only the rearrangement of the orders of the meeting is required, the Chair shall make such arrangement. The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda (including extraordinary motions), except by a resolution of the shareholders meeting. When the meeting is adjourned bya resolution of the


After amendment	Before amendment	Description

shareholders meeting, the shareholder may not elect another chair and continue the meeting at the original place or find another place to continue the meeting. If the chair declares the meeting adjourned in violation of the rules of procedure, the other members of the board of directors shall promptly assistthe attending shareholders in electing a new chair in	the votes represented by the attending shareholders,the shareholdersmay continue the meeting. Article 7 The chair shall allowdiscussionof proposals; when the chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announce the discussion closed and shall call for a vote.
accordance with statutory procedures, by agreement of a majority of the votes represented by the attending shareholders, and then continue the meeting. The chairshall allow ample opportunity during the meeting for explanation and discussion of proposals and of amendments or extraordinary motionsput forward by the shareholders; when the chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announcethe discussion closed and call for a vote.
Article 6 (Shareholder speech) Before speaking, an attending shareholder must specify on a speaker's slip the subject of the speech, his/her shareholder account number(or attendance card number),and account name. The order in which shareholders speak will be set by the chair. A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker's slip, the spoken content shall prevail. A shareholder may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes, if with the consent of the chair, the speech may be extended by3 minutes once. If the	Article 5 Before speaking, an attending shareholder(or proxy)must specify on a speaker's slip the subject of the speech, his/her shareholder account number and account name. The order in which shareholders speak will be set by the chair. A shareholder(or proxy)in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker's slip, the spoken content shall prevail. When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder that has the floor; the chair shall stop any violation. Article 6 A shareholder may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes, if with the consent of the chair, the speech may be extended by3 minutes once. If the	1. The article number was changed. 2. Item 1 is the previous Article 5. 3. Item 2 is the previous Article 6. 4. Item 3 is the ending paragraph of the previous Article 5. 5. Item 4 is the previous Article 16. 6. Item 5 is the previous Article 17. 7. Pursuant to the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company amended the article.


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shareholder's speechviolates the rules or exceeds the scope of the agenda item, the chair mayterminate the speech. When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder that has the floor; the chair shall stop any violation. When a juristic person is entrusted to attend a shareholders meeting, that juridical person can only appoint one representative to attend the meeting. When a juristic person shareholder appoints two or more representatives to attend a shareholders meeting, only one of the representatives so appointed may speak on the same proposal. After an attending shareholder has spoken, the chair may respond in person or direct relevantpersonnel to respond.	shareholder's speech exceedsthe time limit or exceeds the scope of the agenda item, the chair mayterminatethe speech. Article 16 When a juristic person is entrusted to attend a shareholders meeting, that juridical person can only appoint one representative to attend the meeting. When a juristic person shareholder appoints two or more representatives to attend a shareholders meeting, only one of the representatives so appointed may speak on the same proposal. Article 17 After an attending shareholder has spoken, the chair may respond in person or direct relevantpersonnel to respond.
Article 7 (Calculation of voting shares and recusal system) Voting at a shareholders meeting shall be calculated based the number of shares. With respect to resolutions of shareholders meetings, the number of shares held by a shareholder with no voting rights shall not be calculated as part of the total number of issued shares. For motions where specific shareholders have a conflict of interest	Article 8 When the Company holds a shareholders	1. Item 1 and 2 were added. 2. Item 3 is the ending paragraph of the previous Article 8, paragraph 2. 3. Pursuant to Article 178 and 180 of the Company Act and the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company added item 1 and 2.
	meeting, shareholders may exercise their
	voting power in writing or by way of electronic transmission. The way of the exercise shall be in compliance with the regulations of the Company Act and the competent authority. Except as otherwise provided in the Company Act, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. The Chair is to consult the motion ready for balloting with the attendees at the meeting and it is deemed as having been passed if there are no objections raised. A shareholder shall be entitled to one vote for each share held, pursuant to Article 179, paragraph 2 of the Company Act, “With the exception of a trust enterprise or a shareholder services agent approved by the competent securities authority, when one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed 3 percent of the voting rights represented bythe total number of issued
with the company, these shareholder shall be excused from voting and cannot acting as the proxy of another shareholder to exercise the voting right. The number of shares for which voting
rights may not be exercised under the preceding paragraph shall not be calculated as part of the voting rights represented by attending shareholders.
With the exception of a trust enterprise or a shareholder services agent approved by the competent securities authority, when one person is concurrently appointed as proxy by two or more shareholders, the votingrights represented bythatproxy


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may not exceed 3 percent of the voting rights represented by the total number of issued shares. If that percentage is exceeded, the voting rights in excess of that percentage shall not be included in the calculation.	shares. If that percentage is exceeded, the voting rights in excess of that percentage shall not be included in the calculation”.
Article 8 A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares under Article 179, paragraph 2 of the Company Act. When the Company holds a shareholders meeting, it may allow the	Article 8 When the Company holds a shareholders meeting, shareholders may exercise their voting powerin writingor by way of electronic transmission.The way of the exercise shall be in compliance with the regulations of the Company Act and the competent authority.	1. Items 1, 3 and 4 were added. 2. Item 5 is the previous Article 20. 3. Item 6 is the previous Article 18. 4. Item 7 is an amendment to the ending paragraph of the previous Article 18. 5. Pursuant to Article 177-1, 177-2 of the Company Act and the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company amended the article.
shareholders to exercise voting rights by correspondence or electronic means. When voting rights are exercised by correspondence or electronic means, the method of exercise shall be specified in the shareholders meeting notice. Shareholders casting their votes by correspondence or electronic means shall be deemed attending the meeting
in person, but to have waived his/her rights with respect to the extraordinary motions and amendments to original proposals of that meeting; it is therefore advisable that this Company avoid the submission of extraordinary motions and amendments to original proposals.
A shareholder intending to exercise voting rights by correspondence or electronic means under the preceding paragraph shall deliver a written declaration of intent to this Company before 2 days before the date of the shareholders meeting. When duplicate
declarations of intent are delivered, the one received earliest shall prevail. In case of repeated expression of intent, the initial intent so expressed shall stand unless declaration for the revocation of the previous expression of intent is made. After a shareholder has exercised voting rights by correspondence or electronic means, in the event the


