Stock Code：2421

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Sunonwealth Electric Machine Industry Co., Ltd. 2020 Annual General Shareholders’ Meeting Meeting Handbook

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Printed on June 17, 2020

Sunonwealth Electric Machine Industry Co., Ltd. Agenda for the 2020 General Shareholders Meeting

I. Time: 9:00 a.m. June 17, 2020 (Wednesday)
II. Location: 6F-1 (Employee Cafeteria), No. 288-7, Xinya Road, Qianzhen District, Kaohsiung City
III. Chairman's Speech:
IV. Matters to be Reported:
(I) The Company's 2019 Business Report.
(II) 2019 Audit Committee's Report.
(III) Report on the distribution of remuneration for employees and Directors in 2019.
(IV) Report on the status of endorsements and guarantees.
V. Proposed Resolutions:
(I) 2019 Business Report and Financial Statements.
(II) Earnings distribution for 2019.
VI. Extraordinary Motions
VII. Adjournment

[Report items]

(I) The Company's 2019 Business Report. Please refer to page 37 to 43 of the Handbook.
(II) The 2019 Audit Committee's Report. Please refer to page 44 of the Handbook.
(III) Report on the distribution of remuneration for employees and Directors in 2019. The Company's earnings in 2019 (net profit before tax with remuneration for employees and Directors) totaled NT$851,642,967. The Company plans to distribute NT$10,500,000 as remuneration for Directors and NT$18,619,000 as remuneration for employees in accordance with Article 29 of the Articles of Incorporation. All remuneration shall be distributed in cash.
(IV) Report on the status of endorsements and guarantees
As of December 31, 2019, the Company's total endorsement and guarantees for external parties total US$20 million.

[Proposed Resolutions]

Agenda item #1 (Proposed by the Board of Directors) Agenda: The 2019 Business Report and Financial Statements are filed for resolution. Description:

I. The Company's Financial Statements for 2019 have been audited by the CPAs Ching-Lin Li and Shu-Man Tsai of Crowe Horwath (TW). Please refer to page 5 to 27 of the Handbook.
II. The aforementioned statements of final accounts and the Business Report have been reviewed by the Audit Committee.
III. They are hereby filed for resolution.

Resolution:

Agenda item #2 (Proposed by the Board of Directors)

Agenda: The earnings distribution proposal for 2019 is filed for resolution. Description:

I. The Company's net profit after tax in 2019 was NT$680,800,541 and total distributable earnings was NT$594,496,368. The Company plans to appropriate NT$501,859,464 as dividends for shareholders with NT$2 per share. All dividends shall be distributed in cash (calculated to the NTD and the remaining amounts below NT$1 will be rounded down). The sum of fractional amounts of less than NT$1 shall be tallied and transferred to the Employee Welfare Committee.
II. After the dividends are approved by the shareholders' meeting, the Chairman of the Board is authorized to establish the ex-dividend date, distribution date, and other related matters.
III. If the number of shares outstanding is affected by changes in the Company's share capital before the ex-dividend date for the distribution of earnings and causes changes in the shareholders' dividend rate, the shareholders' meeting is requested to authorize the Chairman of the Board process the adjustments at his full discretion.

IV.	Please refer to the table below for the earnings distribution statement	Please refer to the table below for the earnings distribution statement
	Undistributed earnings at the beginning of the period	71,913,406
	Plus: After-tax net profit of 2019	680,800,541
	Minus: Appropriation for statutory reserve	(68,683,267)
	Minus: Appropriation for special earnings reserve	(95,566,440)
	Plus: Other consolidated income (loss) (remeasurement in	6,032,128
	defined benefit plans in 2019)
	Distributable earnings in current period	594,496,368
	Minus: Distributed shareholder dividends - cash dividends	(501,859,464)
	of NT$2 per share (Note)
	Undistributed retained earnings from previous years	92,636,904

Note: Stock dividends for shareholders: 250,929,732 shares *NT$2 =NT$501,859,464

Chairman of the Board: Yin-Su Hong President: Ching-Shen Hong Head of Accounting: William Li

V. These are filed for resolution by the shareholders. Resolution:

[Extraordinary motions]

Sunonwealth Electric Machine Industry Co., Ltd.

Statement of Shares Held by Directors

		(April 19,2020)	(April 19,2020)
Title	Name	Appointment date	Term	Number of shares currentlyheld
				Number of shares	Shareholding ratio
Chairman of the Board	Yu Yuan Investment Co., Ltd. Representative: Yin-Su Hong Fu-Ing Hong Chen Ching-Shen Hong Li-Ju Chen	2018.5.30	3 years	14,825,000	5.91%
Director	Nice Enterprise Co., Ltd. Representative: Ching-LiangChen	2018.5.30	3 years	4,006,813	1.60%
Director	Tseng-ChengLin	2018.5.30	3years	-	-
Independent Director	Chun-Hao Xin	2018.5.30	3 years	-	-
Independent Director	Mei-Hsiang Pai	2018.5.30	3 years	24,128	0.01%
Independent Director	Chih-Ming Chen	2018.5.30	3 years	-	-

Shareholdings required of all Directors 12,000,000 Shareholdings of all Directors 18,855,941

Book closure date: 2020/4/19

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國富浩華聯合會計師事務所

Crowe (TW) CPAs 80250 高雄市苓雅區四維三路 6 號 27 樓之 1 27F-1., No.6, Siwei 3rd Rd., Lingya Dist., Kaohsiung City 80250, Taiwan Tel +886 7 3312133 Fax +886 7 3331710 www.crowe.tw

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Sunonwealth Electric Machine Industry Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of Sunonwealth Electric Machine Industry Co., Ltd. and its subsidiaries (the “Group") as of December 31, 2019 and 2018, and the related 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, based on our audits and the report of the other independent accountants, as described in the other matters section of our report, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRlC), 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 base on the result that we audited and the audit reports of other accountants.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters of the Group's consolidated financial statements for the year ended December 31, 2019 are stated as follows:

Valuation of inventory

Please refer to Note 4(8) to the consolidated financial statements for the accounting policy of inventories, Note 5(2)F for critical accounting judgments, estimates and key sources of assumption uncertainty of inventories, and Note 6(5) for inventory valuation.

Description of key audit matter:

As of December 31, 2019, inventory was $1,518,566 thousand and accounted for 16.1% of the total assets. Due to rapid changes in technology may lead to write-downs of slow-moving inventories to their net relizable values. As uncertainty exists in management's judgment when the determining the loss on inventory, the valuation of inventory has been identified as a key audit matter.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included the understanding of the feature of the product and the inventory aging to confirm the appropriateness of the inventory evaluation method, testing the book value of the inventory to assess the rationality of the change in the impairment loss of the inventory, obtaining the inventory status of the Group and compare the actual write-offs of the past to assess the appropriateness of the valuation for absolescent and damaged inventories.

Revenue recognition

Please refer to Note 4(20) to the consolidated financial statements for the accounting policy of revenue recognition, Note 5(1)B and Note 5(2)A for critical accounting judgements, estimates and key sources of assumption uncertainty of revenue recognition, and Note 6 (25) for the description of revenue recognition.

Description of key audit matter:

The Group’s sales revenue is easily influenced by various factors such as the industry boom and market environment, and has a significant impact on the utilization rate of the Group (the levy of idle capacity loss), inventory risk and cash flow. Consequently, this is one of the key areas our audit focused on.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included testing the Group’s controls surrounding revenue recognition, inspecting customer orders and performing a test of revenue transactions which incurred within a certain period before or after the balance sheet date, analysis of the trend of product sales and comparing the number of relevant changes or differences with the budget to confirm whether there is a significant exception.

Other Matters

As described in Note 4(3) to the consolidated financial statements, we didn’t audit the financial statements of certain subsidiaries. The financial statements of the subsidiaries were audited by the other auditors. Therefore, our opinion, insofar as it relates to the amounts and information disclosed, is solely based on the report of the other auditors. The figures as to these subsidiaries’ total assets amounted to $526,307 thousand and $447,334 thousand, representing 5.58% and 4.99% of the consolidated assets, and their total liabilities amounted to $364,252 thousand and $304,169 thousand, representing 6.99% and 6.29% of the consolidated liabilities as of December 31, 2019 and 2018, respectively; their total revenues amounted $1,120,254 thousand and $1,054,511 thousand, representing 9.61% and 8.81% of the consolidated revenue, and their total comprehensive income amounted to $18,890 thousand and $18,793 thousand, representing 3.19% and 3.27% of the consolidated comprehensive income for the years ended December 31, 2019 and 2018, respectively.

