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WPG AGM Information 2020

Jul 3, 2020

52368_rns_2020-07-03_c810f141-1f8e-4e4c-8e9f-5d9a5b50c566.pdf

AGM Information

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WPG HOLDINGS LIMITED

2020 ANNUAL SHAREHOLDERS’ MEETING

MEETING AGENDA

(Translation)

June 24, 2020

WPG HOLDINGS LIMITED

2020 ANNUAL SHAREHOLDERS’ MEETING

Table of Contents

1. Meeting Procedure................................................................................................................... 1 Meeting Procedure................................................................................................................... 1
2. Meeting Agenda........................................................................................................................ 2
(1) Report Items ...................................................................................................................... 3
(2) Proposed Resolutions ........................................................................................................ 3
(3) Discussion Matters ............................................................................................................ 6
(4) Director Election ............................................................................................................... 6
(5) Other Proposals ................................................................................................................. 7
(6) Other Business and Special Motions ................................................................................. 7
3. Attachment
I. Business Report ................................................................................................................. 8
II. Audit Committee’s Review Report ................................................................................. 11
III. Independent Auditors’ Report and 2019 Parent Company Only Financial Statements .. 12
IV. Independent Auditors’ Report and 2019 Consolidated Financial Statements ................ 25
V. Comparison Table for Amendments to the Articles of Incorporation ............................ 39
VI. List of Director Candidates ............................................................................................. 43
VII. List of Director Candidates to be released from Non-Compete Restriction ................... 49
4. Appendix
I. Rules and Procedures for Shareholders' Meetings .......................................................... 50
II. Articles of Incorporation ................................................................................................. 54
III. Rules for Election of Directors ....................................................................................... 65
IV. Shareholding of All Directors ......................................................................................... 67

1. Meeting Procedure

WPG HOLDINGS LIMITED

Meeting Procedure for 2020 Annual Shareholders' Meeting

  • (1) Call Meeting to Order

  • (2) Chairman Remarks

  • (3) Report Items

  • (4) Proposed Resolutions

  • (5) Discussion Matters

  • (6) Director Election

  • (7) Other Proposals

  • (8) Other Business and Special Motions

  • (9) Meeting Adjourned

  • 1 -

2. Meeting Agenda

WPG HOLDINGS LIMITED

2020 Annual Shareholders' Meeting Agenda

Time: 9:00 a.m., June 24, 2020 (Wednesday)

Place: B1F, Conference Hall, No.76, Sec. 1, Chenggong Rd., Nangang Dist., Taipei City, Taiwan

(If a change in meeting venue is warranted due to COVID-19 epidemic prevention reasons, we will make the related public announcements on WPG’s website and Market Observation Post System.)

Chairman: Simon Huang, Chairman of the Board of Directors

  1. Report on the Number of Shares Present and Call Meeting to Order

  2. Chairman Remarks

  3. Report Items

  4. (1) To report the business of 2019

  5. (2) Audit Committee’s Review Report

  6. (3) To report 2019 employees' and directors' compensation

  7. Proposed Resolutions

  8. (1) To accept 2019 Business Report and Financial Statements

  9. (2) To approve 2019 profit distribution proposal

  10. Discussion Matters

  11. (1) To amend the Articles of Incorporation

  12. Director Election

  13. (1) To elect the Sixth Board of Directors

  14. Other Matters

  15. (1) To release Directors of the Company from Non-Compete Restriction

  16. Other Business and Special Motions

  17. Meeting Adjourned

  18. 2 -

Report Items

1. To report the business of 2019

Explanatory Notes: 2019 Business Report. Please refer to Attachment I on page 8-10 of this Handbook.

2. Audit Committee’s Review Report

  • Explanatory Notes: Audit Committee’s Review Report. Please refer to Attachment II on page 11 of this Handbook.

3. To report 2019 employees' and directors' compensation

Explanatory Notes:

  • (1) To be conducted in accordance with the regulations stipulated in Article 31 of the Articles of Incorporation.

  • (2) The Board of Directors approved 2019 employees' and directors' compensation on April 28, 2020.

  • (3) 2019 employees' compensation is NT$29,300,000, and 2019 Directors' compensation is NT$35,000,000, totaling NT$64,300,000 to be distributed in cash.

Proposed Resolutions

1. To accept 2019 Business Report and Financial Statements (including Parent Company Only and Consolidated Financial Statements) (Proposed by the Board of Directors)

Explanatory Notes:

  • (1) The Company's 2019 Financial Statements, including Parent Company Only and Consolidated Financial Statements, were audited by independent auditors, Mr. Chun-Yao Lin and Mr. Chien-Hung Chou of PricewaterhouseCoopers, Taiwan.

  • (2) See Attachment I on page 8-10 and Attachments III and IV on page 12-38 for the Company's 2019 Business Report, Independent Auditors’ Report, and the aforementioned Financial Statements.

  • (3) Please accept the aforementioned Business Report and Financial Statements.

Resolution:

  • 3 -

2. To approve 2019 profits distribution proposal (Proposed by the Board of Directors)

Explanatory Notes:

  • (1) The Board has proposed 2019 Profit Distribution in accordance with Article 31 of the Articles of Incorporation. Please refer to the 2019 PROFIT DISTRIBUTION TABLE below.

WPG HOLDINGS LIMITED

2019 PROFIT DISTRIBUTION TABLE

Beginning Retained Earnings
Plus: 2019 Net Profit after Tax
Plus: Adjustments for the Retained Earnings in
2019 (Note 1)
Less: Legal Reserve (Note 2)
Less: Amount appropriated as Special Reserve
Accumulated Retained Earnings Available for
Distribution
Distribution Items:
Dividends to Preferred Shares A (Note 3)
Cash Dividends to Common Shareholders
NT$2.4per share		 Unit: NT$ 7,558,793,433
6,453,400,944
10,035,961
(
646,343,691)
(
2,818,011,746)
10,557,874,901
115,068,493
4,029,736,399
Unappropriated Retained Earnings at the end of the
period (Note 4)		 6,413,070,009

Note 1: The increase in 2019 retained earnings by remeasuring defined benefit plans amounted to NT$10,035,961.

Note 2: (NT$6,453,400,944 + NT$10,035,961) * 10% = NT$646,343,691.

Note 3: The Company issued 200,000,000 shares of preferred shares A on September 18, 2019. As per the issuance price of NT$50 and the actual number of days issued in 2019 (a total of 105 days), the dividend for the preferred shares A based on the earnings in 2019 amounted to NT$115,068,493 (200,000,000 shares * 50 * 4% * 105 / 365)

Note 4: This year’s earnings assignment sequence is based on the calculation in Article 66-9 of the Income Tax Act. Thus, the 2019 earnings will be assigned first.

  • (2) From the Company’s accumulated retained earnings available for distribution in 2019, NT$115,068,493 is proposed to be distributed as dividend for preferred shares A, and NT$4,029,736,399 is proposed to be distributed as dividend for common shares (The

  • 4 -

aforesaid dividend for individual shareholders are rounded down to a New Taiwan Dollar, and the total amount of the fractional sums should be listed as other income in our business ledger). Upon the approval of the shareholders' meeting, it is proposed to distribute such amount as cash dividend, and to authorize the Chairman of the Board to determine record date, distribution date and other relevant matters. (Please refer to Letter No. 10002407180 issued by Ministry of Economic Affairs on April 7, 2011).

  • (3) In case of share capital change which causes an impact on the number of outstanding shares, and thus impacts dividend payout ratio, it is proposed that the shareholders' meeting authorizes the Chairman of the Board to handle related matters in comply with the Company Law or related laws and regulations.

  • (4) Please approve the proposal of 2019 Profits Distribution.

Resolution:

  • 5 -

Discussion Matters

1. To amend the Articles of Incorporation (Proposed by the Board of Directors)

Explanatory Notes:

  • (1) To amend the Articles of Incorporation to comply with regulations and actual needs. For the comparison table, please refer to Attachment V on page 39-42 of this Handbook.

  • (2) Please discuss the amendment to the Articles of Incorporation.

Resolution:

Director Election

1. To Elect the Sixth Board of Directors. (Proposed by the Board of Directors)

Explanatory Notes:

  • (1) The term of the current Fifth Board of Directors of the Company is originally scheduled to expire on June 18, 2020. In accordance with the provisions of Article 195, Paragraph 2 of the Company Act, in case no election of new directors is effected after expiration of the existing directors office term, the executive duties of the current Directors are extended to the date when Directors newly elected take office. The Sixth Board of Directors (totaling 11 Directors, including 4 Independent Directors) are to be elected at the 2020 annual shareholders' meeting.

  • (2) The newly-elected Sixth Board of Directors will take office upon the election of the 2020 annual shareholders' meeting, with a term of 3 years ranging from June 24, 2020 to June 23, 2023; the Fifth Board of Directors will be relieved of office upon the completion of the election in the 2020 annual shareholders' meeting.

  • (3) In accordance with the Articles of Incorporation of the Company, the candidate nomination system is adopted for the election. Directors shall be selected from the list of Director Candidates. Please refer to Attachment VI on page 43-48 of this Handbook for the education background, experience, other relevant information of the Directors Candidates, as well as nomination rationale of independent director nominee serving for 3 consecutive terms or more.

  • 6 -

Other Proposals

1. To release Directors of the Company from Non-Compete Restriction. (Proposed by the Board of Directors)

Explanatory Notes:

  • (1) According to Article 209 of the Company Act, "A Director who does anything for himself or on behalf of another person that is within the scope of the Company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval." Please refer to Attachment VII on page 49 of this Handbook for the List of Director Candidates to be released from Non-Compete Restriction submitted to the shareholders’ meeting for approval.

  • (2) The details of the newly elected Directors and their representatives to be released from Non-Compete Restriction will be disclosed at the shareholders' meeting after the election.

  • (3) Please discuss the matter.

Resolution:

Other Business and Special Motions

Meeting Adjourned

  • 7 -

3. Attachment

Business Report

Thanks to accurate product portfolio, growing productivity, and continuous operation expansion, WPG was named second largest semiconductor components distributor in revenue globally, and the largest in Asia Pacific in 2019. We are expanding our operation globally. Currently, our main sales locations are Taiwan, China, Hong Kong, and South Asia, but we are gradually expanding our sales locations to Northeast Asia, ASEAN countries, India, and North America. Looking into 2020 global semiconductor revenue growth, 5G mobile communication, servers, memory, IoT, automobiles, and industrial electronics remain to be the market mainstay. After years of active deployment, WPG sufficiently grasps market growth opportunities by continue growing in market applications, offering supply chain management service with added value, providing components and turnkey solution with competitive advantage, and helping our customers develop and invest in future markets. We aim to create win-winwin situations with our vendors and customers.

1. 2019 Review

WPG’s consolidated revenue in 2019 reached NT$527.6 billion (US$17.07 billion), operating income and net income reached NT$9.71 billion and NT$6.45 billion, respectively. Basic earnings per share were NT$3.84. Key performance indicator return on working capital (ROWC) was 8.31%. Parent company’s shareholder’s return on equity (ROE) was 10.95%.

In 2019, WPG developed diverse product structure. Core 3C products showed stable growth while non-3C fields such as IoT, automobiles, and industrial electronics grew rapidly, accounted for 25% of the total revenue. We have approximately 5,400 employees in total, of which field applications engineers (FAE) account for 16% and offered 240 “online solutions.” WPG has approximately 104 operating locations worldwide, including 76 in Asia Pacific and 28 in North America. Our global supply chain supported approximately 469 VMI logistic projects cross-regions, and our Hong Kong smart warehouse construction was completed to realize one-stop service. We believe the added-value service we provided is highly recognized in semiconductor supply chain.

WPG has been ranked top 20% of listed companies in corporate governance evaluation, as well as nominated for the Taiwan Corporate Governance 100 Index for 5 consecutive years. We participated in the TCSA Taiwan Corporate Sustainability Award CSR Competition in 2019 and won the Merit Award in the service and telecommunication group of Taiwan sustainable enterprise and the silver medal in service group of corporate sustainability report.

  • 8 -

2. 2020 Outlook

Having digital transformation as the foundation, WPG actively cooperates with vendors and customers regarding supply chain transfer plan through both online platforms and offline teams, and searches for new product lines based on customer needs in various regions. We face the challenge of important vendor terminating cooperation positively as well. Apart from continue improving sales of new product lines, we fully prepare ourselves for different possible outcomes no matter from product line, customer, or manpower allocation standpoint. When facing dynamic changes in the market, we always aim to seek for maximum company interest.

  • Key financial indicators: Increase net income and effectively control operating costs. Use ROWC as the key financial indicator to continuously optimize product mix. Improve account receivable and collateral management to ensure asset quality and liquidity. Utilize financial leverage discreetly to lower debt ratio. Enhance asset structure and profitability to improve shareholders’ return on equity and dividend distribution.

  • Active deployment and expansion: Gather, analyze, and coordinate information actively in regards to target market, as well as utilize various resources such as product line and sales among WPG subsidiaries to strengthen our position in the market. Optimize overall business process through systematization and risk control. Increase global market penetration through improved customer service quality and market influence. Optimize management capability for better productivity regarding target customers. Strictly manage business development strategy schedule and resource allocation to serve customers globally.

  • Product portfolio management and enhancement: Propose corresponding resource allocation plan and communication strategy considering the advantages/disadvantages of various product lines to improve operating efficiency and operating profit model. Strengthen WPG brand image in service and promote WPGDADAWANT service platform. Conduct internal and external promotions online and offline (O2O) to strengthen brand identification and value-added synergy, as well as utilize forum management techniques and knowledge sharing communities to develop loyal fan base and usage habits, hence increasing interaction with our customers, and creating long-term value.

  • Risk management: WPG risk management department is determined to promote and maintain high standards of corporate governance and sustainable development concepts. The department conducts enterprise risk management (ERM) in comply with the operating objectives and risks. Risks are identified through risk item identification as well as both quantitative and qualitative evaluations. Key risk indicators (KRIs) are introduced to prevent risks in early stage. In addition, risk management training and related practices are conducted regularly every year for all employees to strengthen awareness and understanding of such topic.

  • Integration process and information platform: In response to digital transformation, WPGDADAWANT, Business Process as a Service (BPaaS), and Data Intelligence as a Service (DIaaS) are emphasized. Operation process optimization and smart warehouse and platform

  • 9 -

construction for cross-region logistics management are continue implemented in accordance with WPG development strategy. We aim to improve quality and efficiency to meet the needs of company operation and to face the rapidly changing environment.