After amendment	Before amendment	Description

shareholder intends to attend the shareholders meeting in person, a written declaration of intent to retract	Except as otherwise provided in the Company Act, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. The resolution shall be deemed adopted and shall have the same effect as if it was voted by casting ballots if no objection is voiced after solicitation by the Chair.A shareholder shall be entitled to one vote for each share held, pursuant to Article 177, paragraph 2 of the Company Act, “With the exception of a trust enterprise or a shareholder services agent approved by the competent securities authority, when one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed 3 percent of the voting rights represented by the total number of issued
the voting rights already exercised under the preceding paragraph shall be made known to this Company, by the same means by which the voting rights were exercised, before 2 business days before the date of the shareholders meeting. If the notice of retraction is submitted after that time,
the voting rights already exercised by correspondence or electronic means shall prevail. If an expression of intent
to vote by correspondence or electronic means has been made and at
the same time, a proxy has been appointed to attend the meeting, the votes cast by the proxy in the meeting shall stand. Except as otherwise provided in the Company Act and in this Company's articles of incorporation, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. At the time of a vote, for each proposal, the chair or a person designated by the chair shall first announce the total number of voting rights represented by the attending shareholders, followed by a poll of the shareholders.After the conclusion of the meeting, on the same day it is held,
the results for each proposal, based on
the numbers of votes for and against and the number of abstentions, shall be entered into the MOPS. When there is an amendment or an alternative to a proposal, the chair shall present the amended or alternative proposal together with the original proposal and decide the order in which theywill beput to a vote. When anyone
	shares. If that percentage is exceeded, the
	voting rights in excess of that percentage
	shall not be included in the calculation”.
	Article 20 When there is an amendment or an alternative to a proposal, the chair shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When any one among them is passed, the other


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among them is passed, the other proposals will then be deemed rejected, and no further voting shall be required. Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of this Company. Vote counting for shareholders meeting proposals or elections shall be conducted in public at the place of the shareholders meeting. Immediately after vote counting has been completed, the results of the voting, including the statistical tallies of the numbers of votes, shall be announced on-site at the meeting, and a record made of the vote.	proposals will then be deemed rejected, and no further voting shall be required. Article 18 Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of this Company.The result of voting shall be announced at the meeting and placed on record.
Article 9 (Recess and resumption of a shareholders meeting) Whena meeting is in progress, the chair may announce a break based on time considerations. If a force majeure	Article 9 During the meeting, the chair may, at his discretion, set time for intermission.If the meeting is not over yet, by resolution	Pursuant to the Letter Tai-Zheng-Zhi-Li-Zi No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company amended the article.
	of the shareholders present at the meeting, the chair may resume the meeting within five dayswithout further notice or public announcement.
event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed. If the meeting venue is no longer available for continued use and not all
of the items (including extraordinary motions) on the meeting agenda have been addressed, the shareholders meeting may adopt a resolution to resume the meeting at another venue. A resolution may be adopted at a shareholders meeting to defer or resume the meetingwithin 5 daysin accordance with Article 182 of the Company Act.
	Article 10 During the meeting, if there is an air raid	The article was deleted.
	alert, the meeting will be stopped and
	shareholders shall evacuate. The meeting
	will be resumed an hour after the alert is
	lifted.
Article 10 Attendance at shareholders meetings shall be calculated based on numbers of shares.The number of shares in	Article 2 Shareholders and proxies attending the meeting shall submit the sign-in card for the purpose of signing in. The number of	1. Item 1 is an amendment to the previous Article 2. 2. Item 2 is an


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attendance shall be calculated according to the shares indicated by the attendance book and sign-in cards handed in plus the number of shares whose voting rights are exercised by correspondence or electronically. The chair shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares,the chair may announce a postponement, provided that no more than two such postponements,for a combined total of no more than 1 hour, may be made. If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares,the chair shall declare the meeting adjourned. If the quorum is not met after two postponements as referred to in the preceding paragraph, but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Article 175, paragraph 1of the Company Act; all shareholders shall be notified of the tentative resolution and another shareholders meeting shall be convened within 1 month. When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chair may resubmit the tentative resolution for a vote bythe shareholdersmeeting pursuant to Article 174 of the Company Act.	shares in attendance shall be calculated according to the shares indicated by the sign-in cards handed in plus the number of shares whose voting rights are exercised by correspondence or electronically. Article 3 When the share amount represented by the attending shareholder (or proxy) has exceeded half of the total number of shares issued by the Company,the chair shall call the meeting.However, if the appointed meeting time has passed and the attending shareholders do not represent a majority of the total number of issued shares,the chair may announce a postponement. If after two postponements no quorum can yet be constituted but the shareholders(or proxy)present at the meeting represent more than one third of the total outstanding shares, tentative resolutions may be made.The passage of a tentative resolution shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders and shall be in accordance with Section 1 of Article 175 of the Company Act. When a tentative resolution is made, if the share amount represented by the attending shareholder (or proxy)has met the legal requirement, the chair may resubmit the tentative resolution for a vote by the shareholders meeting pursuant to Article 174 of the Company Act.	amendment to the previous Article 3. 3. Pursuant to Article 175 of the Company Act and the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company amended the article.
Article 12 (The chair and non-voting participants of a shareholders meeting) If a shareholders meeting is convened by the board of directors, the meeting shall be chaired by the Chairman of the board. When the Chairman of the board ison leave or for any reason unable to	Article 12 Unless otherwise specified in the Company Act,the meeting shall be chaired by the Chairman of the board. When the Chairman of the board is on leave or for any reason unable to exercise the powers of the Chairman, the Vice Chairman shall act inplace of the	1. Items 2, 3 and 4 were added. 2. Item 5 is the starting paragraph of the previous Article 13. 3. Pursuant to the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221


