SINBON Electronics — AGM Information 2015

Jun 15, 2015

SINBON ELECTRONICS CO., LTD. Year 2015 Annual Meeting Minutes of Shareholders

Time: 9:00 a.m. on Thursday, Jun. 11, 2015.

Place: 582 KUOHWA ROAD, MIAOLI 360, TAIWAN.

Total outstanding shares: 207,989,994 shares.

Total shares represented by shareholders present in person or by proxy: 141,957,961 shares.

The percentage of shares held by shareholders present in person or by proxy: 68.25 %.

Chairman: Joseph Wang (Chairman of the Board)

Recorder: Leo Chang

Chairperson Remarks (omitted)

Reports on Company Affairs:

1. 2014 Business Report (appendix 1)

2. Supervisor’s Review Report on the 2014 Financial Statements (appendix 2 & 4)

3. Amendment to the Company’s Ethical Corporate Management Best Practice Principles (appendix 3)

4. The Status of Domestic Unsecured Convertible Bonds

Proposals, Elections and Discussion:

1. Proposed by the Board

Proposal:

Adoption of the 2014 Business Report and Financial Statements Explanation:

• (1) The Company’s Financial Statements, including the balance sheet, income statement, statement of changes in shareholders’ equity, and statement of cash flows, were audited by independent auditors, Yan,

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Wen-Pi and Lin, Hong-Kuang of Ernst & Young CPA Firm. Also Business Report and Financial Statements have been approved by the Board and examined by the supervisors.

• (2) The 2014 Business Report, independent auditors’ audit report, and the above-mentioned Financial Statements are attached on pp. 7 and 12, Appendix 1 and 4.

Resolution: proposal was approved as proposed.

2. Proposed by the Board

Proposal:

Adoption of the Proposal for Distribution of 2014 Profits Explanation:

• (1) The Board has adopted a Proposal for Distribution of 2014 Profits in accordance with the Company Act and Articles of Incorporation. Please refer to the 2014 PROFIT DISTRIBUTION TABLE below.

• (2) 2014 net profit after tax is NT$793,752,299. After setting aside the legal reserve of NT$79,375,230, deducting Other comprehensive loss (Defined benefit plan actuarial losses in 2014) NT$1,635,815 and then adding beginning retained earnings of NT$457,707,105, the unappropriated retained earnings are NT$588,969,850 and the proposed dividend to shareholders is NT$581,478,509.

• (3) Upon the approval of the Annual Meeting of Shareholders, it is proposed that the Board of Directors be authorized to resolve the ex-dividend date, ex-rights date, and other relevant issues.

• (4) In the event that, before the distribution record date, the proposed profit distribution is affected by an amendment to relevant laws or regulations, a request by the competent authorities, or a buyback of shares or issuance of new shares for transferring treasury shares to employees or for equity conversion in connection with domestic or overseas convertible corporate bonds or other convertible securities or employee stock options, it is proposed that the Board of Directors be authorized to adjust the cash to be distributed to each share based on the number of actual shares outstanding on the record date for distribution.

• (5) Please refer to the Profit Distribution Table as follows:

SINBON ELECTRONICS CO., LTD. PROFIT DISTRIBUTION TABLE Year 2014

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（ Unit: NTD ）

	（Unit: NTD）
Items	Total
Beginning retained earnings	$457,707,105
Less: Other comprehensive loss(Defined benefit
plan actuarial losses in 2014)	(1,635,815)
Add: netprofit after tax	793,752,299
Less: 10% legal reserve	(79,375,230)
Distributable net profit	1,170,448,359
Distributable items:
Cash Dividend to shareholders	(581,478,509)
Unappropriated retained earnings	$588,969,850
Notes: Employee bonus sharing $16,000,000. Compensation of directors and supervisors $11,500,000. Above employee bonus and compensations of directors and supervisors have been reviewed by the Company’s Salary Compensation Committee on Mar. 13,2015.

