MSI - AGM Information 2021 | FinancialReports.eu

Micro-Star International Co., Ltd.

2021 Annual Shareholders' Meeting Minutes

(Translation)

This English-version handbook is a summary translation of the Chinese version and is

not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

Time: 9:00 a.m. on Friday, July 16, 2021.

Place: Company’s conference room 3102 (1F., No. 488, Bannan Rd., Zhonghe Dist., New Taipei City 235, Taiwan R.O.C.)

Total shares represented by shareholders present in person or proxy: 756,514,727 shares were represented by shareholders in person and by proxy(including by exercising voting rights electronically 505,411,640 shares),which are mounted to 89.54% of the Company's 844,856,199 issued and outstanding shares.

，，， Director present: Hsu, Hsiang Huang, Chin-Ching Yu, Hsien-Neng Lin,

Wen-Tung ， Kuo, Hsu-Kuang ， Liao, Chun-Keng ， Hung, Yu-Sheng

，， Independent Director: Wang, Sung-Chou Liu, Cheng-Yi Hsu, Kao-Shan

Attendance:

Audit Committee &Remuneration Committee ： Wang, Sung-Chou ， Liu, Cheng-Yi ， Hsu, Kao-Shan

PricewaterhouseCoopers: Liang, Hua-Ling, CPA

Chairman: Hsu, Hsiang Recorder: Chang, Ju-Ting

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

Chairman’s Remarks (Omitted)

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I. Report Items:

1.Business Report of 2020.(see Appendix Ⅰ )
2.The Audit Committee's Review Report on the 2020 Financial Statements. (see Appendix Ⅱ )
3.Report of Employees’ Compensation and Directors’ Compensation for 2020.
(1) 2020 Employees’ Compensation and Directors’ Compensation distribution plan is in accordance with Article 235-1 of the Company Act and Article 19-1 of the Articles of Incorporation.
(2) The company's 2020 profit before allocation of Employees’ Compensation and Directors’ Compensation of which an approximate 7.09% is distributed to Employees’ Compensation, count NT $725,000,000 (all cash distribution); of which 0.70% is distributed to Directors’ Compensation, count NT$71,500,000. Both Employees’ Compensation and Directors’ Compensation are distributed in cash.
(3) The distribution above is resolved by the Company’s Remuneration Committee and the Board of Directors. The above figures are no difference from the amount recognized in 2020.
4.Report of 2020 Earnings Distribution of cash dividends.
(1)The Board of Directors is authorized to decide the distribution of partial or full dividends in cash, and report the decision to the shareholders meeting in accordance with Company Law in Paragraph 5 of Article 240 and Article 19 of the Articles of Incorporation. Shareholders’ meeting may explicitly stipulate in the Articles of Incorporation to authorize the distributable shareholders’ bonuses in whole or in part may 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 reported to the shareholders’ meeting.
(2) The distributable earnings of the year 2020 is NT$5,153,622,813 will be distributed in cash totally to Shareholders’ dividends (NT$6.1 per share) have been approved by the board of directors on March 22, 2021. With the approval of the cash dividend by the meeting of shareholders, the chairperson will be authorized to determine the base date and distribution date of dividends. Cash dividends will be

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distributed up to one dollar (rounded down values below NT$1). The odd amount will be combined to the Company’s non-operating income.

(3) The dividend rate changed after this date as the number of shares circulated on the market under the influence of the following factors: buying back of the company shares and transfer or revocation of treasury shares. The chairperson is authorized by the Board of Directors to make adjustment to such distribution at his discretion.

II. Adoption Items

1. Proposed by the Board

Proposal:

Adoption of the 2020 Business Report and Financial Statements

Explanation:

(1)MSI Company’s Financial Statements, including balance sheet, income statement, statement of changes in shareholders’ equity, and statement of cash flows, were audited by independent auditors, Liang, Hua-Ling and Lai, Chung-His of PricewaterhouseCoopers, Taiwan. Also Business Report and Financial Statements have been approved by the Board of Directors and examined by the Audit Committee.
(2)2020 Business Report, independent auditors’ audit report, and the above-mentioned Financial Statements. see Appendix Ⅲ.

Voting Results:

Votes in favor	Votes against	Votes invalid	Votes abstained	Votes in favor of the total represented share present
671,129,368	93,814	0	85,291,545	88.71%

(Including votes casted electronically)

It was resolved that the above proposal is approved as proposed.

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2. Proposed by the Board

Proposal:

Adoption of the Proposal for Distribution of 2020 Profits

Explanation:

(1) The Board of Directors has adopted a Proposal for Distribution of 2020

Profits in accordance with Article 19 of the Articles of Incorporation.

2020 Earnings Distribution Table as below.

Micro-Star International Co., Ltd. Earnings Distribution Table of 2020

Micro-Star International Co., Ltd. Earnings Distribution Table of 2020
	（Unit: NT＄）
Items	Amount
Beginningunappropriated retained earnings	12,670,290,317
(-)2020 Other comprehensive net income(loss)	(4,084,830)
+2020 Net Profit after Tax	7,959,505,509
(-)Legal Reserve	(795,542,068)
+Reverse Special Reserve	120,066,041
(-)Cash Dividends to Shareholders(NT$6.1per share)	(5,153,622,813)
EndingUnappropriated Retained Earnings	14,796,612,156

Note:

Profit of 2020 is prioritized for profit distribution this year.
The cash dividend distribution earnings of the year 2020 accordance with Company Law in Paragraph 5 of Article 240 and Article 19 of the Articles of Incorporation 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 examined by the Audit Committee on March 22, 2021.

Chairman ： Hsu, Hsiang CEO ： Huang, Chin-Ching Accounting Officer ： Lin, Hui-Chin

Voting Results:

Votes in favor	Votes against	Votes invalid	Votes abstained	Votes in favor of the total represented share present
670,671,767	1,141,214	0	84,701,746	88.65%

(Including votes casted electronically)

It was resolved that the above proposal is approved as proposed.

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Ⅲ .Discussion Items

1. Proposed by the Board

Proposal:

Amendment to the ‟Rules of Shareholders’ Meeting” of the Company. Please proceed to discuss.

Explanation:

In accordance with the Acts, the Company hereby proposes amendments to

some articles of the Company’s ‟Rules of Shareholders’ Meeting”. see Appendix Ⅳ & Ⅳ-1.

Voting Results:

Votes in favor	Votes against	Votes invalid	Votes abstained	Votes in favor of the total represented share present
669,031,043	142,435	0	87,341,249	88.43%

(Including votes casted electronically)

It was resolved that the above proposal is approved as proposed.

Ⅳ .Election Items

1. Proposed by the Board

Proposal:

Election of Directors. Please vote.

Explanation:

(1) The present directors of the Company were elected at shareholders’ meeting on June 15, 2018 for a term of three years and the term will expire on June 14, 2021. Apprvoed by the Board meeting on March 22, 2021, directors will be re-elected at 2021 shareholders’ meeting.
(2) In accordance with Article 14 of MSI's Articles of Incorporation, eleven directors (including three independent directors) will be elected by shareholders' general meeting this year. The tenure of directors shall assume from the day of election during the current year’s regular shareholder meeting, for a term of 3 years, starting from June 11, 2021and expiring on June 10, 2024.

According to the announcement of the competent authority, " Contingency measures of the public companies shall suspend the convening of shareholders’ meetings for pandemic prevention", the Company shareholders’ meeting was postponed to July 16, 2021, so the term of the newly elected directors shall be calculated from the actual date of election, the tenure is from July 16, 2021 to July 15, 2024.