After amendment	Before amendment	Description

exercise the powers of the Chairman, the Vice Chairman shall act in place of the Chairman; if there is no Vice Chairman or the Vice Chairman also is on leave or for any reason unable to exercise the powers of the Vice Chairman, the Chairman shall appoint one of the managing directors to act as chair, or, if there are no managing directors, one of the directors shall be appointed to act as chair. Where the Chairman does not make such a designation, the managing directors or the directors shall select from among themselves one person to serve as chair. When a managing director or a director serves as chair, as referred to in the preceding paragraph, the managing director or director shall be one who has held that position for six months or more and who understands the financial and business conditions of the company. The same shall be true	Chairman; if there is no Vice Chairman or the Vice Chairman also is absent, the Chairman shall appoint one of the managing directors to act as chair, or, if there are no managing directors, one of the directors shall be appointed to act as chair. Where the Chairman does not make such a designation, the managing directors or the directors shall select from among themselves one person to serve as chair. Article 13 This Company may appoint its attorneys, certified public accountants, or related persons retained by it to attend a shareholders meeting in a non-voting capacity.The service personnel for the shareholders’meeting shall wear identification badges or armbands.	issued on January 2, 2020 by the Taiwan Stock Exchange, the Company amended the article.
for a representative of a juristic person
director that serves as chair. It is advisable that shareholders meetings convened by the board of directors be chaired by the Chairman of the board in person and attended by
a majority of the directors, at least one
supervisor in person, and at least one member of each functional committee on behalf of the committee. The attendance shall be recorded in the meeting minutess. If a shareholders meeting is convened by a party with power to convene but other than the board of directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chair from among themselves. This Company may appoint its attorneys, certified public accountants, or related persons retained by it to attend a shareholders meeting in a non-voting capacity.
Article 13 (Documentation of a shareholders meeting by audio or video)	Article 14	1. The article number was changed. 2. Pursuant to the Letter


After amendment	Before amendment	Description

This Company, beginning from the time it accepts shareholder attendance	The Company shall document a shareholders meeting by audio or video and shall retain the recorded material for at least 1 year.	Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company amended the article.
registrations, shall make an uninterrupted audio and video recording of the registration procedure, the proceedings of the shareholders meeting, and the voting and vote counting procedures. The recorded materials of the preceding paragraph shall be retained
for at least 1 year. If legal action is instituted by shareholders pursuant to Article 189 of the Company Act, the ballots shall be retained until the final ruling of the action.
Article 14 (Preparation of documents such as the attendance book) This Company shall specify in its shareholders meeting notices the time during which shareholder attendance registrations will be accepted, the place to register for attendance, and other matters for attention. The time during which shareholder attendance registrations will be accepted, as stated in the preceding paragraph, shall be at least 30 minutes		1. The article is an additional article. 2. Pursuant to the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company added the article.
prior to the time the meeting commences. The place at which attendance registrations are accepted shall be clearly marked and a sufficient number of suitable personnel
assigned to handle the registrations. Shareholders and their proxies (collectively,"shareholders") shall attend shareholders meetings based on
attendance cards, sign-in cards, or other certificates of attendance. This Company may not arbitrarily add requirements for other documents beyond those showing eligibility to attend presented by shareholders. Solicitors soliciting proxy forms shall also bring identification documents for
verification. This Company shall furnish the attending shareholders with an attendance book to sign, or attending shareholders may hand in a sign-in card in lieu of signing in. This Company shall furnish attending


After amendment	Before amendment	Description

shareholders with the meeting agenda book, annual report, attendance card, speaker's slips, voting slips, and other meeting materials. Where there is an election of directors or supervisors, pre-printed ballots shall also be furnished. Where the shareholders may be the government or institutions, more than one representative may be assigned to attend the meeting. When a juristic person is appointed to attend as proxy,
it may designate only one person to represent it in the meeting.
Article 15 (Election of directors and supervisors) The election of directors or supervisors		1. The article is an additional article. 2. Pursuant to the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company added the article.
at a shareholders meeting shall be held
in accordance with the applicable election and appointment rules adopted by this Company, and the voting results shall be announced on-site immediately, including the names of those elected as directors and
supervisors and the numbers of votes with which they were elected. The ballots for the aforementioned election shall be kept in the box, sealed
and signed by the witness, and retained for at least one year. If legal action is instituted by shareholders pursuant to Article 189 of the Company Act, the ballots shall be retained until the final ruling of the action.
Article 16 Resolutions adopted at a shareholders meeting shall be recorded in the meeting minutes, which shall be affixed with the signature or seal of the		1. The article is an additional article. 2. Pursuant to the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company added the article.
Chair of the meeting and shall be distributed to all shareholders of the company within twenty (20) days after
the close of the meeting. The preparation and the circulation of the meeting minutes on record may be made electronically. The minutes of meeting on record as mentioned may be uploaded to MOPS for announcement. The meeting minutes shall accurately