Resolution: proposal was approved as proposed.

3. Proposed by the Board

The Company is responsible for identifying and evaluating nominees for independent director seats, and recommending to the Board a slate of nominees for the Directors and Supervisors election. Explanation:

• (1) The three-year term of 7 directors (including 2 independent directors) and 3 supervisors of the Board will be end on Jun. 14, 2015. Accordingly, the company proposes to duly elect new Board members at this year's Annual Meeting of Shareholders.

• (2) The Board election proposal has been approved by the meeting of the Board of the Company on Mar. 13, 2015.

• (3) The shareholders’ meeting shall elect 7 directors (including 2 independent directors) and 3 supervisors. Their three-year term will start from Jun. 11, 2015 and conclude on Jun. 10, 2018.

• (4) According to Article 21-1 of the Corporate Charter, a total of 2 independent directors shall be elected from the nomination list prepared by the Company. The qualification of the 2 nominated independent directors has been reviewed by the Board meeting on

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Apr. 24, 2015. Personal information of the 2 nominees is as follows:

Name	Education	Experience	Presentposition	Shareholding
WEA, CHILIN	PHD of Economics, University of Paris,France	Professor of Taiwan University	Chairman of WATERLAND Financial Holdings	0
CHEN, SHIKUAN	PHD of Economics, Yale University, USA	Associate Dean of Business school in Taiwan University	Professor of Business school in Taiwan University	0

Voting Results:

Director:

	Director:
No.	ID or Shareholder Account No.	Name	Number of votes right
1	1	Wang,Shaw-Shing	127,609,177
2	133	Liang,Wei-Ming	94,047,432
3	7	Yeh,Hsin-Chih	94,047,432
4	132	AgrocyResearch Inc.	94,047,432
5	22265	Tai-Yi Investment Co.,Ltd.	94,047,432

Independent Director:

	Independent Director:
No.	ID or Shareholder Account No.	Name	Number of votes right
1	J100***868	Wea,Chi-Lin	104,503,439
2	A223***295	Chen,Shi-Kuan	105,327,440

Supervisor:

	Supervisor:
No.	ID or Shareholder Account No.	Name	Number of votes right
1	692	Lin,Min-Cheng	98,593,671
2	13159	Chiu,Te-Chen	98,593,671
3	71146	Kuo-Shian Investment Co.,Ltd.	98,593,671

Remarks: Representative of Agrocy Research Inc.: Wang, Chao-Liang, Representative of Tai-Yi Investment Co., Ltd.: Wang, Wei-Chung, Representative of Kuo-Shian Investment Co., Ltd.: Wang, Kuo-Hong.

4. Proposed by the Board

Proposal:

Proposal for Release the Prohibition on Directors from Participation in Competitive Business. Please proceed to discuss.

Explanation:

Proposal for release the prohibition on directors from participation in competitive business. Please refer to page 20 ( appendix 5) for details. Resolution: proposal was approved as proposed.

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5. Proposed by the Board

Proposal:

Proposal for a new share issue through capitalization of Capital Reserve. Please proceed to discuss.

Explanation:

• (1) For the further development of company business, the management plans to withdraw NTD$41,534,180 from Capital Reserve to issue dividends stocks of NTD$41,534,180 (4,153,418 shares), gratis allotment 20 shares per 1,000 shares to original shareholders. Dividends stocks of less than one share shall be distributed in cash.

• (2) The shareholder rights and obligations of the new shares are the same as those of existing shares.

• (3) After the approval of the Annual Meeting of Shareholders and the competent authority, the new shares will be distributed on a record date determined by the Board.

• (4) In the event that, before the distribution record date, the proposed profit distribution is affected by an amendment to relevant laws or regulations, a request by the competent authorities, or a buyback of shares or issuance of new shares for transferring treasury shares to employees or for equity conversion in connection with domestic or overseas convertible corporate bonds or other convertible securities or employee stock options, it is proposed that the Board of Directors be authorized to adjust the stock to be distributed to each share based on the number of actual shares outstanding on the record date for distribution.