We have also audited the parent company only financial statements of Sunonwealth Electric Machinie Industry Co., Ltd. as of and for the years ended December 31, 2019 and 2018 on which we have issued an unmodified opinion including an other matter paragraph.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the 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 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 (inclusive of the Audit Committee) are responsible for overseeing the Group's financial reporting process.

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.

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.

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

Note	Amount December 31,	% 2019	Amount December 31,	Note	Amount December 31,	% 2019	Amount December 31,	% 2018
6(1) 6(2) 6(3) 6(4) 6(5) 6(6) 6(8) 6(9) 6(10) 6(11) 6(30) 6(12) 6(13)	$1,271,420 387,731 12,714 3,310,527 60,754 1,214 1,518,566 38,935 9,852	13.5 4.1 0.1 35.1 0.6 - 16.1 0.4 0.1	$1,144,973 107,831 31,737 3,059,211 45,695 3,563 1,794,369 47,778 143,382	6(14) 6(25) 6(15) 6(16) 6(9) 6(18) 6(17) 6(30) 6(9) 6(18) 6(19) 6(20) 6(21) 6(22) 6(22) 6(22) 6(23) 6(24)	$926,878 77,337 2,705,054 726,912 78,003 41,030 76,959 460 -	9.9 0.8 28.7 7.7 0.8 0.4 0.8 - -	$843,257 72,085 2,671,027 799,255 46,654 42,570 - - 2,361	9.4 0.8 29.8 8.9 0.5 0.5 - - -
					4,632,633	49.1	4,477,209	49.9
	6,611,713	70.0	6,378,539		220,000 64,825 227,080 - 61,729 4,253	2.3 0.7 2.4 - 0.7 -	220,000 51,715 - 2,456 75,660 5,145	2.5 0.6 - - 0.8 0.1
	2,277,290 316,279 81,306 18,954 53,250 24,372 53,701 - 2,433	24.1 3.3 0.9 0.2 0.6 0.3 0.6 - -	2,377,611 - 75,011 23,506 65,794 29,322 - 18,805 2,968
					577,887	6.1	354,976	4.0
					5,210,520	55.2	4,832,185	53.9
					2,509,297 366,903 689,398 164,709 758,746 (260,275)	26.6 3.9 7.3 1.7 8.1 (2.8)	2,509,297 366,903 628,886 127,111 671,883 (164,709)	28.0 4.1 7.0 1.4 7.5 (1.9)
	2,827,585	30.0	2,593,017

					4,228,778 -	44.8 -	4,139,371 -	46.1 -
					4,228,778	44.8	4,139,371	46.1
	$9,439,298	100.0	$8,971,556		$9,439,298	100.0	$8,971,556	100.0

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

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Year Ended December 31	Year Ended December 31	Year Ended December 31
2019	% 100.0 (77.9) 22.1 (4.2) (4.8) (6.4) - (15.4) 6.7 1.3 - (0.2) 1.1 7.8 (2.0) 5.8 0.1 - - 0.1 (1.0) 0.2 (0.8) (0.7) 5.1 5.8 - 5.8 5.1 - 5.1	2018
Amount $11,659,915 (9,081,302) 2,578,613 (487,904) (561,805) (742,087) 435 (1,791,361) 787,252 148,233 3,084 (28,845) 122,472 909,724 (228,923) 680,801 7,540 - (1,508) 6,032 (119,458) 23,892 (95,566) (89,534) $591,267 680,801 - 680,801 591,267 - $591,267 $2.71 $2.71		Amount $11,965,298 (9,563,763) 2,401,535 (531,682) (570,707) (690,164) (7,433) (1,799,986) 601,549 136,934 63,530 (18,188) 182,276 783,825 (176,142) 607,683 (6,841) 8,985 2,020 4,164 (45,335) 8,614 (36,721) (32,557) $575,126 605,120 2,563 607,683 572,736 2,390 $575,126 $2.41 $2.41	%
			100.0 (79.9)
			20.1 (4.4) (4.8) (5.8) -
			(15.0)
			5.1
			1.1 0.5 (0.1)
			1.5
			6.6 (1.5)
			5.1
			(0.1) 0.1 -
			-
			(0.4) 0.1
			(0.3)
			(0.3)
			4.8
			5.1 -
			5.1
			4.8 -
			4.8

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

－6－

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

		EquityAttributable to Shareholders of the Parent	EquityAttributable to Shareholders of the Parent		Non-controlling Interests	Total Equity
Share Capital OdinaryShares $2,509,297 - 2,509,297 - - - - - - - - - - - 2,509,297 - - - - - - - - $2,509,297	Capital Surplus $365,706 - 365,706 - - - - - - - 1,050 147 - - 366,903 - - - - - - - - $366,903		Unappropriated Special Reserve Earnings $82,857 $746,322 - - 82,857 746,322 - (65,746) 44,254 (44,254) - (577,138) 44,254 (687,138) - 605,120 - (4,821) - 600,299 - - - - - - - 12,400 127,111 671,883 - (60,512) 37,598 (37,598) - (501,860) 37,598 (599,970) - 680,801 - 6,032 - 686,833 - - $164,709 $758,746 Retained Earnings	Unrealized Gain (Loss) on Exchange Financial Assets Differences on at Fair Value Through Translating foreign Other Comprehensive Operations Income ($127,111) - $ - 3,415 (127,111) 3,415 - - - - - - - - - - (36,548) 8,985 (36,548) 8,985 (1,050) - - - - - - (12,400) (164,709) - - - - - - - - - - - (95,566) - (95,566) - - - ($260,275) - Others Equity
				Exchange Differences on Translating foreign Operations
		Legal Reserve $563,140 - 563,140 65,746 - - 65,746 - - - - - - - 628,886 60,512 - - 60,512 - - - - $689,398	Special Reserve $82,857 - 82,857 - 44,254 - 44,254 - - - - - - - 127,111 - 37,598 - 37,598 - - - - $164,709
				($127,111) -	$33,838 -	$4,174,049 3,415
				(127,111) - - -	33,838 - - -	4,177,464 - - (577,138)
				-	-	(577,138)
				- (36,548)	2,563 (173)	607,683 (32,557)
				(36,548) (1,050) - - -	2,390 - - (36,228) -	575,126 - 147 (36,228) -
				(164,709) - - -	- - - -	4,139,371 - - (501,860)
				-	-	(501,860)
				- (95,566)	- -	680,801 (89,534)
				(95,566) -	- -	591,267 -
				($260,275)	-	$4,228,778

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

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments : Adjustments to reconcile profit (loss) Depreciation Amortization Expected credit loss (gain) Net gain on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Loss on disposal and retirement of property, plant and equipment Transfer of property, plant and equipment to expenses Gain on disposal of investments Gain on reversal of impairment loss on non-financial assets Total adjustments to reconcile profit (loss) Net changes in operating assets and liabilities Decerase (increase) in financial assets mandatorily classified as at fair value through profit or loss Decerase (increase) in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in other receivables Decrease (increase) in inventories Decrease (increase) in prepayments Decrease (increase) in other financial assets Total changes in operating assets Net changes in operating liabilities Increase (decrease) in contract liabilities Increase (decrease) in accounts payable Increase (decrease) in other payables Increase (decrease) in provisions Increase (decrease) in advance receipts Increase (decrease) in net defined benefit liabilities Total changes in operating liabilities Total net changes in operating assets and liabilities Total adjustments	Year Ended December 31	Year Ended December 31
	2019 $909,724 399,490 38,178 (435) (1,114) 28,845 (16,791) 2,121 15,001 (2,597) (6,745) 455,953 (292,599) 19,023 (250,577) (14,744) 276,598 (14,655) 211 (276,743) 5,252 34,027 (57,887) (386) 460 (6,391) (24,925) (301,668)	2018
		$783,825 285,265 57,248 7,433 (4) 18,188 (31,377) 8,229 1,571 (25,547) -
		321,006
		124,941 (3,962) (370,924) 37,815 (47,998) (29,532) 16,679
		(272,981)
		(25,275) 121,899 18,694 2,945 - (4,893)
		113,370
		(159,611)
	154,285	161,395

Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Disposal of financial assets at fair value through other comprehensive income Increase in prepayments for investments Subsidiary disposal 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 Increase in other financial assets Decrease in other financial assets Increase in other noncurrent assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Repayments of long-term loans Increase in guarantee deposits Decrease in guarantee deposits Increase in obligation under captial leases Repayments of lease principal Cash dividends paid Increase (decrease) in non-controlling interests Net cash used in financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR	Year Ended December 31	Year Ended December 31
	2019 1,064,009 16,476 (26,851) (147,187) 906,447 - ($53,701) - (329,035) 27,382 - 4,950 (8,951) - 133,319 (2,066) (228,102) 83,621 - - (892) - (89,247) (501,860) - (508,378) (43,520) 126,447 1,144,973 $1,271,420	2018
		945,220 31,492 (17,778) (192,501)
		766,433
		74,400 - 23,330 (440,705) 17,365 (3,225) - (15,507) (133,319) - (7,391)
		(485,052)
		206,995 (100,000) 646 - 4,817 - (577,138) (36,081)
		(500,761)
		(22,397)
		(241,777) 1,386,750
		$1,144,973

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

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國富浩華聯合會計師事務所

Crowe (TW) CPAs

80250 高雄市苓雅區四維三路 6 號 27 樓之 1 27F-1., No.6, Siwei 3rd Rd., Lingya Dist., Kaohsiung City 80250, Taiwan Tel +886 7 3312133 Fax +886 7 3331710 www.crowe.tw

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Sunonwealth Electric Machine Industry Co., Ltd.

Opinion

We have audited the accompanying parent company only balance sheets of Sunonwealth Electric Machine Industry Co., Ltd. (the “Company") as of December 31, 2019 and 2018, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the parent company only financial statements, including a summary of significant accounting policies.

In Our opinion, based on our audits and the report of the other independent accountants, as described in the other matters section of our report, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as of December 31, 2019 and 2018, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and 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 parent company only Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public 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 base on the results that we audit and the audit report of other accountants.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters of the Company's parent company only financial statements for the year ended December 31, 2019 are stated as follows:

Valuation of inventory

Please refer to Note 4(7) to the parent company only financial statements for the accounting policy of inventories, Note 5(2)G for critical accounting judgments, estimates and key sources of assumption uncertainty of inventories, and Note 6(4) for inventory valuation.

Description of key audit matter:

As of December 31, 2019, inventory was $773,926 thousand and accounted for 10.1% of the total assets. Due to rapid changes in technology may lead to write-downs of slow-moving inventories to their net realizable values. As uncertainty exists in management's judgment when the determining the loss on inventory, the valuation of inventory has been identified as a key audit matter.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included the understanding of the feature of the product and the inventory aging to confirm the appropriateness of the inventory evaluation method ； testing the book value of the inventory to assess the rationality of the change in the impairment loss of the inventory, obtaining the inventory status of the Company and compare the actual write-offs of the past to assess the appropriateness of the valuation for obsolescent and damaged inventories.

Revenue recognition

Please refer to Note 4(19) to the parent company only financial statements for the accounting policy of revenue recognition, Note 5(1)B and Note 5(2)A for critical accounting judgements, estimates and key sources of assumption uncertainty of revenue recognition, and Note 6 (23) for the description of revenue recognition.

Description of key audit matter:

The Company’s sales revenue is easily influenced by various factors such as the industry boom and market environment, and has a significant impact on the utilization rate of the Company (the levy of idle capacity loss), inventory risk and cash flow. Consequently, this is one of the key areas our audit focused on.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included testing the Company’s controls surrounding revenue recognition; inspecting customer orders and performing a test of revenue transactions which incurred within a certain period before or after the balance sheet date; analysis of the trend of product sales and comparing the number of relevant changes or differences with the budget to confirm whether there is a significant exception.

Other Matters

We did not audit the financial statements of associates accounted for using the equity method that are included in the parent company only financial statements. Those financial statements were audited by other independent accountants, whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included in the parent company only financial statements is based solely on the audit reports of other independent accountants. The balances of these associates accounted for under the equity method amounted to $144,099 thousand and $ 126,809 thousand, representing 1.89% and 1.72% of total assets as of December 31, 2019 and 2018, respectively, and share of profits from associates and joint ventures amounted to $25,601 thousand and $15,400 thousand, representing 3.11% and 2.09% of the income before income tax for the years ended December 31, 2019 and 2018, respectively.

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

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

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

Those charged with governance (inclusive of the Audit Committee) are responsible for overseeing the Company's financial reporting process.

Auditors' Responsibilities for the Audit of the Parent Company Only Financial Statements

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

Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in Our auditors' report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion .

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

Note	December 31,	2019	December 31,	Note	December 31,	2019	December 31,	2018
	Amount	%	Amount		Amount	%	Amount	%
6(1) 6(2) 6(3) 6(3)、7 7 6(4) 6(6) 6(7) 6(8) 6(9) 6(10) 6(28) 6(11)	$465,806 12,713 1,863,678 361,188 13,959 18,228 773,926 11,260	6.1 0.2 24.5 4.7 0.2 0.2 10.1 0.1	$447,217 31,737 1,780,771 347,039 9,838 11,242 869,834 14,591	6(12) 6(23) 7 6(13) 6(13)、7 6(14) 6(8) 6(16) 6(15) 6(28) 6(8) 6(16) 6(17) 6(18) 6(19) 6(20) 6(20) 6(20) 6(21)	$685,000 19,240 903,644 1,125,993 245,196 11,921 21,895 13,276 12,190 460 -	9.0 0.2 11.8 14.8 3.2 0.2 0.3 0.2 0.2 - -	$510,000 10,745 1,021,169 1,026,604 261,760 13,440 34,211 13,120 - - 2,361	6.9 0.1 13.9 13.9 3.5 0.2 0.5 0.2 - - -
	3,520,758	46.1	3,512,269
	2,848,292 1,063,832 29,335 81,306 9,853 20,280 2,682 53,701 -	37.4 13.9 0.4 1.1 0.1 0.3 - 0.7 -	2,691,244 1,062,632 - 75,011 12,904 28,840 2,485 - 66
					3,038,815	39.9	2,893,410	39.2
					220,000 64,825 15,136 - 61,729 756	2.9 0.8 0.2 - 0.8 -	220,000 51,377 - 2,456 75,660 3,177	3.0 0.8 - - 1.0 -
	4,109,281	53.9	3,873,182		362,446	4.7	352,670	4.8
					3,401,261	44.6	3,246,080	44.0
					2,509,297 366,903 689,398 164,709 758,746 (260,275)	32.9 4.8 9.0 2.2 9.9 (3.4)	2,509,297 366,903 628,886 127,111 671,883 (164,709)	34.0 4.9 8.5 1.7 9.1 (2.2)
					4,228,778	55.4	4,139,371	56.0
	$7,630,039	100.0	$7,385,451		$7,630,039	100.0	$7,385,451	100.0

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

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. PANENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Year Ended December 31	Year Ended December 31	Year Ended December 31
2019	% 100.0 (84.40) 15.6 (0.40) 0.4 (3.20) (3.50) (5.80) - (12.50) 3.1 1.5 0.5 (0.1) 5.5 7.4 10.5 (1.80) 8.7 0.1 - - 0.1 (1.5) 0.3 (1.20) (1.1) 7.6	2018
Amount $7,831,346 (6,607,080) 1,224,266 (33,951) 32,687 (252,946) (273,061) (455,280) (364) (981,651) 241,351 115,935 42,317 (7,775) 430,696 581,173 822,524 (141,723) 680,801 7,540 - (1,508) 6,032 (119,458) 23,892 (95,566) (89,534) $591,267 $2.71 $2.71		Amount $8,186,530 (6,951,866) 1,234,664 (32,687) 32,758 (268,733) (263,774) (416,191) (2,547) (951,245) 283,490 92,337 83,577 (7,873) 285,106 453,147 736,637 (131,517) 605,120 (6,841) 8,985 2,020 4,164 (45,162) 8,614 (36,548) (32,384) $572,736 $2.41 $2.41	%
			100.0 (84.90)
			15.1 (0.40) 0.4 (3.30) (3.20) (5.10) -
			(11.60)
			3.5
			1.1 1.0 (0.1) 3.5
			5.5
			9.0 (1.60)
			7.4
			- 0.1 -
			0.1
			(0.6) 0.1
			(0.50)
			(0.4)
			7.0