(3) Directors shall be elected by adopting candidates nomination system as specified in Article 192-1 of the Company Law. Shareholders shall elect the directors (including independent directors) from the list of the nominated candidates below:

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Title	Shareholder No. or ID No	Education	Current Job	Current Job
	Name	Experience		Representative
Director	1	Electronic engineering from National Cheng Kung University	Chairman of MSI Director & President of MICRO-STAR NETHERLANDS HOLDING B. V.	MICRO STAR INTERNATIONAL CO., LTD.
	Hsu, Hsiang	Engineer of Sony Industries Taiwan Co., Ltd.
Director	5	Electronics from Chung Yuan Christian University	Vice Chairman and The President of MSI Director & President of the following companies: MSI COMPUTER (AUSTRALIA) PTY. LTD. MSI COMPUTER (CAYMAN) CO., LTD. Director of the following company: MSI COMPUTER CORP. Executive Director of the following company: MSI ELECTRONIC(KUNSHAN)CO.,LTD.	MICRO STAR INTERNATIONAL CO., LTD. MICRO STAR INTERNATIONAL CO., LTD. MICRO STAR INTERNATIONAL CO., LTD. MICRO ELECTRONICS
	Huang, Chin-Ching	Engineer of Sony Industries Taiwan Co., Ltd.
Director	9	Electronics from Feng Chia University	Senior Vice President of MSI Director & President of the following companies: MICRO-STAR INTERNATIONAL (B.V.I) HOLDING CO., LTD. MSI POLSKA SP. Z O.O Director of the following company: MSI COMPUTER CORP. Executive Director of the following companies: MSI COMPUTER (SHENZHEN) CO., LTD. SHENZHEN MEGA INFORMATION CO.,LTD.	MSI PACIFIC MSI HOLDING MICRO STAR INTERNATIONAL CO., LTD. MSI(B.V.I) MSI PACIFIC
	Yu, Hsien-Neng	Engineer of Sony Industries Taiwan Co., Ltd.
Director	10	Electronic engineering from the Lien Ho Industrial and Technological Junior College	Senior Vice President of MSI Director & President of MSI COMPUTER JAPAN CO., LTD. Director of the following company: MSI COMPUTER(AUSTRALIA)PTY. LTD.	MICRO STAR INTERNATIONAL CO., LTD. MICRO STAR INTERNATIONAL CO.,LTD.
	Lin, Wen-Tung	Engineer of Sony Industries Taiwan Co., Ltd.
Director	99	Master degree of business administration from Universityof SouthernQueensland	ExecutiveVice President & NB BU GM of MSI
	Kuo,Hsu-Kuang	Manager of Chun-ShengComputer
Director	492	Master degree of business administration from Universityof South Australia	ExecutiveVice President & GNP BU GM of MSI
	Liao,Chun-Keng	Sales manager of Magic Systech Inc
Director	11864	ITI International Business Administration Program Shih Chien College of Design and Management	ExecutiveVice President & CND BU GM of MSI The Executive Director of the following company: MSI(ShenZhen)Co.,Ltd.	STAR INFORMATION HOLDING CO.,LTD
	Hung,Yu-Sheng	MA of Pou Chen Group
Director	A22412****	Foreign Languages and Literatures from National Taiwan University	Vice President of Procurement Division of MSI
	Chen,Te-Ling	D-LINK CORPORATION Administrator

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Title	Shareholder No. or ID No	Education	Current Job
	Name	Experience
Independent Director	26	Master degree of accountingfrom National Taipei University	Accountant of Chung Feng Accounting Firm
	Hsu, Jun-Shyan	Supervisor of MSI TUNG SHING & CO. C.P.A.
Independent Director	461	Criminal investigation of Central Police University	Independent Director of MSI Li Tsai Attorneys-At-Law
	Hsu, Kao-Shan	Attorney of Yung Jan Attorneys-At-Law
Independent Director	P12021****	Master degree of science in finance from The City University of New York	Independent Director of MSI
	Liu, Cheng-Yi	Independent Director of JOCHU TECHNOLOGY CO., LTD. Director of Administration Division of Micro-Star International Co., Ltd. Supervisor of TXC Administration Division of MSI Assistant Manager of Twin Head International Corp.

Reasons for nominating a candidate who has already served as an Independent Director for three consecutive terms or more:

Director Liu, Cheng-Yi meets the qualifications provided in the "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies", and can supervise the board of directors and provide professional opinions when performing the duties as an Independent Director. He continues to be nominated as a candidate for the independent directorship this time.

(4) The “Procedures for Election of Directors” of the Company. Please refer to page 40~41 in the Meeting Agenda Handbook.

Election Results:

Election Results:
Title	Shareholders’ No	Name	Elected votingnumber(votes)
Director	1	HSU,HSIANG	916,431,157
Director	5	HUANG,CHIN-CHING	697,914,808
Director	10	LIN,WEN-TUNG	604,346,697
Director	9	YU,HSIEN-NENG	576,926,804
Director	99	KUO,HSU-KUANG	548,966,041
Director	492	LIAO,CHUN-KENG	525,188,314
Director	11864	HUNG,YU-SHENG	512,819,491
Director	A22412****	CHEN,TE-LING	332,874,668
Independent Director	26	HSU,JUN-SHYAN	547,458,331
Independent Director	461	HSU,KAO-SHAN	497,289,304
Independent Director	P12021****	LIU,CHENG-YI	482,499,090

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Ⅴ. Extempore motions ： None.

Adjournment

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Appendix Ⅰ

Business Report

In 2020, the spread of the COVID-19 pandemic had a significant impact on the global economy, and the work and life patterns in the areas affected by the pandemic also changed drastically. Long-distance working from home, learning from home and home entertainment, plus the product buying effect brought by the successive launch of cost-effective new products had all caused the demand for PC and e-sports related products to increase greatly; the rise in relative demand had also resulted in the lack of supply of multiple upstream electronic components and tight global logistics, making PC shipments clearly unable to meet the demand. Fortunately, thanks to the Company's good long-term relationship with the supply chain and channel customers, as well as the close grasp of the needs of the end users, the Company was able to respond appropriately and supply smoothly. With the concerted efforts of all employees of the Company and the full support of suppliers and customers, in 2020, both the annual revenue and profit reached new highs.

(Ⅰ) Operating Performance in 2020

1. Consolidated financial results

(Ⅰ) Operating Performance in 2020 1. Consolidated financial results
			Unit: NT$ thousands
Year Item	2020	2019	YoY amount	YoY %
Sales revenue	146,502,789	120,491,417	26,011,372	21.59%
Gross profit	21,302,840	15,862,156	5,440,684	34.30%
After-taxprofit	7,959,505	5,587,210	2,372,295	42.46%
Basic earnings per share(After-tax) (NT$)	9.42	6.61	2.81	42.51%
Diluted earnings per share (After-tax) (NT$)	9.34	6.56	2.78	42.38%

2. Profitability analysis

Item	Year	Financial Analysis for the Last Two-Years	Financial Analysis for the Last Two-Years
		2020	2019
Financial structure(%)	Debt to asset ratio (%)	54.67	48.61
	Long-term capital to property, plant and equipment(%)	705.74	648.29
Solvency(%)	Current ratio(%)	169.13	188.25
	Quick ratio(%)	99.71	103.70
	Interest earned ratio (times) (%)	30,141.93	27,783.82
Profitability (%)	Return on assets (%)	11.51	9.71
	Return on shareholders’ equity (%)	23.92	18.33
	Profit ratio (%)	5.43	4.64
	Basic after-tax EPS(NT$)	9.42	6.61

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Research and Development Status
As a benchmark brand in the global gaming field, MSI is the most trust-worthy name in the gaming and e-sports industry. We've dedicated countless hours and committed numerous resources to the e-sports community to be a strong supporter for the world's most aspiring and best gamers and used their knowledge and expertise in our products in return. MSI integrates the e-sports functions required by the players, saves the trouble of exploring and adjusting by the players themselves, and pushes the system performance to the extreme. MSI equals to True Gaming! -- a true e-sports brand.

In addition to being recognized in the field of e-sports, MSI is also a pioneer and leading brand in the field of global digital content creation. The Content Creation series inherits the profound technology accumulated by MSI from the many years in e-sports, integrating accurate color gamut display, abundant battery life, excellent sound experience and powerful performance in a simple and stylish lightweight model. It is the best partner especially for design and creative work professionals in fields such as photography, image editing, 3D graphics, audio and video editing! Furthermore, the MSI Business and Productivity series is not only beautiful and light, but also has ultimate performance, information security protection and long-lasting power, with a boutique-like appearance made by simple and clean lines, just like the extraordinary taste of the successful business persons.

MSI listens to the needs of customers and the market, invests in R&D and design resources to create high-quality and well received laptops, graphics cards, monitors, motherboards, desktops and accessories. The GAMING series launched has won unanimous praise from players. The Content Creation series, which is carefully crafted especially for the digital content creation community, is highly recognized in terms of artistic quality and efficiency, and has become a leader in the high-end product market. Besides, MSI integrates servers that conform to the concept of cloud, industrial computers that meet customer requirements, robots that lead smart life, and automotive electronics that realize humanity technology to provide the most complete AIoT solutions. It is also the leading brand in artificial intelligence, commercial and the Internet of Things market.

