SENAO — AGM Information 2020

Jun 18, 2020

NOTICE:If there is any discrepancy between the English version and the original Chinese version

or any difference in the interpretation of the two versions, the Chinese version shall prevail.

Senao International Co., Ltd. 2020 General Shareholders’ Meeting Minutes

Date and Time: June 12, 2020 at 9:00 a.m. (Friday)

Location : No.500, Fuxing 3rd Rd., Guishan Dist., Taoyuan City

Number of shares represented by shareholders present:

Shares represented by the shareholders in attendance or by proxies totaled 258,252,657(including the 197,156,495 shares represented by the shareholders exercising voting rights through e-voting), accounting for 78.87% of the total shares issued by the Company, i.e. 258,252,657 shares.

Chairman : Jin-Lin Lai, Chairman of the Board of Directors

Recorder : Kuan-Heng Lai

Directors represent:

Jin-Lin Lai

Kung-Liang Yeh, Chairman of the Audit Committee, Chairman of the Compensation Committee, Independent Director

Yung-Lin Su, Member of the Audit Committee, Member of the Compensation Committee, Independent Director

Yuan-Kuang Tu

Cheng-Feng Lin

Cheng-Kang Lin

Attendees:

Dien-Sheng Chang, CPA of Deloitte & Touche

Kuan Hao Huang, Huang & Partners Law Office

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I. Announcement of the Commencement of the Meeting

II.. Chairperson’s Remarks : (omitted)

III. Reporting Matters

1. 2019 Business Report. Please Kindly Review. (Attachment 1)

2. 2019 Audit Committee Report. Please Kindly Review. (Attachment 2)

3. Report on the Distribution of Dividends and Bonuses for 2019. Please Kindly Review. ( Shareholders’ Meeting Handbook)

4. Report on Distribution of Employees’ Compensation and Directors’ Remuneration for 2019. Please Kindly Review. ( Shareholders’ Meeting Handbook)

5. Amendments to the Company’s “Ethical Corporate Management Best Practice Principles and Procedures.” Please Kindly Review. ( Shareholders’ Meeting Handbook)

IV. Recognition Matters

Agenda 1: 2019 Business Report and Financial Statements. Recognition is Respectfully Requested.

Proposed by the Board of Directors

• Explanation: (1) The 2019 Financial Statements (including consolidated financial statements) were prepared by the Company and audited by independent auditors Dien Sheng Chang and Benjamin Shih of Deloitte & Touche, who have submitted an unqualified independent auditors’ report. The Audit committee has audited the financial statements together with the Business Report, and recognition was respectfully requested.

• (2) Please refer to pages 10 and 16 of this handbook for the Business Report, Independent Auditors’ Report and financial statements (including consolidated financial statements.) (Attachment 1 and 3)

Resolution:Voting results: 200,521,084 “for” votes, representing 98.43% of the shares present at the time of voting; 105,498 “against” votes; 0

• “ invalid“ vote; 3,081,691 “abstain/non-vote” votes

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RESOLVED, the above proposal submitted by the Board of Directors was ratified upon shareholder voting

Agenda 2: 2019 Earnings Distribution Plan. Recognition is Respectfully Requested.

Proposed by the Board of Directors

• Explanation: (1) The Company’s 2019 earnings distribution plan was approved by the Board of Directors and audited by the Audit Committee, and the earnings distribution plan is as follows:

Senao International Co., Ltd.

Earnings Distribution Plan Fiscal Year 2019

Unit: NT$

	Unit: NT$	Unit: NT$
Item	Amount
Beginning undistributed retained earnings		678,305,342
Net income of 2019	411,231,004
Add: remeasurements of defined benefit plans recognized in retained earnings	15,438,459
Less: Adjustment resulting from application of 2019 TIFRS	(11,860,090)
Total amount of after-tax net income for the period and other items adjusted to the current year’s undistributed earnings other than after-tax net income for theperiod
		414,809,373
Less: Appropriation of 10% retained earnings for legal reserve		(41,480,937)
Less: Appropriation of special reserve in accordance with laws		(244,566)
Distributable retained earnings for currentperiod		1,051,389,212
Distribution item:
Cash dividends on Common Shares		(374,466,353)

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(NT$1.45 per share) Ending undistributed retained 676,922,859 earnings

Chairperson:Jin-Lin Lai Manager:Pao-Yung Lin Accounting Manager:Tsai-Hung Yu

• (2) The current number of outstanding shares is 258,252,657 shares, and the cash dividend is NT$1.45 per share.

Note: The Company’s principle for earnings distribution is that the distributable retained earnings of 2019 should be distributed with priority.