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

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

	Unappropriated Special Reserve Earnings $82,857 $746,322 - - 82,857 746,322 - (65,746) 44,254 (44,254) - (577,138) 44,254 (687,138) - 605,120 - (4,821) - 600,299 - - - - - 12,400 127,111 671,883 - (60,512) 37,598 (37,598) - (501,860) 37,598 (599,970) - 680,801 - 6,032 - 686,833 $164,709 $758,746 Retained Earnings	Others	Others	Total Equity
		Exchange Differences on Translating Foreign Operations ($127,111) - (127,111) - - - - - (36,548) (36,548) (1,050) - - (164,709) - - - - - (95,566) (95,566) ($260,275)	Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Comprehensive Income - 3,415 3,415 - - - - - 8,985 8,985 - - (12,400) - - - - - - - - -
Legal Reserve $563,140 - 563,140 65,746 - - 65,746 - - - - - - 628,886 60,512 - - 60,512 - - - $689,398	Special Reserve $82,857 - 82,857 - 44,254 - 44,254 - - - - - - 127,111 - 37,598 - 37,598 - - - $164,709
				$4,140,211 3,415
				4,143,626 - - (577,138)
				(577,138)
				605,120 (32,384)
				572,736
				- 147 -
				4,139,371 - - (501,860)
				(501,860)
				680,801 (89,534)
				591,267
				$4,228,778

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

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments : Adjustments to reconcile profit (loss) Depreciation Amortization Expected credit loss Interest expense Interest income Share of profits of subsidiaries, associates and joint ventures Gain on disposal and retirement of property, plant and equipment Transfer of property, plant and equipment to expenses Gain on reversal of impairment loss on non-financial assets Unrealized gross profit on sales to subsidiaries and associates Realized gross profit on sales to subsidiaries and associates Total adjustments to reconcile profit (loss) Net changes in operating assets and liabilities Decerase (increase) in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in accounts receivable - related parties Decrease (increase) in other receivables Decrease (increase) in other receivables - related parties Decrease (increase) in inventories Decrease (increase) in prepayments Total changes in operating assets Net changes in operating liabilities Increase (decrease) in contract liabilities Increase (decrease) in accounts payable Increase (decrease) in accounts payable - related parties Increase (decrease) in other payables Increase (decrease) in other payables - related parties Increase (decrease) in provisions Increase (decrease) in advance receipts Increase (decrease) in net defined benefit liabilities Total changes in operating liabilities Total net changes in operating assets and liabilities Total adjustments	Year Ended December 31	Year Ended December 31
	2019 $822,524 62,537 9,585 364 7,775 (7,540) (430,696) (216) 2,343 (6,745) 33,951 (32,687) (361,329) 19,024 (83,271) (14,149) (4,130) (6,986) 95,908 2,901 9,297 8,495 (117,525) 99,389 (3,233) 162 156 460 (6,391) (18,487) (9,190) (370,519)	2018
		$736,637 37,209 9,248 2,547 7,873 (7,968) (285,106) (114) 445 - 32,687 (32,758)
		(235,937)
		(3,436) (76,720) 17,978 3,486 6,354 (112,925) (6,164)
		(171,427)
		(9,266) 88,576 186,200 (9,366) (431) 399 - (4,974)
		251,138
		79,711
		(156,226)

Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Disposal of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Increase in prepayments for investments Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrase in other receivables - related parties Acquisition of intangible assets Cash received through merger Increase in other noncurrent assets Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Repayments of long-term loans Increase in guarantee deposits Decrase in guarantee deposits Repayments of lease principal Increase in obligation under captial leases Cash dividends paid Acquisition of subsidiary equity Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR	Year Ended December 31	Year Ended December 31
	2019 452,005 7,549 157,806 (7,788) (109,647) 499,925 - ($4,880) ($53,701) (75,007) 2,257 (197) - (7,163) - - (138,691) 175,000 - - (2,421) (13,364) - (501,860) - (342,645) 18,589 447,217 $465,806	2018
		580,411 7,954 139,540 (7,875) (155,582)
		564,448
		74,400 - - (70,570) 2,922 (182) 21,342 (11,778) 48,256 (635)
		63,755
		100,000 (100,000) 100 - - 4,817 (577,138) (30,827)
		(603,048)
		25,155 422,062
		$447,217

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

The effects of the stock dividends proposed by the shareholders' meeting on the Company's business performances and earnings per share.

Year Item	Year Item	Year Item	2020 (Estimated)
Initialpaid-in capital(NT$1,000)			2,509,297
Distribution of stock and cash dividends in the current fiscalyear	Cash dividendsper share(NT$)		2.00
	Number of shares distributed per share in capital increase by retained earnings (NT$)		-
	Number of shares distributed per share in capital increase by capital reserve (NT$)		-
Change in operating performance	Operating profits(NT$1,000)		Not applicable (Note 2)
	Percentage of increase (decrease) in operating profit over the sameperiod in theprevious fiscalyear(%)
	After-tax netprofit(NT$1,000)
	Percentage of increase (decrease) in after-tax net profit over the sameperiod in theprevious fiscalyear(%)
	Earningsper share(NT$)
	Percentage of increase (decrease) in EPS over the same period in theprevious fiscalyear(%)
	Annual average return on investment (reciprocal of average annualprice/earnings ratio) (%)
Pro forma earnings per share and price/earnings ratio	If capital increase by retained earnings is entirely replaced by cash dividend distribution	Pro forma earningsper share
		Pro forma average annual return on investment
	If capital reserve is not used for capital increase	Pro forma earningsper share
		Pro forma average annual return on investment
	If capital reserve is not used for capital increase and capital increase by retained earnings is replaced by cash dividend distribution	Pro forma earningsper share
		Pro forma average annual return on investment

Note 1: Filed in accordance with the resolution of the meeting of the Board of Directors on March 11, 2020. To be passed in the general shareholders meeting in 2020.

Note 2: According to the "Regulations Governing the Publication of Financial Forecasts of Public Companies", the Company is not required to disclose its financial forecasts for 2020.

Sunonwealth Electric Machine Industry Co., Ltd. Shareholders' Meeting Policy

Article 1: Unless otherwise specified by law or the Articles of Incorporation, the shareholders' meetings of the Company shall be implemented in accordance with this Policy.
Article 2: The Company shall provide an attendance log to record attendance of shareholders in attendance; alternatively, attendance cards may be presented to signify their presence at the meeting. The number of shares represented during the meeting is calculated based on the total amount registered in the attendance log or the attendance cards collected.
Article 3: Shareholders' attendance and votes are determined by the number of shares represented during the meeting.
Article 4: Shareholders' meetings of the Company shall be held at locations that are suitable and convenient for shareholders to attend. Meetings shall not begin earlier than 9 AM or later than 3 PM.
Article 5: Shareholders' meetings that are convened by the Chairman shall be chaired by the Chairman. If the Chairman is unable to perform such duties due to leave of absence or any reason, the Vice Chairman shall act on the Chairman's behalf. If the Vice Chairman is also unavailable or is non-existent, the Chairman may appoint one of the Managing Directors to act on the Chairman's behalf. If the Company does not have a Managing Director, one of the Directors shall be appointed to act on the Chairman's behalf. If no such designation is made by the Chairman, the Managing Directors or Directors shall select one person from among themselves to serve as chair. If the shareholders' meeting is convened by an authorized party other than the Board of Directors, the meeting shall be chaired by the authorized convener.
Article 6: The Company may summon its lawyers, certified public accountants, and any relevant personnel to be present at the shareholders' meeting. Organizers of the shareholders' meeting must wear proper identification or arm badges.
Article 7: The Company's shareholder meetings must be video or audio recorded and kept for at least one year.
Article 8: The chair shall announce the commencement of the meeting as soon as it is due. However, if the attendants represented less than half of the Company's outstanding shares, the chair may announce to postpone the meeting up to two times, for a period totaling no more than one hour. If after two postponements the number of shareholders present is still insufficient while representing at least one third of the total issued shares, provisional resolutions may be adopted in accordance with Article 175, Paragraph 1 of the Company Act. If the number of shares represented during the meeting accumulates to more than half of all outstanding shares before the meeting ends, the chair may re-propose the tentative resolution for final voting according to Article 174 of the Company Act.
Article 9: If the shareholders' meeting is convened by the Board of Directors, the Board of Directors shall determine the meeting proceedings. The proceedings shall not be changed unless