(Ⅱ) Operating Plan for 2021

To adjust to the future environment, MSI’s adopted operation guidelines, estimated goals and important sales strategies for 2021 are as follows:
Operation guideline
(1)Sales and marketing aspect: progressively explore new markets and new customers and establish a long-term entrusted stable business relationship with customers with potentials and sound financial status to create mutual benefits.
(2)Product R&D aspect: Develop products which meet users’ needs.
(3)Manufacturing, quality and service aspect: continue implementing automated manufacturing to increase quality and efficiency. Improve repair and services to enhance customer satisfaction.
(4)In business management: Continue to improve operational efficiency.
(5)Finance aspect: uphold the principle of steady and stable operation, and control various financial risks.
Expected Sales and Rationales
We cover a wide range of products. While we continuously devote our efforts in the market of high-end products and pursuit of stable growth of each product, we will seek to increase the shipment in new product development and marketing, including motherboards, display cards, laptops, PCs, gaming monitors, gaming peripherals, servers, industrial computers, and auto electronics. We anticipate room for growth in the market. The company’s objective is to increase the overall revenue, and will proactively broaden the market share of every product.
Important sales policies
(1)Production policy aspect: Always paying attention to the global major political and economic situations to respond to the possible change in market demand and the suppliers’ productivity. To increase capacity utilization rate by adopting planned procurement of components. To adopt flexible production to reduce stock level yet fulfilling customer’s order demand. To observe the dynamic of supply chains and to ensure an effective production of employees, equipment, materials, and manufacturing methods.
(2)Sales policy aspect: to provide good quality products that fulfill customers’ need. To gain a win-win success in sales target with our customers.

Looking forward into 2021, the COVID-19 pandemic still cannot be eliminated, and its impact on industry supply and demand still exists, however, the uncertainty towards the global ICT industry and the overall economic environment will gradually decrease. In the face of rapid changes in the external environment, the Company will continue to integrate departments such as business, marketing, R&D, and operation management to improve the operational performance. All colleagues will also promote various businesses in concert, so that the performance can continue to grow. As the outside environment changes rapidly, we will coordinate the sales, marketing, R&D, and operational departments, and keep raising the operational performance. The 2021 shipment forecast for motherboards and graphic cards is 24 million pieces. Our employees will work together to promote every business to maintain the continuous growth of performance.

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I hereby on behalf of the MSI management team express our appreciation to all our shareholders, customers and suppliers. We also appreciate the hard efforts of all employees and directors made during the past year. We hope our shareholders will keep supporting and encouraging us. We will work harder to achieve a greater performance and sales results to share with you.

Sincerely yours,

Chairman ： Hsu, Hsiang CEO ： Huang, Chin-Ching Accounting Officer ： Lin, Hui-Chin

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Appendix Ⅱ

Audit Committee's Review Report

The Board of Directors has prepared the Company's 2020 Business Report, Financial Statements, and proposal for distribution of earnings. The CPA firm of PWC was retained to audit MSI's Financial Statements and has issued an audit report relating to the Financial Statements. The Business Report, Financial Statements, and earnings distribution proposal have been reviewed and determined to be correct and accurate by the Audit Committee members of Micro-Star International Co., Ltd.

According to relevant requirements of the Securities and Exchange Law and the Company Law, we hereby submit this report.

Micro-Star International Co., Ltd.

Chairman of the Audit Committee:

March 22, 2021

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Appendix Ⅲ

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of MICRO‐STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Opinion

We have audited the accompanying consolidated balance sheets of MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES (the “Group”) as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

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Key audit matters for the Group’s consolidated financial statements for the year ended December 31, 2020 are stated as follows:

Recognition of sales revenue generated from own-brand products

Description

Please refer to Note 4(26) for accounting policies on revenue recognition. The sales revenue from own-brand products for the year ended December 31, 2020 is higher than previous year due to the substantial increase in demand for notebook computers and peripherals. The recognition of sales revenue generated from own-brand products is critical to the Group’s consolidated financial statements. Therefore, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

A. Obtained an understanding of and assessed internal controls in relation to sales revenue, and validated the operating effectiveness of those above-mentioned internal controls.
B. Obtained detailed listing of sales revenue from own-brand products in the current year, and validated supporting documents, including sales invoices, customer purchase orders and delivery documents to ensure the appropriateness of recognition.
C. Inspected contents and relevant evidences in relation to sales returns and discounts occurring subsequent to the reporting period.
D. Performed accounts receivable confirmation procedure to significant customers.

Estimation of allowance for inventory valuation losses

Description

Please refer to Note 4(13) for accounting policies on inventory valuation, Note 5(2) for the uncertainty of accounting estimates and assumptions applied on inventory valuation, and Note 6(6) for details of inventories. As of December 31, 2020, the balances of inventories and allowance for inventory valuation losses are NT$27,966,905 thousand and NT$484,368 thousand, respectively.

The Group is primarily engaged in manufacturing and sales of motherboards, interface cards, notebook computers and other electronic products. Due to the rapid technological innovations and competition within the industry as well as frequent releases of new products resulting in potential price fluctuations, there is a higher risk of inventory losses due from market value decline or obsolescence. The Group recognises inventories at the lower of cost and net realisable value. As the monetary values of allowance for inventory valuation losses is critical to the financial statements as of December 31, 2020. Therefore, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

A. Inquired with management, and assessed the reasonableness in relation to the provision of allowance for inventory valuation losses.

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B. Validated the accuracy of the system logic in calculating the ageing of inventories, and confirmed the consistency with the Group’s policies.
C. Validated the appropriateness of system logic of the report of individually identified obsolete inventory prepared by management and confirmed the consistency with the Group’s policies.
D. Sampled and tested the net realisable value basis of the individual inventory and validated the appropriateness.

Other matter –Reference to audits of other independent auditors

We did not audit the financial statements of certain consolidated subsidiaries and investments accounted for under the equity method that are included in the consolidated financial statements. Those financial statements were audited by other independent auditors, whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on reports of the other independent auditors. Total assets of the above-mentioned entities (including investments accounted for under the equity method) amounted to NT$18,755,869 thousand and NT$11,727,830 thousand as of December 31, 2020 and 2019, constituting 24% and 19% of consolidated total assets, respectively. Sales revenue of the above-mentioned entities amounted to NT$35,899,397 thousand and NT$23,178,240 thousand for the years ended December 31, 2020 and 2019, constituting 25% and 19% of consolidated total sales revenue, respectively.

Other matter – Parent company only financial reports

We have audited and expressed an unmodified opinion with other matter section on the parent company only financial statements of MICRO-STAR INTERNATIONAL CO., LTD. as of and for the years ended December 31, 2020 and 2019.

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

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

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

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

Independent auditors’ responsibilities for the audit of the consolidated financial statements

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

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

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

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

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

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

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

Liang, Hua-Ling Lai, Chung-Hsi

For and on behalf of PricewaterhouseCoopers, Taiwan March 22, 2021

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

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

~17~

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars) December31,2020 Assets Notes AMOUNT % Current assets 1100 Cash and cash equivalents 6(1) $ 18,585,955 24 1110 Financial assets at fair value through profit or loss - current 6(2) 203,737 - 1136 Current financial assets at amortised cost 6(4) 1,000,447 1 1150 Notes receivable, net 6(5) 113,287 - 1170 Accounts receivable, net 6(5) 21,867,246 28 1200 Other receivables 265,987 - 1220 Current income tax assets 34,759 - 130X Inventories, net 6(6) 27,482,537 35 1410 Prepayments 6(7) 1,807,513 3 11XX Total current assets 71,361,468 91 Non-current assets 1517 Non-current financial assets at fair value through other comprehensive income 6(3) 124,338 - 1535 Non-current financial assets at amortised cost 6(4) and 8 226,937 - 1600 Property, plant and equipment 6(8) and 8 5,130,094 7 1755 Right-of-use assets 6(9) 502,400 1 1760 Investment property - net 6(11) 207,637 - 1840 Deferred income tax assets 6(26) 769,613 1 1900 Other non-current assets 75,028 - 15XX Total non-current assets 7,036,047 9 1XXX Total assets $ 78,397,515 100 (Continued)	December31,2019	December31,2019
	AMOUNT $ 10,709,045 152,805 1,200,000 47,114 17,205,783 227,116 16,417 22,527,840 1,675,701 53,761,821 151,975 227,848 4,893,433 474,897 300,559 471,523 66,652 6,586,887 $ 60,348,708	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Current financial assets at amortised cost 1150 Notes receivable, net 1170 Accounts receivable, net 1200 Other receivables 1220 Current income tax assets 130X Inventories, net 1410 Prepayments 11XX Total current assets Non-current assets 1517 Non-current financial assets at fair value through other comprehensive income 1535 Non-current financial assets at amortised cost 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property - net 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets		18 - 2 - 29 - - 37 3
		89
		- - 8 1 1 1 -
		11
		100

