SENAO - AGM Information 2021 | FinancialReports.eu

Stock Code: 2450

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Senao International Co., Ltd. 2021 General Shareholders’ Meeting

Meeting Handbook

Prepared by Senao International Co., Ltd.

Date: June 21, 2021

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

	Contents
	Page
I. Meeting	Procedures ..................................................................................... 1
II. Meeting Agenda ......................................................................................... 2
III. Reporting Matters ..................................................................................... 3
IV. Recognition Matters .................................................................................. 5
V. Discussion Matters ..................................................................................... 6
VI. Special Motions ........................................................................................ 8
Attachments
1.	The Comparison Table of the Amended “Articles of Incorporation”
	........................................................................................................ 9
2.	The Comparison Table of the Amended “Rules Governing the
	Procedures for Shareholders’ Meeting” ........................................ 12
Appendix
1.	2020 Business Report ................................................................... 14
2.	2020 Audit Committee Report ..................................................... 20
3.	2020 Independent Auditors’ Report and Financial Statements
	(Including Consolidated Financial Statements.) ........................... 21
4.	Earnings Distribution Plan ........................................................... 43
5.	Articles of Incorporation (Original) ............................................. 44
6.	Rules Governing the Procedures for Shareholders’ Meeting ........ 56
7.	Shareholdings by the Directors .................................................... 60

I. Meeting Procedures

Senao International Co., Ltd.

2021 General Shareholders’ Meeting Procedures

1. Announcement of the Commencement of the Meeting

Chairperson’s Remarks
Reporting Matters
Recognition Matters

5. Discussion Matters

Special Motions

7. Meeting Adjourned

II. Meeting Agenda

Senao International Co., Ltd.

2021 General Shareholders’ Meeting Agenda

Date and Time: June 21, 2021 at 9:00 a.m. (Monday)

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

Announcement of the Commencement of the Meeting
Chairperson’s Remarks
Reporting Matters

(1) 2020 Business Report.

(2) 2020 Audit Committee Report.

(3) Report on the Distribution of Dividends and Bonuses for 2020.

(4) Report on the Distribution of Employees’ Compensation and Directors’ Remuneration for 2020.

Recognition Matters

2020 Business Report and Financial Statements.

Discussion Matters

(1) Amendments to parts of the Company’s “Articles of Incorporation”.

(2) Amendments to parts of the Company’s “Rules Governing the Procedures for Shareholders’ Meeting”.

(3) Release of the Corporate Director’s representatives from Non-Competition Restrictions.

Special Motions
Meeting Adjourned
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III. Reporting Matters

1. 2020 Business Report. Please Kindly Review.

Explanation: Please refer to page 10 of this handbook for the Business Report (Appendix 1).

2. 2020 Audit Committee Report. Please Kindly Review.

Explanation: Please refer to page 14 of this handbook for the Audit Committee Report (Appendix 2).

3. Report on the Distribution of Dividends and Bonuses for 2020. Please Kindly Review.

Explanation: (1) In accordance with Article 20 of the Articles of Incorporation, the board of directors is authorized to pay whole or part of the distributable dividends and bonuses in cash, and the distribution shall be reported to the shareholders’ meeting.
- (2) Shareholder bonus totaling NT$387,378,986 has been appropriated as cash dividends, which is equivalent to NT$1.5 per share. The cash dividends are pro rata and rounded down to the nearest whole dollar with any amount less than NT$1 being forfeited. Less than a dollar fractional totals are adjusted in order from large to small decimal points and shareholders numbers are ordered from first to last to meet the distribution of the cash dividend total.
- (3) The ex-dividend date for the cash dividend distribution is proposed to be set on June 29, 2021.
- (4) If the number of outstanding shares of the Company subsequently changes due to changes to the capital resulting in a different dividend ratio to be adjusted, it is proposed that the Board of Directors authorizes the
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Chairperson to handle accordingly.

4. Report on Distribution of Employees’ Compensation and Directors’ Remuneration for 2020. Please Kindly Review.

Explanation: As approved by the board of directors’ meeting on February 18, 2021, it is proposed to appropriate 3.5% employees’ compensation totaling NT$18,784,175 and 1.5% directors’ remuneration of NT$8,050,361 in this year. Both are paid in cash.

IV. Recognition Matters

Agenda 1: 2020 Business Report and Financial Statements. Recognition is Respectfully Requested.

Proposed by the Board of Directors

Explanation: (1) The 2020 Financial Statements (including consolidated financial statements) were prepared by the Company and audited by independent auditors Dien-Sheng Chang and Denny Kuo 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, 15 and 40 of this handbook for the Business Report, Independent Auditors’ Report, Earnings Distribution Plan and financial statements (including consolidated financial statements.) (Appendix 1, 3 and 4)

Resolution:

V. Discussion Matters

Agenda 1: Amendments to parts of the “Articles of Incorporation” of the Company are submitted for discussion.

Proposed by the Board of Directors

Explanation: (1) Pursuant to the Company Act and the Regulations

Governing the Administration of Shareholder Services of Public Companies, parts of the “Articles of Incorporation” are amended accordingly, and please refer to page 7 of this handbook for the comparison table (Attachment 1).

(2) Please refer to page 41 of this handbook for the original
“Articles of Incorporation” (Appendix 4).

Resolution:

Agenda 2: Amendments to parts of the “Rules Governing the Procedures for Shareholders’ Meeting” of the Company are submitted for discussion.

Proposed by the Board of Directors

Explanation: (1) Pursuant to the Order No. Financial-Supervisory-SecuritiesTrading-1090150567, parts of the “Rules Governing the Procedures for Shareholders’ Meeting” are amended accordingly, and please refer to page 9 of this handbook for the comparison table (Attachment 2).

(2) Please refer to page 49 of this handbook for the original “Rules Governing the Procedures for Shareholders’ Meeting” (Appendix 5).

Resolution:

Agenda 3: Release of the corporate director’s representatives from non-competition restrictions is submitted for discussion.

Proposed by the Board of Directors

Explanation: (1) Pursuant to Article 209 of the Company Act, “A director who does anything for himself or on behalf of another person that is within the scope of the company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.”

(2) It is proposed to release the representatives of corporate director, Chunghwa Telecom Co., Ltd., namely Yi-Feng Chang, Chih-Cheng Chien and Wen-Chih Lin, from non-competition restrictions, and details are as follows.

Name	Current participation in other companies and positions relevant to the non-competition restrictions
Yi-Feng Chang	President, Chunghwa Telecom Co., Ltd. Southern Taiwan Business Group; President, Chunghwa Telecom Co., Ltd. Northern Taiwan Business Group; Director, Honghwa International Corp.
Chih-Cheng Chien	President, Chunghwa Telecom Co., Ltd. Mobile Business Group; President, Chunghwa Telecom Co., Ltd. Telecommunication Training Institute; Chairman, Chunghwa Telecom Singapore Pte., Ltd.; Director, Chunghwa Telecom (China) Co., Ltd.; Director, Tatung TechnologyInc.

Wen-Chih Lin	Vice President, Chunghwa Telecom Co., Ltd. Marketing Department; Vice President, Chunghwa Telecom Co., Ltd. Northern Taiwan Business Group; Chairman, Smartfun Digital Co., Ltd.; Director, Honghwa International Corp.; Director, Spring House Entertainment Technology Inc.; Director, KKBOX Taiwan Co., Ltd.

Resolution:

VI. Special Motions

VII. Meeting Adjourned

Attachment 1

Senao International Co., Ltd.