  • Corporate governance and CSR: Continue to increase information transparency and improve in the corporate governance evaluation held by the authorities. We aim to be ranked top 5% of listed companies in the evaluation. Continue the implementation of board meetings, audit committees, remuneration committees, and new business strategy committees, and execute work plans as scheduled. The key emphasis of 2020 WPG Corporate Social Responsibility and Sustainability Report (CSR) includes stakeholder interaction, honest governance and sustainability, talent development and friendly workplace, innovative supply chain and partnerships, green management, and local care.

In the future, WPG shall maintain global leading position, continue expansion, and develop healthy product revenue structure through digital transformation projects, including customer needs integration and analysis, upstream and downstream integration, and supply chain management. We aim to create innovative business model and provide higher added-value services to customers.

We, the management team, as well as all WPG employees thank you for the support and encouragement, and look forward to the continuous guidance and advice in the coming year. With our vision “To Become the First Choice of Industry. To Become the Benchmark of Distribution.” in mind, we will remain consistent in our business philosophy and services, and promote the core value of “Teamwork, Integrity, Professionalism and Effectiveness” comprehensively. We will strive to create win-win solutions with our vendors, customers, and shareholders, and wish to share exceptional business results with you.

We sincerely welcome all our peers and shareholders to share their concerns and advice with us.

Chairman: Simon Huang

Chief Executive Officer: Frank Yeh Chief Financial Officer: Cliff Yuan

  • 10 -

Audit Committee’s Review Report

The Board of Directors has prepared the 2019 Business Report, Financial Statements,

and proposal for allocation of profits. The aforementioned 2019 Business Report, Financial Statements, and proposal for allocation of profits have been reviewed and determined to be correct and accurate by the Audit Committee members of WPG HOLDINGS LIMITED. According to Article 14-4, 14-5 of the Securities and Exchange

Act and Article 219 of the Company Act, we hereby submit this report.

AUDIT COMMITTEE OF WPG HOLDINGS LIMITED

Independent Director Rong-Ruey Duh

Independent Director Jack J. T. Huang

Independent Director Yung-Hong Yu

April 28, 2020

  • 11 -

AUDIT REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Stockholders of WPG Holdings Limited

Opinion

We have audited the accompanying parent company only balance sheets of WPG Holdings Limited (the “Company”) as at December 31, 2019 and 2018, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. 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.

The key audit matters in relation to the parent company only financial statements for the year ended December 31, 2019 are outlined as follows:

Impairment assessment of investments accounted for under equity method

Description

  • 12 -

Refer to Note 4(10) for accounting policy on investments accounted for under equity method, Note 5(2) for uncertainty of accounting estimates and assumptions in relation to impairment assessment of investments accounted for under equity method, and Note 6(3) for details of investments accounted for under equity method.

In 2010, the Company acquired 100% shareholding of Yosun Industrial Corp. (referred herein as “Yosun Industrial”) amounting to $12,939,060 thousand, and was recognized as investments accounted for under equity method. The Company uses the estimated future cash flows of each cash-generating unit and proper discount rate to assess whether the investment may be impaired. Given that the assumptions used in the calculation of recoverable amount requires significant management judgement with respect to the discount rate and the underlying cash flows, we consider impairment assessment of the investment a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  1. Assessing the process in which management evaluates the estimated future cash flows of each cash generating unit, and reconciling the input data used in the valuation model to the approved operational plan by management.

  2. Evaluating the reasonableness of the estimated growth rate, gross rate, discount rate and other significant assumptions used in the valuation model, by:

  3. (1) Comparing estimated growth rate and gross rate with historical data and our knowledge of the business and industry;

  4. (2) Comparing discount rate assumptions with respect to cash generating units’ capital cost and similar return on assets; and

  5. (3) Checking the setting of valuation model’s calculation formula.

  6. Comparing the recoverable value and book value of each cash-generating unit.

Valuation of investments accounted for under equity method

Description

Refer to Note 4(10) for accounting policy on investments accounted for under equity method, and Note 6(3) for details of investments accounted for under equity method.

As at December 31, 2019, the balance of the Company’s investments in its subsidiaries, World Peace Industrial Co., Ltd. (referred herein as “World Peace Industrial”), Yosun Industrial, Silicon Application Corp. (referred herein as “Silicon Application”) and Asian Information Technology Inc. (referred herein as “Asian Information Technology”) amounted to $26,017,736 thousand, $12,581,042 thousand, $7,074,395 thousand and $6,178,954 thousand, respectively, and the investment income amounted to $3,335,885 thousand, $1,030,929 thousand, $920,534 thousand and $1,012,977 thousand, respectively

  • 13 -

for the year then ended. As the balance of investments accounted for under equity method constituted 71% of the Company’s total assets, and investment income constituted 95% of the Company’s profit before tax, we consider the assessment of investments accounted for under equity method, valuation of allowance for uncollectible accounts receivable, and recognition of purchase discounts and allowances of these subsidiaries as key audit matters as summarised below:

Valuation of allowance for uncollectible accounts receivable - World Peace Industrial, Yosun Industrial, Silicon Application and Asian Information Technology (collectively referred herein as the “Subsidiaries”)

Description

Refer to Note 4(10) of consolidated financial statements for accounting policy on accounts receivable, Note 5(2) of consolidated financial statements for uncertainty of accounting estimates and assumptions in relation to provision for uncollectible accounts receivable, and Note 6(5) of consolidated financial statements for details of accounts receivable and overdue receivables.

The Subsidiaries assess the collectibility of accounts receivable based on historical experience with its customers. As the estimation of allowance for uncollectible accounts is subject to management’s judgment in estimating future recovery, such as management’s assessment of customer’s credit risk, we consider the valuation of allowance for uncollectible accounts receivable a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  1. Obtaining an understanding of, and evaluating the formal approval process for the customer’s credit limit application.

  2. Checking the provision policy on allowance for uncollectible accounts, and assessing the reasonableness of provision policy.

  3. Checking the adequacy of the loss rate calculation by sampling the historical accounts receivable aging data and verifying the formula for the calculation of expected credit loss rate.

  4. Comparing the classification of accounts receivable aging with current year and prior year, and checking subsequent collections after balance sheet date to confirm recovery of outstanding receivables.

  5. For those accounts receivable specifically identified by management to have been impaired, evaluating propriety of impairment assessment against related supporting documents.

Recognition of purchase discounts and allowances - subsidiaries

Description

Refer to Note 4(13) of the consolidated financial statements for accounting policy on recognition of purchase discounts and allowances.

The Subsidiaries are engaged in operating sales channel for various electronic components. In line with industry practice, the Subsidiaries have entered into purchase discounts and allowances agreements with

  • 14 -

suppliers for various kinds and quantities of inventories. The Subsidiaries calculate and recognize the amount of purchase discounts and allowances in accordance with the agreement. The Subsidiaries negotiate the amount with the supplier, and after receiving credit note from supplier, the Subsidiaries pay the net amount.

The discounts and allowances from supplier are calculated either automatically by the system or manually. The Subsidiaries have to gather a lot of information to input in the system, such as the items subject to discount and corresponding discount rate, etc. Given that the Subsidiaries have a large volume of purchases, and have entered into various purchase discounts and allowances agreements with terms and conditions that vary with each agreement, we consider the recognition of purchase discounts and allowances a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  1. Understanding the process in recognizing purchase discounts and allowances, evaluating related internal control procedures and testing its effectiveness, checking the basic information set up in the computer system with respect to discount and allowance calculation randomly, and selecting samples to determine whether purchase discounts and allowances recognized were reviewed by an authorised supervisor.

  2. Selecting samples of purchase discounts and allowances, obtaining confirmed documents and approved credit note from supplier for selected commodity’s part number, and checking whether the part number and discount and allowance amount in obtained vouchers were consistent with the amounts recognized.

  3. Performing confirmation of selected material accounts payable, checking whether there is a difference between the amount of purchase discounts and allowances recognized based on credit note from supplier with the amount confirmed by the supplier, and investigating differences, if any. Selecting samples of outstanding accounts payable and checking whether subsequent payments were made after the balance sheet date.

Responsibilities of management and those charged with governance for financial statements

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

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease

  • 15 -

operations, or has no realistic alternative but to do so.

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

Auditor’s responsibilities for the audit of the financial statements

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

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

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

  2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

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

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

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

  6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the financial statements to express an opinion on the financial statements.

  7. 16 -

We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

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

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

Lin, Chun-Yao Chou, Chien-hung

for and on behalf of PricewaterhouseCoopers, Taiwan March 24, 2020

  • 17 -

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

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

  • 18 -

WPG HOLDINGS LIMITED

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Assets Notes
6(1)
7(3)
7(3)
6(2)
6(3) and 8
6(4)
6(5) and 7(3)
6(6) and 8
6(7)
6(23)
6(8)		 December 31, 2019
Amount
%
$ 1,983,588
3
105,022
-
56
-
803,118
1
23,269
-
537
-
2,915,590
4
594,615
1
58,854,405
81
1,427,534
2
15,819
-
709,805
1
15,419
-
15,437
-
8,111,638
11
10,045
-
69,754,717
96
$ 72,670,307
100		 December 31, 2018 December 31, 2018
Amount
$ 1,983,588
105,022
56
803,118
23,269
537
2,915,590
594,615
58,854,405
1,427,534
15,819
709,805
15,419
15,437
8,111,638
10,045
69,754,717
$ 72,670,307		 Amount
$ 52,637
81,425
56
350,349
17,416
296
502,179
547,357
55,235,857
1,181,993
-
715,151
7,691
12,134
-
5,245
57,705,428
$ 58,207,607		 %
Current assets
1100
Cash and cash equivalents
1180
Accounts receivable - related
parties, net
1200
Other receivables
1210
Other receivables - related parties
1410
Prepayments
1470
Other current assets
11XX
Total current assets
Non-current assets
1510
Financial assets at fair value
through profit or loss - non-
current
1550
Investments accounted for under
equity method
1600
Property, plant and equipment
1755
Right-of-use assets
1760
Investment property, net
1780
Intangible assets
1840
Deferred income tax assets
1960
Prepayment for investments
1990
Other non-current assets
15XX
Total non-current assets
1XXX
Total assets		 -
-
-
1
-
-
1
1
95
2
-
1
-
-
-
-
99
100

(Continued)

  • 19 -

WPG HOLDINGS LIMITED

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Liabilities andEquity December 31, 2019
December 31, 2018
Notes
Amount
%
Amount
%
6(9)
$ 7,200,000
10
$ 1,995,000
3
6(10)
998,987
1
619,593
1
1,603
-
1,018
-
288,929
1
281,344
1
7(3)
133,802
-
14,685
-
430,090
1
413,503
1
7,013
-
-
-
6(11)
4,664
-
55,145
-
9,065,088
13
3,380,288
6
6(11) and 8
-
-
358,577
1
6(23)
78,413
-
73,873
-
8,890
-
-
-
6(12)
45,759
-
36,100
-
133,062
-
468,550
1
9,198,150
13
3,848,838
7
6(13)
16,790,568
23
16,790,568
29
6(13)
2,000,000
3
-
-
6(14)
27,456,298
38
19,454,882
33
6(15)
6,021,073
8
5,274,872
9
2,602,682
4
4,124,936
7
14,022,230
19
11,316,193
19
6(16)
(
5,420,694)(
8)(
2,602,682)(
4)
63,472,157
87
54,358,769
93
9
11
$ 72,670,307
100
$ 58,207,607
100
Current liabilities
2100
Short-term borrowings
2110
Short-term notes and bills payable
2150
Notes payable
2200
Other payables
2220
Other payables - related parties
2230
Current income tax liabilities
2280
Current lease liabilities
2300
Other current liabilities
21XX
Total current liabilities
Non-current liabilities
2540
Long-term borrowings
2570
Deferred income tax liabilities
2580
Non-current lease liabilities
2600
Other non-current liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Equity
Capital
3110
Common stock
3120
Preference stock
Capital reserve
3200
Capital reserve
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated earnings
Other equity interest
3400
Other equity interest
3XXX
Total equity
Significant contingent liabilities
and unrecognized contract
commitments
Significant events after the
balance sheet date
3X2X
Total liabilities and equity

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

  • 20 -

WPG HOLDINGS LIMITED

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

4000
5000
5900
7010
7020
7050
7000
7900
7950
8200
8311
8330
8349
8310
8361
8380
8399
8360
8300
8500
9750
9850		 2019
2018
Items
Notes
Amount
%
Amount
%
Operating revenues
6(17) and 7(3)
$ 7,384,531
100
$ 8,212,827
100
Operating costs
6(21)(22)and
7(3)
( 732,414)
( 10)
( 697,955)
( 8)
Gross profit
6,652,117
90
7,514,872
92
Non-operating income and expenses
Other income
6(18)
26,127
-
27,248
-
Other gains or losses
6(19)
2,884
- ( 7,282) -
Financial costs
6(20)
( 26,166)
-
( 23,702)
-
Total non-operating income and expenses
2,845
-
( 3,736)
-
Income before income tax
6,654,962
90
7,511,136
92
Income tax expense
6(23)
( 201,561)
( 3)
( 49,126)
( 1)
Profit for the year
$ 6,453,401
87
$ 7,462,010
91
Other comprehensive income / (loss), net
Components of other comprehensive income
(loss) that will not be reclassified to profit or
loss
Loss on remeasurement of defined benefit
plan
6(12)
($ 1,702) - ($ 5,479) -
Share of other comprehensive income (loss) of
subsidiaries, associates and joint ventures
accounted for under equity method
11,399
- ( 107,723) ( 1)
Income tax related to components of other
comprehensive income that will not be
reclassified to profit or loss
6(23)
339
-
1,841
-
Other comprehensive income (loss) that
will not be reclassified to profit or loss
10,036
-
( 111,361)
( 1)
Components of other comprehensive income
(loss) that will be reclassified to profit or loss
Exchange differences on translation of foreign
financial statements
( 200,675) ( 3) ( 26,739) -
Share of other comprehensive (loss) income of
subsidiaries, associates and joint ventures
accounted for under equity method
( 2,620,770) ( 35) 1,683,772
20
Income tax related to components of other
comprehensive income that will be
reclassified to profit or loss
6(23)
3,433
-
564
-
Other comprehensive income (loss) that
will be reclassified to profit or loss
( 2,818,012)
( 38)
1,657,597
20
Other comprehensive income (loss), net
($ 2,807,976)
( 38)
$ 1,546,236
19
Total comprehensive income
$ 3,645,425
49
$ 9,008,246
110
Earnings per share (in dollars)
Basic earnings per share
6(24)
$ 3.84
$ 4.22
Diluted earnings per share
6(24)
$ 3.84
$ 4.22