~18~

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

		(Expressed in thousands of New	(Expressed in thousands of New	Taiwan dollars)
				December31,2020			December31,2019
	Liabilities andEquity		Notes	AMOUNT	%		AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(12)	$	3,000,000		4 $	1,500,000		3
2120	Financial liabilities at fair value	6(2)
	through profit or loss - current			103,885		-	24,943		-
2170	Accounts payable			27,177,751	35		20,391,520	34
2200	Other payables	6(13)		5,344,410		7	3,844,835		6
2230	Current income tax liabilities			1,604,500		2	402,714		1
2250	Provision for liabilities - current	6(16)		850,435		1	556,720		1
2280	Current lease liabilities			218,182		-	159,081		-
2365	Refund liabilities- current			3,555,792		5	1,636,499		3
2399	Other current liabilities, others			337,535		-	108,961		-
21XX	Total current liabilities			42,192,490	54		28,625,273	48
	Non-current liabilities
2540	Long-term borrowings	6(14)	and 8	-		-	15,095		-
2570	Deferred income tax liabilities	6(26)		6,928		-	27,214		-
2580	Non-current lease liabilities			225,548		1	247,767		1
2640	Net defined benefit liability,	6(15)
	non-current			220,314		-	221,974		-
2670	Other non-current liabilities, others			212,383		-	198,920		-
25XX	Total non-current liabilities			665,173		1	710,970		1
2XXX	Total liabilities			42,857,663	55		29,336,243	49
	Equity attributable to owners of
	parent
	Share capital	6(17)
3110	Share capital - common stock			8,448,562	11		8,448,562	14
	Capital surplus	6(18)
3200	Capital surplus			804,214		1	803,918		1
	Retained earnings	6(19)
3310	Legal reserve			5,541,298		7	4,982,577		8
3320	Special reserve			794,525		1	505,966		1
3350	Unappropriated retained earnings			20,625,711	26		17,065,967	28
	Other equity interest
3400	Other equity interest		(	674,458) (		1) (	794,525) (		1)
31XX	Equity attributable to owners of
	the parent			35,539,852	45		31,012,465	51
3XXX	Total equity			35,539,852	45		31,012,465	51
3X2X	Total liabilities and equity		$	78,397,515	100 $		60,348,708	100

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

~19~

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items	YearendedDecember31 2020 2019 Notes AMOUNT % AMOUNT % 6(20) $ 146,502,789 100 $ 120,491,417 100 6(6)(24) ( 125,199,949)( 85) ( 104,629,261) ( 87) 21,302,840 15 15,862,156 13 6(24) ( 7,053,359) ( 5 ) ( 5,508,321) ( 4) ( 1,345,054) ( 1 ) ( 1,070,509) ( 1) ( 3,724,340) ( 3 ) ( 3,315,224) ( 3) 7,741 - ( 15,696) - ( 12,115,012)( 9) ( 9,909,750) ( 8) 9,187,828 6 5,952,406 5 6(21) 88,822 - 82,368 - 6(22) 576,975 - 632,915 - 6(23) ( 224,787) - ( 125,710) - ( 31,945) - ( 23,546) - 409,065 - 566,027 - 9,596,893 6 6,518,433 5 6(26) ( 1,637,388)( 1) ( 931,223) ( 1) $ 7,959,505 5 $ 5,587,210 4 6(15) ($ 5,106) - ($ 10,079) - 6(3) ( 27,637) - - - 6(26) 1,021 - 2,016 - ( 31,722) - ( 8,063) - 147,704 - ( 288,559) - 147,704 - ( 288,559) - $ 115,982 - ($ 296,622) - $ 8,075,487 5 $ 5,290,588 4 $ 7,959,505 5 $ 5,587,210 4 $ 8,075,487 5 $ 5,290,588 4 6(27) $ 9.42 $ 6.61 $ 9.34 $ 6.56
4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit gain(loss) 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the period Other comprehensive income Components of other comprehensive loss that will not be reclassified to profit or loss 8311 Actuarial loss on defined benefit plan 8316 Unrealised losses from investments in equity instruments measured at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive loss that will not be reclassified to profit or loss Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8300 Total other comprehensive income (loss) for the period 8500 Total comprehensive income for the period Profit attributable to: 8610 Owners of the parent Comprehensive income attributable to: 8710 Owners of the parent Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

Items

YearendedDecember31
2020
2019
Notes
AMOUNT
%
AMOUNT
%
6(20)
$ 146,502,789
100
$ 120,491,417
100
6(6)(24)
(
125,199,949)(
85) (
104,629,261) (
87)
21,302,840
15
15,862,156
13
6(24)
(
7,053,359) (
5 ) (
5,508,321) (
4)

(
1,345,054) (
1 ) (
1,070,509) (
1)

(
3,724,340) (
3 ) (
3,315,224) (
3)
7,741
- (
15,696)
-
(
12,115,012)(
9) (
9,909,750) (
8)
9,187,828
6
5,952,406
5
6(21)
88,822
-
82,368
-
6(22)
576,975
-
632,915
-
6(23)
(
224,787)
- (
125,710)
-
(
31,945)
- (
23,546)
-
409,065
-
566,027
-
9,596,893
6
6,518,433
5
6(26)
(
1,637,388)(
1) (
931,223) (
1)
$ 7,959,505
5
$ 5,587,210
4

6(15)
($ 5,106)
- ($ 10,079)
-
6(3)
(
27,637)
-
-
-
6(26)
1,021
-
2,016
-
(
31,722)
- (
8,063)
-
147,704
- (
288,559)
-
147,704
- (
288,559)
-
$ 115,982
- ($ 296,622)
-
$ 8,075,487
5
$ 5,290,588
4
$ 7,959,505
5
$ 5,587,210
4

$ 8,075,487
5
$ 5,290,588
4
6(27)
$ 9.42
$ 6.61
$ 9.34
$ 6.56

4000
Sales revenue

5000
Operating costs

5900
Net operating margin
Operating expenses

6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6450
Expected credit gain(loss)
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7100
Interest income

7010
Other income

7020
Other gains and losses

7050
Finance costs
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense

8200
Profit for the period
Other comprehensive income
Components of other
comprehensive loss that will not be
reclassified to profit or loss
8311
Actuarial loss on defined benefit plan
8316
Unrealised losses from investments
in equity instruments measured at
fair value through other
comprehensive income

8349
Income tax related to components of
other comprehensive income that
will not be reclassified to profit or
loss

8310
Components of other
comprehensive loss that will not be
reclassified to profit or loss
Components of other
comprehensive income (loss) that
will be reclassified to profit or loss
8361
Financial statements translation
differences of foreign operations
8360
Components of other
comprehensive income (loss) that
will be reclassified to profit or loss
8300
Total other comprehensive income
(loss) for the period
8500
Total comprehensive income for the
period
Profit attributable to:
8610
Owners of the parent
Comprehensive income attributable to:
8710
Owners of the parent
Earnings per share (in dollars)