resolved during the shareholders' meeting. The above rule also applies if the shareholders' meeting is convened by any authorized party other than the Board of Directors. In either of the two arrangements described above, the chair cannot dismiss the meeting while an agenda item (including extraordinary motions) is still in progress. If the chair violates the meeting policy by dismissing the meeting when it is not allowed to do so, the attending shareholders may elect another chair with the support of more than half of voting rights represented and continue the meeting.
Article 10: Shareholders who wish to speak during the meeting must produce an opinion slip detailing the topics and the shareholder's account number (or the attendance ID serial). The order of shareholders' comments shall be determined by the chair. Shareholders who submit an opinion slip without actually speaking are considered to have remained silent. If the shareholder's actual comments differ from those stated on the opinion slip, the actual comments expressed shall be recorded. While a shareholder is speaking, other shareholders shall not speak simultaneously or interfere in any way unless agreed by the chair and the person speaking. Any violators shall be restrained by the chair.
Article 11: Each shareholder shall speak no more than twice, for a maximum of five minutes each, on the same agenda item unless otherwise agreed by the chair. The chair may stop shareholders from speaking if they violate the rules or speak outside the agenda item under discussion.
Article 12: Corporate entities that have been designated as proxy attendants shall only appoint one representative to attend the shareholders' meeting. Where a corporate shareholder has appointed two or more representatives to attend the shareholders' meeting, only one representative may speak per agenda item.
Article 13: After the shareholder has finished speaking, the chair may answer to the shareholder's queries personally or appoint any relevant personnel to do so.
Article 14: When the chair at a board meeting is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announce the discussion closed and call a vote.
Article 15: The chair will appoint a ballot scrutineer and a ballot counter; the ballot scrutineer must be a shareholder. Voting results shall be made known on-site immediately and recorded in writing.
Article 16: The chair may put the meeting in recess at appropriate times.
Article 17: Unless otherwise regulated by the Company Act or the Articles of Incorporation, an agenda item is passed when supported by shareholders who represent more than half of the total voting rights in the meeting. No voting power shall be granted, however, to shares specified in Article 179 of the Company Act. An agenda is considered passed if the chair receives no objections from any attendants. This voting method is as effective as does the conventional ballot method.
Article 18: When there is an amendment or alternative to a proposal, the chair shall present the amended or alternative proposal together with the original proposal and decide the order in

which they will be put to a vote. If any resolution is passed, all other proposals shall be deemed rejected and no further voting is necessary.

Article 19: The chair may instruct marshals (or security staff) to help maintain order in the meeting. While maintaining order in the meeting, all marshals or security staff must wear arm bands which identify their roles as "Marshall."
Article 20: Matters not provided herein shall be subject to the provisions of the Articles of Incorporation and other applicable laws and regulations.
Article 21: The Policy shall come into effect upon approval of the shareholders' meeting. The same applies to all subsequent amendments.
Article 22: The Policy was established on June 23, 1991. The first amendment was on April 3, 1997. The second amendment was on April 3, 1998. The third amendment was on May 28, 2002. The fourth amendment was on June 16, 2006.

Sunonwealth Electric Machine Industry CO., LTD.

Articles of Incorporation

SECTION I: General Principals

Article 1. The Company is called 建準電機工業股份有限公司 and is registered as a company limited by shares according to the ROC Company Act. The English name of the Company is SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. Article 2 The Company is engaged in the following businesses: 01.CC01080 Electronic Parts and Components Manufacturing 02.CC01990 Electrical Machinery, Supplies Manufacturing 03.CB01010 Machinery and Equipment Manufacturing 04.CC01010 Electric Power Supply, Electric Transmission and Power Distribution Machinery Manufacturing 05.CC01030 Electric Appliance and Audiovisual Electric Products Manufacturing 06.F401010 International Trade 07.ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval. Article 3. The Company’s headquarter is located in Kaohsiung city, Taiwan and may set up domestic or foreign branches, offices or business establishments as resolved by the Board of Directors, if necessary. Article 4. Public announcements by the Company are to be made following Article 28 of Company Act. Article 5. The total amount of the Company’s reinvestment shall not be subject to the restriction of not exceeding 40% of its paid-in capital, and the Company may act as a guarantor.

SECTION II: Shares

Article 6. The total capital amount of the Company shall be three billion New Taiwan Dollars (NT$3,000,000,000), divided into three hundred million (300,000,000) shares, at a par value of ten New Taiwan Dollars (NT$10) per share, and may be issued separately according to the resolution of the Board of Directors. Article 6-1. To transfer shares to employees at less than the average actual share repurchase price, a company must have obtained the consent of at least two-thirds of the voting rights present at the most recent shareholders meeting attended by shareholders representing a majority of total issued shares. Article 7. The Company's stocks shall be registered. Share certificates shall be affixed with the signatures or personal seals of the director representing the Company and shall be duly certified or authenticated by the bank which is competent to certify shares under the laws before issuance thereof. The Company may issue shares without printing share certificate(s), but shall have the shares registered with the Taiwan Depository & Clearing Corporation.

Article	8.	A shareholder shall for record purposes provide to the Company his official name. it shall
		state the official name and registered address of the each shareholder and(or) the proxy of
		the shareholder in the roster of shareholder. Where there are several persons owning the
		same share or shares, such co-owners shall select one of them for the exercise of their
		shareholders rights.
Article	9.	Unless otherwise required by the laws and the Securities and Exchange Act, the shareholder
		services including transferring of share ownership, creation of pledge, removal of pledge,
		reporting of loss, inheritance, gift, change of basic shareholder information, etc. shall be
		handled in accordance with the Regulations Governing the Administration of Shareholder
		Services of Public Companies promulgated by competent authority
Article	10.	A company shall not handle any requests for transfers of shares within 60 days prior to the
		shareholders meeting, 30 days prior to the special shareholders meeting, or 5 days prior to
		the record date for the distribution of dividends, bonuses or other interests.
		SECTION III: General Shareholders’ Meeting
Article	11.	Shareholders’ meeting shall be of two types, namely general and extraordinary shareholders’
		meeting. The former shall be convened once a year within six months after the close of each
		fiscal year and the latter shall be convened whenever necessary. Notices which clearly state the
		purpose(s) for convening meeting shall be sent to each shareholder at least thirty (30) days in
		advance, in case of general meetings, and at least fifteen (15) days in advance, in case of
		extraordinary meetings.
Article	12.	Any shareholder, who for any reason is unable to attend general shareholders’ meetings, may
		execute a proxy printed by the Company, in which the authorized matters shall be expressly
		stated, to authorize a proxy to attend the meeting for him/her.
Article	13.	Shareholders’ meeting shall be convened by the Board of Directors and, be presided over
		by the Chairman of the Board of Directors; in case the Chairman of the Board of
		Directors is on leave or unable to perform his duties for cause, the Chairman of the
		Board of Directors shall designate a director to act as the chairman; if no such
		designation, the directors shall elect one from among themselves.
Article	14.	Except in the circumstances otherwise provided under the Article 179 of the Company Act, a
		shareholder shall have one voting power in respect of each share in his/her/its possession.
Article	15.	Unless otherwise required by the Company Act, shareholders’ resolutions shall be adopted by at
		least half of the votes of the shareholders present at a general shareholders’ meeting who hold at
		least half of all issued and outstanding shares of the Company.
Article	16.	Shareholder meeting minutes made for the purpose of recording all proceedings and
		resolutions at meetings of the holders of any class of Shares should be signed by respective
		chairpersons and dispatched within 20 days from the date the meetings concluded to all of the
		Shareholders for the time being entitled to receive notice of and to attend and vote at the
		meetings. Minutes shall also specify the place, the day and the hour of the meeting and name
		of the chairperson and are to be kept in the Company along with relevant Shareholder sign-in
		records and instruments of proxies. The attendance list bearing the signatures of the
		shareholders present at the shareholders meeting and the powers of attorney of the proxies
		shall be kept for a period of at least one year.

SECTION IV: Director

Article 17. The Company shall have seven (7) to nine (9) directors to be elected by the general shareholders’ meeting through the provisions of Article 192-1 of the Company Act in that a candidate nomination system from the nominees listed to serve a term of three years, and may continue to serve in the office if re-elected. The minimum number of total shares to be owned by the directors of the Company shall be in compliance with the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies as promulgated by the Financial Supervisory Commission.

The aforesaid Board of Directors must have at least three (3) or one-fifth (1/5) of all directors, whichever is higher, independent directors. Shareholders shall elect independent directors from among those listed in the slate of independent director candidates. The independent directors may not continue to server over nine (9) years. Regulations governing the professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, method of nomination, and other matters for compliance with respect to independent directors shall be subject to the applicable laws.