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

  • 21 -

WPG HOLDINGS LIMITED

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2019 AND 2018

2018
Balance at January 1, 2018
Effect of retrospective application of new
standards
Balance after restatement on January 1, 2018
Net income
Other comprehensive income (loss)
Total comprehensive income
Appropriation and distribution of 2017
retained earnings
Legal reserve
Special reserve
Cash dividends
Capital reduction payments to shareholders
Disposal of investments accounted for under
equity method
Reorganisation
Difference between consideration and carrying
amount of subsidiaries acquired or disposed
Balance at December 31, 2018
2019
Balance at January 1, 2019
Net income
Other comprehensive income (loss)
Total comprehensive income (loss)
Appropriation and distribution of 2018 retained
earnings
Legal reserve
Reversal of special reserve
Cash dividends
Issuance of preference stock
Changes in equity of associates and joint
ventures accounted for under equity method
Balance at December 31, 2019		 Notes Share (EXPRESSED IN THOUSANDS OF NEW
capital
Preference stock
Capital reserve
Legal reserve
$ -
$ 19,569,525
$ 4,544,073
-
-
-
-
19,569,525
4,544,073
-
-
-
-
-
-
-
-
-
-
-
730,799
-
-
-
-
-
-
-
-
-
-
(
112,053 )
-
-
(
2,590 )
-
-
-
-
$ -
$ 19,454,882
$ 5,274,872
$ -
$ 19,454,882
$ 5,274,872
-
-
-
-
-
-
-
-
-
-
-
746,201
-
-
-

-
-
-
2,000,000
7,994,638
-
-
6,778
-
$ 2,000,000
$ 27,456,298
$ 6,021,073		 (EXPRESSED IN THOUSANDS OF NEW
capital
Preference stock
Capital reserve
Legal reserve
$ -
$ 19,569,525
$ 4,544,073
-
-
-
-
19,569,525
4,544,073
-
-
-
-
-
-
-
-
-
-
-
730,799
-
-
-
-
-
-
-
-
-
-
(
112,053 )
-
-
(
2,590 )
-
-
-
-
$ -
$ 19,454,882
$ 5,274,872
$ -
$ 19,454,882
$ 5,274,872
-
-
-
-
-
-
-
-
-
-
-
746,201
-
-
-

-
-
-
2,000,000
7,994,638
-
-
6,778
-
$ 2,000,000
$ 27,456,298
$ 6,021,073		 (EXPRESSED IN THOUSANDS OF NEW
capital
Preference stock
Capital reserve
Legal reserve
$ -
$ 19,569,525
$ 4,544,073
-
-
-
-
19,569,525
4,544,073
-
-
-
-
-
-
-
-
-
-
-
730,799
-
-
-
-
-
-
-
-
-
-
(
112,053 )
-
-
(
2,590 )
-
-
-
-
$ -
$ 19,454,882
$ 5,274,872
$ -
$ 19,454,882
$ 5,274,872
-
-
-
-
-
-
-
-
-
-
-
746,201
-
-
-

-
-
-
2,000,000
7,994,638
-
-
6,778
-
$ 2,000,000
$ 27,456,298
$ 6,021,073		 (EXPRESSED IN THOUSANDS OF NEW
capital
Preference stock
Capital reserve
Legal reserve
$ -
$ 19,569,525
$ 4,544,073
-
-
-
-
19,569,525
4,544,073
-
-
-
-
-
-
-
-
-
-
-
730,799
-
-
-
-
-
-
-
-
-
-
(
112,053 )
-
-
(
2,590 )
-
-
-
-
$ -
$ 19,454,882
$ 5,274,872
$ -
$ 19,454,882
$ 5,274,872
-
-
-
-
-
-
-
-
-
-
-
746,201
-
-
-

-
-
-
2,000,000
7,994,638
-
-
6,778
-
$ 2,000,000
$ 27,456,298
$ 6,021,073		 (EXPRESSED IN THOUSANDS OF NEW
capital
Preference stock
Capital reserve
Legal reserve
$ -
$ 19,569,525
$ 4,544,073
-
-
-
-
19,569,525
4,544,073
-
-
-
-
-
-
-
-
-
-
-
730,799
-
-
-
-
-
-
-
-
-
-
(
112,053 )
-
-
(
2,590 )
-
-
-
-
$ -
$ 19,454,882
$ 5,274,872
$ -
$ 19,454,882
$ 5,274,872
-
-
-
-
-
-
-
-
-
-
-
746,201
-
-
-

-
-
-
2,000,000
7,994,638
-
-
6,778
-
$ 2,000,000
$ 27,456,298
$ 6,021,073		 (EXPRESSED IN THOUSANDS OF NEW
capital
Preference stock
Capital reserve
Legal reserve
$ -
$ 19,569,525
$ 4,544,073
-
-
-
-
19,569,525
4,544,073
-
-
-
-
-
-
-
-
-
-
-
730,799
-
-
-
-
-
-
-
-
-
-
(
112,053 )
-
-
(
2,590 )
-
-
-
-
$ -
$ 19,454,882
$ 5,274,872
$ -
$ 19,454,882
$ 5,274,872
-
-
-
-
-
-
-
-
-
-
-
746,201
-
-
-

-
-
-
2,000,000
7,994,638
-
-
6,778
-
$ 2,000,000
$ 27,456,298
$ 6,021,073		 (EXPRESSED IN THOUSANDS OF NEW
capital
Preference stock
Capital reserve
Legal reserve
$ -
$ 19,569,525
$ 4,544,073
-
-
-
-
19,569,525
4,544,073
-
-
-
-
-
-
-
-
-
-
-
730,799
-
-
-
-
-
-
-
-
-
-
(
112,053 )
-
-
(
2,590 )
-
-
-
-
$ -
$ 19,454,882
$ 5,274,872
$ -
$ 19,454,882
$ 5,274,872
-
-
-
-
-
-
-
-
-
-
-
746,201
-
-
-

-
-
-
2,000,000
7,994,638
-
-
6,778
-
$ 2,000,000
$ 27,456,298
$ 6,021,073		 TAIWAN DOLLARS)
Retained earnings		 TAIWAN DOLLARS)
Retained earnings		 TAIWAN DOLLARS)
Retained earnings		 O therequityinterest Totalequity
Commonstock Preference stock Legal reserve Special reserve Unappropriated
earnings		 Exchange
differences of
foreign financial
statements
Unrealized gains
(losses) from
financial assets
measured at fair
value through other
comprehensive
income		 Unrealized gain or
loss or available-
for-sale financial
assets
6(15)
6(13)
6(14)
6(14)
6(25)
6(15)
6(13)
6(14)		 $ 18,250,618
-
18,250,618
-
-
-
-
-
-
(
1,460,050 )
-
-
-
$ 16,790,568
$ 16,790,568
-
-
-
-
-
-
-
-
$ 16,790,568		 $ -
-
-
-
-
-
-
-
-
-
-
-
-
$ -
$ -
-
-
-
-
-
-
2,000,000
-
$ 2,000,000		 $ 19,569,525
-
19,569,525
-
-
-
-
-
-
-
(
112,053 )
(
2,590 )
-
$ 19,454,882
$ 19,454,882
-
-
-
-
-
-
7,994,638
6,778
$ 27,456,298		 $ 4,544,073
-
4,544,073
-
-
-
730,799
-
-
-
-
-
-
$ 5,274,872
$ 5,274,872
-
-
-
746,201
-
-
-
-
$ 6,021,073		 $ -
-
-
-
-
-
-
4,124,936
-
-
-
-
-
$ 4,124,936
$ 4,124,936
-
-
-
-
(
1,522,254 )
-
-
-
$ 2,602,682		 $ 13,279,694
(
49,737 )
13,229,957
7,462,010
(
111,361 )
7,350,649
(
730,799 )
(
4,124,936 )
(
4,380,148 )
-
-
-
(
28,530 )
$ 11,316,193
$ 11,316,193
6,453,401
10,036
6,463,437
(
746,201 )
1,522,254
(
4,533,453 )
-
-
$ 14,022,230













($ 4,254,279 )
-
(
4,254,279 )
-
1,657,597
1,657,597
-
-
-
-
-
-
-
($ 2,596,682 )
($ 2,596,682 )
-
(
2,818,012 )
(
2,818,012 )
-
-
-
-
-
($ 5,414,694 )		 $ -
(
6,000 )
(
6,000 )
-
-
-
-
-
-
-
-
-
-
($ 6,000 )
($ 6,000 )
-
-
-
-
-
-
-
-
($ 6,000 )




$ 129,342
(
129,342 )
-
-
-
-
-
-
-
-
-
-
-
$ -
$ -
-
-
-
-
-
-
-
-
$ -		 $ 51,518,973
(
185,079 )
51,333,894
7,462,010
1,546,236
9,008,246
-
-
(
4,380,148 )
(
1,460,050 )
(
112,053 )
(
2,590 )
(
28,530 )
$ 54,358,769
$ 54,358,769
6,453,401
(
2,807,976 )
3,645,425
-
-
(
4,533,453 )
9,994,638
6,778
$ 63,472,157

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

  • 22 -

WPG HOLDINGS LIMITED

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Cash flows from operating activities
Income before income tax
Adjustments
Income and expenses
Depreciation
Amortization
Interest expense
Interest income
Dividend income
Share of profit of subsidiaries, associates and joint
ventures accounted for under the equity method
Gains on financial assets at fair value through profit
or loss
Changes in assets/liabilities relating to operating
activities
Net changes in assets relating to operating activities
Accounts receivable - related parties, net
Other receivables
Other receivables - related parties
Prepayments
Other current assets
Changes in operating liabilities
Notes payable
Other payables
Other payables - related parties
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest paid
Income tax paid
Interest received
Dividends received
Net cash provided by operating activities		 Notes
2019
2018
$ 6,654,962 $ 7,511,136
6(21)
25,133
18,611
6(21)
8,174
8,827
6(20)
23,279
30,650
6(18)
(
1,263 ) (
127 )
6(18)
(
4,128 ) (
3,900 )
6(17)
(
6,580,682 ) (
7,486,801 )
6(19)
(
12,602 ) (
2,935 )

(
23,597 ) (
48,467 )
8,584 (
8 )
640,097
451,045
(
5,853 ) (
3,888 )
(
241 )
193
585
-
7,990
20,947
(
5,883 )
480
141
666
7,957 (
152 )
742,653
496,277
(
22,133 ) (
20,123 )
(
681,415 ) (
469,496 )
1,263
127
4,662,994
4,691,336
4,703,362
4,698,121

(Continued)

  • 23 -

WPG HOLDINGS LIMITED

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Cash flows from investing activities
Increase in prepayments for investments
Acquisition of property, plant and equipment
Acquisition of intangible assets
Increase in guarantee deposits paid
Proceeds from capital reduction of financial assets at fair
value through profit or loss
Acquisition of financial assets at fair value through profit
or loss - non-current
Capital increase in investees
Proceeds from capital reduction of investments accounted
for under equity method
Net cash (used in) provided by investing
activities
Cash flows from financing activities
Principal repayment of lease liability
Increase in short-term borrowings
Decrease in short-term borrowings
Increase in short-term notes and bills payables
Decrease in short-term notes and bills payables
Decrease in long-term borrowings (including current
portion of long-term borrowings)
Increase (decrease) in other payables - related parties
Distribution of cash dividends
Issuance of preference stock
Capital reduction payments to shareholders
Net cash provided by (used in) financing
activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 Notes
2019
2018
6(8)
( $ 8,111,638 ) $ -
6(26)
(
259,836 ) (
257,524 )
6(26)
(
15,902 ) (
245 )
(
4,800 ) (
5,235 )
22,666
-
(
57,322 ) (
55,254 )
7(3)
(
5,100,000 )
-
7(3)
-
1,500,000
(
13,526,832 )
1,181,742
(
6,959 )
-
6(27)
35,270,000
16,165,000
6(27)
(
30,065,000 ) (
15,915,000 )
6(27)
4,391,097
4,457,772
6(27)
(
4,011,703 ) (
4,567,783 )
6(27)
(
409,199 ) (
47,242 )
125,000 (
110,000 )
6(15)
(
4,533,453 ) (
4,380,148 )
6(13)
9,994,638
-
6(13)
- (
1,460,050 )
10,754,421 (
5,857,451 )
1,930,951
22,412
52,637
30,225
$ 1,983,588 $ 52,637

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

  • 24 -

AUDIT REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Stockholders of WPG Holdings Limited

Opinion

We have audited the accompanying consolidated balance sheets of WPG Holdings Limited and its subsidiaries (the “Group”) as at December 31, 2019 and 2018, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 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, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. 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.

The key audit matters in relation to the consolidated financial statements for the year ended December 31, 2019 are outlined as follows:

Impairment assessment of goodwill

Description

Refer to Note 4(20) for accounting policy on goodwill impairment, Note 5(2) for uncertainty of

  • 25 -

accounting estimates and assumptions in relation to goodwill impairment, and Note 6(13) for details of intangible assets.

The Group acquired shares of stock of target companies by cash or through exchange of shares of stock. The purchase price is allocated to the net identifiable assets acquired at fair value in accordance with the accounting policies on business combinations. The Group uses the estimated future cash flows of each cash-generating unit and proper discount rate to determine recoverable amount of goodwill, and assesses whether goodwill may be impaired. Given that the assumptions used in the calculation of recoverable amount requires significant management judgement with respect to the discount rate and the underlying cash flows, we consider impairment assessment of goodwill a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  1. Assessing the process in which management evaluates the estimated future cash flows of each cash generating unit, and reconciling the input data used in the valuation model to the approved operational plan by management.

  2. Evaluating the reasonableness of the estimated growth rate, gross rate, discount rate and other significant assumptions used in the valuation model, by:

  3. (1) Comparing estimated growth rate and gross rate with historical data and our knowledge of the business and industry;

  4. (2) Comparing discount rate assumptions with respect to cash generating units’ capital cost and similar return on assets; and

  5. (3) Checking the setting of valuation model’s calculation formula.

  6. Comparing the recoverable value and book value of each cash-generating unit.

  7. 26 -

Valuation of allowance for uncollectible accounts receivable

Description

Refer to Note 4(10) for accounting policy on accounts receivable, Note 5(2) for uncertainty of accounting estimates and assumptions in relation to provision for uncollectible accounts receivable, and Notes 6(5)(15) for details of accounts receivable and overdue receivables.

The Group assesses the collectability of accounts receivable based on historical experience with its customers. As the estimation of allowance for uncollectible accounts is subject to management’s judgment in estimating future recovery, such as management’s assessment of customer’s credit risk, we consider the valuation of allowance for uncollectible accounts receivable a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  1. Obtaining an understanding of, and evaluating the formal approval process for the customer’s credit limit application.

  2. Checking the provision policy on allowance for uncollectible accounts, and assessing the reasonableness of provision policy.