Resolution: proposal was approved as proposed.

6. Proposed by the Board

Proposal:

Amendment to the Company's Articles of Incorporation. Please proceed to discuss.

Explanation:

In order to conform to the needs of commercial practice, the Company hereby proposes to amend the Articles of Incorporation. Please refer to page 23 ( appendix 6) for details.

Resolution: proposal was approved as proposed.

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Other Matters: None.

Questions and Motions: None.

Adjournment

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Appendix 1 The 2014 Business Report

Business Report

Dear Shareholders,

First of all, I would like to thank you for your continuing support throughout the year. SINBON has responded to the changing business climate by adopting an aggressive stance in strengthening our competitiveness. Total consolidated revenue for 2014 was NT$11,642,719 thousand, a 10.30% increase compared with NT$10,555,261 thousand in 2013. Net income increased 27.37% to NT$774,947 thousand, compared with 2013 net income of NT$608,426 thousand. Meanwhile, basic earnings per share increased19.38% to NT$3.82, compared with NT$3.20 a year earlier.

Operating policies and strategies, the operation result in 2014, budget implement, profitability, and research and development (R&D) status are illustrated as follows:

I. Operation Policies and Strategies :

• A. Policies:

• a. To develop a variety of component products and joint design and provide manufacturing integration Service: SINBON is providing one-stop shop services for clients in components designing and manufacturing. In order to reach the target, SINBON is continuously enhancing the R&D team abilities in the development of niche products and actively expanding vertical integration for supplying products to new segment markets, developing new products and serving for new customers.

• b. To extend agency products: Diversification strategy is using for the agency departments by investment or strategic alliances to seek cooperation opportunity through SINBON marketing channels.

• c. Growth via alliance, merge, and acquisition: In order to continuous growth in the future, the Company will seek any opportunities to invest or buy a company, which is in component industry.

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B. Strategies ：

• a. Alliance, merge, and acquisition ： In order to catch component industry high speed changes, we are looking for alliance opportunities with other companies for expanding our scope and enhance ourselves capabilities.

• b. Performance Improvement ： Headquarter office has set up a full multi-functional department to evaluate and trace the performance of every individual business unit and assist everyone to upgrade and improve.

• c. Niche Markets Focus ： Continuously focusing on niche markets and high gross profit fields. Medical, Auto, Green, Industrial, and Communication industries had been picked and they will be SINBON target markets.

II. The Operation Result in 2014 : (Consolidated)

				Unit: NT$ thousands	Unit: NT$ thousands
	2013		2014		percent change
Net Sales	$10,555,261	100%	$11,642,719	100%	10.30%
Gross Profit	2,268,093	21%	2,530,400	22%	11.57%
OperatingIncome	732,998	7%	950,590	8%	29.69%
Pre-tax Income	867,044	8%	1,043,522	9%	20.35%
Net Income	608,426	6%	774,947	5%	27.37%

III. Budget implement:

The Company is not required to make public Company's 2015 financial forecast information; however, overall business revenue and net income reached 98% and 106% respectively of the internal business targets in 2014.

IV. Profitability: (Consolidated)

Profitability: (Consolidated)
Items	2013	2014
Return Of Aessts(%)	7.00	8.14
Return Of Equites(%)	13.88	15.92
Profit before tax to capital(%)	41.75	50.25
Net Profit Rate(%)	5.76	6.66
Basic EPS(NT$Dollar)	3.20	3.82