The monthly remuneration and Transportation allowance of the directors of the company shall be prescribed by the Remuneration Committee referring to the typical pay levels adopted by peer companies and be submitted to the Board of Directors for resolution.

The Board of Directors may obtain directors liability insurance during their terms of directorship when necessary with a resolution to be adopted by a majority vote of the directors at a meeting of the Board of Directors attended by at least a majority of the entire directors of the company.

Article 18. Tenure of incumbent Directors and Supervisor may be extended until such date new Directors and new Supervisor are appointed if shareholder general meeting to elect new Directors and new Supervisor, for any reason, is not convened in time.

Article 19. The Board of Directors is constituted by directors, and the Chairman is elected by more than half of the directors at a board meeting at which two-thirds or more of the directors are present. The Chairman shall perform all his/her duties in accordance with laws and regulations, the Articles of Incorporation, resolutions adopted at meetings of Shareholders and the Board of Directors.

Article 20. By-elections shall be convened for the purpose of filling vacant seats in the board of Directors if any such vacancy arises prior to expiration of the designated 3-year tenure. Appointment through by-election shall not carry tenure beyond the original expiration date of the vacant position for which the by-election is held.

Article 21. The meeting of the Board of Directors shall be held once every quarter; special meeting of the Board of Directors may be held when Chairman deems necessary or requested by two (2) or more Board members. Unless otherwise stipulated in the Company Act, board meetings shall be called and chaired by the Chairman of the Company. When the Chairman cannot exercise his power and authority, the act on his behalf shall be in according with the provisions of Article 192-1 of the Company Act.

In convening a meeting of the Board of Directors, a notice indicated the purpose(s) for convening the meeting shall be given to each director no later than 7 days prior to the scheduled meeting date in writing or via e-mail or fax. However, in the case of urgency, the meeting may be convened at any time.

Article 22. Unless otherwise required by the Company Act, shareholders’ resolutions shall be adopted by at least half of the votes of the shareholders present at a general shareholders’ meeting who hold at least half of all issued and outstanding shares of the Company. A director may execute a proxy to appoint another director to attend the Board of Directors meeting and to exercise his/her voting right, but a director can accept only one proxy. In case a meeting of the board of directors is proceeded via visual communication network, then the directors taking part in such a visual communication meeting shall be deemed to have attended the meeting in person. Article 23. Board meeting minutes made for the purpose of recording all proceedings and resolutions at meetings of the Directors should be signed by the chairman and dispatched within 20 days from the date the meetings concluded to all of the Directors. Minutes shall be kept in the Company along with relevant Director sign-in records and instruments of proxies. Article 24. The Company shall set forth the Audit Committee, which comprises of all the independent directors, in accordance with the Securities and Exchange Act. Oneof independent directors shall be convener, and at least one of whom shall have accounting or financial expertise. After the establishment of the Audit Committee, the Audit Committee shall be responsible for performing the power of supervisors as provided in the Company Act, the Securities and Exchange Act, the Articles of Incorporation and the internal rules of the Company and the relevant laws and regulations.

The resolution of the Audit Committee shall be made at the meeting in which a majority of the independent directors shall vote in favor of the resolution. When holding a meeting of the board of directors, the company may invite personnel of Atticle 25. relevant departments to attend the meeting as nonvoting participants. SECTION V: Manager Article 26. The Company may have managers whose appointment, dismissal andremuneration shall be handled in accordance with Article 29 of the Company Act. Article 27. (Deleted) SECTION VI: ACCOUNTING Article 28. At the end of each fiscal year, the Board of Directors shall prepare financial and accounting books in accordance with the ROC Company Act and submit them according to law to the ordinary general shareholders’ meeting for approval.

the business report;
the financial statements; and

3 . the surplus earning distribution or loss off-setting proposals.

Article 29. The company operates the business of electronic components industry and it is currently at the growth stage of the industry life cycle. Research, development and increasing production capacity are the key to competitive capability and sustainable operation. Based on the factors including capital required for operation and stable dividends distribution, the Company adopts Residual Dividend Policy with fixed dividends.If the Company is profitable, 2% (inclusive) of the profits shall be allocated as compensation to employees and 5% (inclusive) or less of the profits should be allocated as compensation to directors. While the Company has accumulated losses, the profit shall be set aside to compensate losses before distribution.

The company may, by a resolution adopted by a majority vote at a meeting of board of

directors attended by two-thirds of the total number of directors, have the profit distributable as employees’ compensation in the preceding paragraph distributed in the form of shares or in cash; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting.

Qualification requirements of employees, including the employees of subsidiaries of the company meeting certain specific requirements, entitled to receive shares or cash.

At each fiscal year-end, the Company should allocate as legal surplus ten percent (10%) of earnings that are net of tax payment and net of adjustments for any losses from prior years. Total of earnings balance from current fiscal year and undistributed earnings from previous years is considered earnings available for distribution. Proposal of earnings distribution shall be presented in board meetings and resolved in shareholder general meetings.

In the case of dividends distribution by the Company, the Board of Directors may refer to the operational and capital expenditure requirements to draw a proposal of appropriate proportions of cash and stock dividends, and such proposal shall be submitted to the shareholders' meeting for approval. Stock dividend provided that the cash dividends shall not be less than 20% of the total dividends.

SECTION VII: Appendix

Article 30. The internal organization of the Company and the detailed procedures of business operation shall be determined by the Board of Directors. Article 31. In regard to all matters not provided for in these Articles of Incorporation, the Company Act or other laws and regulations shall govern. Article 32. Terms of these articles of incorporation have been fully ratified, confirmed, and approved by shareholder general meeting and filed with authority for adoption. Any future amendment to the terms of these articles shall be approved by shareholder general meeting and file with authority for adoption. Article 33. These Article of Incorporation were enacted on Aug 12,1980 and amended on Sep. 26, 1980 for the first time, on May 25, 1983 for the second time, on Sep. 1,1986 for the third time, on Oct. 5,1988 for the fourth time, on Mar. 7,1989 for the fifth time, on Mar. 23,1989 for the sixth time, on Oct. 1,1989 for the seventh time, on Mar. 1,1991 for the eighth time, on June 23,1981 for the ninth time, on June 19,1983 for the tenth time, on Aug. 20,1994 for the eleventh time, on June 16,1995 for the twelfth time, on May 30,1996 for the thirteenth time, on Apr 3,1997 for the fourteenth time, and on May 14, 1999 for the fifteenth time , on May 26,2000 for the sixteenth time, on May 28,2002 for the seventeenth time, on June 3,2003 for the eighteenth time, on June 27,2005 for the nineteenth time, on June 16,2006 for the twentyth time, on June 22,2007 for the twentyfirst time, on June 19,2008 for the twenty-second time, on May 27,2009 for the twentythird time, on June 9,2010 for the twenty-fourth time, on May 25,2012 for the twenty-fifth time, on June 4,2014 for the twenty-sixth time, on June 9,2015 for the twenty-seventh time, on June 3,2016 for the twenty-eighth time, on June 19,2019 for the twenty-ninth time.

Sunonwealth Electric Machine Industry Co., Ltd. 2019 Business Report

I. Business Performance

Growth in the global economic has weakened significantly in 2019 as the standoff between the United States and China on trade continued into the second half of 2019 and the global cargo trading volume declined. However, factors such as the accelerated development of high-speed computing, IoT, and 5G infrastructure have also brought forth another wave of new business opportunities for the industry. Sunonwealth is the best partner for industrial motor and fan heat dissipation. We continue to invest in the development and research of heat dissipation products for emerging industries to provide optimal heat dissipation solutions for new technologies. We also maintain optimal business performance in our existing product lines to maximize business interests for companies.

Sunonwealth has been focused on inventions and innovation in core technologies in energyefficient motors for 40 years. Sunonwealth has continuously achieved innovation and led product development trends in the industry in solutions for motors, fans, heat dissipation modules, and ventilation. Examples include the world's first MagLev motor fans and the world's smallest and slimmest Mighty Mini Fan. The product received wide acclaim in the industry and it was widely adopted in mobile devices, automotive electronics, IoT, home appliances, industrial applications, refrigeration equipment, monitoring and control services, energy storage systems, and green building ventilation. It was designated for use by multiple international brands and we became customers' optimal heat dissipation design partner. We launched large ceiling fans in 2019 to provide the most energy-efficient air-conditioning solutions for industrial building ventilation design.