After amendment	Before amendment	Description

record the year, month, day, and place
of the meeting, the chair's full name, the methods by which resolutions were
adopted, and a summary of the deliberations and their results, and shall be retained for the duration of the existence of this Company.
Article 17 (Public disclosure) On the day of a shareholders meeting, this Company shall compile in the prescribed format a statistical statement of the number of shares obtained by solicitors through solicitation and the number of shares represented by proxies, and shall make		1. The article is an additional article. 2. Pursuant to the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company added the article.
an express disclosure of the same at the place of the shareholders meeting. If matters put to a resolution at a shareholders meeting constitute material information under applicable
laws or regulations or under Taiwan Stock Exchange Corporation regulations, this Company shall upload the content of such resolution to the MOPS within the prescribed time period.
Article 18 (Maintaining order at the meeting place) Staff handling administrative affairs of a shareholders meeting shall wear identification cards or arm bands. The Chair may instruct a prefect team (or security personnel) to maintain order of the meeting. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word “Proctor.” Where the meeting place may be equipped with sound amplifier equipment, the Chair shall stop any speech delivered by shareholders not using the equipment installed by the company. In the event of insubordination to the correction of the Chair, obstruction of the progress of the meeting and failure	Article 21 The Chair may instruct a prefect team (or security personnel) to maintain order of the meeting. When proctors (or security personnel) help maintain order at the meeting place, they shall wear an identification card or armband bearing the word “Proctor.”	1. Item 1 is the ending paragraph of the previous Article 13. 2. Item 3 was added. 3. Pursuant to the Letter Tai-Zheng-Zhi-Li-Z i No. 1080024221 issued on January 2, 2020 by the Taiwan Stock Exchange, the Company amended the article.
to take corrective action upon persuasion, the respective shareholder shall be escorted by the prefect or security personnel to leave the venue


After amendment	Before amendment	Description

on the order of the Chair.
	Article 22 For matters not specified in the Rules, the Company shall follow the regulations	The article was deleted.
	in the Company Act, rules of procedure issued by the Ministry of the Interior and
	the Company’s Articles of incorporation for the implementation.
Article 19 These Rules, and any amendments hereto, shall be implemented after adoption byshareholders meetings.	Article 23 These Rules, and any amendments hereto, shall be implemented after adoption byshareholders meetings.	1. The article number was changed. 2. Text amendment.
Article 20 The Rules of Procedure was established on June 10, 1977. The first amendment was made on June 7, 1983. The second amendment was made on June 13, 1996. The third amendment was made on June 2, 1998. The 4th amendment was made on June 2, 1999. The 5th amendment was made on May 19, 2000. The 6th amendment was made on May 28, 2002. The 7th amendment was made on June 9, 2010. The 8th amendment was made on June 26, 2014. The 9th amendment was made on June 26, 2018.The 10th amendment was made on September 1,	Article 24 The Rules of Procedure was established on June 10, 1977. The first amendment was made on June 7, 1983. The second amendment was made on June 13, 1996. The third amendment was made on June 2, 1998. The 4th amendment was made on June 2, 1999. The 5th amendment was made on May 19, 2000. The 6th amendment was made on May 28, 2002. The 7th amendment was made on June 9, 2010. The 8th amendment was made on June 26, 2014. The 9th amendment was made on June 26, 2018. The 10th amendment was made on September 1, 2019.	1. The article number was changed. 2. The number of the amendment and the date it was made were added.
2019. The 11th amendment was made on June 23, 2020.

Lien Hwa Industrial Holdings Corporation Appendix 1

Effect upon business performance and earnings per share of any dividend distribution proposed or adopted at this shareholders' meeting

Year Item	Year Item	Year Item	2020 (Projected)
Opening paid-upcapital(NTD thousands)			11,047,399
Dividends for the current year	Cash dividendsper share(NT$)		1.60
	Stock dividends per share (from capitalization of earnings) (shares)		1.60
	Stock dividends per share (from capitalization of reserves) (shares)		-
Changes in business performance	Operatingincome		Not applicable (Note 2)
	Year-on-yearpercentagevariation of operatingincome
	After-tax net income
	Year-on-year percentage variation of after-tax net income
	Earningsper share
	Year-on-yearpercentage variation of earningsper share
	Yearly average return on investment (a reciprocal of yearlyaverage P/E ratio)
Pro forma EPS and P/E ratio	If capitalized earnings were entirely distributed as cash dividends instead	Pro forma EPS
		Pro forma yearly return on investment
	Without capitalization of reserves	Pro forma EPS
		Pro forma yearly return on investment
	Without capitalization of reserves and if capitalized earnings were entirely distributed as cash dividends instead	Pro forma EPS
		Pro forma yearly return on investment

Note 1. Not yet resolved by 2020 Shareholder meeting.

Note 2. According to the “Regulations Governing the Publication of Financial Forecasting of Public Companies”, the Company did not disclose financial forecasting in complete form thereby not required for disclosure of financial forecast in 2020.

Lien Hwa Industrial Holdings Corporation Appendix 2 Articles of Incorporation

Chapter 1 General Provisions

Article 1 The Company is incorporated in accordance with the Business Mergers And Acquisitions Act, the regulations governing the company limited by shares specified in the Company Act and related laws and regulations and has the name of Lien Hwa Industrial Holdings Corporation. Article 2 The Company’s business activities comprise the following: 1. H201010 Investment. Article 3 The Company may provide guarantees to external parties as needed for its business activities. Article 4 The Company is a professional investment company and the restrictions that the total investment shall not exceed 40% of the paid-up capital specified in Paragraph 2, Article 13 of the Company Act are not applicable.

Article 5 The Company is headquartered in Taipei City, and may establish domestic or foreign branches if necessary.