Resolution: Voting results: 200,515,088 “for” votes, representing 98.43% of the shares present at the time of voting; 118,844 “against” votes; 0

“ invalid“ vote; 3,074,341 “abstain/non-vote” votes

RESOLVED, the above proposal submitted by the Board of Directors was ratified upon shareholder voting

V. Special Motions

VI. Meeting Adjourned 9:12 a.m. of the same day

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Attachment 1

1. 2019 Operating Result

(1) Operating Result

Annual consolidated operating income reached NT$28.865 billion; profit before tax was NT$480 million; net income was NT$410 million; net income attributable to owners of parent was NT$411 million; earnings per share was NT$1.59.

(2) Profitability Analysis:

Profitability Analysis

Year Item	Year 2019	Year 2018
Return on Assets(%)	4.26	3.98
Return on Equity (%)	7.01	6.78
Net Profit Margin(%)	1.42	1.27
Earningsper Share(NT$)	1.59	1.59

Note: Amounts in the table are data from the consolidated financial statements of the Company and its subsidiaries.

(3) Research and Development:

2019 is definitely a key year for the development of telecommunication technology, when countries such as the U.S., South Korea, China have all kicked off their commercialization of 5G services; whereas, in Taiwan, the 5G licenses are expected to be released in early 2020, and the commercialization are likely to be launched in July, 2020. In the near future, the consumer application market will be the very first area for 5G application in Taiwan. Higher resolution video streaming and content service for mobile devices will come into the picture and lead a better immersive experience in comparison to those of current 4G services. As the 5G technology matures, more application focuses will be placed on the B2B services. We are looking forwards to emerging 5G applications such as remote medical care, self-driving vehicles, and artificial intelligence and Internet of things (AIoT). Furthermore, the 5G services can replace the traditional back end network equipment, e,g, WI-FI assess points and switches. Such as 5G application in an enterprise network, for example, can lead to faster connections and meet enterprises’ security needs.

In terms of hardware specification of telecommunication products,

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full upgrades will definitely follow the advent of 5G telecommunication technology, namely upgrades of 5G processor and CPU, elevation of camera resolution, increase of memory capacity, and rise of screen-to-body ratio. In addition, as challenges on foldable screen technology have been overcome, in 2019, many smartphone manufacturers introduced their foldable models (e.g. Samsung’s Galaxy Fold, LG’s G8X ThinQ and Huawei’s Mate X, etc.). We are looking forwards to various forms of foldable phone in 2020. As technology advances and production scale grows, the price of a foldable phone tends to fall and thus leads to more purchases.

2. 2020 Business Plan

(1) Business Policy

1. Through the new retail model that integrates virtual and physical services, combining with seasonal new products, best sellers and clearance products, supported with resources from major phone manufacturers, Senao will enrich a product’s lifespan and smooth the whole selling process.

2. Senao analyzes and segments its members’ behaviors, and keens to cultivate and expand the number of its members as well as social media fans. It also enhances the branding and product marketing, so to deepen member loyalty and adhesiveness through the sales customization tailoring to specific member segment.

3. It is foreseeable that launch of 5G service in Taiwan in 2020 will be followed by a peak of 5G phone sales, and Senao will act its role as a valuable sales channel by providing a full spectrum of products and diverse telecommunications services.

4. Working closely with global and local home appliance brands, Senao deploys in luxury and smart home appliances market. By placing focus on training to the service personnel at the retail stores and brand experience zones, Senao wishes to offer unique experience to its customers.

5. Senao will continue to push the sales of health care and beauty products under the brands, “sakuyo” and “Healthy Collection” it carries. In 2020, shampoo, conditioner and hair loss treatment

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products under these brands will kick off the market, allowing Senao get closer to customers’ daily livings. Through the distribution of trail packages in retail stores, customers will know better about the products and place an order.

• (2) Business Objectives:

• Sales of 5G smartphones will enter its growth phase in 2020. According to the forecast made by the Institute for Information Industry in December, 2019, the global shipment of 5G phones will reach to 260 million phones in 2020. Thus, Senao will increase the training on 5G services and products to its service personnel at retail stores in order to provide full-dimensional experience to its customers.

• By analyzing customers’ characteristics and preference, lifting employees’ understanding of product features as well as execution, and pairing with reasonable sales KPI system, Senao wishes to satisfy its customers with better product experience and in-store services.

• Via the brand-new decoration in Senao retail stores, we look forwards to attract more customers visit to Senao retail stores for product experience and provide smart home services.

• (3) Sales Policy:

• As the 3C market trend turns to consumer-oriented, Senao will focus on introducing popular communication and information products, appliance and accessories from well-known brands, and hence providing our customers more popular and top-quality product selections and packages to create a win-win situation among Senao, phone makers and customers.

• In terms of distribution rights, we will work on the dealership of top brands’ competitive products, and ceaselessly look for second-tier brands’ products with high potential and price-to-performance ratio.

3. The Company’s Future Development Strategy

The Company will continue to be customer-centric and provide its customers with “all time, all products, all services and all channels”

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services via the new retail model. In the coming year, Senao aims not only to boost the Senao member base, but also to offer 24/7 services by connecting the online and offline businesses through the Senaonline platform. Senao will hold the recruiting events to introduce the 2R startup online platform, “Coco Back”, aiming to pick up sales momentum.