The Comparison Table of the Amended “Articles of Incorporation”

Amended Article	Original Article	Explanation
Article 1: The Company is organized in accordance with the Company Act and named Senao International Co., Ltd. (hereinafter referred to as “the Company”.)(The Company’s name in English is Senao International Co., Ltd.)	Article 1: The Company is organized in accordance with the Company Act and named Senao International Co., Ltd. (hereinafter referred to as “the Company”.)	Amendments with reference to Article 392-1 of the Company Act.
Article 7: The share certificates of the Company shall without exception be in registered form, signed by, or affixed with seals of the directorrepresenting the Company, and authenticated by the competent authority before issuance. Shares issued by the Company need not be in certificate form, but shall be registered with centralized securities depositoryenterprises.	Article 7: The share certificates of the Company shall without exception be in registered form, signed by, or affixed with seals of, at least three directors, and authenticated by the competent authority before issuance. Shares issued by the Company need not be in certificate form, but shall be registered with centralized securities depository enterprises.	Amendment in accordance with Article 162 of the Company Act.
Article 9: The shareholders of the Company shall process the shareholder services such as transfer of share ownership, creation of pledge, removal of pledge, reporting of loss, inheritance of shares, gift, reporting of specimen chop loss or change, or change of address, etc., in accordance with the	Article 9: The shareholders of the Company shall process the shareholder services such as transfer of share ownership, creation of pledge, removal of pledge, reporting of loss, inheritance of shares, gift, reporting of specimen chop loss or change, or change of address, etc., in accordance with the	Amendment in accordance with the Regulations Governing the Administration of Shareholder Services of Public Companies.

Amended Article	Original Article	Explanation
“Regulations Governing the Administration of Shareholder Services of Public Companies” announced by the competent authority in addition to the relevant securities laws and regulations.	“Regulations Governing the Administration of Shareholder Services of Public Companies” announced by the competent authority in addition to the relevant securities laws and regulations.
Article 17: The Company shall have nine to thirteen directors to be elected from persons having legal capacity at a shareholders’ meeting. Each director shall hold office for a term of three years and is eligible for re-election. Starting from the tenth term of the Board of Directors, the number of independent directors, among the aforementioned number of directors, shall be no less than three, and shall be no less than one fifth of the total number of directors. Election of directors shall adopt the candidate nomination measure and directors shall be elected from among the list of candidates for directors by the shareholders’ meeting in accordance with Article 192-1 of the Company Act. Independent and non-independent directors shall be elected at the same time, but in separately calculated numbers. Matters regarding professional	Article 17: The Company shall have nine to thirteen directors to be elected from persons having legal capacity at a shareholders’ meeting. Each director shall hold office for a term of three years and is eligible for re-election. Starting from the tenth term of the Board of Directors, the number of independent directors, among the aforementioned number of directors, shall be no less than three, and shall be no less than one fifth of the total number of directors. The election ofindependent directors shall adopt the candidate nomination measure, and independent directors shall be elected from among the list of candidates for independent directors by the shareholders’ meeting in accordance with Article 192-1 of the Company Act. Independentand non-independent directors shall be elected at the same time, but in separately calculated numbers.	Amendments with reference to Article 192-1 of the Company Act.

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Amended Article	Original Article	Explanation
qualification, restrictions on shareholdings, concurrent positions held, determination of independency, method of nomination and election and other matters for compliance with respect to independent directors shall be subject to the rules prescribed by the securities governingauthorities.	Matters regarding professional qualification, restrictions on shareholdings, concurrent positions held, determination of independency, method of nomination and election and other matters for compliance with respect to independent directors shall be subject to the rules prescribed by the securitiesgoverningauthorities.
Article 31 These Articles of Incorporation were adopted on May 7, 1979. Omitted The 29th amendment was made on June 14, 2018. The 30th amendment was made on June 14, 2019.The 31st amendment was made on June 21, 2021.	Article 31 These Articles of Incorporation were adopted on May 7, 1979. Omitted The 29th amendment was made on June 14, 2018. The 30th amendment was made on June 14, 2019.	To add the number and date of this amendment.

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Attachment 2

Senao International Co., Ltd.

The Comparison Table of the Amended “Rules Governing the Procedures for Shareholders’ Meeting”

Article order	Amended Article	Original Article	Explanation
Article 8	The chairperson shall call the meeting to order at the appointed meeting time,and announce relevant information regarding number of shares with no voting rights and number of shares held by attending shareholders. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chairperson may announce a postponement, provided that no more than two (2) such postponements, for a combined total of no more than one (1) hour, may be made. If the quorum is not met after two (2) postponements but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Paragraph 1, Article 175 of the Company Act. When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chairperson may resubmit the tentative resolution	The chairperson shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chairperson may announce a postponement, provided that no more than two (2) such postponements, for a combined total of no more than one (1) hour, may be made. If the quorum is not met after two (2) postponements but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Paragraph 1, Article 175 of the Company Act. When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chairperson may resubmit the tentative resolution for a	Amendments with reference to the Order No. Financial- Supervisory- Securities- Trading- 1090150567.

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Article order	Amended Article	Original Article	Explanation
	for a vote by the Shareholders’ meeting pursuant to Article 174 of the CompanyAct.	vote by the Shareholders’ meeting pursuant to Article 174 of the CompanyAct.

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Appendix 1

1. 2020 Operating Result

(1) Operating Result

Annual consolidated operating income reached NT$27.007 billion; profit before tax was NT$517 million; net income was NT$436 million; net income attributable to owners of parent was NT$437 million; earnings per share was NT$1.69.

(2) Profitability Analysis:

Profitability Analysis

Year Item	Year 2020	Year 2019
Return on Assets(%)	4.36	4.26
Return on Equity (%)	7.39	7.01
Net Profit Margin(%)	1.61	1.42
Earningsper Share(NT$)	1.69	1.59

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

(3) Research and Development:

The debut of 5G network was set to be in 2020. However, the global COVID-19 pandemic since the end of 2019 has interfered the long-awaited plan of 5G network deployment, and thus a supply-demand mismatch arose between the 5G infrastructure and compatible mobile devices.

Due to the quarantine policy, the demand for 5G increased and pushed the progression of 5G infrastructure. On the other hand, the supply chain was temporarily disrupted while phone parts manufacturers and assemblers faced shortage of labors and materials

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induced by COVID-19 and logistics disruption under regional lockdown. Meanwhile, the sales of mobile phones dropped due to a consumption crunch under the quarantine policy and COVID-19 pandemic. According to a statistic made by a market research agency, the global smartphone shipments in 2020 was approximately 1.26 billion units, representing a roughly 10% slide in comparison to 1.37 billion units in 2019. As smartphone consumers turned conservative in spending behaviors, the sales of flagship models slightly declined year-on-year, and a reverse effect was observed in the increased sales of mid-range phone.

In terms of hardware specification of telecommunication products, 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. Nevertheless, the market share and consumer acceptance of 5G flagship models at a higher price remain uncertain.

With the delivery of high data speed, low latency, and massive network capacity by 5G network system, there will be many emerging new applications using 5G, including AR/VR, IoT, smart home appliances, smart transportation, smart agriculture, smart manufacturing, and etc. Private industrial 5G networks operate independently without dependencies on jammed public network and are likely to be adopted by major companies in the context of speeding up digital transformation.

The 5G communication market will continue to blossom whereas the Institute for Information Industry highlights smartphones, 5G telecommunication network, private industrial networks, IoT and

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massive data centers as major focuses for global communication industry in 2021.

2. 2021 Business Plan

(1) Business Policy

“Focusing on products and integrating channels”: By expanding product lines from communication products to information, home appliances and health care products, and promoting through the new retail business model integrating Senao’s four major diverse channels (retails, distribution, online and 2R), Senao anticipates to create a deep-rooted brand image in customers and achieve synergy in the cooperation with manufacturers.
Building a brand image of “Buy smartphones at Senao”: By offering fully thoughtful services, Senao will enhance customer adhesiveness and brand image as a whole.
By analyzing Senao members’ buying behavior using the Senao digital service and providing tailor-made packages and promotion kits to reinforce customers loyalty and adhesiveness, Senao aims to achieve goals of member base expansion, precise marketing and customer experience optimization.
By allying with cross-industry partners, such as sports channels, and pet supplies channels, Senao will widen its spectrum of sales channels and enrich opportunities of cross-selling.
Senao will also capture the opportunities led by 5G commercialization, and, from customer’s perspective, build a one-stop shop for 5G IoT, smart home appliances and multi-telecommunication service, truly leveraging the value of being a channel.
Following the raising health awareness, in addition to entry of luxury and smart home appliance business through the cooperation
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with global and local brands, Senao will introduce the health-care home appliance product line. With home appliance expert training program and one-stop shop campaign at our retail stores, Senao wishes to deliver a unique purchasing experience to our customers.