  3. Checking the adequacy of the loss rate calculation by sampling the historical accounts receivable aging data and verifying the formula for the calculation of expected credit loss rate.

  4. Comparing the classification of accounts receivable aging with current year and prior year, and checking subsequent collections after balance sheet date to confirm recovery of outstanding receivables.

  5. For those accounts receivable specifically identified by management to have been impaired, evaluating propriety of impairment assessment against related supporting documents.

Recognition of purchase discounts and allowances

Description

Refer to Note 4(13) for accounting policy on recognition of purchase discounts and allowances. The Group is engaged in operating sales channel for various electronic components. In line with industry practice, the Group has entered into purchase discounts and allowances agreements with suppliers for various kinds and quantities of inventories. The Group calculates and recognizes the amount of purchase discounts and allowances in accordance with the agreement. The Group negotiates the amount with the supplier, and after receiving credit note from supplier, the Group pays the net amount.

The discounts and allowances from supplier are calculated either automatically by the system or manually. The Group has to gather a lot of information to input in the system, such as the items subject to discount and corresponding discount rate, etc. Given that the Group has a large volume of purchases, and has entered into various purchase discounts and allowances agreements with terms and conditions that vary with each argument, we consider the recognition of purchase discounts and allowances a key audit matter.

  • 27 -

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  1. Understanding the process in recognizing purchase discounts and allowances, evaluating related internal control procedures and testing its effectiveness, checking the basic information set up in the computer system with respect to discount and allowance calculation randomly, and selecting samples to determine whether purchase discounts and allowances recognized were reviewed by an authorized supervisor.

  2. Selecting samples of purchase discounts and allowances, obtaining confirmed documents and approved credit note from supplier for selected commodity’s part number, and checking whether the part number and discount and allowance amount in obtained vouchers were consistent with the amounts recognized.

  3. Performing confirmation of selected material accounts payable, checking whether there is a difference between the amount of purchase discounts and allowances recognized based on credit note from supplier with the amount confirmed by the supplier, and investigating differences, if any. Selecting samples of outstanding accounts payable and checking whether subsequent payments were made after the balance sheet date.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of WPG Holdings Limited as at and for the years ended December 31, 2019 and 2018.

  • 28 -

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

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

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

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

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

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

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

  2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

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

  4. 29 -

  5. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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 auditor’s 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 auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  6. 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.

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

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

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

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

  • 30 -

Lin, Chun-Yao

[Chou, Chien-hung ]

For and on behalf of PricewaterhouseCoopers, Taiwan March 24, 2020

----------------------------------------------------------------------------------

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

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

  • 31 -

WPG HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Assets Notes
6(1)
6(2)
6(4) and 8
6(5)
6(5)
7(3)
6(7)
7(3)
6(8)
6(2) and 8
6(3)
6(9)
6(10) and 8
6(11)
6(12) and 8
6(13)
6(31)
6(14)
6(15)		 December31,2019
Amount
%
$ 9,992,582
4
339,649
-
84,055
-
1,977,097
1
110,656,082
48
98,292
-
11,428,975
5
1,208
-
27,980
-
67,721,637
29
2,242,687
1
1,396,017
1
205,966,261
89
1,315,509
1
32,035
-
586,142
-
5,735,417
3
1,129,079
1
1,060,115
-
5,568,851
2
506,897
-
8,142,688
4
303,826
-
24,380,559
11
$ 230,346,820
100		 December31,2018 December31,2018
Amount
$ 9,992,582
339,649
84,055
1,977,097
110,656,082
98,292
11,428,975
1,208
27,980
67,721,637
2,242,687
1,396,017
205,966,261
1,315,509
32,035
586,142
5,735,417
1,129,079
1,060,115
5,568,851
506,897
8,142,688
303,826
24,380,559
$ 230,346,820		 Amount
$ 7,116,888
28,469
197,942
2,884,889
95,258,035
82,590
8,531,684
1,610
77,016
64,772,967
1,507,232
515,584
180,974,906
1,276,064
32,035
617,491
5,701,436
-
1,107,246
5,567,934
482,037
-
301,715
15,085,958
$ 196,060,864		 %
Current assets
Cash and cash equivalents
Financial assets at fair value through profit
or loss - current
Current financial assets at amortized cost
Notes receivable, net
Accounts receivable, net
Accounts receivable - related parties, net
Other receivables
Other receivables - related parties
Current income tax assets
Inventory
Prepayments
Other current assets
Non-current assets
Financial assets at fair value through profit
or loss - non-current
Financial assets at fair value through other
comprehensive income - non-current
Investments accounted for under equity
method
Property, plant and equipment
Right-of-use assets
Investment property - net
Intangible assets
Deferred income tax assets
Prepayments for investments
Other non-current assets
TOTAL ASSETS		 4
-
-
1
49
-
4
-
-
33
1
-
92
1
-
-
3
-
1
3
-
-
-
8
100

(Continued)

-32-

WPG HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Liabilities and Equity December31,2019
December31,2018
Notes
Amount
%
Amount
%
6(16)
$ 68,891,614
30
$ 57,221,436
29
6(17)
5,555,424
2
4,957,027
3
6(2)
16,051
-
5,660
-
34,642
-
35,497
-
63,588,170
28
53,161,904
27
7(3)
653
-
401
-
5,697,289
2
5,333,973
3
1,310,711
1
803,225
-
416,902
-
-
-
6(18)(19)
11,447,611
5
4,945,142
2
156,959,067
68
126,464,265
64
6(18)
7,330,788
3
13,366,171
7
6(31)
499,268
-
496,996
-
740,641
-
-
-
6(20)
849,961
1
909,437
1
9,420,658
4
14,772,604
8
166,379,725
72
141,236,869
72
1 and 6(21)
16,790,568
7
16,790,568
8
2,000,000
1
-
-
6(22)
27,456,298
12
19,454,882
10
6(23)
6,021,073
3
5,274,872
3
2,602,682
1
4,124,936
2
14,022,230
6
11,316,193
6
6(24)
(
5,420,694) (
2) (
2,602,682 ) (
1 )
63,472,157
28
54,358,769
28
494,938
-
465,226
-
63,967,095
28
54,823,995
28
7(3) and 9
11
$ 230,346,820
100
$ 196,060,864
100
Current liabilities
Short-term borrowings
Short-term notes and bills payable
Financial liabilities at fair value through
profit or loss - current
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Current income tax liabilities
Current lease liabilities
Other current liabilities
Non-current liabilities
Long-term borrowings
Deferred income tax liabilities
Non-current lease liabilities
Other non-current liabilities
Total liabilities
Equity attributable to owners of parent
Capital
Common stock
Preference stock
Capital reserve
Capital reserve
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Other equity interest
Other equity interest
Total equity attributable to owners of
parent
Non-controlling interest
Total equity
Significant contingent liabilities and
unrecognized contract commitments
Significant events after the balance sheet date
TOTAL LIABILITIES AND EQUITY

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

  • 33 -

WPG HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

Year ended December ended December 31
2019 2018
Items Notes Amount % Amount %
Operating revenue 6(25) and 7(3) $ 527,601,353 100 $ 545,127,804 100
Operating costs 6(8) and 7(3) ( 505,173,257 ) ( 96) ( 521,497,383) ( 96 )
Gross profit 22,428,096 4 23,630,421 4
Operating expenses 6(29)(30) and 7(3)
Selling and marketing expenses ( 9,030,334 ) ( 1) ( 9,183,915) ( 1 )
General and administrative expenses ( 3,777,517 ) ( 1) ( 3,687,165) ( 1 )
Expected credit impairment gain (loss) 92,319 - ( 182,803) -
Total operating expenses ( 12,715,532 ) ( 2) ( 13,053,883) ( 2 )
Operating profit 9,712,564 2 10,576,538 2
Non-operating income and expenses
Other income 6(26) 283,658 - 336,343 -
Other gains and losses 6(27) 516,634 - 731,477 -
Finance costs 6(28) ( 2,347,372 ) ( 1) ( 2,489,578) -
Share of profit of associates and joint
ventures accounted for under equity
method 22,118 - 46,400 -
Total non-operating income and
expenses ( 1,524,962 ) ( 1) ( 1,375,358) -
Income before income tax 8,187,602 1 9,201,180 2
Income tax expense 6(31) ( 1,681,643 ) - ( 1,686,163) -
Consolidated net income $ 6,505,959 1 $ 7,515,017 2

(Continued)

  • 34 -

WPG HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

Items Year ended December 31
2019
2018
Notes
Amount
%
Amount
6(20)
$ 8,849
-
($ 150,756)
(
72 )
-
(
16)
6(31)
(
1,771)
-
37,295

7,006
-
(
113,477)
(
2,814,019 )
-
1,624,228
(
5,027 )
-
24,929
6(31)
3,218
-
502
(
2,815,828)
-
1,649,659
($ 2,808,822)
-
$ 1,536,182
$ 3,697,137
1
$ 9,051,199
$ 6,453,401
1
$ 7,462,010
52,558
-
53,007
$ 6,505,959
1
$ 7,515,017
$ 3,645,425
1
$ 9,008,246
51,712
-
42,953
$ 3,697,137
1
$ 9,051,199
6(32)
$ 3.84
$ $ 3.84
$		 Year ended December 31 Year ended December 31 Year ended December 31
2019 2018
%
Amount
-
($ 150,756)
-
(
16)
-
37,295
-
(
113,477)
-
1,624,228
-
24,929
-
502
-
1,649,659
-
$ 1,536,182
1
$ 9,051,199
1
$ 7,462,010
-
53,007
1
$ 7,515,017
1
$ 9,008,246
-
42,953
1
$ 9,051,199
3.84
$ 3.84
$		 2018
%
Other comprehensive income
Components of other comprehensive income
that will not be reclassified to profit or loss
Other comprehensive income before tax,
actuarial gain (loss) on defined benefit
plans
Share of other comprehensive loss of
associates and joint ventures accounted
for under equity method that will not be
reclassified to profit or loss
Income tax related to components of other
comprehensive income that will not be
reclassified to profit or loss
Other comprehensive income (loss) that
will not be reclassified to profit or loss
Components of other comprehensive income
that will be reclassified to profit or loss
Exchange differences on translation of
foreign financial statements
Share of other comprehensive (loss)
income of associates and joint ventures
accounted for under equity method
Income tax related to components of other
comprehensive income that will be
reclassified to profit or loss
Other comprehensive (loss) income that
will be reclassified to profit or loss
Total other comprehensive (loss) income
Total comprehensive income
Consolidated net income attributable to:
Owners of the parent
Non-controlling interest
Comprehensive income attributable to:
Owners of the parent
Non-controlling interest
Earnings per share
Basic earnings per share
Diluted earnings per share		 -
-
-
-
-
-
-
-
-
2
2
-
2
2
-
2
4.22
$ $ 4.22

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

  • 35 -

WPG HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Year ended December 31, 2018
Balance at January 1, 2018
Effects of retrospective application of new standards
Balance after restatement on January 1, 2018
Total consolidated profit
Net other comprehensive income (loss)
Total comprehensive income
Appropriation and distribution of 2017 retained earnings
Legal reserve
Special reserve
Cash dividends
Capital reduction payments to shareholders
Disposal of investments accounted for using equity method
Reorganization
Difference between consideration and carrying amount of
subsidiaries acquired or disposed
Acquisition of non-controlling interest
Changes in non-controlling interests
Balance at December 31, 2018
Year ended December 31, 2019
Balance at January 1, 2019
Total consolidated profit
Net other comprehensive income (loss)
Total comprehensive income
Appropriation and distribution of 2018 retained earnings
Legal reserve
Reversal of special reserve
Cash dividends
Issuance of preference stock
Changes in equity of associate and joint ventures accounted for
using equity method
Changes in non-controlling interests
Balance at December 31, 2019		 Notes Equityattributable to Equityattributable to owners of theparent Total
$ 51,518,973
(
185,079 )
51,333,894
7,462,010
1,546,236
9,008,246
-
-
(
4,380,148 )
(
1,460,050 )
(
112,053 )
(
2,590 )
(
28,530 )
-
-
$ 54,358,769
$ 54,358,769
6,453,401
(
2,807,976 )
3,645,425
-
-
(
4,533,453 )
9,994,638
6,778
-
$ 63,472,157		 Non-controlling
interest		 Total equity
Share Capital
Common stock
Preference stock
$ 18,250,618
$ -
-
-
18,250,618
-
-
-
-
-
-
-
-
-
-
-
-
-
(
1,460,050 )
-
-
-
-
-
-
-
-
-
-
-
$ 16,790,568
$ -
$ 16,790,568
$ -
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
-
-
-
-
$ 16,790,568
$ 2,000,000		 Capital reserve RetainedEarnings Unappropriated
earnings		 O ther EquityInterest
Unrealized gain or
loss on available-
for-
sale financial
assets
Common stock
$ 18,250,618
-
18,250,618
-
-
-
-
-
-
(
1,460,050 )
-
-
-
-
-
$ 16,790,568
$ 16,790,568
-
-
-
-
-
-
-
-
-
$ 16,790,568		 Legal reserve Special reserve Exchange
differences of
foreign financial
statements
 Unrealized gains
(loss) on financial
assets at fair value
through other
comprehensive
income
$ -
(
6,000 )
(
6,000 )
-
-
-
-
-
-
-
-
-
-
-
-
($ 6,000 )
($ 6,000 )
-
-
-
-
-
-
-
-
-
($ 6,000 )
6(23)
6(21)
6(22)
6(23)
6(21)
6(22)		 $ -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ -
$ -
-
-
-
-
-
-
2,000,000
-
-
$ 2,000,000		 $ 19,569,525
-
19,569,525
-
-
-
-
-
-
-
(
112,053 )
(
2,590 )
-
-
-
$ 19,454,882
$ 19,454,882
-
-
-
-
-
-
7,994,638
6,778
-
$ 27,456,298		 $ 4,544,073
-
4,544,073
-
-
-
730,799
-
-
-
-
-
-
-
-
$ 5,274,872
$ 5,274,872
-
-
-
746,201
-
-
-
-
-
$ 6,021,073		 $ -
-
-
-
-
-
-
4,124,936
-
-
-
-
-
-
-
$ 4,124,936
$ 4,124,936
-
-
-
-
(
1,522,254 )
-
-
-
-
$ 2,602,682		 $ 13,279,694
(
49,737 )
13,229,957
7,462,010
(
111,361 )
7,350,649
(
730,799 )
(
4,124,936 )
(
4,380,148 )
-
-
-
(
28,530 )
-
-
$ 11,316,193
$ 11,316,193
6,453,401
10,036
6,463,437
(
746,201 )
1,522,254
(
4,533,453 )
-
-
-
$ 14,022,230		 ($ 4,254,279 )
-
(
4,254,279 )
-
1,657,597
1,657,597
-
-
-
-
-
-
-
-
-
($ 2,596,682 )
($ 2,596,682 )
-
(
2,818,012 )
(
2,818,012 )
-
-
-
-
-
-
($ 5,414,694 )		 $ 129,342
(
129,342 )
-
-
-
-
-
-
-
-
-
-
-
-
-
$ -
$ -
-
-
-
-
-
-
-
-
-
$ -		 $ 536,465
(
298 )
536,167
53,007
(
10,054 )
42,953
-
-
-
-
-
2,590
(
18,627 )
(
72,714 )
(
25,143 )
$ 465,226
$ 465,226
52,558
(
846 )
51,712
-
-
-
-
-
(
22,000 )
$ 494,938		 $ 52,055,438
(
185,377 )
51,870,061
7,515,017
1,536,182
9,051,199
-
-
(
4,380,148 )
(
1,460,050 )
(
112,053 )
-
(
47,157 )
(
72,714 )
(
25,143 )
$ 54,823,995
$ 54,823,995
6,505,959
(
2,808,822 )
3,697,137
-
-
(
4,533,453 )
9,994,638
6,778
(
22,000 )
$ 63,967,095