2020 will be the official launch of the 5G market, and a peak of phone sales is anticipated, and Senao will target to create opportunities in sales of accessories, information, home appliance, health care products in addition to the existing telecommunication business. With flexible product packages, varied marketing campaigns, and dense sales network, we will create more potential business opportunities.

Finally, Senao will ceaselessly promote all kinds of social welfare events through the Senao Technology Education Foundation to pursue our corporate social responsibilities.

1. Effect of External Competition, the Legal Environment, and the Overall Business Environment

According to the forecast announced by the Directorate-General of Budget, Accounting and Statistics, Executive Yuan on February 12, 2020 , the projected economic growth rate for 2020 is 2.37%, declined by 0.35% in comparison to 2.72% projected in November 2019; declined by 0.34% in comparison to 2.71% of the year 2019.

A slow growth of Taiwan's overall economy is anticipated in 2020. In the first quarter of 2020, the domestic economy is likely to be negatively impacted by the Novel Coronavirus (COVID-19) outbreak, especially for airlines, travel industry, hotels, restaurants and Taiwanese enterprises who have operations in Mainland China.

In terms of telecommunication industry in Taiwan, it is expected that 5G phones sales will follow with the launch of 5G service, and all phone manufacturers are likely to introduce their 5G flagship models packaged with 5G fare plans from all telecommunication companies to capture a piece of the 5G pie.

Taiwan’s mobile communication user market has become saturated. According to NCC’s statistics, as of the end of December 2019, the population of mobile users was 29.21 million declined by

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0.04% in comparison to 29.22 million at the end of December 2018. The Company will work closely with its parent company, Chunghwa Telecom, to promote Chunghwa Telecom's mobile numbers pairing with diverse fare plans and provide a wide range of product selection and marketing strategy.

Chairman: Chin-Lin Lai

Manager: Pao-Yung Lin

Accounting Manager: Tsai-Hung Yu

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Attachment 2

Senao International Co., Ltd.

Audit Committee Report

The Board of Directors has prepared this Company’s 2019 financial statements (including consolidated financial statements), which have been audited by external auditors Dien Sheng Chang and Benjamin Shih of Deloitte & Touche, together with the business report and proposal of earning distribution plan. We have examined above statements and reports and found no irregularities. We hereby report as above in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. Please kindly approve.

To

The Company’s 2020 General Shareholders’ Meeting

Senao International Co., Ltd.

Audit Committee Convenor : Kung-Liang Yeh

February 21, 2020

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Attachment 3

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders Senao International Co., Ltd.

Opinion

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

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

Key Audit Matter

Key audit matter is the matter that, in our professional judgment, was of most significance in our audit of the financial statements for the year ended December 31, 2019. The matter was addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on the matter.

Key audit matter of the financial statements for the year ended December 31, 2019 is as follows:

Valuation of Inventories

As described in Note 9 to the financial statements, the carrying amount of the Company’s inventories was $1,785,706 thousand as of December 31, 2019, which represented 18% of the total assets. The inventories of the Company are mainly consisted of communication products. Due to rapid changes in technology, the value of inventory is greatly affected by market price fluctuations, and there is high risk of inventory loss or obsolescence. In addition, the amount of inventories is significant and the valuation of inventories involved significant judgement and estimates made by the management. Consequently, valuation of inventories was considered to be a key audit matter.

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For the accounting policy on inventory and the related material accounting judgement and estimation, refer to Notes 4-e. and 5.

Corresponding audit procedures:

We evaluated the appropriateness of the method applied in the calculation of the valuation loss for inventories at year end. Then, we verified the data used in the assumptions against the relevant supporting documents and recalculated the loss provision to ensure its accuracy.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. 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.

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4. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

5. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

7. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision, and performance of the Company 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 financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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The engagement partners on the audit resulting in this independent auditors’ report are Dien Sheng Chang and Shih Ching Pin.

Deloitte & Touche Taipei, Taiwan Republic of China

February 21, 2020

Notice to Readers

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

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

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SENAO INTERNATIONAL CO., LTD.

BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss (Note 7) Notes receivable, net (Note 8) Trade receivables, net (Note 8) Trade receivables from related parties (Note 27) Other receivables (Note 8) Other receivables from related parties (Note 27) Inventories (Note 9) Other prepaid expenses (Note 27) Prepayments Other current assets (Note 10) Total current assets NONCURRENT ASSETS Financial assets at fair value through other comprehensive income (Note 11) Investments accounted for using equity method (Note 12) Property, plant and equipment (Notes 13 and 27) Right-of-use assets (Note 14) Intangible assets (Notes 15 and 27) Deferred tax assets (Note 22) Refundable deposits (Note 27) Other noncurrent assets Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Financial liabilities at fair value through profit or loss (Note 7) Contract liabilities (Note 20) Notes payable (Note 16) Notes payable to related parties (Note 27) Trade payables (Note 16) Trade payables to related parties (Note 27) Other payables (Note 17) Other payables to related parties (Note 27) Current tax liabilities (Note 22) Lease liabilities - current (Note 14) Advance receipts (Note 27) Other current liabilities Total current liabilities NONCURRENT LIABILITIES Deferred income tax liabilities (Note 22) Lease liabilities - noncurrent (Note 14) Net defined benefit liabilities - noncurrent (Note 18) Guarantee deposits Total noncurrent liabilities Total liabilities EQUITY Share capital - ordinary shares (Note 19) Capital surplus (Note 19) Retained earnings (Note 19) Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares (Note 19) Total equity TOTAL		2019 Amount % $ 2,255,114 23 53 - 85,066 1 606,155 6 902,930 9 101,969 1 193,516 2 1,785,706 18 34,257 - 39,159 1 9,463 - 6,013,388 61 10,648 - 1,669,375 17 869,510 9 695,029 7 38,710 - 437,994 5 61,363 1 3,000 - 3,785,629 39 $ 9,799,017 100 $ 11 - 112,928 1 2,989 - 18 - 1,415,687 15 261,302 3 1,052,670 11 207,505 2 32,863 - 262,856 3 8,369 - 39,622 - 3,396,820 35 52 - 447,799 4 81,607 1 24,561 - 554,019 5 3,950,839 40 2,582,527 27 717,885 7 1,454,896 15 13,536 - 1,093,115 11 2,561,547 26 (13,781) - - - 5,848,178 60 $ 9,799,017 100		2018
				Amount % $ 2,112,082 22 - - 133,818 1 643,800 7 1,031,573 11 141,911 1 289,160 3 1,915,572 20 18,732 - 46,829 1 7,822 - 6,341,299 66 25,704 - 1,717,228 18 934,876 10 - - 28,275 - 434,038 5 60,774 1 12,136 - 3,213,031 34 $ 9,554,330 100 $ 217 - 51,466 1 15,789 - 18 - 2,147,308 23 214,714 2 897,726 9 237,647 3 1,443 - - - 5,828 - 42,290 - 3,614,446 38 129 - - - 104,294 1 27,382 - 131,805 1 3,746,251 39 2,582,527 27 717,885 8 1,414,311 15 - - 1,106,892 11 2,521,203 26 (13,536) - - - 5,808,079 61 $ 9,554,330 100

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

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SENAO INTERNATIONAL CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 20 and 27) Sales Less: Sales returns Sales discounts and allowances Net sales Service and repairs revenue Total operating revenue OPERATING COSTS (Notes 9, 21 and 27) Cost of goods sold Service and repairs costs Total operating costs GROSS PROFIT OPERATING EXPENSES (Notes 21 and 27) Selling and marketing expenses General and administrative expenses Total operating expenses OTHER INCOME AND EXPENSES (Note 21) INCOME FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Note 27) Other income (Note 21) Share of profit of subsidiaries and associates accounted for using equity method Net gain on foreign currency exchange (Note 21) Gain on financial assets and liabilities at fair value through profit or loss Interest expense (Notes 21 and 27) Miscellaneous disbursements Total non-operating income and expenses		2019 Amount % $ 26,364,640 96 259,562 1 606,055 2 25,499,023 93 1,994,845 7 27,493,868 100 23,806,106 87 605,532 2 24,411,638 89 3,082,230 11 2,457,379 9 351,910 1 2,809,289 10 1,510 - 274,451 1 117,204 1 99,863 - 1,195 - 259 - (14,280) - (2,063) - 202,178 1		2018
				Amount % $ 28,423,743 96 264,005 1 738,547 2 27,421,191 93 2,200,545 7 29,621,736 100 25,397,696 86 784,053 2 26,181,749 88 3,439,987 12 2,813,653 10 394,539 1 3,208,192 11 (5,773) - 226,022 1 126,465 - 59,161 - 1,636 - 267 - - - (1,493) - 186,036 - (Continued)

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SENAO INTERNATIONAL CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Note 22) NET INCOME TOTAL OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified to profit or loss: Remeasurement of defined benefit plans (Note 18) Unrealized gain or loss on investments in equity instruments at fair value through other comprehensive income Share of remeasurement of defined benefit plans of associates Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 22) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Share of exchange differences arising from the translation of the foreign operations of associates Total other comprehensive income (loss), net of income tax TOTAL COMPREHENSIVE INCOME EARNINGS PER SHARE (Note 23) Basic Diluted		2019 Amount % $ 476,629 2 65,398 - 411,231 2 20,363 - (15,056) - (851) - (4,073) - 383 - 15,795 - (984) - 14,811 - 15,194 - $ 426,425 2 $ 1.59 $ 1.59		2018
				Amount % $ 412,058 1 6,204 - 405,854 1 (12,556) - (10,296) - 67 - 4,499 - (18,286) - (5,248) - 898 - (4,350) - (22,636) - $ 383,218 1 $ 1.59 $ 1.58
		$		$

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

(Concluded)

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SENAO INTERNATIONAL CO., LTD.

STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Dividends Per Share)

Share Capital - Ordinary Shares (Note 19) Capital Surplus (Note 19) BALANCE, JANUARY 1, 2018 $ 2,582,527 $ 703,314 Appropriation of 2017 earnings Legal reserve - - Cash dividends - NT$3.1662 per share - - - - Other changes in capital surplus Changes in capital surplus from investments in associates accounted for using the equity method - (39) Changes in percentage of ownership interests in subsidiaries - - Net income for the year ended December 31, 2018 - - Other comprehensive loss for the year ended December 31, 2018 - - Total comprehensive income (loss) for the year ended December 31, 2018 - - Share-based payment - 14,610 BALANCE, DECEMBER 31, 2018 2,582,527 717,885 Effect of retrospective application - - BALANCE, JANUARY 1, 2019 AS ADJUSTED 2,582,527 717,885 Appropriation of 2018 earnings Legal reserve - - Special reserve - - Cash dividends - NT$1.4500 per share - - - - Net income for the year ended December 31, 2019 - - Other comprehensive income (loss) for the year ended December 31, 2019 - - Total comprehensive income (loss) for the year ended December 31, 2019 - - BALANCE, DECEMBER 31, 2019 $ 2,582,527 $ 717,885	Retained Earnings (Note 19) Legal Reserve Special Reserve Unappropriated Earnings $ 1,331,759 $ - $ 1,609,507 82,552 - (82,552) - - (817,683) 82,552 - (900,235) - - - - - (244) - - 405,854 - - (7,990) - - 397,864 - - - 1,414,311 - 1,106,892 - - (11,860) 1,414,311 - 1,095,032 40,585 - (40,585) - 13,536 (13,536) - - (374,466) 40,585 13,536 (428,587) - - 411,231 - - 15,439 - - 426,670 $ 1,454,896 $ 13,536 $ 1,093,115	Other Equity Exchange Differences on Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Translating Foreign Operations Comprehensive Income Treasury Shares (Note 19) $ 1,110 $ - $ (328,076) - - - - - - - - - - - - - - - - - - (4,350) (10,296) - (4,350) (10,296) - - - 328,076 (3,240) (10,296) - - - - (3,240) (10,296) - - - - - - - - - - - - - - - - 14,811 (15,056) - 14,811 (15,056) - $ 11,571 $ (25,352) $ -	Total Equity $ 5,900,141 - (817,683) (817,683) (39) (244) 405,854 (22,636) 383,218 342,686 5,808,079 (11,860) 5,796,219 - - (374,466) (374,466) 411,231 15,194 426,425 $ 5,848,178

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

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SENAO INTERNATIONAL CO., LTD.

STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments to reconcile income before income tax to net cash provided by operating activities: Depreciation expenses Amortization expenses Expected credit loss Net gain on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Compensation cost of share-based payment transactions Share of profit of subsidiaries and associates accounted for using equity method Net loss on disposal of property, plant and equipment Net gain on lease modification Net loss (gain) on foreign currency exchange Changes in operating assets and liabilities: Decrease (increase) in: Notes receivable Trade receivables Trade receivables from related parties Other receivables Other receivables from related parties Inventories Other prepaid expenses Prepayments Other current assets Increase (decrease) in: Contract liabilities Notes payable Trade payables Trade payables to related parties Other payables Other payables to related parties Advance receipts Other current liabilities Net defined benefit liabilities - noncurrent Cash generated from operations Interest paid Income tax paid Net cash generated from operating activities

2019 2018 $ 476,629 $ 412,058 416,517 88,900 31,227 24,824 1,254 1,307 (259) (267) 14,280 - (4,978) (5,530) - 15,564 (99,863) (59,161) 1,121 5,773 (2,631) - 80 (456) 48,752 91,079 36,381 52,164 128,643 247,556 39,979 (3,237) 95,644 41,616 129,866 310,603 (15,525) (1,630) 7,670 (1,615) (1,641) (7,822) 61,462 (21,815) (12,800) 5,303 (731,621) (102,560) 46,588 81,135 154,944 (22,256) (30,142) (265,308) 2,541 (9,942) (2,668) (9,597) (2,324) (2,581) 789,126 864,105 (14,280) - (39,228) (136,266) 735,618 727,839 (Continued)

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SENAO INTERNATIONAL CO., LTD.

STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of investments accounted for using equity method Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Acquisition of intangible assets Decrease (increase) in other noncurrent assets Interest received Dividends received Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Decrease in guarantee deposits Repayment of the principal portion of lease liabilities Cash dividends paid Treasury shares transferred to employees Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF THE YEAR	2019 $ (29,550) 83,025 (16,731) 135 (589) - (41,662) 9,136 4,951 107,764 116,479 (2,821) (331,698) (374,466) - (708,985) (80) 143,032 2,112,082 $ 2,255,114	2018 $ (78,500) - (59,223) 59 - 3,715 (34,023) 11,169 5,516 99,474 (51,813) (98) - (817,683) 327,122 (490,659) 456 185,823 1,926,259 $ 2,112,082

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

(Concluded)

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders Senao International Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of Senao International Co., Ltd. and its subsidiaries (the Group), which comprise the consolidated balance sheets as of December 31, 2019 and 2018, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the 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, 2019 and 2018, 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 International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matter

Key audit matter is the matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements for the year ended December 31, 2019. The matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on the matter.

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Key audit matter of the consolidated financial statements for the year ended December 31, 2019 is as follows:

Valuation of Inventories

As described in Note 9 to the consolidated financial statements, the carrying amount of the inventories held by Group was $1,866,957 thousand as of December 31, 2019, which represented 19% of the consolidated total assets. The inventories of the Group are mainly consisted of communication products. Due to rapid changes in technology, the value of inventory is greatly affected by market price fluctuations, and there is high risk of inventory loss or obsolescence. In addition, the amount of inventories is significant and the valuation of inventories involved significant judgments and estimates made by the management. Consequently, valuation of inventories was considered to be a key audit matter.

For the accounting policy on inventory and the related significant accounting judgments and estimates, refer to Notes 4-f. and 5.

Corresponding audit procedures:

We evaluated the appropriateness of the method applied in the calculation of the valuation loss for inventories at year end. Then, we verified the data used in the assumptions against the relevant supporting documents and recalculated the loss provision to ensure its accuracy.

Emphasis of Matter

As disclosed in Note 3 to the consolidated financial statements, the Group initially applied IFRS 16 “Leases” in 2019. Our audit opinion is not modified in respect of this matter.

Other Matter

We have also audited the parent company only financial statements of Senao International Co., Ltd. as of and for the years ended December 31, 2019 and 2018 on which we have issued an unmodified opinion with emphasis of matter.

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 IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

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Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

1. 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.

2. 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.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. 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.

5. 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.

6. 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.

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Dien Sheng Chang and Shih Ching Pin.

Deloitte & Touche Taipei, Taiwan Republic of China February 21, 2020

Notice to Readers

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

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

• 24 -

SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss (Note 7) Notes receivable, net (Note 8) Trade receivables, net (Note 8) Trade receivables from related parties (Note 29) Other receivables (Note 8) Other receivables from related parties (Note 29) Inventories (Note 9) Other prepaid expenses (Note 29) Prepayments Other current assets (Notes 10 and 31) Total current assets NONCURRENT ASSETS Financial assets at fair value through other comprehensive income (Note 11) Investments accounted for using equity method (Note 13) Property, plant and equipment (Notes 14, 23 and 29) Right-of-use assets (Notes 15, 23 and 29) Goodwill (Note 16) Intangible assets (Notes 17 and 23) Deferred tax assets (Note 24) Refundable deposits (Note 29) Other noncurrent assets (Note 30) Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Financial liabilities at fair value through profit or loss (Note 7) Contract liabilities (Note 22) Notes payable (Note 18) Notes payable to related parties (Note 29) Trade payables (Note 18) Trade payables to related parties (Note 29) Other payables (Note 19) Other payables to related parties (Note 29) Current tax liabilities (Note 24) Lease liabilities - current (Notes 15 and 29) Advance receipts (Note 29) Other current liabilities Total current liabilities NONCURRENT LIABILITIES Deferred income tax liabilities (Note 24) Lease liabilities - noncurrent (Notes 15 and 29) Net defined benefit liabilities - noncurrent (Note 20) Guarantee deposits Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT Share capital - ordinary shares (Note 21) Capital surplus (Note 21) Retained earnings (Note 21) Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares (Note 21) Total equity attributable to stockholders of the parent NONCONTROLLING INTERESTS (Note 21) Total equity TOTAL		2019 Amount % $ 2,568,897 25 53 - 85,098 1 775,269 8 825,474 8 297,482 3 193,265 2 1,866,957 19 40,475 - 58,892 1 39,523 - 6,751,385 67 10,648 - 953,685 10 895,742 9 707,610 7 38,001 - 189,111 2 444,380 4 73,177 1 5,830 - 3,318,184 33 $ 10,069,569 100 $ 11 - 117,083 1 3,499 - 18 - 1,546,693 15 261,122 3 1,082,626 11 236,840 2 37,636 - 269,839 3 11,678 - 50,120 1 3,617,165 36 29,565 - 453,847 5 81,607 1 24,863 - 589,882 6 4,207,047 42 2,582,527 26 717,885 7 1,454,896 14 13,536 - 1,093,115 11 2,561,547 25 (13,781) - - - 5,848,178 58 14,344 - 5,862,522 58 $ 10,069,569 100		2018
				Amount % $ 2,513,558 26 - - 133,866 1 742,325 8 943,962 10 153,230 1 288,923 3 1,983,094 20 21,652 - 61,071 1 199,735 2 7,041,416 72 25,704 - 919,841 9 965,662 10 - - 46,947 1 193,264 2 442,467 5 78,748 1 13,837 - 2,686,470 28 $ 9,727,886 100 $ 217 - 52,841 1 16,589 - 18 - 2,230,261 23 215,780 2 926,967 9 237,564 2 1,443 - - - 6,733 - 51,749 1 3,740,162 38 32,156 1 - - 104,294 1 27,606 - 164,056 2 3,904,218 40 2,582,527 27 717,885 7 1,414,311 15 - - 1,106,892 11 2,521,203 26 (13,536) - - - 5,808,079 60 15,589 - 5,823,668 60 $ 9,727,886 100