9750
Basic earnings per share
9850
Diluted earnings per share

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

~20~

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Notes						Equity attributa	e to owners ofth	e parent	e parent
	Share capital - common stock			CapitalSurplus				Retained Earnings			Other Equity	In	terest
			Additional paid-in capital	Treasury stock transactions	Donated assets received	Employee stock warrants	Legal reserve	Special reserve		Unappropriated retained earnings	Financial statements translation differences of foreign operations	a f	Unrealized losses from financial ssets measured at air value through other comprehensive income
6(19) 6(19) 6(19)	$8,448,562 - - - - - - - - $8,448,562 $8,448,562 - - - - - - - $8,448,562	$1,050,563 - - - - - - ( 422,429 ) - $ 628,134 $ 628,134 - - - - - - - $ 628,134		$130,592 - - - - - - - - $130,592 $130,592 - - - - - - - $130,592	$ 434 - - - - - - - 298 $ 732 $ 732 - - - - - - 296 $ 1,028	$ 44,460 - - - - - - - - $ 44,460 $ 44,460 - - - - - - - $ 44,460	$4,378,464 - - - 604,113 - - - - $4,982,577 $4,982,577 - - - 558,721 - - - $5,541,298	$421,815 - - - - 84,151 - - - $505,966 $505,966 - - - - 288,559 - - $794,525	$15,976,937 5,587,210 ( 8,063 ) 5,579,147 ( 604,113 ) ( 84,151 ) ( 3,801,853 ) - - $17,065,967 $17,065,967 7,959,505 ( 4,085 ) 7,955,420 ( 558,721 ) ( 288,559 ) ( 3,548,396 ) - $20,625,711		($ 505,966 ) - ( 288,559 ) ( 288,559 ) - - - - - ($ 794,525 ) ($ 794,525 ) - 147,704 147,704 - - - - ($ 646,821 )	$ - - - - - - - - - $ - $ - - ( 27,637 ) ( 27,637 ) - - - - ($ 27,637 )		$29,945,861 5,587,210 ( 296,622 ) 5,290,588 - - ( 3,801,853 ) ( 422,429 ) 298 $31,012,465 $31,012,465 7,959,505 115,982 8,075,487 - - ( 3,548,396 ) 296 $35,539,852

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

~21~

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation (including right-of-use assets and
investment properties)

Amortization

Expected credit (gain) loss
Net loss (gain) on financial assets and liabilities
at fair value through profit or loss
Interest expense
Interest income

Loss (gain) on disposal of property, plant and
equipment

Gain on lease modification

Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or
loss
Notes receivable, net
Accounts receivable
Other receivables
Inventories, net
Prepayments
Other non-current assets
Changes in operating liabilities
Notes payable
Accounts payable
Other payables
Provision for liabilities - current
Refund liabilities- current
Other current liabilities, others
Net defined benefit liability
Cash inflow generated from operations
Interest received
Interest paid
Income tax paid
Net cash flows from operating Activities

Year ended December 31
Notes
2020
2019
$ 9,596,893 $ 6,518,433
6(24)
1,095,818
890,056
6(24)
200
224
(
7,741 )
15,696
31,850 (
39,222 )
31,945
23,546
6(21)
(
88,822 ) (
82,368 )
6(23)
540 (
2,906 )
6(9)
(
366 ) (
214 )
900
-
(
66,173 ) (
11,931 )
(
4,652,441 ) (
1,179,668 )
(
37,322 ) (
70,951 )
(
4,954,697 ) (
474,978 )
(
131,812 ) (
294,679 )
18,207
97,176
- (
200 )
6,786,231
5,457,896
1,497,850
427,104
293,715
55,625
1,919,293 (
160,406 )
215,321
16,728
(
6,766 ) (
5,714 )
11,542,623
11,179,247
86,784
84,991
(
29,945 ) (
23,559 )
(
774,794 ) (
1,520,287 )
10,824,668
9,720,392

(Continued)

~22~

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through
other comprehensive income

Acquisition of financial assets at amortised cost
Proceeds from disposal of financial assets at
amortised cost
Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and
equipment
Acquisition of investment properties

Increase in refundable deposits
Net cash flows used in investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings
Repayment of the principal portion of lease liabilities
Payment of long-term borrowings
Increase (decrease) in guarantee deposits received
Cash dividends paid

Cash distribution from capital surplus

Due to donated assets received
Net cash flows used in financing Activities
Effect of exchange rate
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Year ended December 31
Notes
2020
2019
6(3)
$ - ($ 151,975 )
- (
616,024 )
200,464
-
6(8)
(
970,766 ) (
982,667 )
557
57,700
6(11)
(
316 ) (
3,602 )
(
22,474 ) (
15,894 )
(
792,535 ) (
1,712,462 )
1,500,000 (
1,500,000 )

(
239,125 ) (
152,916 )
(
1,039 ) (
843 )
13,463 (
27,983 )
6(19)
(
3,548,396 ) (
3,801,853 )
6(19)
- (
422,429 )
296
298
(
2,274,801 ) (
5,905,726 )
119,578 (
208,839 )
7,876,910
1,893,365
6(1)
10,709,045
8,815,680
6(1)
$ 18,585,955 $ 10,709,045

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

~23~

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of MICRO-STAR INTERNATIONAL CO., LTD.

Opinion

We have audited the accompanying parent company only balance sheets of MICRO-STAR INTERNATIONAL CO., LTD. (the “Company”) as at December 31, 2020 and 2019, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as at December 31, 2020 and 2019, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Company’s parent company only financial statements for the year ended December 31, 2020 are stated as follows:

~24~

Recognition of sales revenue generated from own-brand products

Description

Please refer to Note 4(24) for accounting policies on revenue recognition. The sales revenue from own-brand products for the year ended December 31, 2020 is higher than previous year due to the substantial increase in demand for notebook computers and peripherals. The recognition of sales revenue generated from own-brand products is critical to the Company’s financial statements. Therefore, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

A. Obtained an understanding of and assessed internal controls in relation to sales revenue, and validated the operating effectiveness of those above-mentioned internal controls.
B. Obtained detailed listing of sales revenue from own-brand products in the current year, and validated supporting documents, including sales invoices, customer purchase orders and delivery documents to ensure the appropriateness of recognition.
C. Inspected contents and relevant evidences in relation to sales returns and discounts occurring subsequent to the reporting period.
D. Performed accounts receivable confirmation procedure to significant customers.

Estimation of allowance for inventory valuation losses

Description

Please refer to Note 4(11) for accounting policies on inventory valuation, Note 5(2) for the uncertainty of accounting estimates and assumptions applied on inventory valuation, and Note 6(6) for details of inventories. As of December 31, 2020, the balances of inventories and allowance for inventory valuation losses are NT$27,539,446 thousand and NT$423,070 thousand, respectively.

The Company is primarily engaged in manufacturing and sales of motherboards, interface cards, notebook computers and other electronic products. Due to the rapid technological innovations and competition within the industry as well as frequent releases of new products resulting in potential price fluctuations, there is a higher risk of inventory losses due from market value decline or obsolescence. The Company recognises inventories at the lower of cost and net realisable value. As the monetary values of allowance for inventory valuation losses is critical to the financial statements as of December 31, 2020. Therefore, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

A. Inquired with management, and assessed the reasonableness in relation to the provision of allowance for inventory valuation losses.
B. Validated the accuracy of the system logic in calculating the ageing of inventories, and confirmed the consistency with the Company’s policies.

~25~

C. Validated the appropriateness of system logic of the report of individually identified obsolete inventory prepared by management and confirmed the consistency with the Company’s policies.
D. Sampled and tested the net realisable value basis of the individual inventory and validated the appropriateness.

Other matter-Reference to audits of other independent auditors

We did not audit the financial statements of certain investments accounted for under the equity method that are included in the parent company only financial statements. Those financial statements were audited by other independent auditors, whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on reports of the other independent auditors. Total assets of the above-mentioned investees (including investments accounted for under the equity method) amounted to NT$1,230,304 thousand and NT$1,097,458 thousand as at December 31, 2020 and 2019, constituting 1.52% and 1.75% of total assets, respectively. Comprehensive income of the above-mentioned investees amounted to NT$121,586 thousand and NT$88,436 thousand for the years ended December 31, 2020 and 2019, constituting 1.51% and 1.67% of total comprehensive income, respectively.