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

-36-

WPG HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Cash flows from operating activities
Income before income tax
Adjustments
Income and expenses
Depreciation
Amortization
Expected credit impairment (gain) loss
Interest expense
Net gain on financial assets or liabilities at fair value
through profit or loss
Interest income
Dividend income
Share of profit of associates and joint ventures
accounted for under equity method
Loss on disposal of property, plant and equipment
Loss (gain) on disposal of investments
Changes in assets/liabilities relating to operating activities
Changes in assets relating to operating activities
Financial assets (liabilities) at fair value through
profit or loss - current
Notes receivable
Accounts receivable
Accounts receivable - related parties, net
Other receivables
Other receivables - related parties
Inventories
Prepayments
Other current assets
Changes in liabilities relating to operating activities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest paid
Income tax paid
Interest received
Income tax refund
Dividends received
Net cash used in operating activities		 Year ended December 31
Notes
2019
2018
$ 8,187,602
$ 9,201,180
6(29)
724,256
216,436
6(13)(29)
16,303
19,364
(
92,319 )
182,803
6(28)
2,145,552
2,286,498
6(27)
(
83,921 ) (
499,433 )
6(26)
(
55,365 ) (
41,585 )
6(26)
(
17,285 ) (
24,724 )
(
22,118 ) (
46,400 )
6(27)
1,939
10,297
6(27)
8
(
57,613 )

(
300,736 )
7,551
907,790
1,293,315
(
15,305,726 ) (
6,010,219 )
(
15,702 )
192,138
(
2,896,080 ) (
2,821,645 )
402
436
(
2,950,244 ) (
7,300,703 )
(
735,455 ) (
14,534 )
15,541
137,213
(
855 ) (
178,850 )
10,426,266
4,252,282
252
(
911 )
412,201
244,656
1,491,128
1,281,210
(
48,588 )
119,466
1,804,846
2,448,228
(
2,193,406 ) (
2,241,241 )
(
1,173,322 ) (
1,542,453 )
54,154
42,959
21,779
2,681
72,431
75,131
(
1,413,518 ) (
1,214,695 )

(Continued)

-37-

WPG HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Year ended December 31
Notes 2019 2018
Cash flows from investing activities
Acquisition of investments accounted for under equity
method $ - ( $ 86,663 )
Increase in prepayments for investments 6((14) ( 8,142,688 ) -
Proceeds from disposal of investments accounted for under
equity method - 183,453
Acquisition of property, plant and equipment and intangible
assets 6(34) ( 358,755 ) ( 837,503 )
Proceeds from disposal of property, plant and equipment and
intangible assets 4,097 3,102
Increase in guarantee deposits paid ( 30,566 ) ( 207,923 )
Decrease in guarantee deposits paid 32,765 275,841
Increase in other financial assets - current ( 895,975 ) ( 59,240 )
Increase in other financial assets - non-current - ( 12,567 )
Decrease in other financial assets - non-current - 11,375
Increase in other non-current assets ( 5,394 ) ( 71,970 )
Acquisition of financial assets at fair value through profit or
loss - non-current ( 102,096 ) ( 83,175 )
Proceeds from disposal of financial assets at fair value
through profit or loss - non-current 14,971 791,259
Proceeds from capital reduction of financial assets at fair
value through profit or loss 38,203 -
Increase in current financial assets at amortized cost ( 11,583 ) ( 160,853 )
Decrease in current financial assets at amortized cost 124,325 15,674
Acquisition of subsidiaries 6(33) - ( 119,871 )
Net cash used in investing activities ( 9,332,696 ) ( 359,061 )
Cash flows from financing activities
Principal repayment of lease liability 6(35) ( 432,770 ) -
Increase in short-term borrowings 6(35) 745,217,964 716,529,261
Decrease in short-term borrowings ( 733,547,786 ) ( 713,081,432 )
Increase in long-term borrowings (including current portion 6(35)
of long-term liabilities) 2,415,923 8,755,065
Decrease in long-term borrowings (including current portion
of long-term liabilities) ( 3,439,965 ) ( 7,223,686 )
Increase in short-term notes and bills payable 6(35) 39,514,147 31,336,877
Decrease in short-term notes and bills payable ( 38,915,715 ) ( 30,267,455 )
Increase in guarantee deposit received 9,118 82,580
Decrease in guarantee deposit received ( 8,571 ) ( 26,797 )
Issuance of preference stock 6(21) 9,994,638 -
Cash dividends paid 6(23) ( 4,533,453 ) ( 4,380,148 )
Capital reduction 6(21) - ( 1,460,050 )
Change in non-controlling interest ( 22,000 ) ( 25,143 )
Net cash provided by financing activities 16,251,495 239,072
Effect of exchange rate changes on cash and cash equivalents ( 2,629,587 ) 1,353,658
Net increase in cash and cash equivalents 2,875,694 18,974
Cash and cash equivalents at beginning of year 7,116,888 7,097,914
Cash and cash equivalents at end of year $ 9,992,582 $ 7,116,888

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

-38-

WPG HOLDINGS LIMITED

Comparison Table for Amendments to the Articles of Incorporation

Original Article Amended Article Explanation
Article 31
Where the financial results
for the fiscal year show a
profit, the Company shall,
by the resolution of Board
of Directors, distribute not
less than 0.01% and not
more than 5% of the profit
as employees’
compensation, and
distribute not more than 3%
of the foresaid profit as
remuneration of Directors
and Supervisors. Reports of
such distribution shall be
submitted to the
shareholders’ meeting.
However, in case of the
accumulated losses, certain
profits shall first be
reserved to cover them.
The employees’
compensation could be
distributed in the form of
shares or in cash and the
employees of subsidiaries
meeting certain specific
requirements shall be
entitled to receive shares or
cash.
The profits stated in the
first paragraph represent the
pre-tax income of current

Article 31
Where the financial results
for the fiscal year show a
profit, the Company shall,
by the resolution of Board
of Directors, distribute not
less than 0.01% and not
more than 5% of the profit
as employees’
compensation, and
distribute not more than 3%
of the foresaid profit as
remuneration of Directors
and Supervisors. Reports of
such distribution shall be
submitted to the
shareholders’ meeting.
However, in case of the
accumulated losses, certain
profits shall first be
reserved to cover them. The
employees’ compensation
could be distributed in the
form of shares or in cash
and the employees of
subsidiaries meeting certain
specific requirements shall
be entitled to receive shares
or cash.
The profits stated in the
first paragraph represent the
pre-tax income of current

Amendment made
for actual needs.
  • 39 -

Original Article year before deducting distributed employees' compensation and Directors' remuneration. When the Company has no surplus, it shall not pay dividends and bonuses. If the Company has surplus at the end of the year, after tax payment and recovery of losses over the years, 10% of the amount shall be appropriated as legal capital reserve; if there is any balance after setting aside or reversion to special capital reserve in accordance with laws and regulations, the dividends for special shares in the current year shall be paid in priority. The remaining balance (hereinafter referred to as "surplus earnings of the year") plus the retained earnings at the beginning of the year is deemed as the surplus earnings available for distribution that are to be distributed as the dividends and bonuses to shareholders. The distribution plan shall be proposed by the Board of Directors and subject to the resolution of the shareholders' meeting.

Amended Article Explanation year before deducting distributed employees' compensation and Directors' remuneration. When the Company has no surplus, it shall not pay dividends and bonuses. If the Company has surplus earnings at the end of the year, after tax payment and recovery of losses over the years, 10% of the amount shall be appropriated as legal capital reserve; the balance after the special capital reserve is set aside or reversed in accordance with laws and regulations (hereinafter referred to as "surplus earnings of the year") plus the retained earnings at the beginning of the year shall be used to pay the dividends for preferred shares in priority as the surplus earnings available for distribution. The distribution plan shall be proposed by the Board of Shareholders and subject to the resolution of the shareholders' meeting. This Company’s dividend policy and dividend distribution shall consider the Company’s profitability, future operation funding needs, and changes in

  • 40 -
Original Article Amended Article Explanation
This Company’s dividend
policy and dividend
distribution shall consider
the Company’s profitability,
future operation funding
needs, and changes in
industry environment, as
well as the shareholders’
rights and the Company’s
long-term financial plans.
This Company’s yearly
total dividend distribution
amount shall not be less
than 50% of the year’s
earnings. The distributed
cash dividend shall not be
less than 20% of the total
dividend distribution
amount.
industry environment, as
well as the shareholders’
rights and the Company’s
long-term financial plans.
This Company’s yearly
total dividend distribution
amount shall not be less
than 50% of the year’s
earnings. The distributed
cash dividend shall not be
less than 20% of the total
dividend distribution
amount.
Article 34
The Articles were
formulated on June 14,
2005.
The first amendment was
made on June 14, 2006.
The second amendment was
made on June 13, 2007.
The third amendment was
made on June 25, 2008.
The fourth amendment was
made on June 16, 2009.
The fifth amendment was
made on June 21, 2010.
The sixth amendment was
made on June 22, 2012.
The seventh amendment
was made on June 19,2013.

Article 34
The Articles were
formulated on June 14,
2005.
The first amendment was
made on June 14, 2006.
The second amendment
was made on June 13,
2007.
The third amendment was
made on June 25, 2008.
The fourth amendment was
made on June 16, 2009.
The fifth amendment was
made on June 21, 2010.
The sixth amendment was
made on June 22, 2012.
The seventh amendment
Added date of
amendment.
  • 41 -
Original Article Amended Article Amended Article Explanation
The eighth amendment was
made on June 18, 2014.
The ninth amendment was
made on June 22, 2016.
The tenth amendment was
made on June 28, 2019.		 was made on June 19,
2013.
The eighth amendment was
made on June 18, 2014.
The ninth amendment was
made on June 22, 2016.
The tenth amendment was
made on June 28, 2019.
The eleventh amendment
was made on June 24,
2020.
  • 42 -