Senao is planning to carry more health care and beauty products under the brands, “sakuyo” and projecting to introduce to external sales channels in 2021. Through an ongoing plan of subscription service that creates recurring purchases, we wish to brand Senao as an essential brand in customers’ everyday life.

(2) Business Objectives:

Senao’s main business objectives are maintaining a solid position in main telecommunication business, exploring opportunities in cross-industry alliance, seeking potential 5G IoT/Smart Home application products, expanding business in corporate welfare platforms, promoting the no-cost startup platform, “Cocoback”, and providing customers digital service.
In order to improve customer experience in retail stores, we will continue to optimize procedures and establish warehouse particularly serving purchases in the retail stores to eliminate frequency of stockouts at stores and retain customers.
Combining the new retail store personality with telecommunication and home appliances, we wish to bring our customers refreshing shopping experience at a scene of smart home application and meanwhile offer more variety of services, so as to break customers’ stereotype about Senao as a brand and bring more attentions towards Senao’s periodic promotion events.

(3) Sales Policy:

As the telecommunication market trend turns to tailor-made and consumer-oriented, Senao will focus on introducing popular
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communication and information products, home appliances, accessories, and health care and beauty products 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, manufacturers 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 is committed to be customer-centric and provide its customers with “all time, all products, all services and all channels” services via the new retail model. Via the Senaonline platform, Senao integrates online and offline channels and provides 24/7 premium services. With Senao’s diverse product portfolio and complete after-sale services, consumers will perceive a full-dimensional purchase experience.

We are optimistic to see the flourish of 5G telecommunication market in 2021 that leads momentum of sales growth. Aiming to be the best among all digital sales channels, in addition to existing telecommunication products, Senao is keen to explore opportunities in new products and application and invest more in marketing campaigns.

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

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

According to the forecast announced by the Directorate-General of

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Budget, Accounting and Statistics, Executive Yuan on November 27, 2020, the projected economic growth rate for 2021 is 3.83%, declined by 0.09% in comparison to 3.92% projected in August 2020.

Looking forward, Taiwan will maintain a steady economic growth in 2021. Despite the remaining negative side effects of COVID-19 pandemic on domestic consumption especially in airlines, travel agencies, hotels and restaurants, the overall impact of pandemic in Taiwan is relatively minor and may have minimal impact on current economy.

Telecommunication companies in Taiwan launched 5G services around the middle of 2020 and hence lit up the sales of 5G phones. Since then, phone manufacturers raced to introduce new 5G flagship models pairing with 5G fare plans offered by all telecommunication companies. Chunghwa Telecom now has 500,000 5G users, exceeding the goal of 300,000 for 2020, and this number is very likely to reach 1 million in June 2021.

Taiwan’s mobile communication user market has become saturated. According to NCC’s statistics, as of the end of December 2020, the population of mobile users was 29.29 million slightly increased by 80,000 users in comparison to previous year. 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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Appendix 2

Senao International Co., Ltd.

Audit Committee Report

The Board of Directors has prepared this Company’s 2020 financial statements (including consolidated financial statements), which have been audited by external auditors Dien-Sheng Chang and Denny Kuo 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 Review.

The Company’s 2021 General Shareholders’ Meeting

Senao International Co., Ltd.

Audit Committee Convenor: Kung-Liang Yeh

March 26, 2021

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Appendix 3

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The entities that are required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2020 are all the same as those included in the consolidated financial statements of Senao International Co., Ltd. and its subsidiaries prepared in conformity with the International Financial Reporting Standard 10 “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates is included in the consolidated financial statements of Senao International Co., Ltd. and its subsidiaries. Hence, we did not prepare a separate set of consolidated financial statements of affiliates.

Very truly yours,

SENAO INTERNATIONAL CO., LTD.

LAI, CHING-LIN Chairman

February 18, 2021

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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, 2020 and 2019, 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, 2020 and 2019, 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, 2020. 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, 2020 is as follows:

Valuation of Inventories

As described in Note 8 to the consolidated financial statements, the carrying amount of the inventories held by Group was $1,982,469 thousand as of December 31, 2020, which represented 19% of the consolidated total assets. The inventories of the Group are mainly consisted of communication products such as mobile phones and the peripheral products. Due to rapid changes in technology and continue launches in new models, 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 Note 4-f. and Note 5.

Corresponding audit procedures mainly includes:

Execute control testing to understand the process of valuation of inventories and the design and execution of relevant control system.
Obtain the relevant supporting documents used by the management to evaluate the method and basic assumptions of inventory loss provision at the end of the year, and evaluate its appropriateness.
Conduct a selective examination of the sales price of the inventory at the end of the year to verify and evaluate the reasonableness of the estimated amount of provision for inventory.

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, 2020 and 2019 on which we have issued an unmodified opinion.

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:

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.
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, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Dien Sheng Chang and Cheng Hung Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China

February 18, 2021

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.

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SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (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 26) Notes receivable, net (Note 7) Trade receivables, net (Note 7) Trade receivables from related parties (Note 27) Other receivables (Notes 7 and 15) Other receivables from related parties (Note 27) Inventories (Note 8) Prepayments (Note 27) Other current assets (Note 15) Total current assets NONCURRENT ASSETS Financial assets at fair value through other comprehensive income (Note 26) Investments accounted for using equity method (Note 10) Property, plant and equipment (Notes 11, 21 and 27) Right-of-use assets (Notes 12, 21 and 27) Goodwill (Note 13) Intangible assets (Notes 14 and 21) Deferred tax assets (Note 22) Refundable deposits (Note 27) Other noncurrent assets (Notes 15 and 28) Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Financial liabilities at fair value through profit or loss (Note 26) 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 (Notes 12 and 27) Other current liabilities (Note 27) Total current liabilities NONCURRENT LIABILITIES Deferred income tax liabilities (Note 22) Lease liabilities - noncurrent (Notes 12 and 27) Net defined benefit liabilities - noncurrent (Note 18) Guarantee deposits Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT 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 Total equity attributable to stockholders of the parent NONCONTROLLING INTERESTS (Note 19) Total equity TOTAL		2020 Amount % $ 2,797,626 28 - - 71,453 1 848,412 8 792,741 8 105,625 1 137,816 1 1,982,469 19 83,206 1 14,873 - 6,834,221 67 10,017 - 991,610 10 839,868 8 571,398 6 28,698 - 151,145 2 436,132 4 81,307 1 230,808 2 3,340,983 33 $ 10,175,204 100 $ - - 113,399 1 3,608 - 18 - 1,309,718 13 598,968 6 1,123,775 11 269,780 3 82,810 1 278,088 3 52,208 - 3,832,372 38 26,998 - 314,046 3 50,767 1 23,901 - 415,712 4 4,248,084 42 2,582,527 25 717,521 7 1,496,377 15 13,781 - 1,135,585 11 2,645,743 26 (32,410) - 5,913,381 58 13,739 - 5,927,120 58 $ 10,175,204 100		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 99,367 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 61,798 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

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, 2020 AND 2019 (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 8, 18, 21 and 27) Cost of goods sold Service and repairs costs Total operating costs GROSS PROFIT OPERATING EXPENSES (Notes 18, 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 (Notes 21 and 27) Other income (Notes 21 and 27) Share of profit of associates accounted for using equity method Interest income Interest expense (Notes 21 and 27) Miscellaneous disbursements Loss on disposal of investments Net loss on foreign currency exchange Net (loss) gain on financial assets and liabilities at fair value through profit or loss Total non-operating income and expenses		2020 Amount % $ 25,682,701 95 263,162 1 533,031 2 24,886,508 92 2,120,565 8 27,007,073 100 23,364,905 87 555,846 2 23,920,751 89 3,086,322 11 2,408,337 9 359,116 1 2,767,453 10 (9,902) - 308,967 1 89,803 - 127,184 1 5,081 - (11,457) - (2,181) - - - (814) - (42) - 207,574 1		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 1 113,250 - 143,443 - 8,265 - (14,695) - (2,726) - (21,282) - (2,312) - 259 - 224,202 - (Continued)