Chapter 2 Share capital

Article 6 The Company has an authorize capital of Fifteen Billion New Taiwan Dollars (NTD 15,000,000,000), available in one billion two hundred and eighty million shares of Ten New Taiwan Dollars each. Sixty million shares shall be reserved for the issuance and conversion of employee warrants. The board of directors is authorized to raise share capital in multiple issues; unissued shares may be issued by the board of directors over multiple offerings as deemed necessary to support business activities. Article 7 The stocks of the Company are registered. They must be signed by or affixed with the stamp of the director representing the Company and numbered. The stocks may be issued only after the authentication of the competent authority or the issue and registration organ designated thereby. Shares of the Company may be issued in non-tangible form, subject to registration with the centralized securities depository. Article 8 Unless otherwise specified by law or securities regulations, all share-related affairs of the Company shall proceed according to the authority’s “Regulations Governing the Administration of Shareholder Services of Public Companies.” Article 9 Transfer of share ownership shall be suspended during the 60 days prior to an annual general meeting, and during the 30 days prior to an extraordinary shareholder meeting, and during the 5 days prior to the baseline date of any dividend, bonus or rights distribution. Article 9-1 As for the shares re-purchased by the Company, the transferee may include the employees of the holding or the affiliated companies who meet specific requirements.Employees of the Company entitled to receive the stock option certificates shall include those of the holding or the affiliated companies who meet specific requirements.

When the Company issues new shares, employees eligible for subscription shall include those of the holding or the affiliated companies who meet specific requirements.

Employees eligible for restricted stocks issued by the Company shall include those of the holding or the affiliated companies who meet specific requirements. The Chairman is authorized to establish specific requirements that shall be met by employees of the holding or the affiliated companies specified in this article.

Chapter 3 Shareholder meetings

Article 10 The Company convenes two types of shareholder meeting: the annual general meeting and extraordinary shareholder meeting. The annual general meeting is held once a year within six months after the end of an accounting period, whereas extraordinary shareholder meetings may be held at any time deemed necessary.

Article 11 The Company shall implement shareholder conference rules based on “Public Company Shareholder Meeting Guidelines” published by the Securities and Futures Commission, The Ministry of Finance. The same applies to subsequent amendments. Article 12 The Company is required to notify all shareholders at least 30 days before convention of annual general meeting, and at least 15 days before convention of extraordinary shareholder meeting. Article 13 If a shareholder is unable to attend the shareholder meeting in person, a proxy can be appointed by completing the Company’s proxy form and by specifying the scope of delegated authority. Unless otherwise regulated in The Company Act, shareholders shall delegate their proxy attendants in compliance with “Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies.”

Article 14 Unless otherwise regulated in The Company Act, common shareholders are entitled to one voting right per share. However, the Company is not entitled to any voting rights for holding its own shares. Article 15 Except otherwise regulated by law, a shareholder meeting motion may proceed only when more than 50% of all outstanding shares are represented in the meeting (either by shareholders in person or by proxy attendants); the motion is passed if voted in favor by more than 50% of all voting rights represented at the meeting. Article 16 Shareholder meetings shall be held within the county/city where the headquarters is domiciled, or at

the Company’s factory premises, or at a location that is convenient to the participants. Article 17 Shareholder meetings that are convened by the board of directors shall be chaired by the Chairman. If the Chairman is absent for any reason, the Vice Chairman shall perform acting duty on behalf. If both the Chairman and Vice Chairman are absent, the Chairman shall appoint one of the directors to act on behalf; if no person of acting duty is appointed, one shall be appointed among the directors. Shareholder meetings that are convened by other authorized persons shall be chaired by the convener. If there are two or more conveners, one shall be appointed among them to act as chairperson. Shareholder meetings shall proceed according to the Company’s “Shareholder Conference Rules.” Article 18 Shareholder meeting resolutions shall be compiled into detailed minutes. Preparation, distribution and filing of shareholder meeting minutes are subject to compliance with The Company Act and related laws. Shareholders’ attendance logs and proxy forms shall be retained for at least one year, or in the event where shareholders have filed for litigation pursuant to Article 189 of The Company Act, such documents shall be retained until the litigation has concluded. Chapter 4 Directors and managers Article 19 The board of directors shall comprise 7 to 10 members including at least 3 independent directors, all of whom shall be elected from persons of adequate capacity during shareholder meetings to serve a term of 3 years. The term of service may be renewed if re-elected in subsequent elections. Unless otherwise regulated by law, election of directors shall proceed according to the Company’s “Director Election Policy.” Subject to board of directors’ resolution, the Company may purchase insurance policy to insure itself against the liabilities of newly elected directors. The board of directors is authorized to determine the level of directors’ remuneration based on recommendations of the Company’s Remuneration Committee and in reference to industry peers. Directors of the Company shall be elected using the nomination system, in which shareholders will elect from the list of nominated director candidates. Article 20 The aggregate quantity of registered shares held by all of the Company’s directors shall not be less than a certain percentage of total outstanding shares determined by the authority. Article 21 The Company has one Chairman and may create one Vice Chairman position. Both of which are to be appointed in a board of directors meeting with more than two-thirds of directors present, and with the support of more than half of all attending directors. The Chairman oversees all affairs within the organization, and represents the Company to the outside world. Article 22 Board of directors meetings are chaired by the Chairman. If the Chairman is absent for any reason, the Vice Chairman shall perform acting duty on behalf. If both the Chairman and Vice Chairman are absent, the Chairman shall appoint one of the directors to act on behalf; if no person of acting duty is appointed, one shall be appointed among the directors. Convention of board of directors meeting shall be advised to all directors with detailed agenda at least 7 days in advance. However, meetings can be held in shorter notices in case of emergency. The above meeting advice can be issued in writing or sent via e-mail or fax. Article 23 Unless otherwise regulated by The Company Act, board resolution is passed only if more than half of total board members are present in a meeting, and with more than half of attending directors voting in favor. Directors who are unable to attend meetings personally may seek proxy attendance by another director. However, a director may only represent the presence of one other director. Article 24 Where board meeting is carried out by way of video conferencing, those who participate in the video conference are considered to have attended the meeting in person. Article 25 The Company shall comply with the Securities and Exchange Act by assembling an Audit Committee that consists entirely of independent directors. The Audit Committee or members thereof are responsible for carrying out duties of the supervisor, as specified in The Company Act, Securities and Exchange Act and other relevant laws. Article 26 The Company shall create managerial positions as needed for its operations. Appointment and dismissal of managers shall be passed in a board of directors meeting with more than half of total directors present, and with the support of at least half of attending directors. The Company may create positions for one Chief Executive Officer and one Deputy Chief Executive Officer. Appointment and dismissal of which shall be passed in a board of directors meeting with more than half of total directors present, and with the support of at least half of attending directors.