List of Director Candidates

Type of
Nominee		 Nominee
Name		 Education Background Experience Current Position Board
Meeting
Attendance
Rate (Note 3)
Director T.L. Lin Department of Electrical
Engineering, National Taipei
Institute of Technology
(Department of Electrical
Engineering, National Taipei
University of Technology)		 Director, Trigold Holdings Limited (2017-
present); Executive Director, Taipei Electronic
Components Suppliers' Association (TECSA);
Chairman,
WPG Investment Co., Ltd. (2010-2016);
President, World Peace Industrial Co., Ltd. (1991-
2009)		 Director, WPG Holdings; Director,
Trigold Holdings Limited; Executive
Director, TECSA		 80%
Director K.Y. Chen Department of Electronic
Physics, National Chiao-
Tung University;		 Chairman, Silicon Application Corp. (1987-
present); Director, TECSA; Director, Trigold
Holdings Limited (2017-present); Director,
LeadSun New Star Corp. (2016-present);
Director, Chiayang Biotech Inc. (2013-present)		 Chairman, Silicon Application Corp.;
Director, Chiayang Biotech Inc.;
Director, LeadSun New Star Corp.;
Director, TECSA;		 90%
Director Mike Chang Department of Electrical
Engineering, National Taipei
Institute of Technology
(Department of Electrical
Engineering, National Taipei
University of Technology)		 Chairman,World PeaceIndustrial Co., Ltd.
(2008-present); Supervisor, TECSA;
CEO, World Peace Industrial Co., Ltd. (1997-
2008);
Vice President of Marketing, World Peace
Industrial Co., Ltd. (1994-1997);		 Chairman, World Peace Industrial
Co., Ltd.;
Supervisor, TECSA		 100%
  • 43 -
Executive Assistant to CEO, World Peace
Industrial Co., Ltd. (1993-1994);
President of Far East Dist., TXC Corporation.
(1988-1993);
Sales Manager, Texas Instruments Taiwan
Limited (1980-1988)
Director Simon Huang Department of Engineering
Science, National Cheng-
Kung University		 Chairman, WPG Holdings Ltd. (2005-present);
Chairman, Trigold Holdings Limited (2017-
present); Executive Director, TECSA		 Chairman, WPG Holdings Ltd.;
Chairman, Trigold Holdings Limited;
Executive Director, TECSA		 90%
Director K.D. Tseng Department of Electronics
Engineering, National
Taiwan Ocean University		 Chairman, Yosun Industrial Corp. (1999-present);
Vice President, WPG Holdings Ltd. (2011-
present); Director, Trigold Holdings Limited
(2017-present); President, TECSA (2014-present)
Chairman, Yosun Industrial Corp.;
Vice President, WPG Holdings Ltd.;
Director, Trigold Holdings Limited;
President, TECSA; President,
Management Intelligence Sharing
Association		 100%
Director Richard Wu,
Representative,
Fullerton
Technology Co.		 Department of Electronics,
Feng Chia University		 Chairman & President, Fullerton Technology Co.
(2016-present); Director (Corporate
Representative), Fullerton Digital Co. Ltd. (2016-
present); Chairman (Corporate Representative),
Niceday IT Co. Ltd. (2016-present);
Director (Corporate Representative), British
Cayman Islands CloudMile (2018-present);
Director (Corporate Representative), Udar Digital
Inc. (2016-present);
Director (Corporate Representative), Spire
Technology Limited (2016-present);		 Chairman & President, Fullerton
Technology Co.; Director (Corporate
Representative), Fullerton Digital Co.
Ltd.; Chairman (Corporate
Representative), Niceday IT Co. Ltd.;
Director (Corporate Representative),
British Cayman Islands CloudMile;
Director (Corporate Representative),
Udar Digital Inc.; Director
(Corporate Representative), Spire
Technology Limited; Director		 90%
  • 44 -
Director (Corporate Representative), D. Cinema
Technology Co., Ltd. (2016-present);
Director, Bestek Corp. (2015-present)		 (Corporate Representative), D.
Cinema Technology Co., Ltd.;
Director, Bestek Corp.
Director Frank Yeh Department of Electronic
Engineering, Feng Chia
University		 President, WPG Holdings Ltd. (2013-present);
Independent Director, BenQ Materials Corp.
(2007-present); President, Asian Information
Technology Inc. (2007-2018); President, Arrow
Electronics, Inc.; Chairman, Shuangmeng
Network Technology Co., Ltd.; Vice President,
Acer Incorporated		 President, WPG Holdings Ltd.;
Independent Director, BenQ
Materials Corp.		 100%
Independent
Director		 Chun Lin University of Chicago
(MBA);
University of Massachusetts
(Master of Science in
Electrical and Computer
Engineering)		 Vice Chairman, Lotus Pharmaceutical Co.,
Ltd.(2018-present); Independent Director, Fubon
Life Insurance Co., Ltd. (2017-present);
Chairman, Lotus Pharmaceutical Co., Ltd. (2016-
2018); Strategy Officer, Chicony Group
Corporate (2012-2016); President of the Greater
China area, Macquarie Capital (2008-2012);
Chief Financial Officer, LITE-ON Technology
Corporation (2003-2008); Chief Investment
Officer, ABN AMRO Asset Management;
President, J.P. Morgan Securities; McKinsey &
Company; AT&T Nokia Bell Labs		 Vice Chairman, Lotus
Pharmaceutical Co., Ltd.;
Independent Director, Fubon Life
Insurance Co., Ltd.		 Newly
nominated
Independent
Director		 Yung-Ching
Chen		 Master of Science in
Accounting, Soochow
University; Certified Public
Accountant of R.O.C.		 Director, Prime Oil Chemical Service
Corporation;
Independent Director, China Television
Company, Ltd.; Independent Director, Delta		 Vice President, United Way of
Taiwan; Director, Prime Oil
Chemical Service Corporation;
Independent Director, China		 Newly
nominated
  • 45 -
Electronics, Inc.;
President, United Way of Taiwan (2014-2020);
Chairman, Wei Chuan Foods Corporation (2016-
2019); Independent Director, HeySong
Corporation (2016-2019); Assistant Professor,
Soochow University (2004-2008);
PwC Taiwan (1977-2010); Lecturer, Soochow
University (1977-1997)		 Television Company, Ltd.;
Independent Director, Delta
Electronics, Inc.
Independent
Director		 Wei-Ju Chen Doctor of Strategic
Management, Purdue
University; Master of
Business Administration,
Tamkang University;
Bachelor of Business
Administration, National
Taiwan University		 Independent Director, Beijing Century Good
Future Education Technology Co., Ltd. (2015-
present);
Independent Non-executive Director, Country
Garden Holdings Co. Ltd. (2018-present);
Independent Director, Shenzhen Fangdd Network
Technology Co., Ltd. (2019-present);
Independent Director, Dian Diagnostics Co., Ltd.
(2017-present);
Director, Alibaba Business School Industry
Network Center (2019-present);
Chief Strategy Officer, Zhejiang Cuisine Bird
Supply Chain Management Co., Ltd. (2017-
2019);
Associate Professor in Science of Strategy, China
Europe International Business School (2011-
2017);		 Director, Alibaba Business School
Industry Network Center
Independent Director, Beijing
Century Good Future Education
Technology Co., Ltd.; Independent
Non-executive Director, Country
Garden Holdings Co. Ltd.;
Independent Director, Shenzhen
Fangdd Network Technology Co.,
Ltd.;
Independent Director, Dian
Diagnostics Co., Ltd.		 Newly
Nominated
  • 46 -
Assistant Professor in Strategy, INSEAD (2003-
2011)
Independent
Director		 Jack J. T. Huang
(Note 1)		 Harvard University (S.J.D.);
Northwestern University
(LL.M.); National Taiwan
University (LL.B.); R.O.C.
lawyer (1976);
New York State lawyer
(1983)		 Founder & Chairman, Taiwan Renaissance
Platform;
Special Adviser to the CEO, Yulon Group;
Special Adviser to the CEO, Tai Yuen Textile
Co., Ltd.; Independent Director, Taiwan Mobile
Co., Ltd. (2014-present); Independent Director,
SYSTEX Corporation (2007-present);
Independent Director, CTCI Corporation (2014-
present); Corporate Director Representative,
Yulon Motor Co., Ltd. (2016-present);
Corporate Director Representative, Taiwania
Capital (2017-present)		 Chairman, Taiwan Renaissance
Platform;
Special Adviser to the CEO, Yulon
Group;
Special Adviser to the CEO, Tai
Yuen Textile Co., Ltd.;
Independent Director, Taiwan Mobile
Co., Ltd.; Independent Director,
SYSTEX Corporation; Independent
Director, CTCI Corporation;
Corporate Director Representative,
Yulon Motor Co., Ltd.; Corporate
Director Representative, Taiwania
Capital		 90%

Note 1:

Nomination rationale of independent director serving for 3 consecutive terms or more:

Mr. Jack, J.T. Huang has served on the board for more than 3 consecutive terms, yet based upon the Board of Directors’ assessment of Mr. Huang’s attendance of Board meetings, it is believed that Mr. Huang holds the qualification of independence and capability of fair judgement. Given Mr. Huang’s expertise in law and business mergers and acquisitions, as well as his extensive experience in related law practice and business management, Mr. Huang’s forward looking and fair advices are often applied. The Company also relies on Mr. Huang’s professional advices and supervision toward functional committees under Board of Directors to continually improve corporate governance through experience. Mr. Huang’s presence at the board significantly benefits the Company, and therefore the Company would like to nominate Mr. Huang as independent director for the Company’s Sixth Board of Directors.

  • 47 -

Note 2:

To strengthen corporate governance and diverse functional knowledge and expertise of the Board of Directors, the director candidates’ skill and experience are shown below:

Director Nominee Director
Classification		 Business
Management		 Leadership Industry
Knowledge
and
experience		 Financial,
accounting, or
financial
reporting		 Law Human
Resources		 Risk
Management		 Global
Business		 Investment
Management
T.L. Lin Non-Independent ✓ ✓ ✓ ✓ ✓
K.Y. Chen Non-Independent ✓ ✓ ✓ ✓ ✓ ✓
Mike Chang Non-Independent ✓ ✓ ✓ ✓ ✓ ✓
Simon Huang Non-Independent ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
K.D. Tseng Non-Independent ✓ ✓ ✓ ✓ ✓ ✓
Richard Wu,
Representative,
Fullerton
Technology Co.		 Non-Independent ✓ ✓ ✓ ✓ ✓
Frank Yeh Non-Independent ✓ ✓ ✓ ✓ ✓ ✓ ✓
Chun Lin Independent ✓ ✓ ✓ ✓ ✓ ✓ ✓
Yung-Ching Chen Independent ✓ ✓ ✓ ✓ ✓ ✓ ✓
Wei-Ju Chen Independent ✓ ✓ ✓ ✓ ✓
Jack J. T. Huang Independent ✓ ✓ ✓ ✓ ✓ ✓ ✓

Note 3: Nominated directors’ rate of attending board meeting in person during the fiscal year of 2019. Calculated period: from Jan 1, 2019 to Dec 31, 2019.

  • 48 -

List of Director Candidates to be released from Non-Compete Restriction

Discussion
No.		 Director
Classification		 Director Nominee Company where position is held
concurrently		 Title Remarks
1 Non-Independent T.L. Lin Trigold Holdings Limited Director
(Corporate Representative)		 To be elected on June 18, 2020
2 Non-Independent K.Y. Chen ChiayangBiotech Inc. Director Assumingoffice
LeadSun New Star Corp. Director Assumingoffice
3 Non-Independent Simon Huang Trigold Holdings Limited Director
(Corporate Representative)		 To be elected on June 18, 2020
Phenix Innovation and Entrepreneurship
Investment Inc.		 Director Assuming office
4 Non-Independent K.D. Tseng Trigold Holdings Limited Director
(Corporate Representative)		 To be elected on June 18, 2020
Qleap Accelerators Limited Director
(Corporate Representative)		 Assuming office
Ability I Venture Capital Corporation Director
(Corporate Representative)		 Assuming office
5 Non-Independent Fullerton Technology
Co., (Representative:
Richard Wu)		 British Cayman Islands CloudMile Directors
(Corporate Representative)		 Assuming office
6 Independent Chun Lin Fubon Life Insurance Independent Director
(Corporate Representative)		 Assuming office
  • 49 -

4. Appendix

WPG HOLDINGS LIMITED

Rules of Procedures for Shareholders' Meetings

  • Article 1. The shareholders’ meetings of the Company, unless otherwise required by the laws and regulations, shall be conducted in accordance with the Rules.

  • Article 2. The attending shareholders (or proxies) shall hand in attendance cards in lieu of signing on the attendance book. The number of shares of the attending shareholders in the meeting shall be calculated based on the attendance cards handed in and electronic voting records.

  • Article 3. The presence of shareholders in a shareholders’ meeting and their voting thereof shall be calculated based on the number of shares.

  • Article 4. The place of convening a shareholders’ meeting shall be held inside the premises of We, or at any other place convenient for shareholders to attend, and suitable for holding such meeting. The time of commencing such meetings shall not be earlier than 9 a.m. or later than 3 p.m.

  • Article 5. If a shareholders’ meeting is called by the Board of Directors, the Chairman shall preside at the said shareholder meeting. In case the Chairman is on leave or absence, or cannot exercise his power and authority, the person acts in lieu of him shall be determined by the requirements of the Company Act. If a shareholders’ meeting is called by any person other than the Board of Directors, who has the right to call the meeting, such person shall preside at the meeting. Where there are two or more such persons with the right to call the meeting, they shall elect among themselves a person to preside at the meeting.

  • Article 6. We may designate lawyer, certified public accountant or other relevant persons to attend the shareholders’ meeting. Those handling the affairs of the shareholders’ meeting shall wear an identification card or a badge.

  • Article 7. We shall record with an audio or video tape the whole proceedings of the shareholders’ meeting, and such video tapes or audio tapes shall be kept for at least 1 year.

  • Article 8. When it is time to convene a shareholders' meeting, the Chairman shall immediately convene the meeting. If the attending shareholders do not represent a majority of the total amount of issued shares, the Chairman may postpone the meeting. However, the postponement of such meeting shall be limited to two times, and the total time postponed shall not exceed 1 hour. If the meeting has been postponed for two times, but the

  • 50 -

attending shareholders still do not represent a majority of the total amount of issued shares, a tentative resolution may be adopted in accordance with Paragraph 1 of Article 175 of Company Act by shareholders representing one-third of the total amount of issued shares.

By the end of such meetings if the attending shareholders represent a majority of the total amount of issued shares, the Chairman may submit the tentative resolution to the meeting for approval in accordance with the provisions of Article 174 of the Company Act.

  • Article 9. If a shareholders' meeting is called by the Board of Directors, the agenda of the meeting shall be formulated by the Board of Directors, and the meeting shall be conducted based on the agenda. The agenda shall not be changed without a resolution made by the shareholders' meeting.

If a shareholders' meeting shall be called by any person other than the Board of Directors, the preceding provisions shall apply mutatis mutandis to such meeting.

The Chairman shall not adjourn a meeting without resolution adopted by shareholders if the motions (including extraordinary motions) covered in the agenda as arranged in the above two Paragraphs shall not have been resolved. By the end of such meeting, shareholders shall not elect another Chairman to hold another meeting at the same place or at any other place. Provided where the Chairman closes the meeting in breach of the Rules, the attending shareholders might elect, by more than half of the voting rights, another person to serve as the Chairman and continue the meeting.

  • Article 10. A shareholder wishing to speak in a shareholders' meeting shall first fill out with a speech note, specifying therein the major points of his speech, his serial number as a shareholder (or number of attendance) and his name, and the Chairman shall determine his order of giving a speech.

  • A shareholder who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. If the contents of speech are inconsistent with the contents of speaker's slip, the contents of speech shall prevail.

  • When a shareholder attends the shareholders' meeting, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the Chairman and the shareholder that has the floor. The Chairman shall stop any violation.

  • Article 11. A shareholder shall not speak more than two times for one motion, unless he has obtained the prior consent from the Chairman, and each speech shall not exceed 5 minutes. If a shareholder violates the above provisions or his or her speech exceeds the scope of the motion, the Chairman may prevent him/her from doing so.

  • 51 -

Article 12. A corporate shareholder being entrusted to attend in a shareholders' meeting may designate only one representative to represent it in the meeting. When a juristic person shareholder appoints two or more representatives to attend a shareholders' meeting, only one of the representatives may speak on the same proposal. Article 13. After a shareholder has given a speech, the Chairman may respond personally or designate relevant person to respond. Article 14. When the Chairman considers that the discussion for a motion has reached the extent for making a resolution, he may announce discontinuance of the discussion and submit the motion for resolution. Article 15. The persons for supervising the casting of votes and the counting thereof for resolutions shall be designated by the Chairman, provided, however, that the person supervising the casting of votes shall be a shareholder. The voting result shall be announced at the meeting and placed on record. Article 16. During the proceedings of a meeting, the Chairman may consider the schedule and announce for a break. Where events of force majeure arise, the Chairman shall declare that the meeting is adjourned, and announce time for restoration of the meeting after having considered the circumstances, or by resolution of the shareholders’ meeting restore the meeting within 5 days without notice and announcement. If the motions (including extraordinary motions) set forth in the shareholders’ meeting are not concluded, and the meeting cannot be continued to be convened in the place, the shareholders’ meeting might resolve to restore the meeting in another place. Article 17. Unless otherwise specifically provided in Company Act or the Company's Articles of Incorporation, resolutions shall be adopted by a majority vote at a meeting attended by the shareholders. When a motion is to be voted for, it shall be deemed adopted if the Chairman consults all shareholders and none of them voice the objection, and its effect shall be the same as a motion adopted by ballots. Article 18. If there shall be an amendment or alternative to one motion, the Chairman may combine the amendment or alternative into the original motion and determine their orders for resolution. When any one among them is passed, the other proposals will then be deemed rejected, and no further voting shall be required. Article 19. The Chairman may direct disciplinary personnel (or security personnel) to maintain the order of the meeting. For doing so they shall wear armbands with the word "Picket" when maintaining order. Where a shareholder violates the Rules of Procedures and disagrees with the correction from the Chairman, or obstructs the meeting process and fails to obey after being stopped, the Chairman may instruct disciplinary officers (or

  • 52 -

security personnel) to escort the shareholder leaving the meeting venue.