27 -

SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019 (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 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, 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		2020 Amount % $ 516,541 2 80,626 - 435,915 2 28,331 - (631) - (887) - (5,666) - 21,147 - (15,837) - (2,161) - (17,998) - 3,149 - $ 439,064 2 $ 436,884 2 (969) - $ 435,915 2 $ 440,033 2 (969) - $ 439,064 2		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 (Continued)

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SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

EARNINGS PER SHARE (Note 23) Basic Diluted	2020 Amount % $ 1.69 $ 1.69	2019
		Amount % $ 1.59 $ 1.59

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, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Dividends Per Share)

BALANCE, JANUARY 1, 2019 Effect of retrospective application BALANCE, JANUARY 1, 2019 AS ADJUSTED Appropriation of 2018 earnings Legal reserve Special reserve Cash dividends - NT$1.45 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 Appropriation of 2019 earnings Legal reserve Special reserve Cash dividends - NT$1.45 per share Changes in percentage of ownership interest in subsidiaries Net income for the year ended December 31, 2020 Other comprehensive income (loss) for the year ended December 31, 2020 Total comprehensive income (loss) for the year ended December 31, 2020 BALANCE, DECEMBER 31, 2020		Equity Attributable to Stockholders of the	Parent	Noncontrolling Total Interests (Note 19) Total Equity $ 5,808,079 $ 15,589 $ 5,823,668 (11,860) (25) (11,885) 5,796,219 15,564 5,811,783 - - - - - - (374,466) - (374,466) (374,466) - (374,466) 411,231 (1,220) 410,011 15,194 - 15,194 426,425 (1,220) 425,205 5,848,178 14,344 5,862,522 - - - - - - (374,466) - (374,466) (374,466) - (374,466) (364) 364 - 436,884 (969) 435,915 3,149 - 3,149 440,033 (969) 439,064 $ 5,913,381 $ 13,739 $ 5,927,120
	Share Capital - Ordinary Shares (Note 19) Capital Surplus (Note 19) $ 2,582,527 $ 717,885 - - 2,582,527 717,885 - - - - - - - - - - - - - - 2,582,527 717,885 - - - - - - - - - (364) - - - - - - $ 2,582,527 $ 717,521	Retained Earnings (Note 19) Legal Reserve Special Reserve Unappropriated Earnings $ 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 41,481 - (41,481) - 245 (245) - - (374,466) 41,481 245 (416,192) - - - - - 436,884 - - 21,778 - - 458,662 $ 1,496,377 $ 13,781 $ 1,135,585	Other Equity Exchange Differences on Translating Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income $ (3,240) $ (10,296) - - (3,240) (10,296) - - - - - - - - - - 14,811 (15,056) 14,811 (15,056) 11,571 (25,352) - - - - - - - - - - - - (17,998) (631) (17,998) (631) $ (6,427) $ (25,983)
		Legal Reserve $ 1,414,311 - 1,414,311 40,585 - - 40,585 - - - 1,454,896 41,481 - - 41,481 - - - - $ 1,496,377

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 CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019 (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 generated from operating activities: Depreciation expenses Amortization expenses Expected credit loss Net loss (gain) on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of associates accounted for using equity method Net loss on disposal of property, plant and equipment Net loss on disposal of intangible assets Net gain on lease modification Loss on disposal of investment Impairment loss recognized on non-financial assets Provision for inventory and obsolescence Net 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 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 Other current liabilities Net defined benefit liabilities - noncurrent Cash generated from operations Interest paid Income tax paid Net cash generated from operating activities	2020 $ 516,541 387,786 38,500 290 42 11,457 (5,081) (1,044) (127,184) 918 1,852 (2,171) - 9,303 175 (15,061) 13,645 (73,442) 32,733 9,792 55,449 (115,687) 16,161 (5,410) (3,684) 109 (236,975) 337,846 41,149 32,940 (9,590) (2,509) 908,850 (11,457) (35,070) 862,323	2019 $ 479,864 428,858 45,746 1,254 (259) 14,695 (8,265) - (143,443) 2,670 - (2,751) 21,282 8,946 187 (7,870) 48,768 (34,208) 118,488 (144,940) 95,658 115,950 (16,644) (1,641) 64,242 (13,090) (683,568) 45,342 155,659 (724) 3,316 (2,324) 591,198 (14,695) (39,294) 537,209 (Continued)

31 -

SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES 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 Acquisition of time deposits with maturities of more than three months Proceeds from disposal of time deposits with maturities of more than three months Increase in other noncurrent assets Decrease in other noncurrent assets Interest received Dividends received Net cash generated from 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 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	2020 $ (13,932) 55 (8,130) - (2,405) (4,049) 33,783 (43,428) - 5,238 87,255 54,387 100,000 (100,000) (962) (312,127) (374,466) (687,555) (426) 228,729 2,568,897 $ 2,797,626	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

The accompanying notes are an integral part of the consolidated 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 financial statements of Senao International Co., Ltd (“the Company”), which comprise the balance sheets as of December 31, 2020 and 2019, 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, 2020 and 2019, 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, 2020. 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, 2020 is as follows:

Valuation of Inventories

As described in Note 8 to the financial statements, the carrying amount of the Company’s inventories was $1,869,885 thousand as of December 31, 2020, which represented 19% of the total assets. The inventories of the Company are mainly consisted of communication products such as mobile phones and the peripheral products. Due to rapid changes in technology and continue launches in new models 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 Note 4-e. and Note 5.

33 -

Corresponding audit procedures mainly includes:

Execute control testing to understand the process of valuation of inventories and the design and execution of relevant control system.
Obtain the relevant supporting documents used by the management to evaluate the method and basic assumptions of inventory loss provision at the end of the year, and evaluate its appropriateness.
Conduct a selective examination of the sales price of the inventory at the end of the year to verify and evaluate the reasonableness of the estimated amount of provision for inventory.

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.

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
34 -
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the 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.

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, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Dien Sheng Chang and Cheng Hung Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China

February 18, 2021

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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.

36 -

SENAO INTERNATIONAL CO., LTD.

BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (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 22) Notes receivable, net (Note 7) Trade receivables, net (Note 7) Trade receivables from related parties (Note 23) Other receivables (Note 7) Other receivables from related parties (Note 23) Inventories (Note 8) Prepayments (Note 23) Other current assets Total current assets NONCURRENT ASSETS Financial assets at fair value through other comprehensive income (Note 22) Investments accounted for using equity method (Note 9) Property, plant and equipment (Notes 10, 17 and 23) Right-of-use assets (Notes 11, 17 and 23) Intangible assets (Note 17) Deferred tax assets (Note 18) Refundable deposits (Note 23) Other noncurrent assets Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Financial liabilities at fair value through profit or loss (Note 22) Contract liabilities (Note 16) Notes payable (Note 12) Notes payable to related parties (Note 23) Trade payables (Note 12) Trade payables to related parties (Note 23) Other payables (Note 13) Other payables to related parties (Note 23) Current tax liabilities (Note 18) Lease liabilities - current (Notes 11 and 23) Other current liabilities (Note 23) Total current liabilities NONCURRENT LIABILITIES Deferred income tax liabilities (Note 18) Lease liabilities - noncurrent (Notes 11 and 23) Net defined benefit liabilities - noncurrent (Note 14) Guarantee deposits Total noncurrent liabilities Total liabilities EQUITY Share capital - ordinary shares (Note 15) Capital surplus (Note 15) Retained earnings (Note 15) Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		2020 Amount % $ 2,494,797 25 - - 71,429 1 572,417 6 945,308 10 103,209 1 138,087 1 1,869,885 19 72,572 1 14,873 - 6,282,577 64 10,017 - 1,657,055 17 813,507 8 565,738 6 14,204 - 428,020 4 56,058 1 3,000 - 3,547,599 36 $ 9,830,176 100 $ - - 112,097 1 3,184 - 18 - 1,104,482 11 608,628 6 1,091,140 11 222,011 2 73,128 1 273,819 3 41,356 1 3,529,863 36 - - 312,264 3 50,767 1 23,901 - 386,932 4 3,916,795 40 2,582,527 26 717,521 7 1,496,377 15 13,781 - 1,135,585 12 2,645,743 27 (32,410) - 5,913,381 60 $ 9,830,176 100		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 73,416 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 14 261,302 3 1,052,670 11 207,505 2 32,863 - 262,856 3 47,991 1 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