The Company's net operating revenues in 2019 was NT$7,831,346 thousand which was a decrease of NT$355,184 thousand or 4.34% from NT$8,186,530 thousand in 2018. The consolidated net operating revenues was NT$11,659,915 thousand which was a decrease of NT$305,383 thousand or 2.56% from NT$11,965,298 thousand in 2018.

Sunonwealth Group launched the world's first DR MagLev Motor Fan which uses new MagLev technology with micro dust insulation technology and S&C (seal & clip) to effectively prevent motor stator blades from falling off and provides superior dust resistance, higher reliability, and longer useful life. It has become Sunonwealth's optimal competitive niche in the heat dissipation industry. Sunonwealth has intensified development in inventions and innovation for many years and we have established comprehensive and industry-leading technology capacity. Sunonwealth was ranked 48th in the world and 4th in Taiwan in terms of technical strength by the MIT Technology Review . These achievements prove Sunonwealth's technical prowess in the industry.

As technology continues to progress and with the arrival of the 5G generation with faster transmission speed, application service providers (ASPs) continue to upgrade their comprehensive solutions and they increase the power requirements for telecommunication equipment such as telecommunication switches and data center servers. The demand for heat dissipation products also

continues to grow. Thus, the servers and storage equipment in important data centers around the world rely heavily on Sunonwealth's heat dissipation products. In addition to telecommunication equipment, the market where 5G technologies have the most important impact is the electric vehicle market. As conditions inside cars are now being processed in the smart cloud, the demand for heat dissipation in all electronic systems have increased significantly. Sunonwealth has dedicated development efforts on the heat dissipation market for 40 years. We have won opportunities in the 5G market and used the advantages of our outstanding energy-efficient, low-vibration, and low-noise products to win the recognition of major international brands.

In terms of diverse automotive applications, in response to the increase in green energy and environmental protection awareness and the rapid development of electric vehicles, Sunonwealth's fan products have gradually been expanded from traditional automotive applications to various electronic applications in electric vehicles. Our products are used in the CPUs of advanced driver assistance systems and trip computers and our customers include major automobile manufacturers such as Tesla, BMW, Mercedes Benz, Audi, and Jaguar. As cars gradually become smarter, the proportion of automotive electronics applications has grown each year and automotive electronics has become the source of 90% of the innovation in the current automotive industry. Various applications for cleaner energy, safer, smarter, and more comfortable vehicles are being developed. Cooling design has become a key technology for maintaining the maximum performance of high-end electronics products. Since 1999, Sunonwealth has accumulated years of experience in projects with European and American automobile manufacturers and we provide products with high reliability, high protection, high temperature resistance, vibration resistance, acid corrosion resistance, salt fog resistance (GR487 certification), dust resistance, waterproof, and certified in 1000 desert tests that meet cooling and ventilation requirements of the automotive industry and satisfy automobile manufacturers' high demand for quality.

In the past ten or more years, the use of chlorofluorocarbons (CFCs) have gradually been ceased in the refrigeration, air-conditioning, and fire safety equipment produced around the world due to the Montreal Protocol. The levels of these substances have been gradually reduced each year with the hard work of the industry and the Antarctic ozone hole was finally minimized and stabilized in the past 2 years. Countries have outlawed or reduced the use of such substances while fluorine-free and environmentally friendly refrigerants have been adopted in more and more refrigeration equipment. As most environmentally friendly refrigerants are produced from hydrocarbons which have low-fire points and are explosive, Sunonwealth has begun producing ultra-high efficiency energy-saving EC fans for commercial refrigeration equipment with 80% lower electricity consumption to control surface temperature more effectively during operations and maintain them within a safe range so that no short circuits in internal parts can cause any flame. This prevents any high temperature of flames or explosions and the product passed the EU's ATEX certification, making it safer for customers' designs and usage.

Global warming has caused severe climate issues in recent years and countries began to pay more attention to energy conservation, carbon emissions reduction, and sustainable development of

the environment. Sunonwealth's international customers with whom we have worked for many years began transitioning from traditional motors to energy-efficient DC motors and Sunonwealth has advanced greatly in energy-efficient motor technologies and environmentally friendly materials for products. Sunonwealth has accumulated technologies for energy-efficient motors and abundant experience in industrial cooperation and R&D for many years. We have established a series of ultraenergy-efficient DC ventilation products for sectors that still use traditional motors in 2015. The futuristic products consume 80% less energy and are ultra-quiet, waterproof, flame retardant, and equipped with multiple protection technologies that provide people with safer, more comfortable, and more energy-efficient ventilation products. In addition to adopting the latest motor technologies for our products, we surpassed traditional constraints in the external design of the products by integrating LED lighting and ventilation design and adopting minimalist styles for control panels. Our products have received the iF product design award in Germany and the Taiwan Excellence Silver Award. They provide the home environment with superior ventilation products.

In addition to climate change, the increasingly severe smog endemic around the world also severely threaten human health, Sunonwealth created the Flow2 One-AHR Ventilation Fan to address air pollution and smog in 2016. The product is used for bidirectional exchange of air for closed building environment. With simple installation, it provides fresh air for indoor areas and quickly expels indoor CO2, dust, formaldehyde, and other pollution. It also filters PM.25 from external air to introduce fresh air and increases the oxygen content of the indoor environment. The total heat exchange function achieves truly comfortable indoor temperature and humidity and the product received recognition in the 2017 Taiwan Excellence Award. We launched an advanced model in 2019 and won the 2020 Taiwan Excellence Award again. With an innovative external design and more efficient PM2.5 filtering, its smart functions detect air quality at home and provides refreshing air at all times so that you can enjoy forest-like good air without opening the windows.

In response to global energy conservation trends, air-conditioning used along with ceiling fans can effectively lower indoor temperature by 5-8°C. Under general temperatures, it can even replace air-conditioning and lower the air-conditioning cost of commercial spaces. As ceiling fans operate over long periods of time, higher energy efficiency standards have become more important. Sunonwealth's ceiling fans are completely lead-free in design and they meet RoHS 2.0 and REACH requirements. The fans are powered by ultra-slim motors and the fans incorporate aluminum and patented aircraft-grade blade designs that effectively reduce drag and eliminate nose. We provide higher performance with lighter and quieter designs than competitors and the ultra-slim fashionable external appearance also provide large spaces with more energy efficient options to improve the appearance of workplace and home living environment.

Sunonwealth has established a pair of core business units in Kaohsiung including the "Invention and Innovation Center" and the "Business Headquarters" to construct a customer service and technical and R&D support system that spans across all continents in the world. Sunonwealth's Invention and Innovation Center invents innovative motors and integrates more than 400 R&D engineers its laboratories in Europe, the United States, Japan, and China to resolve energy conservation and heat

management design challenges of customers in all regions and provide customers across the world with the most suitable solutions. The Business Headquarters is the Group's command center for its global operations. With 12 subsidiary companies and offices in Europe, the United States, Japan, and China, more than 130 distributors across the world, and more than 1,000 sales service locations, Sunonwealth Group is able to provide rapid and attentive services to customers across the world through a series of close-knit networks.

II. Production status

The Company produced a total of 127,570 thousand fan products in 2019 which was a 8.02% decrease from 138,683 thousand units in 2018. AC fans accounted for 3.79% of total annual production while DC fans accounted for 96.21%.

Sunonwealth currently has four production bases in Taiwan and China. The Kaohsiung Plant is the headquarters of the Invention and Innovation Center and it focuses on the trial and mass production of new products and the production of the Mighty Mini Fan. With four production bases in Foshan, Beihai, and Kunshan in China, and Kaohsiung, the Group's comprehensive production and supply network has a monthly output of 22.8 million units in cooling fans and 730 thousand cooling modules. We use flexible processes and delivery capacity to respond to customer demands and provide rapid and reliable supply services.

In terms of production quality management, Sunonwealth implements ISO quality management systems to improve quality performance. We continue to expand high-tech automation equipment for production to increase production efficiency, standardization, and zero-defect and win customers' long-term trust. All production bases have passed ISO9001, ISO14001, and OHSAS18001 international certification. In response to the quality requirements of the automotive electronics industry, we obtained ISO/TS 16949 certification in 2006 to satisfy high-level safety requirements and meet strict standards in the international automobile industry.