Article 20. Matters not fully provided for in this Procedure shall be handled in accordance with the relevant acts and the Company's Articles of Incorporation. Article 21. (Deleted)

Article 22. The Rules and any amendments hereto shall be implemented after adoption by shareholders’ meetings. Article 23. The Rules were formulated on June 14, 2005.

The first amendment was made on June 25, 2006. The second amendment was made on June 22, 2012.

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WPG HOLDINGS LIMITED

Articles of Incorporation

Chapter 1. General Provisions

  • Article 1. The Company shall be incorporated in accordance with the Business Mergers and Acquisitions Act, Company Act and the requirements of relevant acts, and its name shall be WPG Holdings Limited.

  • Article 2. The headquarters of the Company shall be in Taipei City. Where it is necessary for business, the Company might set up branch companies and representative offices in appropriate locations within and outside the territory upon resolutions by the Board of Directors.

Chapter 2. Shares

  • Article 3. The total capital stock of the Company shall be NT$25 billion divided into 2.5 billion shares, with face value of each share at NT$10. The Board of Directors is authorized to issue the shares by installments, part of which may be preferred shares. 50 million shares among the above shall be reserved for issuance of stock warrants, restricted stock awards, preferred shares with warrants or corporate bonds with warrants issued.

  • Where the Company issues share warrants to its employees, the share warrants may be purchased by employees of the Company or the companies controlled by or subordinate to the Company that meet certain conditions. Under the special resolution of the shareholders' meeting, the exercise prices of such share warrants issued to the employees might be lower than the market prices. Such an issue shall be preceded and reported in batches within 1 year from the date of resolution by a shareholders’ meeting.

  • The Company may repurchase treasury stocks to transfer them to employees of the Company or the companies controlled by or subordinate to the Company. If the stocks are transferred at a price lower than the average repurchase price, prior to such transfer, it shall be submitted to the most recent shareholders’ meeting for special resolution. When the Company issues new stocks, it must retain a portion for purchase by employees according to Article 267-1 of the Company Act. This can include employees of the Company and its subsidiary companies or domestic/international controlled companies that meet certain conditions.

Restricted stock awards, according to Article 267-9 of the Company Act, are new stocks with service conditions or performance conditions attached that are issued to employees

  • 54 -

with restricted stock rights until the conditions are met. Restricted stock awards issuance by the Company shall be approved through special resolution at shareholders' meeting. The stocks can be issued to employees of the Company and its subsidiary companies or domestic/international controlled companies that meet certain conditions. Such an issue shall be preceded and reported in batches within 1 year from the date of resolution by a shareholders’ meeting.

  • Article 3-1 The rights and obligations of this Company’s preferred stock and related issuing conditions are as follows:

  • Preferred stock dividend is limited to an annual rate of 8%, calculated based on the issuing price of each share. The dividend can be issued in a cash lump sum each year. After the annual shareholders’ meeting accepts the Financial Statements, the Board of Directors shall set a benchmark date to issue the previous year’s dividend. The issued dividend of the issuing year and the recovery year is based on the calculation of the current year’s actual issued days.

  • The Company’s preferred stock dividend distribution has autonomous discretion. If the Company’s annual final account shows no earnings or the earnings are insufficient for preferred stock dividend distribution, or any other consideration, the shareholders' meeting may decide not to distribute preferred stock dividends without violation of the contract. If the issued preferred stock is of the noncumulative type, and the resolution is not to distribute or to distribute insufficient dividend, this is not accumulated as deferred payment in future earnings years.

  • In addition to receiving dividend described in Item one, the holder of preferred stocks shall not participate in the distribution of common stock earnings, capital reserve for cash, and capitalization.

  • The holder of the Company’s preferred stocks has priority over holders of common stocks in the distribution of the Company’s remaining asset. Holders of preferred stock also have the same compensation priority sequence as the holder of other preferred stocks issued by the Company, and are only second to ordinary creditors. However, this is limited to the amount calculated based on the number of circulating preferred stock and the issuing price.

  • The holders of preferred stock do not have voting or election rights in the shareholders' meeting. However, holders of preferred stocks have voting rights in the preferred stock shareholders' meeting and regarding issues in the shareholders’ meeting that is unfavorable to the rights and obligations of preferred stockholders.

  • Preferred stock cannot be converted to common stock.

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  • Preferred stock has no expiration date. Holders of preferred stock cannot request this Company to buy back their preferred stocks. However, the Company can buy back part or all preferred stock on the following day of the 5-year anniversary of the issuing based on the actual issuing price. The unrecovered preferred stock will continue to have the aforementioned issuing conditions and rights and obligations. If the Company decides to issue dividends for the current year, the dividend that should be issued up to the recovery date shall be calculated according to the current year’s actual number of issuing days.

  • The paid-in-capital that the preferred stock premium is issued from shall not be used for capitalization during the preferred stock issuing period other than to make up for losses.

The name of the preferred stock, the issuing date, and specific issuing conditions shall be determined by the Board of Directors based on actual market situation and investors’ willingness to purchase the stocks at the time of issuance. The Directors’ authorization is according to the Articles of Incorporation and related regulations.

  • Article 4. The share certificates of the Company shall all be name-bearing, be signed or sealed by Directors representing the company and numbered in accordance with the requirements of the competent securities authority. The Company might issue shares without printing share certificates, that such are registered or kept in custody by a centralized securities depository enterprise.

  • Article 5. Shareholder services of the Company shall be administered in accordance with the Regulations Governing the Administration of Shareholder Services of Public Companies enacted by the competent securities authority and the requirements of other relevant acts.

Chapter 3. Scope of Business

  • Article 6. The business operated by the Company: H201010 General Investment.

  • Article 7. The Company’s expertise is on investment, provided that the total amount of investment shall not be limited to 40% of the paid-in capital of the Company by virtue of the first paragraph of Article 13 of the Company Act.

  • Article 8. With respect to guarantees to the external parties necessary for business or to the projects invested by the Company, the Board of Directors is authorized to formulate separate regulations.

Chapter 4. Shareholders’ Meetings

  • Article 9. Shareholders' meetings shall be divided into regular shareholders' meetings and special shareholders' meetings. The regular shareholders' meeting shall be convened within 6

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months after close of each fiscal year; a special shareholders' meeting shall be held when necessary in accordance with the requirements of the Company Act.

A shareholders' meeting shall, unless otherwise provided in the Company Act and other acts, be convened by the Board of Directors.

The preferred stockholders' meeting shall be convened in accordance with the relevant laws and regulations, whenever necessary.

  • Article 10. A notice to convene a regular shareholders' meeting shall be given no later than 30 days prior to the scheduled meeting date. Where a special shareholders' meeting is convened, notice shall be given no later than 15 days prior to the scheduled meeting date. The date, place, and cause(s) of a shareholders' meeting to be convened shall be notified to each shareholder and be announced. However, for shareholders holding registered shares that are less than one thousand shares, the notice of the shareholders' meeting may be issued by announcement. Such notice of a shareholders' meeting might be given by means of electronic transmission, after obtaining prior consent from the recipient(s) thereof.

  • Article 11. A shareholder might appoint a proxy to attend a shareholders' meeting on his/her/its behalf by executing a power of attorney printed by the Company stating therein the scope of power authorized to the proxy. Except for trust enterprises or stock agencies approved by the competent authority, when a person who acts as the proxy for two or more shareholders, the number of voting power represented by him/her shall not exceed 3% of the total number of voting shares of the Company, otherwise, the portion of excessive voting power shall not be counted. A shareholder may only execute one power of attorney and appoint one proxy only, and shall serve such written proxy to the Company no later than 5 days prior to the meeting date of the shareholders' meeting. In case two or more written proxies are received from one shareholder, the first one received by the Company shall prevail; unless an explicit statement to revoke the previous written proxy is made in the proxy which comes later.

  • Where a shareholder appoints a proxy to attend a shareholders' meeting on his/her/its behalf by a power of attorney printed by the Company, the appointment shall be invalid. As the Company holds the shareholders' meeting, a shareholder, except attending the meeting in person, could also exercise his voting right in writing or by way of electronic transmission, which shall be exercised in accordance with the information in the meeting notice. Those who exercise his voting right in writing or by way of electronic transmission shall be deemed as participation in person, while deemed as abstention for the other business and special motions, and the amendment to the original agenda. In case a shareholder elects to exercise his voting right in writing or by way of electronic

  • 57 -

transmission, his declaration of intention shall be delivered to the Company 2 days prior to the scheduled meeting date of the shareholders' meeting, whereas if two or more declarations of the same intention are delivered to the Company, the first declaration of such intention received shall prevail, unless an explicit statement to rescind the previous declaration is made in the declaration which comes later. In case a shareholder who has exercised his voting right in writing or by way of electronic transmission intends to attend the shareholders' meeting in person, he shall, 2 days prior to the meeting date of the scheduled shareholders' meeting and in the same manner previously used in exercising his voting right, deliver a separate declaration of intention to rescind his previous declaration of intention made in exercising the voting right under the preceding paragraph. In the absence of a timely rescission of the previous declaration of intention, the voting right exercised in writing or by way of electronic transmission shall prevail.

In case a shareholder has exercised his voting right in writing or by way of electronic transmission, and has also authorized a proxy to attend the shareholders' meeting on his behalf, then the voting right exercised by the authorized proxy for the said shareholder shall prevail.

  • Article 12. Each shareholder of the Company shall have one voting power in respect of each share; except the preferred stock with no voting rights issued by the Company or those with no voting right as set out in the second paragraph of Article 179 of the Company Act. Where a government agency or a juristic person acts as the shareholder, the voting rights of such representatives shall be exercised based on their combined shareholding. Where there are more than two representatives, such representatives shall jointly exercise their voting rights.

  • Where a shareholder holds shares for others, such shareholder may exercise his voting right separately. The qualifications and methods of exercise shall comply with the regulation of the competent authorities.

  • Article 13. Except that the acts require otherwise, the following matters shall be determined by shareholders’ meetings:

  • I. Formulation and amendments of the Articles of Incorporation of the Company. II. Election of Directors.

  • III. Examination and approval of statements and reports prepared by the Board of Directors and the reports by the Audit Committee.

  • IV. Resolutions on the increase/decrease of the total capital stock.

  • V. Distribution of profits or covering of losses.

  • VI. Dissolution, merger or split of the Company.

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  • VII. Other matters to be resolved by shareholders’ meetings in accordance with the acts.

  • Article 14. For a shareholders' meeting convened by the Board of Directors, the Chairman of the meeting shall be the Chairman of the Board. In case the Chairman of the Board is on leave or absent or cannot exercise his power and authority for any cause, the Vice Chairman shall act on his behalf. In case the Vice Chairman is also on leave or absent or unable to exercise his power and authority for any cause, the Chairman of the Board shall designate one of the Directors to act on his behalf. In the absence of such designation, the Directors shall elect one from among themselves to act for him. Where a shareholders' meeting is convened by a person with convening rights outside the Board of Directors, such person with convening right shall act as the Chairman; where two or more persons having the convening right, the Chairman of the meeting shall be elected from among themselves.

  • Article 15. Resolutions at a shareholders' meeting shall, unless otherwise provided in the Company Act or other acts, be adopted by a majority vote of the attending shareholders, who represent more than one-half of the total number of voting shares.

  • The “special resolution” in this charter refers to resolution passed by shareholders' meeting attended by shareholders that represent over 2/3 of the total issued shares, and the resolution was passed by over half the present votes. Or, according to regulations, when the number of shares represented by attending shareholders does not reach the aforementioned amount, attending shareholders must represent over half of the total issued shares and over 2/3 of the attending shareholders must agree to the resolution. However, if other regulations stipulate shares held by attending shareholders or the votes of attending shareholders, follow the regulation.

  • Article 16. Resolutions adopted at a shareholders' meeting shall be recorded in the minutes of the meeting, which shall be affixed with the signature or seal of the Chairman of the meeting and shall be distributed to all shareholders of the Company within 20 days after the close of the meeting.

  • The preparation and distribution of the minutes of shareholders' meeting as required in the preceding Paragraph may be made by means of electronic transmission. The distribution of the minutes of shareholders' meeting as required in the preceding paragraph to the registered stock shareholders whose shareholding is less than one thousand shares may be made by means of a public notice.

Chapter 5. Directors and the Audit Committee

Article 17. The Board of Directors of the Company shall have 9 to 13 Directors. The number of

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Directors shall be determined by the Board of Directors and shall be in accordance with the requirements of the relevant acts. The election of the Board of Directors, pursuant to Article 192-1 of the Company Act, shall adopt the candidate nomination measure. The shareholders shall elect the Directors from the list of candidates.

The percentage of shareholdings of all the Directors shall be subject to the provisions prescribed by the competent securities authority.

Among the number of Directors specified in the first paragraph, there shall be at least three Independent Directors, whom shall be elected from lists of candidates by shareholders’ meetings in candidate nomination system. The professional qualifications, shareholdings, restrictions on concurrent positions, manners of nomination and election and other matters to be adhered to shall be handled in accordance with the requirements of the competent securities authority.

  • Article 18. Directors shall each hold office for a term not exceeding 3 years; but he/she may be eligible for re-election.

In case no election of new Directors is affected after expiration of the term of existing directors, the term of out-going directors shall be extended until the new directors have been elected and assumed their office. However, the competent authority may, ex officio, order the Company to elect new directors within a given time limit; and if no re-election is effected after the expiry of the given time limit, the out-going directors shall be discharged ipso facto from such expiration date.

Within the terms of the directors, the Company might by resolution of the Board of Directors purchase liability insurance for the directors.

Article 19. The Company shall have one Chairman of the Board, whom shall be elected by more than half of the directors present at a meeting attended by more than two third of all Directors, and where necessary, a Vice Chairman of the Board of Directors shall be elected among themselves.

The Chairman of the Board shall internally preside at the shareholders' meetings and Board meetings and shall externally represent the Company.

Article 19-1 Other than the first Board meeting, which shall be convened by the Director with the most representative votes at the election, the Board meeting shall be convened by the Chairman. Over half of the directors may request the Chairman to convene a Board meeting by filing a written proposal which sets forth the subjects for discussion and the reasons thereof. If the Chairman does not convene a Board meeting within 15 days of the submission of the request, board meeting with over half of the directors can be convened on their own.

  • Article 20. In calling a Board meeting, a notice setting forth therein the subject(s) to be discussed at

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the meeting shall be given to each Director no later than 7 days prior to the scheduled meeting date, which might be given by ways of facsimile or electronic mails. However, in the case of an emergency, the meeting may be convened at any time.