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

37 -

SENAO INTERNATIONAL CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 16 and 23) Sales Less: Sales returns Sales discounts and allowances Net sales Service and repairs revenue Total operating revenue OPERATING COSTS (Notes 8, 14, 17 and 23) Cost of goods sold Service and repairs costs Total operating costs GROSS PROFIT OPERATING EXPENSES (Notes 14, 17 and 23) Selling and marketing expenses General and administrative expenses Total operating expenses OTHER INCOME AND EXPENSES (Note 17) INCOME FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 17 and 23) Other income (Notes 17 and 23) Share of profit of subsidiaries and associates accounted for using equity method Interest income Interest expense (Notes 17 and 23) Miscellaneous disbursements Net (loss) gain on foreign currency exchange Net (loss) gain on financial assets and liabilities at fair value through profit or loss Total non-operating income and expenses		2020 Amount % $ 24,313,833 96 250,965 1 504,303 2 23,558,565 93 1,867,464 7 25,426,029 100 22,074,852 87 547,806 2 22,622,658 89 2,803,371 11 2,179,121 9 316,382 1 2,495,503 10 1,527 - 309,395 1 84,561 - 125,018 1 3,397 - (11,239) - (706) - (528) - (42) - 200,461 1		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 1 112,226 1 99,863 - 4,978 - (14,280) - (2,063) - 1,195 - 259 - 202,178 1 (Continued)

38 -

SENAO INTERNATIONAL CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Note 18) NET INCOME TOTAL OTHER COMPREHENSIVE INCOME Items that will not be reclassified to profit or loss: Remeasurement of defined benefit plans (Note 14) 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 18) 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, net of income tax TOTAL COMPREHENSIVE INCOME EARNINGS PER SHARE (Note 19) Basic Diluted		2020 Amount % $ 509,856 2 72,972 - 436,884 2 28,331 - (631) - (887) - (5,666) - 21,147 - (15,837) - (2,161) - (17,998) - 3,149 - $ 440,033 2 $ 1.69 $ 1.69		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






		$		$

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

(Concluded)

39 -

SENAO INTERNATIONAL CO., LTD.

STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Dividends Per Share)

Share Capital - Ordinary Shares (Note 15) Capital Surplus (Note 15) BALANCE, JANUARY 1, 2019 $ 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$1.45 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 Appropriation of 2019 earnings Legal reserve - - Special reserve - - Cash dividends - NT$1.45 per share - - - - Changes in percentage of ownership interests in subsidiaries - (364) Net income for the year ended December 31, 2020 - - Other comprehensive income (loss) for the year ended December 31, 2020 - - Total comprehensive income (loss) for the year ended December 31, 2020 - - BALANCE, DECEMBER 31, 2020 $ 2,582,527 $ 717,521	Retained Earnings (Note 15) Exchange Differences on Translating Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Legal Reserve Special Reserve Unappropriated Earnings Foreign Operations Comprehensive Income $ 1,414,311 $ - $ 1,106,892 $ (3,240) $ (10,296) - - (11,860) - - 1,414,311 - 1,095,032 (3,240) (10,296) 40,585 - (40,585) - - - 13,536 (13,536) - - - - (374,466) - - 40,585 13,536 (428,587) - - - - 411,231 - - - - 15,439 14,811 (15,056) - - 426,670 14,811 (15,056) 1,454,896 13,536 1,093,115 11,571 (25,352) 41,481 - (41,481) - - - 245 (245) - - - - (374,466) - - 41,481 245 (416,192) - - - - - - - - - 436,884 - - - - 21,778 (17,998) (631) - - 458,662 (17,998) (631) $ 1,496,377 $ 13,781 $ 1,135,585 $ (6,427) $ (25,983)	Total Equity $ 5,808,079 (11,860) 5,796,219 - - (374,466) (374,466) 411,231 15,194 426,425 5,848,178 - - (374,466) (374,466) (364) 436,884 3,149 440,033 $ 5,913,381

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, 2020 AND 2019 (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 generated from operating activities: Depreciation expenses Amortization expenses Expected credit loss Net loss (gain) on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Dividend income 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 Provision for (reversal of) impairment loss and obsolescence of inventory Net 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 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 Other current liabilities Net defined benefit liabilities - noncurrent Cash generated from operations Interest paid Income tax paid Net cash generated from operating activities	2020 $ 509,856 378,771 24,858 290 42 11,239 (3,397) (1,044) (125,018) 644 (2,171) 423 957 13,637 33,439 (42,378) (1,284) 55,429 (84,602) 844 (5,410) (831) 195 (311,205) 347,326 38,470 14,506 (6,635) (2,509) 844,442 (11,239) (28,451) 804,752	2019 $ 476,629 416,517 31,227 1,254 (259) 14,280 (4,978) - (99,863) 1,121 (2,631) (5,250) 80 48,752 36,381 128,643 39,979 95,644 135,116 (7,855) (1,641) 61,462 (12,800) (731,621) 46,588 154,944 (30,142) (127) (2,324) 789,126 (14,280) (39,228) 735,618 (Continued)

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SENAO INTERNATIONAL CO., LTD.

STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019 (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 in other noncurrent assets Interest received Dividends received Net cash generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Decrease in guarantee deposits Repayment of the principal portion of lease liabilities Cash dividends paid 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	2020 $ (62,900) 79,792 (12,117) - - 5,305 (352) - 3,450 102,241 115,419 (660) (304,405) (374,466) (679,531) (957) 239,683 2,255,114 $ 2,494,797	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

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

(Concluded)

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Appendix 4

Senao International Co., Ltd. Earnings Distribution Plan Fiscal Year 2020

Unit: NT$

Fiscal Year 2020	Unit: NT$	Unit: NT$
Item	Amount
Beginningundistributed retained earnings		676,922,859
Net income of 2020	436,883,802
Add: remeasurements of defined benefit plans recognized in retained earnings	21,779,150


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
		458,662,952

Less: Appropriation of 10% retained earnings for legal reserve		(45,866,295)

Less: Appropriation of special reserve in accordance with laws		(18,629,358)

Distributable retained earnings for current period		1,071,090,158

Distribution item for currentperiod:
Cash dividends on Common Shares (NT$1.5 per share)		(387,378,986)
Endingundistributed retained earnings		683,711,172

Chairperson: Manager: Accounting Manager:

(2) The current number of outstanding shares is 258,252,657 shares, and the cash dividend is NT$1.5 per share.

Note: The Company’s principle for earnings distribution is that the distributable retained earnings of 2020 should be distributed with priority.

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Appendix 5

Senao International Co., Ltd.

Articles of Incorporation

Chapter I General Provisions

Article 1: The Company is organized in accordance with the Company Act and named Senao International Co., Ltd. (hereinafter referred to as “the Company”.)

Article 2: The scope of business of the Company is as follows:

CC01060 Wired Communication Mechanical Equipment
Manufacturing.
CC01070 Wireless Communication Mechanical Equipment Manufacturing.
CC01110 Computer and Peripheral Equipment Manufacturing.
E605010 Computer Equipment Installation.
F118010 Wholesale of Computer Software.
F218010 Retail Sale of Computer Software.
I301010 Information Software Services.
I301020 Data Processing Services.
I301030 Electronic Information Supply Services.
CB01020 Affairs Machine Manufacturing.
F113050 Wholesale of Computers and Clerical Machinery Equipment.
F213030 Retail Sale of Computers and Clerical Machinery Equipment.
CC01090 Manufacture of Batteries and Accumulators.
F113110 Wholesale of Batteries.
F213110 Retail Sale of Batteries.
CC01101 Controlled Telecommunications Radio-Frequency Devices and Materials Manufacturing.
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F401021 Restrained Telecom Radio Frequency Equipments and Materials Import.
F113070 Wholesale of Telecommunication Apparatus.
F213060 Retail Sale of Telecommunication Apparatus.
IE01010 Telecommunications Service Number Agencies.
CC01030 Electrical Appliances and Audiovisual Electronic Products

Manufacturing.