To ensure that products completely meet the EU's RoHS and other green environmental protection regulations, Sunonwealth established an exclusive green supply chain system and fully introduced green procurement procedures to increase management over green materials and control over R&D recognition operations. We strictly prohibit the use of controlled substances and we prohibit suppliers from using or including prohibited substances in production and products. We passed the IECQ QC080000 Hazardous Substance Process Management audit and certification in 2008 and we established a green quality management system that meet international standards.

Sunon places great emphasis on environmental protection and energy conservation in product design and R&D and we adopt green designs that reduce consumption of components and save energy and electricity. The production process requires complete compliance of suppliers with the related substance control declaration standard for the environment in the EU's RoHS and REACH directives in terms of the production process and raw materials. We do not use materials extracted from conflict resources. In addition, we also pay close attention to international issues regarding environmental protection and use of energy and resources. We have implemented the halogen-free initiative and

completed education and training for suppliers and employees. In addition, Sunonwealth Group also actively educates all employees on the importance of "environmental protection and energy conservation". In addition to establishing comprehensive procedures and systems for digital documents, we also implemented the 6S policy (sort, set in order, shine, standardize, sustain, and safety) in all plants. We aim to set Sunonwealth Group as a role model and inspire more people to work hard to protect the Earth and our environment. We aim to create "An Entirely Green Sunon".

III. Research and development status

Sunonwealth upholds the "Trinity R&D theory" for the Group's inventions and innovation. We have accumulated more than 39 years of experience in motor technologies and we focus on 3 major technological fields including "motor invention", "motor applications", and "total solutions for heat dissipation". We aim to explore the best performance and unlimited possibilities in motor applications. Our persistent pursuit of technical breakthrough and product innovation have pushed Sunonwealth Group to the forefront of technology development to provide clients with key modules in motors, cooling fans, and cooling modules to help them build their next-generation dream products. As of the end of December 31, 2019, we had been granted 2,802 patents worldwide with 366 pending patents totaling 3,037 patents. These patents for R&D and innovation achievements demonstrate the Company's lead in innovation and its advantages in grasping market opportunities.

The Company's short-term and medium to long-term research plans in recent years are summarized in the table below:

Term	R&D Program(Project)Content
Short-term plans	1. Low-noise and low-vibration DC fan product development 2. Durable and energy-efficient fan and module product development 3. High-performance large-scale DC fan product development 4. Energy-efficient environmentally friendly DC fan product development 5. Industrial/commercial high-performance smart control EC motor fan product development 6. High-grade IP protection/salt spray resistance fan motor development 7. High-performance DC automotive brushless motor development 8. IoT high-performance heat dissipation module development 9. Vehicle-mounted heat dissipation module development 10. 5G communications equipment system heat dissipation modules 11. Air quality sensors and micro fan products for air quality management

Term

R&D Program(Project)Content

Short-term plans

1. Low-noise and low-vibration DC fan product development
2. Durable and energy-efficient fan and module product
development
3. High-performance large-scale DC fan product development
4. Energy-efficient environmentally friendly DC fan product
development
5. Industrial/commercial high-performance smart control EC
motor fan product development
6. High-grade IP protection/salt spray resistance fan motor
development
7. High-performance DC automotive brushless motor
development
8. IoT high-performance heat dissipation module development
9. Vehicle-mounted heat dissipation module development
10. 5G communications equipment system heat dissipation
modules
11. Air quality sensors and micro fan products for air quality
management

	12. Home environment and commercial ceiling fan/ceiling fan motor development 13. Industrial/commercial ceiling fan product development 14. High-performance cold-water cold panel module design and development 15. Smart online air quality Flow2 One-AHR Ventilation Fan product development 16. Micro high-load axial fan film system development 17. Smart control module development 18. IoT module and motor applications and research 19. Industry 4.0 light-weight motor development 20. Automotive communication protocols circuit design and development 21. Low-noise and high-heat dissipation thin fan module product development 22. Cost-efficient thin heat dissipation module development 23. Environmentally-friendly low-resistance heat dissipation module technologydevelopment
Medium and long- term plans	1. Continuous R&D for high-performance heat-dissipation module solutions 2. Continuous R&D for high-reliability component and technologies 3. Continuous R&D for slim, lightweight, precision, and durable products 4. Nano heat dissipation technology development 5. R&D for Green energy technologies and products 6. Continuous development of heat-resistant cooling materials 7. Heat dissipation modules for communication and transmission 8. Research in programmable control for smart motor fans 9. Development of overall control modules for one-to-multiple equipment 10. Smart remote-control module development 11. IoT control system development 12. High-weather resistance and high-reliability ventilation equipment 13. High-performancequiet waterpump product development

12. Home environment and commercial ceiling fan/ceiling fan
motor development
13. Industrial/commercial ceiling fan product development
14. High-performance cold-water cold panel module design and
development
15. Smart online air quality Flow2 One-AHR Ventilation Fan
product development
16. Micro high-load axial fan film system development
17. Smart control module development
18. IoT module and motor applications and research
19. Industry 4.0 light-weight motor development
20. Automotive communication protocols circuit design and
development
21. Low-noise and high-heat dissipation thin fan module product
development
22. Cost-efficient thin heat dissipation module development
23. Environmentally-friendly low-resistance heat dissipation
module technologydevelopment

Medium and long-
term plans

1. Continuous R&D for high-performance heat-dissipation
module solutions
2. Continuous R&D for high-reliability component and
technologies
3. Continuous R&D for slim, lightweight, precision, and
durable products
4. Nano heat dissipation technology development
5. R&D for Green energy technologies and products
6. Continuous development of heat-resistant cooling materials
7. Heat dissipation modules for communication and
transmission
8. Research in programmable control for smart motor fans
9. Development of overall control modules for one-to-multiple
equipment
10. Smart remote-control module development
11. IoT control system development
12. High-weather resistance and high-reliability ventilation
equipment
13. High-performancequiet waterpump product development

As the leader in the cooling fans and modules industry, Sunonwealth integrates the energy of its global R&D team and uses energy-efficient motors to initiate the "quiet revolution", "energy conservation revolution", "performance revolution", and "miniature revolution" with the aim of bringing quiet, comfortable, and smart green innovative technologies for humans and fulfilling the mission of "Make Life Easier".

Chairman of the Board Yin-Su Hong

President Ching-Shen Hong

Accounting Managerial Officer William Li

Audit Committee's Audit Report

The Board of Directors has prepared and submitted the 2019 business report, financial statements, and earnings distribution proposal. The financial statements have been audited by Crowe Horwath (TW) CPAs and they have submitted an audit report. The Audit Committee has reviewed the business report, financial statements, and the earnings distribution proposal and did not find any instances of noncompliance. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, it is hereby submitted for your review and perusal.

Sunonwealth Electric Machine Industry Co., Ltd. Chairman of the Audit Committee: Chun-Hao Xin

March 11, 2020

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S h i n i n g T o g e t h e r

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Sunonwealth Electric Machine Industry Co., Ltd.

T E L：886-7-8135888 FAX：886-7-8122929 Http：//www.sunon.com E-mail：[email protected]

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SUNON — AGM Information 2020

52070_rns_2020-06-22_83bb0570-0feb-4738-ab04-4985ef92753a.pdf

Sunonwealth Electric Machine Industry Co., Ltd. 2020 Annual General Shareholders’ Meeting Meeting Handbook

Sunonwealth Electric Machine Industry Co., Ltd. Agenda for the 2020 General Shareholders Meeting

[Report items]

[Proposed Resolutions]

[Extraordinary motions]

Sunonwealth Electric Machine Industry Co., Ltd.

Statement of Shares Held by Directors

國富浩華聯合會計師事務所

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Valuation of inventory

Description of key audit matter:

Revenue recognition

Other Matters

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

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

國富浩華聯合會計師事務所

Crowe (TW) CPAs

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Valuation of inventory

Description of key audit matter:

Revenue recognition

Other Matters

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

Auditors' Responsibilities for the Audit of the Parent Company Only Financial Statements

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. PANENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

Sunonwealth Electric Machine Industry Co., Ltd. Shareholders' Meeting Policy

Sunonwealth Electric Machine Industry CO., LTD.

Articles of Incorporation

SECTION I: General Principals

SECTION II: Shares

SECTION IV: Director

SECTION VII: Appendix

Sunonwealth Electric Machine Industry Co., Ltd. 2019 Business Report

I. Business Performance

II. Production status

Audit Committee's Audit Report

More from SUNON

SUNON AGM Information 2020