Chapter 5 Accounting

Article 27 The Company’s accounting period begins January 1 and ends December 31 each year. The board of directors is responsible for preparing the following statements and reports at the end of each financial year, and presenting them for acknowledgment at an annual general meeting:
Business report;
Financial statements;
Earnings appropriation or loss reimbursement proposals.
Article 28 Where there is profit in any fiscal year, no less than 1‰ and no more than 1% of the annual profit shall be separately appropriated as remuneration for employees and directors. However, the accumulated loss of the Company, if any, shall be reimbursed.

The profit in the current year referred to in the preceding paragraph means the pre-tax profit in the

current year before deducting the remuneration distributed to the employees and the directors. The distribution of remuneration for employees and directors shall be approved by a majority of directors at a meeting attended by two-thirds of the total number of directors and be reported to the shareholders’ meeting.

The remuneration for directors is distributed in cash. The remuneration for employees is distributed in the form of shares or in cash. Employees entitled to receive the distribution includes those of the holding or the affiliated companies who meet specified requirements established by the authorized Chairman.

The Company is currently in stable growth and most of the earnings of the Company come from the invested business recognized using the equity method. For the sustainable operation and long-term development of the Company, the earnings, if any, in the total final account of a fiscal year shall be used to pay all relevant taxes, make up for the accumulated losses, set aside 10% of the profit as legal reserve and appropriate or reverse a special reserve in accordance with the laws and regulations. If there is any surplus left, a proposal for the distribution of the surplus along with the accumulative undivided earnings is formulated by the Board of Directors. If the surplus is distributed by issuing new shares, it shall be made upon approval at the shareholder’s meeting. If the surplus is distributed in the form of cash, the distribution shall be subject to the approval by a majority of the authorized directors at a meeting attended by two-thirds of the total number of directors and the resolution shall be reported to the shareholders’ meeting in accordance with Paragraph 5, Article 240 of the Company Act.

The aforementioned distribution ratio of earnings and the ratio of cash dividend for shareholders are planned by the Board of Directors in consideration of the financial structure of the Company, future capital needs and profitability. The cash dividends for shareholders shall not be less than 10% of the total amount of the dividends.

Article 28-1 Based on the approval of a majority of directors at the meeting attended by two-thirds of the total number of directors, the Company shall distribute the legal reserve and capital reserve, in whole or in part, in the form of cash in accordance with Article 241 of the Company Act and report the resolution to the shareholders’ meeting.

Chapter 6 Additional rules
Article 29 Execution rules for the various principles stated herein shall be established separately. Article 30 Any details that are not addressed in the Articles of Incorporation shall be governed by The Company Act.

Article 31 The Articles of Incorporation was first established on June 29, 1955. The 1st amendment was made on March 10, 1956; the 2nd amendment was made on September 30, 1959; the 3rd amendment was made on September 30, 1960; the 4th amendment was made on January 20, 1964; the 5th amendment was made on August 1, 1965; the 6th amendment was made on December 12, 1965; the 7th amendment was made on December 5, 1966; the 8th amendment was made on September 22, 1967; the 9th amendment was made on August 8, 1968; the 10th amendment was made on April 17, 1969; the 11th amendment was made on May 14, 1970; the 12th amendment was made on January 16, 1972; the 13th amendment was made on February 1, 1974; the 14th amendment was made on December 16, 1974; the 15th amendment was made on December 15, 1975; the 16th amendment was made on April 1, 1976; the 17th amendment was made on June 10, 1977; the 18th amendment was made on June 2, 1978; the 19th amendment was made on December 21, 1978; the 20th amendment was made on June 15, 1979; the 21st amendment was made on June 28, 1980; the 22nd amendment was made on April 9, 1981; the 23rd amendment was made on April 29, 1982; the 24th amendment was made on June 7, 1983; the 25th amendment was made on June 27, 1984; the 26th amendment was made on July 19, 1985; the 27th amendment was made on June 21, 1986; the 28th amendment was made on June 10, 1987; the 29th amendment was made on June 3, 1988; the 30th amendment was made on June 6, 1989; the 31st amendment was made on May 24, 1990; the 32nd amendment was made on June 7, 1991; the 33rd amendment was made on June 15, 1992; the 34th amendment was made on June 17, 1994; the 35th amendment was made on May 30, 1995; the 36th amendment was made on June 13, 1996; the 37th amendment was made on May 28, 1997; the 38th amendment was made on June 2, 1998; the 39th amendment was made on June 2, 1999; the 40th amendment was made on May 19, 2000; the 41st amendment was made on May 22, 2001; the 42nd amendment was made on May 28, 2002; the 43rd amendment was made on May 22, 2003; the 44th amendment was made on May 24, 2005; the 45th amendment was made on June 15, 2006; the 46th amendment was made on June 14, 2007; the 47th amendment was made on June 13, 2008; the 48th amendment was made on June 9, 2010; the 49th amendment was made on June 26, 2014 and effected with shareholders’ resolution; the 50th amendment was made on June 22, 2016; the 51st amendment was made on June 26, 2017; and the 52nd amendment was made on June 26, 2018; and the 53nd amendment was made on June 25, 2019. (the name of the Company and Article I, II and IV will take effect on the effective date of the demerger).The same applies to all subsequent amendments.