F113020 Wholesale of Electrical Appliances.
F213010 Retail Sale of Electrical Appliances.
J303010 Magazine (Periodical) Publishing.
F401010 International Trade.
I103060 Management Consulting.
JE01010 Rental and Leasing.
IZ99990 Other Industrial and Commercial Services.
F108031 Wholesale of Medical Devices.
F208031 Retail Sale of Medical Apparatus.
F102020 Wholesale of Edible Fat and Oil.
F102030 Wholesale of Tobacco and Alcohol.
F102040 Wholesale of Nonalcoholic Beverages.
F102170 Wholesale of Foods and Groceries.
F104110 Wholesale of Cloths, Garments, Shoes, Hats, Umbrellas and Clothing Accessories.
F105050 Wholesale of Furniture, Bedding Kitchen Utensils and Fixtures.
F106010 Wholesale of Hardware.
F106020 Wholesale of Daily Commodities.
F108040 Wholesale of Cosmetics.
F109070 Wholesale of Culture, Education, Musical Instruments and Educational Entertainment Supplies.
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F110010 Wholesale of Clocks and Watches.
F110020 Wholesale of Glasses. 43. F111090 Wholesale of Building Materials. 44. F112040 Wholesale of Petroleum Products.
F113010 Wholesale of Machinery.
F113030 Wholesale of Precision Instruments.
F113060 Wholesale of Measuring Instruments.
F114010 Wholesale of Motor Vehicles.
F114030 Wholesale of Motor Vehicle Parts and Motorcycle Parts, Accessories.
F114040 Wholesale of Bicycle and Component Parts Thereof. 51. F114050 Wholesale of Tires.
F115010 Wholesale of Jewelry and Precious Metals.
F116010 Wholesale of Camera Equipment.
F119010 Wholesale of Electronic Materials.
F201010 Retail Sale of Agricultural Products.
F201020 Retail Sale of Livestock Products.
F201050 Retail sale of Fishing Tackles.
F201070 Retail sale of Flowers.
F201090 Retail Sale of Ornamental Fishes.
F201990 Retail Sale of Other Agricultural, Livestock and

Aquaculture Products.

F202010 Retail Sale of Feeds.
F203010 Retail Sale of Food, Grocery and Beverage.
F203020 Retail Sale of Tobacco and Alcohol.
F204110 Retail Sale of Cloths, Garments, Shoes, Hats, Umbrellas and Clothing Accessories.
F205040 Retail Sale of Furniture, Bedding Kitchen Utensils and Fixtures.
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F206010 Retail Sale of Hardware.
F206020 Retail Sale of daily commodities.
F206050 Retail Sale of Pet Food and Supplies.
F207030 Retail Sale of Cleaning Supplies.
F207050 Retail Sale of Fertilizer.
F208040 Retail Sale of Cosmetics.
F208050 Retail Over-the-counter drugs class B.
F209060 Retail Sale of Culture, Education, Musical Instruments and Educational Entertainment Supplies.
F210010 Retail Sale of Watches and Clocks.
F210020 Retail Sale of Glasses.
F211010 Retail Sale of Building Materials.
F212050 Retail Sale of Petroleum Products.
F213040 Retail Sale of Precision Instruments.
F213050 Retail Sale of Measuring Instruments.
F213080 Retail Sale of Machinery and Tools.
F214010 Retail Sale of Motor Vehicles.
F214020 Retail Sale of Motorcycles.
F214030 Retail Sale of Motor Vehicle Parts and Motorcycle Parts, Accessories.
F214040 Retail Sale of Bicycle and Component Parts Thereof.
F214050 Retail Sale of Tires.
F215010 Retail Sale of Jewelry and Precious Metals.
F216010 Retail Sale of Camera Equipment.
F219010 Retail Sale of Electronic Materials.
F299990 Retail Sale of Other Products.
F301010 Department Stores. 91. F301020 Supermarkets.
F399010 Convenience Stores.
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F399040 Retail Sale No Storefront.
F399990 Retail sale of Other Integrated.
G801010 Warehousing.
I301040 The Third Party Payment.
F401161 Tobacco Products Import.
F401171 Alcohol Products Importation.
ZZ99999 All business items that are not prohibited or restricted by
- law, except those that are subject to special approval.
Article 3: The Company is headquartered in New Taipei City and when necessary may establish branches at home and abroad as resolved by the Board of Directors and approved by the competent authority.
Article 4: The Company may act as a guarantor.

Chapter II Shares

Article 5: The authorized capital of the Company is NT$4.5 billion consisting of 450 million shares. The par value of each share is NT$10, and such shares can be issued in separate installments.
Among these shares, 20 million shares are reserved for the holders of employee stock warrants, and the Board of Directors is authorized to issue the shares in separate installments.
Article 6: The Company’s total amount of investment in other businesses is not subject to the limitation of 40% of the Company’s paid-in capital under Article 13 of the Company Act.
Article 7: The share certificates of the Company shall without exception be in registered form, signed by, or affixed with seals of, at least three directors, and authenticated by the competent authority before issuance. Shares issued by the Company need not be in certificate form, but shall be registered with centralized securities depository enterprises.
Article 8: Deleted.
Article 9: The shareholders of the Company shall process the shareholder services
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such as transfer of share ownership, creation of pledge, removal of pledge, reporting of loss, inheritance of shares, gift, reporting of specimen chop loss or change, or change of address, etc., in accordance with the “Regulations Governing the Administration of Shareholder Services of Public Companies” announced by the competent authority in addition to the relevant securities laws and regulations.

Article 10: All entries in the shareholders register due to share transfers shall be suspended for 60 days prior to a general shareholders’ meeting, or for 30 days prior to an extraordinary shareholders’ meeting, or for 5 days prior to the record date fixed for distributing dividends, bonus, or any other benefit.

Chapter III Shareholders’ Meeting

Article 11: Shareholders’ meetings of the Company are of two kinds: general shareholders’ meetings and extraordinary shareholders’ meetings. The general shareholders’ meeting is convened once per year within six months from the close of the fiscal year. Extraordinary shareholders’ meetings may be convened in accordance with applicable laws and regulations whenever necessary.
Article 12: The chairperson shall chair the Shareholders’ meeting and the meeting of the Board of Directors internally, and represent the Company in external matters. When the chairperson of the Board is on leave or unable to perform his/her duties, the vice chairperson shall act on the chairperson’s behalf. If vice chairperson is also on leave or unable to perform his/her duties or there is no vice chairperson appointed in accordance with Article 19 herein, the chairperson shall designate a director to act on his/her behalf.
Article 13: For general shareholders’ meeting, the notice of meeting shall be served to each shareholder at least thirty days prior to the meeting; for extraordinary shareholders’ meeting, a notice of meeting shall be served
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to each shareholder at least fifteen days prior to the meeting. The notice of meeting shall specify the date, location and reasons for convening the meeting.

Article 14: A shareholder unable to attend the shareholders’ meeting in person may appoint a proxy to attend the meeting by using the proxy form issued by the Company and specifying the scope of proxy, which shall be signed and chopped by the shareholder.
Article 15: Unless otherwise regulated by the laws, each shareholder of the Company is entitled to one vote per share.
Article 16: Except as otherwise provided by the Company Act, resolutions of a Shareholders’ meeting shall be adopted at a meeting attended by shareholders representing a majority of the total number of issued shares and at which meeting a majority of the shareholders vote in favor of such resolutions.

Chapter IV Directors and the Audit Committee

Article 17: The Company shall have nine to thirteen directors to be elected from persons having legal capacity at a shareholders’ meeting. Each director shall hold office for a term of three years and is eligible for re-election. Starting from the tenth term of the Board of Directors, the number of independent directors, among the aforementioned number of directors, shall be no less than three, and shall be no less than one fifth of the total number of directors.
The election of independent directors shall adopt the candidate nomination measure, and independent directors shall be elected from among the list of candidates for independent directors by the shareholders’ meeting in accordance with Article 192-1 of the Company Act.
Independent and non-independent directors shall be elected at the same time, but in separately calculated numbers.
Matters regarding professional qualification, restrictions on shareholdings, concurrent positions held, determination of independency, method of nomination and election and other matters for compliance with respect to independent directors shall be subject to the
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rules prescribed by the securities governing authorities.