Unless otherwise provided in the Company Act, Business Mergers and Acquisitions Act or other acts, resolutions of the Board of Directors shall be adopted by a majority vote of the Directors at a meeting attended by a majority of the Directors.

  • Article 21. In case the Chairman of the Board is on leave or absent or cannot exercise his power and authority for any cause, where there is a Vice Chairman, the Vice Chairman shall act on his behalf. In case the Vice Chairman is also on leave or absent or unable to exercise his power and authority for any cause, the Chairman of the Board shall designate one of the Directors to act on his behalf. In the absence of such designation, the Directors shall elect from among themselves a Director to act on his behalf.

  • Article 22. Each Director shall attend the Board meeting in person. Where a Director cannot attend a Board meeting, he shall in each time appoint another Director to attend the meeting on his behalf by issuing a written proxy and state therein the scope of authority with reference to the subjects to be discussed at the meeting. A Director may accept the appointment to act as the proxy referred to in the above of one other Director only.

  • In case a Board meeting is proceeded via visual communication network, the Directors participate in such visual communication meetings shall be deemed as participation in person.

  • Article 23. The powers of the Board of Directors shall be as follows:

  • I. Determination of guiding principles of business.

  • II. Approval of budgets and examination of final accounts.

  • III. Approval of material internal regulations.

  • IV. Drafting proposals on an increase/decrease of total capital stock.

  • V. Drafting proposals on distribution of profits and covering of losses.

  • VI. Resolutions on the issue of company bonds.

  • VII. Resolutions on the purchase of the shares of the Company.

  • VIII. Ratification of the appointment, dismissal, and remuneration of the Chief Manager.

  • IX. Designation of directors and supervisors of subsidiaries.

  • X. Other powers stipulated by acts to be exercised by the Board of Directors and matters authorized by shareholders’ meetings.

  • XI. The Board of Directors of the Company might establish various specialized functional committees, each of which shall be accountable to the Board of Directors and shall submit its proposals to the Board of Directors for resolutions. The committees shall establish the regulations governing the exercise of their

  • 61 -

power, which shall be approved by the Board of Directors.

  • XII. The Company shall, in accordance with Article 14-4 of the Securities and Exchange Act, establish an Audit Committee, which or the members of which shall be responsible for exercising the powers of supervisors stipulated by the Company Act, Securities and Exchange Act and other acts. The Audit Committee shall be composed of all Independent Directors. The relevant articles shall be formulated by resolutions of the Board of Directors.

  • Article 24. (Deleted)

Article 25. (Deleted)

  • Article 26. Where a Director of the Company fulfill duties for the Company, without regard to the operational profits or losses, the Company shall pay remuneration considering his degree of participation in the operation of the Company and the value he contributes, and with reference with the industrial standards within and outside the territory. The Board of Directors is authorized to determine such remuneration. The remuneration of Independent Directors might be determined reasonably higher than and different from the remuneration of non-independent Directors. Where the Company makes profits, remunerations shall also be allocated in accordance with Article 31.

  • Article 27. Directors of the Company might serve concurrently as directors and supervisors of its subsidiaries.

Chapter 6. Chief Managers

  • Article 28. The Company shall, in accordance with the resolutions by the Board of Directors, appoint a President or Chief Executive Officer and several chief managers. The appointment, dismissal, and remuneration of whom shall be submitted for resolutions by more than half of the Directors present at a Board meeting attended by more than half of all Directors. The President or Chief Executive Officer shall be accountable to the Board of Directors and shall fulfill the duties designated by the Chairman of the Board or the Board of Directors.

  • The appointment and dismissal of the President or Chief Executive Officer in the preceding paragraph shall be submitted by the Chairman to the Board of Directors for handing in accordance with the requirements of the preceding paragraph.

  • The appointment and dismissal of other chief managers shall be submitted by the President or Chief Executive Officer to the Board of Directors for handling in accordance with the first paragraph.

  • Article 29. In addition to the powers conferred by the acts or the Articles of Incorporation of the Company, the regulations and authorizations with respect to the division of powers and

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responsibilities between the Board of Directors, President or Chief Executive Officer and each department shall be determined and executed by the Board of Directors.

Chapter 7. Accounting

  • Article 30. The fiscal year for the Company shall be from January 1 to December 31 of each year. After the closing of each fiscal year, the Board of Directors shall prepare the following statements and records the consolidated reports of the Company and all its subsidiaries. Such consolidated statements shall be forwarded to the Audit Committee for their auditing not later than the 30th day prior to the meeting date of a general shareholders' meeting.

  • I. Business Reports.

  • II. Financial Statements.

  • III. The surplus earning distribution or loss off-setting proposals.

  • The documents in the preceding paragraph and the preparation, audition, declaration, and reference of the items required by the competent authority shall comply with the Company Act, Securities and Exchange Act and other relevant regulations.

The financial statements in the first item, surplus earnings distribution, or loss make-up proposal, after presented at a shareholders’ meeting for acceptance, shall be distributed to the shareholders. The distribution may be made by means of public announcement.

  • Article 31. Where the financial results for the fiscal year show a profit, the Company shall, by the resolution of Board of Directors, distribute not less than 0.01% and not more than 5% of the profit as employees’ compensation, and distribute not more than 3% of the foresaid profit as remuneration of Directors and Supervisors. Reports of such distribution shall be submitted to the shareholders’ meeting. However, in case of the accumulated losses, certain profits shall first be reserved to cover them.

  • The employees’ compensation could be distributed in the form of shares or in cash and the employees of subsidiaries meeting certain specific requirements shall be entitled to receive shares or cash.

The profits stated in the first paragraph represent the pre-tax income of current year before deducting distributed employees' compensation and Directors' remuneration.

  • When the Company has no surplus, it shall not pay dividends and bonuses. If the Company has surplus at the end of the year, after tax payment and recovery of losses over the years, 10% of the amount shall be appropriated as legal capital reserve; if there is any balance after setting aside or reversion to special capital reserve in accordance with laws and regulations, the dividends for preferred shares in the current year shall be paid in

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priority. The remaining balance (hereinafter referred to as "surplus earnings of the year") plus the retained earnings at the beginning of the year is deemed as the surplus earnings available for distribution that are to be distributed as the dividends and bonuses to shareholders. The distribution plan shall be proposed by the Board of Directors and subject to the resolution of the shareholders' meeting.

This Company’s dividend policy and dividend distribution shall consider the Company’s profitability, future operation funding needs, and changes in industry environment, as well as the shareholders’ rights and the Company’s long-term financial plans. This Company’s yearly total dividend distribution amount shall not be less than 50% of the year’s earnings. Cash dividend distributed shall not be less than 20% of the total dividend distribution amount.

Chapter 8. Supplementary Provisions

  • Article 32. The Board of Directors is authorized to formulate the Articles of Incorporation, detail procedures of operation and management rules for the Company.

  • Article 33. Matters not fully provided for by the Articles shall be handled in accordance with the Company Act, Securities and Exchange Act, Business Mergers and Acquisitions Act, and the requirements of other relevant acts.

  • Article 34. The Articles were formulated on June 14, 2005. The first amendment was made on June 14, 2006. The second amendment was made on June 13, 2007. The third amendment was made on June 25, 2008. The fourth amendment was made on June 16, 2009. The fifth amendment was made on June 21, 2010. The sixth amendment was made on June 22, 2012. The seventh amendment was made on June 19, 2013. The eighth amendment was made on June 18, 2014. The ninth amendment was made on June 22, 2016. The tenth amendment was made on June 28, 2019.

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WPG HOLDINGS LIMITED

Rules for Election of Directors

The amendments were approved by the shareholders' meeting on June 19, 2013.

  • Article 1. Unless otherwise provided in the Company Act and Articles of Incorporation, the Directors of the Company shall be elected in accordance with the rules specified herein.

  • Article 2. Election of directors of the Company shall be held at the shareholders’ meeting. The Company shall prepare ballots and note the number of voting rights. The names of voters may be represented by shareholders’ numbers. Electronic voting records are regarded as the check result of ballots.

  • Article 3. The election of directors of the Company shall be conducted in accordance with the candidate nomination system set out in Article 192-1 of the Company Act. The Directors shall be elected from candidates based on the candidate nomination system.

  • Article 4. The Company shall adopt a cumulative voting method with open ballots to elect the Directors. The number of votes exercisable in respect of one share shall be the same as the number of Directors to be elected, and the total number of votes per share may be consolidated for election of one candidate or may be split for the election of two or more candidates. The election for independent and non-independent Directors shall be held at the same time, but the numbers to be elected shall be calculated separately.

  • Article 5. Before election, the Chairman shall designate several controllers and counters to perform relevant duties. The ballot boxes shall be prepared by the Company and publicly checked by the vote monitoring personnel before voting commences.

  • Article 6. If a candidate is a shareholder, the voter shall enter the candidate's account name and shareholder account number in the "candidate" column of the ballot; for a nonshareholder, the voter shall enter the candidate's full name and identity card number. However, when the candidate is a government organization or corporate shareholder, the name of the government organization or corporate shareholder shall be entered in the column for the candidate's account name on the ballot, or both the name of the government organization or corporate shareholder and the name of its representative may be entered. When there are multiple representatives, the names of each representative shall be entered.

When the shareholder fills in the name, account number and identification number of

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the candidate in the preceding paragraph, stamping can be valid.

  • Article 7. A ballot is invalid under any of the following circumstances:

  • (I) Ballots not placed in the ballot box

  • (II) Ballots not prepared by the Company.

  • (III) A blank ballot is placed in the ballot box.

  • (IV) The writing is unclear and indecipherable or has been altered.

  • (V) The candidate whose name is entered in the ballot is a shareholder, but the candidate's account name and shareholder account number do not conform to those given in the shareholder register.

  • (VI) The candidate whose name is entered in the ballot is a non-shareholder, and a cross-check shows that the candidate's name and identity card number do not match.

  • (VII) Other words or marks are entered in addition to the candidate's account name or shareholder account number (or identity card number) and the number of voting rights allotted.

  • (VIII) The name of the candidate entered in the ballot is identical to that of another shareholder, but no shareholder account number or identity card number is provided in the ballot to identify such an individual.

  • (IX) There is more than one candidate in a ballot.

  • Article 8. Those receiving ballots representing the highest numbers of voting rights will be elected sequentially according to their respective numbers of votes. When two or more persons receive the same number of votes, thus exceeding the specified number of positions, they shall draw lots to determine the winner, with the chairman drawing lots on behalf of any person not in attendance.

  • Article 9. After voting, the votes shall be opened on the spot, and the voting result shall be announced by the Chairman on the spot.

  • Article 10. The Board of Directors shall send each elected Director a notice of appointment, and the elected Directors are required signing the letter of intent to take office.

  • Article 11. These Rules and any amendments thereto shall be implemented after the approval by the shareholders' meeting.

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WPG HOLDINGS LIMITED

Shareholdings of All Directors

Base Day: April 26, 2020 Base Day: April 26, 2020 Base Day: April 26, 2020
Position Name Date elected Term Shareholding when elected Shareholding in the shareholders roster within the
share transferprohibitionperiod
Share Type Shares Shareholding
ratio (%)
(Note 1)		 Share Type Shares Shareholding
ratio (%)
(Note 2)
Chairman Simon Huang 2017/06/19 3 years Common Share 46,512,508 2.66 Common Share 41,411,507 2.47
Preferred Share A － － Preferred Share A － －
Vice Chairman
K.D. Tseng		 2017/06/19 3 years Common Share 10,494,000 0.60 Common Share 9,654,480 0.57
Preferred Share A － － Preferred Share A － －
Director Mike Chang 2017/06/19 3 years Common Share 27,358,674 1.57 Common Share 25,112,020 1.50
Preferred Share A － － Preferred Share A － －
Director T.L. Lin 2017/06/19 3 years Common Share 24,951,707 1.43 Common Share 19,195,570 1.14
Preferred Share A － － Preferred Share A － －
Director K.Y. Chen 2017/06/19 3 years Common Share 5,015,933 0.29 Common Share 4,614,658 0.27
Preferred Share A － － Preferred Share A 561,738 0.28
Director Fullerton Technology Co.
(Representative: Richard Wu)		 2017/06/19 3 years Common Share 45,135,951 2.59 Common Share 34,421,074 2.05
Preferred Share A － － Preferred Share A 2,000,000 1.00
Director Frank Yeh 2017/06/19 3 years Common Share 1,300,584 0.07 Common Share 1,196,537 0.07
Preferred Share A － － Preferred Share A 113,000 0.06
  • 67 -
Position Name Date elected Term Shareholding when elected Shareholding when elected Shareholding when elected Shareholding in the shareholders roster within the
share transferprohibitionperiod		 Shareholding in the shareholders roster within the
share transferprohibitionperiod		 Shareholding in the shareholders roster within the
share transferprohibitionperiod
Share Type Shares Shareholding
ratio (%)
(Note 1)		 Share Type Shares Shareholding
ratio (%)
(Note 2)
Director Henry Shaw 2017/06/19 3 years Common Share 406,618 0.02 Common Share 636,888 0.04
Preferred Share A － － Preferred Share A 60,690 0.03
Independent
Director		 Rong-Ruey Duh 2017/06/19 3 years Common Share － － Common Share － －
Preferred Share A － － Preferred Share A － －
Independent
Director		 Jack J. T. Huang 2017/06/19 3 years Common Share － － Common Share － －
Preferred Share A － － Preferred Share A － －
Independent
Director		 Yung-Hong Yu 2017/06/19 3 years Common Share － － Common Share － －
Preferred Share A － － Preferred Share A － －
Total
Shareholdings
of the
Directors		 Common Share 161,175,975 9.23 Common Share 136,242,734 8.11
Preferred Share A － － Preferred Share A 2,735,428 1.37

Note 1: Total issued common shares on June 19, 2017 (Date elected): 1,745,420,665 shares

Total issued preferred shares A on June 19, 2017 (Date elected): 0 share

Note 2: Total issued common shares on April 26, 2020 (Book closure date): 1,679,056,833 shares

  • Total issued preferred shares A on April 26, 2020 (Book closure date): 200,000,000 shares

  • Remarks:

  • The minimum required combined shareholding ratio of all Directors by law: 2.4%

  • The minimum required combined shareholding of all Directors by law: 45,097,363 shares; As of April 26, 2020 (Book closure date), the total common shares and preferred shares A held by all Directors was 138,978,162 shares (not including the shareholding of Independent Directors)

  • The Company has established the Audit Committee; hence there is no applicable legal requirement for shareholding of Supervisors

  • 68 -

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