Lien Hwa Industrial Holdings Corporation Appendix 3 Shareholder Conference Rules

Article 1 Unless otherwise specified by law, shareholder meetings of Lien Hwa Industrial Corporation (the Company) shall proceed according to the following rules.
Article 2 Shareholder meeting attendants and proxies shall present attendance cards to signify their presence at the meeting. The number of shares represented during the meeting is calculated based on the attendance cards collected, plus the number of shares with voting rights exercised in writing or through electronic means.
Article 3 The chairperson shall announce commencement of the meeting when half of the Company’s outstanding shares have been represented by shareholders (or proxies) at the meeting. The chairperson may postpone the meeting if the number of shares represented on-site falls short of the statutory requirement when the meeting is due to commence. If attending shareholders (or proxies) represent more than one-third but less than half of outstanding shares after two postponements, the attending shareholders may reach a tentative resolution according to Article 175 of The Company Act with the support of more than half of voting rights represented at the meeting. If the number of shares represented at the meeting accumulates above the statutory requirement after a tentative resolution is reached, the chairperson may propose the tentative resolution for final voting according to Article 174 of The Company Act.

		shares after two postponements, the attending shareholders may reach a tentative resolution according to Article 175 of The Company Act with the support of more than half of voting rights represented at the meeting. If the number of shares represented at the meeting accumulates above the statutory requirement after a tentative resolution is reached, the chairperson may propose the tentative resolution for final voting according to Article 174 of The Company Act.
Article	4	The board of directors is responsible for determining the agenda for the shareholder meeting. Meetings shall
		progress according to the proposed agenda. The chairperson may not adjourn the meeting without resolution
		while a motion (including special motions) is still in progress. Once the meeting has been adjourned,
		shareholders (or proxies) may not elect to continue the meeting with another chairperson or at a different venue.
		If the chairperson violates the conference rules by adjourning the meeting when it is not allowed to do so,
		shareholders may elect another chairperson with the support of more than half of voting rights represented
		on-site to continue the meeting.
Article	5	Shareholders (or proxies) who wish to speak during the meeting shall first produce an opinion slip detailing the
		topic and shareholder account number and name. The order of shareholders’ comments shall be determined by
		the chairperson. Shareholders (or proxies) who submit an opinion slip without actually speaking are considered
		to have remained silent. If the shareholder’s actual comments differ from those stated in the opinion slip, only
		the confirmed comments shall be taken into record. While a shareholder is speaking, other shareholders shall not
		speak simultaneously or interfere in any way unless agreed by the chairperson and the person speaking. Any
		violators shall be restrained by the chairperson.
Article	6	Shareholders (or speakers) shall not speak for more than two times, for 5 minutes each, on the same topic;
		however, up to one 3-minute extension is allowed with the permission of the chairperson. The chairperson may
		restrain shareholders who speak in violation of their allocated time or outside of the proposed topic.
Article	7	The chairperson may announce to discontinue further discussions at an appropriate time if the topic is considered
		to have been sufficiently discussed to proceed with the vote.
Article	8	Shareholders may exercise voting rights in writing or using electronic methods. Uses of various voting methods
		are subject to comply with The Company Act and rules of the authority.
		Unless otherwise specified in The Company Act, a resolution is passed with the support of shareholders
		representing more than half of total voting interests in the meeting. A motion is considered passed if the
		chairperson receives no objections from any attendants. This voting method is deemed as effective as does the
		conventional ballot method. Shareholders are entitled to one voting right per share. Pursuant to Paragraph 2,
		Article 177 of The Company Act: “Except for trust enterprises or stock agencies approved by the competent
		authority, when a person who acts as the proxy for two or more shareholders, the number of voting power
		represented by him/her shall not exceed 3% of the total number of voting shares of the company, otherwise, the
		portion of excessive voting power shall not be counted.”
Article	9	The chairperson may call recess at an appropriate time while the meeting is in progress. If the agenda cannot be
		completed in one meeting session, shareholders may reach a resolution to continue the meeting in the next 5 days
		and no further notice or announcement is needed.
Article	10	Meeting shall be suspended with the participants evacuated in the event of an air raid siren, and resume one hour
		after the siren has been deactivated.
Article	11	Shareholder meetings shall be held at the county/city where the Company’s headquarter is located, or at a factory
		premise, or at a location that is convenient for shareholders to attend. Meetings shall not commence anytime
		earlier than 9am or later than 3pm.
Article	12	Shareholder meetings shall be chaired by the Chairman unless otherwise regulated in The Company Act. If the
		Chairman is unable to perform duty due to leave of absence or any reason, the Vice Chairman will act on behalf.
		If both the Chairman and Vice Chairman are unavailable, the Chairman will appoint one of the directors to act
		on behalf. If no one is appointed, the remaining directors shall appoint among themselves to perform the

Chairman’s duties on behalf.