V. Research and development (R&D) status:

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In 2014, SINBON invested NT$351,754 thousand in R&D for the cable and PCB assembly, box build, and component products, a 1.55% growth comparing to the previous year and expecting annual R&D expenditures will be at least NT$300 millions or over 3% of annual revenue in the future. The R&D results before 2014, we have successfully developed all types of HDMI, DDR 3, DDR 4, and USB connectors and created Junction Box, PV Connectors, and Solar Cables, which all passed TUV and UL test. DigiO2, a subsidiary of the Company, also developed a portable drug atomizer, Brezze ® Nebulizer, which was cooperated with Digital Medical Center of National Taiwan University Hospital and the product received 2013 iF design award in Germany. Since 2014, the Company focused on developing cable and PCBA products or other components, which use in internet of things, warehouse automation equipments, robot, and smart home equipments. The Company’s board of directors also passed an investment, NT$150 million, to DigiO2 Biomedical Technology Inc. for developing telemedicine care and portable electronic biomedical equipments.

Finally, management team appreciates for shareholders’ greatest support and encouragement, and hope that shareholders will continue to provide us guidance and suggestions in the future. We will do our best to achieve higher profit and returns for all shareholders.

Best Regards,

Chairman and Chief Operation Officer Joseph Wang

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Appendix 2   Supervisor’s Review Report on the 2014 Financial
Statements

SUPERVISOR’S REVIEW REPORT

The Board of Directors has prepared the Company’s 2014 Financial Statements. The CPA firm of Ernst & Young, by CPA Yan, Wen-Pi and Lin, Hong-Kuang, was retained to audit the Company’s Financial Statements and has issued an audited report relating to the Financial Statements. The Financial Statements, Business Report, and the Proposal for Distribution of 2014 Profits have been reviewed and determined to be correct and accurate by Supervisor. According to Article 219 of the

Company Law, we hereby submit this report.

Supervisor: Lin, Min-Cheng

Chiu, Te-Chen

Liang, Jun-Xing March 31, 2015

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Appendix 3 Amendment to the Company’s Ethical Corporate Management Best Practice Principles

Please refer Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies on Web site and find the Legislative/Regulation History icon. The Company all followed the regulations amendment the Ethical Corporate Management Best Practice Principles.

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Appendix 4 2014 Financial Statements

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Appendix 5 The Prohibition on Directors from Participation in Competitive Business

Position	Name	Participation in Competitive Business	Explanation
Director	Wang, Shaw-Shing (Joseph Wang)	Chairman of SINBON Beijing (representative of corporate shareholder), chairman of SINBON Hong Kong (representative of corporate shareholder), chairman of SINBON Shanghai (representative of corporate shareholder), chairman of SINBON Shenzhen (representative of corporate shareholder), chairman of SINBON Jiangyin (representative of corporate shareholder), chairman of Guanze, chairman of SINBON International (representative of corporate shareholder), chairman of SINBON Japan (representative of corporate shareholder), director of SAMOA Smart & Diligent Co., Ltd. (representative of corporate shareholder), supervisor of Argosy Technology (representative of corporate shareholder), chairman of Liandign Venture Capital (representative of corporate shareholder), chairman of Fuding Venture Capital (representative of corporate shareholder), director of Heding Venture Capital (representative of corporate shareholder), director of Huading International Venture Capital (representative of corporate shareholder), independent director of AOPEN Inc, director of SINACT (Hong Kong) International Co., Ltd. (representative of corporate shareholder), director of INPAQ Technology (representative of corporate shareholder), director of T-CONN Precision (representative of corporate shareholder), director of T-CONN Precision Zhongshan (representative of corporate shareholder), director of Super Elite Ltd.(representative of corporate	All are SINBON’s subsidiaries or invested companies excluding of AOPEN Inc., which has no competitive with SINBON.