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

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SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 22 and 29) Sales Less: Sales returns Sales discounts and allowances Net sales Service and repairs revenue Total operating revenue OPERATING COSTS (Notes 9, 20, 23 and 29) Cost of goods sold Service and repairs costs Total operating costs GROSS PROFIT OPERATING EXPENSES (Notes 20, 23 and 29) Selling and marketing expenses General and administrative expenses Total operating expenses OTHER INCOME AND EXPENSES (Note 23) INCOME FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Note 23) Share of profit of associates accounted for using equity method Gain on financial assets and liabilities at fair value through profit or loss Interest expense (Notes 23 and 29) Miscellaneous disbursements Gain (loss) on disposal of investments Net loss on foreign currency exchange (Note 23) Total non-operating income and expenses		2019 Amount % $ 27,620,481 96 283,049 1 622,762 2 26,714,670 93 2,150,203 7 28,864,873 100 24,991,556 87 618,745 2 25,610,301 89 3,254,572 11 2,600,243 9 389,802 1 2,990,045 10 (8,865) - 255,662 1 121,515 - 143,443 - 259 - (14,695) - (2,726) - (21,282) - (2,312) - 224,202 -		2018
				Amount % $ 30,006,380 96 293,473 1 757,922 2 28,954,985 93 2,285,955 7 31,240,940 100 26,897,328 86 798,850 3 27,696,178 89 3,544,762 11 2,934,045 10 433,746 1 3,367,791 11 (57,943) - 119,028 - 132,483 - 155,981 1 5,199 - (182) - (5,164) - 1,342 - (2,036) - 287,623 1 (Continued)

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SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Note 24) NET INCOME TOTAL OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified to profit or loss: Remeasurement of defined benefit plans (Note 20) Unrealized gain or loss on investments in equity instruments at fair value through other comprehensive income Share of remeasurement of defined benefit plans of associates Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 24) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Share of exchange differences arising from the translation of the foreign operations of associates Total other comprehensive income (loss), net of income tax TOTAL COMPREHENSIVE INCOME NET INCOME ATTRIBUTABLE TO: Owners of the Parent Noncontrolling interests COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Parent Noncontrolling interests		2019 Amount % $ 479,864 1 69,853 - 410,011 1 20,363 - (15,056) - (851) - (4,073) - 383 - 15,795 - (984) - 14,811 - 15,194 - $ 425,205 1 $ 411,231 1 (1,220) - $ 410,011 1 $ 426,425 1 (1,220) - $ 425,205 1		2018
				Amount % $ 406,651 1 8,134 - 398,517 1 (12,556) - (10,296) - 67 - 4,499 - (18,286) - (5,248) - 898 - (4,350) - (22,636) - $ 375,881 1 $ 405,854 1 (7,337) - $ 398,517 1 $ 383,218 1 (7,337) - $ 375,881 1

(Continued)

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SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

EARNINGS PER SHARE (Note 25) Basic Diluted	2019 Amount % $ 1.59 $ 1.59	2018
		Amount % $ 1.59 $ 1.58

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

(Concluded)

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SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Dividends Per Share)