Article 13 The Company may summon its lawyers, certified public accounts and any relevant personnel to be present at shareholder meetings. Organizers of the shareholder meeting shall wear proper identification or arm badges.
Article 14 The Company’s shareholder meetings shall be recorded in video or audio, and kept for at least 1 year.
Article 15 (Deleted)
Article 16 Corporate entities may only appoint one representative to attend shareholder meetings. Where a corporate shareholder has appointed two or more representatives to attend the shareholder meeting, only one representative may speak per motion.
Article 17 After a shareholder has spoken during the meeting, the chairperson may answer the shareholder’s queries personally or appoint any relevant personnel to do so.
Article 18 Ballot examiners and a ballot counters are to be assigned by the chairperson. Ballot examiners shall also carry the identity of shareholder. The outcome of the vote shall be documented and announced on site.
Article 19 (Deleted)
Article 20 In cases where several amendment or alternative solutions have been proposed at the same time, the chairperson shall determine the order in which the proposals are voted. However, if any solution is passed, all other proposals shall be deemed rejected and no further voting is necessary.
Article 21 The chairperson may appoint security staff to help maintain order in the meeting. While maintaining order in the meeting, all security staff shall wear arm badges that identify their role as “Picketer.”
Article 22 Any matters that are not addressed in the rules shall be governed by The Company Act, the conference regulations stipulated by the Ministry of the Interior, and the Company’s Articles of Incorporation.
Article 23 The above rules shall take effect once resolved in a shareholder meeting; the same applies to all subsequent revisions.
Article 24 The conference rules were first established on June 10, 1977. The 1st amendment was made on June 7, 1983; the 2nd amendment was made on June 13, 1996; the 3rd amendment was made on June 2, 1998; the 4th amendment was made on June 2, 1999; the 5th amendment was made on May 19, 2000; the 6th amendment was made on May 28, 2002; the 7th amendment was made on June 9, 2010; the 8th amendment was made on June 26, 2014; and the 9th amendment was made on June 26, 2018; and the 10th amendment was made on September 1, 2019.

Lien Hwa Industrial Holdings Corporation Appendix 4 Shareholdings of All Directors

Record Date ： : 2020/04/25

				Record Date`：`:	Record Date`：`:	2020/04/25
Position	Name			Current shareholding		Remarks
			Type	Shares	Shareholdingratio(%)
Chairman	MatthewFeng-ChiangMiau		Ordinary	35,235,333	3.19%
Vice Chairman	Feng-ShengMiao			35,139,896	3.18%
Director	ChunChen	Rep:UPC Technology Corporation		106,927,648	9.68%
Director	Song-En Sun
Director	Cheng-Yu Tan	Rep:Yiyuan Investment Corporation		101,008,815	9.14%
Director	JasonChow
Director	Roger Lin	Rep:Hua ChengInvestment Co.,Ltd.		121,535	0.01%
Independent Director	Lucy-Sun Hwang			0	0.00%
Independent Director	Lo-Hou Chew			0	0.00%
Independent Director	Chien-JenChen			0	0.00%
Total				278,433,227	25.20%

Total Issued shares: 1,104,739,841 shares on 2020/04/25 (book closure date). Note: The minimum required combined shareholding of all directors by law: 32,000,000shares.

The combined shareholding of all directors on the book closure date: 278,433,227 shares.

The Audit Committee is set for the Company, so there is no held amount of shares of supervisors.

The shares held by independent directors shall not be counted in the calculation of director shareholdings.

AI assistant

LHIHC — Annual Report 2019

51754_rns_2020-07-03_c9be14d2-caab-45cb-a7ff-54d954bde8d3.pdf

Lien Hwa Industrial Holdings Corporation

Handbook

Table of Contents

Lien Hwa Industrial Holdings Corporation

Annual Shareholders' Meeting 2020

Meeting Agenda

Six. Extemporary Motions

Three. Report Items

Six. Extemporary Motions

I. 2019 Business Result Report

1. Consolidated operating revenue and profitability

II. Business Plan and Development Strategy in 2020

III. Impacts from the External Competitive Environment, Legal Environment and Overall Business Environment

Auditor’s Report

Audit opinion

Basis for the audit opinion

Key audit matters

Other matters

The responsibility of the management and the governing body for the consolidated financial statements

Our responsibility for the audit of the consolidated financial statements

KPMG

Notes to Readers

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation) and Subsidiaries

Consolidated Balance Sheet

31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Lien Hwa Industrial Holdings Corporation

(original name: Lien Hwa Industrial Corporation) and Subsidiaries

Consolidated comprehensive income statement

1 January to 31 December in 2018 and 2019

(Expressed in thousands of New Taiwan Dollars , except for earnings per common share)

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation) and Subsidiaries

Consolidated Statement of Changes in Shareholders’ Equity

1 January to 31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Lien Hwa Industrial Holdings Corporation

(original name: Lien Hwa Industrial Corporation) and Subsidiaries

Consolidated Statement of Cash Flow

1 January to 31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Lien Hwa Industrial Holdings Corporation

(original name: Lien Hwa Industrial Corporation) and Subsidiaries

Consolidated Statement of Cash Flow

1 January to 31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Auditor's Report

Audit opinion

Basis for the audit opinion

Key audit matters

The responsibility of the management and the governing body for the parent company only financial statements

financial statements.

Our responsibility for the audit of the parent company only financial statements

KPMG

Notice to Readers

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Balance Sheet

31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Lien Hwa Industrial Holdings Corporation

(original name: Lien Hwa Industrial Corporation)

Comprehensive Income Statement

1 January to 31 December in 2018 and 2019

(Expressed in thousands of New Taiwan Dollars , except for earnings per common share)

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Statement of Changes in Equity

1 January to 31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Statement of Cash Flow

1 January to 31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Statement of Cash Flow

1 January to 31 December in 2018 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Lien Hwa Industrial Holdings Corporation Attachment 4 Comparison Table of Amendment to the Articles of Incorporation

After amendment

LHIHC Annual Report 2019