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		shareholder), director of Super Progressive Ltd. (representative of corporate shareholder), chairman of Xinbang Material Technology(representative of corporate shareholder), director of COMTEK Electronics (representative of corporate shareholder), and director Beijing SINBON Electronics (representative of corporate shareholder)
Director	Yeh, Hsin-Chih (Daniel Yeh)	Director of SINBON Shenzhen (representative of corporate shareholder), director of Guanze (representative of corporate shareholder), director of Argosy Beijing (representative of corporate shareholder), chairman of T-CONN Precision (representative of corporate shareholder), chairman of T-CONN Precision Zhongshan (representative of corporate shareholder), and chairman of Super Elite Ltd. (representative of corporate shareholder)	All are SINBON’s subsidiaries or invested companies.
Director	Liang, Wei-Ming (Mite Liang)	Director of Worldwide Wire Harnesses Ltd. (representative of corporate shareholder), chairman of SINACT Electronics (representative of corporate shareholder), chairman of SINBON Tongcheng (representative of corporate shareholder), chairman of DigiO2 International (representative of corporate shareholder), director of SINBON Jiangyin (representative of corporate shareholder), director of SINBON Hong Kong (representative of corporate shareholder), supervisor of SINBON Beijing (representative of corporate shareholder), director of SINBON Technologies (representative of corporate shareholder), director of SINBON Beijing (representative of corporate shareholder), director of SINBON Shenzhen (representative of corporate shareholder), and director of SINBON Shanghai (representative of corporate shareholder)	All are SINBON’s subsidiaries or invested companies.
Director	Agrocy	Chairman of ArgosyTechnology,	All are

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	Research Inc. Representative: Wang, Chao-Liang	chairman of Argosy Technology B.V., chairman of Argosy Technology, Inc., chairman of Global Saber Electronics Co., Ltd., chairman of Rotec Limited, supervisor of INPAQ Technology (representative of corporate shareholder), director of Fuding Venture Capital (representative of corporate shareholder), director of Yuanding Venture Capital (representative of corporate shareholder), and director of Huanyu Precision (representative of corporate shareholder)	Agrocy’s subsidiaries or invested companies and there’s no competitive with SINBON.

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Appendix 6 Amendment to the Company’s Articles of Incorporation

After Before Explanation Article 21 Article 21 In order to The Company’s directors shall have The Company’s directors shall have conform to the 7 to 9 seats and supervisors have 3 7 seats and supervisors have 3 seats needs of seats and all of directors and and all of directors and supervisors commercial supervisors shall be elected by shall be elected by shareholders’ practice, the shareholders’ meeting and their meeting and their qualifications shall Company shall qualifications shall be in line with be in line with Taiwanese Laws and establish an Audit Taiwanese Laws and Regulations. The Regulations. The term of directors Committee in term of directors and supervisors and supervisors shall be 3 years, and 2018, so shall be 3 years, and all directors and all directors and supervisors shall be amending the supervisors shall be eligible for eligible for re-election. Shareholding director seats to 7 re-election. Shareholding of directors of directors and supervisors shall be to 9 seats. and supervisors shall be followed followed government’s requests. government’s requests. Article 21-1 Article 21-1 Accompanying The aforesaid Board of Directors The aforesaid Board of Directors with the must have at least 2 independent must have 2 independent directors. amendment of directors. Directors shall be elected Directors shall be elected by article 21 and by adopting candidate’s adopting candidate’s nomination keep flexibility for nomination system. The nomination system. The nomination of directors independent of directors and related and related announcement shall director seats. announcement shall comply with the comply with the relevant regulations relevant regulations of the ROC of the ROC Company Law and Company Law and Securities and Securities and Exchange Law. Exchange Law. Article 36 Article 36 Amendment of These Articles of Incorporation are These Articles of Incorporation are amendment date. agreed to and signed on November agreed to and signed on November 23, 1989 by all the promoters of the 23, 1989 by all the promoters of the Corporation. Corporation.

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After	Before	Explanation
The first Amendment was approved by the shareholders’ meeting on May 29, 1991. …… The twenty-first Amendment on June 15, 2012. The twenty-second Amendment on	The first Amendment was approved by the shareholders’ meeting on May 29, 1991. …… The twenty-first Amendment on June 15, 2012.
June 11, 2015.

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