BALANCE, JANUARY 1, 2018 Appropriation of 2017 earnings Legal reserve Cash dividends - NT$3.1662 per share Other changes in capital surplus Changes in capital surplus from investments in associates accounted for using the equity method Changes in percentage of ownership interests in subsidiaries Net income for the year ended December 31, 2018 Other comprehensive loss for the year ended December 31, 2018 Total comprehensive income for the year ended December 31, 2018 Share-based payment transactions BALANCE, DECEMBER 31, 2018 Effect of retrospective application BALANCE, JANUARY 1, 2019 AS ADJUSTED Appropriation of 2018 earnings Legal reserve Special reserve Cash dividends - NT$1.4500 per share Net income for the year ended December 31, 2019 Other comprehensive income (loss) for the year ended December 31, 2019 Total comprehensive income (loss) for the year ended December 31, 2019 BALANCE, DECEMBER 31, 2019		Equity Attributable to Stockholders of the Parent	Equity Attributable to Stockholders of the Parent	Noncontrolling Total Interests (Note 21) $ 5,900,141 $ 22,682 - - (817,683) - (817,683) - (39) - (244) 244 405,854 (7,337) (22,636) - 383,218 (7,337) 342,686 - 5,808,079 15,589 (11,860) (25) 5,796,219 15,564 - - - - (374,466) - (374,466) - 411,231 (1,220) 15,194 - 426,425 (1,220) $ 5,848,178 $ 14,344	Total Equity $ 5,922,823 - (817,683) (817,683) (39) - 398,517 (22,636) 375,881 342,686 5,823,668 (11,885) 5,811,783 - - (374,466) (374,466) 410,011 15,194 425,205 $ 5,862,522
	Share Capital - Ordinary Shares (Note 21) Capital Surplus (Note 21) $ 2,582,527 $ 703,314 - - - - - - - (39) - - - - - - - - - 14,610 2,582,527 717,885 - - 2,582,527 717,885 - - - - - - - - - - - - - - $ 2,582,527 $ 717,885	Retained Earnings (Note 21) Legal Reserve Special Reserve Unappropriated Earnings $ 1,331,759 $ - $ 1,609,507 82,552 - (82,552) - - (817,683) 82,552 - (900,235) - - - - - (244) - - 405,854 - - (7,990) - - 397,864 - - - 1,414,311 - 1,106,892 - - (11,860) 1,414,311 - 1,095,032 40,585 - (40,585) - 13,536 (13,536) - - (374,466) 40,585 13,536 (428,587) - - 411,231 - - 15,439 - - 426,670 $ 1,454,896 $ 13,536 $ 1,093,115	Other Equity Exchange Differences on Translating Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income Treasury Shares (Note 21) $ 1,110 $ - $ (328,076) - - - - - - - - - - - - - - - - - - (4,350) (10,296) - (4,350) (10,296) - - - 328,076 (3,240) (10,296) - - - - (3,240) (10,296) - - - - - - - - - - - - - - - - 14,811 (15,056) - 14,811 (15,056) - $ 11,571 $ (25,352) $ -

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

• 29 -

SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments to reconcile income before income tax to net cash provided by operating activities: Depreciation expenses Amortization expenses Expected credit loss Net gain on financial liabilities at fair value through profit or loss Interest expense Interest income Compensation cost of share-based payment transactions Share of profit of associates accounted for using equity method Net loss on disposal of property, plant and equipment Net gain on lease modification Net loss (gain) on disposal of investment Impairment loss recognized on non-financial assets Net (gain) loss on foreign currency exchange Changes in operating assets and liabilities: Decrease (increase) in: Notes receivable Trade receivables Trade receivables from related parties Other receivables Other receivables from related parties Inventories Other prepaid expenses Prepayments Other current assets Increase (decrease) in: Contract liabilities Notes payable Trade payables Trade payables to related parties Other payables Other payables to related parties Advance receipts Other current liabilities Net defined benefit liabilities - noncurrent Cash generated from operations Interest paid Income tax paid Net cash generated from operating activities

2019 2018 $ 479,864 $ 406,651 428,858 93,378 45,746 39,738 1,254 1,307 (259) (5,199) 14,695 182 (8,265) (11,762) - 15,564 (143,443) (155,981) 2,670 7,193 (2,751) - 21,282 (1,342) 8,946 50,750 (7,870) 1,024 48,768 91,105 (34,208) 39,835 118,488 286,176 (144,940) 7,580 95,658 41,699 116,137 321,400 (18,823) 20,519 2,179 (3,570) (1,641) (7,822) 64,242 (21,707) (13,090) 4,602 (683,568) (143,644) 45,342 81,863 155,659 (31,083) (724) (265,370) 4,945 (10,560) (1,629) (16,738) (2,324) (2,581) 591,198 833,207 (14,695) (182) (39,294) (136,883) 537,209 696,142 (Continued)

－ － 30

SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Proceeds from disposal of investments accounted for using equity method Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in refundable deposits Acquisition of intangible assets Acquisition of time deposits with maturities of more than three months Proceeds from disposal of time deposits with maturities of more than three months Decrease (increase) in other noncurrent assets Interest received Dividends received Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term loans Repayment of short-term loans Decrease in guarantee deposits Repayment of the principal portion of lease liabilities Cash dividends paid Treasury shares transferred to employees Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF THE YEAR	2019 $ - - - - (17,437) 212 5,571 (41,662) (62,752) 227,255 8,007 8,967 107,764 235,925 240,000 (240,000) (2,743) (340,393) (374,466) - (717,602) (193) 55,339 2,513,558 $ 2,568,897	2018 $ (476,489) 479,930 3,379 19,184 (60,881) 521 3,345 (37,512) (385,279) 317,367 11,168 13,197 99,474 (12,596) 95,000 (95,000) (196) - (817,683) 327,122 (490,757) 516 193,305 2,320,253 $ 2,513,558

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

(Concluded)

• 31 -