Article 17-1: Pursuant to Article 14-4 of the Securities and Exchange Act, starting from the tenth term of the Board of Directors, the Company shall set up the Audit Committee, which shall consist of the entire independent directors.

The members of the Audit Committee exercise of duties and other matters of compliance shall be handled in accordance with relevant laws and regulations, and the Board of Directors shall establish the Audit Committee Charter.

Article 18: The Board shall be formed by the directors and shall perform the following functions:
Prepare the business plan.
Propose the distribution of profits or offsetting of deficit.
Propose the adjustment to capital.
Compose material rules and regulations and the Company’s Articles of Incorporation.
Appoint and dismiss the Company’s President and Vice President.
Establish or withdraw branch units.
Prepare annual budgets and financial statements.
Appoint and dismiss financial, accounting and internal auditing officers.
Propose changes to the company name or trademark.
Approve long-term equity investments over NT$30 million (inclusive).
For item 9 and 10, resolution by consent of a two-thirds of the directors present at a meeting attended by over majority of the directors shall be reached.
Other functions prescribed by the Company Act or the Shareholders’ meeting.
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Article 19: The Board shall be formed by the directors. The chairperson of the Board shall be elected from among the directors by a majority vote of the directors present at a meeting attended by at least two-thirds of all directors. Where necessary, vice chairperson of the Board may also be elected from among the directors.
Article 20: A directors’ meeting shall be convened by the chairperson unless otherwise provided by the Company Act. Unless otherwise provided by the Company Act, resolutions of a directors’ meeting shall be adopted by a majority vote of the directors present at a meeting attended by a majority of all directors.
Article 20-1: The directors’ meeting shall be held at least once every quarter, and the notice for the meeting shall specify the reasons for the meeting and shall be served to each director at least seven days prior to the meeting. A directors’ meeting may be held at any time in case of an emergency. The notice of directors’ meeting may be served in the form of fax, e-mail and etc.
Article 21: In case a director cannot, for cause, attend a meeting, he or she may appoint another director in writing as his/her proxy to attend in his/her place. A director may act as the proxy of only one other director.
If the Board meeting is held in the form of videoconference, those participated by video conference are deemed as participation in person.
Article 22: (Deleted)
Article 22-1: The Company may purchase liability insurance for its directors and other important personnel.
Article 22-2: When the Company’s directors perform their duties for the Company, the Company may pay remuneration regardless of whether the Company operates at a profit or loss. The Board of Directors is authorized to decide the rates of such remuneration based on the extent of their performance at a level consistent with general practices in the industry.
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Chapter V Managerial Officers

Article 23: The Company may have one president and several vice presidents. The appointment, dismissal and remuneration of the president shall be resolved by two-third of the votes of the directors present at a meeting attended by the majority of all directors. The appointment, dismissal and remuneration of the president shall be resolved by majority votes of the directors present at a meeting attended by a majority of all directors.
Article 24: The president shall adhere to the policies of the Board to manage Company’s affairs.

Chapter VI Accounting

Article 25: The Company’s fiscal year is from January 1 to December 31 each year, and at the end of each fiscal year, the closing of books shall be made.
Article 26: In accordance with Article 228 of the Company Act, at the close of each fiscal year, the Board of Directors shall prepare the following statements and records that shall be presented at a General Shareholders’ Meeting for recognition pursuant to the rules prescribed by the securities governing authorities..
Business report.
Financial statements.
Proposal for allocating profit or covering loss.
Article 27: If the Company records a profit in a year, the Company shall appropriate no less than 3% of the profit for employee’s compensation., and no more than 3% of the profit for director’s compensation. If, however, the Company has accumulated losses, profit shall first be used to offset accumulated losses.
Employees entitled to receive the treasury shares, share warrants, bonus, new shares subscription, restricted shares may include the employees of the Company’s controlled companies meeting specific requirements set by the Board.
If after the annual closing of books there is a profit, the Company shall, after having provided for taxes and offset the accumulated losses of previous years, appropriate the 10% legal reserve and recognize or
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reverse special reserve return earnings in accordance with laws and regulations. The remaining balance, together with the undistributed profits of previous years, shall be retained or distributed upon the resolution of the shareholders’ meeting.

The distributable dividends, bonuses, capital surplus or legal reserve in whole or in part shall 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. Such a distribution shall be reported to the shareholders’ meeting, and the requirement for resolution of the shareholders’ meeting in the preceding paragraph is not applicable herein.

In order to align the Securities and Futures Bureau’s “Balanced Dividend Policy” with the Company’s current business environment and the goals of sustainable operation and long-term development, the earning distribution plan would focus on the stability and growth of the dividends. Every year, the Board shall propose the earnings distribution plan and submit to the shareholders’ meeting for approval before the distribution. The total dividends amount shall be no less than 30% of the total distributable earnings of the year, among which the cash dividend ratio shall be no less than 10% of the total dividends.

Chapter VII Supplemental Provisions

Article 28: The Company may act as a guarantor according to the governmental regulations.
Article 29: The Company’s charter and operational regulations shall be separately adopted.
Article 30: Matters not addressed by these Articles of Incorporation shall be governed by the Company Act.
Article 31: These Articles of Incorporation were adopted on May 7, 1979. The 1st amendment was made on August 15, 1980.
The 2nd amendment was made on March 12, 1981. The 3rd amendment was made on February 2, 1982. The 4th amendment was made on May 27, 1987. The 5th amendment was made on July 20, 1987.
The 6th amendment was made on October 28, 1992.
The 7th amendment was made on August 26, 1993.
The 8th amendment was made on June 2, 1994. The 9th amendment was made on March 10, 1995.
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The 10th amendment was made on April 30, 1995. The 11th amendment was made on August 14, 1995. The 12th amendment was made on June 15, 1996. The 13th amendment was made on May 30, 1997. The 14th amendment was made on April 20, 1998. The 15th amendment was made on June 13, 2000. The 16th amendment was made on May 17, 2001. The 17th amendment was made on January 17, 2002. The 18th amendment was made on May 30, 2003. The 19th amendment was made on May 27, 2004. The 20th amendment was made on June 14, 2005. The 21st amendment was made on June 14, 2006. The 22nd amendment was made on April 12, 2007. The 23rd amendment was made on June 13, 2008. The 24th amendment was made on May 19, 2009. The 25th amendment was made on June 4, 2010. The 26th amendment was made on April 26, 2012. The 27th amendment was made on June 15, 2015. The 28th amendment was made on June 27, 2016. The 29th amendment was made on June 14, 2018. The 30th amendment was made on June 14, 2019.

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Appendix 6

Senao International Co., Ltd.

Rules Governing the Procedures for Shareholders’ Meeting

(Amended by the General Shareholders’ Meeting on June 14, 2006) (Amended by the General Shareholders’ Meeting on June 27, 2016)

The Company’s shareholders’ meeting shall be proceeded with in accordance with the Rules. Relevant laws and regulations shall govern matters not provided in the Rules.
The Company shall furnish the attending shareholders with an attendance book to sign at the shareholders’ meeting, or attending shareholders may hand in a sign-in card in lieu of signing in. The number of shares in attendance shall be calculated according to the shares indicated by the attendance book and sign-in cards handed in plus the number of shares whose voting rights are exercised by correspondence or electronically.
Attendance and voting at shareholders meetings shall be calculated based on number of shares.
The venue for a shareholders meeting shall be the premises of the Company, or a place easily accessible to shareholders and suitable for a shareholders meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m.
If a shareholders meeting is convened by the Board of Directors, the meeting shall be chaired by the chairperson of the Board. When the chairperson of the Board is on leave or for any reason is unable to exercise the powers of the chairperson, the vice chairperson shall act on behalf the chairperson; if there is no vice chairperson or the vice chairperson also is on leave or for any reason is unable to exercise the powers of the vice chairperson, the chairperson shall appoint one of the managing directors to act as a chairperson, or, if there are no managing directors, one of the directors shall be appointed to act as a chairperson. Where the chairperson does not make such a designation, the managing directors or the directors shall select one person from among themselves
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one person to serve as a chairperson. If a shareholders meeting is convened by a party with power to convene but other than the Board of Directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chairperson from among themselves.