Responsibilities of management and those charged with governance for the parent

company only financial statements

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

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

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

Independent auditors’ responsibilities for the audit of the parent company only financial statements

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

~26~

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

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

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

Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

~27~

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

Liang, Hua-Ling[Lai, Chung-Hsi ]

For and on behalf of PricewaterhouseCoopers, Taiwan March 22, 2021

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

~28~

MICRO-STAR INTERNATIONAL CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	December31,2019	December31,2019
	AMOUNT $ 8,881,827 56,641 1,200,000 3,929 10,846,273 6,632,030 157,760 22,756,055 1,351,294 51,885,809 151,975 7,496,491 2,567,030 179,398 407,702 18,890 10,821,486 $ 62,707,295	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Current financial assets at amortised cost 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 130X Inventories, net 1410 Prepayments 11XX Total current assets Non-current assets 1517 Non-current financial assets at fair value through other comprehensive income 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets		14 - 2 - 18 11 - 36 2
		83
		- 12 4 - 1 -
		17
		100

~29~

MICRO-STAR INTERNATIONAL CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities andEquity	December31,2020 December31,2019 Notes AMOUNT % AMOUNT % 6(10) $ 3,000,000 4 $ 1,500,000 2 6(2) 103,885 - 24,943 - 26,409,577 33 19,764,458 32 6(11) 4,340,669 6 3,049,919 5 7 4,964,060 6 4,272,610 7 1,499,604 2 362,183 1 6(13) 873,229 1 579,337 1 97,029 - 71,892 - 3,418,122 4 1,555,509 2 215,875 - 65,353 - 44,922,050 56 31,246,204 50 6(22) 6,084 - 26,830 - 63,594 - 108,013 - 6(12) 220,314 - 221,974 1 107,328 - 91,809 - 397,320 - 448,626 1 45,319,370 56 31,694,830 51 6(14) 8,448,562 10 8,448,562 13 6(15) 804,214 1 803,918 1 6(16) 5,541,298 7 4,982,577 8 794,525 1 505,966 1 20,625,711 26 17,065,967 27 ( 674,458) ( 1) ( 794,525) ( 1) 35,539,852 44 31,012,465 49 $ 80,859,222 100 $ 62,707,295 100
Current liabilities 2100 Short-term borrowings 2120 Financial liabilities at fair value through profit or loss - current 2170 Accounts payable 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2250 Provisions for liabilities - current 2280 Current lease liabilities 2365 Refund liabilities-current 2399 Other current liabilities, others 21XX Total current Liabilities Non-current liabilities 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2640 Net defined benefit liability, non-current 2670 Other non-current liabilities, others 25XX Total non-current liabilities 2XXX Total Liabilities Equity Share capital 3110 Share capital - common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3XXX Total equity 3X2X Total liabilities and equity

Liabilities andEquity

December31,2020
December31,2019
Notes
AMOUNT
%
AMOUNT
%
6(10)
$ 3,000,000
4 $ 1,500,000
2
6(2)
103,885
-
24,943
-
26,409,577
33
19,764,458
32
6(11)
4,340,669
6
3,049,919
5
7
4,964,060
6
4,272,610
7
1,499,604
2
362,183
1
6(13)
873,229
1
579,337
1
97,029
-
71,892
-
3,418,122
4
1,555,509
2
215,875
-
65,353
-
44,922,050
56
31,246,204
50
6(22)
6,084
-
26,830
-
63,594
-
108,013
-
6(12)
220,314
-
221,974
1
107,328
-
91,809
-
397,320
-
448,626
1
45,319,370
56
31,694,830
51
6(14)
8,448,562
10
8,448,562
13
6(15)
804,214
1
803,918
1
6(16)
5,541,298
7
4,982,577
8
794,525
1
505,966
1
20,625,711
26
17,065,967
27
(
674,458) (
1) (
794,525) (
1)
35,539,852
44
31,012,465
49
$ 80,859,222
100 $ 62,707,295 100

Current liabilities
2100
Short-term borrowings

2120
Financial liabilities at fair value
through profit or loss - current

2170
Accounts payable
2200
Other payables

2220
Other payables - related parties

2230
Current income tax liabilities
2250
Provisions for liabilities - current

2280
Current lease liabilities
2365
Refund liabilities-current
2399
Other current liabilities, others
21XX
Total current Liabilities
Non-current liabilities
2570
Deferred income tax liabilities

2580
Non-current lease liabilities
2640
Net defined benefit liability,
non-current

2670
Other non-current liabilities, others
25XX
Total non-current liabilities
2XXX
Total Liabilities
Equity
Share capital

3110
Share capital - common stock
Capital surplus

3200
Capital surplus
Retained earnings

3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained earnings
Other equity interest
3400
Other equity interest
3XXX
Total equity
3X2X
Total liabilities and equity

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

~30~

MICRO-STAR INTERNATIONAL CO., LTD. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items	YearendedDecember31 2020 2019 Notes AMOUNT % AMOUNT % 6(17) and 7 $ 144,805,966 100 $ 118,740,373 100 6(6)(20) and 7 ( 125,877,926)( 87) ( 105,097,585) ( 89) 18,928,040 13 13,642,788 11 6(20) and 7 ( 6,079,422) ( 4 ) ( 4,689,816) ( 4) ( 842,682) ( 1 ) ( 526,354) - ( 3,349,045) ( 2 ) ( 2,937,315) ( 2) 6(5) ( 2,446) - ( 4,095) - ( 10,273,595)( 7) ( 8,157,580) ( 6) 8,654,445 6 5,485,208 5 6(18) 49,551 - 57,384 - 216,357 - 240,016 - 6(2)(19) ( 138,396) - ( 50,864) - ( 21,446) - ( 13,504) - 6(7) 667,569 - 685,979 1 773,635 - 919,011 1 9,428,080 6 6,404,219 6 6(22) ( 1,468,575)( 1) ( 817,009) ( 1) $ 7,959,505 5 $ 5,587,210 5 6(12) ($ 5,106) - ($ 10,079) - ( 27,637) - - - 6(22) 1,021 - 2,016 - ( 31,722) -( 8,063) - 147,704 - ( 288,559) - 147,704 - ( 288,559) - $ 115,982 - ($ 296,622) - $ 8,075,487 5 $ 5,290,588 5 6(23) $ 9.42 $ 6.61 $ 9.34 $ 6.56
4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit loss 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of associates and joint ventures accounted for using equity method, net 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year Other comprehensive income Components of other comprehensive loss that will not be reclassified to profit or loss 8311 Other comprehensive loss, before tax, Actuarial losses on defined benefit plans 8316 Unrealised losses from investments in equity instruments measured at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive loss that will not be reclassified to profit or loss Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8300 Total other comprehensive income (loss) for the year 8500 Total comprehensive income for the year Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

Items

YearendedDecember31
2020
2019
Notes
AMOUNT
%
AMOUNT
%
6(17) and 7
$ 144,805,966
100
$ 118,740,373
100
6(6)(20) and 7
(
125,877,926)(
87) (
105,097,585) (
89)
18,928,040
13
13,642,788
11
6(20) and 7
(
6,079,422) (
4 ) (
4,689,816) (
4)

(
842,682) (
1 ) (
526,354)
-

(
3,349,045) (
2 ) (
2,937,315) (
2)
6(5)
(
2,446)
- (
4,095)
-
(
10,273,595)(
7) (
8,157,580) (
6)
8,654,445
6
5,485,208
5
6(18)
49,551
-
57,384
-
216,357
-
240,016
-
6(2)(19)
(
138,396)
- (
50,864)
-
(
21,446)
- (
13,504)
-
6(7)
667,569
-
685,979
1
773,635
-
919,011
1
9,428,080
6
6,404,219
6
6(22)
(
1,468,575)(
1) (
817,009) (
1)
$ 7,959,505
5
$ 5,587,210
5

6(12)
($ 5,106)
- ($ 10,079)
-
(
27,637)
-
-
-
6(22)
1,021
-
2,016
-
(
31,722)
-(
8,063)
-
147,704
- (
288,559)
-
147,704
- (
288,559)
-
$ 115,982
- ($ 296,622)
-
$ 8,075,487
5
$ 5,290,588
5
6(23)
$ 9.42
$ 6.61
$ 9.34
$ 6.56

4000
Sales revenue

5000
Operating costs

5900
Net operating margin
Operating expenses

6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6450
Expected credit loss

6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7100
Interest income

7010
Other income
7020
Other gains and losses

7050
Finance costs
7070
Share of profit of associates and joint
ventures accounted for using equity
method, net

7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense

8200
Profit for the year
Other comprehensive income
Components of other
comprehensive loss that will not be
reclassified to profit or loss
8311
Other comprehensive loss, before
tax, Actuarial losses on defined
benefit plans

8316
Unrealised losses from investments
in equity instruments measured at
fair value through other
comprehensive income
8349
Income tax related to components of
other comprehensive income that
will not be reclassified to profit or
loss

8310
Components of other
comprehensive loss that will not be
reclassified to profit or loss
Components of other
comprehensive income (loss) that
will be reclassified to profit or loss
8361
Financial statements translation
differences of foreign operations
8360
Components of other
comprehensive income (loss) that
will be reclassified to profit or loss
8300
Total other comprehensive income
(loss) for the year
8500
Total comprehensive income for the
year
Earnings per share (in dollars)