The Company may appoint its attorneys, certified public accountants, or related persons to attend a shareholders meeting. Staff handling administrative affairs of a shareholders meeting shall wear identification cards or arm bands.
The company shall make an audio and video recording of the entire Shareholders’ meeting and retain the recorded materials for at least one (1) year.
The chairperson shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chairperson may announce a postponement, provided that no more than two (2) such postponements, for a combined total of no more than one (1) hour, may be made. If the quorum is not met after two (2) postponements but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Paragraph 1, Article 175 of the Company Act. When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chairperson may resubmit the tentative resolution for a vote by the Shareholders’ meeting pursuant to Article 174 of the Company Act.
If a shareholders meeting is convened by the Board of Directors, the meeting agenda shall be set by the Board of Directors. The meeting shall proceed in the order set by the agenda, which may not be changed without a resolution of the shareholders meeting. The provisions of the preceding paragraph apply mutatis mutandis to a shareholders meeting convened by a party with the power to convene that is not the board of directors. The chairperson may not declare the meeting adjourned prior
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to completion of deliberation on the meeting agenda of the preceding two paragraphs (including special motions). After the meeting adjourned, shareholders may not select another person to serve as chairperson and continue the meeting at the same location or other location. During the shareholders’ meeting, if the chairperson announces the adjournment of the meeting in violation of the Rules, other members of the Board shall promptly assist the attending shareholders to elect, by a majority of votes represented by attending shareholders in the meeting, another person to serve as chairperson and continue the meeting in accordance with due procedures.

When a shareholder attending the meeting wishes to speak, a speech note shall be filled out with summary of the speech, the shareholder’s account number (or the number of attendance card) and the account name of the shareholder. The chairperson shall determine the sequence of shareholders’ speeches. If any attending shareholder at the meeting submits a speech note but does not speak, no speech should be deemed to have been made by the shareholder. In case the content of the speech of a shareholder are inconsistent with the contents of the speech note, the contents of actual speech shall prevail. Unless otherwise permitted by the chairperson and the speaking shareholder, no shareholder shall interrupt the speech of the speaking shareholder; otherwise, the chairperson shall stop such interruptions.
For the same proposal, each shareholder shall not speak twice without the chairperson’s consent, with a maximum of five (5) minutes for each speech. The chairperson may stop the speech of any shareholder who violates the above rules or exceeds the scope of the agenda.
When a juristic person is appointed to attend as proxy, it may designate only one person to represent it in the meeting. When a juristic person shareholder appoints two or more representatives to attend a Shareholders’ meeting, only one of the representatives appointed may speak on the same proposal.
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After an attending shareholder has spoken, the chairperson may respond in person or direct relevant personnel to respond.
When the chairperson is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chairperson may announce the discussion closed and call for a vote.
Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chairperson, provided that all monitoring personnel shall be shareholders of the Company. The results of the voting shall be announced on-site at the meeting, and a record made of the vote.
When a meeting is in progress, the chairperson may announce a break based on time considerations.
Except as otherwise provided in the Company Act and in the Company's Articles of Incorporation, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders.
When there is an amendment or an alternative to a proposal, the chairperson shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When anyone among them is passed, the other proposals will then be deemed to be rejected, and no further voting shall be required.
The chairperson may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an armband bearing the word "Proctor."
Matters not specified in the Rules but beneficial to the shareholders’ meeting may be added or amended to the Rules, provided that no violations of laws and preceding regulations are made.
These Rules, and any amendments or abrogation hereto, shall be implemented after adoption by shareholders meetings.
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Appendix 7

Senao International Co., Ltd.

Shareholdings by the Directors

(1) The Company’s paid-in capital is NT$2,582,526,570 with total 258,252,657 shares issued.
(2) Pursuant to Article 26 of the Securities and Exchange Act, the minimum number of shares required to be held by all the directors is 12,000,000 shares. (Since the Company has two or more independent directors, shareholdings requirement of all directors other than the independent directors shall be decreased by 20%.)
(3) As of the share register closure date (April 23, 2021) for this General Shareholders’ Meeting, the numbers of shares held by individual and all directors are as follows, which complies with the minimum shareholding requirement by Article 26 of the Securities and Exchange Act.

Title	Name	Date of election	Term of office	Shareholding as of the election date	Shareholding as of the election date	Shareholding as of the share register closure date	Shareholding as of the share register closure date
				Number of shareholdings	Percentage	Number of shareholdings	Percentage
Chairman (Note 1)	Chin-Lin Lai	June 14, 2019	3 years	71,773,155	27.79%	71,773,155	27.79%
Vice Chairperson (Note 2)	Pao-Yung Lin	June 14, 2019	3 years	14,820,975	5.74%	14,820,975	5.74%
Director (Note 1)	Yi-Feng Chang	June 14, 2019	3 years	71,773,155	27.79%	71,773,155	27.79%
Director (Note 1)	Chih-Cheng Chien	June 14, 2019	3 years	71,773,155	27.79%	71,773,155	27.79%
Director (Note 1)	Wen-Chih Lin	June 14, 2019	3 years	71,773,155	27.79%	71,773,155	27.79%
Director (Note 1)	Chien-Chih Chen	June 14, 2019	3 years	71,773,155	27.79%	71,773,155	27.79%
Director (Note 2)	Cheng-Feng Lin	June 14, 2019	3 years	14,820,975	5.74%	14,820,975	5.74%
Director (Note 2)	Cheng-Kang Lin	June 14, 2019	3 years	14,820,975	5.74%	14,820,975	5.74%
Independent Director	Kung-Liang Yeh	June 14, 2019	3 years	0	0%	0	0%
Independent Director	Yung-Lin Su	June 14, 2019	3 years	12,209	0.00%	12,209	0.00%
Independent Director	Wen-Tsan Wu	June 14, 2019	3 years	0	0%	0	0%
Total shareholdings of all directors				86,606,339	33.54%	86,606,339	33.54%

Note 1: Representative of the Chunghwa Telecom Co., Ltd.

Note 2: Representative of the Cheng Kang Investment Co., Ltd.

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SENAO — AGM Information 2021

52091_rns_2021-08-23_0fd41bbd-35bd-405c-bbe1-6dceffed46be.pdf

Senao International Co., Ltd. 2021 General Shareholders’ Meeting

Meeting Handbook

Contents

I. Meeting Procedures

1. Announcement of the Commencement of the Meeting

5. Discussion Matters

7. Meeting Adjourned

II. Meeting Agenda

2021 General Shareholders’ Meeting Agenda

III. Reporting Matters

1. 2020 Business Report. Please Kindly Review.

2. 2020 Audit Committee Report. Please Kindly Review.

4. Report on Distribution of Employees’ Compensation and Directors’ Remuneration for 2020. Please Kindly Review.

IV. Recognition Matters

Agenda 1: 2020 Business Report and Financial Statements. Recognition is Respectfully Requested.

V. Discussion Matters

Agenda 1: Amendments to parts of the “Articles of Incorporation” of the Company are submitted for discussion.

Agenda 2: Amendments to parts of the “Rules Governing the Procedures for Shareholders’ Meeting” of the Company are submitted for discussion.

Agenda 3: Release of the corporate director’s representatives from non-competition restrictions is submitted for discussion.

VI. Special Motions

VII. Meeting Adjourned

Senao International Co., Ltd.

The Comparison Table of the Amended “Articles of Incorporation”

Senao International Co., Ltd.

The Comparison Table of the Amended “Rules Governing the Procedures for Shareholders’ Meeting”

1. 2020 Operating Result

(1) Operating Result

(2) Profitability Analysis:

Profitability Analysis

(3) Research and Development:

2. 2021 Business Plan

(1) Business Policy

(2) Business Objectives:

(3) Sales Policy:

3. The Company’s Future Development Strategy

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

Chairman: Chin-Lin Lai

Audit Committee Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matter

Valuation of Inventories

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Dividends Per Share)

SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

SENAO INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matter

Valuation of Inventories

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

Auditors’ Responsibilities for the Audit of the Financial Statements

Notice to Readers

SENAO INTERNATIONAL CO., LTD.

BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

SENAO INTERNATIONAL CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

SENAO INTERNATIONAL CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

SENAO INTERNATIONAL CO., LTD.

SENAO AGM Information 2021