9750
Basic earnings per share
9850
Diluted earnings per share

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

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MICRO-STAR INTERNATIONAL CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in thousands of New Taiwan dollars)

2019 Balance at January 1, 2019 Profit for the year Other comprehensive loss for the yea Total comprehensive income (loss) Appropriation of 2018 earnings Legal reserve Special reserve Cash dividends Cash dividends from capital surplus Due to donated assets received Balance at December 31, 2019 2020 Balance at January 1, 2020 Profit for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) Appropriation of 2019 earnings Legal reserve Special reserve Cash dividends Due to donated assets received Balance at December 31, 2020	Notes		Share capital - common stock				Capital	Surplus	Surplus						RetainedEarnings			Other EquityInterest	Other EquityInterest	Other EquityInterest		Total equity
					Additional paid-in capital		Treasury stock transactions		Donated assets received		Employee stock warrants		Legal reserve		Special reserve		Unappropriated retained earnings	Financial statements translation differences of foreign operations	a f	Unrealised losses from financial ssets measured at air value through other comprehensive income
	r 6(16) 6(16) 6(16)		$8,448,562 - - - - - - - - $8,448,562 $8,448,562 - - - - - - - $8,448,562	$1,050,563 - - - - - - ( 422,429 ) - $ 628,134 $ 628,134 - - - - - - - $ 628,134			$ 130,592 - - - - - - - - $ 130,592 $ 130,592 - - - - - - - $ 130,592		$ 434 - - - - - - - 298 $ 732 $ 732 - - - - - - 296 $ 1,028		$ 44,460 - - - - - - - - $ 44,460 $ 44,460 - - - - - - - $ 44,460		$4,378,464 - - - 604,113 - - - - $4,982,577 $4,982,577 - - - 558,721 - - - $5,541,298		$ 421,815 - - - - 84,151 - - - $ 505,966 $ 505,966 - - - - 288,559 - - $ 794,525	$15,976,937 5,587,210 ( 8,063 ) 5,579,147 ( 604,113 ) ( 84,151 ) ( 3,801,853 ) - - $17,065,967 $17,065,967 7,959,505 ( 4,085 ) 7,955,420 ( 558,721 ) ( 288,559 ) ( 3,548,396 ) - $20,625,711		($ 505,966 ) - ( 288,559 ) ( 288,559 ) - - - - - ($ 794,525 ) ($ 794,525 ) - 147,704 147,704 - - - - ($ 646,821 )	$ - - - - - - - - - $ - $ - - ( 27,637 ) ( 27,637 ) - - - - ($ 27,637 )		$29,945,861 5,587,210 ( 296,622 ) 5,290,588 - - ( 3,801,853 ) ( 422,429 ) 298 $31,012,465 $31,012,465 7,959,505 115,982 8,075,487 - - ( 3,548,396 ) 296 $35,539,852

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

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MICRO-STAR INTERNATIONAL CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation (including right-of-use assets)

Amortization

Expected credit loss

Net loss (gain) on financial assets and liabilities
at fair value through profit or loss
Interest expense
Interest income

Share of profit of associates and joint ventures
accounted for using equity method
Gain on disposal of property, plant and
equipment

Gain on lease modification

Changes in operating assets and liabilities
Changes in operating assets
Notes receivable, net
Accounts receivable
Accounts receivable due from related parties
Other receivables
Inventories, net
Prepayments
Changes in operating liabilities
Notes payable
Accounts payable
Other payables
Other payables - related parties
Provisions for liabilities - current
Refund liabilities - current
Other current liabilities, others
Net defined benefit liability
Cash inflow generated from operations
Interest received
Interest paid
Income tax paid
Net cash flows from operating Activities

Year ended December 31
Notes
2020
2019
$ 9,428,080 $ 6,404,219
6(8)(9)(20)
280,442
157,384
6(20)
3
4
6(5)
2,446
4,095
56,286 (
22,921 )
21,446
13,504
6(18)
(
49,551 ) (
57,384 )
(
667,569 ) (
685,979 )
6(19)
- (
11 )
6(9)
(
53 ) (
163 )
3,257 (
1,552 )
(
2,160,868 ) (
113,958 )
(
3,655,599 ) (
750,153 )
(
60,584 ) (
70,283 )
(
4,360,321 ) (
589,004 )
(
26,305 ) (
235,903 )
- (
200 )
6,645,119
5,105,653
1,288,865
295,762
691,450
600,849
293,892
64,736
1,862,613 (
147,149 )
150,522
37,814
(
6,766 ) (
5,714 )
9,736,805
10,003,646
48,128
61,236
(
19,561 ) (
13,859 )
(
656,478 ) (
1,403,648 )
9,108,894
8,647,375

(Continued)

~33~

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at amortised cost			$	- ($	471,064 )
Proceeds from disposal of financial assets at
amortised cost				200,000	-
Acquisition of financial assets at fair value through	6(3)
other comprehensive income				- (	151,975 )
Acquisition of investment accounted for using equity
method		(		2,150 )	-
Acquisition of property, plant and equipment	6(8)	(		270,927 ) (	298,543 )
Proceeds from disposal of property, plant and
equipment				-	13
Increase in refundable deposits		(		5,836 ) (	13,291 )
Net cash flows used in investing Activities		(		78,913 ) (	934,860 )
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings				1,500,000 (	1,500,000 )
Repayment of the principal portion of lease liabilities		(		102,593 ) (	62,065 )
Increase (decrease) in guarantee deposits received				15,519 (	24,081 )
Cash dividends paid	6(16)	(		3,548,396 ) (	3,801,853 )
Cash distribution from capital surplus	6(16)			- (	422,429 )
Due to donated assets received				296	298
Net cash flows used in financing Activities		(		2,135,174 ) (	5,810,130 )
Net increase in cash and cash equivalents				6,894,807	1,902,385
Cash and cash equivalents at beginning of year	6(1)			8,881,827	6,979,442
Cash and cash equivalents at end of year	6(1)		$	15,776,634 $	8,881,827

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

~34~

Appendix Ⅳ

Shareholders Meeting Rules of Micro-Star International Co., Ltd.

Article 1

The shareholders meeting rules of the Company is promulgated in accordance with Article 182-1 of the Company Law.

Article 2

Shareholders attending the Meeting shall submit the attendance card for the purpose of signing in. The number of shares represented by shareholders attending the Meeting shall be calculated in accordance with the attendance cards submitted by the shareholders. Article 3

When the Company holds a shareholders meeting, it may opt for the shareholders to exercise voting rights by correspondence or electronic means.

Shareholders exercising voting rights by electronic means shall cast their votes through the Company designated electronic voting platform.

The attendance and voting at the shareholders meeting shall be calculated based on the shares.

Article 4

The place of the shareholders meeting shall be at the office of the Company or at a location convenient to the shareholders and suitable for convening a shareholders meeting. The time of the meeting may not be earlier than 9 a.m or later than 3 p.m. Article 5

When the shareholders meeting was convened by the Board of Directors, the shareholders meeting shall be presided by the Chairman of the Board of Directors. If the Chairman is absent or is unable to exercise the duties for certain reasons, the vice-Chairman shall act on his/her behalf. If the vice-Chairman is absent or is unable to exercise the duties for certain reasons, the Chairman may designate the managing director to act on his/her behalf; if there is no managing director, one of the directors may be designated to act on his/her behalf. Where the Chairman does not designate a proxy, the managing director or directors may elect a person among themselves to act on behalf of the Chairman.

When the shareholders meeting was convened by other persons who have the convening right, the shareholders meeting shall be presided by the convener.

Article 6

The Company may designate attorneys, accountants or relevant personnel engaged to be present in the shareholders meeting. The staffs handling the shareholders meeting shall wear identification cards or arm-band.

Article 7

The Company shall sound record or video record the whole process of the shareholders meeting and shall preserve it for at least one year.

Article 8

Upon the starting time of the meeting, the chairman shall order the meeting to begin and announce the relevant information such as the number of non-voting rights and the number of shares present. However, where the shareholders present represent half or less than half of the total outstanding shares, the chairman may postpone the meeting for a total of two times. The postponed time may not in total exceed one hour. Where after two postponements, the shareholders present still do not meet the quorum but represent one-third or more of the total outstanding shares, a tentative resolution may be passed in accordance with Paragraph 1, Article 175 of the Company Law. If the shares present represent more than half of the total outstanding shares before the end of the meeting, the chairman may propose the tentative resolution to the shareholders meeting for voting in accordance with Article 174 of the Company Law.

Article 9

The agenda of the Meeting shall be set by the Board of Directors if the Meeting is convened by the Board of Directors. Unless otherwise resolved at the Meeting, the Meeting shall proceed in accordance with the agenda. The above provision applies mutatis mutandis to cases where the Meeting is convened by any person, other than the Board of Directors, entitled to convene such Meeting. Unless otherwise resolved at the Meeting, the chairman

~35~

cannot announce adjournment of the Meeting before all the discussion items (including special motions) listed in the agenda are resolved.

The shareholders shall not designate any other person as chairman and continue the Meeting in the same or other place after the Meeting is adjourned. However, in the event that the Chairman adjourns the Meeting in violation of these Rules and Procedures, the shareholders may designate, by a majority of votes represented by shareholders attending the Meeting, one person as chairman to continue the Meeting. Article 10

Before a shareholder makes a statement, he/she must complete a statement slip stating the subject of the statement, the shareholder number (or attendance card number) and shareholder name, and the chairman shall determine the order of his/her statement. Where a shareholder present only completed a statement slip but did not make a statement, he/she will be deemed to not have made a statement. Where the statement made is inconsistent with that stated on the statement slip, the statement made will prevail. When a shareholder present makes a statement, the other shareholders may not make a statement and interfere, unless consent is obtained from the chairman and the shareholder making the statement. The chairman shall restrain such interfering shareholder.

Article 11

For each proposal, a shareholder may not make more than two statements, unless consent is obtained from the chairman. Each statement may not exceed five minutes. The chairman may restrain the shareholder form making the statement if he/she violates the above provisions or has exceeded the scope of the proposal.

Article 12

Where an institution is delegated to attend the shareholders meeting, it may only appoint one representative to attend. Where the institution appoints two or more

representatives to attend the shareholders meeting, only one person may make a statement for each proposal.

Article 13

After a shareholder makes a statement, the chairman may respond him/herself or designate a relevant person to respond.

Article 14

Where the chairman believes that the proposal discussed may be resolved, he/she may announce the ending of the discussion and propose that votes be made.

The votes for the proposals shall be calculated by the votes casted on the spot plus the votes casted by electronic voting.

Article 15

The personnel supervising and calculating the votes for the proposals shall be designated by the chairman, but the supervising personnel shall be a shareholder. The result of the votes shall be announced on the spot and recorded.

Article 15-1

The election of directors at a shareholders meeting shall be held in accordance with the applicable election and appointment rules adopted by the Company, and the voting results shall be announced on-site immediately, including the names of those elected as directors and the numbers of votes with which they were elected.

The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least one year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Law, the ballots shall be retained until the conclusion of the litigation.

Article 16

During the meeting, the chairman may announce recesses at his/her own discretion. Article 17

Unless otherwise specified in the Company Law and the Articles of Incorporation, resolutions at a shareholders meeting shall be adopted by a majority vote of the shareholders present. When making a resolution, if shareholders present have no objections upon the inquiry of the chairman, it will be deemed as adopted and its effect shall be the same as resolution by voting. Article 18

When a proposal has an amendment or a replacement, the chairman may combine it with the original proposal and determine the order of resolution. If one of the proposals is resolved, the other proposals will be deemed as rejected and there is no need to make another resolution.

~36~

Article 19

The chairman may instruct the security officer to assist in maintaining the order of the meeting. The security officer shall wear an arm-band with the word "Security" when assisting in the maintenance of the order of the meeting.

Article 20 The Rule shall be approved by the shareholders’ meeting, so does the amendment. The first version established on January 19, 1998; The second version amended on March 3, 2000; The third version amended on May 16, 2002; The fourth version amended on June 17, 2014; The fifth amendment was made on July 16, 2021.

~37~

Attachment Ⅳ -1

Comparison Table for the “Rules of Shareholders’ Meeting” Before and After Revision

AFTER THE REVISION BEFORE THE REVISION Remarks Article8 Article8 In response to Upon the starting time of the meeting, the chairman Upon the starting time of the meeting, the chairman shall revised the shall order the meeting to begin and announce the order the meeting to begin. However, where the relevant. relevant information such as the number of non-voting shareholders present represent half or less than half of rights and the number of shares present. However, where the total outstanding shares, the chairman may postpone the shareholders present represent half or less than half the meeting for a total of two times. The postponed time of the total outstanding shares, the chairman may may not in total exceed one hour. Where after two postpone the meeting for a total of two times. The postponements, the shareholders present still do not meet postponed time may not in total exceed one hour. Where the quorum but represent one-third or more of the total after two postponements, the shareholders present still outstanding shares, a tentative resolution may be passed do not meet the quorum but represent one-third or more in accordance with Paragraph 1, Article 175 of the of the total outstanding shares, a tentative resolution may Company Law. If the shares present represent more than be passed in accordance with Paragraph 1, Article 175 of half of the total outstanding shares before the end of the the Company Law. If the shares present represent more meeting, the chairman may propose the tentative than half of the total outstanding shares before the end of resolution to the shareholders meeting for voting in the meeting, the chairman may propose the tentative accordance with Article 174 of the Company Law. resolution to the shareholders meeting for voting in accordance with Article 174 of the Company Law. Article 15-1 To comply The election of directors at a shareholders meeting shall with the be held in accordance with the applicable election and amended appointment rules adopted by the Company, and the Regulations. - voting results shall be announced on site immediately, including the names of those elected as directors and the numbers of votes with which they were elected. The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least one year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Law, the ballots shall be retained until the conclusion of the litigation. Article 20 Article 20 To increase The Rule shall be approved by the shareholders’ meeting, The Rule shall be approved by the shareholders’ meeting, the date of so does the amendment. The first version established on so does the amendment. The first version established on the January 19, 1998; January 19, 1998; amendment. The second version amended on March 3, 2000; The second version amended on March 3, 2000; The third version amended on May 16, 2002; The third version amended on May 16, 2002; The fourth version amended on June 17, 2014; The fourth version amended on June 17, 2014. The fifth amendment was made on July 16, 2021.

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AI assistant

MSI — AGM Information 2021

52042_rns_2021-10-08_aaec7ec8-0fd7-4117-b3dd-bb09be7a7a41.pdf

Micro-Star International Co., Ltd.

2021 Annual Shareholders' Meeting Minutes

Attendance:

I. Report Items:

II. Adoption Items

1. Proposed by the Board

Proposal:

Explanation:

Voting Results:

2.

Proposed by the Board

Proposal:

Explanation:

Voting Results:

Ⅲ .Discussion Items

1. Proposed by the Board

Proposal:

Explanation:

Voting Results:

Ⅳ .Election Items

1. Proposed by the Board

Proposal:

Explanation:

Election Results:

Ⅴ. Extempore motions ： None.

Adjournment

Appendix Ⅰ

Business Report

(Ⅰ) Operating Performance in 2020

1. Consolidated financial results

2. Profitability analysis

(Ⅱ) Operating Plan for 2021

Appendix Ⅱ

Audit Committee's Review Report

Appendix Ⅲ

Opinion

Basis for opinion

Key audit matters

Recognition of sales revenue generated from own-brand products

Description

How our audit addressed the matter

Estimation of allowance for inventory valuation losses

Description

How our audit addressed the matter

Other matter –Reference to audits of other independent auditors

Other matter – Parent company only financial reports

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

Independent auditors’ responsibilities for the audit of the consolidated financial statements

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

Opinion

Basis for opinion

Key audit matters

Recognition of sales revenue generated from own-brand products

Description

How our audit addressed the matter

Estimation of allowance for inventory valuation losses

Description

How our audit addressed the matter

Other matter-Reference to audits of other independent auditors

Responsibilities of management and those charged with governance for the parent

company only financial statements

Independent auditors’ responsibilities for the audit of the parent company only financial statements

MICRO-STAR INTERNATIONAL CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

MICRO-STAR INTERNATIONAL CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

MICRO-STAR INTERNATIONAL CO., LTD. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

MICRO-STAR INTERNATIONAL CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in thousands of New Taiwan dollars)

MICRO-STAR INTERNATIONAL CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Appendix Ⅳ

Shareholders Meeting Rules of Micro-Star International Co., Ltd.

MSI AGM Information 2021